-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, MD/J4/KVJG1d/WR84hq2R2DWDQq5cpvKP2vJuUD9l609VzkB2+uPt1XNT+h3szYX r0TDTyB2tt4JnoCkoS3wyA== 0000018540-94-000014.txt : 19940315 0000018540-94-000014.hdr.sgml : 19940315 ACCESSION NUMBER: 0000018540-94-000014 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19940314 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTRAL & SOUTH WEST CORP CENTRAL INDEX KEY: 0000018540 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 510007707 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1/A SEC ACT: 35 SEC FILE NUMBER: 070-08339 FILM NUMBER: 94515771 BUSINESS ADDRESS: STREET 1: 1616 WOODALL RODGERS FRWY CITY: DALLAS STATE: TX ZIP: 75202 BUSINESS PHONE: 2147541000 U-1/A 1 EL PASO ACQUISITION 1 File No. 70-8339 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 1 TO FORM U-1 APPLICATION-DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ______________________________________ CENTRAL AND SOUTH WEST CORPORATION 1616 Woodall Rodgers Freeway P.O. Box 660164 Dallas, Texas 75202 (Names of companies filing this statement and addresses of principal executive offices) _____________________________________ CENTRAL AND SOUTH WEST CORPORATION (Name of top registered holding company parent) ____________________________________ Stephen J. McDonnell Treasurer Central and South West Corporation 1616 Woodall Rodgers Freeway P.O. Box 660164 Dallas, Texas 75202 M. Douglas Dunn Milbank, Tweed, Hadley & McCloy One Chase Manhattan Plaza New York, New York 10005 (Names and addresses of agents for service) with copies to George J. Forsyth & Joris M. Hogan Milbank, Tweed, Hadley & McCloy One Chase Manhattan Plaza New York, New York 10005 2 Central and South West Corporation ("CSW"), a Delaware corporation and a holding company registered under the Public Utility Holding Company Act of 1935, as amended (the "Act"), hereby files this Amendment No. 1 to the Form U-1 Application-Declaration in File No. 70-8339 for the purpose of amending Item 6 in the following respects. Item 6. Exhibits and Financial Statements. Item 6 is hereby amended to file the following exhibits: A-13 - Form of Reorganized EPE First Mortgage Bond Indenture, including forms of bonds. A-14 - Form of Reorganized EPE Second Mortgage Bond Indenture, including forms of bonds. A-15 - Form of Reorganized EPE Senior Debt Securities Indenture, including forms of notes. A-20 - Forms of Reorganized EPE Letter of Credit and Reimbursement Agreements. B-9.1 - Supplement to APS Settlement Agreement. D-14.1 - Amended Findings of Fact. 3 S I G N A T U R E - - - - - - - - - Pursuant to the requirements of the Public Utility Holding Company Act of 1935, as amended, the undersigned company has duly caused this document to be signed on its behalf by the undersigned thereunto duly authorized. Dated: March 14, 1994 CENTRAL AND SOUTH WEST CORPORATION By: /s/ STEPHEN J. MCDONNELL Stephen J. McDonnell Treasurer EX-99 2 EXHIBIT INDEX 1 INDEX OF EXHIBITS EXHIBIT TRANSMISSION NUMBER EXHIBIT METHOD - ------- ------- ------------ A-13 Form of Reorganized EPE First Electronic Mortgage Bond Indenture, including forms of bonds. A-14 Form of Reorganized EPE Second Electronic Mortgage Bond Indenture, including forms of bonds. A-15 Form of Reorganized EPE Senior Electronic Debt Securities Indenture, including forms of notes. A-20 Forms of Reorganized EPE Letter Electronic of Credit and Reimbursement Agreements. B-9.1 Supplement to APS Settlement Agreement Electronic D-14.1 Amended Findings of Fact Electronic EX-99 3 FORM OF REORGANIZED EPE PREFERRED STOCK CERTIFICATE 1 EXHIBIT A-13 ========================================================== INDENTURE _______________ EL PASO ELECTRIC COMPANY TO STATE STREET BANK AND TRUST COMPANY AS TRUSTEE _________________ Dated as of , 1994 _________________ (FIRST MORTGAGE BONDS) THIS INSTRUMENT GRANTS A SECURITY INTEREST BY A UTILITY THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS ========================================================== 2 Explanations of Dates and Amounts [Not Part of the Indenture] * Initial issuance date of bonds ** This amount will equal (1) the amount of bondable property (determined on a net basis - i.e., net of retirements and depreciation) of the Company existing on the Effective Date, less (2) the amount of bondable property that would be utilized as a basis for the issuance of the Series A to C and Series X Bonds, if a 66-2/3% issuance test were applicable. For example, using hypothetical numbers, the Company has bondable property of $1.5 billion on the Effective Date and $400 million of bonds are issued (on the basis of $600 million of bondable property), the number inserted will be $900 million ($1.5 billion of bondable property less $600 million of bondable property used). *** First April 1st after initial issuance of bonds **** These schedules are included for purposes of complying with state law requirements and will list the property of the Company specified in the relevant definition as of the initial issuance date of bonds. Schedule A will include all the real property of the Company (other than as set forth in Schedule B). Schedule B will only contain certain property, if any, in an immaterial amount. 3 EL PASO ELECTRIC COMPANY INDENTURE DATED AS OF ___________, 1994 TABLE OF CONTENTS Page Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Preliminary Statement. . . . . . . . . . . . . . . . . . . . . 1 Property Conveyed. . . . . . . . . . . . . . . . . . . . . . . 2 After-acquired Property. . . . . . . . . . . . . . . . . . . . 3 Excepted Property. . . . . . . . . . . . . . . . . . . . . . . 4 Subject Clause . . . . . . . . . . . . . . . . . . . . . . . . 5 Habendum . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Grant in Trust . . . . . . . . . . . . . . . . . . . . . . . . 5 Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . 5 ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION. . . . . . . . . . 6 SECTION 1.01. Construction of Document. . . . . . . . . . . . 6 SECTION 1.02. Certain Defined Terms . . . . . . . . . . . . . 6 affiliate. . . . . . . . . . . . . . . . . . . . . . 6 amount of depreciable property . . . . . . . . . . . 6 application. . . . . . . . . . . . . . . . . . . . . 6 Board of Directors . . . . . . . . . . . . . . . . . 6 bondable property. . . . . . . . . . . . . . . . . . 7 bonds. . . . . . . . . . . . . . . . . . . . . . . . 7 Business Day . . . . . . . . . . . . . . . . . . . . 7 Company. . . . . . . . . . . . . . . . . . . . . . . 7 Commission . . . . . . . . . . . . . . . . . . . . . 7 control. . . . . . . . . . . . . . . . . . . . . . . 7 cost . . . . . . . . . . . . . . . . . . . . . . . . 7 Current Fair Value . . . . . . . . . . . . . . . . . 7 Daily Newspaper. . . . . . . . . . . . . . . . . . . 7 deposited cash . . . . . . . . . . . . . . . . . . . 7 Effective Date . . . . . . . . . . . . . . . . . . . 7 Engineer . . . . . . . . . . . . . . . . . . . . . . 7 Engineer's Certificate . . . . . . . . . . . . . . . 7 Excepted Encumbrances. . . . . . . . . . . . . . . . 8 Excepted Property. . . . . . . . . . . . . . . . . . 9 fair value to the Company. . . . . . . . . . . . . . 9 Funds. . . . . . . . . . . . . . . . . . . . . . . . 9 gross expenditures . . . . . . . . . . . . . . . . . 9 gross retirements of property. . . . . . . . . . . . 9 holder" or "bondholder . . . . . . . . . . . . . . . 9 Independent Engineer . . . . . . . . . . . . . . . . 9 lien hereof" and "lien of this Indenture . . . . . . . . . . . . . . . . . . . 9 net earnings . . . . . . . . . . . . . . . . . . . . 10 4 Net Earnings Certificate . . . . . . . . . . . . . . 10 net expenditures . . . . . . . . . . . . . . . . . . 10 Obligor. . . . . . . . . . . . . . . . . . . . . . . 10 Officers' Certificate. . . . . . . . . . . . . . . . 10 Opinion of Counsel . . . . . . . . . . . . . . . . . 10 Original Fair Value. . . . . . . . . . . . . . . . . 10 Outstanding. . . . . . . . . . . . . . . . . . . . . 11 person . . . . . . . . . . . . . . . . . . . . . . . 11 Plan . . . . . . . . . . . . . . . . . . . . . . . . 11 plant or property operated by others . . . . . . . . 11 Prepaid Liens. . . . . . . . . . . . . . . . . . . . 12 Prior Lien . . . . . . . . . . . . . . . . . . . . . 12 purchased property . . . . . . . . . . . . . . . . . 12 Required Percentage. . . . . . . . . . . . . . . . . 12 Resolution . . . . . . . . . . . . . . . . . . . . . 12 Responsible Officers . . . . . . . . . . . . . . . . 12 TIA. . . . . . . . . . . . . . . . . . . . . . . . . 12 title. . . . . . . . . . . . . . . . . . . . . . . . 13 Trustee. . . . . . . . . . . . . . . . . . . . . . . 13 Trust Estate . . . . . . . . . . . . . . . . . . . . 13 U.S. Government Obligations. . . . . . . . . . . . . 13 SECTION 1.03. Compliance Certificates and Opinions. . . . . . . . 13 SECTION 1.04. Amount to be Deposited to Pay or Redeem Bonds, etc. 14 SECTION 1.05. Certificate of Resolutions . . . . . . . . . . . . 15 SECTION 1.06. Incorporation by Reference of Trust Indenture Act . 15 SECTION 1.07. Indenture as Deed of Trust in New Mexico. . . . . . 15 SECTION 1.08. Indenture as Deed of Trust in Arizona . . . . . . . 15 ARTICLE II THE BONDS. . . . . . . . . . . . . 16 SECTION 2.01. General Limitations; Bonds Issuable in Series . 16 SECTION 2.02. Date of and Interest on Bonds . . . . . . . . . 18 SECTION 2.03. Legends on Bonds. . . . . . . . . . . . . . . . 18 SECTION 2.04. Exchange of Bonds; Transfers. . . . . . . . . . 19 SECTION 2.05. Registration and Transfer of Bonds. . . . . . . 19 SECTION 2.06. Execution of Bonds. . . . . . . . . . . . . . . 20 SECTION 2.07. Temporary Bonds . . . . . . . . . . . . . . . . 20 SECTION 2.08. Lost, Destroyed or Mutilated Bonds. . . . . . . 21 SECTION 2.09. Certificate of the Trustee. . . . . . . . . . . 21 SECTION 2.10. Authorized Denominations. . . . . . . . . . . . 21 ARTICLE III BOND FORMS. . . . . . . . . . . . . 21 SECTION 3.01. Forms Generally . . . . . . . . . . . . . . . . 21 SECTION 3.02. Trustee's Certificate of Authentication . . . . 27 5 ARTICLE IV ISSUANCE OF BONDS. . . . . . . . . . . 28 SECTION 4.01.Initial Issuance of Bonds . . . . . . . . . . . . 28 SECTION 4.01A.Terms of Initial Issues of Bonds . . . . . . . . 28 SECTION 4.01B. Certain Covenants for Bonds of Series A and Series B . . . . . . . . . . . . . . . . . . . . . 28 SECTION 4.01C.Certain Provisions for Bonds of Series X . . . . 30 SECTION 4.02. Issuance of Bonds Upon Retirement of Bonds Previously Outstanding Hereunder . . . . . . . 31 SECTION 4.03. Issuance of Bonds Upon the Basis of Property and Property Additions . . . . . . . . . . . . . . 33 SECTION 4.04. Issuance of Bonds Upon Deposit of Cash With Trustee; Withdrawal or Application of Deposited Cash . . . . . . . . . . . . . . . . 39 SECTION 4.05. Net Earnings Certificate. . . . . . . . . . . . 40 SECTION 4.06. Documents to be Delivered . . . . . . . . . . . 42 ARTICLE V PARTICULAR COVENANTS OF THE COMPANY . . . . . . 44 SECTION 5.01. Seizin and Warranty . . . . . . . . . . . . . . 44 SECTION 5.02. Payment of Principal, Premium and Interest; Maintenance of Office. . . . . . . . . . . . . 45 SECTION 5.03. Regarding Paying Agent; Funds in Trust. . . . . 46 SECTION 5.04. Limitations on Liens; Payment of Taxes. . . . . 46 SECTION 5.05. To Insure . . . . . . . . . . . . . . . . . . . 48 SECTION 5.06. To Maintain Property, etc.. . . . . . . . . . . 49 SECTION 5.07. To Maintain Corporate Existence and Franchises. 50 SECTION 5.08. Repayment of Advances made by a Receiver, etc.. 50 SECTION 5.09. To Record and File Indenture and Supplemental Indenture. . . . . . . . . . . . . . . . . . . 50 SECTION 5.10. To Furnish Opinions of Counsel as to Recording. 51 SECTION 5.11. Further Advances and After-acquired Property. . 52 SECTION 5.12. To Appoint a Trustee to Fill Vacancies. . . . . 52 SECTION 5.13. Periodic Examinations as to Maintenance . . . . 52 SECTION 5.14. Annual Statement by Officers as to Default. . . 55 SECTION 5.15. Maintenance and Renewal . . . . . . . . . . . . 55 SECTION 5.16. To Comply With Indenture. . . . . . . . . . . . 58 ARTICLE VI BONDHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE . . . . . . . . . . . 58 SECTION 6.01. Company to Furnish Lists of Names and Addresses of Bondholders . . . . . . . . . . . . . . . . 58 SECTION 6.02. Current Lists of Bondholders. . . . . . . . . . 58 SECTION 6.03. Company's Covenants as to Filing Reports. . . . 59 SECTION 6.04. Trustee's Reports . . . . . . . . . . . . . . . 59 6 ARTICLE VII REDEMPTION AND PURCHASE OF BONDS . . . . . . . 60 SECTION 7.01. Exercise of Option to Redeem. . . . . . . . . . 60 SECTION 7.02. Notice of Redemption. . . . . . . . . . . . . . 60 SECTION 7.03. Deposit of Cash to Redeem . . . . . . . . . . . 61 SECTION 7.04. Payment of Bonds Called for Redemption and Cessation of Lien. . . . . . . . . . . . . . . . . 62 SECTION 7.05. Bonds to be Cancelled . . . . . . . . . . . . . 62 ARTICLE VIII POSSESSION, USE AND RELEASE OF MORTGAGED PROPERTY. . . . . . . . . . . . 62 SECTION 8.01. Company to Possess Property Until Default; Disposal of Certain Property Without Release . . . 62 SECTION 8.02. Trustee to Release Property Upon Certain Conditions . . . . . . . . . . . . . . . . . . . . 64 SECTION 8.03. Eminent Domain. . . . . . . . . . . . . . . . . . . 67 SECTION 8.04. Rights of Purchaser of Released Property. . . . . . 73 SECTION 8.05. Receiver or Trustee May Exercise Company's Rights . 67 SECTION 8.06. Withdrawal, Use and Application of Cash Deposited with Trustee . . . . . . . . . . . . . . . . . . . . . 67 ARTICLE IX REMEDIES IN EVENT OF DEFAULT . . . . . . . . . . . . 71 SECTION 9.01. Defaults. . . . . . . . . . . . . . . . . . . . . . . . 71 SECTION 9.02. Notice of Defaults. . . . . . . . . . . . . . . . . . . 72 SECTION 9.03. Acceleration of Maturity Date. . . . . . . . . . . . . 73 SECTION 9.04. Right of Entry and Application of Proceeds Received by Trustee . . . . . . . . . . . . . . . . . . . . . . 73 SECTION 9.05. Power of Sale Upon Default. . . . . . . . . . . . . . . 74 SECTION 9.06. Notice of Sale and Manner of Making Same. . . . . . . . 75 SECTION 9.06A. Operation of Power of Sale. . . . . . . . . . . . . . . 76 SECTION 9.07. Application of Proceeds of Sale . . . . . . . . . . . . 77 SECTION 9.08. Purchaser at Sale May Use Bonds as Payment. . . . . . . 78 SECTION 9.09. Principal and Interest Payable to Trustee After Default; Proofs of Claim; Judgments. . . . . . . . . . 79 SECTION 9.10. Majority of Bondholders Entitled to Direct Trustee. . . 81 SECTION 9.11. Remedies Cumulative and Not Waived by Failure to Act . 82 SECTION 9.12. Rights of Bondholders to Sue. . . . . . . . . . . . . . 82 ARTICLE X EVIDENCE OF RIGHTS OF BONDHOLDERS. . . . . . . . . 83 SECTION 10.01. Execution of Requests, etc. by Bondholders . . . . 83 SECTION 10.02. Registered Holders Treated as Absolute Owners. . . 84 7 ARTICLE XI DEFEASANCE. . . . . . . . . . . . . . . 84 SECTION 11.01. Release and Discharge of Indenture . . . . . . . . 84 SECTION 11.02. Defeasance of a Series of Bonds. . . . . . . . . . 86 SECTION 11.03. Payment of Deposited Cash to Company . . . . . . . 88 ARTICLE XII IMMUNITY OF INCORPORATORS, OFFICERS, SHAREHOLDERS AND DIRECTORS. . . . . . . . . . . . . . . 89 SECTION 12.01. Exemption from Personal Liability. . . . . . . . . 89 ARTICLE XIII CONSOLIDATIONS, MERGERS, TRANSFERS AND SALES . . . . . . 90 SECTION 13.01. Merger, Consolidation or Sale. . . . . . . . . . . 90 SECTION 13.02. Successor to Succeed to Rights of Company. . . . . 92 SECTION 13.03. Limitation of After-Acquired Clauses . . . . . . . 93 ARTICLE XIV CONCERNING THE TRUSTEE. . . . . . . . . . . . 94 SECTION 14.01. Capital and Surplus Requirement. . . . . . . . . . 94 SECTION 14.02. Acceptance of Trust and Duties by Trustee. . . . . 94 SECTION 14.03. Limitation on Liability of Trustee . . . . . . . . 94 SECTION 14.04. Recitals are by Company Alone. . . . . . . . . . . 95 SECTION 14.05. Exemption of Trustee from Personal Liability in Case of Entry . . . . . . . . . . . . . . . . . . 96 SECTION 14.06. Trustee may Rely on Documents, etc.. . . . . . . . 96 SECTION 14.07. Trustee's Responsibility for Selection of Experts. 97 SECTION 14.08. Trustee may be Bondholder, etc.. . . . . . . . . . 97 SECTION 14.09. Cash to be Held in Trust . . . . . . . . . . . . . 97 SECTION 14.10. Trustee Compensation and Reimbursement . . . . . . 97 SECTION 14.11. Certificate of Officers of Company to Constitute Proof . . . . . . . . . . . . . . . . . . . . . . 99 SECTION 14.12. Trustee to Have Power to Give Notices. . . . . . . 99 SECTION 14.13. Trustee Acquiring Conflicting Interest . . . . . . 99 SECTION 14.14. Preferential Collection of Claims Against the Company if Trustee Becomes a Creditor . . . . . . 99 SECTION 14.15. Trustee may Resign . . . . . . . . . . . . . . . . 99 SECTION 14.16. Trustee may be Removed . . . . . . . . . . . . . . 99 SECTION 14.17. Appointment of Successor Trustee . . . . . . . . .100 SECTION 14.18. Separate Trustee or Co-trustee may be Appointed . 101 SECTION 14.19. Conditions Upon Appointment of Separate Trustee or Co-trustee or Successor Trustee. . . . . . . .101 8 SECTION 14.20. Notices to Trustee . . . . . . . . . . . . . . . .102 SECTION 14.21. Trustee as Agent . . . . . . . . . . . . . . . . .103 SECTION 14.22. Successor Trustee to Execute Acceptance and Become Vested with Estate . . . . . . . . . . . . . .103 SECTION 14.23. Consolidation or Merger of Trustee . . . . . . . .104 ARTICLE XV CONCERNING PLEDGED SECURITIES. . . . . . . . . .104 SECTION 15.01. Pledged Securities Deposited with Trustee. . . . .104 SECTION 15.02. Voting . . . . . . . . . . . . . . . . . . . . . .105 SECTION 15.03. Income Before Event of Default . . . . . . . . . .106 SECTION 15.04. Payments Upon Dissolution, etc. of Issuer of Pledged Securities. . . . . . . . . . . . . . . .107 SECTION 15.05. Renewal and Refunding. . . . . . . . . . . . . . .107 SECTION 15.06. Pledged Securities Not Basis of Issuance . . . . .107 ARTICLE XVI SUPPLEMENTAL INDENTURES . . . . . . . . . . .108 SECTION 16.01. Supplemental Indentures to be Executed for Specified Purposes. . . . . . . . . . . . . . . .108 SECTION 16.02. Modification of Indenture with Consent of Bondholders . . . . . . . . . . . . . . . . . . .110 SECTION 16.03. Effect of Supplemental Indenture . . . . . . . . .112 SECTION 16.04. Opinion of Counsel as Evidence of Compliance . . .112 SECTION 16.05. Notations on Bonds; Provision for New Bonds. . . .112 SECTION 16.06. Supplemental Indenture to Conform to Trust Indenture Act of 1939 . . . . . . . . . . . . . .112 ARTICLE XVII BONDHOLDERS' MEETINGS. . . . . . . . . . . .112 SECTION 17.01. Meeting Called for Specified Purposes. . . . . . .112 SECTION 17.02. Meeting Called by Trustee. . . . . . . . . . . . .113 SECTION 17.03. Meeting Called by Company or Bondholders . . . . .113 SECTION 17.04. Bondholders Entitled to Vote . . . . . . . . . . .113 SECTION 17.05. Regulations for Meeting. . . . . . . . . . . . . .114 SECTION 17.06. Bondholders' Vote by Written Ballot. . . . . . . .115 SECTION 17.07. Nothing Authorizes Hindrance or Delay of Rights of Trustee or Bondholders . . . . . . . . . . . .115 9 ARTICLE XVIII MISCELLANEOUS PROVISIONS . . . . . . . . . . .115 SECTION 18.01. Covenants for Sole Benefit of Parties and Bondholders; Severability . . . . . . . . . . . .115 SECTION 18.02. Court may Require Bond for Costs, Under Certain Conditions. . . . . . . . . . . . . . . . . . . .116 SECTION 18.03. Provisions of Trust Indenture Act of 1939 to be Controlling . . . . . . . . . . . . . . . . . . .116 SECTION 18.04. Notice to the Company. . . . . . . . . . . . . . .116 SECTION 18.05. Reference to Parties Includes Successors . . . . .116 SECTION 18.06. Headings Inserted for Convenience Only . . . . . .117 SECTION 18.07. Cancellation and Cremation of Bonds. . . . . . . .117 SECTION 18.08. Execution in Counterparts. . . . . . . . . . . . .117 SECTION 18.09. Deposit of Securities in Lieu of Cash. . . . . . .117 SECTION 18.10. Termination. . . . . . . . . . . . . . . . . . . .118 . . APPENDIX A-1 Form of bond of Series A APPENDIX A-2 Form of bond of Series B APPENDIX A-3 Form of bond of Series C APPENDIX A-4 Form of bond of Series X Schedule A Real Property of the Company [****] Schedule B Certain Excepted Property [****] 10 INDENTURE, dated as of ____________, 1994, between EL PASO ELECTRIC COMPANY, a corporation organized and existing under the laws of the State of Texas, with its principal office in El Paso, Texas (hereinafter called the "Company") and STATE STREET BANK AND TRUST COMPANY, a banking corporation organized and existing under the laws of the Commonwealth of Massachusetts, with its principal corporate trust office in Boston, Massachusetts, as Trustee (hereinafter called the "Trustee"). PRELIMINARY STATEMENT The Company owns and possesses the property hereinafter described, together with certain franchises, permits, rights and privileges, and has legal authority to make and execute this indenture of mortgage or deed of trust (hereinafter called the "Indenture") upon such property, franchises, permits, rights and privileges, and to issue its evidences of indebtedness as herein provided. The Company is entering into this Indenture pursuant to the terms of that Modified Third Amended Plan of Reorganization, dated August 27, 1993 and corrected on September 15, 1993, of the Company (the "Plan") filed in the United States Bankruptcy Court, Western District of Texas, Chapter 11 Case No. 92-10148-FM. The Company desires to issue the bonds provided in Section 4.01 hereof pursuant to the Plan and, with respect to the issuance of further series of bonds, to provide funds for and otherwise to accomplish its lawful corporate purposes from the sale of bonds issued under and secured by this Indenture and to that end, as authorized by resolutions duly adopted by its Board of Directors at meetings duly called and held for that purpose, has determined to borrow cash (except for the issuance of bonds pursuant to Section 4.01 hereof) and for that purpose to issue its bonds in an aggregate amount from time to time outstanding, which (except as provided in Article IV of this Indenture) shall not be subject to any limit, under and secured by this Indenture on the properties of the Company as hereinafter provided. Said bonds may be issued from time to time in one or more series subject to the restrictions and provisions contained in this Indenture with respect thereto. The bonds of each series shall be in registered form and shall (a) bear such date, (b) be payable on such date or dates (in the case of serial maturities) and at such place or places, (c) bear interest at such rate or rates payable at such time or times and at such place or places, (d) bear such designation or title herein provided for, and (e) contain such provisions, if any, with respect to tax exemptions, tax reimbursements, redemption, sinking fund, conversion into stock or other securities, limitations, if any, as to aggregate principal amount of bonds of such series issuable and other characteristics not in conflict with the terms of this Indenture, all as set forth herein or as the Board of Directors shall determine with respect to each successive series prior to the authentication of any bonds thereof. 11 All acts and things necessary to make the bonds, when authenticated by the Trustee and issued as provided in this Indenture, the valid, binding and legal obligations of the Company, and to constitute this Indenture a valid, binding and legal instrument for the security thereof, have been done and performed, and the creation, execution and delivery of this Indenture have in all respects been duly authorized. PROPERTY CONVEYED NOW THEREFORE, in consideration of the premises, and of the acceptance and purchase by the holders thereof of the bonds to be issued under this Indenture, and of the sum of Ten Dollars ($10.00) duly paid by the Trustee to the Company at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, and for the purpose of securing the due and punctual payment of the principal of and premium, if any, and interest on all bonds which shall from time to time be issued hereunder according to their tenor and effect and the faithful performance and observance of all covenants and conditions hereof (including any supplemental indentures and any modification made as provided herein), the Company has given, granted, bargained, sold, released, transferred, assigned, hypothecated, pledged, mortgaged, confirmed, set over, warranted, aliened, conveyed, and created a security interest in, and by these presents does, give, grant, bargain, sell, release, transfer, assign, hypothecate, pledge, mortgage, confirm, set over, warrant, alien, convey, and create a security interest, unto the Trustee as herein provided, and to its successors or successors in the trust hereby created, and to its or their assigns forever, all right, title and interest of the Company in and to (i) the real properties described on Schedule A annexed hereto and hereby made a part hereof, and (ii) all other properties of the Company, real, personal and mixed, of the kind and nature specifically mentioned herein or of any other kind or nature (except any hereinbefore or hereinafter expressly excepted) now owned or subject to the provisions of Section 13.02 hereof hereafter acquired by the Company (by purchase, consolidation, merger, donation, construction, erection or in any other way), and wheresoever situated, including (without in anywise limiting or impairing by the enumeration of the same, the scope and intent of the foregoing or of any general description contained in this Indenture) all real estate, lands, leaseholds, easements, lands under water, water and riparian rights, servitudes, licenses, permits, franchises, privileges, rights of way and other rights in or relating to real estate or the occupancy of the same; all rights of way and roads or tracks; all plants for the generation of electricity by steam, water, and/or other power; all power houses, gas plants, street lighting systems, standards and other equipment incidental thereto; all telephone, radio and television systems, air-conditioning systems and equipment incidental thereto; all offices, buildings and other structures and the equipment thereof; all machinery, engines, boilers, turbines, electric, gas and other machines, prime movers, regulators, 12 meters, transformers, generators (including, but not limited to, engine driven generators and turbogenerator units), motors, electrical, gas and mechanical appliances, conduits, cables, gas or other pipes, gas mains and pipes, service pipes, fittings, valves and connections, pole and transmission lines, towers, overhead conductors and devices, underground conduits, underground conductors and devices, wires, cables, tools, implements, apparatus, storage battery equipment, and all other fixtures and personalty; all municipal and other franchises, consents or permits; all lines for the transmission and distribution of electric current or gas for any purpose including towers, poles, wires, cables, pipes, conduits, ducts and all apparatus for use in connection therewith; and (except as hereinbefore or hereinafter expressly excepted) all the right, title and interest of the Company in and to all other property of any kind or nature appertaining to and/or used and/or occupied and/or enjoyed in connection with any property hereinbefore described. TOGETHER WITH all and singular the tenements, hereditaments, prescriptions, servitudes and appurtenances belonging or in anywise appertaining to the aforesaid property or any part thereof, with the reversion and reversions, remainder and remainders and (subject to the provisions of Section 8.01 hereof) the tolls, rents, revenues, issues, proceeds, earnings, income, product and profits thereof, and all the estate, right, title, and interest and claim whatsoever, at law as well as in equity, which the Company now has or may hereafter acquire in and to the aforesaid property and franchises and every part and parcel thereof, with mortgage covenants and upon the statutory mortgage conditions for the breach of which such property is subject to foreclosure as provided by law. AFTER-ACQUIRED PROPERTY IT IS HEREBY AGREED by the Company that, subject to the provisions of Section 13.02 hereof, all the property, rights and franchises acquired by the Company (by purchase, consolidation, merger, donation, construction, erection or in any other way) after the date hereof, except any hereinbefore or hereinafter expressly excepted, shall be and are as fully granted and conveyed hereby and as fully embraced within the lien hereof as if such property, rights and franchises were now owned by the Company and were specifically described herein and conveyed hereby. 13 EXCEPTED PROPERTY PROVIDED that the following are not and are not intended to be now or hereafter granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, hypothecated, affected, pledged, set over or confirmed hereunder, nor is a security interest therein hereby granted or intended to be granted, and the same are hereby expressly excepted from the lien hereof and the operation of this Indenture, the following described property of the Company, herein sometimes referred to as "Excepted Property": (1) cash, shares of stock, bonds, notes and other obligations and other securities not hereinbefore or hereafter specifically pledged, paid, deposited, delivered or held hereunder or covenanted so to be; (2) bills, notes and other instruments and accounts receivable, judgments, demands, general intangibles and choses in action, and all contracts, leases and operating agreements not specifically pledged hereunder or hereafter covenanted so to be; (3) rolling stock, buses, motor coaches, automobiles and other vehicles and all aircraft, boats, ships and other vessels; merchandise, equipment (including office furniture, equipment and supplies), apparatus, materials or supplies held for the purpose of sale, lease, rental, use or other disposition in the ordinary course of business or for the purpose of repairing or replacing (in whole or part) any rolling stock, buses, motor coaches, automobiles or other vehicles or aircraft or boats, ships, or other vessels and any fuel (including nuclear), oil and similar materials and supplies consumable in the operation of any of the properties of the Company; (4) the last day of the term of any lease or leasehold which may hereafter become subject to the lien hereof; (5) electric energy, gas and other materials or products generated, manufactured, produced or purchased by the Company for sale, distribution or use in the ordinary course of its business; (6) timber, oil, gas, casinghead gas, coal, lignite or other minerals or mineral rights and royalties in place, together with all rights of ingress and egress thereto, the right to produce the same and all production therefrom and the proceeds thereof; (7) the Company's franchise to be a corporation; and (8) the property described in Schedule B annexed hereto and hereby made a part hereof. PROVIDED, HOWEVER, that if, upon the occurrence of a default as hereinafter in this Indenture defined, the Trustee or any receiver appointed hereunder or upon the application of the Trustee or holders of bonds outstanding hereunder shall enter upon and take possession of the Trust Estate, the Trustee or such receiver may, to the extent permitted by law, at the same time likewise take possession of any and all of the property excepted and reserved from the lien and effect of this Indenture then on hand which is used or useful in connection with the business of the Company and use and administer the same, to the extent permitted by law, to the same extent as if such property were part of the mortgaged and pledged property, unless and until such default shall be remedied and possession of the Trust Estate restored to the Company, its successors or assigns. 14 SUBJECT CLAUSE SUBJECT HOWEVER, with respect to premises, property, and franchises now owned or hereafter acquired and subject to Excepted Encumbrances as such term is defined in Section 1.02 hereof, and subject, with respect to property hereafter acquired, to all defects and limitations of title and to all encumbrances existing at the time of such acquisition. HABENDUM TO HAVE AND TO HOLD all said premises, property, franchises and rights hereby conveyed, assigned, pledged or mortgaged, or intended so to be, unto the Trustee, its successor or successors in trust, and their assigns forever. GRANT IN TRUST BUT IN TRUST, NEVERTHELESS, with power of sale, for the equal and proportionate benefit and security of the holders of all bonds hereafter authenticated and delivered under and secured by this Indenture pursuant to the provisions of this Indenture and of any supplemental indenture and for the enforcement of the payment of said bonds when payable and the performance of and compliance with the covenants and conditions of this Indenture, without any preference, distinction or priority as to lien or otherwise of any bond or bonds over others by reason of the difference in time of the actual authentication, delivery, issue, sale or negotiation thereof or for any other reason whatsoever; and so that each and every bond now or hereafter authenticated and delivered hereunder shall have the same lien, and so that the principal of and premium, if any, and interest on every such bond shall be equally and proportionately secured hereby, as if it had been made, executed, authenticated, delivered, sold and negotiated simultaneously with the execution and delivery hereof. CONDITION UPON CONDITION that, if the Company, or its successors or assigns, shall well and truly pay, or cause to be paid, the principal of (and premium, if any) and interest on the Outstanding bonds according to the true intent and meaning thereof, or there shall be deposited with the Trustee such amounts in such form in order that none of the bonds shall remain Outstanding as herein defined and provided, and shall pay or cause to be paid to the Trustee all sums of money due or to become due to it in accordance with the terms and provisions hereof, then upon the full and final payment of all such sums and other amounts secured hereby or upon such deposit, the rights, titles, liens, security interests, and assignments herein granted shall cease, determine, and be void and this grant shall be released by the Trustee in due form at the expense of the Company, except only as herein provided; otherwise this grant to be and shall remain in full force and effect. 15 And it is expressly declared that all bonds issued and secured hereunder are to be issued, authenticated and delivered, and all said property, rights and franchises hereby conveyed, assigned, pledged or mortgaged, or intended so to be, are to be dealt with and disposed of, under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes hereinafter expressed. ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.01. Construction of Document. The terms specified in the next succeeding Section hereof shall, for all purposes of this Indenture and of any supplemental indenture and of any certificate, opinion or other document filed with the Trustee, unless otherwise specified therein, have the meanings specified in such Section. Unless otherwise defined in this Indenture, all terms used herein shall, for all such purposes, have the meanings assigned to such terms in the TIA. The accounting terms used in this Indenture shall be construed in accordance with U.S. generally accepted accounting principles and practices in use at the time by companies engaged in a business similar to that of the Company and operating like properties. SECTION 1.02. Certain Defined Terms. As used herein, the following terms shall have the following meanings: "affiliate" shall mean a person controlling, controlled by, or under common control with, another person, whether directly or indirectly, and the term "affiliated" shall have a meaning correlative to the foregoing. "amount of depreciable property" shall have the meaning specified in Section 5.15 hereof. An "application" for the authentication and delivery of bonds, or the release of property, or the withdrawal of cash, under any provision of this Indenture, shall consist of, and shall not be deemed complete until the Trustee shall have been furnished with, such resolutions, certificates, opinions, cash, bonds and other instruments as are required by such provisions to establish the right of the Company to the authentication and delivery of such bonds, or to such release or withdrawal, as the case may be, and the date of such application shall be deemed to be the date upon which such application shall be completed. "Board of Directors" shall mean the Board of Directors of the Company and shall also include any executive committee or other committee of said Board duly authorized to act on behalf of said Board. 16 "bondable property" shall have the meaning specified in Section 4.03 hereof. "bonds" shall mean the bonds issued under and pursuant to this Indenture. "Business Day" shall mean those days which are not Saturdays, Sundays or days on which banking institutions are authorized or required by law to close in the city in which the principal corporate trust office of the Trustee is located. "Company" shall mean the person named as the "Company" in the first paragraph of this Indenture, and shall also include its successors and assigns as provided in Article XIII hereof. "Commission" means the Securities and Exchange Commission. "control" shall mean the power to direct or cause the direction of, whether directly or indirectly, the management and policies of a person, directly or through one or more intermediaries, whether through the ownership of voting securities or by contract or otherwise, and the terms "controlling" and "controlled" shall have meanings correlative to the foregoing. "cost" shall have the meaning specified in Section 4.03 hereof. "Current Fair Value", when used with respect to any particular property described in any certificate required under this Indenture, shall mean the fair value of such property as of a date not more than ninety (90) days prior to the date of such certificate. "Daily Newspaper" shall mean a newspaper of general circulation, printed in the English language and customarily published on each business day in any of the cities wherein any of such bonds are expressed to be payable. "deposited cash" shall have the meaning specified in Section 4.04 hereof. "Effective Date" shall have the meaning specified in the Plan. "Engineer" shall mean any engineer, firm of engineers or engineering corporation selected by the Company and who or which may be in the employ of or under retainer by the Company. "Engineer's Certificate" shall mean a certificate signed by the President or a Vice President of the Company, and by an Engineer or, if required by this Indenture or the TIA, by an Independent Engineer (as hereinafter defined). Any Engineer's 17 Certificate required to be signed by an Independent Engineer shall contain a statement that the signer is an Independent Engineer under this Indenture. "Excepted Encumbrances" shall mean as of any particular time any of the following: (a) liens for taxes, assessments or governmental charges not then delinquent, or if delinquent in course of contest and secured by sufficient bond, and liens for worker's compensation awards and similar obligations not then delinquent and undetermined liens or charges incidental to labor, materials or supplies not delinquent, and liens for taxes, assessments or governmental charges then delinquent but the validity of which is being contested at the time by the Company in good faith as provided in Section 5.04 hereof; (b) judgments in course of appeal or otherwise in contest in good faith and, if required by law, secured by sufficient bond; (c) any liens securing indebtedness, neither assumed nor guaranteed by the Company nor on which it customarily pays interest, directly or indirectly, existing upon real estate or rights in or relating to real estate acquired by the Company for substation, transmission line, transportation line, distribution line or right of way purposes; (d) rights reserved to or vested in any municipality, political subdivision or public authority by the terms of any right, power, franchise, grant, license or permit, or by any provision of law, to terminate such right, power, franchise, grant, license or permit or to condemn, purchase or otherwise acquire any of the property of the Company; (e) rights reserved to or vested in others to take or use any part of the power, gas, oil or other minerals or timber generated, developed, manufactured or produced by, or grown on, or acquired with, any property of the Company; (f) easements, restrictions, exceptions or reservations in any property and/or rights of way of the Company for the purpose of roads, pipe lines, transmission lines, distribution lines, removal of oil, gas, coal or other minerals or timber, and other like purposes, or for the joint or common use of real property, rights of way, facilities and/or equipment and defects, irregularities and deficiencies in titles of any property and/or rights of way, which do not in the reasonable judgment of the Company materially impair the use of such property and/or rights of way for the purposes for which such property and/or rights of way are held by the Company; 18 (g) rights reserved to or vested in any municipality or public authority to control or regulate any property of the Company, or to use such property in a manner which does not materially impair the use of such property for the purposes for which it is held by the Company; (h) any obligations or duties, affecting the property of the Company, to any municipality or public authority with respect to any franchise, grant, license or permit; (i) any controls, liens, restrictions, regulations, easements, exceptions or reservations of any governmental authority applying to the property or facilities of the Company; or (j) any lien reserved as security for rent or for compliance with other provisions of the lease in the case of any leasehold estate. "Excepted Property" shall have the meaning specified in the Preliminary Statement hereof. "fair value to the Company" or "fair value" shall have the meaning specified in Section 4.03 hereof. "Funds" means the currency of the United States of America which at the time is legal tender for public and private debts and U.S. Government Obligations. "gross expenditures" shall have the meaning specified in Section 4.03 hereof. "gross retirements of property" shall have the meaning specified in Section 4.03 hereof. "holder" or "bondholder", when used with reference to bonds authenticated and delivered hereunder, shall mean the person in whose name a particular registered bond is at the time registered on the books of the Company kept for that purpose in accordance with the provisions of Section 2.05 hereof. "Independent Engineer" shall mean any engineer, firm of engineers or engineering corporation appointed by the Company and satisfactory to the Trustee in the exercise of reasonable care and who or which shall be in fact independent and shall not be a director, officer or employee of, or under retainer by, the Company or any affiliate of the Company. "lien hereof" and "lien of this Indenture" shall mean the lien created or intended to be created by these presents (including the after-acquired property clauses hereof) and the lien created or intended to be created by any subsequent conveyance or delivery to or pledge with the Trustee hereunder (whether made by the Company or any other person) constituting or 19 intended to constitute any property a part of the security held by the Trustee upon the terms and trusts and subject to the conditions specified in this Indenture. "net earnings" shall have the meaning specified in Section 4.05 hereof. "Net Earnings Certificate" shall have the meaning specified in Section 4.05 hereof. "net expenditures" shall have the meaning specified in Section 4.03 hereof. "Obligor", when used with reference to bonds authenticated and delivered hereunder, shall mean every person who is liable thereon. "Officers' Certificate" shall mean a certificate signed by the President or a Vice President and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, provided, that in respect of Section 5.14, Officers' Certificate shall mean a certificate signed by the principal executive officer, principal financial officer or principal accounting officer of the Company. Each such certificate shall comply with the requirements of subsection (b) of Section 1.03 hereof and shall include, in addition to the statements, if any, required by any other applicable provision of this Indenture, a statement that the conditions precedent, if any, provided for in this Indenture (including any covenants compliance with which constitutes a condition precedent) which relate to any action to be taken by the Trustee at the request or upon the application of the Company, as the case may be, have been complied with. "Opinion of Counsel" shall mean one or more written opinions of counsel, each of whom may be an employee of or regular counsel to the Company selected by the Company and satisfactory to the Trustee. Each such opinion shall conform to the requirements of subsection (b) of Section 1.03 hereof and shall include, in addition to the statements, if any, required by any other applicable provision of this Indenture, a statement that, in the opinion of such counsel, the conditions precedent, if any, provided for in this Indenture (including any covenants compliance with which constitutes a condition precedent) which relate to any action to be taken by the Trustee at the request or upon the application of the Company, as the case may be, have been complied with. Any Opinion of Counsel may contain such limitations, assumptions and qualifications as are reasonable and customary in light of the type of opinion being delivered. "Original Fair Value", when used with respect to any particular property described in any certificate required under this Indenture, shall mean the fair value of such property to the Company as of the time of the actual acquisition thereof by the Company. 20 "Outstanding" shall mean, as of any particular time, with respect to bonds issued, authenticated and delivered under this Indenture (except where the context otherwise specifically provides), all bonds which theretofore shall have been issued, authenticated and delivered under this Indenture by the Trustee, except (a) bonds theretofore or then paid, retired, cancelled or redeemed and not held for the benefit of any sinking fund and bonds for the purchase, payment or redemption of which (for cancellation and not for holding for the benefit of any sinking fund) cash (or U.S. Government Obligations to the extent permitted by Sections 11.01 and 11.02 hereof) in the necessary amount shall have been or shall be then deposited with or held by the Trustee in trust with irrevocable direction so to apply the same, (b) bonds then held by the Trustee under any of the provisions of this Indenture and (c) bonds in lieu of which bonds have been authenticated and delivered, as provided in Section 2.08 hereof; provided, however, that, in determining the percentage of the principal amount of bonds Outstanding (or of bonds of a particular series Outstanding) entitling the holders thereof to take any action hereunder, or in determining whether the holders of the required percentage of the principal amount of bonds Outstanding (or of bonds of a particular series Outstanding) have concurred in any direction to the Trustee or in any consent, bonds owned by the Company or by any other Obligor upon the bonds or by any affiliate of the Company or any other Obligor upon the bonds, shall be disregarded, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction or consent, only bonds which the Trustee knows are so owned shall be disregarded. Bonds so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such bonds and that the pledgee is not an affiliate of the Company or any other Obligor upon the bonds. 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. "person" shall mean and include an individual, a corporation, a partnership, an association, a joint stock company, a trust, an estate, any unincorporated organization or entity or any government or political subdivision thereof. "Plan" shall have the meaning specified in the Preliminary Statement hereof. "plant or property operated by others" shall mean, as used in Section 5.05 hereof, any bondable property, which, within six (6) months prior to the date of actual acquisition thereof by the Company, constituted plant or property used or operated by others in a business similar to that in which it has been or is to be used or operated by the Company, and the Original Fair Value of which, as set forth in the certificate setting forth such value, is not less than one per centum (1%) of the aggregate principal amount of all bonds at the time Outstanding hereunder. 21 "Prepaid Liens" shall mean and include any mortgage or other lien, equal or prior to the lien of this Indenture, securing obligations or indebtedness for the payment, purchase or redemption of which the necessary Funds shall have been deposited with the trustee under such mortgage or lien or with the Trustee hereunder, together with instructions in either case to apply such funds to the payment, purchase or redemption of such obligations or indebtedness and, until so applied, to hold such deposited funds irrevocably in trust for the purpose for which they shall have been deposited, but subject, if so instructed, to any applicable provision in such mortgage or lien for the return of any unclaimed portion of such deposited funds to the Company. "Prior Lien" shall mean any mortgage or other lien, other than Excepted Encumbrances, which secures obligations (except obligations for the purchase, payment or redemption of which cash (or U.S. Government Obligations to the extent permitted by Sections 11.01 and 11.02 hereof) in the necessary amount shall have been or shall be then deposited with and held in trust by, with irrevocable direction so to apply the same, the Trustee hereunder or the trustee or other holder of the mortgage or other lien securing such obligations) of any nature, which is prior to the lien of this Indenture and which, as of any particular time, exists upon any of the Trust Estate or upon any property which is about to become part of the Trust Estate. "purchased property" shall have the meaning specified in Section 4.03 hereof. "Required Percentage" shall have the meaning specified in Section 5.15 hereof. "Resolution" shall mean a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date certified. "Responsible Officers" of the Trustee shall mean and include any officer assigned to and working in the Trustee's corporate trust department or similar group administering the trust hereunder, and every other officer and assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his or her knowledge of, and familiarity with, a particular subject; and the term "Responsible Officer" shall mean and include any of said officers or persons. "TIA" shall mean the Trust Indenture Act of 1939, as amended and in force on the date of this Indenture; provided, however that, in the event the Trust Indenture Act of 1939 is amended after such date, TIA shall mean, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. 22 "title" shall mean such title, whether fairly deducible of record or based on prescriptive right, as, in the Opinion of Counsel, is satisfactory for the needs and operations of the Company in its business, and counsel in giving such opinion may disregard irregularities or deficiencies in the record evidence of title which, in the Opinion of such Counsel, can be cured by proceedings within the power of the Company or which, in the Opinion of Counsel, do not materially impair the use of such property in the operation of the business of the Company, and such counsel may base such opinion on such counsel's own investigation and/or upon abstracts, affidavits, certificates, statements and/or investigations made by persons in whom such counsel has confidence and/or upon examination of a certificate or guarantee of title or a policy of title insurance in which such counsel has confidence. For such purpose a perfected or a valid and legally protected security interest created pursuant to the Uniform Commercial Code in effect or other provision of law in favor of the Company encumbering property consisting of components of, or partially completed, products, not yet delivered to the Company, being constructed, manufactured or otherwise prepared pursuant to a contract between the Company and another person providing for partial or progress payments by the Company during the course of such construction, manufacturing or preparation shall be deemed title to such property to the extent of the partial or progress payments made by the Company. "Trustee" shall mean the person named as the "Trustee" in the first paragraph of this Indenture, or its successor from time to time as trustee hereunder as provided in Article XIV hereof. "Trust Estate" shall mean as of any particular time the property which at said time is subject to the lien of this Indenture whether such lien be created by these presents (including the lien created by the after-acquired property clauses hereof) or by subsequent conveyance, delivery or pledge to the Trustee hereunder or otherwise. "U.S. Government Obligations" means direct obligations of the United States of America for the payment of which its full faith and credit is pledged, or obligations of a person controlled or supervised by and acting as an agency or instrumentality of the United States of America and the payment of which is unconditionally guaranteed by the United States of America. SECTION 1.03. Compliance Certificates and Opinions. (a) Each certificate or opinion with respect to compliance with a condition or covenant contained in this Indenture shall include (1) a statement that the person making such certificate or opinion has read such covenant or condition and the definitions, if any, relevant to such covenant or condition; (2) a brief statement as to the nature and scope of 23 the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Any certificate or opinion of an officer of the Company may be based, in so far as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which such officer's certificate or opinion may be based as aforesaid are erroneous or, in the exercise of reasonable care, should have known that the same were erroneous. Any such certificate or opinion may be based, in so far as it relates to factual matters and information which is in the possession of the Company, upon a certificate or opinion of, or representations by, an officer or officers of the Company, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion may be based as aforesaid are erroneous or, in the exercise of reasonable care, should have known that the same were erroneous. Any officer or counsel shall, in the performance of his or her duties, be fully protected in relying in good faith upon the books of account or reports made to the Company by any of its officers, or by an independent public accountant, or by an appraiser or Engineer selected with reasonable care by the Company, or in relying in good faith upon other records of the Company. (b) Any certificate to be executed by a Treasurer or an Assistant Treasurer of the Company may be signed, in lieu thereof, by a person (who need not be an employee or officer of the Company) designated to the Trustee by the Company and evidenced by a Resolution. SECTION 1.04. Amount to be Deposited to Pay or Redeem Bonds, etc. Wherever in this Indenture it is provided or permitted that there be deposited with or held in trust by the Trustee or any other person cash, money or Funds sufficient or in the necessary amount (or other words of similar import) to pay or redeem any bonds, obligations or other indebtedness, the amount so to be deposited or held shall be the principal amount of such bonds, obligations or other indebtedness and all unpaid interest thereon to maturity, unless said bonds, obligations or other indebtedness are redeemable and are to be redeemed prior to maturity and there shall be furnished to the Trustee proof satisfactory to the Trustee that notice of such redemption on the specified redemption date has been duly given or provision satisfactory to the Trustee shall be made for the giving of such notice, in which case the amount of cash, money or Funds so to be 24 deposited or held shall be the principal amount of such bonds, obligations or indebtedness and all unpaid interest thereon to the redemption date, together with the redemption premium, if any. Notwithstanding the foregoing, for the purpose of determining the sufficiency of the amount of any U.S. Government Obligations deposited by the Company under Sections 11.01 or 11.02 hereof, the amount of interest scheduled to be received with respect to those U.S. Government Obligations, shall be taken into account in calculating the amount thereof as provided in said Sections. SECTION 1.05. Certificate of Resolutions. Any resolution of the Board of Directors or shareholders of the Company required or permitted under any provision of this Indenture to be delivered to the Trustee hereunder shall have attached thereto a certificate of the Secretary or an Assistant Secretary of the Company certifying the adoption and the then effectiveness of such resolution. SECTION 1.06. Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, such provision (and any related definitions) is incorporated by reference in and made a part of this Indenture. SECTION 1.07. Indenture as Deed of Trust in New Mexico. The Company, trustor under this Indenture, expressly agrees pursuant to the New Mexico Deed of Trust Act, 48-10-1 to 48-10-21 NMSA 1978 (the "Deed of Trust Act" or the "Act"), that all the real and personal property comprising the Trust Estate which is located entirely within the State of New Mexico (the "New Mexico Trust Estate"), as more specifically described herein, shall be and hereby is subject to the Deed of Trust Act, thereby conferring upon the Trustee the power of sale as provided therein with respect to the New Mexico Trust Estate. This Indenture, as filed in New Mexico, shall encumber only the New Mexico Trust Estate and shall not purport to encumber any real estate located in one or more other states. The Company agrees to execute and file in each county in New Mexico in which the New Mexico Trust Estate is situated, additional instruments or deeds of trust encumbering the New Mexico Trust Estate necessary to secure performance of this Indenture as a Deed of Trust under the Deed of Trust Act. SECTION 1.08. Indenture as Deed of Trust in Arizona. The Company, trustor under this Indenture, expressly agrees pursuant to the provisions of Arizona Revised Statutes Sections 33-801 to 33-821 as may be in effect from time to time (the, "Arizona Deed of Trust Law" or the "Law"), that all the real and personal property comprising the Trust Estate which is located entirely within the State of Arizona (the "Arizona Trust Estate"), as more specifically described herein, shall be and hereby is subject to the Arizona Deed of Trust Law, thereby conferring upon the Trustee the power of sale as provided therein with respect to the Arizona Trust Estate. This Indenture, as filed in Arizona, shall 25 encumber only the Arizona Trust Estate and shall not purport to encumber any real estate located in one or more other states. The Company agrees to execute and file in each county in Arizona in which Arizona Trust Estate is situated, additional instruments or deeds of trust encumbering the Arizona Trust Estate necessary to secure performance of this Indenture as a Deed of Trust under the Deed of Trust Law. ARTICLE II THE BONDS SECTION 2.01. General Limitations; Bonds Issuable in Series. This Indenture may secure an unlimited aggregate principal amount of bonds which may be issued from time to time hereunder. All advances and other indebtedness and sums which may be secured by this Indenture shall be secured equally, to the same extent and with the same priority, as the amount originally advanced on the security of this Indenture. At the option of the Company, bonds may be issued in one or more series, the bonds of each series maturing on such dates and bearing interest at such rates as the Board of Directors prior to the authentication thereof may determine. The form and terms of each series of bonds authenticated and delivered hereunder shall be as established by Resolution of the Board of Directors and the text thereof shall be as set forth in the Appendices hereto or in the supplemental indenture creating the series. The bonds of any one or more series may be expressed in one or more foreign languages, if also expressed in the English language. The English text shall govern the construction thereof and both or all texts shall constitute but a single obligation. The English text of the registered bonds and the Trustee's certificate of authentication shall be substantially of the tenor and purport hereinafter recited; provided, however, that the form and terms of each series, as established by the Board of Directors, shall specify the descriptive title of the bonds (which shall contain the words "First Mortgage Bond"), the designation of the series, the rate or rates of interest to be borne by the bonds of that series, the coin or currency, including composite currencies such as the european currency unit, in which payable (which need not be coin or currency of the United States), the date or dates of maturity, the dates for the payment of interest, record dates for the payment of interest, a place or places for the payment of principal and interest and a place or places for the registration and transfer of bonds. Any series of bonds may also have such omissions or modifications or contain such other provisions as the Board of Directors may, in its discretion, cause to be inserted therein including, but not limited to, the following: (a) specifying any additional place or places, either in the United States of America or elsewhere, for the payment of principal or interest or a place or places for 26 the registration of bonds or transfer of bonds (provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee); (b) expressing any obligation of the Company for the payment of the principal of the bonds of that series or the interest thereon, or both, without deduction for taxes or for the reimbursement of taxes in case of payment by the bondholders, it being agreed that such obligation may be limited to taxes imposed by taxing authorities of a specified class and may exclude from its operation or be limited to any specified tax or taxes or any portion thereof; (c) expressing any obligation of the Company for the creation of a sinking, purchase, improvement or other analogous fund for bonds of that series, or expressing any obligation of the Company to permit the conversion of bonds of that series into stock or other securities of the Company or of any other corporation; (d) permitting the bondholders to make, at a specified place or places, either or both of the following exchanges, in each instance the exchange to be for a like aggregate principal amount of bonds: exchanges of registered bonds for registered bonds of other denominations, and exchanges of bonds of one series for bonds of another series; such privilege of exchange may in any case be made subject to such conditions, limitations or restrictions as the Board of Directors shall determine and the privilege of exchange may in any case be conferred upon the holders of bonds of one or more denominations and withheld from the holders of bonds of other denominations of the same series; (e) reserving to the Company the right to redeem all or any part of the bonds of that series before maturity at a time or times and at a redemption price or prices which shall be specified in the form of bond; (f) specifying, if other than such coin or currency of the United States of America as at the time of payment is legal tender for payment of public or private debts, the coin or currency, including composite currencies such as the european currency unit, in which payment of the principal of (and premium, if any) and interest, if any, on the bonds of the series shall be payable, and any currency conversion methods to be used in connection with Article IV hereof; (g) specifying, if the principal of (and premium, if any) or interest, if any, on the bonds of the series are to be payable, at the election of the Company or a holder thereof, in a coin or currency, including a composite currency such as the european currency unit, other than that 27 in which the bonds are stated to be payable, the period or periods within which, and the terms and conditions upon which, such election may be made; (h) specifying, if the amount of payments of principal of (and premium, if any) or interest, if any, on the bonds of the series may be determined with reference to an index based on a coin, currency, including a composite currency such as the european currency unit, other than that in which the bonds are stated to be payable, the manner in which such amounts shall be determined; (i) reserving to the Company the right to create fully registered bonds that may be registered as to the payment of principal to one holder and to the payment of interest to another holder; (j) complying with any law or with any rules or regulations of any stock exchange or conforming to usage; (k) providing for book entry certificate bonds; and (l) expressing any other terms and conditions, not inconsistent with the provisions hereof, upon which such bonds are to be issued and secured by this Indenture. SECTION 2.02. Date of and Interest on Bonds. Unless otherwise specifically provided with respect to a series of bonds, bonds shall be dated as of the date of the interest payment date thereof to which interest was paid next preceding the date of issue, unless (a) issued on an interest payment date thereof to which interest was paid, in which event it shall be dated as of the date of issue, or (b) issued prior to the occurrence of the first interest payment date thereof to which interest was paid, in which event it shall be dated the date of initial issuance of such bonds. Unless other provisions (including, but not limited to, provisions establishing record dates for the payment of interest) are specifically provided with respect to a series of bonds, bonds shall bear interest from the beginning of the current interest period for that series; provided, however, that if any bond shall be authenticated and delivered upon a transfer of, or in exchange for or in lieu of, any bond or bonds upon which interest is in default, it shall be dated so that such bond shall bear interest from the last preceding date to which interest shall have been paid on the bond or bonds in respect of which such bond shall have been delivered, unless otherwise specifically provided with respect to a series of bonds. Unless otherwise specifically provided with respect to a series of bonds, interest, if any, on the bonds of each series shall be computed based on a 360-day year of twelve 30-day months. SECTION 2.03. Legends on Bonds. Any bond may have imprinted thereon or included therein any legend or legends required in order to comply with any law or with any rules or 28 regulations or with the rules or regulations of any stock exchange or to conform to general usage, and the Board of Directors by resolution may at any time amend the form of any legend to be used on bonds then Outstanding so as to comply with any such law, rule or regulation or so as to conform to such usage. SECTION 2.04. Exchange of Bonds; Transfers. Unless otherwise specifically provided with respect to a series of bonds, bonds of a series may be exchanged by the holder thereof for bonds of the same series, of authorized denominations as set forth in Section 2.10 hereof and in the same aggregate principal amount, and any bonds to be exchanged shall be surrendered at such place or places as shall be designated by the Board of Directors for the purpose (or, if no such place is at the time so designated for the purpose, at the principal corporate trust office of the Trustee), and the Trustee shall authenticate and deliver in exchange therefor such bond or bonds of authorized denominations as denominated by the surrendering bondholder (or as selected by the Trustee in its discretion in the absence of such designation) aggregating in principal amount the principal amount of the bonds surrendered. All bonds so surrendered for exchange shall be cancelled by the Trustee. Upon every transfer of bonds as permitted by the next succeeding Section hereof, and upon every exchange of bonds, the Company shall be entitled to receive funds sufficient to reimburse it for any tax or taxes or other governmental charge required to be paid by the Company as a direct consequence of such transfer or exchange which amounts shall be paid by the party requesting such transfer or exchange as a condition precedent to the exercise of the privilege of making such transfer or exchange. The Company shall not be required to make transfers or exchanges of bonds of any series for a period of ten (10) days next preceding any designation of bonds of said series to be redeemed. The Company shall not be required to make transfers or exchanges of the principal amount of any bonds of any such series called or selected for redemption. Each bond delivered pursuant to any provision of this Indenture in exchange or substitution for, or upon the transfer of, the whole or any part of one or more other bonds, shall carry all of the rights to interest accrued and unpaid and to accrue which were carried by the whole or such part, as the case may be, of such one or more other bonds. SECTION 2.05. Registration and Transfer of Bonds. The Company shall cause to be kept, at such place or places as shall be designated for the purpose (which shall be at the principal corporate trust office of the Trustee, unless otherwise specifically provided with respect to a series of bonds), books for the registration and transfer of bonds issued hereunder, which, at all reasonable times, shall be open for inspection by the Company; and upon the presentation for such purpose at any such place or places, the Trustee will register or cause to be 29 registered therein, and permit to be transferred thereon, under such reasonable regulations as it may prescribe, any bonds issued under this Indenture and entitled to registration or transfer at such office. Upon the surrender for transfer of any fully registered bond, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the transferee or transferees a new registered bond or new registered bonds of the same series and of authorized denominations for a like principal amount. All registered bonds so surrendered for transfer shall be cancelled by the Trustee and upon a request signed by the President or a Vice President of the Company a certificate evidencing the cancellation thereof shall be delivered to the Company. SECTION 2.06. Execution of Bonds. All bonds issued hereunder shall, from time to time, be executed on behalf of the Company by its President or a Vice-President and its corporate seal shall be thereunto affixed or a facsimile thereof shall be printed, lithographed or engraved thereon and attested by its Secretary or an Assistant Secretary. The signatures of any such President or Vice-President and/or of any such Secretary or Assistant Secretary may be facsimile. In case any of the officers who shall have signed any bonds or attested the seal thereon or whose facsimile signature appears on any bonds shall cease to be such officers of the Company before the bonds so signed and sealed shall have been authenticated and delivered by the Trustee or issued by the Company, such bonds nevertheless may be authenticated, delivered and issued with the same force and effect as though the person or persons who signed such bonds and attested the seal thereon or whose facsimile signature appears on any bonds had not ceased to be such officer or officers of the Company. SECTION 2.07. Temporary Bonds. There may be authenticated, delivered and issued in lieu of any definitive bonds of any series a temporary typewritten, printed, lithographed or engraved bond or bonds substantially of the tenor of the bonds of such series, with or without specification of the redemption premium or premiums, if any, and such temporary bond or bonds shall be in such denomination or denominations as the Board of Directors may determine. Until a definitive bond or bonds secured hereby are delivered in exchange therefor, each such temporary bond or bonds shall be entitled to the lien and benefit of this Indenture. Upon exchange thereof for definitive bonds of the same series, which the Company shall make without any charge therefor, such temporary bond or bonds shall be cancelled by the Trustee and upon a request signed by the President or a Vice President of the Company a certificate of such cancellation shall be delivered to it. The holder of one or more temporary bonds may exchange the same, upon payment, if the Company shall require, of the charges provided in Section 2.04 hereof, upon the surrender of such temporary bonds, properly endorsed for transfer, to the Trustee for cancellation, and shall be entitled to receive temporary bonds of the same series of like aggregate principal amount of other authorized denominations. 30 SECTION 2.08. Lost, Destroyed or Mutilated Bonds. Upon receipt by the Company and the Trustee of evidence satisfactory to them of the theft, loss, destruction, defacement or mutilation of any bond Outstanding hereunder not then matured or subject to payment, and of indemnity satisfactory to them, and upon payment, if the Company or the Trustee shall require it, of an amount sufficient to reimburse it for stamp tax or other governmental charge or expense connected therewith, and upon surrender and cancellation of such bond, if defaced or mutilated, the Company shall execute, and upon the request signed by the President or a Vice President of the Company the Trustee shall authenticate and deliver, a new bond of like tenor and of the same series in lieu of such stolen, lost, destroyed, defaced or mutilated bond. In case of the theft, loss, destruction, defacement or mutilation of any bond Outstanding hereunder which has matured or is then subject to payment by redemption, purchase or otherwise, the Trustee and the Company, upon receipt from the owner of such bond or of evidence satisfactory to them of such theft, loss, destruction, defacement or mutilation and upon surrender and cancellation of such bond if defaced or mutilated and upon receipt of indemnity satisfactory to them, may pay to the owner of such bond the amount payable thereon without the execution, authentication and delivery of a substitute bond. Every new bond issued pursuant to this Section in lieu of any destroyed, lost or stolen bond shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost, defaced, mutilated or stolen bond shall be at any time enforceable by anyone, and shall be entitled to all the security and benefits of this Indenture equally and ratably with all other Outstanding bonds. SECTION 2.09. Certificate of the Trustee. No bonds shall be secured hereby unless there shall be endorsed thereon the certificate of authentication of the Trustee, substantially in the form recited in Section 3.02 hereof, that it is one of the bonds (or temporary bonds) of the series therein designated, or herein described or provided for; and such certificate on any such bond shall be conclusive evidence, and the only evidence, that such bond has been duly authenticated and delivered by the Trustee and when delivered by the Company will be secured hereby and is secured hereby. SECTION 2.10. Authorized Denominations. Unless otherwise specified in a supplemental indenture with respect to a series of bonds, the bonds of each series shall be issuable in denominations of $1,000 original principal amount and in integral multiples thereof. 31 ARTICLE III BOND FORMS SECTION 3.01. Forms Generally. The bonds of each series (other than book entry bonds contemplated by Section 16.01 hereof and other than bonds of Series A through C and Series X for which forms of bonds are set forth in Appendices A-1 through A-4) are to be substantially in the forms set forth in this Article, with such modifications thereof and additions thereto or eliminations therefrom, authorized or permitted by this Indenture as to any particular series, as in the opinion of the Board of Directors at the time may be necessary or proper. 32 [GENERAL FORM OF REGISTERED BOND] [FACE] EL PASO ELECTRIC COMPANY FIRST MORTGAGE BOND, SERIES ___ __% DUE _______, ____ No. EL PASO ELECTRIC COMPANY, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to __________________ or registered assigns, the principal sum of $___________ Dollars on _________, and to pay to the registered holder hereof interest on said sum from the date hereof at the rate of ___ per centum per annum, payable half-yearly on the ______ day of ______ and the ______ day of ______ in each year, commencing __________, until said principal sum is paid. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in __________, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. The provisions of this bond are continued on the reverse hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. 33 IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By _______________________ [Title] Attest: _____________________________ Secretary 34 [REVERSE] EL PASO ELECTRIC COMPANY FIRST MORTGAGE BOND, SERIES ___ ___% DUE ________, ___ The interest payable on this bond on any interest payment date will, subject to certain exceptions provided in the Indenture hereinafter mentioned, be paid to the person in whose name this bond is registered at the close of business on the record date, which shall be the ___________ or __________, as the case may be, next preceding such interest payment date, or, if such date shall be a legal holiday or a day on which banking institutions in _____________________ are authorized or required to close, the next preceding day which shall not be a legal holiday or a day on which such institutions are so authorized or required to close. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to State Street Bank and Trust Company (herein sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (herein referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. [The bonds of Series __, of which this bond is one, are not redeemable prior to maturity.] [The bonds of Series ___, of which this bond is one, are not redeemable prior to __________. On or after that date, at the option of the Company and upon the notice and in the manner and with the effect provided in the Indenture, bonds of Series __ may be redeemed by or on behalf of the Company, as a whole at any time, or in part from time to time, at the applicable general redemption price, expressed as a percentage of the principal amount of the bonds, stated in the following table under "General Redemption Price," together with accrued interest on such principal amount to the date fixed for redemption: 35 If redeemed If redeemed during the during the 12 months General 12 months General beginning Redemption beginning Redemption _______, ___ Price* _______, ___ Price* __________________ * Stated as a percentage of principal amount of the bonds.] In case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is transferable or exchangeable by the holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in Boston, Massachusetts, but only in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in exchange herefor. The Company shall not register, exchange or transfer any bonds of this series during the period of ten days next preceding any designation of bonds of said series to be redeemed, if applicable, and, as to any bonds selected for redemption, from and after the date of such selection. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. This bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. 36 SECTION 3.02. Trustee's Certificate of Authentication. Each of the registered bonds (other than book entry bonds contemplated by Section 16.01 hereof) of each and every series issued under and secured by this Indenture (whether in temporary or definitive form) is to bear a certificate of the Trustee substantially in the following form: TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. STATE STREET BANK AND TRUST COMPANY, as Trustee By __________________________ Authorized Signature 37 ARTICLE IV ISSUANCE OF BONDS SECTION 4.01. Initial Issuance of Bonds. There shall be, and are hereby created, four initial series of bonds, each known as and titled as, and subject to the maximum aggregate principal amount, set forth in the table below. Maximum Principal Series Designation Amount Series A, ___% due $100,000,000 Series B, ___% due $ Series C, ___% due $ Series X, Floating Rate due $ The Trustee shall authenticate the bonds of Series A through C and Series X (up to the maximum aggregate principal amount set forth above) and deliver the same to or upon the written order of the President or a Vice-President of the Company, upon receipt by the Trustee of the Opinions of Counsel, orders and certificates referred to in Section 4.06 hereof. SECTION 4.01A. Terms of Initial Issues of Bonds. The bonds of Series A through C and Series X shall be issued in fully registered form without coupons, substantially in the forms thereof attached as Appendices A-1 through A-4, respectively. All bonds of said Series shall be due and payable as set forth in the respective form of bond, shall bear interest from the date set forth in the respective form of bond, at the rate set forth in the respective form of bond, payable at the times set forth in the respective form of bond, and shall be payable, both as to principal and interest, at the office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts, provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. The bonds of Series A through Series C and Series X are not redeemable except as set forth in the respective form of bond. SECTION 4.01B. Certain Covenants for Bonds of Series A and Series B. (a) Limitation on Redemption to Satisfy Maintenance Fund. The Company covenants and agrees that, so long as any of the bonds of Series A or Series B are outstanding, and notwithstanding clause (c) of Section 5.15 hereof, any retirement 38 or redemption of bonds of either of said Series shall not be used to satisfy the maintenance and renewal obligations set forth in said Section. (b) Dividend Limitation. The Company covenants and agrees that, so long as any of the bonds of Series A or Series B are outstanding, it will not declare or pay any dividends on its common stock (except (i) dividends payable in shares of its common stock, and (ii) dividends payable in cash where concurrently with the payment thereof an amount in cash equal to the amount of the cash dividends paid is received by the Company as a capital contribution or as the proceeds of the issue and sale of shares of its common stock), or make any other dis- tributions on shares of its common stock, or purchase or other- wise acquire for value or retire, or permit any subsidiary to purchase or otherwise acquire for value, any shares of the Company's common stock (except in exchange for, or out of the proceeds from the sale of, other shares of the Company's common stock) if, after giving effect thereto, the aggregate amount of all such dividends, distributions, purchases or acquisitions (other than those excepted above) paid or made subsequent to ___________, 1994[*] would exceed the sum of (x) $300 million, and (y) the net income of the Company for the period from ____________, 1994[*] to the date of such dividend, distribution, purchase or acquisition as determined in accordance with generally accepted accounting principles. (c) Special Limitation on Dividends. Notwithstanding paragraph 4.01B(b) above, the Company covenants and agrees that, so long as any of the bonds of Series A or Series B have been owned continuously by the initial beneficial owners thereof since the date of their initial issuance (as evidenced by the registration books of the Trustee, the records of any applicable depository company and other information reasonably satisfactory to the Company which may include certifications from the holders of the relevant bonds), the Company will not declare any dividends on its common stock or make any distributions, purchases or acquisitions described (and not excepted) in paragraph 4.01B(b) above if the bonds of such applicable Series do not, at such time, have an Investment Grade Rating (as defined below). If at any time the bonds of such applicable Series do not have an Investment Grade Rating, the Company may, with the unanimous consent of the initial beneficial owners of such bonds who continue to hold such bonds, amend, modify or waive the covenant contained in the first sentence of this paragraph. The consent of the Trustee shall not be required for any such amendment, modification or waiver. The Company will be deemed to have received such unanimous consent if (i) the Company offers to redeem the bonds of such applicable Series held by any dissenting initial beneficial owners thereof at a redemption price equal to the principal amount of such bonds, together with accrued interest on such principal amount to the date fixed for redemption, and (ii) the Company redeems, in accordance with the provisions of this Indenture, all bonds of such applicable Series 39 which such dissenting initial beneficial owners thereof have elected to have so redeemed. "Investment Grade Rating" means a rating of BBB- or better (or equivalent rating) by at least two (2) of Moody's Investors Service, Inc., Standard & Poor's Ratings Group and Duff & Phelps, Inc. SECTION 4.01C. Certain Provisions for Bonds of Series X. The bonds of Series X are issued to partially secure the payment of the principal and interest due on the Class 3A Secured Notes (the "Notes") issued by the Company in the aggregate principal amount of $_________ pursuant to a Term Loan Agreement dated as of the Effective Date (the "Term Loan Agreement") among the Company, the creditors named therein (the "Creditors") and _________, as agent for the Creditors (together with any successor, the "Agent"). The bonds of Series X will be registered in the name of the Agent for the benefit of the Creditors and will be transferable solely to a successor to the Agent as provided in the Term Loan Agreement. The Trustee shall be fully protected in registering the transfer of the bonds of Series X in accordance with the written direction of the Agent. The bonds of Series X will mature as provided therein and will bear interest at the same rates as the Notes under the terms of the Term Loan Agreement, which provide for floating interest rates. The obligation of the Company to make payments with respect to principal and interest on the bonds of Series X shall be satisfied and discharged to the extent the Company shall have satisfied and discharged its obligation to pay principal and interest on the Notes which the bonds of Series X secure. The Trustee may conclusively presume that the obligations of the Company to make principal and interest payments on the Notes which the bonds of Series X secure have been satisfied and discharged unless and until the Trustee shall have received a notice of the occurrence of an event of default under the Term Loan Agreement or a written demand for redemption from the Agent (which notice or demand has not been subsequently rescinded by the Agent) as described in the form of bond. The Trustee shall be fully protected in relying upon any notice or demand from the Agent or the absence of such notice or demand and shall have no duty to inquire into the rights, obligations or performance of any party to the Term Loan Agreement. When such Notes have been fully satisfied and discharged in accordance with the terms of the Term Loan Agreement, the Agent will surrender to the Trustee the bonds of Series X, and upon such surrender the bonds of Series X will be deemed to have been paid in full and shall cease to be entitled to the lien of this Indenture. The bonds of Series X will not be redeemable prior to maturity except as set forth in the form of bond of Series X set forth in Appendix A-4. 40 SECTION 4.02. Issuance of Bonds Upon Retirement of Bonds Previously Outstanding Hereunder. Bonds of any series (other than bonds of Series A through C and Series X) may be executed by the Company and authenticated and delivered hereunder by the Trustee from time to time in the manner and subject to the limitations provided in this Section and in Articles II and III hereof, for or on account of the payment, cancellation, redemption or other discharge at, before or after maturity, of bonds of one or more other series theretofore authenticated under any provision of this Indenture, in a principal amount not exceeding the aggregate principal amount of the bonds of such other series so retired, or for the retirement of which the necessary Funds have been deposited with the Trustee, provided, however, (1) that such bonds of such other series have not been previously used as a basis for the authentication of any bonds issued under any provision of this Indenture or for the withdrawal of deposited cash or any other moneys under any provision of this Indenture, have not been certified to the Trustee to comply with any maintenance or renewal requirement contained herein or in any supplemental indenture, and have not been acquired, redeemed or discharged with cash applied to any such purpose pursuant to Section 4.04 hereof, Section 8.06 hereof or any maintenance or renewal provisions contained herein or in any supplemental indenture, and that no part of the expenditures for the redemption, the payment or the purchase and cancellation of such bonds has been made out of any insurance moneys or moneys received from the condemnation, sale or other disposition of any of the Company's property subject to the lien of this Indenture or has been used or applied or certified to the Trustee to comply with any maintenance or renewal requirement contained herein or in any supplemental indenture, and (2) that such bonds have not been acquired, redeemed or discharged through the operation of, or certified to comply with, any sinking fund or analogous fund created hereafter pursuant to the terms of this Indenture in respect of any bonds authenticated and delivered hereunder; but the limitation of this clause (2) of this proviso shall apply only to the extent to which the provisions relating to any such fund preclude the authentication of bonds under this Section on account of bonds so retired through the operation of, or certified to comply with, any such fund. Bonds shall be authenticated by the Trustee under this Section subject to the restrictions hereof and shall be delivered by it to or upon the written order of the President or a Vice- President of the Company upon receipt by the Trustee of the following: (a) A copy of a Resolution authorizing the execution and authentication of the bonds proposed to be authenticated, and stating the principal amount thereof and the designation of the series in which to be authenticated and setting forth, either expressly or by reference to a Resolution theretofore adopted, the terms, provisions and characteristics of such bonds, all in accordance with and 41 subject to the restrictions of Articles II and III hereof, and specifying the principal amount and series designation of the bonds of such other series for or on account of the payment, cancellation, redemption or discharge of which such bonds are authorized to be authenticated; and (b) One of the following: (x) A principal amount of bonds, properly endorsed (either cancelled or uncancelled, and in either temporary or definitive form), theretofore authenticated hereunder and specified in such Resolution, equal to the principal amount of bonds then requested to be authenticated hereunder or if such bonds have been destroyed a certificate of the destruction thereof executed on behalf of the Trustee; or (y) An amount of Funds equal to the principal amount, with interest thereon to maturity, of the bonds of such other series specified in such Resolution for the purpose of the payment at maturity of such bonds and the interest thereon from time to time; or (z) An amount of Funds sufficient to redeem, and for the purpose of redeeming, the bonds of such other series specified in such Resolution at a date, specified by the Company, upon which such bonds can be redeemed in accordance with the terms of such bonds and of this Indenture; and (c) An Officers' Certificate stating that the bonds of such other series delivered to the Trustee have not theretofore been used as a basis for the authentication of any bonds under any provision of this Indenture or for the withdrawal of deposited cash or any other moneys under any provision of this Indenture, have not been certified to the Trustee to comply with any maintenance or renewal requirement contained herein or in any supplemental indenture and have not been acquired, redeemed or discharged with cash applied to any such purpose pursuant to Section 4.04 hereof, Section 8.06 hereof or any maintenance or renewal provision contained herein or in any supplemental indenture; that no part of the expenditures for the redemption, the payment or the purchase and cancellation of such bonds has been made out of any insurance moneys or moneys received from the condemnation, sale or other disposition of any of the Company's property subject to the lien of this Indenture or has been used or applied or certified to the Trustee to comply with any maintenance or renewal requirement contained herein or in any supplemental indenture; and that such bonds have not been acquired, redeemed or discharged through the operation of, or 42 certified to comply with, any sinking fund or analogous fund created hereafter pursuant to the terms of this Indenture in respect of any bonds authenticated and delivered under this Indenture, or, in the alternative, that the provisions relating to any such fund do not preclude the use of such bonds retired through the operation of, or certified to comply with, any such fund as the basis for the authentication of bonds under this Section; and (d) The certificates, orders, opinions, supplemental indentures and/or other instruments, if any, required by Sections 4.05 and 4.06 hereof. Any bond which is delivered uncancelled to the Trustee and on account of which a new bond is authenticated under this Section shall, when received by the Trustee, immediately be cancelled and, together with every cancelled bond delivered to the Trustee under this Section, shall be destroyed, and a certificate of such destruction shall be delivered to the Company. Any cash deposited with the Trustee under the provisions of this Section shall be applied by the Trustee to the purposes for which such cash was so deposited and, until so applied, shall (subject to the provisions of Article XI hereof) be held irrevocably in trust by the Trustee for such purposes; provided, however, that upon the surrender by the Company to the Trustee for cancellation of any bond or bonds authenticated hereunder (properly endorsed), for the payment at maturity or for the redemption of which cash shall have been deposited with the Trustee under the provisions of this Section, the Trustee shall return to the Company out of such cash an amount equal to the amount deposited for the payment at maturity or the redemption, as the case may be, of such bond or bonds so surrendered. SECTION 4.03. Issuance of Bonds Upon the Basis of Property and Property Additions. Bonds of any series (other than bonds of Series A through C and Series X) may be executed by the Company and authenticated and delivered hereunder by the Trustee from time to time, in the manner and subject to the limitations provided in this Section and in Articles II and III hereof, up to a principal amount equal to sixty-six and two-thirds per centum (66-2/3%) of the sum of (a) $_______ million[**] in respect of expenditures for bondable property constructed or otherwise acquired by the Company prior to ______, 1994[*], plus (b) all net expenditures made by the Company for bondable property acquired by the Company through construction, purchase, consolidation, or otherwise, at any time on or after __________, 1994[*]; provided (1) that all bondable property on account of which bonds are at any time authenticated under the provisions of this Section shall be subject to the lien of this Indenture and shall not be subject to any liens or encumbrances equal or prior in lien to this Indenture, except Excepted Encumbrances and Prepaid Liens, and (2) that no bonds shall be authenticated and delivered under the provisions of this Section for or on account of any expenditures for property which shall previously have been 43 used as a basis for the authentication of bonds under any provision of this Indenture or as a basis for the withdrawal of deposited cash or any other moneys or the release of any property under any provision of this Indenture, or which shall have been made out of any insurance moneys or moneys received from the condemnation, sale or other disposition of any of the Company's property subject to the lien of this Indenture or which shall have been certified or used to comply with any maintenance or renewal requirement contained herein or in any supplemental indenture, or which shall have been certified or used to comply with the provisions respecting any sinking fund or analogous fund created hereafter under the terms of this Indenture in respect of any bonds authenticated and delivered hereunder, if and to the extent that the provisions relating to any such fund preclude the use of such expenditures as a basis for the authentication and delivery of bonds hereunder. The term "bondable property" shall mean and include any property, plant or equipment owned by the Company on ______________, 1994[*], or constructed or otherwise acquired by it on or after said date, in either case that constitutes a part of its permanent and fixed investment in the conduct by it of the business of generating, manufacturing, purchasing, transmitting, distributing, supplying and/or selling electricity for light, heat, power or other purposes. The term "bondable property" shall not include, however, (a) any Excepted Property, (b) any office furniture and equipment, (c) any goodwill or going concern value, as such, or any franchise granted by any municipality, state or subdivision thereof, or any governmental permit, (d) any property acquired or constructed by the Company the cost of which is properly chargeable to maintenance or other operating expense, (e) any oil, gas and mineral leases, wells and equipment owned, used or obtained for use for the exploration, drilling, production, storage and transportation of oil or gas; oil, natural gas or liquid hydrocarbon gathering or transportation lines connecting wells with main branch or trunk lines, compressor stations and all appurtenances thereto; easements, rights-of-way, permits, licenses relating thereto; and all other works, property, rights, titles and interests used primarily and principally in the exploration, production, storage and transportation of oil or natural gas and liquid hydrocarbons produced in association therewith (but shall include gas distribution systems and gas transmission lines interconnecting gas distribution systems, and gas transmission lines constructed for the purpose of supplying an electric generating plant or plants of the Company with gas for fuel supply); and (f) any leasehold interest in property or permanent improvements constructed on property held by the Company under lease, but shall include rights-of-way and easements and any electric or gas transmission or distribution lines and equipment or appurtenances (other than gas gathering or 44 transmission lines and equipment and appurtenances of the character excluded by clause (e) above) thereto located on any such right-of-way or easement or located upon any street, alley or public place of any municipality or upon any public highway. The term "purchased property" shall mean any bondable property which within six months prior to the date of its acquisition by the Company has been used or operated by a person or persons other than the Company in the electric utility or gas utility business, and shall be included in the term "bondable property." The terms "fair value to the Company" or "fair value" of any property shall mean the fair value to the Company or the fair value, as the case may be, as determined by an Engineer or an Independent Engineer (except where some other method of determination, if any, is specifically provided for in this Indenture) and evidenced by an Engineer's Certificate signed by such Engineer or Independent Engineer, as the case may be, and delivered to the Trustee. If the fair value to the Company of any purchased property, as shown by the Engineer's Certificate, is (i) not less than $25,000 and (ii) not less than one per centum (1%) of the aggregate principal amount of the bonds then outstanding under this Indenture, such Engineer's Certificate covering any such purchased property shall be made and signed by an Independent Engineer. "Gross expenditures" shall mean and include cash payments actually made or agreed to be made and for which liability shall have been actually incurred by the Company for the construction or acquisition of bondable property and, in the case of purchased property, shall mean and include (a) all cash payments actually made or agreed to be made and for which liability shall have been actually incurred by the Company for the purchase thereof (including any expenditures made by the Company in the payment or discharge of the principal of any mortgage indebtedness existing on any purchased property at the time of its acquisition by the Company) in excess of any net current assets received by the Company or (b) the fair value to the Company of such purchased property at the time of its acquisition by the Company, whichever shall be less; provided that in cases where purchased property is acquired by the Company without consideration or for a consideration not consisting wholly of cash payments made or agreed to be made, the fair value to the Company of such purchased property at the time of its acquisition by the Company, shall, within the meaning of this Indenture, be deemed to be a gross expenditure for such property. The "cost" of any bondable property shall mean the aggregate of the gross expenditures therefor. 45 "Net expenditures" for bondable property shall be determined as of any date as follows: From the total gross expenditures for bondable property made by the Company during the period beginning _____________, 1994[*], and ending on the date as of which the net expenditures are to be determined, there shall be deducted (a) the aggregate amount of such gross expenditures, if any, certified for or during such period to comply with the requirements of sub-paragraph (b) of Section 5.15 hereof, and (b) the aggregate amount of gross retirements of property, as hereinafter defined, made during such period after deducting therefrom the sum of (1) the aggregate amount certified by the Company to the Trustee as expended during such period for the purposes specified in sub-paragraphs (b) and (c) of Section 5.15 hereof (excluding the aggregate amount certified under Section 5.15 as a basis for the withdrawal of cash under said Section), (2) the aggregate amount paid to the Trustee for or during said period to comply with the requirements of Section 5.15 and (3) the aggregate amount of all net considerations received by the Company during said period in connection with the release of property from the lien of this Indenture under the provisions of Article VIII hereof. In making any determination of net expenditures for the purpose of the authentication of bonds under the provisions of this Section or the withdrawal of deposited cash under the provisions of Sections 4.04 or 8.06 hereof, the net expenditures shall be determined as of a date (to be selected by the Company) not more than ninety days prior to the authentication of such bonds or the withdrawal of such deposited cash, as the case may be, and the deductions required by subdivisions (a) and (b) of the next preceding paragraph to be made from gross expenditures shall be made for the period beginning ______________, 1994[*], to such date. "Gross retirements of property" made during any such period shall mean and include (a) all retirements made during any such period as the result of renewals, replacements, abandonments, losses, sales or other dispositions of bondable property owned by the Company on _____________, 1994[*], or constructed or otherwise acquired by it after said date, all such retirements to be stated and included in "gross retirements of property" at the amount (estimated by the Company if not separately shown) at which the property retired was included at _____________, 1994[*], as tangible property in utility plant account on the books and records of the Company, if owned by the Company at said date, or at the cost thereof if constructed or acquired by the Company after said date, and (b) all other reductions made during such period in the amount at which bondable property owned by the Company on _______________, 1994[*], or constructed or otherwise acquired by it after said date, was included as tangible property in utility plant account on the books and records of the Company at the beginning of such period, except any reduction resulting from the transfer of any portion of such amount to some other property account, tangible 46 or intangible, of the Company. "Gross retirements of property" shall not include any reductions in the amounts included in utility plant account as "intangible property" or as "intangibles" on the books and records of the Company. Bonds shall be authenticated by the Trustee under this Section subject to the restrictions hereof and shall be delivered by it to or upon the written order of the President or a Vice- President of the Company upon receipt by the Trustee of the following: (a) A copy of a Resolution authorizing the execution and authentication of the bonds proposed to be authenticated and stating the principal amount thereof and the designation of the series in which to be authenticated and setting forth, either expressly or by reference to a Resolution theretofore adopted, the terms, provisions and characteristics of such bonds, all in accordance with and subject to the restrictions of Articles II and III hereof; (b) An Officers' Certificate setting forth (1) the remaining aggregate principal amount of bonds which may be issued with respect to the $___ million in respect of expenditures for bondable property constructed or otherwise acquired by the Company prior to ______, 1994[*] (as specified in the first sentence of this Section), and (2) the gross expenditures for bondable property (other than purchased property) made by the Company in the period covered by the certificate (which shall begin on ______________, 1994[*]), briefly describing such bondable property and identifying it as such within the definition thereof contained in this Section, and stating that said expenditures have been actually made, or a liability therefor incurred, by the Company, and (3) the gross expenditures for, and the fair value to the Company at the time of acquisition (as determined by an Engineer's Certificate signed by an Engineer or an Independent Engineer in accordance with the provisions of this Section) of, any purchased property acquired by the Company during the period covered by the certificate, a brief description of such purchased property (identifying the same as purchased property as defined above), the date of its acquisition, and the amount and character of the consideration paid therefor, and (4) the aggregate amount of such gross expenditures, if any, certified for or during the period covered by the certificate, to comply with the requirements of sub- paragraph (b) of Section 5.15 hereof, and (5) (a) the aggregate amount of gross retirements of property, as defined above, made during said period, and (b) the sum of all amounts certified by the Company to the Trustee as expended during such period for the purposes specified in sub-paragraphs (b) and (c) of Section 5.15 hereof (excluding all amounts certified under said Section as a basis for the withdrawal of cash under said Section), and (c) the 47 aggregate amount paid to the Trustee for or during said period to comply with the requirements of Section 5.15 hereof, and (d) the aggregate amount of all net considerations received by the Company during said period in connection with the release of property from the lien of this Indenture under the provisions of Article VIII hereof, and (6) a computation showing the net expenditures for bondable property, as defined above, made by the Company during such period which may be used as the basis for the authentication of additional bonds, and (7) that all such bondable property, including such purchased property, if any, has become subject to the lien of this Indenture and is not subject to any liens or encumbrances equal or prior in lien to this Indenture, except Excepted Encumbrances and Prepaid Liens, and (8) that no part of said net expenditures for bondable property has been previously used as a basis for the authentication of any bonds under this Indenture or as a basis for the withdrawal of deposited cash or any other moneys or the release of any property under any provision of this Indenture or has been made out of any insurance moneys or moneys received from the condemnation, sale or other disposition of any property of the Company subject to the lien of this Indenture or has been certified or used to comply with any maintenance or renewal requirement contained herein or in a supplemental indenture or has been certified or used to comply with the provisions respecting any sinking fund or analogous fund created hereafter pursuant to the terms of this Indenture or, in the alternative, that the provisions relating to any such fund then existing do not preclude the use of any such expenditures as a basis for the authentication of bonds hereunder, and (9) any other facts and data (not specifically required to be shown in some other manner) showing that the Company is entitled under the foregoing provisions of this Section to have authenticated the bonds requested to be authenticated; (c) An Engineer's Certificate signed by an Engineer certifying to the fair value to the Company, at a date within ninety days prior to the date of delivery to the Trustee of the application of the Company for the authentication of bonds, of the bondable property (other than purchased property if any be included in such bondable property) described in the certificate required by subparagraph (b) of this Section; (d) An Engineer's Certificate signed by an Engineer or an Independent Engineer (conforming to and as may be required by the provisions of this Section) certifying to the fair value to the Company, at a date within ninety days prior to the date of delivery to the Trustee of the application of the Company for the authentication of bonds, of any purchased property described in the certificate required by subparagraph (b) of this Section and also its fair value to the Company at the time of its acquisition; and 48 (e) The certificates, orders, opinions, supplemental indentures and/or other instruments, if any, required by Sections 4.05 and 4.06 hereof. "Bondable property" (other than purchased property and land) may be sufficiently described other than in the granting clauses for any purpose of this Indenture by stating the descriptive name or title of the account or accounts (and subdivisions thereof applicable thereto) under or pursuant to a standard classification of accounts in general use to which the expenditures made for such property are applicable or have been charged or allocated and the amounts thereof. SECTION 4.04. Issuance of Bonds Upon Deposit of Cash With Trustee; Withdrawal or Application of Deposited Cash. Bonds of any series (other than bonds of Series A through C and Series X) may be executed by the Company and be delivered to the Trustee for authentication, from time to time, in the manner and subject to the limitations provided in this Section and in Articles II and III hereof, and shall be authenticated by the Trustee and delivered by it to or upon the written order of the President or a Vice-President of the Company, upon receipt by the Trustee of the following: (a) A copy of a Resolution authorizing the execution and authentication of the bonds proposed to be authenticated and stating the principal amount thereof and the designation of the series in which to be authenticated and setting forth, either expressly or by reference to a Resolution theretofore adopted, the terms, provisions and characteristics of such bonds, all in accordance with and subject to the restrictions of Articles II and III hereof; (b) An amount of cash equal to the principal amount of the bonds requested to be authenticated; and (c) The certificate, orders, opinions, supplemental indentures and/or other instruments, if any, required by Sections 4.05 and 4.06 hereof. Cash received by the Trustee under the provisions of this Section is sometimes referred to in this Indenture as "deposited cash." Whenever the Company shall be entitled to the authentication and delivery of bonds under the provisions of either Section 4.02 hereof or Section 4.03 hereof and the Trustee shall have in its possession deposited cash equal to the principal amount of such bonds, the Trustee shall, on the request signed by the President or a Vice President of the Company evidenced by a Resolution and in lieu of the authentication and delivery of such bonds, pay over to the Company, on the written order of its President or a Vice-President, an amount of deposited cash equal to the principal amount of such bonds, but only upon receipt by the Trustee of an Officers' Certificate stating that the Company is not then in default under any 49 provision of this Indenture and of the certificate or certificates, order or orders, opinion or opinions and other instruments (if any) of the character required to be given for the authentication and delivery of such bonds (excepting only the certificates, orders, opinions, supplemental indentures and/or other instruments, if any, required by Section 4.05 and by sub- divisions (a) to (e), inclusive, of Section 4.06) but with such changes or differences as may be appropriate or required by reason of the fact that the Company's application is for the withdrawal of deposited cash instead of for the authentication of bonds. All cash received by the Trustee under the provisions of this Section shall, until paid out as aforesaid, be held by it as part of the Trust Estate, except that all or any part of such cash may, upon the written direction of the Company, be applied by the Trustee to the purchase or redemption of bonds, upon the terms and conditions set forth in Section 8.06 hereof, and all such cash remaining on deposit with the Trustee at the end of three years from the date of deposit of the same shall be so applied by the Trustee. SECTION 4.05. Net Earnings Certificate. (a) No bonds shall be authenticated and delivered by the Trustee under the provisions of Sections 4.03 or 4.04 hereof, and (b) no bonds bearing a higher rate of interest than the bonds for or on account of the payment, cancellation, redemption or discharge of which they are authenticated shall be authenticated and delivered by the Trustee under the provisions of Section 4.02 hereof more than five years prior to the maturity of the bonds for or on account of the payment, cancellation, redemption or discharge of which they are authenticated, except, in each case, upon receipt by the Trustee of a certificate (a "Net Earnings Certificate") signed by the President or a Vice-President of the Company, by the Treasurer or an Assistant Treasurer of the Company and by an accountant, whose qualifications shall conform to the requirements of this Section. The Net Earnings Certificate shall show that for a period of twelve consecutive calendar months ending within ninety days next preceding the authentication and delivery by the Trustee of any such bonds hereunder the net earnings, as hereinafter defined, of the Company shall have been a sum at least equal to twice the interest for one year (1) on all the bonds to be Outstanding under this Indenture immediately after such authentication and (2) on all other indebtedness then secured by a lien equal or prior to the lien of this Indenture on any part of the Company's property (excepting any such indebtedness the evidences of which shall then be held in pledge by the Trustee hereunder or by the trustee under any mortgage constituting a lien equal or prior to the lien of this Indenture on any part of the Company's property, and excepting Prepaid Liens). The accountant signing such Net Earnings Certificate shall be an independent public accountant, selected by the Company and approved by the Trustee in the exercise of reasonable care, if (a) the aggregate principal amount of the bonds then 50 proposed to be authenticated hereunder and of other bonds authenticated and delivered hereunder since the commencement of the then current calendar year (other than bonds with respect to which a Net Earnings Certificate is not required by this Indenture or with respect to which a certificate of an independent public accountant has previously been furnished) is ten per centum (10%) or more of the aggregate principal amount of all bonds at the time outstanding hereunder and (b) the twelve consecutive calendar months for which the net earnings of the Company shall be stated in such Net Earnings Certificate are the period covered by an annual report required to be filed by the Company. In every other case, the accountant signing such Net Earnings Certificate may be an accountant who is the chief accounting officer or other accounting officer or employee of the Company. The "net earnings" of the Company shall for any period mean the earnings of the Company, computed in accordance with generally accepted accounting principles determined by deducting from the total gross earnings and income of the Company derived from all sources for such period, all operating expenses of the Company for such period including current maintenance and repairs, rentals, insurance, taxes other than taxes on income, and all charges or provisions for depreciation, retirements, renewals, replacements and/or amortization; and by making such adjustments, if any, of the resulting amount as may be necessary to comply with the provisions as to net earnings hereinafter contained in this Section. Not more than ten per centum (10%) of the net earnings as finally determined shall consist of the aggregate of (a) net non-operating income, (b) net operating revenues derived from the operation by the Company of any properties other than electric utility properties and (c) net revenues from any properties not owned by the Company. No dividends or interest received by the Company from any subsidiary or affiliated company shall be included in the net earnings of the Company except to the extent that such dividends or interest were earned by the paying company in the current or the next preceding fiscal year of such company. No profits or losses resulting from the sale or other disposition of capital assets shall be included in computing the net earnings of the Company. In case any property owned by the Company at the time of the authentication of bonds under this Indenture shall not have been owned by it during any part of any such period or shall have been owned by it only during a part of such period, then and in every such case the net earnings or net loss of such property during said period (including net earnings or net loss during such part thereof as shall have preceded the acquisition of said property by the Company) shall be included in computing the net earnings or net loss of the Company for such period. In case any property owned by the Company during any part of any such period shall not be owned by the Company at the time of the authentication of bonds hereunder, the net earnings or the net loss of the Company from such property during such period shall be excluded in computing the net earnings or net loss of the Company. In 51 computing the net earnings of the Company for any period pursuant to the provisions of this Section, the amounts to be deducted from the total gross earnings and income as charges or provisions for depreciation, retirements, renewals and replacements and/or amortization, shall be not less in the aggregate than an amount equal to the Required Percentage of the arithmetical average of the amount of depreciable property of the Company at the beginning, and the amount thereof at the end, of such period. SECTION 4.06. Documents to be Delivered. No bonds shall be authenticated and delivered by the Trustee under the provisions of Sections 4.01, 4.02, 4.03 or 4.04 hereof except upon receipt by the Trustee of the following: (a) An Opinion of Counsel stating each public service commission or other governmental agency, if any, of the United States of America or of any state or states thereof then having or claiming to have jurisdiction over the issuance of bonds under this Indenture by the Company, and also stating the principal amount of the bonds then requested to be authenticated with respect to which a certificate or order of any such public service commission or governmental agency is required or claimed to be required; and a certified copy of each such certificate or order, shown by said opinion to be required, together with an Opinion of Counsel to the effect that such certificates or orders are sufficient to authorize or permit the issuance of the bonds requested to be authenticated; (b) An Opinion of Counsel stating that any recording or other tax or taxes required by law in connection with the issuance of such bonds or for the effectiveness of the lien of this Indenture as security for such bonds have been paid, or that no such tax or taxes are required by law to be paid, and stating further that such bonds have been duly authorized to be issued and will be, when authenticated and issued, the legal and binding obligations of the Company secured by this Indenture; (c) An Officers' Certificate stating that the Company is not then (and will not be, after giving effect to such authentication and delivery) in default under any provision of this Indenture, and stating the aggregate principal amount of all bonds of all series and also the aggregate principal amount of all bonds of any particular series, of which any bonds then requested to be authenticated are a part, which will be outstanding under this Indenture upon the authentication and issue of the bonds then requested to be authenticated; (d) An Opinion of Counsel that, upon the authentication and issue of the bonds then requested to be authenticated, the aggregate principal amount of all bonds of all series that will be outstanding under this Indenture, 52 as shown by the certificate provided for in subdivision (c) of this Section 4.06, will not exceed the amount which at that time may be lawfully outstanding hereunder nor exceed any limitation then existing upon the indebtedness of the Company under its Amended and Restated Certificate of Incorporation and amendments thereto or, to the best of such counsel's knowledge, under any contract, indenture or other instrument to which the Company is a party or under any applicable law, and that the aggregate principal amount of all bonds of any particular series, of which any bonds then requested to be authenticated are a part, will not exceed the maximum principal amount, if any, fixed with respect to the bonds of such series; (e) In case of the first authentication of bonds of any series (other than an issuance under the provisions of Section 4.01 hereof), a supplemental indenture, executed as provided in Article XVI hereof, (1) setting forth the form and substance of the bonds of said series and the terms, provisions and characteristics thereof, and (2) limiting the aggregate principal amount of bonds of such series that may be outstanding at any one time to an amount stated in such supplemental indenture, unless such supplemental indenture be accompanied by an Opinion of Counsel to the effect that such limitation is not required by law or by this Indenture, and (3) containing such other provisions, not inconsistent with the provisions of this Indenture, as may be deemed necessary or appropriate in the premises and as shall be satisfactory to the Trustee; (f) In case of an application for the authentication of bonds under the provisions of Section 4.03 hereof or in case of an application for the withdrawal of deposited cash under the provisions of Section 4.04 hereof on account of expenditures for bondable property, (1) an Opinion of Counsel stating that the Company has substantially good title to any such bondable property included in the certificate provided for in subdivision (b) of said Section 4.03 or in said Section 4.04 (unless such bondable property shall have been covered by an Opinion of Counsel theretofore filed with the Trustee), and that such bondable property is subject to the lien of this Indenture and is not subject to any liens or encumbrances equal or prior in lien to this Indenture, except Excepted Encumbrances and Prepaid Liens, and (2) all such deeds, conveyances, transfers or instruments of further assurance as may be necessary for the purpose of effectually subjecting such bondable property to the direct lien and operation of this Indenture, together with an Opinion of Counsel that the same are sufficient for the purpose, or an Opinion of Counsel that no such deeds, conveyances, transfers or instruments are necessary for such purpose; 53 (g) An Officers' Certificate stating that in the opinion of the officers signing the certificate all conditions and requirements of this Indenture relating to the authentication and delivery of the bonds requested to be authenticated and delivered have been complied with; or, in the case of an application for the withdrawal of deposited cash under the provisions of Section 4.04 hereof, that all conditions and requirements of this Indenture relating to the withdrawal of cash requested to be withdrawn have been complied with; and (h) An Opinion of Counsel stating that in such counsel's opinion all conditions and requirements of this Indenture relating to the authentication and delivery of the bonds requested to be authenticated and delivered have been complied with; or, in the case of an application for the withdrawal of deposited cash under the provisions of Section 4.04 hereof, that in his or her opinion all conditions and requirements of this Indenture relating to the withdrawal of cash requested to be withdrawn have been complied with. To the extent any of the foregoing opinions relate to enforceability, counsel may express that such opinion is limited by the following: (i) the rights of any governmental entity under any statutory lien provisions; (ii) principles of equity which may limit the availability of certain equitable remedies; and (iii) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, and other laws applicable to creditors' rights or the collection of debtors' obligations generally. Such opinions may also be expressed to be further subject to the qualification that the enforceability of certain of the remedial, waiver and other provisions of this Indenture is limited by all applicable constitutional, legislative, judicial and administrative provisions, statutes, regulations, decisions, rulings and other laws in addition to those described in the immediately preceding sentence; provided, however, that such laws do not, in such counsel's opinion, substantially interfere with the practical realization of the benefits expressed in this Indenture except for the economic consequences of any procedural delay which may result from such laws. ARTICLE V PARTICULAR COVENANTS OF THE COMPANY SECTION 5.01. Seizin and Warranty. The Company hereby covenants that it is lawfully seized and possessed of all the Trust Estate except any portions of the Trust Estate constituting a leasehold estate and as to these the Company has a valid and subsisting leasehold interest; that it will warrant and defend unto the Trustee, its successors and assigns, for the benefit of the holders of the bonds, the Trust Estate and the lien and interest of the Trustee thereon and therein under this Indenture against all claims and demands of any person whomsoever; that it 54 will maintain and preserve the lien of this Indenture so long as any of the bonds authenticated hereunder are Outstanding; that it has good right and lawful authority to mortgage and pledge the Trust Estate, as provided in and by this Indenture; and that said Trust Estate is not subject to any Prior Lien except Excepted Encumbrances and Prepaid Liens. SECTION 5.02. Payment of Principal, Premium and Interest; Maintenance of Office. (a) The Company hereby covenants that it will duly and punctually pay the principal of and premium, if any, and interest on all the bonds Outstanding hereunder, according to the terms thereof and of this Indenture, and that so long as any of such bonds shall remain Outstanding and unpaid, it will not directly or indirectly extend or assent to the extension of the time for the payment of any bond or claim for interest of or upon any such bond, and will not directly or indirectly be a party to any arrangement therefor, either by purchasing or refunding or in any manner keeping alive such bond or claim for interest, or otherwise, and that in case the payment of any such bond or claim for interest shall be so extended by or with or without the consent of the Company, then, anything contained in this Indenture to the contrary notwithstanding, such bond or claim for interest so extended shall not be entitled, in case of default hereunder, to any benefit of or from this Indenture, except after the prior payment in full of the principal of all bonds and claims for interest as shall not have been so extended. (b) The Company hereby covenants that it will keep an office or agency, while any of the bonds issued hereunder are Outstanding, at any and all places (i) at which the principal of or interest on and premium, if any, on any of said bonds may be payable, (ii) where bonds entitled to be registered, transferred, exchanged, or converted may be presented or surrendered for registration, transfer, exchange or conversion and (iii) where notices, presentations and demands to or upon the Company in respect of such bonds as may be payable at such places or in respect of this Indenture may be given or made. The Company will from time to time give the Trustee written notice of the location of such office or offices or agency or agencies, and in case the Company shall fail to maintain such office or offices or agency or agencies or to give the Trustee written notice of the location thereof, then in addition to any other remedy or right arising as a result of the violation of the covenants contained in this Section, the Company agrees that any such notice, presentation or demand in respect of said bonds or of this Indenture may be given or made, unless other provision is expressly made herein, to or upon the Trustee at its principal corporate trust office, and the Company hereby authorizes such presentation and demand to be made to and such notice to be served on the Trustee in either of such events and the principal of and interest and premium, if any, on said bonds shall in such event be payable at said office of the Trustee. Unless otherwise provided in a supplemental indenture 55 or in any notice of redemption pursuant to Section 7.02 hereof, the principal of or interest on and premium, if any, on any bonds issued hereunder shall be payable at the principal corporate trust office of the Trustee. SECTION 5.03. Regarding Paying Agent; Funds in Trust. (a) The Company hereby covenants that, if it shall appoint a paying agent other than the Trustee, it will cause such paying agent to execute and deliver to the Trustee an instrument in which it shall agree with the Trustee, subject to the provisions of this Section, (1) that such paying agent shall hold in trust for the benefit of the bondholders or the Trustee all sums held by such paying agent for the payment of the principal of or interest (and premium, if any) on the bonds; and (2) that such paying agent shall give the Trustee notice of any default by the Company or by any other Obligor in the making of any such payment to or through such paying agent. Such paying agent shall not be obligated to segregate such sums from other funds of such paying agent except to the extent required by law. (b) The Company hereby covenants that, if the Company acts as its own paying agent, it will, on or before each due date of each installment of principal or interest (and premium, if any) on the bonds, set aside and segregate and hold in trust for the benefit of the bondholders a sum sufficient to pay such principal or interest (and premium, if any) so becoming due on the bonds and will notify the Trustee of such action, or of any failure to take such action. (c) Anything in this Section to the contrary notwithstanding, the Company may at any time, for the purpose of obtaining a release or satisfaction of this Indenture or for any other reason, pay or cause to be paid to the Trustee all sums held in trust by it or any paying agent as required by this Section, such sums to be held by the Trustee upon the trusts contained in this Indenture. (d) Anything in this Section to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section is subject to the provisions of Section 11.03 hereof. SECTION 5.04. Limitations on Liens; Payment of Taxes. (a) The Company hereby covenants that it will pay all taxes and assessments and other governmental charges lawfully levied or assessed upon the Trust Estate, or upon any part thereof or upon any income therefrom, or upon the interest of the Trustee in the Trust Estate, when the same shall become due. (b) The Company hereby covenants that it will not suffer any lien to be hereafter created upon the Trust Estate, or any part thereof, or the income therefrom, prior or equal to the lien hereof other than the Excepted Encumbrances and Prepaid 56 Liens, and other than, in the case of property hereafter acquired by the Company, vendors' liens, purchase money mortgages or trust deeds incurred or executed in connection with such acquisition and any lien thereon at the time of acquisition. (c) The Company hereby covenants that, within 120 days or such shorter period as may be required by law after any lawful claim or demand for payment for labor, materials, supplies or other objects, which if unpaid would or might be given precedence over the lien of this Indenture as a lien or charge upon any of the Trust Estate or the income thereof, the Company will pay or cause to be discharged or make adequate provision to satisfy or discharge the same. (d) The Company hereby covenants that it will duly observe and conform in all material respects to all valid requirements of any governmental authority relative to any of the Trust Estate, and all covenants, terms and conditions upon or under which any of the Trust Estate is held. (e) The Company hereby covenants that it will comply in all material respects with all valid laws of the United States of America and of any state or states thereof applicable to the Company and to the right of the Company to transact business under any such laws, and with all lawful ordinances, rules, orders and regulations of any commission, board or public authority having jurisdiction in the Trust Estate, in such form and manner as counsel may advise. (f) The Company hereby covenants that it will do and perform all matters or things necessary or expedient to be done or observed by reason of any law of the United States of America, or any state thereof, or any other competent authority, for the purpose of creating, performing and maintaining the trust hereby created for the security of the payment of the bonds authenticated hereunder to, and perform all the obligations hereby imposed upon, the Company. (g) The Company hereby covenants that books of record and account will be kept in which full, true and correct entries will be made of all dealings or transactions of, or in relation to, the plants, properties, business and affairs of the Company, such books, records and accounts to be kept, unless in the course of contest in good faith, in accordance with the valid orders, rules and regulations of each regulatory body that may from time to time have jurisdiction in respect thereof and with which the Company is compelled to comply by any valid provision of law, and such books, records and accounts shall at all reasonable times be open to the inspection of such reputable accountants or other agent of recognized standing as the Trustee may from time to time designate. 57 Nothing in this Section contained, however, shall require the Company to observe or conform to any requirement of governmental authority or to cause to be paid or discharged, or to make provision for, any such lien or charge, or any claim or demand, or to pay any such tax, assessment or governmental charge, so long as the validity thereof shall be contested by it in good faith and by appropriate legal proceedings, and nothing in this Section shall require the Company to pay, discharge or make provision for any tax, assessment or other governmental charge, or any claim or demand, the validity of which shall not be so contested if adequate security for the payment of such tax, assessment or other governmental charge, or any claim or demand, and for any damages which may reasonably be anticipated from failure to pay the same shall be given to the Trustee; and that, save as aforesaid, it will not suffer any matter or thing whereby the lien hereof might or could be impaired in contravention of the provisions hereof. SECTION 5.05. To Insure. The Company hereby covenants that it will keep the Trust Estate insured against loss or damage, to the extent that property of similar character is usually so insured by companies similarly situated and operating like properties, to a reasonable amount by insurance companies believed by the Company to be responsible; any loss (except as to materials and supplies and except any particular loss of less than the lesser of Four Million Dollars ($4,000,000) and two per centum (2%) of the bonds Outstanding hereunder on the date of such particular loss) to be made payable to the Trustee as its interest may appear; or that it will, in lieu of or supplementing such insurance, in whole or in part, adopt and comply with some other method or plan of protection against loss or damage, to provide for the payment, consistent with industry practice, to the Trustee, to the extent provided in such method or plan, in cash, of the amount made available under such method or plan by reason of loss or damage to property (except as to materials and supplies and except any particular loss less than the lesser of Four Million Dollars ($4,000,000) and two per centum (2%) of the bonds Outstanding hereunder on the date of such particular loss). The Company further covenants that it will, in each year on or before April 1, deliver to the Trustee a statement of all such policies of insurance or other methods or plans of insurance and will promptly advise the Trustee of any cancellation or other change affecting such policies or methods or plans of insurance. Such statement shall be signed by the President or a Vice-President or the Treasurer of the Company and shall certify that all property of the Company required by this Section to be insured is insured in the manner and to the extent herein provided and that loss under such insurance is made payable as hereinabove provided. All cash received by the Trustee pursuant to the provisions of this Section, except payments received on account of any loss of materials or supplies or on account of any particular loss of less than the lesser of Four Million Dollars 58 ($4,000,000) and two per centum (2%) of the bonds Outstanding hereunder on the date of such particular loss, shall be held by the Trustee as a part of the Trust Estate, and, subject as aforesaid, shall be disposed of as provided in Section 8.06 hereof. The Trustee shall pay over to the Company, by endorsement or otherwise, any payment received by it on account of any loss of materials or supplies or on account of any particular loss of less than the lesser of Four Million Dollars ($4,000,000) and two per centum (2%) of the bonds Outstanding hereunder on the date of such particular loss upon receipt by the Trustee of an Officers' Certificate to the effect that such payment represents the proceeds of insurance on account of loss of materials or supplies or on account of a particular loss of less than the lesser of Four Million Dollars ($4,000,000) and two per centum (2%) of the bonds Outstanding hereunder on the date of such particular loss. All such cash received by the Company shall be applied by it to the rebuilding, renewal or replacement of property or to the acquisition of additional property that will become subject to the lien of this Indenture. Any cash received by the Trustee pursuant to the provisions of this Section and not so applied within twelve (12) months after its receipt by the Trustee, or in respect of which notice in writing of intention to apply the same to the work of rebuilding or renewal then in progress and uncompleted shall not have been given to the Trustee by the Company within such twelve (12) months, or which the Company shall at any time notify the Trustee in writing is not to be so applied, shall thereafter, and may at any time subsequent to the receipt thereof by the Trustee, be withdrawn, used or applied in the manner and for the purposes and subject to the conditions provided in Section 8.06 hereof. SECTION 5.06. To Maintain Property, etc. The Company hereby covenants, subject to the last paragraph of Section 5.13 hereof, that: (a) it will at all times maintain, preserve and keep the Trust Estate in good repair, working order and condition and equipped with suitable equipment and appliances; (b) it will make regular charges to expense for the establishment of a reasonably adequate reserve or reserves for depreciation, and from time to time will make all needful and proper repairs, retirements, renewals and replacements of the Trust Estate; (c) it will not charge to its property, plant and equipment accounts any expenditures which are properly chargeable to maintenance or repairs or to any other expense account in accordance with generally accepted accounting principles; and (d) it will promptly classify as retired all property that has permanently ceased to be used or useful in the Company's business. Nothing in this Section or elsewhere in this Indenture contained shall be construed to prevent the Company from ceasing to operate or maintain any of its plants or any other property, if, in the judgment of the Company, it is advisable not to operate or maintain the same or if the Company intends to sell or 59 otherwise dispose of the same and within a reasonable time endeavors to effectuate such a sale or other disposition; provided, however, that the operation or maintenance of such plant or plants or any other property shall not be essential to the maintenance and continued operation of the rest of the Trust Estate and the security afforded by this Indenture will not be substantially impaired by the termination of such operation. SECTION 5.07. To Maintain Corporate Existence and Franchises. The Company hereby covenants that it will, subject to the provisions of Articles VIII and XIII hereof and except as herein otherwise provided or permitted either expressly or by implication, at all times maintain its corporate existence and right to carry on business and will use its reasonable efforts to procure, maintain, preserve and renew all the rights, powers, privileges and franchises owned by it as shall be required for such purpose; provided that the Company may amend, surrender, abandon or otherwise terminate any right, permit, privilege or franchise, whenever the Company shall, contemporaneously or as a part of the same transaction, obtain or shall previously have obtained a new and, in the opinion of a majority of the Board of Directors, an equally advantageous right, permit, privilege or franchise under which the Company may continue to perform the service and conduct the business theretofore performed or conducted under or by virtue of the right, permit, privilege or franchise amended, surrendered, abandoned or terminated, or whenever the right, permit, privilege or franchise to be amended, surrendered, abandoned or terminated can no longer be profitably exercised or availed of or shall not be essential to the maintenance and continued use of the rest of the Trust Estate, and consequently the security afforded by this Indenture would not be substantially impaired. SECTION 5.08. Repayment of Advances made by a Receiver, etc. The Company hereby covenants that, if it shall fail to perform any of the covenants contained in Sections 5.04, 5.05, clause (b) in the first paragraph of Section 5.06, Sections 5.07, 5.09 or 5.13 hereof, any receiver or trustee appointed by any court, as herein provided, may make advances to perform the same in its behalf; and all sums so advanced shall be at once repayable by the Company, and shall bear interest at the prime commercial loan rate charged by the Company's primary bank to large corporate borrowers on the date such advance is made until paid, and shall be secured hereby, having the benefit of the lien hereby created in priority to the indebtedness evidenced by the bonds issued hereunder, but no such advance shall be deemed to relieve the Company from, or constitute a waiver of, any default hereunder. SECTION 5.09. To Record and File Indenture and Supplemental Indenture. The Company hereby covenants that it will cause this Indenture and all indentures and instruments supplemental hereto or notices in respect thereof to be promptly recorded and filed and re-recorded and re-filed in such manner 60 and in such places as may be provided by law in order to make effective the lien intended to be created hereby or thereby and in order fully to preserve and protect the security of the bondholders and all rights of the Trustee, and that it will pay or cause to be paid any mortgage recording tax and filing fees in connection with such recording and filing, and that it will do and perform all matters or things necessary or expedient to be done or observed by reason of any law of the United States of America, or of any state or states thereof, or any other competent authority, for the purpose of creating, performing and maintaining the trust hereby created for the security of the payment of the bonds, and to perform all the obligations hereby imposed upon the Company. SECTION 5.10. To Furnish Opinions of Counsel as to Recording. The Company hereby covenants that it will furnish to the Trustee (a copy of which will be available to any holder of bonds upon request) (i) promptly, and in any event within ten (10) Business Days after the execution and delivery of this Indenture and of each supplemental indenture, an Opinion of Counsel either stating that, in the opinion of such counsel, this Indenture or such supplemental indenture and any appropriate Uniform Commercial Code financing statements have been properly recorded and filed, so as to make effective the lien intended to be created hereby or thereby and fully to preserve and protect the security of the bondholders and all rights of the Trustee, and reciting the details of such action, or stating that, in the opinion of such counsel, no such action is necessary to make such lien effective. The Company shall have complied with this subsection (i) if (1) the Opinion of Counsel herein required to be delivered to the Trustee shall state that this Indenture or such supplemental indenture has been received for record or filing in each jurisdiction in which it is required to be recorded or filed and that, in the Opinion of Counsel (if such is the case), upon such receipt for record or filing the lien intended to be created by this Indenture or such supplemental indenture is effective and fully preserves and protects such security and rights as aforesaid, and (2) such opinion is delivered to the Trustee, notwithstanding the ten (10) Business Day period mentioned above, within such time, following the date of the execution and delivery of this Indenture or such supplemental indenture, as shall be practicable having due regard to the number and distance of the jurisdictions in which this Indenture or such supplemental indenture is required to be recorded or filed; and (ii) On or before April 1 of each year, beginning April 1, _____ [***] an Opinion of Counsel either stating that, in the opinion of such counsel, such action has been taken, since the date of the most recent Opinion of Counsel 61 furnished pursuant to this subsection (ii) or of the initial Opinion of Counsel furnished pursuant to subsection (i) of this Section, whichever is later, with respect to the recording, filing, re-recording and re-filing of this Indenture and each notice with respect thereto and of each supplemental indenture and of any appropriate Uniform Commercial Code financing statements, as is necessary to maintain the lien thereof and so to preserve and protect such security and rights, and reciting the details of such action, or stating that, in the opinion of such counsel, no such action is necessary to maintain such lien and so to preserve and protect such security and rights. In rendering the aforementioned Opinions of Counsel, counsel may rely on the property descriptions contained in this Indenture or a certificate of an appropriate officer of the Company as to the jurisdictions in which the bondable property intended to be subject to the lien of this Indenture is located. Such counsel may also rely upon and qualify any such Opinion of Counsel in the manner described in Sections 1.02 (pertaining to "title") and 4.06 hereof to the extent such counsel deems it necessary to do so and may rely upon the same type of abstracts, affidavits, certificates, statements and investigations as mentioned in the definition of "title" contained in this Indenture. SECTION 5.11. Further Advances and After-acquired Property. The Company hereby covenants that it will execute and deliver such supplemental indenture or indentures and such further instruments and do such further acts as the Trustee shall require (a) for accomplishing the purposes of this Indenture, (b) to convey to the Trustee any property, both real and personal, now held or hereafter acquired, made or constructed, intended to be subject to the lien hereof, or (c) to transfer to any new trustee or co-trustees, the estate, powers, instruments or funds held in trust hereunder. SECTION 5.12. To Appoint a Trustee to Fill Vacancies. The Company hereby covenants that, whenever necessary to avoid or fill a vacancy in the office of Trustee, the Company will in the manner provided in Section 14.17 hereof appoint a Trustee so that there shall be at all times a Trustee hereunder eligible pursuant to the TIA to act as such, with a combined capital and surplus of at least Fifty Million Dollars ($50,000,000). SECTION 5.13. Periodic Examinations as to Maintenance. The Trustee may, and, if so requested in writing by the holders of not less than a majority in principal amount of the bonds then Outstanding and upon being furnished by the Company with the necessary funds therefor, shall, cause an inspection of the Trust Estate to be made by an Independent Engineer, for the purpose of determining the matters hereinafter provided to be set forth in the report of such Independent Engineer, and that the Company will grant such Independent Engineer access to the properties, 62 books and records of the Company for the purpose of such inspection; but no such inspection shall be made within five years from the date of filing with the Trustee of the report of any such inspection previously made hereunder. Such Independent Engineer, within a reasonable time from the date of its appointment, shall file with the Trustee and the Company an Engineer's Certificate signed by such Independent Engineer stating whether or not the Trust Estate (other than property which has been retired) is in general being maintained in good physical condition and in a state of good operating efficiency for the purposes of the Company and whether or not all of the Trust Estate that is no longer used or useful in the Company's business has been duly recorded as retired on the books of the Company. If such certificate shall state that the Trust Estate (other than property which has been retired) in general is not being so maintained, it shall state clearly the character and extent and the estimated cost of making good such deficiency and the estimated time reasonably necessary to make good such deficiency, and, if it shall state that there is a portion of the Trust Estate that is no longer used or useful in the Company's business and has not been recorded as retired on the books of the Company, it shall briefly describe such property and shall state the aggregate retirement which should be recorded on the books in respect of such property. Said certificate shall be open to inspection by any bondholder at any reasonable time. Such certificate may be modified by a supplemental certificate signed and filed by the Independent Engineer with the Trustee and with the Company. If the Company, within thirty (30) days after the filing of the certificate of such Independent Engineer, objects in writing, delivered to the Trustee, to the findings of such Independent Engineer as to the character and extent of such maintenance deficiency and/or to the property which should be retired upon the books of the Company, then the character and extent of such maintenance deficiency, if any, and/or the property, if any, so to be retired upon the books of the Company shall be forthwith referred to a board consisting of three arbitrators selected in the following manner: The Trustee, within ten (10) days after the expiration of said period of thirty (30) days, shall name one arbitrator and give notice of such selection to the Company. Within ten (10) days after receipt of such notice, the Company shall name one arbitrator and give notice of such selection to the Trustee, and failure so to do shall entitle the Trustee to name an arbitrator on behalf of the Company. The two thus selected shall, within ten (10) days after the appointment of the arbitrator representing the Company, select a third arbitrator, but if said arbitrators are unable, within said ten (10) days, to agree upon such third arbitrator, then, upon the election of either the Company or the Trustee, any District Judge of the United States of America for the District in which the Trustee has its principal corporate trust office may appoint such third arbitrator, upon application to said District Judge by either party after five business days' notice thereof to 63 the other party. The board of arbitrators so chosen shall immediately proceed to hear and determine all matters stated in the certificate which are in dispute, after giving to the Trustee and the Company not less than five days' notice in writing of the time and place of such hearing; and at the time and place appointed they shall proceed summarily to hear and dispose of the matters in dispute unless in their judgment the hearing should be postponed to a later day or days, of which postponement like notice shall be given, unless such notice is waived by both parties, in which case the hearing may proceed at an earlier agreed date. The written decision of a majority of such arbitrators shall be filed as soon as practicable with the Trustee and a copy thereof delivered to the Company, and shall be binding upon the Trustee, the Company and the bondholders. The Company covenants and agrees that, if such certificate shall state that such a maintenance deficiency exists, the Company will with all reasonable speed make such repairs and/or do such other maintenance work as may be necessary to make good such deficiency as shall exist at the time of such certificate or at the time of such decision of arbitrators, as the case may be; whereupon such Independent Engineer (or, in the case of such Independent Engineer's refusal or inability to act, some other Independent Engineer) shall file with the Trustee and the Company an Engineer's Certificate signed by such Independent Engineer stating that such deficiency has been made good. The Company further covenants and agrees that, if such certificate shall state that there has not been recorded as retired on the books of the Company a portion of the Trust Estate which is no longer used or useful in the Company's business, the Company will forthwith make appropriate entries on its books recording the retirement of such property and will file with the Trustee an Officers' Certificate stating that such entries have been made. All expenses incurred under this Section, including (without limitation) the reasonable compensation of the Independent Engineer and of the arbitrators, if any shall be appointed, shall be borne by the Company. In the event that any regulatory authority having jurisdiction over the Company shall determine that the expenditures for repairs and maintenance necessary to make good any such maintenance deficiency as shall have been so determined would be excessive or shall, by order or regulation, prohibit, in whole or in part, such expenditures for repairs and maintenance, then, upon filing with the Trustee a certified copy of such determination, order or regulation, as the case may be, the Company shall, so long as such determination, order or regulation remains in effect, be relieved from compliance with the covenants contained in this Section, in regard to the maintenance of the Trust Estate, to the extent such expenditures for repairs and maintenance shall have been held excessive or shall be prohibited. 64 SECTION 5.14. Annual Statement by Officers as to Default. The Company will deliver to the Trustee not less often than annually, commencing on April 1, 199_ [***], during which any bonds are Outstanding, a written statement signed by the principal executive officer, principal financial officer or principal accounting officer of the Company stating that (1) a review of the activities of the Company during such year and of performance under this Indenture and under the terms of the bonds has been made under his or her supervision; and (2) to the best of his or her knowledge, based on such review, the Company has fulfilled all its obligations under this Indenture and has complied with all conditions and covenants on its part contained in this Indenture through such year, or, if there has been a default in the fulfillment of any such obligation, covenant or condition, specifying each such default known to him or her and the nature and status thereof. For the purpose of this Section 5.14, default and compliance shall be determined without regard to any grace period or requirement of notice provided pursuant to the terms of this Indenture. SECTION 5.15. Maintenance and Renewal. The Company covenants and agrees that during each calendar year, so long as any bonds issued under and secured by this Indenture shall be Outstanding, it will, except as otherwise provided in this Section, expend for one or more of the following purposes: (a) The maintenance and repair of the electric utility properties of the Company upon which this Indenture is or shall be a lien; (b) The construction or acquisition of bondable property upon which this Indenture is a first lien, subject only to Excepted Encumbrances and Prepaid Liens; or (c) The retirement, through purchase or payment, of bonds issued under and secured by this Indenture, or redemption of any bonds issued under and secured by this Indenture that are subject to redemption; amounts which shall not be less in the aggregate than (i) during each whole calendar year, the Required Percentage of the arithme- tical average of the amount of depreciable property of the Company at the beginning, and the amount thereof at the end, of such calendar year, and (ii) during each portion, less than the whole, of a calendar year, one-twelfth, multiplied by the number of whole months included in such portion of a calendar year, of the Required Percentage of the arithmetical average of the amount of depreciable property of the Company at the beginning, and the 65 amount thereof at the end, of such portion of a calendar year. The term "Required Percentage" shall mean two and one-half per centum (2.50%) per annum, or such other percentage as at any time or from time to time hereafter, upon application of the Company, is authorized or approved by the Securities and Exchange Commission, or any successor commission thereto, under the Public Utility Holding Company Act of 1935, as amended. The term "amount of depreciable property" shall mean as of any date the amount of bondable property included at such date in plant accounts on the books of the Company and which is depreciable. Amounts included in plant acquisition adjustment accounts, or accounts of similar purpose, shall not be included in the amount of depreciable property if adequate provision for their amortization is made by current charges to income or surplus. The amount of any bonds purchased, paid or redeemed shall be deemed to be the principal amount thereof for purposes of Sections 4.02, 5.15(c) and 8.06 hereof. If in any calendar year the total expenditures for one or more of the foregoing purposes shall be in excess of the amount required by this Section to be expended in such year, the Company shall be entitled to be credited to the extent of such excess on account of amounts required under the provisions of this Section to be expended in any subsequent calendar year or years. For the purposes of this Section the __________ months' period beginning _____________, 1994[*] and ending December 31, 1995 shall be deemed to be a calendar year. Gross expenditures made by the Company on or after ___________, 1994[*] for bondable property may be certified to comply with the provisions of subparagraph (b) of this Section. No expenditures which shall have been made the basis for the authentication of bonds or the withdrawal of deposited cash or any other moneys or the release of property, under any provision of this Indenture, or which shall have been made with cash applied pursuant to any provision of this Section or of Section 4.04 or Section 8.06 hereof or which shall have been made out of any insurance moneys or moneys received from the condemnation, sale or other disposition of any of the Company's property subject to the lien of this Indenture or out of cash withdrawn under any provision of this Indenture, and no expen- ditures which shall have been previously used or certified or applied to comply with any requirement of this Section or with any other provision of this Indenture, shall be certified or be applied for the purpose of complying with this Section. On or before the first day of April in each year, beginning with April 1, 199_[***], the Company shall deliver to the Trustee an Officers' Certificate setting forth in reasonable detail (1) the amount of depreciable property of the Company at the beginning, and the amount thereof at the end, of the calendar year next preceding, the arithmetical average of those amounts, and the amount which is equal to the Required Percentage of such arithmetical average; (2) the amounts expended during such 66 preceding calendar year for any one or more of the purposes specified in subparagraphs (a), (b) and (c) of this Section which the Company desires and is entitled to have applied to the requirements of this Section for such year; and (3) such excess amounts, if any, as may have been expended for any one or more of such purposes in any preceding calendar year or years (not prior to __________, 1994[*]) which the Company desires, and is entitled, to have applied to the requirements of this Section for the calendar year next preceding the date of such certificate; and stating that no part of the amounts expended which the Company desires to have applied to the requirements of this Section for such year has been made the basis for the authentication of bonds or the withdrawal of deposited cash or any other moneys or the release of property, under any provision of this Indenture, or has been made with cash applied pursuant to any provision of this Section or of Section 4.04 or Section 8.06 hereof or has been made out of any insurance moneys or moneys received from the condemnation, sale or other disposition of any of the Company's property subject to the lien of this Indenture or out of cash withdrawn under any provision of this Indenture or has been previously used or certified or applied to comply with any requirement of this Section or with any other provision of this Indenture. If in any calendar year, the expenditures of the Company for any one or more of the purposes set forth in subparagraphs (a), (b) and (c) of this Section shall be less than the amount required by this Section to be expended for such purpose or purposes during such calendar year and if the Company shall not be entitled to take credit for such calendar year in the amount of such deficiency on account of excess expenditures made in some preceding year or years the Company shall pay in cash to the Trustee on or before April 1st next succeeding the expiration of such calendar year the amount of any remaining deficiency. All sums received by the Trustee under this Section shall be held by it as a part of the Trust Estate until paid out as hereinafter provided. In case the expenditures made by the Company for the purpose specified in subparagraph (b) of this Section shall, in any calendar year, exceed the amount required to be expended and certified to comply with the requirements of this Section for such year, any cash theretofore paid to the Trustee under the provisions of this Section and not withdrawn or applied under the provisions of Section 8.06 hereof, may be withdrawn by the Company upon delivery to the Trustee of an Officers' Certificate certifying the expenditures made for said purpose during such calendar year and showing that they were in excess of the expenditures required by this Section to be made in such calendar year and requesting the payment to or on the order of the Company of an amount of cash equal to the excess of said expenditures. Any sums received by the Trustee under this Section and not withdrawn under the provisions of this paragraph may be withdrawn or applied in accordance with the provisions of Section 8.06 hereof. 67 No expenditures certified or applied to the require- ments of this Section, and no bonds retired (by purchase, payment or redemption) through expenditures certified or applied to the requirements of this Section, shall be available as a basis for the authentication of bonds or the withdrawal of deposited cash or any other moneys or the release of property under, or to comply with, any provision of this Indenture. SECTION 5.16. To Comply With Indenture. The Company covenants that it will not issue, or permit to be issued, any bonds hereby secured in any manner other than in accordance with the provisions of this Indenture. ARTICLE VI BONDHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE SECTION 6.01. Company to Furnish Lists of Names and Addresses of Bondholders. The Company covenants and agrees that it will furnish or cause to be furnished to the Trustee between March 15 and April 1 and between September 15 and October 1 in each year beginning with the first such period after the date of this Indenture, and at such other times as the Trustee may request in writing, a list in such form as the Trustee may reasonably require containing all the information in the possession or control of the Company or of its paying agents, as to the names and addresses of the holders of bonds obtained since the date as of which the next previous list, if any, was furnished. Any such list may be dated as of a date not more than fifteen (15) days prior to the time such information is furnished or caused to be furnished, and need not include information received after such date; and, provided, that the Company need not furnish or cause to be furnished any such list with respect to bonds with respect to which the Trustee maintains the books for the registration and transfer of bonds as provided for in Section 2.05 hereof. SECTION 6.02. Current Lists of Bondholders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the holders of bonds (1) contained in the most recent list furnished to it as provided in Section 6.01 hereof, (2) received by it in the capacity of paying agent hereunder, or (3) filed with it within two preceding years pursuant to Section 313(c)(2) of the TIA. The Trustee may (1) destroy any list furnished to it as provided in Section 6.01 hereof upon receipt of a new list so furnished; (2) destroy any information received by it as paying agent upon delivering to itself as Trustee, not earlier than forty-five (45) days after an interest payment date of the bonds, a list containing the names and addresses of the holders of bonds obtained from such information since the delivery of the next previous list, if any; (3) destroy any list delivered to itself 68 as Trustee which was compiled from information received by it as paying agent upon the receipt of a new list so delivered; and (4) destroy any information received by it pursuant to the provisions of paragraph (2) of subsection (c) of Section 313 of the TIA, but not until two years after such information has been filed with it. (b) The Company, the Trustee and any paying agent shall not be held accountable by reason of any disclosure of information or the mailing of any material required to be disclosed or mailed by the TIA. SECTION 6.03. Company's Covenants as to Filing Reports. The Company shall file with the Trustee and the Securities and Exchange Commission, and shall cause to be transmitted to the holders of bonds, such information, documents and other reports, and such summaries thereof, as may be required pursuant to Section 314 of the TIA at the times and in the manner provided pursuant thereto; provided that any such information, documents or reports required to be filed with the Securities and Exchange Commission pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934, as amended, shall be filed with the Trustee within 15 days after the same is so required to be filed with said Commission. SECTION 6.04. Trustee's Reports. (a) The Trustee shall transmit, on or before April 1 in each year beginning with the year 199_[***], so long as any bonds of any series are Outstanding, to the bondholders and to the Company, such reports as may be required pursuant to, and in the manner required by, Section 313 of the TIA. (b) A copy of each such report shall, at the time of such transmission to bondholders, be filed with each stock exchange upon which the bonds are listed and also with the Securities and Exchange Commission. The Company will notify the Trustee when any bonds are listed on any stock exchange. (c) The provisions of this Section which have been made specifically applicable to the Trustee shall apply to the Trustee and, if a separate or co-trustee is appointed pursuant to Section 14.18 hereof, to any separate or co-trustee to the extent consistent with the rights, powers, duties and obligations conferred or imposed upon such separate or co-trustee by the supplemental indenture appointing such separate or co-trustee. Notwithstanding any of the provisions of this Section which require any separate or co-trustee appointed pursuant to Section 14.18 hereof to transmit reports to the bondholders and to file such reports with each stock exchange upon which the bonds are listed and also with the Securities and Exchange Commission, such separate or co-trustee may, if it or he or she so elects, furnish to the Trustee all information concerning such separate or co-trustee which such separate or co-trustee is required to report, and the Trustee shall transmit and file such information, 69 in accordance with the provisions of this Section, on behalf and at the expense of such separate or co-trustee; provided, however, that, subject to the provisions of Article XIV hereof, the Trustee shall not be responsible for the accuracy or completeness of any such information or for the failure of any such separate or co-trustee to report or to furnish any such information. In the event that any such separate or co-trustee shall elect to furnish information to the Trustee in accordance with the provisions of this subsection (c), the information required pursuant to this Section shall be furnished to the Trustee in writing not less than fifteen (15) days before the report is required to be made by the Trustee or within sixty (60) days after the taking by any such separate or co-trustee of any action required to be reported, as the case may be. (d) For the purpose of this Section, all bonds which have been authenticated and delivered and not returned to the Trustee and cancelled shall be deemed to be Outstanding. ARTICLE VII REDEMPTION AND PURCHASE OF BONDS SECTION 7.01. Exercise of Option to Redeem. Such of the bonds of any series issued and authenticated hereunder as are, by their terms, redeemable before maturity may, at the option of the Company or pursuant to the requirements of this Indenture (including any supplemental indentures), be redeemed at such times, in such amounts and at such prices as may be specified herein or therein and in accordance with the provisions of the succeeding Sections of this Article. SECTION 7.02. Notice of Redemption. If less than all the bonds of any series are to be redeemed, the particular bonds to be redeemed shall be selected by the Trustee from the bonds of such series which have not previously been called for redemption, by such method as the Trustee shall deem fair and appropriate. Notwithstanding the foregoing, special provisions for the selection of the particular bonds to be redeemed within a particular series may be provided by a supplemental indenture to this Indenture. Unless otherwise provided as to a particular series of bonds, notice of intention to redeem to the holder of any bond which is to be redeemed in whole or part shall be mailed by or on behalf and at the expense of the Company not less than thirty (30) days before the date fixed for redemption to such holder at his or her last address appearing upon the registry books. Failure to duly give such notice to the holder of any bond designated for redemption in whole or part shall not affect the validity of the proceedings for the redemption of any other bond. 70 The Trustee, upon a request signed by the President or a Vice President of the Company evidenced by a Resolution delivered to the Trustee at least five business days prior to the date on which notice of redemption must first be published or mailed (unless a shorter notice shall be accepted by the Trustee as sufficient) shall, for and on behalf and at the expense of and in the name of the Company, call for redemption bonds secured hereby (whether or not the Trustee shall hold at the time of such call cash sufficient for such redemption). Once notice of redemption is given (and accepted by the holder, in the case of a redemption pursuant to Section 4.01B(c) hereof), the bonds called for redemption shall become due and payable on the redemption date specified in such notice. Any notice of redemption mailed to holders of bonds shall specify the offices or agencies of the Company where the bonds may be surrendered for redemption and payment and that, unless the Company defaults in making the redemption payment, interest shall cease to accrue on and after the redemption date. Notwithstanding the foregoing, with respect to a redemption pursuant to Section 4.01B(c) hereof, there shall be mailed by or on behalf and at the expense of the Company not less than thirty (30) days before the date fixed for redemption an offer to redeem in the manner set forth above to the holders of bonds set forth in Section 4.01B(c). Any such holder electing to have his or her bonds redeemed by the Company pursuant to said Section shall so notify the Company five business days prior to the date fixed for redemption, and the Company shall redeem such bonds in the manner set forth in this Article. SECTION 7.03. Deposit of Cash to Redeem. If the Company shall complete the giving of the required notice of its intention to redeem any bonds so redeemable, the Company shall, and it hereby covenants that it will, on or before the date fixed for redemption as specified in such notice, deposit with the Trustee, irrevocably in trust for the purpose, a sum of cash sufficient to redeem all such bonds so to be redeemed on such date or irrevocably direct the Trustee to apply from cash held by it, available to be used for the redemption of bonds, a sum of cash sufficient to redeem such bonds. If the Company shall fail so to deposit or direct the application of the cash for the redemption of said bonds, such failure shall constitute a default under this Indenture and the said bonds so called for redemption shall immediately become due and payable, and the holders of said bonds shall be entitled to receive and the Company shall be obligated to pay the redemption price of said bonds, including accrued interest, and thereupon and without the lapse of any period of time all the remedies provided for in Article IX hereof 71 with respect to a default in the payment of principal of bonds Outstanding hereunder shall be available to and enforceable by the Trustee. SECTION 7.04. Payment of Bonds Called for Redemption and Cessation of Lien. All cash deposited by the Company with the Trustee for the redemption of bonds or which the Company directs shall be applied by the Trustee to the redemption of bonds shall, subject to the provisions of Section 11.03 hereof, no longer be a part of the Trust Estate, but shall be held in trust solely for account of the holders of the bonds so to be redeemed, and shall be paid to them, upon presentation and surrender of said bonds properly endorsed for transfer. On or after the date fixed for redemption, if the cash necessary for the redemption of the bonds to be redeemed shall be held by the Trustee for such purpose, such bonds shall cease to bear interest and shall cease to be entitled to the lien of this Indenture, and, as respects the Company's liability thereon, such bonds shall be deemed to have been paid. If any bond shall be called for redemption in part only, the notice of redemption shall specify the principal amount thereof to be redeemed, and such bond shall be presented for cancellation properly endorsed for transfer at or after the date fixed for the redemption of said bond so called for redemption, and thereupon the payment with respect to said bond shall be made upon surrender of said bond so endorsed, and bonds for the unpaid balance of the principal amount of the bond so presented and surrendered shall be executed by the Company and authenticated and delivered by the Trustee without charge therefor to the holder thereof. SECTION 7.05. Bonds to be Cancelled. All bonds issued hereunder paid, retired or redeemed under any of the provisions of this Indenture or purchased by the Trustee as provided in Section 8.06 hereof shall forthwith be cancelled by the Trustee. ARTICLE VIII POSSESSION, USE AND RELEASE OF MORTGAGED PROPERTY SECTION 8.01. Company to Possess Property Until Default; Disposal of Certain Property Without Release. Prior to the occurrence of any default, as defined in Section 9.01, and after default if such default shall have been cured, or shall have been waived as provided in Section 9.03, the Company shall be suffered and permitted by the Trustee to remain in full possession, enjoyment and control of all the properties, rights, privileges and franchises hereby mortgaged (other than any cash and securities deposited or pledged hereunder) and shall be permitted to manage and operate the same, and subject always to the observance of the covenants in this Indenture with respect 72 thereto, to receive, receipt for, take, use, enjoy and dispose of all rents, tolls, earnings, surplus, profits, revenues and income thereof, to modify and/or terminate its contracts, rights, permits, privileges and/or franchises and to make changes in the location of its lines, structures and equipment in the same manner and with the same effect as if this Indenture had not been made. The Company may at all times and from time to time so long as it shall remain in possession of the Trust Estate, without any release by the Trustee: (i) demolish, dismantle, tear down or use for scrap any property in the Trust Estate, or abandon any thereof other than land and interests in land, provided that such action is, in the opinion of the President or a Vice President of the Company (or of the Board of Directors where such action is material to the Company), in the best interests of the Company and the value and utility of the Trust Estate as an entirety and the security for the bonds will not thereby be impaired; (ii) sell or otherwise dispose of, free from the lien of this Indenture, any part of the Trust Estate which, in the opinion of the President or a Vice President of the Company (or of the Board of Directors where such action is material to the Company), shall have become old, worn out, obsolete, inadequate, unfit, unnecessary or unadapted for use in the operation of the Company; (iii) abandon, terminate, cancel, release or make alterations in or substitutions of any and all leases and rights-of-way grants, provided that such action is, in the opinion of the President or a Vice President of the Company (or of the Board of Directors where such action is material to the Company), in the best interests of the Company; (iv) surrender or assent to the modification of any right, power, franchise, license, governmental consent or permit which it may hold or under which it may be operating, provided that such surrender or modification is, in the opinion of the President or a Vice President of the Company (or of the Board of Directors where such action is material to the Company), in the best interests of the Company; and (v) grant rights-of-way and easements over or in respect of any property-owned by the Company, provided that such grant will not, in the opinion of the President or a Vice President of the Company (or of the Board of Directors 73 where such action is material to the Company), materially impair the usefulness of such property in the conduct of the Company's business and will not be unduly prejudicial to the interests of the holders of the bonds. SECTION 8.02. Trustee to Release Property Upon Certain Conditions. The Company may at any time and from time to time so long as it remains in possession of the Trust Estate sell or otherwise dispose of any other property of the Company (including pledged securities) which shall be subject to the lien of this Indenture (but as to securities pledged under this Indenture pursuant to the provisions of Article XV hereof, subject to the provisions of any instrument executed for the purpose of or in connection with the subjecting of such securities to the lien hereof) and the Trustee shall release the same from the lien hereof upon receipt by the Trustee of the following: 1. A copy of a Resolution reasonably identifying, and requesting the release of, the property to be released; 2. An Engineer's Certificate, which shall be made and signed by an Independent Engineer if required by the provisions of Section 314(d) of the TIA, which certificate: (a) shall state that the Company has sold or otherwise disposed of, or has contracted to sell or otherwise dispose of, the property to be released, describing the same in reasonable detail and stating the fair value thereof, as of a date within ninety days prior to the delivery of such certificate to the Trustee, as determined by such Engineer or Independent Engineer, as the case may be; (b) shall show, in reasonable detail, the amount and character of the consideration to be received by the Company for the property to be released, which consideration (subject to the provisions of this Section) may be cash, purchase money obligations secured by first lien upon the property to be released, or other property constituting bondable property as defined in Section 4.03 hereof; (c) if all or any part of such consideration shall consist of purchase money obligations secured by first lien upon the property to be released, shall state that such purchase money obligations are subject to no liens of record for the payment of cash except Excepted Encumbrances and Prepaid Liens and, if the property to be released is electric utility property, that the principal amount of such purchase money obligations does not exceed sixty-six and two-thirds 74 per centum (66-2/3%) of the fair value of such property (as stated in such certificate) and that such purchase money obligations constitute the entire amount of the purchase money obligations secured by lien upon such property and that the principal amount of all such purchase money obligations, together with the principal amount of all other purchase money obligations, if any, then held by the Trustee and secured by lien upon electric utility property previously released, does not exceed in the aggregate fifteen per centum (15%) of the principal amount of the bonds then outstanding under this Indenture; (d) if all or any part of the consideration to be received by the Company for the property to be released shall consist of other property, shall reasonably identify such property and shall state the fair value to the Company of such property as of a date within ninety days prior to the delivery of such certificate to the Trustee, as determined by the Engineer or Independent Engineer, as the case may be, signing the certificate, and that such property constitutes bondable property as defined in Section 4.03 hereof; (e) shall show the consideration to be received by the Company for the property to be released, taking any purchase money obligations included in such consideration at their face value and any property included in such consideration at the fair value thereof to the Company as shown by said certificate, is not less than the fair value (as shown by said certificate) of the property to be released; and (f) shall state that the retention of the property to be released is no longer desirable in the conduct of the business of the Company or that other property to be acquired, in the case of exchange, is not less suited to the needs of the business of the Company than the property to be released, and in each case, that the security afforded by this Indenture will not be impaired by such release. 3. Any cash or purchase money obligations stated in said certificate to have been or to be received in consideration for the property requested to be released, or the certificate of the trustee under any mortgage constituting a prior lien upon the property to be released stating that it has received such cash or purchase money obligations; and, if real estate or other property is included in the consideration for the property to be released, such deeds or other instruments of conveyance, 75 assignment, transfer or release as are sufficient, in the Opinion of Counsel, to subject the same to the lien of this Indenture with at least the same degree of priority which it possessed as a lien on the property to be released, or an Opinion of Counsel to the effect that no deeds or other instruments of conveyance, assignment or transfer are necessary to subject the same to the lien of this Indenture in the manner stated; 4. An Opinion of Counsel stating in effect that in his or her opinion any purchase money obligations included in such consideration and the mortgage or other instrument securing the same are valid instruments and that such mortgage or other instrument constitutes a first lien upon the property released subject to no liens or encumbrances prior in lien thereto except Excepted Encumbrances and Prepaid Liens, and that all conditions and requirements of this Indenture relating to the release of the property requested to be released have been complied with; and 5. A certified copy of a certificate or order of each public service commission or other governmental agency of the United States of America, or of any state or states thereof, if any, then having jurisdiction over the Trust Estate, together with an Opinion of Counsel to the effect that such certificates or orders are such as are required to be obtained in connection with the sale, exchange or other disposition of the property to be released and that no certificate, consent or authorization of any other commission or agency is required therefor or for the release of said property, or, in the alternative, an Opinion of Counsel to the effect that no certificate, consent or authorization of any such commission or agency is required in the premises. In rendering the aforementioned Opinions of Counsel, counsel may, to the extent such counsel deems necessary, express the same qualifications and assumptions permitted in connection with the Opinions of Counsel to be given pursuant to Section 4.06 hereof and may rely upon the same type of abstracts, affidavits, certificates, statements and investigations as mentioned in the definition of "title" contained in this Indenture. Any new property acquired by the Company by exchange, purchase, or otherwise, to take the place of any property released from the lien of this Indenture, shall forthwith and without further conveyance be and become subject to the lien and be covered by this Indenture, but if requested by the Trustee the Company shall convey the same to the Trustee by proper deeds upon the trusts and for the purposes of this Indenture. 76 SECTION 8.03. Eminent Domain. If any property is taken by condemnation proceedings, the Trustee may accept any award made therein, if approved by the Company as representing its full value, and, if such award is accepted by the Trustee, it shall, if requested by the President or a Vice President of the Company evidenced by a Resolution, execute and deliver a release of the property so taken upon receipt by the Trustee of the consideration therefor, after deducting from the amount thereof the amount of any assessments levied on property of the Company in connection with such condemnation proceedings unless some other disposition thereof is required in connection with a Prior Lien. In any such proceedings the Trustee may be represented by counsel, who may be counsel for the Company, and either the Company or the Trustee may appeal from any judgment, order or decree in such proceedings. SECTION 8.04. Rights of Purchaser of Released Property. No purchaser in good faith of property purporting to be released hereunder shall be bound to ascertain the authority of the Trustee to execute the release or to inquire as to any facts required by the provisions hereof for the exercise of such authority; nor shall any purchaser of machinery or equipment be under obligation to ascertain or inquire into the existence of any fact on which any such sale is hereby authorized. SECTION 8.05. Receiver or Trustee May Exercise Company's Rights. In case any of the Trust Estate shall be in the possession of a receiver or trustee appointed in judicial proceedings, the powers hereinbefore conferred upon the Company with respect to the sale or other disposition of property covered by this Indenture may be exercised by such receiver or trustee and, in any such event, the certificates provided by this Article to be executed by officers of the Company shall be executed by such receiver or trustee; and if the Trustee shall be in possession of any of the Trust Estate under any provision of this Indenture, then such powers may be exercised by the Trustee in its discretion. SECTION 8.06. Withdrawal, Use and Application of Cash Deposited with Trustee. All cash received by the Trustee as proceeds of released property or of property taken by the power of eminent domain or as insurance money, and all other cash received by the Trustee which, under any other provisions of this Indenture, are required to be paid out or disposed of under the provisions of this Article, shall be paid over from time to time by the Trustee to the Company, at its request, to reimburse the Company to the extent of one hundred per centum of (a) the sum of (i) $_______ [**] in respect of expenditures for bondable property constructed or otherwise acquired by the Company prior to ______, 1994[*] (as specified in the first sentence of Section 4.03 hereof) and (ii) net expenditures for bondable property (as 77 defined in Section 4.03 hereof) upon which this Indenture is a first lien subject only to Excepted Encumbrances and Prepaid Liens made by it at any time on or subsequent to __________, 1994[*], which have not been used as the basis for the authentication of bonds or the withdrawal of deposited cash hereunder, and whether prior or subsequent to the receipt of such cash by the Trustee, or (b) expenditures for repairs or replacements of or substitutions for property damaged or destroyed as a result of hazards or risks insured against (to the extent that insurance moneys arising from such loss are then held by the Trustee). Such payments shall be made by the Trustee upon receipt by it of: (1) A request in writing signed by the President or a Vice-President and by the Treasurer or an Assistant Treasurer of the Company for the payment of the amount of cash stated therein; (2) An Officers' Certificate setting forth: (a) (i) the remaining amount of the $________[**] in respect of expenditures for bondable property constructed or otherwise acquired by the Company prior to _______, 1994[*] (as specified in the first sentence of Section 4.03 hereof), taking into account the aggregate principal amount of bonds issued with respect thereto under Section 4.03 hereof, and (ii) that on or subsequent to __________, 1994, the Company has acquired bondable property (as defined in Section 4.03 hereof), briefly describing the same and separately describing any purchased property, and showing the gross and the net expenditures (as defined in Section 4.03 hereof) therefor, and that such net expenditures were usable, but have not been used, as a basis for the authentication of bonds under this Indenture, or has made certain repairs or replacements of or substitutions for property damaged or destroyed as a result of hazards or risks insured against (describing the same with reasonable detail), and that such bondable property or such repairs, replacements or substitutions, as the case may be, are subject to the lien of this Indenture and are not subject to any liens or encumbrances equal or prior in lien to this Indenture except Excepted Encumbrances and Prepaid Liens; (b) that the Company has made net expenditures for such bondable property, or has made expenditures for repairs or replacements of or substitutions for property damaged or destroyed as a result of hazards or risks insured against, in the amount specified in the certificate; 78 (c) that no part of any such net expenditures for such bondable property or of any such expenditures for repairs or replacements of or substitutions for property damaged or destroyed as a result of hazards or risks insured against, as the case may be, has been previously used as a basis for the authentication of any bonds or for the withdrawal of deposited cash or any other moneys or for the release of any property under any provision of this Indenture or has been made out of insurance moneys or out of the proceeds of the sale, condemnation or other disposition of any property of the Company subject to the lien of this Indenture, or has been used or applied or certified to the Trustee to comply with any maintenance or renewal requirements contained in this Indenture or to comply with the provisions respecting any sinking fund or analogous fund created hereafter pursuant to the terms of this Indenture, or, in the alternative, that the provisions relating to any such fund do not preclude the use of any such expenditures as a basis for the withdrawal of cash under this Section; (d) that the Company is not, to the knowledge of the officers signing the certificate, in default in any of the terms, covenants or conditions of this Indenture; and (e) that in the opinion of the officers signing the certificate, all conditions and requirements of this Indenture relating to the withdrawal of the cash requested to be withdrawn have been complied with. (3) (a) An Engineer's Certificate signed by an Engineer (conforming to the requirements of Section 4.03 hereof) certifying to the fair value to the Company, at a date within ninety days prior to the date of the delivery of such certificate to the Trustee, of the bondable property (except purchased property if any be included in such bondable property and except repairs or replacements of or substitutions for property damaged or destroyed as a result of hazards or risks insured against) described in the certificate required by subparagraph (2) above and on account of which cash is requested to be withdrawn; and (b) An Engineer's Certificate signed by an Engineer or an Independent Engineer (conforming to and as may be required by the provisions of Section 4.03 hereof) certifying to the fair value to the Company, at a date within ninety days prior to the date of the delivery of such certificate to the Trustee, of any purchased property (on account of which cash is requested to be withdrawn) described in the certificate required by subparagraph (2) above and also the fair value to the Company of such purchased property at the time of its acquisition; 79 (4) An Opinion of Counsel (a) stating that in his or her opinion the Company has acquired substantially good title to, and has lawful power to own, any bondable property described in the certificate required by subparagraph (2) above (unless the bondable property described in such certificate shall have been covered by an Opinion of Counsel theretofore filed with the Trustee) and that such bondable property is subject to the lien of this Indenture and is not subject to any liens or encumbrances equal or prior in lien to this Indenture, except Excepted Encumbrances and Prepaid Liens, and (b) stating that in his or her opinion all conditions and requirements of this Indenture relating to the withdrawal of the cash requested to be withdrawn have been complied with; and (5) All such deeds, conveyances, transfers or instruments of further assurance as may be necessary for the purpose of effectually subjecting such bondable property to the direct lien and operation of this Indenture, together with an Opinion of Counsel that the same are sufficient for the purpose, or an Opinion of Counsel that no such deeds, conveyances, transfers or instruments are necessary for such purpose. In rendering the aforementioned Opinions of Counsel, counsel may, to the extent such counsel deems necessary, express the same qualifications and assumptions permitted in connection with the Opinions of Counsel given pursuant to Section 4.06 hereof. All or any part of any such cash in the hands of the Trustee and not theretofore paid over or requested to be paid over to reimburse the Company as aforesaid shall, in accordance with a request in writing signed by the President or a Vice- President and by the Treasurer or an Assistant Treasurer of the Company, be applied by the Trustee (i) to the redemption of bonds of any series specified in such request (if they are then redeemable) issued hereunder and Outstanding or (ii) to the purchase of such bonds at not exceeding their current redemption price if they are then redeemable, or, if they are not then redeemable, at not exceeding the price at which they are next thereafter redeemable, or, if they are never redeemable, at not exceeding 110% of the principal amount thereof and accrued interest. Any bonds redeemed or purchased pursuant to the foregoing provisions hereof shall be cancelled and destroyed by the Trustee and a certificate of such destruction shall be delivered to the Company and no other bonds shall be issued, nor shall any deposited cash or any other moneys be withdrawn, under any provision of this Indenture by reason of the redemption or purchase and cancellation of such bonds, nor shall such bonds be applied or certified for the purpose of complying with any maintenance or renewal requirements or any other provisions of this Indenture. The Company covenants and agrees that it will 80 from time to time upon request of the Trustee immediately pay to the Trustee, to be held and disposed of pursuant to the provisions of this Section and Article VII hereof, an amount in cash equal to the accrued interest and the premium, if any, paid or required to be paid by the Trustee in purchasing or redeeming bonds of the Company pursuant to the provisions of this Section. The provisions of this Section shall not apply to any cash at any time deposited with the Trustee hereunder for the purpose of purchasing, redeeming and/or discharging any obligations secured by any mortgage equal or prior in lien to this Indenture upon any property now or hereafter owned by the Company, but all such cash shall be held and applied by the Trustee to the purposes for which the same were deposited and in accordance with the terms and provisions under which the same were deposited. ARTICLE IX REMEDIES IN EVENT OF DEFAULT SECTION 9.01. Defaults. The following events are hereby defined for all purposes of this Indenture (except where the term is otherwise defined for specific purposes) as "defaults": (a) Failure to pay the principal or premium, if any, of any bond hereby secured when the same shall become due and payable, whether at maturity, as therein expressed, upon redemption, or by declaration or otherwise; (b) Failure to pay interest upon any bond hereby secured for a period of sixty (60) days after such interest shall have become due and payable; (c) Failure to pay any installment of any sinking fund for a period of sixty (60) days after the same shall have become due and payable; (d) The entry by a court of competent jurisdiction of an order or decree under the Federal Bankruptcy Code or any other applicable federal or state law of a similar nature that (i) is an order for relief against the Company in an involuntary case or proceeding, (ii) appoints a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of or for the Company or any substantial part of its property or (iii) orders the liquidation of the Company or winding up of its affairs; and in the case of (i), (ii) or (iii) the order or decree remains unstayed and in effect for ninety (90) days. 81 (e) The commencement by the Company of a voluntary case, or the institution by it of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization, arrangement or relief under the Federal Bankruptcy Code or any other applicable Federal or State law of a similar nature, or the consent or acquiescence by it to the filing of any such petition or the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action; or (f) Failure to perform any other covenant, condition or agreement contained herein or in any supplemental indenture or in any bond issued hereunder for a period of ninety (90) days following the mailing by the Trustee to the Company of a written demand that such failure be cured, such failure not having been cured in the meantime. The Trustee may, and if requested in writing so to do by the holders of a majority in principal amount of the bonds then Outstanding as provided in Article X, shall, make such demand. SECTION 9.02. Notice of Defaults. The Trustee and, if a separate or co-trustee is appointed pursuant to Section 14.18 hereof, such separate or co-trustee shall, within ninety (90) days after the occurrence thereof, give to the bondholders, in the manner and to the extent provided in Section 6.04(a) hereof, notice of all defaults known to the Trustee or to such separate or co-trustee, as the case may be, unless such defaults shall have been cured before the giving of such notice (the term "defaults" for the purposes of this Section being hereby defined to be the events specified in subsections (a), (b), (c), (d), (e) and (f) of Section 9.01 hereof, provided that, except in the case of default in the payment of the principal of, premium, if any, or interest on any of the bonds hereby secured, or in the payment of any sinking or purchase fund installment, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trustee committee of directors and/or Responsible Officers, of the Trustee in good faith determine that the withholding of such notice is in the interests of the bondholders and any separate or co-trustee shall be protected in withholding such notice if and so long as such separate or co-trustee in good faith determines that the withholding of such notice is in the interests of the bondholders. 82 SECTION 9.03. Acceleration of Maturity Date. Upon the occurrence of a default, the Trustee may, and upon the written request of the holders of a majority in principal amount of the bonds then Outstanding shall, by notice in writing mailed or delivered to the Company, declare the principal of all the bonds then Outstanding and the interest accrued thereon to be due and payable immediately; and upon any such declaration the same shall become and be immediately due and payable, anything contained in this Indenture or in said bonds to the contrary notwithstanding. This provision is, however, subject to the condition that if at any time after the principal of the bonds shall have been declared due and payable, the holders of a majority in aggregate principal amount of all bonds then Outstanding, by written notice to the Company and to the Trustee, may rescind such declaration and annul such default and its consequences (except defaults under subparagraphs (a) and (b) of Section 9.01 hereof), but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default, or shall impair any right consequent thereon. SECTION 9.04. Right of Entry and Application of Proceeds Received by Trustee. Upon the occurrence of a default, the Company, upon demand of the Trustee (which demand the Trustee shall not be obligated to make), shall (if at the time such action shall be lawful) forthwith surrender to the Trustee the actual possession of and the Trustee (if at the time such action shall be lawful), by its agents or attorneys, may forthwith enter into and upon all or any part of the Trust Estate, and may exclude the Company, its agents and attorneys, wholly therefrom and may use, operate, manage, and control the same, and conduct the business thereof, by agents or attorneys, for the benefit of the holders of the bonds issued hereunder, to the fullest extent authorized by law. Upon every such entry, the Trustee may, from time to time, at the expense of the Trust Estate and of the Company, maintain, restore and insure or keep insured, the tools, machinery, equipment, plants or other properties, buildings and structures of which possession shall be taken as aforesaid; and likewise may, from time to time, at the expense of the Trust Estate and of the Company, make all necessary or proper repairs, renewals, replacements, alterations, additions, betterments and improvements thereto and thereon, as to the Trustee may seem judicious. The Trustee, in case of such entry, shall have the right to manage the Trust Estate and to carry on the business and to exercise all the rights, privileges and franchises of the Company, either in the name of the Company or otherwise as the Trustee shall deem best. In such case the Trustee shall be entitled to collect and receive all tolls, rents, revenues, issues, earnings, income, products and profits of the Trust Estate and of every part thereof whether accrued at or before the time of such entry or accruing thereafter, and out of the same 83 pay all proper costs and expenses of operating the Trust Estate and of conducting the business thereof, and of all repairs, maintenance, renewals, replacements, alterations, additions, betterments and improvements and all payments which may be made for taxes, assessments, insurance and other proper charges upon the Trust Estate, or any part thereof, as well as reasonable compensation for its own services and for the services of all counsel, agents and attorneys properly engaged and employed by it, and all other expenses and liabilities incurred without negligence or bad faith on the part of the Trustee and disbursements made by the Trustee hereunder. The Trustee shall apply the remainder of the cash arising as aforesaid after payment of the costs and expenses provided for in the preceding sentence, subject to the provisions of Section 5.02 hereof, first to the payment of the installments of interest which are due and unpaid (and accrued interest thereon pursuant to Section 9.09 hereof), in the order of their maturity, and next, if the principal of any of said bonds is due, to the payment of the principal (and accrued interest thereon pursuant to Section 9.09 hereof) pro rata without any preference or priority whatever, except as aforesaid. Whenever all that is then due upon such bonds and installments of interest and under any of the terms of this Indenture, notwithstanding any acceleration initiated pursuant to Section 9.03 hereof, shall have been paid and all defaults cured or waived, the Trustee shall surrender possession of the Trust Estate to the Company, its successors or assigns; the same right of entry, however, to exist upon any subsequent default. SECTION 9.05. Power of Sale Upon Default. Upon the occurrence of a default, the Trustee shall, in its discretion, be entitled with or without entry, either personally or by its agent or attorneys, to sell, in the manner provided in Section 9.06 hereof and subject to the provisions of applicable law in the jurisdiction in which the Trust Estate is situated, all and singular the Trust Estate, including all shares of stock and all bonds or other securities then pledged hereunder, or, in its discretion, the Trustee may forthwith proceed to protect and enforce its rights and the rights of the holders of the bonds under this Indenture by a suit or suits in equity or at law, for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or for the foreclosure of this Indenture by nonjudicial exercise of the Trustee's power of sale in the manner provided in Section 9.06 hereof and as otherwise provided for herein, for interest, principal or premium, or for the enforcement of any other appropriate legal or equitable remedy, as the Trustee, being advised by counsel, shall deem most effectual in support of any 84 of its rights or duties hereunder. The court may appoint a special master to make any sale under or by virtue of the power of sale herein contained, or by virtue of judicial proceedings, or of any judgment or decree of foreclosure. SECTION 9.06. Notice of Sale and Manner of Making Same. In the event of any sale under or by virtue of the power of sale herein contained, or by virtue of judicial proceedings, or by virtue of any judgment or decree of foreclosure and sale thereunder, the whole of the Trust Estate, excluding all stocks, bonds and other securities which may be pledged under this Indenture, shall be sold in one parcel, as an entirety, unless such sale as an entirety be impracticable by reason of some statute or other cause, or unless the holders of a majority in aggregate principal amount of all the bonds then Outstanding shall in writing direct the Trustee to cause said Trust Estate, or any part thereof, to be sold in parcels; in which case, so far as lawfully may be, the sales shall be made in such parcels as may be specified in such direction. Notice of any sale or sales made under the power of sale herein conferred shall state the time and place when and where the same is to made, and shall contain a brief description of the properties to be sold, and shall be published once in each week (in each case upon any day of the week) for four consecutive weeks prior to such sale in at least one Daily Newspaper of general circulation in each of the cities in which the principal of any of the bonds is payable; and in such other manner as may be required by law in the jurisdiction in which the Trust Estate is situated, and such other notice shall also be given as may be required to comply with any applicable statute, rule of law or order or rule of any court. The Trustee may adjourn any sale under the power of sale herein contained, or cause the same to be adjourned, from time to time, by announcement at the time and place fixed for such sale or sales; and, without further notice or publication, such sale may be made at the time and place to which the same shall be so adjourned, unless otherwise provided by law. In case of any sale of the Trust Estate, or any part thereof, under the provisions of this Indenture, the whole of the principal of the bonds, together with accrued interest thereon, if not previously due, shall become immediately due and payable, anything contained in the bonds or in this Indenture to the contrary notwithstanding. Upon the completion of any sale or sales, the Trustee shall execute and deliver to the accepted purchaser or purchasers a deed or deeds of the properties sold, or shall execute and deliver, in conjunction with the deed or deeds of the court officer conducting such sale, a conveyance of the interests of the Trustee in such properties. The Trustee and its successors and assigns are hereby appointed the true and lawful attorney or 85 attorneys irrevocably by the Company in its name and stead to make, execute and deliver all necessary deeds and acts of conveyance, sale, assignment and transfer of such properties, and to substitute one or more persons or corporations with like power, the Company hereby ratifying and confirming all that its said attorney, attorneys or substitutes shall lawfully do or cause to be done by virtue hereof. Nevertheless, the Company shall, if so requested by the Trustee, ratify and confirm such sale by executing and delivering to the Trustee, or to such purchaser or purchasers, all such proper assignments, deeds, conveyances and releases as may be designated in such request. In any deeds or instruments of conveyance, sale or transfer executed by the Trustee under this Article, the recitals therein of default, demand that sale be made, notice of sale, postponement of sale, terms of sale, sale, purchaser, payment of purchase money and any other fact or facts affecting the legality or validity of such sale, shall be effectual and conclusive proof of the facts related therein as against the Company, its successors and assigns and all other persons. Any such sale made under or by virtue of this Indenture, either under the power of sale hereby granted and conferred or under or by virtue of judicial proceedings, shall divest all right, title, interest, estate, claim and demand whatsoever, either at law or in equity, of the Company in, of or to the properties sold and every part thereof and shall be a perpetual bar, both at law and in equity, against the Company, its successors and assigns, and against any and all persons claiming or who may claim the properties sold, or any part thereof, from, through or under the Company, its successors or assigns, respectively. Section 9.06A. Operation of Power of Sale. Upon the occurrence of a default, should the Trustee determine in its discretion or be directed pursuant to the terms hereof to foreclose by exercise of the nonjudicial power of sale herein contained, (a) the Trustee shall cause to be recorded, published and delivered to the Company such notice of default and notice of Trustee's intention to sell the Trust Estate, as may be required under the provisions of applicable law in the jurisdiction(s) in which the Trust Estate is situated ("Notice of Trustee's Sale"). The Trustee shall, without demand on the Company, after lapse of such time as may then be required by applicable law and after recordation of such Notice of Trustee's Sale having been given as and if required by applicable law, sell the Trust Estate at the time and place of sale fixed by it in said Notice of Trustee's Sale, either as a whole, or in separate lots or parcels or items as the Trustee shall deem expedient pursuant to the terms hereof, and in such order as it may determine, at public auction to the highest bidder for cash 86 in lawful money of the United States payable at the time of sale. The Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including, without limitation, the Company, the Trustee or the bondholders, may purchase at such sale and, if permitted by applicable law, may credit the amount of the bid against the amount of any indebtedness secured hereby and held by such purchaser. (b) Subject to the provisions hereof and that of applicable law, the Trustee may postpone the sale of all or any portion of the Trust Estate by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement or subsequently noticed sale, and without further notice make such sale at the time fixed by the last postponement, or may, in its discretion, give a new notice of sale. (c) It is the express understanding and intent of the parties that as to any personal property interests conveyed to the Trustee as security under this Indenture, the Trustee may, consistent with its rights and obligations hereunder and under applicable law, proceed as to both real and personal property interests within the Trust Estate in accordance with the provisions of this Indenture and its rights and remedies under applicable law in respect to real property, and treat both real and personal property interests of the Trust Estate as one parcel or package or security. SECTION 9.07. Application of Proceeds of Sale. In case of any sale of the Trust Estate, or any part thereof, whether under the power of sale hereby granted or pursuant to judicial proceedings, the purchase money, proceeds or avails, together with any other sums which may then be held by or be payable to the Trustee under any of the provisions of this Indenture as part of the security hereunder, other than sums held in trust for the payment or redemption of bonds or for the payment of interest thereon, shall be applied, subject to the provisions of applicable law in the jurisdiction in which the Trust Estate is situated, subject to the provisions of Section 5.02 hereof, as follows: FIRST. To the payment of all taxes, assessments, governmental charges, Excepted Encumbrances and Prior Liens permitted under the Indenture, and of all the costs, expenses, fees, and other charges of such sale, and a reasonable compensation to the Trustee, its agents and 87 attorneys, and to the payment of all expenses and liabilities incurred without negligence or bad faith on the part of the Trustee and advances or disbursements made by the Trustee in connection with the management or administration of the trusts hereby created; SECOND. To the payment in full of the amount then due and unpaid either for principal or interest, or for both principal and interest (and accrued interest thereon pursuant to Section 9.09 hereof) upon the bonds issued hereunder then Outstanding, and in case such proceeds shall be insufficient to pay in full the whole amount so due and unpaid, then to the payment thereof ratably, according to the aggregate of such principal and the accrued and unpaid interest, without preference or priority of any one series over any other series of bonds, or of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, except as to the difference, if any, in the respective rates of such interest; THIRD. To the payment of any premium (and accrued interest thereon pursuant to Section 9.09 hereof) on any bonds called for redemption and with respect to which default was made in the payment of the redemption price, ratably and without preference or priority of any one series over any other, except as to the rates of premium; and FOURTH. The remainder, if any, shall be paid over to the Company, its successors or assigns, or to whomsoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct. Before making any such payment, the Trustee may fix a date for the distribution of such cash and may require the presentation of the several bonds and their surrender if fully paid or for proper notation if only partly paid. SECTION 9.08. Purchaser at Sale May Use Bonds as Payment. In case of any sale of the Trust Estate or any part thereof, subject to applicable law in the jurisdiction in which the Trust Estate or such part thereof is situated, the purchaser, for the purpose of making settlement or payment for the property purchased, shall be entitled to apply towards the payment of the purchase price the portion of the principal of any bonds issued under this Indenture plus the portion of any matured claims for interest to which such bonds and claims for interest would be entitled upon a distribution among the bondholders of the proceeds of such sale, after making deductions allowable under the terms hereof for the costs and expenses of the sale, or otherwise; but such bonds and claims for interest so applied in 88 payment by the purchaser shall be deemed to be paid only to the extent so applied. At any such sale, the Trustee or any holder of any bond may bid for and purchase such Trust Estate or any part thereof, and may make payment therefor, as aforesaid, and, upon compliance with the terms of sale, may hold, retain and dispose of such properties without further accountability. The receipt of the Trustee, or of the court officer conducting such sale, shall be sufficient discharge for the purchase money to any purchaser of the Trust Estate, or any part thereof, sold as aforesaid; and no such purchaser, or its representatives, grantees or assigns, upon becoming entitled to and receiving such receipt, shall be bound to see to the application of such purchase money upon or for any trust or purpose of this Indenture or be answerable in any manner whatsoever for any loss, misapplication or non-application of any such purchase money, or any part thereof. SECTION 9.09. Principal and Interest Payable to Trustee After Default; Proofs of Claim; Judgments. In case default shall be made in the payment of any installment of interest on any bond issued hereunder when and as such interest shall become due and payable, and any such default shall continue for a period of sixty (60) days, or in case default shall be made in the payment of the principal of or premium, if any, on any such bond when and as the same shall become due and payable, whether at the maturity of said bond or pursuant to notice of redemption or by declaration, as authorized by this Indenture, or by a sale of the Trust Estate, as hereinbefore provided, or otherwise, then, upon demand of the Trustee, the Company will pay to the Trustee, for the benefit of the holders of the bonds and claims for interest hereby secured then Outstanding, the principal of all such bonds then due and payable, together with any premium due thereon, and the whole amount then due and payable for interest on such bonds, with interest upon the overdue principal and premium, if any, and installments of interest at the same rates borne by the respective bonds which are overdue and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and, in case the Company shall fail to pay the same forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled to recover judgment against the Company or any other obligor on the bonds (and in the case of the pendency of any receivership, insolvency, bankruptcy, reorganization or other similar proceedings affecting the Company or any other obligor on the bonds, its creditors or its property) for the whole amount of such principal, premium and interest remaining unpaid, as well as judgment for any sums that may be 89 payable hereunder for fees, charges, expenses and liabilities (incurred without negligence or bad faith on the part of the Trustee) of the Trustee hereunder and of the holders of the bonds. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and of the bondholders allowed in any judicial proceedings relative to the Company or any other obligor on the bonds or its creditors, or its property. In case of any receivership, insolvency, bankruptcy, reorganization or other similar proceedings affecting the Company or its property, the Trustee, irrespective of whether the principal of the bonds shall then be due and payable and irrespective of whether the Trustee shall have made any demand for such payment, shall be entitled and empowered either in its own name or as trustee of an express trust or as attorney in fact for the holders of the bonds, or in any one or more of such capacities, to file a proof of claim for the whole amount of principal and interest (with interest upon such overdue principal and installments of interest at the same rates borne by the bonds which are overdue) which may be or become owing and unpaid in respect of the bonds and for any additional amount (including the reasonable compensation, expenses, disbursements and advances of the Trustee) which may be or become payable by the Company hereunder, without regard to or deduction for any amount which may have been or which may thereafter be received, collected or realized by the Trustee from or out of the Trust Estate any part thereof or from or out of the proceeds thereof or any part thereof and to take such other action including participating as a member in any official creditors committee appointed in the matter to have the claims of the Trustee and the holders allowed in such judicial proceedings; but nothing in this Indenture contained shall authorize the Trustee to accept or consent to any composition or plan of reorganization on behalf of any bondholder. The Trustee, to the extent permitted by law, shall be entitled to sue and recover judgment or to file and prove such claim as aforesaid either before or after or during the pendency of any proceedings for the enforcement of the lien of this Indenture upon the Trust Estate, and its right to recover such judgment or to file and prove such claim or claims shall not be affected by nor be prejudicial to any entry or sale hereunder, or by or to the exercise of any powers conferred by any of the provisions of this Indenture, or by or to the foreclosure of the lien hereof; and in case of a sale of any of the Trust Estate and of the application of the proceeds of sale to the payment of the debt hereby secured, the Trustee in its own name and as trustee of an express trust shall be entitled to enforce payment of and to receive all amounts then remaining due and unpaid (whether at stated maturity or otherwise) upon any and all the bonds then 90 Outstanding hereunder, for the benefit of the holders thereof, and the Trustee shall be entitled to recover judgment for any portion of the debt remaining unpaid, with interest. No recovery of any such judgment by the Trustee and no levy of any execution upon any such judgment upon any of the Trust Estate or upon any other property shall in any manner or to any extent affect the lien of this Indenture upon the Trust Estate or any part thereof, or any rights, powers or remedies of the Trustee hereunder, or any lien, rights, powers or remedies of the holders of the said bonds, but such lien, rights, powers and remedies of the Trustee and of the bondholders shall continue unimpaired as before. Any cash collected by the Trustee under this Section shall be applied by the Trustee, subject to the provisions of Section 5.02 hereof, first, to the payment of the costs and expenses of the proceedings resulting in the collection of such cash, second, to the payment of the fees, charges, expenses and liabilities (incurred without negligence or bad faith on the part of the Trustee) of the Trustee hereunder and of the holders of the bonds, and third, to the payment of the amounts then due and unpaid (whether at stated maturity or otherwise) upon the bonds issued hereunder then Outstanding and claims for interest, respectively, without any preference or priority of any kind (except as to the difference, if any, in the respective rates of such interest and premium, if any), but ratably according to the amounts due and payable upon such bonds and claims for interest, respectively, at the date fixed by the Trustee for the distribution of such cash, on presentation of the several bonds and their surrender if fully paid or for proper notation if only partly paid. All rights of action vested in the Trustee pursuant to the provisions of this Indenture may be enforced by the Trustee without the possession of any of the bonds or the production thereof at any trial or other proceedings relating thereto; and any suit or proceedings instituted by the Trustee shall be brought in its name, as Trustee, and any recovery of judgment shall be for the equal benefit, in accordance with the provisions of this Indenture, of the holders of the Outstanding bonds entitled thereto. SECTION 9.10. Majority of Bondholders Entitled to Direct Trustee. Anything contained in this Indenture to the contrary notwithstanding, the holders of not less than a majority in aggregate principal amount of the bonds Outstanding hereunder, from time to time, shall have the right, by an instrument or concurrent instruments in writing, executed as provided in Article X hereof and delivered to the Trustee, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or of exercising any trust or power conferred upon the Trustee under this Indenture; provided, 91 however, that such directions shall not be inconsistent with the terms of this Indenture and that the Trustee shall have the right to decline to follow any such direction if the Trustee shall be advised by counsel that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith shall by Responsible Officers determine that the action or proceeding so directed would involve the Trustee in personal liability or be unjustly prejudicial to the non-assenting bondholders; and provided further that the Trustee shall not be required to exercise the power of entry into or upon all or any part of the Trust Estate conferred by Section 9.04 hereof or the power of sale conferred by Section 9.05 hereunder. SECTION 9.11. Remedies Cumulative and Not Waived by Failure to Act. Except as herein expressly provided to the contrary, no remedy herein conferred upon or reserved to the Trustee or to the holders of the bonds is intended to be exclusive of any other remedy, but every remedy herein provided 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. Every power and remedy given by this Indenture to the Trustee or to holders of the bonds may, subject to the provisions of Section 9.12 hereof, be exercised from time to time and as often as may be deemed expedient. No delay or omission by the Trustee or by any holder of any bond to exercise any right or power arising from any default shall impair any such right or power or shall be construed to be a waiver of any default or an acquiescence therein. In case the Trustee shall have proceeded to enforce any right under this Indenture by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned because of waiver, or for any other reason, or shall have been determined adversely, then, and in each and every such case, the Company and the Trustee shall severally and respectively be restored to their former positions and rights hereunder in respect of the Trust Estate, and all rights, remedies and powers of the Trustee shall continue as though no such proceedings had been taken. SECTION 9.12. Rights of Bondholders to Sue. No holder of any bond shall have the right to institute any suit, action or proceeding at law or in equity upon, or in respect of, this Indenture, or for the execution of any trust or power hereof, or for any other remedy under or upon this Indenture, unless (a) the holders of not less than twenty per centum (20%) in aggregate principal amount of all the bonds Outstanding hereunder shall previously have given to the Trustee written notice of the occurrence of a default and (b) the holders of not less than twenty per centum (20%) in aggregate principal amount of all the bonds then Outstanding hereunder shall have tendered to the Trustee reasonable indemnity against all costs, expenses and liabilities which might be incurred in or by reason of such 92 action, suit or proceeding and shall have requested the Trustee in writing to take action in respect of such default, and the Trustee shall have declined to take such action or shall have failed so to do within thirty (30) days thereafter, and (c) no directions inconsistent with such written request shall have been given pursuant to Section 9.10 hereof, it being understood and intended that no holder of any bond shall have any right in any manner whatever to affect, disturb or prejudice the lien of this Indenture by his or her action, or to enforce any right hereunder, except in the manner herein provided, and that all proceedings hereunder with respect to the lien hereof or to the Trust Estate shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all holders of bonds Outstanding hereunder. Nothing contained in this Article or elsewhere in this Indenture shall affect or impair the right of any bondholder, which is absolute and unconditional, to enforce the payment of the principal of and premium, if any, and interest on his or her bonds at and after the maturity thereof as therein expressed or as accelerated by call for redemption thereof, or the obligation of the Company, which is also absolute and unconditional, to pay the principal of and premium, if any, and interest on each of the bonds issued hereunder to the respective holders at the time and place expressed in said bonds and in said notice of redemption, if any. ARTICLE X EVIDENCE OF RIGHTS OF BONDHOLDERS SECTION 10.01. Execution of Requests, etc. by Bondholders. Any request, declaration, or other instrument, which this Indenture may require or permit to be signed and executed by the bondholders, may be in any number of concurrent instruments of similar tenor and may be signed or executed by such bondholders in person or by attorneys appointed in writing. Proof of the execution of any such request or other instrument, or of a writing appointing any such attorney, or of the holding by any person of the bonds, shall be sufficient for any purpose of this Indenture if made in the following manner: (a) The fact and date of the execution by any person of such request or other instrument or writing may be proved by a witness or by a certificate acknowledged before a notary public or other officer authorized to take acknowledgments; and (b) The ownership of registered bonds shall be proved by the registry books as hereinbefore provided. 93 Any request, consent or vote of the holder of any bond shall bind all future holders and owners of said bond or of any bond issued in exchange or substitution for said bond, in respect of anything done or suffered by the Company or the Trustee in pursuance thereof. SECTION 10.02. Registered Holders Treated as Absolute Owners. The Company and the Trustee may deem and treat the person in whose name any bond is registered as the absolute owner of such bond for the purpose of receiving payment of or on account of the principal of and interest on such bond and for all other purposes; and all such payments so made to any such registered holder or upon his or her order shall be valid and effectual to satisfy and discharge the liability upon such bond to the extent of the sum or sums so paid, and neither the Company nor the Trustee shall be affected by any notice to the contrary. Neither the Company nor the Trustee shall be bound to recognize any person as the holder of a bond Outstanding under this Indenture unless and until his or her bond is submitted for inspection, if required, and his or her title thereto satisfactorily established, if disputed. ARTICLE XI DEFEASANCE SECTION 11.01. Release and Discharge of Indenture. If the Company, its successors or assigns, shall pay and discharge or provide for the payment and discharge of the entire indebtedness on all bonds at the time Outstanding hereunder in any one or more of the following ways, namely: (a) by paying or causing to be paid the principal of, and the premium, if any, and interest on bonds, at the time and in the manner therein and herein expressed; or (b) by delivering all then Outstanding bonds to the Trustee for cancellation and by delivering to the Trustee a written order of the Company to cancel any bonds held by the Trustee in uncancelled form under any of the terms hereof; or (c) by irrevocably depositing with the Trustee, in trust for the pro rata benefit of the holders thereof, at or prior to maturity, cash sufficient, or U.S. Government Obligations the principal of and the interest on which will provide cash sufficient without reinvestment (as established by an Officers' Certificate delivered to the Trustee accompanied by a report of an independent certified public accountant setting forth the calculations upon which such 94 Officers' Certificate is based), to pay the principal of, and the premium, if any, on, bonds at maturity together with interest thereon to maturity; provided that: (i) the Company shall have instructed the Trustee to make the Funds so deposited immediately available to the holders of the bonds upon such maturity for the payment of which at maturity the same shall have been so deposited, and (ii) either (aa) a notice of such availability shall have been given by the Trustee to the holders of all bonds in accordance with Article VII hereof, or (bb) provision satisfactory to the Trustee shall have been made for the giving of such notice, or (d) by irrevocably depositing with the Trustee, in trust, cash sufficient, or U.S. Government Obligations the principal of and the interest on which will provide cash sufficient without reinvestment (as established by an Officers' Certificate delivered to the Trustee accompanied by a report of an independent certified public accountant setting forth the calculations upon which such Officers' Certificate is based), to redeem the bonds Outstanding hereunder, together with interest accrued on such bonds to the date fixed for redemption, provided that: (i) notice of the redemption of such bonds shall have been duly given in accordance with Article VII hereof and the date fixed for redemption shall have passed, or (ii) the Company shall have instructed the Trustee to make such Funds immediately available to the holders of such bonds upon such redemption and either (aa) notice of the redemption of such bonds (stating that such Funds are so available) shall have been duly given in accordance with Article VII hereof, or (bb) provision satisfactory to the Trustee shall have been made for the giving of such notice; and if the Company shall also (1) pay or cause to be paid all other sums payable hereunder by the Company or make provision satisfactory to the Trustee for the payment thereof, (2) duly perform and comply with all covenants, agreements, terms and conditions on the part of the Company contained in this Indenture until the date such defeasance becomes effective, 95 (3) in the case of paragraphs (c) or (d) above, deliver to the Trustee an Opinion of Counsel stating that the holders of the bonds will not recognize income, gain or loss for federal income tax purposes as a result of the deposit and defeasance referred to below and will be subject to federal income tax on the same amount and in the manner and at the same times as would have been the case if such deposit and defeasance had not occurred, and in the case of legal defeasance (as defined below) only, such Opinion of Counsel shall be based on a ruling of the Internal Revenue Service or other change in applicable federal income tax law, and (4) deliver to the Trustee an Officers' Certificate and Opinion of Counsel stating that the foregoing conditions have been complied with; then and in that case the Company may at its election specified in an Officers' Certificate delivered with the Opinions of Counsel and Officers' Certificate delivered pursuant to clauses (3) and (4) above (provided that if no such Officers' Certificate is delivered, the Company shall be deemed to have elected a covenant defeasance) to the Trustee either (a) be released from its obligations to comply with any of the covenants contained in this Indenture, other than the covenants contained in Sections 5.02, 5.07 and 14.10, (and any non-compliance shall not be a default hereunder, and rights of the Trustee with respect to a default under Sections 9.01(a), (b), (c), (d) or (e) shall survive such covenant defeasance) ("covenant defeasance") or (b) have this Indenture and all supplemental indentures cancelled and surrendered by the Trustee ("legal defeasance") upon the request and at the expense of the Company and shall in any event, cease and become void (except that the Company's obligations under Section 5.02(b) and 14.10 shall survive) and the Trustee shall execute and deliver to the Company such deeds or releases as shall be requisite to satisfy the lien hereof, and reconvey to the Company the estate and title hereby conveyed and assigned, and deliver to the Company any property subject to the lien of this Indenture which may then be in the possession of the Trustee. SECTION 11.02. Defeasance of a Series of Bonds. If the Company, its successors or assigns, shall pay and discharge or provide for the payment and discharge of the entire indebtedness on all bonds of a particular series at the time Outstanding hereunder in either of the following ways, namely: (a) by irrevocably depositing with the Trustee, in trust for the pro rata benefit of the holders thereof, prior to maturity, cash sufficient, or U.S. Government Obligations the principal of and the interest on which will provide cash 96 sufficient without reinvestment (as established by an Officers' Certificate delivered to the Trustee accompanied by a report of an independent certified public accountant setting forth the calculations upon which such Officers' Certificate is based), to pay the principal of, and premium, if any, on the bonds of such series Outstanding hereunder at maturity together with interest thereon to maturity; provided that: (i) the Company shall have instructed the Trustee to make the Funds so deposited immediately available to the holders of the bonds of such series upon such maturity for the payment of which at maturity the same shall have been so deposited, and (ii) either (aa) a notice of such availability shall have been given by the Trustee to the holders of all bonds of such series in accordance with Article VII, or (bb) provision satisfactory to the Trustee shall have been made for the giving of such notice, or (b) by irrevocably depositing with the Trustee, in trust, cash sufficient, or U.S. Government Obligations the principal of and the interest on which will provide cash sufficient without reinvestment (as established by an Officers' Certificate delivered to the Trustee accompanied by a report of an independent certified public accountant setting forth the calculations upon which such Officers' Certificate is based), to redeem the bonds of such series Outstanding hereunder, together with interest accrued on such bonds to the date fixed for redemption, provided that: (i) notice of the redemption of the bonds of such series shall have been duly given in accordance with Article VII and the date fixed for redemption shall have passed, or (ii) the Company shall have instructed the Trustee to make such Funds immediately available to the holders of the bonds of such series upon such redemption and either (aa) notice of the redemption of such bonds (stating that such Funds are so available) shall have been duly given in accordance with Article VII, or (bb) provision satisfactory to the Trustee shall have been made for the giving of such notice; and if the Company shall also (1) pay or cause to be paid all other sums payable hereunder by the Company with respect to such series or make provision satisfactory to the Trustee for the payment thereof, 97 (2) duly perform and comply with all covenants, agreements, terms and conditions on the part of the Company contained in this Indenture with respect to such series until the date such defeasance becomes effective, (3) deliver to the Trustee an Opinion of Counsel stating that the holders of the bonds will not recognize income, gain or loss for federal income tax purposes as a result of the deposit and defeasance referred to below and will be subject to federal income tax on the same amount and in the manner and at the same times as would have been the case if such deposit and defeasance had not occurred, and in the case of legal defeasance for such series (as defined below) only, such Opinion of Counsel shall be based on a ruling of the Internal Revenue Service or other change in applicable federal income tax law, and (4) deliver to the Trustee an Officer's Certificate and Opinion of Counsel stating that the foregoing conditions have been complied with; then and in that case the Company may at its election specified in an Officers' Certificate delivered with the Opinions of Counsel and Officers' Certificate delivered pursuant to clauses (3) and (4) above (provided that if no such Officers' Certificate is delivered, the Company shall be deemed to have elected a covenant defeasance) to the Trustee either (a) be released from its obligations to comply with any of the covenants contained in this Indenture with respect to such series, other than the covenants contained in Sections 5.02, 5.07 and 14.10, (and any non-compliance shall not be a default hereunder with respect to such series, and the rights of the Trustee with respect to a default under Sections 9.01(a), (b), (c), (d) or (e) shall survive such covenant defeasance) ("covenant defeasance") or (b) be deemed to have been discharged from all obligations in respect of the bonds of such series ("legal defeasance for such series"), this Indenture shall cease to be of further effect with respect to the bonds of such series and the Trustee, on demand of the Company and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the bonds of such series. SECTION 11.03. Payment of Deposited Cash to Company. The U.S. Government Obligations and cash deposited with the Trustee pursuant to Sections 11.01 or 11.02 hereof and principal or interest payments on any such U.S. Government Obligations shall be held in trust, shall not be sold or reinvested, and shall be applied by it in accordance with the provisions of the 98 bonds and this Indenture, to the payment, either directly or through any paying agent as the Trustee may determine, to the persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such cash or U.S. Government Obligations were deposited; provided that, upon delivery to the Trustee of an Officers' Certificate (accompanied by the report of an independent certified public accountant setting forth the calculations upon which such Officers' Certificate is based) establishing that the cash and U.S. Government Obligations on deposit following the taking of the proposed action will be sufficient for the purposes described in Sections 11.01 or 11.02 hereof, as the case may be, any cash received from principal or interest payments on U.S. Government Obligations deposited with the Trustee or the proceeds of any sale of such U.S. Government Obligations, if not then needed for such purpose, shall, upon receipt by the Trustee of an Officers' Certificate requesting same, be reinvested in other U.S. Government Obligations or disposed of as requested in such Officers' Certificate. In case the owner of any bond entitled to payment hereunder at any time Outstanding hereunder shall not, within two years after the maturity date of such bond, or if such bond shall have been called for redemption, then within two years after the date fixed for redemption of such bond, claim the amount on deposit with the Trustee or other depositary for the payment of such bond, the Trustee or other depositary shall pay over to, or to the order of, the Company the amount so deposited, upon receipt of a request signed by the President or a Vice-President of the Company, and thereupon the Trustee or other depositary shall be released from any and all further liability with respect to the payment of such bond and the holder of said bond shall be entitled (subject to any applicable statute of limitations) to look only to the Company as an unsecured creditor for the payment thereof; provided, however, that the Trustee or other depositary before being required to make any such payment may, at the expense of the Company, cause notice that said cash has not been so called for and that after a date named therein any unclaimed balance then remaining will be returned to the Company, to be published once a week for two consecutive weeks (not necessarily on the same day in each week), in a Daily Newspaper of general circulation in each of the cities wherein any of such bonds are expressed to be payable. ARTICLE XII IMMUNITY OF INCORPORATORS, OFFICERS, SHAREHOLDERS AND DIRECTORS SECTION 12.01. Exemption from Personal Liability. No recourse under or upon any obligation, covenant or agreement contained in this Indenture (including any supplemental indenture) or in any bond hereby secured, or because of the creation of any indebtedness hereby secured, or under any 99 judgment obtained against the Company, or by the enforcement of any assessment or penalty, or by any legal or equitable proceedings by virtue of any constitution or statute or rule of law, or otherwise, or under any circumstances, under or independent of this Indenture, or any supplemental indenture, shall be had against any incorporator, shareholder, officer or director of the Company or of any predecessor or successor company, as such, either directly or through the Company or any predecessor or successor company, under any rule of law, statute or constitution or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise; it being expressly agreed and understood that this Indenture and the obligations hereby secured, are solely corporate obligations, and that no such personal liability shall attach to, or be incurred by, such incorporators, shareholders, officers or directors of the Company or of any predecessor or successor company, or any of them, as such, because of the incurring of the indebtedness hereby authorized, or under or by reason of any of the obligations, covenants or agreements contained in this Indenture or in any of the bonds hereby secured, or implied therefrom, and that any and all such personal liability of every name and nature, and any and all such rights and claims against every such incorporator, shareholder, officer or director, as such, whether arising at common law or in equity, or created by rule of law, statute, constitution or otherwise, are expressly released and waived as a condition of, and as part of the consideration for, the execution of this Indenture and the issue of the bonds and interest obligations secured hereby. ARTICLE XIII CONSOLIDATIONS, MERGERS, TRANSFERS AND SALES SECTION 13.01. Merger, Consolidation or Sale. Subject to the provisions of this Article, nothing contained in this Indenture shall prevent any lawful consolidation of the Company with or merger with or into any other corporation, or any conveyance, transfer or lease, subject to the lien of this Indenture, of all or substantially all of the Trust Estate, as an entirety, to any corporation lawfully entitled to acquire or lease or operate the same. The Company covenants and agrees that such consolidation, merger, conveyance, transfer or lease shall be upon such terms as fully to preserve and in no respect to impair the lien or priority of lien of this Indenture upon the property then subject hereto, or the security afforded hereby, or any of the rights or powers of the Trustee or the bondholders hereunder, that any such lease shall be made expressly subject to immediate termination by the Company or by the Trustee at any time during the continuance of a default specified in Section 9.01 hereof, and also by a purchaser of the property so leased at any sale thereof hereunder, whether such sale be made under the 100 power of sale hereby conferred or under judicial proceedings, and that the provisions and conditions of this Section and the execution of the supplemental indenture provided for in this Section shall be a condition to any such consolidation, merger, conveyance, transfer or lease. The corporation formed by such consolidation, or into which the Company shall have been merged, or acquiring all or substantially all of the Trust Estate as an entirety as aforesaid, shall execute and deliver to the Trustee hereunder (and cause to be recorded) a supplemental indenture satisfactory to the Trustee in and by which such corporation shall assume the due and punctual payment of the principal of, premium, if any, and interest on all the bonds issued hereunder according to their tenor, and the due and punctual performance of all the covenants and agreements of this Indenture to be kept or performed by the Company (subject to the provisions of Section 13.03 hereof), and shall make appropriate covenants to protect the lien and priority of lien of this Indenture, the security afforded hereby, and the rights and powers of the Trustee and bondholders hereunder. Any lessee under any such lease shall expressly assume such obligations by instrument in writing satisfactory to the Trustee. The property of the other corporation with which the Company shall consolidate or merge or to which all or substantially all the Trust Estate shall be conveyed or transferred shall not be subject to any lien (other than liens which, if they existed upon property of the Company, would constitute Excepted Encumbrances) which after such consolidation, merger, conveyance or transfer will be equal or prior to the lien of this Indenture on the property owned by such corporation, upon completion of such consolidation, merger, conveyance or transfer, unless the amount of obligations outstanding under and secured by such equal or prior lien or liens shall not exceed sixty-six and two-thirds per centum (66- 2/3%) of the value of the property (which, if owned by the Company, would constitute bondable property as defined in Section 4.03 hereof) of such other corporation and unless the net earnings, determined as provided in Section 4.05 hereof, derived from the operation of the property of such other corporation during a period of twelve consecutive calendar months ending within ninety days next preceding the date of such consolidation, merger or conveyance shall have been a sum at least equal to twice the interest for one year on all obligations outstanding under and secured by such equal or prior lien or liens at the time of such consolidation, merger or conveyance, except obligations for the payment or redemption of which the necessary funds shall have been deposited with the trustee under such equal or prior lien or liens or with the Trustee hereunder, together with instructions to apply such funds to the payment or redemption of such obligations and, until so applied, to hold such funds irrevocably in trust for such purposes (but subject to any applicable provision in the instrument creating such lien or liens for the return of any unclaimed cash to the Company). 101 SECTION 13.02. Successor to Succeed to Rights of Company. In case the Company shall be consolidated with or merged into any other corporation, or shall convey or transfer, subject to the lien of this Indenture, all, or substantially all, the Trust Estate, as an entirety, the successor corporation formed by such consolidation, or into which the Company shall have been merged, or which shall have received a conveyance or transfer, as aforesaid (such corporation being hereinafter called the successor corporation), shall succeed to and be substituted for the Company under this Indenture with the same effect as if it had been named herein and may thereafter, subject to all the terms, conditions and restrictions in this Indenture prescribed, exercise all the powers and rights which the Company might or could exercise prior to such consolidation, merger or sale, either in the name of such successor corporation, or of the Company, and may, without in any way limiting the generality of the foregoing, issue bonds hereunder to the extent and for the purposes herein provided with respect to the issuance of bonds by the Company and may also issue any bonds which the Company was entitled to issue but had not issued hereunder; and any act, proceeding, resolution or certificate by any of the terms of this Indenture required or provided to be done, taken or performed, or made or executed, by any board, committee, officer or employee of the Company may be done, taken and performed, or made and executed, with like force and effect, by the corresponding board, committee, officer or employee of such successor corporation. All the bonds so issued shall in all respects have the same legal rank and security as the bonds theretofore or thereafter issued in accordance with the terms of this Indenture as though all of said bonds had been issued at the date of the execution hereof. As a condition precedent to the execution by such successor corporation and the authentication and delivery by the Trustee of any such additional bonds or the withdrawal, use or application of cash or the release of property on the basis of bondable property of such successor corporation, or the certification of bondable property of such successor corporation under any of the provisions of this Indenture, the supplemental indenture with the Trustee to be executed and caused to be recorded by the successor corporation as provided in this Article XIII, or a subsequent supplemental indenture, shall contain a conveyance or transfer and mortgage in terms sufficient to subject to the lien hereof (a) all property owned or thereafter acquired by such successor corporation (except property of a character similar to that excluded from the lien of this Indenture) or (b) such property as such successor corporation is making the basis for the issuance of bonds or the withdrawal, use or application of cash or the release of property hereunder or is certifying pursuant to any of the provisions of this Indenture, and the lien created thereby shall have similar force, effect and standing as the lien of this 102 Indenture would have if the Company itself should acquire or construct such property and request the authentication of bonds or the withdrawal, use or application of cash or the release of property or certify bondable property hereunder. The Trustee may receive and rely upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence, subject to the provisions of Article XIV hereof, that any consolidation, merger, conveyance, transfer or lease and any supplemental indenture or, in the case of certain leases, any written instrument, executed in connection therewith, comply with the foregoing conditions and provisions of Section 13.01 hereof and of this Section. SECTION 13.03. Limitation of After-Acquired Clauses. In case the Company, pursuant to this Article, shall be consolidated with or merged into any other corporation or shall convey or transfer all or substantially all of the Trust Estate as an entirety subject to the lien of this Indenture, this Indenture (unless the supplemental indenture executed pursuant to Section 13.01 or 13.02 hereof by the successor corporation, or a subsequent indenture, conveys and mortgages upon the trusts herein declared all its property then owned or thereafter acquired, except property of a character similar to that excluded from the lien of this Indenture) shall not become or be a lien upon any of the properties or franchises of the successor corporation except (a) those acquired by it from the Company and property appurtenant thereto and property which the successor corporation shall thereafter acquire or construct which shall form an integral part or be essential to the use or operation of any property then or thereafter subject to the lien hereof; and (b) the property additions to or about the plants or properties of the successor corporation made and used by it as the basis for the authentication and delivery of additional bonds or the withdrawal, use or application of cash or the release of property under this Indenture or certified as property additions pursuant to any of the provisions of this Indenture; and (c) such franchises, repairs, renewals, replacements and additional property as may be acquired, made or constructed by the successor corporation (1) to maintain, renew and preserve the franchises covered by this Indenture, or (2) to maintain the property mortgaged and intended to be mortgaged hereunder as an operating system or systems in good repair, working order and condition, or (3) in a rebuilding or renewal of property subject to the lien hereof damaged or destroyed, or (4) in replacement of or substitution for machinery, apparatus, equipment, frames, towers, poles, wire, pipe, tools, implements or furniture, or any other fixtures or personalty, subject to the lien hereof, which shall have become old, inadequate, obsolete, worn out, unfit, unadapted, unserviceable, undesirable or unnecessary for use in the operation of the property mortgaged and intended to be mortgaged hereunder. 103 ARTICLE XIV CONCERNING THE TRUSTEE SECTION 14.01. Capital and Surplus Requirement. There shall at all times be a Trustee under this Indenture that shall be a bank, trust company, corporation or other person eligible pursuant to the TIA to act as such, having a combined capital and surplus of at least Fifty Million Dollars ($50,000,000). If the Trustee publishes reports of condition at least annually, pursuant to law or to the requirements of its supervising or examining authority, then for the purposes of this Section and Section 5.12 hereof the combined capital and surplus of the Trustee shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. SECTION 14.02. Acceptance of Trust and Duties by Trustee. Notwithstanding any provision contained in the Indenture to the contrary, the Trustee hereby accepts the trust created herein. The Trustee and, if a separate or co-trustee is appointed pursuant to Section 14.18 hereof, such separate or co-trustee, undertakes, prior to default and after the curing of all defaults which may have occurred, to perform such duties and only such duties as are specifically set forth in this Indenture, and in case of default (which has not been cured) to exercise such of the rights and powers vested in it by this Indenture, and to use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. For the purpose of this Section 14.02 and of Section 14.03 hereof a default shall be deemed cured when the act or omission or other event giving rise to such default shall have been cured, remedied or terminated. The Trustee, upon receipt of evidence furnished to it by or on behalf of the Company pursuant to any provision of this Indenture, will examine the same to determine whether or not such evidence conforms to the requirements of this Indenture. SECTION 14.03. Limitation on Liability of Trustee. Notwithstanding any provision contained in the Indenture to the contrary, no provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that (a) prior to default hereunder, and after the curing of all such defaults which may have occurred, the Trustee shall not be liable except for the performance of such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee, but the duties and 104 obligations of the Trustee, prior to default and after the curing of all defaults which may have occurred, shall be determined solely by the express provisions of this Indenture; and (b) prior to default hereunder, and after the curing of all such defaults which may have occurred, and in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions conforming to the requirements of this Indenture; and (c) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Trustee unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (d) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders of not less than a majority in principal amount of the bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture or with respect to any directions or notice from the Agent (as defined in Section 4.01C hereof) in connection with redemption, rescission thereof or any other action in respect of the bonds of Series X. No provision of this Indenture shall require the Trustee to advance or 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 is reasonable ground for believing that the repayment of such funds or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Article. SECTION 14.04. Recitals are by Company Alone. The recitals contained herein and in the bonds (except the Trustee's authentication certificate) shall be taken as the statements of the Company and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the condition, genuineness, validity or value of the Trust Estate or any part thereof, or as to the title of the Company thereto, or to the validity or adequacy of the security afforded 105 thereby and hereby, or as to the validity of this Indenture or of the bonds issued hereunder. The Trustee shall be under no responsibility or duty with respect to the disposition of any bonds authenticated and delivered hereunder or the application of the proceeds thereof or the application of any cash paid to the Company under any of the provisions hereof. SECTION 14.05. Exemption of Trustee from Personal Liability in Case of Entry. In case of entry upon the Trust Estate, the Trustee, and any separate or co-trustee, shall not be personally liable for debts contracted or liability or damages incurred in the management or operation of said property. SECTION 14.06. Trustee may Rely on Documents, etc. To the extent permitted by Sections 14.02 and 14.03 hereof: (1) the Trustee may rely and shall be protected in acting upon, or in failing to take action as a result of, any Resolution, Officers' Certificate, Engineer's Certificate, Net Earnings Certificate, Opinion of Counsel, resolution, certificate, opinion, statement, notice, request, consent, order, appraisal, report, bond, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; and (2) the Trustee may consult with counsel (who may be of counsel to the Company) and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel; and (3) the Trustee shall be under no obligation to exercise any of the trusts or powers hereof at the request, order or direction of any of the bondholders, pursuant to the provisions of this Indenture, unless such bondholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred by it in compliance with such request or direction; and (4) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, bond or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit; and 106 (5) the Trustee may perform any duties hereunder either directly or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence of any agent or attorney appointed with due care by it hereunder; and (6) the Trustee shall not be liable for any action taken by it in good faith and believed by it to have been authorized or within the discretion or powers conferred upon it by this Indenture; and the Trustee shall not be charged with knowledge of any default or any fact, the occurrence of which would require the Trustee to take action unless a Responsible Officer shall have actual knowledge thereof. SECTION 14.07. Trustee's Responsibility for Selection of Experts. The Trustee shall not be under any responsibility for the selection or acceptance of any Engineer, Accountant or other expert for any of the purposes expressed in this Indenture, except that nothing in this Section contained shall relieve the Trustee of its obligation to exercise reasonable care with respect to the selection or acceptance of independent experts who may furnish certificates to the Trustee pursuant to any provision of this Indenture. The Trustee may accept any Resolution as conclusive evidence of the adoption of such Resolution. SECTION 14.08. Trustee may be Bondholder, etc. Subject to the provisions of Sections 14.13 and 14.14 hereof and to the provisions of applicable law in the jurisdictions in which the Trust Estate is situated, the Trustee, in its individual or any other capacity, may become the holder, owner or pledgee of bonds secured hereby, and may otherwise deal with the Company with the same rights it would have if it were not Trustee. SECTION 14.09. Cash to be Held in Trust. Subject to the provisions of Section 11.03 hereof, all cash received by the Trustee, whether as Trustee or paying agent, shall, until withdrawn, used or applied as herein provided, be held in trust for the purposes for which they were paid but need not be segregated from other funds except to the extent required by law. The Trustee may allow and credit to the Company, in the absence of any default, interest on any cash received by it hereunder at such rate, if any, as may be agreed upon with the Company from time to time and as may be permitted by law. SECTION 14.10. Trustee Compensation and Reimbursement. The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation for all services rendered by it in the execution of the trusts hereby created and in the exercise and performance of 107 any of the powers and duties hereunder of the Trustee, which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust, and the Company will reimburse the Trustee for all appropriate advances made by the Trustee in connection with the performance of its duties hereunder and administration of the Trusts created hereby and will pay to the Trustee from time to time its expenses and disbursements (including the reasonable compensation and the expenses and disbursements of persons not regularly in its employ and, to the extent not prohibited by law, of its counsel). The Company also covenants to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Trustee, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending against any claim of liability in the premises. The obligations of the Company to the Trustee under this Section shall survive discharge of this Indenture and resignation or removal of the Trustee and shall constitute additional indebtedness secured hereby. Such additional indebtedness shall be secured by a lien prior to that of the bonds upon the Trust Estate, including all property or funds held or collected by the Trustee as such. If, and to the extent that, the Trustee and its counsel and other persons not regularly in its employ do not receive compensation for services rendered, reimbursement of its or their advances, expenses and disbursements, or indemnity, as herein provided, as the result of allowances made in any reorganization, bankruptcy, receivership, liquidation or other proceeding or by any plan of reorganization or readjustment of obligations of the Company, the Trustee shall be entitled, in priority to the holders of the bonds, to receive any distributions of any securities, dividends or other disbursements which would otherwise be made to the holders of bonds in any such proceeding or proceedings and the Trustee is hereby constituted and appointed, irrevocably, the attorney-in-fact for the holders of the bonds and each of them to collect and receive, in their name, place and stead, such distributions, dividends or other disbursements, to deduct therefrom the amounts due to the Trustee, its counsel and other persons not regularly in its employ on account of services rendered, advances, expenses and disbursements made or incurred, or indemnity, and to pay and distribute the balance, pro rata, in accordance with the provisions of this Indenture, to the holders of the bonds. The Trustee shall have a lien upon any securities or other consideration to which the holders of bonds may become entitled pursuant to any such plan of reorganization or readjustment of obligations, or in any such proceeding or proceedings. 108 SECTION 14.11. Certificate of Officers of Company to Constitute Proof. Whenever in the administration of the trusts of this Indenture, prior to a default hereunder and after the curing of all defaults which may have occurred, the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the President or Vice-President and the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Company and delivered to the Trustee, and such certificate shall be full warrant to the Trustee for any action taken or suffered by it under the provisions of this Indenture upon the faith thereof. SECTION 14.12. Trustee to Have Power to Give Notices. Whenever it is provided in this Indenture that the Trustee shall take any action upon the happening of a specified event or upon the fulfillment of any condition or upon the request of the Company or of bondholders, the Trustee taking such action shall have full power to give any and all notices and to do any and all acts and things incidental to such action. SECTION 14.13. Trustee Acquiring Conflicting Interest. If the Trustee has or shall acquire a conflicting interest within the meaning of the TIA, the Trustee shall either eliminate such interest or resign, and absent the elimination of such interest or resignation may be removed, to the extent and in the manner provided by, and subject to the provisions of, the TIA and this Indenture. SECTION 14.14. Preferential Collection of Claims Against the Company if Trustee Becomes a Creditor. The Trustee shall be subject to the provisions of Section 311 of the TIA. SECTION 14.15. Trustee may Resign. The Trustee may at any time resign and be discharged of the trusts hereby created by giving at least thirty (30) days written notice to the Company specifying the day upon which such resignation shall take effect and thereafter publishing notice thereof in one Daily Newspaper of general circulation in New York, New York and in each of the cities in which the principal of any of the bonds then Outstanding shall be payable, once in each of three consecutive calendar weeks, not necessarily on the same day in each week, and such resignation shall take effect upon the day specified in Section 14.17 hereof. This Section shall not be applicable to resignations pursuant to Section 14.13 hereof. SECTION 14.16. Trustee may be Removed. The Trustee may be removed at any time by an instrument or concurrent instruments in writing filed with the Trustee and signed and acknowledged by the holders of a majority in principal amount of 109 the bonds then Outstanding hereunder or by their attorneys-in-fact duly authorized and upon payment to such Trustee of all amounts owing to it hereunder. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of Section 14.01 hereof, then the Trustee shall resign immediately in the manner and with the effect specified in Section 14.15 hereof; and, in the event that the Trustee does not resign immediately in such case, then it may be removed forthwith by an instrument or concurrent instruments in writing filed with the Trustee and either (a) signed by the President or a Vice-President of the Company with its corporate seal attested by its Secretary or an Assistant Secretary or (b) signed and acknowledged by the holders of a majority in principal amount of the bonds then Outstanding hereunder or by their attorneys-in-fact duly authorized. SECTION 14.17. Appointment of Successor Trustee. 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 under Section 14.22 hereof. In case at any time the Trustee shall resign or shall be removed or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or if a receiver of the Trustee or of its property shall be appointed, or if any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, a vacancy shall be deemed to exist in the office of Trustee, and a successor or successors may be appointed by the holders of a majority in principal amount of the bonds then Outstanding hereunder, by an instrument or concurrent instruments in writing signed and acknowledged by such bondholders or by their attorneys-in-fact duly authorized, and delivered to such new trustee, notification thereof being given to the Company and the retiring trustee; provided, nevertheless, that until a new trustee shall be appointed by the bondholders as aforesaid, the Company, by instrument executed by order of its Board of Directors, by its President or a Vice-President, may appoint a trustee to fill such vacancy until a new trustee shall be appointed by the bondholders as herein authorized. The Company shall publish notice of any such appointment made by it in the manner provided in Section 14.15 hereof. Any new trustee appointed by the Company shall, immediately and without further act, be superseded by a Trustee appointed by the bondholders, as above provided. If in a proper case no appointment of a successor Trustee shall be made pursuant to the foregoing provisions of this Section within six months after a vacancy shall have occurred in the office of Trustee, the holder of any bond Outstanding hereunder or any retiring trustee may apply to any 110 court of competent jurisdiction to appoint a successor trustee. Said court may thereupon after such notice, if any, as such court may deem proper and prescribe, appoint a successor trustee. If the Trustee resigns and a successor has not been appointed by the Company or the bondholders or, if appointed, has not accepted the appointment within thirty (30) days after such resignation, the resigning trustee may apply to any court of competent jurisdiction for the appointment of a successor trustee. Any trustee appointed under the provisions of this Section in succession to the Trustee shall be a bank, trust company, corporation or other person eligible under Sections 5.12 and 14.01 hereof. Any trustee which has resigned or been removed shall nevertheless retain the lien upon the Trust Estate, including all property or funds held or collected by the trustee as such, to secure the amounts due to such trustee as compensation, reimbursement, expenses, disbursements and indemnity and retain the rights afforded to it by Section 14.10 hereof. SECTION 14.18. Separate Trustee or Co-trustee may be Appointed. At any time or times, for the purpose of conforming to any legal requirements, restrictions or conditions in any state or jurisdiction in which any part of the Trust Estate may be located, the Company and the Trustee shall have power to appoint, and, upon the request of the Trustee, the Company shall for such purpose join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to appoint, another corporation or one or more persons approved by the Trustee, to act either as separate trustee or trustees, or as co-trustee or co-trustees jointly with the Trustee, of all or any of the property subject to the lien hereof. In the event that the Company shall not have joined in such appointment within fifteen (15) days after the receipt by it of a request so to do, the Trustee alone shall have power to make such appointment. Any separate or co-trustee appointed hereunder need not satisfy the requirements under Sections 5.12 and 14.01. SECTION 14.19. Conditions Upon Appointment of Separate Trustee or Co-trustee or Successor Trustee. Every separate trustee, every co-trustee and every successor trustee, other than any trustee which may be appointed as successor to the Trustee actually executing this Indenture, shall, to the extent permitted by law, but to such extent only, be appointed subject to the following provisions and conditions, namely: 111 (1) The rights, powers, duties and obligations conferred or imposed upon trustees hereunder or any of them shall be conferred or imposed upon and exercised or performed by the Trustee or by the Trustee and such separate trustee or separate trustees or co-trustee or co-trustees jointly, as shall be provided in the instruments and agreements appointing such separate trustee or separate trustees or co-trustee or co-trustees, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such separate trustee or separate trustees or co-trustee or co-trustees. (2) The bonds secured hereby shall be authenticated and delivered, and all powers, duties, obligations and rights, conferred upon the Trustee in respect of the custody of all bonds and of all cash and securities pledged or deposited hereunder, shall be exercised solely by the Trustee actually executing this Indenture, or its successor in the trust hereunder. (3) The Company and the Trustee, at any time by an instrument in writing executed by them jointly, may accept the resignation of or remove any separate trustee or co-trustee appointed under Section 14.18 hereof or otherwise, and, upon the request of the Trustee, the Company shall, for such purpose, join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to make effective such resignation or removal. In the event that the Company shall not have joined in such action within fifteen (15) days after the receipt by it of a request so to do, the Trustee alone shall have power to accept such resignation or to remove any such separate trustee or co-trustee. A successor to a separate trustee or co-trustee so resigned or removed may be appointed in the manner provided in Section 14.18 hereof. No trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder. SECTION 14.20. Notices to Trustee. Any notice, request or other writing, by or on behalf of the holders of the bonds, delivered to the Trustee actually executing this Indenture, or its successor in the trust hereunder, shall be deemed to have been delivered to all of the then trustees or co- trustees as effectually as if delivered to each of them. Every instrument appointing any trustee or trustees, other than a successor to the Trustee actually executing this Indenture, shall 112 refer to this Indenture and the conditions in this Article expressed, and upon the acceptance in writing by such trustee or trustees or co-trustee or co-trustees, he, they or it shall be vested with the estates or property specified in such instrument, either jointly with the Trustee actually executing this Indenture, or its successor, or separately, as may be provided therein, subject to all the trusts, conditions and provisions of this Indenture; and every such instrument shall be filed with the Trustee actually executing this Indenture, or its successor in the trust hereunder. SECTION 14.21. Trustee as Agent. Any separate trustee or trustees, or any co-trustee or co-trustees, may at any time by an instrument in writing constitute the Trustee, or its successor in the trust hereunder, his, her, their or its agent or attorney-in-fact, with full power and authority, to the extent which may be permitted by law, to do all acts and things and exercise any and all discretion authorized or permitted by him, her, them or it, for and in behalf of him, her, them or it, and in his, her, their or its name. In case any separate trustee or trustees or co-trustee or co-trustees, or a successor to any of them, shall die, become incapable of acting, resign or be removed, all the estates, property, rights, powers, trusts, duties and obligations of said separate trustee or co-trustee, so far as permitted by law, shall vest in and be exercised by the Trustee, or its successor in the trust hereunder, without the appointment of a new trustee or successor to such separate trustee or co-trustee. SECTION 14.22. Successor Trustee to Execute Acceptance and Become Vested with Estate. Any successor trustee appointed hereunder shall execute, acknowledge and deliver to his, her or its predecessor trustee, and also to the Company, an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of his, her or its predecessor in trust hereunder, with like effect as if originally named as trustee herein; but the trustee ceasing to act shall nevertheless, on the written request signed by the President or a Vice President of the Company, or of the successor trustee, or of the holders of ten per centum (10%) in principal amount of the bonds then Outstanding hereunder, execute, acknowledge and deliver such instruments of conveyance and further assurance and do such other things as may reasonably be required for more fully and certainly vesting and confirming in such successor trustee all the right, title and interest of the Trustee to which he or she or it succeeds, in and to the Trust Estate and such rights, powers, trusts, duties and obligations, and the trustee ceasing to act 113 shall also, upon like request, and subject to its rights under the last paragraph of Section 14.17, pay over, assign and deliver to the successor trustee any cash or other property subject to the lien of this Indenture, including any pledged securities which may then be in his, her or its possession. Should any deed, conveyance or instrument in writing from the Company be required by the new trustee for more fully and certainly vesting in and confirming to such new trustee such estates, properties, rights, powers, trusts and duties, any and all such deeds, conveyances and instruments in writing shall, on request, be executed, acknowledged and delivered by the Company. SECTION 14.23. Consolidation or Merger of Trustee. Any corporation into which the Trustee may be merged or with which it may be consolidated or any corporation resulting from any merger or consolidation to which the Trustee shall be a party or any corporation to which substantially all the corporate trust business of the Trustee may be transferred, provided such corporation shall be eligible under the provisions of Sections 5.12 and 14.01 hereof and qualified under Section 14.13 hereof, shall be the successor trustee under this Indenture, without the execution or filing of any paper or the performance of any further act on the part of any other parties hereto, anything herein to the contrary notwithstanding. In case any of the bonds contemplated to be issued hereunder shall have been authenticated but not delivered, any successor to the Trustee may, subject to the same terms and conditions as though such successor had itself authenticated such bonds, adopt the certificate of authentication of the original Trustee or of any successor to it as trustee hereunder, and deliver the said bonds so authenticated and in case any of said bonds shall not have been authenticated any successor to the Trustee may authenticate such bonds either in the name of any predecessor hereunder or in the name of the successor trustee, and in all such cases such certificate shall have the full force which is anywhere in said bonds or in this Indenture provided that the certificate of the Trustee shall have; provided, however, that the right to authenticate bonds in the name of the original Trustee shall apply only to its successor or successors by merger or consolidation as aforesaid. ARTICLE XV CONCERNING PLEDGED SECURITIES SECTION 15.01. Pledged Securities Deposited with Trustee. The Company may deliver to the Trustee and the Trustee may receive from time to time bonds, certificates for shares of stock, debentures, notes and/or other securities or obligations, and all such bonds, certificates for shares of stock, debentures, notes and/or securities or obligations so received shall be held by the Trustee as a part of the Trust Estate. The Trustee shall 114 be under no obligation to accept a certificate for any shares of stock or any bonds, debentures, notes or other securities or obligations, or to cause or permit a transfer thereof to be made to it, if, in the opinion of the Trustee, such acceptance or transfer would involve it in, or render it liable to be subjected to, any liability or expense, unless the Trustee shall be indemnified by the Company to its satisfaction for so doing. All certificates for shares of stock shall at the time of the delivery thereof be duly endorsed for transfer or accompanied by appropriate instruments of assignment and transfer duly executed in blank. The Trustee, from time to time, may, but shall be under no obligation to, transfer into its name as Trustee, or into the name or names of its nominee or nominees, any or all such shares of stock pledged hereunder and may cause all or any securities held by it hereunder to be registered in its name or in the name of its nominee or nominees. The bonds or obligations which may be pledged or deposited under any provision of this Indenture may be in temporary or definitive form and may be in such denomination or denominations as the Company may elect, and if bonds, may be coupon bonds, registered or unregistered as to principal, or registered bonds without coupons. All coupon obligations which may be pledged or deposited with the Trustee under any provision of this Indenture shall, except as hereinafter provided, have attached thereto at the time of such pledge or deposit all unmatured interest coupons thereunto appertaining, and all registered obligations without coupons and all coupon obligations registered as to principal shall be duly endorsed by the registered owner thereof or by his or her attorney thereunto duly authorized, or shall be accompanied by duly executed assignment or transfer powers. If any unmatured coupon or coupons appertaining to any such coupon obligation shall be missing at the time of such pledge or deposit, the Trustee may, nevertheless, accept such obligation without such coupon or coupons in case a sum of cash equal to the face amount of the missing coupon or coupons shall be deposited with the Trustee hereunder. SECTION 15.02. Voting. Prior to the occurrence of any default, as defined in Section 9.01 hereof, and after default if such default shall have been cured, or shall have been waived as provided in Section 9.03 hereof, the Company shall have the right, except as hereinafter limited, to vote any shares of stock pledged hereunder with the same force and effect as though such shares were not so pledged; and from time to time, in case said shares of stock pledged hereunder shall have been transferred into the name of the Trustee or its nominee or nominees, the Trustee, upon the request signed by the President or a Vice President of the Company, evidenced by a Resolution delivered to the Trustee, shall execute and deliver, or cause to be executed and delivered, to the Company proper proxies for voting said 115 stock. During the continuance of a default, the Trustee shall vote any shares of stock pledged hereunder in accordance with the directions of the issuer thereof unless otherwise directed by holders of at least a majority in principal amount of all bonds Outstanding hereunder. The Company shall not use or vote or permit to be used or voted any stock pledged hereunder for any purpose contrary to its covenants herein contained or otherwise inconsistent with the provisions or purposes of this Indenture. SECTION 15.03. Income Before Event of Default. Prior to the occurrence of any default, and after default if such default shall have been cured, or shall have been waived as provided in Section 9.03 hereof, the Company shall be entitled to receive, when and as paid, all interest paid on any obligations pledged hereunder and all cash dividends paid or declared out of earnings or surplus derived from operations in respect of any stock pledge hereunder; and from time to time, upon a request signed by the President or a Vice President of the Company, the Trustee shall forthwith deliver to it as they mature the coupons for such interest, in order that the Company may receive payment thereof for its own use, and shall deliver to the Company, if necessary, suitable orders in favor of the Company or its designated nominee or nominees, for the payment of such interest and such cash dividends, and the Company may collect such interest and dividends, and the Trustee shall at once pay over to the Company any such interest or dividends which may have been collected or received by it; provided, however, that: (1) The Company shall not sell, assign or transfer any coupon or right to such interest or dividends delivered or assigned to it; (2) The Company shall not collect any such coupons or interest by legal proceedings or by the enforcement of any security thereof without the prior written consent of the Trustee, nor in any manner which the Trustee shall deem prejudicial to the bonds issued hereunder; (3) Until actually paid or discharged, every such coupon or right to interest or dividends shall in all respects remain subject to the lien of this Indenture; and (4) If any such coupons so delivered to the Company shall not forthwith be paid or cancelled, the Company shall return the same to the Trustee, subject to the right to have the same redelivered to the Company for payment or cancellation, and in case of payment or cancellation of any such coupon or claim for interest, the Company shall, upon demand, furnish to the Trustee satisfactory evidence thereof. 116 Prior to the occurrence of any default, and after default if such default shall have been cured, or shall have been waived as provided in Section 9.03 hereof, the Trustee may pay over to the Company any interest received by it on any bond or other security pledged hereunder, or any cash dividend received on any share of stock pledged hereunder, if satisfied that such interest or cash dividend was paid or declared out of earnings or surplus derived from operations; and upon being furnished by the Company with a certificate of an accountant or firm of accountants (who or which may be in the employ of or under retainer by the Company) selected by the Company and satisfactory to the Trustee showing that such interest or cash dividend was paid or declared out of earnings or surplus derived from operations or that there were such earnings or surplus available for the purpose, as shown by the books of the company paying or declaring such interest or dividend, shall pay over such interest or cash dividend to the Company. Such accountant's certificate shall also contain the statements required by Section 1.03(a). Prior to the occurrence of any default, and after default if such default shall have been cured, or shall have been waived as provided in Section 9.03, the Trustee shall be under no obligation to make any investigation and shall incur no liability to any bondholder or the Company on account of any action it may take, or refrain from taking, in the premises. SECTION 15.04. Payments Upon Dissolution, etc. of Issuer of Pledged Securities. The Trustee shall be entitled to receive all cash paid on account of the principal of any bonds or other securities held in pledge by it, and all stock dividends on any shares of stock so held in pledge, and all cash at any time payable in respect of shares of stock, bonds or other securities so held in pledge, on dissolution, liquidation, reorganization, merger or consolidation of the issuer thereof, or derived from any sale, condemnation or other disposition of the property of such issuer, and all securities issued in respect of any securities held in pledge upon any reorganization, recapitalization, merger or consolidation of the issuer thereof or otherwise issued in exchange for the pledged securities. The shares of stock and all cash so received shall be held by the Trustee, in trust, as additional security for the payment of the principal of and interest on the bonds issued under this Indenture, and such cash shall be disposed of by the Trustee pursuant to the provisions of Section 8.06. SECTION 15.05. Renewal and Refunding. Prior to the occurrence of any default, and after default if such default shall have been cured, or shall have been waived as provided in Section 9.03 hereof, the Trustee, upon the written request signed by the President or a Vice President of the Company, shall consent to the extension or renewal at the same or a lower or a higher rate of interest or dividend of any securities which may 117 then be held by the Trustee in pledge hereunder, and shall consent to the extension or renewal of any mortgages or liens securing such securities; but if the Company shall then be in default hereunder, the Trustee may, subject to the provisions of Article XIV hereof, give such consent without the request of the Company; and, in any case, the Trustee shall, prior to the occurrence of any default, and after default if such default shall have been cured, or shall have been waived as provided in Section 9.03 hereof, do and perform all acts and things which may be requisite and necessary to give effect to any such renewal or extension so consented to, including the delivery and exchange of pledged securities or the presentation of the same for appropriate endorsement; and the Trustee, upon the written request signed by the President or a Vice President of the Company, may, prior to the occurrence of any default, and after default if such default shall have been cured, or shall have been waived as provided in Section 9.03 hereof, consent to the exercise by the Company of any other right, power or remedy, with respect to such securities, to which the Company may be entitled as owner thereof, including the consent to any plan of reorganization or recapitalization and the acceptance of new or different securities thereunder in exchange for the pledged securities and including also the cancellation of any securities or shares of the stock of a corporation which has conveyed its property to the Company and subjected it to the lien hereof, provided that the exercise of such right, power or remedy, as requested by the Company, shall not, in the Opinion of Counsel, be prejudicial to the bonds hereby secured; and the Company covenants that in exercising any such right, power or remedy, if permitted so to do by the Trustee, it will not in any way act prejudicially to the interests or rights of the Trustee or the holders or registered owners of the bonds. SECTION 15.06. Pledged Securities Not Basis of Issuance. Nothing in this Article contained shall authorize the authentication of bonds or the withdrawal of cash in lieu thereof under any provision of this Indenture on account of the pledge hereunder of any securities whatsoever. ARTICLE XVI SUPPLEMENTAL INDENTURES SECTION 16.01. Supplemental Indentures to be Executed for Specified Purposes. The Company and the Trustee, from time to time and at any time, may enter into one or more supplemental indentures hereto, upon receipt by the Trustee of a Resolution authorizing the execution thereof and requesting the Trustee to execute the same, for any one or more of the following purposes: 118 (a) To describe more fully or to amplify or correct the description of any property hereby conveyed or pledged or intended to be conveyed or pledged, or to assign, convey, mortgage, pledge, transfer and set over unto the Trustee, subject to such liens or other encumbrances, if any, as shall be therein specifically described, additional property of the Company, for the equal and proportionate benefit and security, except as otherwise expressly provided herein, of the holders and owners of all bonds at any time issued and Outstanding under this Indenture; (b) To specify definitive limitations on the total authorized amount of any additional series of bonds issued hereunder; (c) To provide additional or other restrictions and limitations upon the issue of any new series of bonds or additional covenants and undertakings of the Company with respect thereto; (d) To set forth the form and substance of any additional bonds, and the terms, provisions and conditions thereof; (e) To provide the terms and conditions of the exchange of bonds of one series for bonds of another series, or of the exchange of bonds of one denomination for bonds of another denomination of the same series; (f) To provide that the principal of the bonds may be converted at the option of the holders into capital stock or other securities of the Company, and to set forth the terms and conditions of such conversion; (g) To provide for a special sinking, purchase, improvement or other analogous fund for the benefit or retirement of the bonds of any or all series to be issued on or subsequent to the date thereof; (h) To evidence the succession of another corporation to the Company, or successive successions, and the assumption by such successor corporation of the covenants and obligations of the Company under this Indenture, and to evidence the appointment of a separate trustee or a co-trustee or the succession of a new trustee to any trustee hereunder; (i) To provide the terms and conditions for the issuance of the bonds of any series in book entry form; 119 (j) To otherwise add to, change, alter, modify, vary or eliminate any of the terms, provisions, restrictions or conditions of this Indenture; provided, however, that any such addition, changes, alterations, modifications, variations or eliminations made in a supplemental indenture pursuant to this clause which would adversely affect or diminish the rights of the holders of any bonds then Outstanding against the Company or its property shall be expressly stated in such supplemental indenture to become effective only with respect to bonds issued on or subsequent to the date of such supplemental indenture; and (k) For any other purpose not inconsistent with the terms of this Indenture and which shall not impair the security of the same, including the purpose of supplying any omission, curing any ambiguity or curing, correcting or supplementing any defective or inconsistent provision contained herein or in any supplemental indenture. Any supplemental indenture authorized by the provisions of this Section may be executed by the Company and the Trustee without the consent of the holders of any of the bonds at the time Outstanding or the publication or mailing of notice, notwithstanding any of the provisions of Section 16.02 hereof. SECTION 16.02. Modification of Indenture with Consent of Bondholders. With the consent of the holders of not less than sixty-six and two-thirds per centum (66-2/3%) in principal amount of the bonds at the time Outstanding or their attorneys-in-fact duly authorized, and, if the rights of the holders of one or more but less than all series of bonds at the time Outstanding are to be adversely affected, then by the affirmative vote of the holders of not less than sixty-six and two-thirds per centum (66-2/3%) in principal amount of the bonds the rights of the holders of which are adversely affected, the Company, when authorized by a Resolution, and the Trustee may from time to time and at any time enter into a supplemental indenture for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or modifying the rights and obligations of the Company and the rights of the holders of any of the bonds; provided, however, that no such supplemental indenture shall (1) extend the maturity of any of the bonds or reduce the rate or extend the time of payment of interest thereon, or reduce the amount of the principal thereof, or reduce any premium payable on the redemption thereof, without the consent of the holder of each bond so affected, or (2) permit the creation of any lien, not otherwise permitted, prior to or on a parity with the lien of this Indenture, without the consent of the holders of all the bonds then Outstanding, or (3) reduce the aforesaid percentage of the principal amount of bonds the holders of which are required 120 to approve any such supplemental indenture, without the consent of the holders of all the bonds then Outstanding, or (4) affect or impair the rights of the holder of any bond contained in the last paragraph of Section 9.12 hereof, without the consent of the holders of all the bonds then Outstanding, or (5) alter or create redemption and/or sinking fund requirements with respect to an Outstanding series of bonds, without the consent of the holder of each bond so affected, or (6) amend Section 4.01B(a) or (b) with respect to Series A or Series B, without the consent of the holders of 66-2/3% aggregate principal amount of bonds of Series A or Series B, as the case may be, or (7) amend Section 4.01B(c) with respect to Series A or Series B, without the unanimous consent of the initial beneficial owners of the bonds of Series A or Series B, as the case may be, who continue to hold such bonds, or (8) permit the deprivation of any non-assenting holder of any bond of a lien upon the Trust Estate for the security of such holder's bond (subject only to Excepted Encumbrances and Prepaid Liens). For the purposes of this Section, bonds shall be deemed to be affected by a supplemental indenture if such supplemental indenture adversely affects or diminishes the rights of holders thereof against the Company or against its property. Upon the written request signed by the President or a Vice President of the Company, accompanied by a Resolution authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of bondholders as aforesaid (the instrument or instruments evidencing such consent to be dated within one year of such request), the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion but shall not be obligated to enter into such supplemental indenture. It shall not be necessary for the consent of the bondholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Prior to the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Company shall publish a notice, setting forth in general terms the substance of such supplemental indenture, at least once in one Daily Newspaper of general circulation in each city in which the principal of any of the bonds shall be payable, or shall mail such notice, first class, postage prepaid, and registered if the Company so elects, to each holder of bonds at the last address of such holder appearing on the registry books, such publication or mailing, as the case may be, to be made not 121 less than thirty (30) days prior to such execution. Any failure of the Company to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 16.03. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions of this Article, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, duties and obligations under this Indenture of the Company, the Trustee and all holders of bonds Outstanding thereunder shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 16.04. Opinion of Counsel as Evidence of Compliance. The Trustee may receive an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to the provisions of this Article complies with the requirements of this Article. SECTION 16.05. Notations on Bonds; Provision for New Bonds. Bonds authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If such supplemental indenture shall so provide, new bonds, so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture, may be prepared by the Company, authenticated by the Trustee and delivered without cost to the holders of bonds then Outstanding, upon surrender of such bonds, in equal aggregate principal amounts. SECTION 16.06. Supplemental Indenture to Conform to Trust Indenture Act of 1939. Any supplemental indenture executed pursuant to the provisions of this Article shall conform with the requirements of the TIA, as then in force. ARTICLE XVII BONDHOLDERS' MEETINGS SECTION 17.01. Meeting Called for Specified Purposes. A meeting of bondholders may be called at any time and from time to time pursuant to the provisions of this Article XVII for any of the following purposes: 122 (1) to give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to consent to the waiving of any default hereunder and its consequences, or to take any other action authorized to be taken by bondholders pursuant to any of the provisions of Article IX; (2) to remove the Trustee and appoint a successor trustee pursuant to the provisions of Article XIV; (3) to consent to the execution of a supplemental indenture pursuant to the provisions of Section 16.02 hereof; or (4) to take any other action authorized to be taken by or on behalf of the holders of any specified aggregate principal amount of bonds under any other provision of this Indenture or under applicable law. SECTION 17.02. Meeting Called by Trustee. The Trustee may at any time call a meeting of bondholders to take any action specified in Section 17.01 hereof, to be held at such time and at such place as the Trustee shall determine. Notice of every meeting of the bondholders, setting forth the time and the place thereof and, in general terms, the business to be submitted, shall be mailed first class, postage prepaid, by the Trustee not less than thirty (30) days before such meeting to each registered holder of bonds at the last address of such holder appearing in the registry books. SECTION 17.03. Meeting Called by Company or Bondholders. In case at any time the Company by written request signed by the President or a Vice President of the Company, or the holders of at least 20% in aggregate principal amount of the bonds then Outstanding, shall have requested the Trustee to call a meeting of bondholders setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 10 days after receipt of such request, then the Company, or the holders of bonds in the amount above specified, may determine the time and the place for such meeting and may call such meeting to take any action authorized in Section 17.01 hereof, by giving notice thereof as provided in Section 17.02 hereof. SECTION 17.04. Bondholders Entitled to Vote. To be entitled to vote at any meeting of bondholders a person shall (a) be a holder of one or more Outstanding bonds; or (b) be a person duly appointed by an instrument in writing as proxy for a holder of an Outstanding bond; and (c) be the holder of a bond which is one of a series directly affected by the business submitted to the meeting. Officers and representatives of the Company and its 123 counsel, and representatives of the Trustee and its counsel may attend, and speak at, any meeting of bondholders but shall not be entitled to vote thereat. Attendance by bondholders may be in person or by proxy and, unless specifically prohibited by law, any such proxy shall remain in effect unless specifically revoked and shall be binding on any future holder of the bonds represented by such proxy, unless specifically revoked by any such future holder before being voted. SECTION 17.05. Regulations for Meeting. Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of bondholders, in regard to proof of the holding of bonds and of the appointment of proxies, and in regard to the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit. The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by bondholders as provided in Section 17.03 hereof, in which case the Company or the bondholders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the holders of a majority in principal amount of the bonds represented at the meeting and entitled to vote. Subject to the provisions of Section 17.04 hereof, at any meeting each bondholder or proxy shall be entitled to one vote for each $1,000 principal amount of bonds, provided, however, that no vote shall be cast or counted at any meeting in respect of any bonds challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote other than by virtue of bonds held by him or instruments in writing as aforesaid duly designating him as the person to vote on behalf of other bondholders. At any meeting of bondholders, the presence of persons holding or representing bonds in an aggregate principal amount sufficient to take action upon the business for the transaction of which such meeting was called shall constitute a quorum. Any meeting of bondholders, duly called pursuant to the provisions of Section 17.02 or 17.03 hereof, may be adjourned from time to time by vote of persons representing a majority in aggregate principal amount of the bonds represented at the meeting and entitled to vote, whether or not a quorum shall be present, and the meeting may be held as so adjourned without further notice. 124 SECTION 17.06. Bondholders' Vote by Written Ballot. The vote upon any resolution submitted to any meeting of bondholders shall be by written ballots on which shall be subscribed the signatures of the holders of bonds or of their representatives by proxy and the series and identifying number or numbers of the bonds held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes, who shall count all votes cast at a meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record, at least in duplicate, of the proceedings of each meeting of bondholders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts, setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 17.02 hereof. Each copy of the record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be delivered to the Company and another to the Trustee, which latter copy shall be preserved by the Trustee and shall have attached thereto the ballots voted at the meeting. Any copy of the record so signed and verified shall be conclusive evidence of the matters therein stated. SECTION 17.07. Nothing Authorizes Hindrance or Delay of Rights of Trustee or Bondholders. Nothing contained in this Article XVII shall be deemed or construed to authorize or permit, by reason of any call of a meeting of bondholders or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to bondholders under any of the provisions of this Indenture or of the bonds. ARTICLE XVIII MISCELLANEOUS PROVISIONS SECTION 18.01. Covenants for Sole Benefit of Parties and Bondholders; Severability. All the covenants, stipulations and agreements contained in this Indenture are and shall be for the sole and exclusive benefit of the parties hereto, their successors and assigns, and of the holders of the bonds hereby secured. If any provision of this Indenture, or the application of any provision to any person or circumstance, shall be held invalid or unenforceable, the remainder of this Indenture, or the application of such provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby. 125 SECTION 18.02. Court may Require Bond for Costs, Under Certain Conditions. All parties to this Indenture agree, and each holder or owner of any bond by his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as such Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any bondholder, or group of bondholders, holding in the aggregate more than ten per centum (10%) in principal amount of the bonds Outstanding, or to any suit instituted by any bondholder for the enforcement of the payment of the principal of or interest on any bond, on or after the respective due dates expressed in such bond. SECTION 18.03. Provisions of Trust Indenture Act of 1939 to be Controlling. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed upon any person by Sections 310 to 317, inclusive, of the TIA, such imposed duties shall control. SECTION 18.04. Notice to the Company. Any notice to the Company under any provision of this Indenture shall be sufficiently given if served personally upon any officer of the Company or deposited in the mails addressed to the Company at its office at 303 North Oregon Street, El Paso, Texas 79901, or at such other address as may be designated for that purpose in a writing delivered to the Trustee by the Company. SECTION 18.05. Reference to Parties Includes Successors. Subject to the provisions of Article XIII hereof, whenever in this Indenture any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party, and all of the covenants, promises and agreements in this Indenture contained by or on behalf of the Company, or by or on behalf of the Trustee, shall bind and inure to the benefit of the respective successors and assigns of such parties, whether so expressed or not; but the provisions of this paragraph shall not be deemed to subject to the lien hereof, except to the extent in Article XIII hereof provided, the property of any successor corporation not acquired from the Company and not then subject to the lien hereof, unless it shall have expressly agreed that such shall be the case, in the manner provided in Article XIII hereof. 126 SECTION 18.06. Headings Inserted for Convenience Only. The headings of the different Articles or Sections of this Indenture are inserted for convenience of reference, and are not to be taken to be any part of these provisions, or to control or affect the meaning, construction or effect of the same. SECTION 18.07. Cancellation and Cremation of Bonds. Whenever in this Indenture it is provided that the Trustee shall cancel any bonds, the Trustee may cancel and cremate such bonds and deliver a certificate of cremation thereof to the Company. SECTION 18.08. Execution in Counterparts. This Indenture may be simultaneously executed in any number of counterparts, and all said counterparts, executed and delivered each as an original, shall constitute but one and the same instrument. SECTION 18.09. Deposit of Securities in Lieu of Cash. Wherever in this Indenture the Company is permitted or required to deposit cash hereunder with the Trustee, the Company may deposit in lieu of cash an amount of U.S. Government Obligations of at least an equal face amount and having a then market value at least equal to the amount of cash in lieu of which such obligations are deposited; provided, however, that the Company shall not be entitled, less than ten days prior to or on any interest payment date, redemption date or maturity date of any bonds outstanding hereunder, to deposit any such obligations in lieu of the cash due to be paid on such date to the holders of bonds secured hereby and provided further that any deposit of Funds pursuant to Article XI be subject solely to said Article. The Company may at any time withdraw any cash on deposit hereunder with the Trustee by depositing hereunder with the Trustee in substitution therefor an amount of U.S. Government Obligations of at least an equal face amount and having a then market value at least equal to the amount of cash so withdrawn, provided, however, that the Company shall not be entitled, less than ten days prior to or on any interest payment date, redemption date or maturity date of any bonds outstanding hereunder or any time subsequent to such date, to withdraw any cash deposited hereunder for payment on such date to the holders of bonds secured hereby. Any obligations so deposited shall be held by the Trustee in all respects as would be held the cash for which such obligations are so substituted. Any obligations so deposited shall be sold by the Trustee upon the written request signed by the President or a Vice President of the Company, at such prices as shall be fixed by the Company and approved by the Trustee, provided, however, that the Trustee, without any such request from the Company, shall be entitled, in its sole discretion and at such prices as may be approved by it, to sell at public or private sale any obligations so held by it in lieu of any cash which shall be payable, not more than ten days after 127 the date of such sale, on an interest payment date, redemption date or maturity date of any bonds secured hereby. The Trustee shall not be liable for any loss or other expense incurred in connection with any such sale. If the proceeds from any such sale shall be less than the amount of cash in lieu or for the withdrawal of which the obligations sold were deposited, or if the market value of any obligations so deposited hereunder shall, in the judgment of the Trustee, at any time be less than the amount of cash in lieu or for the withdrawal of which they were deposited, in either event the Company shall deposit hereunder with the Trustee cash sufficient to make up the deficiency; but the cash deposited to make up the deficiency in the market value of any obligations may at any time thereafter be withdrawn by the Company if at the time of withdrawal the market value of such obligations shall be not less than the amount of cash in lieu or for the withdrawal of which they were deposited. Except as otherwise provided in Article XI hereof, the Trustee shall collect from time to time all interest upon the deposited obligations as such interest matures and, so long as the Company shall not be in default hereunder, all such interest shall be paid by the Trustee to the Company as and when received. The proceeds of the sale of deposited obligations shall be paid out and applied by the Trustee in like manner and for like purposes as is provided in this Indenture in respect of the cash in lieu or for the withdrawal of which such obligations were deposited. The deposited obligations while held by the Trustee, and the proceeds of the sale thereof, until such proceeds are so paid out and applied, shall be held in accordance with the terms and provisions of this Indenture applicable to the cash in lieu of or in substitution for which such obligations were deposited. Notwithstanding the foregoing, the sufficiency of the amount of U.S. Government Obligations deposited by the Company with the Trustee pursuant to Article XI hereof shall be determined as set forth in said Article. SECTION 18.10. Termination. The Company or the Trustee may terminate this Indenture at any time on or after the date of maturity of that series of bonds issued or to be issued hereunder and secured by this Indenture which, of all the series of bonds issued hereunder, has the latest date of maturity; provided, however, that nothing in this Section shall affect or limit any of the rights or remedies of the Trustee or the bondholders prescribed in Article IX hereof or the obligations of the Company under Section 14.10. 128 IN WITNESS WHEREOF, said EL PASO ELECTRIC COMPANY has caused this Indenture to be executed in its corporate name by its President or one of its Vice-Presidents and its corporate seal to be hereunto affixed and to be attested by its Secretary or one of its Assistant Secretaries, and said STATE STREET BANK AND TRUST COMPANY, to evidence its acceptance of the trust hereby created, has caused this Indenture to be executed in its corporate name by one of its Vice-Presidents and its corporate seal to be hereunto affixed and to be attested by one of its Assistant Secretaries, in several counterparts, all as of the day and year first above written. EL PASO ELECTRIC COMPANY By__________________________ (SEAL) Attest: __________________________ [Asst] Secretary Signed, sealed, acknowledged and delivered on behalf of El Paso Electric Company, in the presence of: _________________________ _________________________ 129 STATE STREET BANK AND TRUST COMPANY, as Trustee and on behalf of the bondholders By___________________________ (SEAL) Attest: ___________________________ [Asst] Secretary Signed, sealed, acknowledged and delivered on behalf of State Street Bank and Trust Company, in the presence of: _________________________ _________________________ 130 [for Texas purposes] THE STATE OF ________ COUNTY OF ______________ Before me personally appeared _____________________, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed said instrument in the capacity herein stated for the purposes and consideration therein expressed. (SEAL) _________________________ Notary Public in and for the State of ________ My commission expires: _________________________ 131 [for Texas purposes] THE STATE OF ________ COUNTY OF ______________ Before me personally appeared _____________________, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed said instrument in the capacity herein stated for the purposes and consideration therein expressed. (SEAL) _________________________ Notary Public in and for the State of ________ My commission expires: _________________________ 132 [for Arizona purposes] THE STATE OF ________ COUNTY OF ______________ Before me personally appeared ____________________ known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed said instrument in the capacity therein stated for the purposes and consideration therein expressed. (SEAL) _________________________ Notary Public in and for the State of ________ My commission expires: _________________________ 133 [for Arizona purposes] THE STATE OF ________ COUNTY OF ______________ Before me personally appeared ____________________ known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed said instrument in the capacity therein stated for the purposes and consideration therein expressed. (SEAL) _________________________ Notary Public in and for the State of ________ My commission expires: _________________________ 134 [for New Mexico purposes] THE STATE OF ________ COUNTY OF ______________ This instrument was acknowledged before me on this __ day of _______, 199_, by ____________ as _____________ of El Paso Electric Company, a Texas corporation, on behalf of the corporation. (SEAL) _________________________ Notary Public in and for the State of ________ My commission expires: _________________________ 135 [for New Mexico purposes] THE STATE OF ________ COUNTY OF ______________ This instrument was acknowledged before me on this __ day of _______, 199_, by ____________ as _____________ of State Street Bank and Trust Company, trustee under the foregoing instrument. (SEAL) _________________________ Notary Public in and for the State of ________ My commission expires: _________________________ 136 Appendix A-1 (Form of face of bond of Series A) No. $ EL PASO ELECTRIC COMPANY First Mortgage Bond, Series A __% Due ______ __, ____ El Paso Electric Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to _______________ or registered assigns, the principal sum of $____ Dollars on _______, ____, and to pay to the registered holder hereof interest on said sum from the date hereof at the rate of ____ per centum per annum, payable half- yearly on the ______ day of _______ and the _______ day of _______ in each year, commencing __________, 1994, until said principal sum is paid. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. The provisions of this bond are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been duly authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. 137 IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice-Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By______________________________ [Title] ATTEST: ________________________ [Asst.] Secretary 138 (Form of reverse side of bond of Series A) EL PASO ELECTRIC COMPANY FIRST MORTGAGE BOND, SERIES A ___% DUE ______ __, ____ The interest payable on this bond on any interest payment date will, subject to certain exceptions provided in the Indenture hereinafter mentioned, be paid to the person in whose name this bond is registered at the close of business on the record date, which shall be the ___________ or __________, as the case may be, next preceding such interest payment date, or, if such date shall be a legal holiday or a day on which banking institutions in New York, New York are authorized or required to close, the next preceding day which shall not be a legal holiday or a day on which such institutions are so authorized or required to close. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to State Street Bank and Trust Company (herein sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (herein referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. The bonds of Series A, of which this bond is one, are not redeemable prior to _______, 1999. On or after _________, 1999, at the option of the Company and upon the notice and in the manner and with the effect provided in the Indenture, bonds of Series A may be redeemed by or on behalf of the Company, as a whole at any time, or in part from time to time, at the applicable general redemption price, expressed as a percentage of the principal amount of the bonds, stated in the following table under "General Redemption Price," together with accrued interest on such principal amount to the date fixed for redemption: 139 If redeemed If redeemed during the during the 12 months General 12 months General beginning Redemption beginning Redemption _______, 1999 Price* _______, 1999 Price* (table to come based on Schedule B to Plan] _________________ * Stated as a percentage of principal amount of the bonds. In addition to the foregoing redemption provisions, in certain circumstances specified in the Indenture, the Company may offer the initial beneficial owner hereof (if such owner continues to hold this bond) the election to have this bond redeemed by the Company at a redemption price equal to the principal amount of this bond, together with accrued interest to the date of redemption. In case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is transferable or exchangeable by the holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in Boston, Massachusetts, but only in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in 140 exchange herefor. The Company shall not register, exchange or transfer any bonds of this series during the period of ten days next preceding any designation of bonds of said Series to be redeemed, if applicable, and, as to any bonds selected for redemption, from and after the date of such selection. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. The bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. Trustee's Certificate of Authentication This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. STATE STREET BANK AND TRUST COMPANY, as Trustee By______________________________ Authorized Signature 141 Appendix A-2 (Form of face of bond of Series B) No. $ EL PASO ELECTRIC COMPANY First Mortgage Bond, Series B __% Due ______ __, ____ El Paso Electric Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to _______________ or registered assigns, the principal sum of $____ Dollars on _______, ____, and to pay to the registered holder hereof interest on said sum from the date hereof at the rate of ____ per centum per annum, payable half- yearly on the ______ day of _______ and the _______ day of _______ in each year, commencing __________, 1994, until said principal sum is paid. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. The provisions of this bond are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been duly authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. 142 IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice-Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By______________________________ [Title] ATTEST: ________________________ [Asst.] Secretary 143 (Form of reverse side of bond of Series B) EL PASO ELECTRIC COMPANY FIRST MORTGAGE BOND, SERIES B ___% DUE ______ __, ____ The interest payable on this bond on any interest payment date will, subject to certain exceptions provided in the Indenture hereinafter mentioned, be paid to the person in whose name this bond is registered at the close of business on the record date, which shall be the ___________ or __________, as the case may be, next preceding such interest payment date, or, if such date shall be a legal holiday or a day on which banking institutions in New York, New York are authorized or required to close, the next preceding day which shall not be a legal holiday or a day on which such institutions are so authorized or required to close. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to State Street Bank and Trust Company (herein sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (herein referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. The bonds of Series B, of which this bond is one, are not redeemable prior to _______, 1999. On or after _________, 1999, at the option of the Company and upon the notice and in the manner and with the effect provided in the Indenture, bonds of Series B may be redeemed by or on behalf of the Company, as a whole at any time, or in part from time to time, at the applicable general redemption price, expressed as a percentage of the principal amount of the bonds, stated in the following table under "General Redemption Price," together with accrued interest on such principal amount to the date fixed for redemption: 144 If redeemed If redeemed during the during the 12 months General 12 months General beginning Redemption beginning Redemption _______, 1999 Price* _______, 1999 Price* (table to come based on Schedule B to Plan] _________________ * Stated as a percentage of principal amount of the bonds. In addition to the foregoing redemption provisions, in certain circumstances specified in the Indenture, the Company may offer the initial beneficial owner hereof (if such owner continues to hold this bond) the election to have this bond redeemed by the Company at a redemption price equal to the principal amount of this bond, together with accrued interest to the date of redemption. In case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is transferable or exchangeable by the holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in Boston, Massachusetts, but only in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in 145 exchange herefor. The Company shall not register, exchange or transfer any bonds of this series during the period of ten days next preceding any designation of bonds of said Series to be redeemed, if applicable, and, as to any bonds selected for redemption, from and after the date of such selection. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. The bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. Trustee's Certificate of Authentication This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. STATE STREET BANK AND TRUST COMPANY, as Trustee By______________________________ Authorized Signature 146 Appendix A-3 (Form of face of bond of Series C) No. $ EL PASO ELECTRIC COMPANY First Mortgage Bond, Series C __% Due ______ __, ____ El Paso Electric Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to _______________ or registered assigns, the principal sum of $____ Dollars on _______, ____, and to pay to the registered holder hereof interest on said sum from the date hereof at the rate of ____ per centum per annum, payable half- yearly on the ______ day of _______ and the _______ day of _______ in each year, commencing __________, 1994, until said principal sum is paid. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. The provisions of this bond are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been duly authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. 147 IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice-Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By______________________________ [Title] ATTEST: ________________________ [Asst.] Secretary 148 (Form of reverse side of bond of Series C) EL PASO ELECTRIC COMPANY FIRST MORTGAGE BOND, SERIES C ___% DUE ______ __, ____ The interest payable on this bond on any interest payment date will, subject to certain exceptions provided in the Indenture hereinafter mentioned, be paid to the person in whose name this bond is registered at the close of business on the record date, which shall be the ___________ or __________, as the case may be, next preceding such interest payment date, or, if such date shall be a legal holiday or a day on which banking institutions in New York, New York are authorized or required to close, the next preceding day which shall not be a legal holiday or a day on which such institutions are so authorized or required to close. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to State Street Bank and Trust Company (herein sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (herein referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. On or after _________, 1994, at the option of the Company and upon the notice and in the manner and with the effect provided in the Indenture, bonds of Series C, of which this bond is one, may be redeemed by or on behalf of the Company, as a whole at any time, or in part from time to time, at the applicable general redemption price, expressed as a percentage of the principal amount of the bonds, stated in the following table under "General Redemption Price," together with accrued interest on such principal amount to the date fixed for redemption: 149 If redeemed If redeemed during the during the 12 months General 12 months General beginning Redemption beginning Redemption _______, 1994 Price* _______, 1994 Price* (table to come based on page 36 and Schedule C to the Plan) _________________ * Stated as a percentage of principal amount of the bonds. In case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is transferable or exchangeable by the holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in Boston, Massachusetts, but only in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in exchange herefor. The Company shall not register, exchange or transfer any bonds of this series during the period of ten days next preceding any designation of bonds of said Series to be redeemed, if applicable, and, as to any bonds selected for redemption, from and after the date of such selection. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. 150 The bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. Trustee's Certificate of Authentication This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. STATE STREET BANK AND TRUST COMPANY, as Trustee By______________________________ Authorized Signature 151 Appendix A-4 (Form of face of bond of Series X) No. $ EL PASO ELECTRIC COMPANY First Mortgage Bond, Series X Floating Rate Due ______ __, ____ El Paso Electric Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to _________, as Agent under the Term Loan Agreement hereinafter described, or registered assigns, the principal sum of $____ Dollars on the dates set forth in the Notes referred to below and to pay to the registered holder hereof interest on said sum as described below. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to State Street Bank and Trust Company (hereinafter sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (hereinafter referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. The bonds of this Series have been issued to ____________, as Agent for the creditors (the "Creditors") named in the Term Loan Agreement dated as of ____________, 1994 (the "Term Loan Agreement"), to partially secure the payment of the principal of and interest due on the Class 3A Secured Notes (the 152 "Notes"), executed by the Company and payable to the Creditors, or order, in the aggregate principal amount of $_________ in accordance with the terms set forth in the Term Loan Agreement. Except as hereinafter provided, interest on this bond accrues and is payable at the same rates (determined on a weighted average basis if more than one rate is in effect with respect to the Notes) and on the same dates as interest is payable on the Notes under the terms of the Term Loan Agreement, which provides for floating rate loans (all as provided for in the Term Loan Agreement). The obligation of the Company to make payments with respect to the principal and interest on the bonds of this Series shall be fully or partially, as the case may be, satisfied and discharged to the extent that, at any time that any such payment shall be due, the Company shall have paid fully or partially the then due principal of and interest on the Notes which the bonds of this Series secure; provided that any payments of principal of or interest on any of the Notes will be deemed to have been applied pro rata among all the Notes. Upon surrender for cancellation, at any time or from time to time, of bonds of this Series by the Agent to the Trustee, the bonds surrendered shall be deemed fully paid and the obligations of the Company thereunder shall be terminated, and such bonds shall be cancelled. In the manner provided in the Indenture, the bonds of this Series shall be redeemed in whole by payment of the principal amount thereof plus accrued interest thereon to the redemption date, upon receipt by the Trustee and the Company of a written demand from the Agent. Such demand shall also state that the principal amount of the Notes which the bonds of this Series secure then outstanding under the Term Loan Agreement has been declared immediately due and payable pursuant to the provisions of the Term Loan Agreement, specifying the date from which unpaid interest on such Notes has then accrued, and stating that such declaration of maturity has not been rescinded. The bonds of this Series shall be redeemed on the fifth business day following receipt of the written demand as aforesaid. Upon the occurrence of certain Events of Default under the Term Loan Agreement, the bonds of this Series shall be redeemed on the fifth business day following receipt by the Trustee of notice from the Agent of such Event of Default; the Agent shall give notice to the Trustee of such Events of Default and of the declaration of maturity as a consequence thereof but failure to give such notice shall not affect the rights of the Agent. Such redemption shall be rescinded and become null and void for all purposes of the Indenture upon rescission in writing of the aforesaid declaration of maturity under the Term Loan Agreement received by the Trustee 153 no later than the Business Day prior to the date fixed for redemption, and thereupon no redemption of the bonds of this Series and no payments in respect thereof shall be effected or required. Notwithstanding the provisions of the previous paragraph, in case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is nontransferable except to effect transfer to any successor to the Agent under the Term Loan Agreement, but is exchangeable by the registered holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in Boston, Massachusetts, any such permitted transfer or exchange to be made in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in exchange herefor. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. The bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been duly authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. 154 IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice-Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By______________________________ [Title] ATTEST: ________________________ [Asst.] Secretary Trustee's Certificate of Authentication This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. STATE STREET BANK AND TRUST COMPANY, as Trustee By______________________________ Authorized Signature EX-99 4 FORM OF REORGANIZED EPE 2ND MORTGAGE BOND INDENTURE 1 EXHIBIT A-14 ========================================================== INDENTURE _______________ EL PASO ELECTRIC COMPANY TO IBJ SCHRODER BANK & TRUST COMPANY AS TRUSTEE _________________ Dated as of , 1994 _________________ (SECOND MORTGAGE BONDS) THIS INSTRUMENT GRANTS A SECURITY INTEREST BY A UTILITY THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS ========================================================== 2 Explanations of Dates and Amounts [Not Part of the Indenture] * Initial issuance date of bonds ** Intentionally omitted *** First April 1st after initial issuance of bonds **** These schedules are included for purposes of complying with state law requirements and will list the property of the Company specified in the relevant definition as of the initial issuance date of bonds. Schedule A will include all the real property of the Company (other than as set forth in Schedule B). Schedule B will only contain certain property, if any, in an immaterial amount. 3 EL PASO ELECTRIC COMPANY INDENTURE DATED AS OF ___________, 1994 TABLE OF CONTENTS Page Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Preliminary Statement. . . . . . . . . . . . . . . . . . . . . 1 Property Conveyed. . . . . . . . . . . . . . . . . . . . . . . 2 After-acquired Property. . . . . . . . . . . . . . . . . . . . 3 Excepted Property. . . . . . . . . . . . . . . . . . . . . . . 4 Subject Clause . . . . . . . . . . . . . . . . . . . . . . . . .5 Habendum . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Grant in Trust . . . . . . . . . . . . . . . . . . . . . . . . 5 Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . .6 ARTICLE I DEFINITIONS AND OTHER PROVISIONS . . . . . . . .6 OF GENERAL APPLICATION SECTION 1.01. Construction of Document. . . . . . . . . . . . 6 SECTION 1.02. Certain Defined Terms . . . . . . . . . . . . . 6 affiliate . . . . . . . . . . . . . . . . . . . . . . . . 6 amount of depreciable property. . . . . . . . . . . . . . 7 application . . . . . . . . . . . . . . . . . . . . . . . 7 Board of Directors. . . . . . . . . . . . . . . . . . . . 7 bondable property . . . . . . . . . . . . . . . . . . . . 7 bonds . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Business Day. . . . . . . . . . . . . . . . . . . . . . . 7 Commission. . . . . . . . . . . . . . . . . . . . . . . . 7 Company . . . . . . . . . . . . . . . . . . . . . . . . . 7 control . . . . . . . . . . . . . . . . . . . . . . . . . 7 cost. . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Current Fair Value. . . . . . . . . . . . . . . . . . . . 7 Daily Newspaper . . . . . . . . . . . . . . . . . . . . . 8 deposited cash. . . . . . . . . . . . . . . . . . . . . . 8 Effective Date. . . . . . . . . . . . . . . . . . . . . . 8 Engineer. . . . . . . . . . . . . . . . . . . . . . . . . 8 Engineer's Certificate. . . . . . . . . . . . . . . . . . 8 Excepted Encumbrances . . . . . . . . . . . . . . . . . . 8 Excepted Property . . . . . . . . . . . . . . . . . . . . 9 fair value to the Company . . . . . . . . . . . . . . . . .9 First Mortgage Indenture. . . . . . . . . . . . . . . . . 9 Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 10 gross expenditures. . . . . . . . . . . . . . . . . . . . 10 gross retirements of property . . . . . . . . . . . . . . 10 holder" or "bondholder. . . . . . . . . . . . . . . . . . 10 Independent Engineer. . . . . . . . . . . . . . . . . . . 10 lien hereof" and "lien of this Indenture. . . . . . . . . 10 net earnings. . . . . . . . . . . . . . . . . . . . . . . 10 4 Net Earnings Certificate. . . . . . . . . . . . . . . . . 10 net expenditures. . . . . . . . . . . . . . . . . . . . . 10 Obligor . . . . . . . . . . . . . . . . . . . . . . . . . 10 Officers' Certificate . . . . . . . . . . . . . . . . . . 11 Opinion of Counsel. . . . . . . . . . . . . . . . . . . . 11 Original Fair Value . . . . . . . . . . . . . . . . . . . 11 Outstanding . . . . . . . . . . . . . . . . . . . . . . . 11 person. . . . . . . . . . . . . . . . . . . . . . . . . . 12 Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . 12 plant or property operated by others. . . . . . . . . . . 12 Prepaid Liens . . . . . . . . . . . . . . . . . . . . . . 12 Prior Lien. . . . . . . . . . . . . . . . . . . . . . . . 12 purchased property. . . . . . . . . . . . . . . . . . . . 13 Required Percentage . . . . . . . . . . . . . . . . . . . 13 Resolution. . . . . . . . . . . . . . . . . . . . . . . . 13 Responsible Officers. . . . . . . . . . . . . . . . . . . 13 TIA . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 title . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 14 Trust Estate. . . . . . . . . . . . . . . . . . . . . . . 14 U.S. Government Obligations . . . . . . . . . . . . . . . 14 SECTION 1.03. Compliance Certificates and Opinions. . . . . . 14 SECTION 1.04. Amount to be Deposited to Pay or Redeem Bonds, etc.. . . . . . . . . . . . . . . . . . . . . . 15 SECTION 1.05. Certificate of Resolutions. . . . . . . . . . . 15 SECTION 1.06. Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . 16 SECTION 1.07. Indenture as Deed of Trust in New Mexico. . . . 16 SECTION 1.08. Indenture as Deed of Trust in Arizona . . . . . 16 ARTICLE II THE BONDS. . . . . . . . . . . . . 17 SECTION 2.01. General Limitations; Bonds Issuable in Series . 17 SECTION 2.02. Date of and Interest on Bonds . . . . . . . . . 19 SECTION 2.03. Legends on Bonds. . . . . . . . . . . . . . . . 19 SECTION 2.04. Exchange of Bonds; Transfers. . . . . . . . . . 20 SECTION 2.05. Registration and Transfer of Bonds. . . . . . . 20 SECTION 2.06. Execution of Bonds. . . . . . . . . . . . . . . 21 SECTION 2.07. Temporary Bonds . . . . . . . . . . . . . . . . 21 /SECTION 2.08. Lost, Destroyed or Mutilated Bonds . . . . . . 22 SECTION 2.09. Certificate of the Trustee. . . . . . . . . . . 22 SECTION 2.10. Authorized Denominations. . . . . . . . . . . . 22 ARTICLE III BOND FORMS. . . . . . . . . . . . . 23 SECTION 3.01. Forms Generally . . . . . . . . . . . . . . . . 23 SECTION 3.02. Trustee's Certificate of Authentication . . . . 23 5 ARTICLE IV ISSUANCE OF BONDS. . . . . . . . . . . 29 SECTION 4.01. Initial Issuance of Bonds . . . . . . . . . . . 29 SECTION 4.01A. Terms of Initial Issues of Bonds. . . . . . . . 29 SECTION 4.01B. Certain Covenants for Bonds of Series A . . . . 30 SECTION 4.01C. Certain Provisions for Bonds of Series D, E, F, X, Y-1 through Y-8 and Z . . . . . . . . . 31 SECTION 4.02. Issuance of Bonds Upon Retirement of Bonds Previously Outstanding Hereunder. . . . . . . 32 SECTION 4.03. Issuance of Bonds Upon the Basis of Property and Property Additions. . . . . . . . . . . . 34 SECTION 4.04. Issuance of Bonds Upon Deposit of Cash With Trustee; Withdrawal or Application of Deposited Cash. . . . . . . . . . . . . . . . 40 SECTION 4.05. Net Earnings Certificate. . . . . . . . . . . . 41 SECTION 4.06. Documents to be Delivered . . . . . . . . . . . 43 ARTICLE V PARTICULAR COVENANTS OF THE COMPANY . . . . . . 46 SECTION 5.01. Seizin and Warranty . . . . . . . . . . . . . . 46 SECTION 5.02. Payment of Principal, Premium and Interest; Maintenance of Office . . . . . . . . . . . . 46 SECTION 5.03. Regarding Paying Agent; Funds in Trust. . . . . 47 SECTION 5.04. Limitations on Liens; Payment of Taxes. . . . . 48 SECTION 5.05. To Insure . . . . . . . . . . . . . . . . . . . 49 SECTION 5.06. To Maintain Property, etc.. . . . . . . . . . . 50 SECTION 5.07. To Maintain Corporate Existence and Franchises. 51 SECTION 5.08. Repayment of Advances made by a Receiver, etc.. 51 SECTION 5.09. To Record and File Indenture and Supplemental Indenture . . . . . . . . . . . . . . . . . . 52 SECTION 5.10. To Furnish Opinions of Counsel as to Recording . . . . . . . . . . . . . . . . . . 52 SECTION 5.11. Further Advances and After-acquired Property. . 53 SECTION 5.12. To Appoint a Trustee to Fill Vacancies. . . . . 53 SECTION 5.13. Periodic Examinations as to Maintenance . . . . 54 SECTION 5.14. Annual Statement by Officers as to Default. . . 56 SECTION 5.15. Maintenance and Renewal . . . . . . . . . . . . 56 SECTION 5.16. To Comply With Indenture. . . . . . . . . . . . 59 ARTICLE VI BONDHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE . . . . . . . . . . . 59 SECTION 6.01. Company to Furnish Lists of Names and Addresses of Bondholders. . . . . . . . . . . 59 SECTION 6.02. Current Lists of Bondholders. . . . . . . . . . 60 SECTION 6.03. Company's Covenants as to Filing Reports. . . . 60 SECTION 6.04. Trustee's Reports . . . . . . . . . . . . . . . 60 6 ARTICLE VII REDEMPTION AND PURCHASE OF BONDS . . . . . . . 61 SECTION 7.01. Exercise of Option to Redeem. . . . . . . . . . 61 SECTION 7.02. Notice of Redemption. . . . . . . . . . . . . . 61 SECTION 7.03. Deposit of Cash to Redeem . . . . . . . . . . . 62 SECTION 7.04. Payment of Bonds Called for Redemption and Cessation of Lien . . . . . . . . . . . . . . 63 SECTION 7.05. Bonds to be Cancelled . . . . . . . . . . . . . 63 ARTICLE VIII POSSESSION, USE AND RELEASE OF MORTGAGED PROPERTY. . . . . . . . . . 63 SECTION 8.01. Company to Possess Property Until Default; Disposal of Certain Property Without Release . . . . . . . . . . . . . . . . . . . 63 SECTION 8.02. Trustee to Release Property Upon Certain Conditions. . . . . . . . . . . . . . . . . . 65 SECTION 8.03. Eminent Domain. . . . . . . . . . . . . . . . . 67 SECTION 8.04. Rights of Purchaser of Released Property. . . . 68 SECTION 8.05. Receiver or Trustee May Exercise Company's Rights. . . . . . . . . . . . . . . . . . . . 68 SECTION 8.06. Withdrawal, Use and Application of Cash Deposited with Trustee. . . . . . . . . . . . 68 ARTICLE IX REMEDIES IN EVENT OF DEFAULT . . . . . . . . 71 SECTION 9.01. Defaults. . . . . . . . . . . . . . . . . . . . 71 SECTION 9.02. Notice of Defaults. . . . . . . . . . . . . . . 72 SECTION 9.03. Acceleration of Maturity Date . . . . . . . . . 73 SECTION 9.04. Right of Entry and Application of Proceeds Received by Trustee . . . . . . . . . . . . . 73 SECTION 9.05. Power of Sale Upon Default. . . . . . . . . . . 73 SECTION 9.06. Notice of Sale and Manner of Making Same. . . . 74 SECTION 9.06A. Operation of Power of Sale. . . . . . . . . . . 75 SECTION 9.07. Application of Proceeds of Sale . . . . . . . . 76 SECTION 9.08. Purchaser at Sale May Use Bonds as Payment. . . 77 SECTION 9.09. Principal and Interest Payable to Trustee After Default; Proofs of Claim; Judgments . . 79 SECTION 9.10. Majority of Bondholders Entitled to Direct Trustee . . . . . . . . . . . . . . . . . . . 81 SECTION 9.11. Remedies Cumulative and Not Waived by Failure to Act. . . . . . . . . . . . . . . . 81 SECTION 9.12. Rights of Bondholders to Sue. . . . . . . . . . 82 7 ARTICLE X EVIDENCE OF RIGHTS OF BONDHOLDERS. . . . . . . 83 SECTION 10.01. Execution of Requests, etc. by Bondholders . . 83 SECTION 10.02. Registered Holders Treated as Absolute Owners. 83 ARTICLE XI DEFEASANCE. . . . . . . . . . . . . 83 SECTION 11.01. Release and Discharge of Indenture . . . . . . 83 SECTION 11.02. Defeasance of a Series of Bonds. . . . . . . . 86 SECTION 11.03. Payment of Deposited Cash to Company . . . . . 86 ARTICLE XII IMMUNITY OF INCORPORATORS, OFFICERS, SHAREHOLDERS AND DIRECTORS. . . . . . . . . 88 SECTION 12.01. Exemption from Personal Liability. . . . . . . 88 ARTICLE XIII CONSOLIDATIONS, MERGERS, TRANSFERS AND SALES . . . . 89 SECTION 13.01. Merger, Consolidation or Sale. . . . . . . . . 89 SECTION 13.02. Successor to Succeed to Rights of Company. . . 90 SECTION 13.03. Limitation of After-Acquired Clauses . . . . . 92 ARTICLE XIV CONCERNING THE TRUSTEE. . . . . . . . . . 92 SECTION 14.01. Capital and Surplus Requirement. . . . . . . . 92 SECTION 14.02. Acceptance of Trust and Duties by Trustee. . . 93 SECTION 14.03. Limitation on Liability of Trustee . . . . . . 93 SECTION 14.04. Recitals are by Company Alone. . . . . . . . . 94 SECTION 14.05. Exemption of Trustee from Personal Liability in Case of Entry . . . . . . . . . . . . . . 94 SECTION 14.06. Trustee may Rely on Documents, etc.. . . . . . 94 SECTION 14.07. Trustee's Responsibility for Selection of Experts. . . . . . . . . . . . . . . . . . . 95 SECTION 14.08. Trustee may be Bondholder, etc.. . . . . . . . 96 SECTION 14.09. Cash to be Held in Trust . . . . . . . . . . . 96 SECTION 14.10. Trustee Compensation and Reimbursement . . . . 96 SECTION 14.11. Certificate of Officers of Company to Constitute Proof . . . . . . . . . . . . . . 97 8 SECTION 14.12. Trustee to Have Power to Give Notices. . . . . 97 SECTION 14.13. Trustee Acquiring Conflicting Interest . . . . 97 SECTION 14.14. Preferential Collection of Claims Against the Company if Trustee Becomes a Creditor. . 98 SECTION 14.15. Trustee may Resign . . . . . . . . . . . . . . 98 SECTION 14.16. Trustee may be Removed . . . . . . . . . . . . 98 SECTION 14.17. Appointment of Successor Trustee . . . . . . . 98 SECTION 14.18. Separate Trustee or Co-trustee may be Appointed. . . . . . . . . . . . . . . . . . 99 SECTION 14.19. Conditions Upon Appointment of Separate Trustee or Co-trustee or Successor Trustee .100 SECTION 14.20. Notices to Trustee . . . . . . . . . . . . . .101 SECTION 14.21. Trustee as Agent . . . . . . . . . . . . . . .101 SECTION 14.22. Successor Trustee to Execute Acceptance and Become Vested with Estate. . . . . . . . . .101 SECTION 14.23. Consolidation or Merger of Trustee . . . . . .102 ARTICLE XV CONCERNING PLEDGED SECURITIES. . . . . . . .102 SECTION 15.01. Pledged Securities Deposited with Trustee. . .102 SECTION 15.02. Voting . . . . . . . . . . . . . . . . . . . .103 SECTION 15.03. Income Before Event of Default . . . . . . . .104 SECTION 15.04. Payments Upon Dissolution, etc. of Issuer of Pledged Securities . . . . . . . . . . . . .105 SECTION 15.05. Renewal and Refunding. . . . . . . . . . . . .105 SECTION 15.06. Pledged Securities Not Basis of Issuance . . .106 ARTICLE XVI SUPPLEMENTAL INDENTURES . . . . . . . . .106 SECTION 16.01. Supplemental Indentures to be Executed For Specified Purposes . . . . . . . . . . . . .106 SECTION 16.02. Modification of Indenture with Consent of Bondholders. . . . . . . . . . . . . . . . .108 SECTION 16.03. Effect of Supplemental Indenture . . . . . . .109 SECTION 16.04. Opinion of Counsel as Evidence of Compliance .109 SECTION 16.05. Notations on Bonds; Provision for New Bonds. .110 SECTION 16.06. Supplemental Indenture to Conform to Trust Indenture Act of 1939. . . . . . . . . . . .110 ARTICLE XVII BONDHOLDERS' MEETINGS. . . . . . . . . .110 SECTION 17.01. Meeting Called for Specified Purposes. . . . .110 SECTION 17.02. Meeting Called by Trustee. . . . . . . . . . .110 SECTION 17.03. Meeting Called by Company or Bondholders . . .111 SECTION 17.04. Bondholders Entitled to Vote . . . . . . . . .111 9 SECTION 17.05. Regulations for Meeting. . . . . . . . . . . .111 SECTION 17.06. Bondholders' Vote by Written Ballot. . . . . .112 SECTION 17.07. Nothing Authorizes Hindrance or Delay of Rights of Trustee or Bondholders . . . . . .112 ARTICLE XVIII MISCELLANEOUS PROVISIONS . . . . . . . . .113 SECTION 18.01. Covenants for Sole Benefit of Parties and Bondholders Severability . . . . . . . . . .113 SECTION 18.02. Court may Require Bond for Costs, Under Certain Conditions . . . . . . . . . . . . .113 SECTION 18.03. Provisions of Trust Indenture Act of 1939 to be Controlling. . . . . . . . . . . . . .113 SECTION 18.04. Notice to the Company. . . . . . . . . . . . .113 SECTION 18.05. Reference to Parties Includes Successors . . .113 SECTION 18.06. Headings Inserted for Convenience Only . . . .114 SECTION 18.07. Cancellation and Cremation of Bonds. . . . . .114 SECTION 18.08. Execution in Counterparts. . . . . . . . . . .114 SECTION 18.09. Deposit of Securities in Lieu of Cash. . . . .114 SECTION 18.10. Termination. . . . . . . . . . . . . . . . . .115 Form of bond of Series A APPENDIX A-2 Form of bond of Series B APPENDIX A-3 Form of bond of Series D APPENDIX A-4 Form of bond of Series E APPENDIX A-5 Form of bond of Series F APPENDIX A-6 Form of bond of Series X APPENDIX A-7 Form of bond of Series Y-1 APPENDIX A-8 Form of bond of Series Y-2 APPENDIX A-9 Form of bond of Series Y-3 APPENDIX A-10 Form of bond of Series Y-4 APPENDIX A-11 Form of bond of Series Y-5 APPENDIX A-12 Form of bond of Series Y-6 APPENDIX A-13 Form of bond of Series Y-7 APPENDIX A-14 Form of bond of Series Y-8 APPENDIX A-15 Form of bond of Series Z Schedule A Real Property of the Company [****] Schedule B Certain Excepted Property [****] 10 INDENTURE, dated as of ____________, 1994, between EL PASO ELECTRIC COMPANY, a corporation organized and existing under the laws of the State of Texas, with its principal office in El Paso, Texas (hereinafter called the "Company") and IBJ SCHRODER BANK & TRUST COMPANY, a New York banking corporation, with its principal corporate trust office in New York, New York, as Trustee (hereinafter called the "Trustee"). PRELIMINARY STATEMENT The Company owns and possesses the property hereinafter described, together with certain franchises, permits, rights and privileges, and has legal authority to make and execute this indenture of mortgage or deed of trust (hereinafter called the "Indenture") upon such property, franchises, permits, rights and privileges, and to issue its evidences of indebtedness as herein provided. The Company is entering into this Indenture pursuant to the terms of that Modified Third Amended Plan of Reorganization, dated August 27, 1993 and corrected on September 15, 1993, of the Company (the "Plan") filed in the United States Bankruptcy Court, Western District of Texas, Chapter 11, Case No. 92-10148-FM. The Company desires to issue the bonds provided in Section 4.01 hereof pursuant to the Plan and, with respect to the issuance of further series of bonds, to provide funds for and otherwise to accomplish its lawful corporate purposes from the sale of bonds issued under and secured by this Indenture and to that end, as authorized by resolutions duly adopted by its Board of Directors at meetings duly called and held for that purpose, has determined to borrow cash (except for the issuance of bonds pursuant to Section 4.01 hereof) and for that purpose to issue its bonds in an aggregate amount from time to time outstanding, which (except as provided in Article IV of this Indenture) shall not be subject to any limit, under and secured by this Indenture on the properties of the Company as hereinafter provided. Said bonds may be issued from time to time in one or more series subject to the restrictions and provisions contained in this Indenture with respect thereto. The bonds of each series shall be in registered form and shall (a) bear such date, (b) be payable on such date or dates (in the case of serial maturities) and at such place or places, (c) bear interest at such rate or rates payable at such time or times and at such place or places, (d) bear such designation or title herein provided for, and (e) contain such provisions, if any, with respect to tax exemptions, tax reimbursements, redemption, sinking fund, conversion into stock or other securities, limitations, if any, as to aggregate principal amount of bonds of such series issuable and other characteristics not in conflict with the terms of this Indenture, all as set forth herein or as the Board of Directors shall determine with respect to each successive series prior to the authentication of any bonds thereof. All acts and things necessary to make the bonds, when authenticated by the Trustee and issued as provided in this Indenture, the valid, binding and legal obligations of the 11 Company, and to constitute this Indenture a valid, binding and legal instrument for the security thereof, have been done and performed, and the creation, execution and delivery of this Indenture have in all respects been duly authorized. PROPERTY CONVEYED NOW THEREFORE, in consideration of the premises, and of the acceptance and purchase by the holders thereof of the bonds to be issued under this Indenture, and of the sum of Ten Dollars ($10.00) duly paid by the Trustee to the Company at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, and for the purpose of securing the due and punctual payment of the principal of and premium, if any, and interest on all bonds which shall from time to time be issued hereunder according to their tenor and effect and the faithful performance and observance of all covenants and conditions hereof (including any supplemental indentures and any modification made as provided herein), the Company has given, granted, bargained, sold, released, transferred, assigned, hypothecated, pledged, mortgaged, confirmed, set over, warranted, alienated, conveyed, and created a security interest in, and by these presents does, give, grant, bargain, sell, release, transfer, assign, hypothecate, pledge, mortgage, confirm, set over, warrant, alien, convey, and create a security interest, unto the Trustee as herein provided, and to its successors or successors in the trust hereby created, and to its or their assigns forever, subject, however, to the lien of the First Mortgage Indenture (as hereinafter defined), all right, title and interest of the Company in and to (i) the real properties described on Schedule A annexed hereto and hereby made a part hereof, and (ii) all other properties of the Company, real, personal and mixed, of the kind and nature specifically mentioned herein or of any other kind or nature (except any hereinbefore or hereinafter expressly excepted) now owned or subject to the provisions of Section 13.02 hereof hereafter acquired by the Company (by purchase, consolidation, merger, donation, construction, erection or in any other way), and wheresoever situated, including (without in anywise limiting or impairing by the enumeration of the same, the scope and intent of the foregoing or of any general description contained in this Indenture) all real estate, lands, leaseholds, easements, lands under water, water and riparian rights, servitudes, licenses, permits, franchises, privileges, rights of way and other rights in or relating to real estate or the occupancy of the same; all rights of way and roads or tracks; all plants for the generation of electricity by steam, water, and/or other power; all power houses, gas plants, street lighting systems, standards and other equipment incidental thereto; all telephone, radio and television systems, air-conditioning systems and equipment incidental thereto; all offices, buildings and other structures and the equipment thereof; all machinery, engines, boilers, turbines, electric, gas and other machines, prime movers, regulators, meters, transformers, generators (including, but not limited to, engine driven generators and 12 turbogenerator units), motors, electrical, gas and mechanical appliances, conduits, cables, gas or other pipes, gas mains and pipes, service pipes, fittings, valves and connections, pole and transmission lines, towers, overhead conductors and devices, underground conduits, underground conductors and devices, wires, cables, tools, implements, apparatus, storage battery equipment, and all other fixtures and personalty; all municipal and other franchises, consents or permits; all lines for the transmission and distribution of electric current or gas for any purpose including towers, poles, wires, cables, pipes, conduits, ducts and all apparatus for use in connection therewith; and (except as hereinbefore or hereinafter expressly excepted) all the right, title and interest of the Company in and to all other property of any kind or nature appertaining to and/or used and/or occupied and/or enjoyed in connection with any property hereinbefore described. TOGETHER WITH all and singular the tenements, hereditaments, prescriptions, servitudes and appurtenances belonging or in anywise appertaining to the aforesaid property or any part thereof, with the reversion and reversions, remainder and remainders and (subject to the provisions of Section 8.01 hereof) the tolls, rents, revenues, issues, proceeds, earnings, income, product and profits thereof, and all the estate, right, title, and interest and claim whatsoever, at law as well as in equity, which the Company now has or may hereafter acquire in and to the aforesaid property and franchises and every part and parcel thereof, with mortgage covenants and upon the statutory mortgage condition for the breach of which such property is subject to foreclosure as provided by law. AFTER-ACQUIRED PROPERTY IT IS HEREBY AGREED by the Company that, subject to the provisions of Section 13.02 hereof, all the property, rights and franchises acquired by the Company (by purchase, consolidation, merger, donation, construction, erection or in any other way) after the date hereof, except any hereinbefore or hereinafter expressly excepted, shall be and are as fully granted and conveyed hereby and as fully embraced within the lien hereof as if such property, rights and franchises were now owned by the Company and were specifically described herein and conveyed hereby. 13 EXCEPTED PROPERTY PROVIDED that the following are not and are not intended to be now or hereafter granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, hypothecated, affected, pledged, set over or confirmed hereunder, nor is a security interest therein hereby granted or intended to be granted, and the same are hereby expressly excepted from the lien hereof and the operation of this Indenture, the following described property of the Company, herein sometimes referred to as "Excepted Property": (1) cash, shares of stock, bonds, notes and other obligations and other securities not hereinbefore or hereafter specifically pledged, paid, deposited, delivered or held hereunder or covenanted so to be; (2) bills, notes and other instruments and accounts receivable, judgments, demands, general intangibles and choses in action, and all contracts, leases and operating agreements not specifically pledged hereunder or hereafter covenanted so to be; (3) rolling stock, buses, motor coaches, automobiles and other vehicles and all aircraft, boats, ships and other vessels; merchandise, equipment (including office furniture, equipment and supplies), apparatus, materials or supplies held for the purpose of sale, lease, rental, use or other disposition in the ordinary course of business or for the purpose of repairing or replacing (in whole or part) any rolling stock, buses, motor coaches, automobiles or other vehicles or aircraft or boats, ships, or other vessels and any fuel (including nuclear), oil and similar materials and supplies consumable in the operation of any of the properties of the Company; (4) the last day of the term of any lease or leasehold which may hereafter become subject to the lien hereof; (5) electric energy, gas and other materials or products generated, manufactured, produced or purchased by the Company for sale, distribution or use in the ordinary course of its business; (6) timber, oil, gas, casinghead gas, coal, lignite or other minerals or mineral rights and royalties in place, together with all rights of ingress and egress thereto, the right to produce the same and all production therefrom and the proceeds thereof; (7) the Company's franchise to be a corporation; and (8) the property described in Schedule B annexed hereto and hereby made a part hereof. PROVIDED, HOWEVER, that if, upon the occurrence of a default as hereinafter in this Indenture defined, the Trustee or any receiver appointed hereunder or upon the application of the Trustee or holders of bonds outstanding hereunder shall enter upon and take possession of the Trust Estate, the Trustee or such receiver may, to the extent permitted by law, at the same time likewise take possession of any and all of the property excepted and reserved from the lien and effect of this Indenture then on hand which is used or useful in connection with the business of the Company and use and administer the same, to the extent permitted by law, to the same extent as if such property were part of the mortgaged and pledged property, unless and until such default shall be remedied and possession of the Trust Estate restored to the Company, its successors or assigns. 14 SUBJECT CLAUSE SUBJECT HOWEVER, with respect to premises, property, and franchises now owned or hereafter acquired and subject to Excepted Encumbrances as such term is defined in Section 1.02 hereof, and subject, with respect to property hereafter acquired, to all defects and limitations of title and to all encumbrances existing at the time of such acquisition. HABENDUM TO HAVE AND TO HOLD all said premises, property, franchises and rights hereby conveyed, assigned, pledged or mortgaged, or intended so to be, unto the Trustee, its successor or successors in trust, and their assigns forever. GRANT IN TRUST BUT IN TRUST, NEVERTHELESS, with power of sale, for the equal and proportionate benefit and security of the holders of all bonds hereafter authenticated and delivered under and secured by this Indenture pursuant to the provisions of this Indenture and of any supplemental indenture and for the enforcement of the payment of said bonds when payable and the performance of and compliance with the covenants and conditions of this Indenture, without any preference, distinction or priority as to lien or otherwise of any bond or bonds over others by reason of the difference in time of the actual authentication, delivery, issue, sale or negotiation thereof or for any other reason whatsoever; and so that each and every bond now or hereafter authenticated and delivered hereunder shall have the same lien, and so that the principal of and premium, if any, and interest on every such bond shall be equally and proportionately secured hereby, as if it had been made, executed, authenticated, delivered, sold and negotiated simultaneously with the execution and delivery hereof. 15 CONDITION UPON CONDITION that, if the Company, or its successors or assigns, shall well and truly pay, or cause to be paid, the principal of (and premium, if any) and interest on the Outstanding bonds according to the true intent and meaning thereof, or there shall be deposited with the Trustee such amounts in such form in order that none of the bonds shall remain Outstanding as herein defined and provided, and shall pay or cause to be paid to the Trustee all sums of money due or to become due to it in accordance with the terms and provisions hereof, then upon the full and final payment of all such sums and other amounts secured hereby or upon such deposit, the rights, titles, liens, security interests, and assignments herein granted shall cease, determine, and be void and this grant shall be released by the Trustee in due form at the expense of the Company, except only as herein provided; otherwise this grant to be and shall remain in full force and effect. And it is expressly declared that all bonds issued and secured hereunder are to be issued, authenticated and delivered, and all said property, rights and franchises hereby conveyed, assigned, pledged or mortgaged, or intended so to be, are to be dealt with and disposed of, under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes hereinafter expressed. ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.01. Construction of Document. The terms specified in the next succeeding Section hereof shall, for all purposes of this Indenture and of any supplemental indenture and of any certificate, opinion or other document filed with the Trustee, unless otherwise specified therein, have the meanings specified in such Section. Unless otherwise defined in this Indenture, all terms used herein shall, for all such purposes, have the meanings assigned to such terms in the TIA. The accounting terms used in this Indenture shall be construed in accordance with U.S. generally accepted accounting principles and practices in use at the time by companies engaged in a business similar to that of the Company and operating like properties. SECTION 1.02. Certain Defined Terms. As used herein, the following terms shall have the following meanings: "affiliate" shall mean a person controlling, controlled by, or under common control with, another person, whether directly or indirectly, and the term "affiliated" shall have a meaning correlative to the foregoing. 16 "amount of depreciable property" shall have the meaning specified in Section 5.15 hereof. An "application" for the authentication and delivery of bonds, or the release of property, or the withdrawal of cash, under any provision of this Indenture, shall consist of, and shall not be deemed complete until the Trustee shall have been furnished with, such resolutions, certificates, opinions, cash, bonds and other instruments as are required by such provisions to establish the right of the Company to the authentication and delivery of such bonds, or to such release or withdrawal, as the case may be, and the date of such application shall be deemed to be the date upon which such application shall be completed. "Board of Directors" shall mean the Board of Directors of the Company and shall also include any executive committee or other committee of said Board duly authorized to act on behalf of said Board. "bondable property" shall have the meaning specified in Section 4.03 hereof. "bonds" shall mean the bonds issued under and pursuant to this Indenture. "Business Day" shall mean those days which are not Saturdays, Sundays or days on which banking institutions are authorized or required by law to close in the city in which the principal corporate trust office of the Trustee is located. "Commission" means the Securities and Exchange Commission. "Company" shall mean the person named as the "Company" in the first paragraph of this Indenture, and shall also include its successors and assigns as provided in Article XIII hereof. "control" shall mean the power to direct or cause the direction of, whether directly or indirectly, the management and policies of a person, directly or through one or more intermediaries, whether through the ownership of voting securities or by contract or otherwise, and the terms "controlling" and "controlled" shall have meanings correlative to the foregoing. "cost" shall have the meaning specified in Section 4.03 hereof. "Current Fair Value", when used with respect to any particular property described in any certificate required under this Indenture, shall mean the fair value of such property as of a date not more than ninety (90) days prior to the date of such certificate. 17 "Daily Newspaper" shall mean a newspaper of general circulation, printed in the English language and customarily published on each business day in any of the cities wherein any of such bonds are expressed to be payable. "deposited cash" shall have the meaning specified in Section 4.04 hereof. "Effective Date" shall have the meaning specified in the Plan. "Engineer" shall mean any engineer, firm of engineers or engineering corporation selected by the Company and who or which may be in the employ of or under retainer by the Company. "Engineer's Certificate" shall mean a certificate signed by the President or a Vice President of the Company, and by an Engineer or, if required by this Indenture or the TIA, by an Independent Engineer (as hereinafter defined). Any Engineer's Certificate required to be signed by an Independent Engineer shall contain a statement that the signer is an Independent Engineer under this Indenture. "Excepted Encumbrances" shall mean as of any particular time any of the following: (a) liens for taxes, assessments or governmental charges not then delinquent, or if delinquent in course of contest and secured by sufficient bond, and liens for worker's compensation awards and similar obligations not then delinquent and undetermined liens or charges incidental to labor, materials or supplies not delinquent, and liens for taxes, assessments or governmental charges then delinquent but the validity of which is being contested at the time by the Company in good faith as provided in Section 5.04 hereof; (b) judgments in course of appeal or otherwise in contest in good faith and, if required by law, secured by sufficient bond; (c) any liens securing indebtedness, neither assumed nor guaranteed by the Company nor on which it customarily pays interest, directly or indirectly, existing upon real estate or rights in or relating to real estate acquired by the Company for substation, transmission line, transportation line, distribution line or right of way purposes; (d) rights reserved to or vested in any municipality, political subdivision or public authority by the terms of any right, power, franchise, grant, license or permit, or by any provision of law, to terminate such right, power, franchise, grant, license or permit or to condemn, purchase or otherwise acquire any of the property of the Company; 18 (e) rights reserved to or vested in others to take or use any part of the power, gas, oil or other minerals or timber generated, developed, manufactured or produced by, or grown on, or acquired with, any property of the Company; (f) easements, restrictions, exceptions or reservations in any property and/or rights of way of the Company for the purpose of roads, pipe lines, transmission lines, distribution lines, removal of oil, gas, coal or other minerals or timber, and other like purposes, or for the joint or common use of real property, rights of way, facilities and/or equipment and defects, irregularities and deficiencies in titles of any property and/or rights of way, which do not in the reasonable judgment of the Company materially impair the use of such property and/or rights of way for the purposes for which such property and/or rights of way are held by the Company; (g) rights reserved to or vested in any municipality or public authority to control or regulate any property of the Company, or to use such property in a manner which does not materially impair the use of such property for the purposes for which it is held by the Company; (h) any obligations or duties, affecting the property of the Company, to any municipality or public authority with respect to any franchise, grant, license or permit; (i) any controls, liens, restrictions, regulations, easements, exceptions or reservations of any governmental authority applying to the property or facilities of the Company; or (j) any lien reserved as security for rent or for compliance with other provisions of the lease in the case of any leasehold estate. "Excepted Property" shall have the meaning specified in the Preliminary Statement hereof. "fair value to the Company" or "fair value" shall have the meaning specified in Section 4.03 hereof. "First Mortgage Indenture" shall mean the Indenture, dated as of _________, 1994 by and between the Company and State Street Bank and Trust Company, as trustee, and all indentures supplemental thereto and in modification thereof, now in existence or hereafter entered into pursuant to the provisions thereof, which creates a first lien upon the Trust Estate as security for the bonds heretofore and hereafter issued thereunder, and any extension, renewal, replacement or refunding thereof. 19 "Funds" means the currency of the United States of America which at the time is legal tender for public and private debts and U.S. Government Obligations. "gross expenditures" shall have the meaning specified in Section 4.03 hereof. "gross retirements of property" shall have the meaning specified in Section 4.03 hereof. "holder" or "bondholder", when used with reference to bonds authenticated and delivered hereunder, shall mean the person in whose name a particular registered bond is at the time registered on the books of the Company kept for that purpose in accordance with the provisions of Section 2.05 hereof. "Independent Engineer" shall mean any engineer, firm of engineers or engineering corporation appointed by the Company and satisfactory to the Trustee in the exercise of reasonable care and who or which shall be in fact independent and shall not be a director, officer or employee of, or under retainer by, the Company or any affiliate of the Company. "lien hereof" and "lien of this Indenture" shall mean the lien created or intended to be created by these presents (including the after-acquired property clauses hereof) and the lien created or intended to be created by any subsequent conveyance or delivery to or pledge with the Trustee hereunder (whether made by the Company or any other person) constituting or intended to constitute any property a part of the security held by the Trustee upon the terms and trusts and subject to the conditions specified in this Indenture. "lien of the First Mortgage Indenture" shall mean the lien created or intended to be created by the First Mortgage Indenture (including the after-acquired property clauses thereof) and the lien created or intended to be created by any subsequent conveyance or delivery to or pledge with the trustee thereunder (whether made by the Company or any other person) constituting or intended to constitute any property a part of the security held by such trustee upon the terms and trusts and subject to the conditions specified in the First Mortgage Indenture. "net earnings" shall have the meaning specified in Section 4.05 hereof. "Net Earnings Certificate" shall have the meaning specified in Section 4.05 hereof. "net expenditures" shall have the meaning specified in Section 4.03 hereof. "Obligor", when used with reference to bonds authenticated and delivered hereunder, shall mean every person who is liable thereon. 20 "Officers' Certificate" shall mean a certificate signed by the President or a Vice President and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, provided, that in respect of Section 5.14, Officers' Certificate shall mean a certificate signed by the principal executive officer, principal financial officer or principal accounting officer of the Company. Each such certificate shall comply with the requirements of subsection (b) of Section 1.03 hereof and shall include, in addition to the statements, if any, required by any other applicable provision of this Indenture, a statement that the conditions precedent, if any, provided for in this Indenture (including any covenants compliance with which constitutes a condition precedent) which relate to any action to be taken by the Trustee at the request or upon the application of the Company, as the case may be, have been complied with. "Opinion of Counsel" shall mean one or more written opinions of counsel, each of whom may be an employee of or regular counsel to the Company selected by the Company and satisfactory to the Trustee. Each such opinion shall conform to the requirements of subsection (b) of Section 1.03 hereof and shall include, in addition to the statements, if any, required by any other applicable provision of this Indenture, a statement that, in the opinion of such counsel, the conditions precedent, if any, provided for in this Indenture (including any covenants compliance with which constitutes a condition precedent) which relate to any action to be taken by the Trustee at the request or upon the application of the Company, as the case may be, have been complied with. Any Opinion of Counsel may contain such limitations, assumptions and qualifications as are reasonable and customary in light of the type of opinion being delivered. "Original Fair Value", when used with respect to any particular property described in any certificate required under this Indenture, shall mean the fair value of such property to the Company as of the time of the actual acquisition thereof by the Company. "Outstanding" shall mean, as of any particular time, with respect to bonds issued, authenticated and delivered under this Indenture (except where the context otherwise specifically provides), all bonds which theretofore shall have been issued, authenticated and delivered under this Indenture by the Trustee, except (a) bonds theretofore or then paid, retired, cancelled or redeemed and not held for the benefit of any sinking fund and bonds for the purchase, payment or redemption of which (for cancellation and not for holding for the benefit of any sinking fund) cash (or U.S. Government Obligations to the extent permitted by Sections 11.01 and 11.02 hereof) in the necessary amount shall have been or shall be then deposited with or held by the Trustee in trust with irrevocable direction so to apply the same, (b) bonds then held by the Trustee under any of the provisions of this Indenture and (c) bonds in lieu of which bonds 21 have been authenticated and delivered, as provided in Section 2.08 hereof; provided, however, that, in determining the percentage of the principal amount of bonds Outstanding (or of bonds of a particular series Outstanding) entitling the holders thereof to take any action hereunder, or in determining whether the holders of the required percentage of the principal amount of bonds Outstanding (or of bonds of a particular series Outstanding) have concurred in any direction to the Trustee or in any consent, bonds owned by the Company or by any other Obligor upon the bonds or by any affiliate of the Company or any other Obligor upon the bonds, shall be disregarded, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction or consent, only bonds which the Trustee knows are so owned shall be disregarded. Bonds so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such bonds and that the pledgee is not an affiliate of the Company or any other Obligor upon the bonds. 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. "person" shall mean and include an individual, a corporation, a partnership, an association, a joint stock company, a trust, an estate, any unincorporated organization or entity or any government or political subdivision thereof. "Plan" shall have the meaning specified in the Preliminary Statements hereof. "plant or property operated by others" shall mean, as used in Section 5.05 hereof, any bondable property, which, within six (6) months prior to the date of actual acquisition thereof by the Company, constituted plant or property used or operated by others in a business similar to that in which it has been or is to be used or operated by the Company, and the Original Fair Value of which, as set forth in the certificate setting forth such value, is not less than one per centum (1%) of the aggregate principal amount of all bonds at the time Outstanding hereunder. "Prepaid Liens" shall mean and include any mortgage or other lien, equal or prior to the lien of this Indenture, securing obligations or indebtedness for the payment, purchase or redemption of which the necessary Funds shall have been deposited with the trustee under such mortgage or lien or with the Trustee hereunder, together with instructions in either case to apply such funds to the payment, purchase or redemption of such obligations or indebtedness and, until so applied, to hold such deposited funds irrevocably in trust for the purpose for which they shall have been deposited, but subject, if so instructed, to any applicable provision in such mortgage or lien for the return of any unclaimed portion of such deposited funds to the Company. 22 "Prior Lien" shall mean any mortgage or other lien, including the lien of the First Mortgage Indenture, other than Excepted Encumbrances, which secures obligations (except obligations for the purchase, payment or redemption of which cash (or U.S. Government Obligations to the extent permitted by Sections 11.01 and 11.02 hereof) in the necessary amount shall have been or shall be then deposited with and held in trust by, with irrevocable direction so to apply the same, the Trustee hereunder or the trustee or other holder of the mortgage or other lien securing such obligations) of any nature, which is prior to the lien of this Indenture and which, as of any particular time, exists upon any of the Trust Estate or upon any property which is about to become part of the Trust Estate. "purchased property" shall have the meaning specified in Section 4.03 hereof. "Required Percentage" shall have the meaning specified in Section 5.15 hereof. "Resolution" shall mean a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date certified. "Responsible Officers" of the Trustee shall mean and include any officer assigned to and working in the Trustee's corporate trust department or similar group administering the trust hereunder, and every other officer and assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his or her knowledge of, and familiarity with, a particular subject; and the term "Responsible Officer" shall mean and include any of said officers or persons. "TIA" shall mean the Trust Indenture Act of 1939, as amended and in force on the date of this Indenture; provided, however that, in the event the Trust Indenture Act of 1939 is amended after such date, TIA shall mean, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "title" shall mean such title, whether fairly deducible of record or based on prescriptive right, as, in the Opinion of Counsel, is satisfactory for the needs and operations of the Company in its business, and counsel in giving such opinion may disregard irregularities or deficiencies in the record evidence of title which, in the Opinion of such Counsel, can be cured by proceedings within the power of the Company or which, in the Opinion of Counsel, do not materially impair the use of such property in the operation of the business of the Company, and such counsel may base such opinion on such counsel's own investigation and/or upon abstracts, affidavits, certificates, 23 statements and/or investigations made by persons in whom such counsel has confidence and/or upon examination of a certificate or guarantee of title or a policy of title insurance in which such counsel has confidence. For such purpose a perfected or a valid and legally protected security interest created pursuant to the Uniform Commercial Code in effect or other provision of law in favor of the Company encumbering property consisting of components of, or partially completed, products, not yet delivered to the Company, being constructed, manufactured or otherwise prepared pursuant to a contract between the Company and another person providing for partial or progress payments by the Company during the course of such construction, manufacturing or preparation shall be deemed title to such property to the extent of the partial or progress payments made by the Company. "Trustee" shall mean the person named as the "Trustee" in the first paragraph of this Indenture, or its successor from time to time as trustee hereunder as provided in Article XIV hereof. "Trust Estate" shall mean as of any particular time the property which at said time is subject to the lien of this Indenture whether such lien be created by these presents (including the lien created by the after-acquired property clauses hereof) or by subsequent conveyance, delivery or pledge to the Trustee hereunder or otherwise. "U.S. Government Obligations" means direct obligations of the United States of America for the payment of which its full faith and credit is pledged, or obligations of a person controlled or supervised by and acting as an agency or instrumentality of the United States of America and the payment of which is unconditionally guaranteed by the United States of America. SECTION 1.03. Compliance Certificates and Opinions. (a) Each certificate or opinion with respect to compliance with a condition or covenant contained in this Indenture shall include (1) a statement that the person making such certificate or opinion has read such covenant or condition and the definitions, if any, relevant to such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Any certificate or opinion of an officer of the Company may be based, in so far as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows that the certificate or opinion or 24 representations with respect to the matters upon which such officer's certificate or opinion may be based as aforesaid are erroneous or, in the exercise of reasonable care, should have known that the same were erroneous. Any such certificate or opinion may be based, in so far as it relates to factual matters and information which is in the possession of the Company, upon a certificate or opinion of, or representations by, an officer or officers of the Company, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion may be based as aforesaid are erroneous or, in the exercise of reasonable care, should have known that the same were erroneous. Any officer or counsel shall, in the performance of his or her duties, be fully protected in relying in good faith upon the books of account or reports made to the Company by any of its officers, or by an independent public accountant, or by an appraiser or Engineer selected with reasonable care by the Company, or in relying in good faith upon other records of the Company. (b) Any certificate to be executed by a Treasurer or an Assistant Treasurer of the Company may be signed, in lieu thereof, by a person (who need not be an employee or officer of the Company) designated to the Trustee by the Company and evidenced by a Resolution. SECTION 1.04. Amount to be Deposited to Pay or Redeem Bonds, etc. Wherever in this Indenture it is provided or permitted that there be deposited with or held in trust by the Trustee or any other person cash, money or Funds sufficient or in the necessary amount (or other words of similar import) to pay or redeem any bonds, obligations or other indebtedness, the amount so to be deposited or held shall be the principal amount of such bonds, obligations or other indebtedness and all unpaid interest thereon to maturity, unless said bonds, obligations or other indebtedness are redeemable and are to be redeemed prior to maturity and there shall be furnished to the Trustee proof satisfactory to the Trustee that notice of such redemption on the specified redemption date has been duly given or provision satisfactory to the Trustee shall be made for the giving of such notice, in which case the amount of cash, money or Funds so to be deposited or held shall be the principal amount of such bonds, obligations or indebtedness and all unpaid interest thereon to the redemption date, together with the redemption premium, if any. Notwithstanding the foregoing, for the purpose of determining the sufficiency of the amount of any U.S. Government Obligations deposited by the Company under Sections 11.01 or 11.02 hereof, the amount of interest scheduled to be received with respect to those U.S. Government Obligations, shall be taken into account in calculating the amount thereof as provided in said Sections. SECTION 1.05. Certificate of Resolutions. Any resolution of the Board of Directors or shareholders of the Company required or permitted under any provision of this 25 Indenture to be delivered to the Trustee hereunder shall have attached thereto a certificate of the Secretary or an Assistant Secretary of the Company certifying the adoption and the then effectiveness of such resolution. SECTION 1.06. Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, such provision (and any related definitions) is incorporated by reference in and made a part of this Indenture. SECTION 1.07. Indenture as Deed of Trust in New Mexico. The Company, trustor under this Indenture, expressly agrees pursuant to the New Mexico Deed of Trust Act, 48-10-1 to 48-10-21 NMSA 1978 (the "Deed of Trust Act" or the "Act"), that all the real and personal property comprising the Trust Estate which is located entirely within the State of New Mexico (the "New Mexico Trust Estate"), as more specifically described herein, shall be and hereby is subject to the Deed of Trust Act, thereby conferring upon the Trustee the power of sale as provided therein with respect to the New Mexico Trust Estate. This Indenture, as filed in New Mexico, shall encumber only the New Mexico Trust Estate and shall not purport to encumber any real estate located in one or more other states. The Company agrees to execute and file in each county in New Mexico in which the New Mexico Trust Estate is situated, additional instruments or deeds of trust encumbering the New Mexico Trust Estate necessary to secure performance of this Indenture as a Deed of Trust under the Deed of Trust Act. SECTION 1.08. Indenture as Deed of Trust in Arizona. The Company, trustor under this Indenture, expressly agrees pursuant to the provisions of Arizona Revised Statutes Sections 33-801 to 33-821 as may be in effect from time to time (the, "Arizona Deed of Trust Law" or the "Law"), that all the real and personal property comprising the Trust Estate which is located entirely within the State of Arizona (the "Arizona Trust Estate"), as more specifically described herein, shall be and hereby is subject to the Arizona Deed of Trust Law, thereby conferring upon the Trustee the power of sale as provided therein with respect to the Arizona Trust Estate. This Indenture, as filed in Arizona, shall encumber only the Arizona Trust Estate and shall not purport to encumber any real estate located in one or more other states. The Company agrees to execute and file in each county in Arizona in which Arizona Trust Estate is situated, additional instruments or deeds of trust encumbering the Arizona Trust Estate necessary to secure performance of this Indenture as a Deed of Trust under the Deed of Trust Law. 26 ARTICLE II THE BONDS SECTION 2.01. General Limitations; Bonds Issuable in Series. This Indenture may secure an unlimited aggregate principal amount of bonds which may be issued from time to time hereunder. All advances and other indebtedness and sums which may be secured by this Indenture shall be secured equally, to the same extent and with the same priority, as the amount originally advanced on the security of this Indenture. At the option of the Company, bonds may be issued in one or more series, the bonds of each series maturing on such dates and bearing interest at such rates as the Board of Directors prior to the authentication thereof may determine. The form and terms of each series of bonds authenticated and delivered hereunder shall be as established by Resolution of the Board of Directors and the text thereof shall be as set forth in the Appendices hereto or in the supplemental indenture creating the series. The bonds of any one or more series may be expressed in one or more foreign languages, if also expressed in the English language. The English text shall govern the construction thereof and both or all texts shall constitute but a single obligation. The English text of the registered bonds and the Trustee's certificate of authentication shall be substantially of the tenor and purport hereinafter recited; provided, however, that the form and terms of each series, as established by the Board of Directors, shall specify the descriptive title of the bonds (which shall contain the words "Second Mortgage Bond"), the designation of the series, the rate or rates of interest to be borne by the bonds of that series, the coin or currency, including composite currencies such as the european currency unit, in which payable (which need not be coin or currency of the United States), the date or dates of maturity, the dates for the payment of interest, record dates for the payment of interest, a place or places for the payment of principal and interest and a place or places for the registration and transfer of bonds. Any series of bonds may also have such omissions or modifications or contain such other provisions as the Board of Directors may, in its discretion, cause to be inserted therein including, but not limited to, the following: (a) specifying any additional place or places, either in the United States of America or elsewhere, for the payment of principal or interest or a place or places for the registration of bonds or transfer of bonds (provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee); 27 (b) expressing any obligation of the Company for the payment of the principal of the bonds of that series or the interest thereon, or both, without deduction for taxes or for the reimbursement of taxes in case of payment by the bondholders, it being agreed that such obligation may be limited to taxes imposed by taxing authorities of a specified class and may exclude from its operation or be limited to any specified tax or taxes or any portion thereof; (c) expressing any obligation of the Company for the creation of a sinking, purchase, improvement or other analogous fund for bonds of that series, or expressing any obligation of the Company to permit the conversion of bonds of that series into stock or other securities of the Company or of any other corporation; (d) permitting the bondholders to make, at a specified place or places, either or both of the following exchanges, in each instance the exchange to be for a like aggregate principal amount of bonds: exchanges of registered bonds for registered bonds of other denominations, and exchanges of bonds of one series for bonds of another series; such privilege of exchange may in any case be made subject to such conditions, limitations or restrictions as the Board of Directors shall determine and the privilege of exchange may in any case be conferred upon the holders of bonds of one or more denominations and withheld from the holders of bonds of other denominations of the same series; (e) reserving to the Company the right to redeem all or any part of the bonds of that series before maturity at a time or times and at a redemption price or prices which shall be specified in the form of bond; (f) specifying, if other than such coin or currency of the United States of America as at the time of payment is legal tender for payment of public or private debts, the coin or currency, including composite currencies such as the european currency unit, in which payment of the principal of (and premium, if any) and interest, if any, on the bonds of the series shall be payable, and any currency conversion methods to be used in connection with Article IV hereof; (g) specifying, if the principal of (and premium, if any) or interest, if any, on the bonds of the series are to be payable, at the election of the Company or a holder thereof, in a coin or currency, including a composite currency such as the european currency unit, other than that in which the bonds are stated to be payable, the period or periods within which, and the terms and conditions upon which, such election may be made; 28 (h) specifying, if the amount of payments of principal of (and premium, if any) or interest, if any, on the bonds of the series may be determined with reference to an index based on a coin, currency, including a composite currency such as the european currency unit, other than that in which the bonds are stated to be payable, the manner in which such amounts shall be determined; (i) reserving to the Company the right to create fully registered bonds that may be registered as to the payment of principal to one holder and to the payment of interest to another holder; (j) complying with any law or with any rules or regulations of any stock exchange or conforming to usage; (k) providing for book entry certificate bonds; and (l) expressing any other terms and conditions, not inconsistent with the provisions hereof, upon which such bonds are to be issued and secured by this Indenture. SECTION 2.02. Date of and Interest on Bonds. Unless otherwise specifically provided with respect to a series of bonds, bonds shall be dated as of the date of the interest payment date thereof to which interest was paid next preceding the date of issue, unless (a) issued on an interest payment date thereof to which interest was paid, in which event it shall be dated as of the date of issue, or (b) issued prior to the occurrence of the first interest payment date thereof to which interest was paid, in which event it shall be dated the date of initial issuance of such bonds. Unless other provisions (including, but not limited to, provisions establishing record dates for the payment of interest) are specifically provided with respect to a series of bonds, bonds shall bear interest from the beginning of the current interest period for that series; provided, however, that if any bond shall be authenticated and delivered upon a transfer of, or in exchange for or in lieu of, any bond or bonds upon which interest is in default, it shall be dated so that such bond shall bear interest from the last preceding date to which interest shall have been paid on the bond or bonds in respect of which such bond shall have been delivered, unless otherwise specifically provided with respect to a series of bonds. Unless otherwise specifically provided with respect to a series of bonds, interest, if any, on the bonds of each series shall be computed based on a 360-day year of twelve 30-day months. SECTION 2.03. Legends on Bonds. Any bond may have imprinted thereon or included therein any legend or legends required in order to comply with any law or with any rules or regulations or with the rules or regulations of any stock exchange or to conform to general usage, and the Board of Directors by resolution may at any time amend the form of any 29 legend to be used on bonds then Outstanding so as to comply with any such law, rule or regulation or so as to conform to such usage. SECTION 2.04. Exchange of Bonds; Transfers. Unless otherwise specifically provided with respect to a series of bonds, bonds of a series may be exchanged by the holder thereof for bonds of the same series, of authorized denominations as set forth in Section 2.10 hereof and in the same aggregate principal amount, and any bonds to be exchanged shall be surrendered at such place or places as shall be designated by the Board of Directors for the purpose (or, if no such place is at the time so designated for the purpose, at the principal corporate trust office of the Trustee), and the Trustee shall authenticate and deliver in exchange therefor such bond or bonds of authorized denominations as denominated by the surrendering bondholder (or as selected by the Trustee in its discretion in the absence of such designation) aggregating in principal amount the principal amount of the bonds surrendered. All bonds so surrendered for exchange shall be cancelled by the Trustee. Upon every transfer of bonds as permitted by the next succeeding Section hereof, and upon every exchange of bonds, the Company shall be entitled to receive funds sufficient to reimburse it for any tax or taxes or other governmental charge required to be paid by the Company as a direct consequence of such transfer or exchange which amounts shall be paid by the party requesting such transfer or exchange as a condition precedent to the exercise of the privilege of making such transfer or exchange. The Company shall not be required to make transfers or exchanges of bonds of any series for a period of ten (10) days next preceding any designation of bonds of said series to be redeemed. The Company shall not be required to make transfers or exchanges of the principal amount of any bonds of any such series called or selected for redemption. Each bond delivered pursuant to any provision of this Indenture in exchange or substitution for, or upon the transfer of, the whole or any part of one or more other bonds, shall carry all of the rights to interest accrued and unpaid and to accrue which were carried by the whole or such part, as the case may be, of such one or more other bonds. SECTION 2.05. Registration and Transfer of Bonds. The Company shall cause to be kept, at such place or places as shall be designated for the purpose (which shall be at the principal corporate trust office of the Trustee, unless otherwise specifically provided with respect to a series of bonds), books for the registration and transfer of bonds issued hereunder, which, at all reasonable times, shall be open for inspection by the Company; and upon the presentation for such purpose at any such place or places, the Trustee will register or cause to be registered therein, and permit to be transferred thereon, under such reasonable regulations as it may prescribe, any bonds issued under this Indenture and entitled to registration or transfer at 30 such office. Upon the surrender for transfer of any fully registered bond, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the transferee or transferees a new registered bond or new registered bonds of the same series and of authorized denominations for a like principal amount. All registered bonds so surrendered for transfer shall be cancelled by the Trustee and upon a request signed by the President or a Vice President of the Company a certificate evidencing the cancellation thereof shall be delivered to the Company. SECTION 2.06. Execution of Bonds. All bonds issued hereunder shall, from time to time, be executed on behalf of the Company by its President or a Vice-President and its corporate seal shall be thereunto affixed or a facsimile thereof shall be printed, lithographed or engraved thereon and attested by its Secretary or an Assistant Secretary. The signatures of any such President or Vice-President and/or of any such Secretary or Assistant Secretary may be facsimile. In case any of the officers who shall have signed any bonds or attested the seal thereon or whose facsimile signature appears on any bonds shall cease to be such officers of the Company before the bonds so signed and sealed shall have been authenticated and delivered by the Trustee or issued by the Company, such bonds nevertheless may be authenticated, delivered and issued with the same force and effect as though the person or persons who signed such bonds and attested the seal thereon or whose facsimile signature appears on any bonds had not ceased to be such officer or officers of the Company. SECTION 2.07. Temporary Bonds. There may be authenticated, delivered and issued in lieu of any definitive bonds of any series a temporary typewritten, printed, lithographed or engraved bond or bonds substantially of the tenor of the bonds of such series, with or without specification of the redemption premium or premiums, if any, and such temporary bond or bonds shall be in such denomination or denominations as the Board of Directors may determine. Until a definitive bond or bonds secured hereby are delivered in exchange therefor, each such temporary bond or bonds shall be entitled to the lien and benefit of this Indenture. Upon exchange thereof for definitive bonds of the same series, which the Company shall make without any charge therefor, such temporary bond or bonds shall be cancelled by the Trustee and upon a request signed by the President or a Vice President of the Company a certificate of such cancellation shall be delivered to it. The holder of one or more temporary bonds may exchange the same, upon payment, if the Company shall require, of the charges provided in Section 2.04 hereof, upon the surrender of such temporary bonds, properly endorsed for transfer, to the Trustee for cancellation, and shall be entitled to receive temporary bonds of the same series of like aggregate principal amount of other authorized denominations. 31 SECTION 2.08. Lost, Destroyed or Mutilated Bonds. Upon receipt by the Company and the Trustee of evidence satisfactory to them of the theft, loss, destruction, defacement or mutilation of any bond Outstanding hereunder not then matured or subject to payment, and of indemnity satisfactory to them, and upon payment, if the Company or the Trustee shall require it, of an amount sufficient to reimburse it for stamp tax or other governmental charge or expense connected therewith, and upon surrender and cancellation of such bond, if defaced or mutilated, the Company shall execute, and upon a request signed by the President or a Vice President of the Company the Trustee shall authenticate and deliver, a new bond of like tenor and of the same series in lieu of such stolen, lost, destroyed, defaced or mutilated bond. In case of the theft, loss, destruction, defacement or mutilation of any bond Outstanding hereunder which has matured or is then subject to payment by redemption, purchase or otherwise, the Trustee and the Company, upon receipt from the owner of such bond or of evidence satisfactory to them of such theft, loss, destruction, defacement or mutilation and upon surrender and cancellation of such bond if defaced or mutilated and upon receipt of indemnity satisfactory to them, may pay to the owner of such bond the amount payable thereon without the execution, authentication and delivery of a substitute bond. Every new bond issued pursuant to this Section in lieu of any destroyed, lost or stolen bond shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost, defaced, mutilated or stolen bond shall be at any time enforceable by anyone, and shall be entitled to all the security and benefits of this Indenture equally and ratably with all other Outstanding bonds. SECTION 2.09. Certificate of the Trustee. No bonds shall be secured hereby unless there shall be endorsed thereon the certificate of authentication of the Trustee, substantially in the form recited in Section 3.02 hereof, that it is one of the bonds (or temporary bonds) of the series therein designated, or herein described or provided for; and such certificate on any such bond shall be conclusive evidence, and the only evidence, that such bond has been duly authenticated and delivered by the Trustee and when delivered by the Company will be secured hereby and is secured hereby. SECTION 2.10. Authorized Denominations. Unless otherwise specified in a supplemental indenture with respect to a series of bonds, the bonds of each series shall be issuable in denominations of $1,000 original principal amount and in integral multiples thereof. 32 ARTICLE III BOND FORMS SECTION 3.01. Forms Generally. The bonds of each series (other than book entry bonds contemplated by Section 16.01 hereof and other than bonds of Series A, B, D, E, F, X, Y-1 through Y-8 and Z for which forms of bonds are set forth in Appendices A-1 through A-15) are to be substantially in the forms set forth in this Article, with such modifications thereof and additions thereto or eliminations therefrom, authorized or permitted by this Indenture as to any particular series, as in the opinion of the Board of Directors at the time may be necessary or proper. 33 [GENERAL FORM OF REGISTERED BOND] [FACE] EL PASO ELECTRIC COMPANY SECOND MORTGAGE BOND, SERIES ___ __% DUE _______, ____ No. EL PASO ELECTRIC COMPANY, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to __________________ or registered assigns, the principal sum of $___________ Dollars on _________, and to pay to the registered holder hereof interest on said sum from the date hereof at the rate of ___ per centum per annum, payable half-yearly on the ______ day of ______ and the ______ day of ______ in each year, commencing __________, until said principal sum is paid. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in __________, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. The provisions of this bond are continued on the reverse hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. 34 IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By ___________________________ [Title] Attest: _____________________________ Secretary 35 [REVERSE] EL PASO ELECTRIC COMPANY SECOND MORTGAGE BOND, SERIES ___ ___% DUE ________, ___ The interest payable on this bond on any interest payment date will, subject to certain exceptions provided in the Indenture hereinafter mentioned, be paid to the person in whose name this bond is registered at the close of business on the record date, which shall be the ___________ or __________, as the case may be, next preceding such interest payment date, or, if such date shall be a legal holiday or a day on which banking institutions in New York, New York are authorized or required to close, the next preceding day which shall not be a legal holiday or a day on which such institutions are so authorized or required to close. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to IBJ Schroder Bank & Trust Company (herein sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (herein referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. [The bonds of Series __, of which this bond is one, are not redeemable prior to maturity.] [The bonds of Series ___, of which this bond is one, are not redeemable prior to __________. On or after that date, at the option of the Company and upon the notice and in the manner and with the effect provided in the Indenture, bonds of Series __ may be redeemed by or on behalf of the Company, as a whole at any time, or in part from time to time, at the applicable general redemption price, expressed as a percentage of the principal amount of the bonds, stated in the following table under "General Redemption Price," together with accrued interest on such principal amount to the date fixed for redemption: 36 If redeemed If redeemed during the during the 12 months General 12 months General beginning Redemption beginning Redemption _______, ___ Price* _______, ___ Price* __________________ * Stated as a percentage of principal amount of the bonds.] In case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is transferable or exchangeable by the holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in New York, New York, but only in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in exchange herefor. The Company shall not register, exchange or transfer any bonds of this series during the period of ten days next preceding any designation of bonds of said series to be redeemed, if applicable, and, as to any bonds selected for redemption, from and after the date of such selection. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. This bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. 37 SECTION 3.02. Trustee's Certificate of Authentication. Each of the registered bonds (other than book entry bonds contemplated by Section 16.01 hereof) of each and every series issued under and secured by this Indenture (whether in temporary or definitive form) is to bear a certificate of the Trustee substantially in the following form: This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. IBJ SCHRODER BANK & TRUST COMPANY, as Trustee By __________________________ Authorized Signature 38 ARTICLE IV ISSUANCE OF BONDS SECTION 4.01. Initial Issuance of Bonds. There shall be, and are hereby created, fourteen initial series of bonds, each known as and titled as, and subject to the maximum aggregate principal amount, set forth in the table below. Maximum Principal Series Designation Amount Series A, ___% due ____ $ Series B, ___% due ____ $ Series D, Floating Rate due 2014 $ Series E, Floating Rate due 2014 $ Series F, Floating Rate due 2015 $ Series X, Floating Rate due ____ $ Series Y-1, Floating Rate due ____ $ Series Y-2, Floating Rate due ____ $ Series Y-3, Floating Rate due ____ $ Series Y-4, Floating Rate due ____ $ Series Y-5, Floating Rate due ____ $ Series Y-6, Floating Rate due ____ $ Series Y-7, Floating Rate due ____ $ Series Y-8, Floating Rate due ____ $ Series Z, Floating Rate due ____ $ The Trustee shall authenticate the bonds of Series A, B, D, E, F, X, Y-1 through Y-8 and Z (up to the maximum aggregate principal amount set forth above) and deliver the same to or upon the written order of the President or a Vice-President of the Company, upon receipt by the Trustee of the Opinions of Counsel, orders and certificates referred to in Section 4.06 hereof. SECTION 4.01A. Terms of Initial Issues of Bonds. The bonds of Series A, B, D, E, F, X, Y-1 through Y-8 and Z shall be issued in fully registered form without coupons, substantially in the forms thereof attached as Appendices A-1 through A-15, respectively. All bonds of said Series shall be due and payable as set forth in the respective form of bond, shall bear interest from the date set forth in the respective form of bond, at the rate as set forth in the respective form of bond, payable at times set forth in the respective form of bond, and shall be pay- able, both as to principal and interest, at the office or agency of the Company in the City of New York, State of New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts, provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. 39 The bonds of Series A, B, D, E, F, X, Y-1 through Y-8 and Z are not redeemable except as set forth in the respective form of bond. SECTION 4.01B. Certain Covenants for Bonds of Series A. (a) Limitation on Redemption to Satisfy Maintenance Fund. The Company covenants and agrees that, so long as any of the bonds of Series A are outstanding, and notwithstanding clause (c) of Section 5.15 hereof, any retirement or redemption of bonds of said Series shall not be used to satisfy the maintenance and renewal obligations set forth in said Section. (b) Dividend Limitation. The Company covenants and agrees that, so long as any of the bonds of Series A are outstanding, it will not declare or pay any dividends on its com- mon stock (except (i) dividends payable in shares of its common stock, and (ii) dividends payable in cash where concurrently with the payment thereof an amount in cash equal to the amount of the cash dividends paid is received by the Company as a capital contribution or as the proceeds of the issue and sale of shares of its common stock), or make any other distributions on shares of its common stock, or purchase or otherwise acquire for value or retire, or permit any subsidiary to purchase or otherwise acquire for value, any shares of the Company's common stock (except in exchange for, or out of the proceeds from the sale of, other shares of the Company's common stock) if, after giving effect thereto, the aggregate amount of all such dividends, distributions, purchases or acquisitions (other than those excepted above) paid or made subsequent to ___________, 1994 [*] would exceed the sum of (x) $300 million, and (y) the net income of the Company for the period from ____________, 1994 [*] to the date of such dividend, distribution, purchase or acquisition as determined in accordance with generally accepted accounting principles. (c) Special Limitation on Dividends. Notwithstanding paragraph 4.01B(b) above, the Company covenants and agrees that, so long as any of the bonds of Series A have been owned continuously by the initial beneficial owners thereof since the date of their initial issuance (as evidenced by the registration books of the Trustee, the records of any applicable depository company and other information reasonably satisfactory to the Company which may include certifications from the holders of the relevant bonds), the Company will not declare any dividends on its common stock or make any distributions, purchases or acquisitions described (and not excepted) in paragraph 4.01B(b) above if the bonds of said Series do not, at such time, have an Investment Grade Rating (as defined below). If at any time the bonds of said Series do not have an Investment Grade Rating, the Company may, with the unanimous consent of the initial beneficial owners of such bonds who continue to hold such bonds, amend, modify or waive the covenant contained in the first sentence of 40 this paragraph. The consent of the Trustee shall not be required for any such amendment, modification or waiver. The Company will be deemed to have received such unanimous consent if (i) the Company offers to redeem the bonds of said Series held by any dissenting initial beneficial owners thereof at a redemption price equal to the principal amount of such bonds, together with accrued interest on such principal amount to the date fixed for redemption, and (ii) the Company redeems, in accordance with the provisions of this Indenture, all bonds of said Series which such dissenting initial beneficial owners thereof have elected to have so redeemed. "Investment Grade Rating" means a rating of BBB- or better (or equivalent rating) by at least two (2) of Moody's Investors Service, Inc., Standard & Poor's Ratings Group and Duff & Phelps, Inc. SECTION 4.01C. Certain Provisions for Bonds of Series D, E, F, X, Y-1 through Y-8 and Z. The bonds of Series D, E, F, X, Y-1 through Y-8 and Z are issued to secure or partially secure the payment of the principal and interest due on certain secured notes or pollution control bonds or the payment of certain reimbursement and other obligations described therein (in each case, the "Obligations"). The bonds of said Series will be registered in the name of the institution, the agent, the letter of credit provider or the Pollution Control Trustee named therein (the "Secured Obligation Holder") and will be transferable solely as provided in the relevant Resolution, Trust Indenture, Reimbursement Agreement or Term Loan Agreement referred to therein. The Trustee shall be fully protected in registering the transfer of the bonds of Series D, E, F, X, Y-1 through Y-8 and Z in accordance with written directions from the Secured Obligation Holder. The bonds of Series D, E, F, X, Y-1 through Y-8 and Z will mature as provided therein and will bear interest at the same rates as the Obligations which such bonds secure, which provide for floating interest rates. The obligation of the Company to make payments with respect to principal and interest on the bonds of each of said Series shall be satisfied and discharged to the extent the Company shall have satisfied and discharged its obligation to pay principal and interest on the related Obligations which the bonds of said Series secure. The Trustee may conclusively presume that the obligations of the Company to make principal, interest and other payments on the related Obligations which the bonds of said Series secure have been satisfied and discharged unless and until the Trustee shall have received a notice of the occurrence of an event of default with respect to the Obligations or a written demand from the Secured Obligation Holder (which notice or demand has not been subsequently rescinded by the Secured Obligation Holder) as described in the form of bond. The Trustee shall be fully protected in relying upon any notice or demand from the Secured Obligation Holder or the absence of such notice or demand and shall have no duty to inquire into the rights, obligations or performance of any party with respect to the Obligations. When such Obligations have been fully satisfied and discharged in 41 accordance with the terms of the relevant Resolution, Trust Indenture, Reimbursement Agreement or Term Loan Agreement, the Secured Obligation Holder will surrender to the Trustee the bonds of the relevant Series, and upon such release the bonds of said Series will be deemed to have been paid in full and shall cease to be entitled to the lien of this Indenture. The bonds of Series D, E, F, X, Y-1 through Y-8 and Z will not be redeemable prior to maturity except as set forth in the forms of bond of such Series set forth in Appendix A-3 through A-15. So long as any bonds of Series A, B, D, E, F, X, Y-1 through Y-8 or Z are Outstanding, the Company hereby covenants that it will not amend the First Mortgage Indenture to increase the percentage test used in Section 4.03 thereof to greater than sixty-six and two-thirds per centum (66-2/3%). SECTION 4.02. Issuance of Bonds Upon Retirement of Bonds Previously Outstanding Hereunder. Bonds of any series (other than bonds of Series A, B, D, E, F, X, Y-1 through Y-8 and Z) may be executed by the Company and authenticated and delivered hereunder by the Trustee from time to time in the manner and subject to the limitations provided in this Section and in Articles II and III hereof, for or on account of the payment, cancellation, redemption or other discharge at, before or after maturity, of bonds of one or more other series theretofore authenticated under any provision of this Indenture, in a principal amount not exceeding the aggregate principal amount of the bonds of such other series so retired, or for the retirement of which the necessary Funds have been deposited with the Trustee, provided, however, (1) that such bonds of such other series have not been previously used as a basis for the authentication of any bonds issued under any provision of this Indenture or for the withdrawal of deposited cash or any other moneys under any provision of this Indenture, have not been certified to the Trustee to comply with any maintenance or renewal requirement contained herein or in any supplemental indenture, and have not been acquired, redeemed or discharged with cash applied to any such purpose pursuant to Section 4.04 hereof, Section 8.06 hereof or any maintenance or renewal provisions contained herein or in any supplemental indenture, and that no part of the expenditures for the redemption, the payment or the purchase and cancellation of such bonds has been made out of any insurance moneys or moneys received from the condemnation, sale or other disposition of any of the Company's property subject to the lien of this Indenture or has been used or applied or certified to the Trustee to comply with any maintenance or renewal requirement contained herein or in any supplemental indenture, and (2) that such bonds have not been acquired, redeemed or discharged through the operation of, or certified to comply with, any sinking fund or analogous fund created hereafter pursuant to the terms of this Indenture in respect of any bonds authenticated and delivered hereunder; but the limitation of this 42 clause (2) of this proviso shall apply only to the extent to which the provisions relating to any such fund preclude the authentication of bonds under this Section on account of bonds so retired through the operation of, or certified to comply with, any such fund. Bonds shall be authenticated by the Trustee under this Section subject to the restrictions hereof and shall be delivered by it to or upon the written order of the President or a Vice- President of the Company upon receipt by the Trustee of the following: (a) A copy of a Resolution authorizing the execution and authentication of the bonds proposed to be authenticated, and stating the principal amount thereof and the designation of the series in which to be authenticated and setting forth, either expressly or by reference to a Resolution theretofore adopted, the terms, provisions and characteristics of such bonds, all in accordance with and subject to the restrictions of Articles II and III hereof, and specifying the principal amount and series designation of the bonds of such other series for or on account of the payment, cancellation, redemption or discharge of which such bonds are authorized to be authenticated; and (b) One of the following: (x) A principal amount of bonds, properly endorsed (either cancelled or uncancelled, and in either temporary or definitive form), theretofore authenticated hereunder and specified in such Resolution, equal to the principal amount of bonds then requested to be authenticated hereunder or if such bonds have been destroyed a certificate of the destruction thereof executed on behalf of the Trustee; or (y) An amount of Funds equal to the principal amount, with interest thereon to maturity, of the bonds of such other series specified in such Resolution for the purpose of the payment at maturity of such bonds and the interest thereon from time to time; or (z) An amount of Funds sufficient to redeem, and for the purpose of redeeming, the bonds of such other series specified in such Resolution at a date, specified by the Company, upon which such bonds can be redeemed in accordance with the terms of such bonds and of this Indenture; and (c) An Officers' Certificate stating that the bonds of such other series delivered to the Trustee have not theretofore been used as a basis for the authentication of any bonds under any provision of this Indenture or for the withdrawal of deposited cash or any other moneys under any 43 provision of this Indenture, have not been certified to the Trustee to comply with any maintenance or renewal requirement contained herein or in any supplemental indenture and have not been acquired, redeemed or discharged with cash applied to any such purpose pursuant to Section 4.04 hereof, Section 8.06 hereof or any maintenance or renewal provision contained herein or in any supplemental indenture; that no part of the expenditures for the redemption, the payment or the purchase and cancellation of such bonds has been made out of any insurance moneys or moneys received from the condemnation, sale or other disposition of any of the Company's property subject to the lien of this Indenture or has been used or applied or certified to the Trustee to comply with any maintenance or renewal requirement contained herein or in any supplemental indenture; and that such bonds have not been acquired, redeemed or discharged through the operation of, or certified to comply with, any sinking fund or analogous fund created hereafter pursuant to the terms of this Indenture in respect of any bonds authenticated and delivered under this Indenture, or, in the alternative, that the provisions relating to any such fund do not preclude the use of such bonds retired through the operation of, or certified to comply with, any such fund as the basis for the authentication of bonds under this Section; and (d) The certificates, orders, opinions, supplemental indentures and/or other instruments, if any, required by Sections 4.05 and 4.06 hereof. Any bond which is delivered uncancelled to the Trustee and on account of which a new bond is authenticated under this Section shall, when received by the Trustee, immediately be cancelled and, together with every cancelled bond delivered to the Trustee under this Section, shall be destroyed, and a certificate of such destruction shall be delivered to the Company. Any cash deposited with the Trustee under the provisions of this Section shall be applied by the Trustee to the purposes for which such cash was so deposited and, until so applied, shall (subject to the provisions of Article XI hereof) be held irrevocably in trust by the Trustee for such purposes; provided, however, that upon the surrender by the Company to the Trustee for cancellation of any bond or bonds authenticated hereunder (properly endorsed), for the payment at maturity or for the redemption of which cash shall have been deposited with the Trustee under the provisions of this Section, the Trustee shall return to the Company out of such cash an amount equal to the amount deposited for the payment at maturity or the redemption, as the case may be, of such bond or bonds so surrendered. SECTION 4.03. Issuance of Bonds Upon the Basis of Property and Property Additions. Bonds of any series (other than bonds of Series A, B, D, E, F, X, Y-1 through Y-8 and Z) may be executed by the Company and authenticated and delivered hereunder by the Trustee from time to time, in the manner and subject to 44 the limitations provided in this Section and in Articles II and III hereof, up to a principal amount equal to thirty-three and one-third per centum (33-1/3%) of all net expenditures made by the Company for bondable property acquired by the Company through construction, purchase, consolidation, or otherwise, at any time on or after __________, 1994[*]; provided (1) that all bondable property on account of which bonds are at any time authenticated under the provisions of this Section shall be subject to the lien of this Indenture and shall not be subject to any liens or encumbrances equal or prior in lien to the lien of this Indenture, except the lien of the First Mortgage Indenture, Excepted Encumbrances and Prepaid Liens, and (2) that no bonds shall be authenticated and delivered under the provisions of this Section for or on account of any expenditures for property which shall previously have been used as a basis for the authentication of bonds under any provision of this Indenture or as a basis for the withdrawal of deposited cash or any other moneys or the release of any property under any provision of this Indenture, or which shall have been made out of any insurance moneys or moneys received from the condemnation, sale or other disposition of any of the Company's property subject to the lien of this Indenture or which shall have been certified or used to comply with any maintenance or renewal requirement contained herein or in any supplemental indenture, or which shall have been certified or used to comply with the provisions respecting any sinking fund or analogous fund created hereafter under the terms of this Indenture in respect of any bonds authenticated and delivered hereunder, if and to the extent that the provisions relating to any such fund preclude the use of such expenditures as a basis for the authentication and delivery of bonds hereunder. The term "bondable property" shall mean and include any property, plant or equipment owned by the Company on ______________, 1994 [*], or constructed or otherwise acquired by it on or after said date, in either case that constitutes a part of its permanent and fixed investment in the conduct by it of the business of generating, manufacturing, purchasing, transmitting, distributing, supplying and/or selling electricity, for light, heat, power or other purposes. The term "bondable property" shall not include, however, (a) any Excepted Property, (b) any office furniture and equipment, (c) any goodwill or going concern value, as such, or any franchise granted by any municipality, state or subdivision thereof, or any governmental permit, (d) any property acquired or constructed by the Company the cost of which is properly chargeable to maintenance or other operating expense, (e) any oil, gas and mineral leases, wells and equipment owned, used or obtained for use for the exploration, drilling, production, storage and transportation of oil or gas; oil, natural gas or liquid hydrocarbon gathering or transportation lines connecting wells with main branch or trunk lines, compressor stations and all appurtenances thereto; easements, rights-of-way, permits, licenses relating thereto; and all other works, property, rights, 45 titles and interests used primarily and principally in the exploration, production, storage and transportation of oil or natural gas and liquid hydocarbons produced in association therewith (but shall include gas distribution systems and gas transmission lines interconnecting gas distribution systems, and gas transmission lines constructed for the purpose of supplying an electric generating plant or plants of the Company with gas for fuel supply); and (f) any leasehold interest in property or permanent improvements constructed on property held by the Company under lease, but shall include rights-of-way and easements and any electric or gas transmission or distribution lines and equipment or appurtenances (other than gas gathering or transmission lines and equipment and appurtenances of the character excluded by clause (e) above) thereto located on any such right-of-way or easement or located upon any street, alley or public place of any municipality or upon any public highway. The term "purchased property" shall mean any bondable property which within six months prior to the date of its acquisition by the Company has been used or operated by a person or persons other than the Company in the electric utility or gas utility business, and shall be included in the term "bondable property." The terms "fair value to the Company" or "fair value" of any property shall mean the fair value to the Company or the fair value, as the case may be, as determined by an Engineer or an Independent Engineer (except where some other method of determination, if any, is specifically provided for in this Indenture) and evidenced by an Engineer's Certificate signed by such Engineer or Independent Engineer, as the case may be, and delivered to the Trustee. If the fair value to the Company of any purchased property, as shown by the Engineer's Certificate, is (i) not less than $25,000 and (ii) not less than one per centum (1%) of the aggregate principal amount of the bonds then outstanding under this Indenture, such Engineer's Certificate covering any such purchased property shall be made and signed by an Independent Engineer. "Gross expenditures" shall mean and include cash payments actually made or agreed to be made and for which liability shall have been actually incurred by the Company for the construction or acquisition of bondable property and, in the case of purchased property, shall mean and include (a) all cash payments actually made or agreed to be made and for which liability shall have been actually incurred by the Company for the purchase thereof (including any expenditures made by the Company in the payment or discharge of the principal of any mortgage indebtedness existing on any purchased property at the time of its acquisition by the Company) in excess of any net current assets received by the Company or (b) the fair value to the Company of such purchased property at the time of its 46 acquisition by the Company, whichever shall be less; provided that in cases where purchased property is acquired by the Company without consideration or for a consideration not consisting wholly of cash payments made or agreed to be made, the fair value to the Company of such purchased property at the time of its acquisition by the Company, shall, within the meaning of this Indenture, be deemed to be a gross expenditure for such property. The "cost" of any bondable property shall mean the aggregate of the gross expenditures therefor. "Net expenditures" for bondable property shall be determined as of any date as follows: From the total gross expenditures for bondable property made by the Company during the period beginning _____________, 1994 [*], and ending on the date as of which the net expenditures are to be determined, there shall be deducted (a) the aggregate amount of such gross expenditures, if any, certified for or during such period to comply with the requirements of sub-paragraph (b) of Section 5.15 hereof, and (b) the aggregate amount of gross retirements of property, as hereinafter defined, made during such period after deducting therefrom the sum of (1) the aggregate amount certified by the Company to the Trustee as expended during such period for the purposes specified in sub-paragraphs (b) and (c) of Section 5.15 hereof (excluding the aggregate amount certified under Section 5.15 as a basis for the withdrawal of cash under said Section), (2) the aggregate amount paid to the Trustee for or during said period to comply with the requirements of Section 5.15 and (3) the aggregate amount of all net considerations received by the Company during said period in connection with the release of property from the lien of this Indenture under the provisions of Article VIII hereof. In making any determination of net expenditures for the purpose of the authentication of bonds under the provisions of this Section or the withdrawal of deposited cash under the provisions of Sections 4.04 or 8.06 hereof, the net expenditures shall be determined as of a date (to be selected by the Company) not more than ninety days prior to the authentication of such bonds or the withdrawal of such deposited cash, as the case may be, and the deductions required by subdivisions (a) and (b) of the next preceding paragraph to be made from gross expenditures shall be made for the period beginning ______________, 1994 [*], to such date. "Gross retirements of property" made during any such period shall mean and include (a) all retirements made during any such period as the result of renewals, replacements, abandonments, losses, sales or other dispositions of bondable property owned by the Company on _____________, 1994 [*], or constructed or otherwise acquired by it after said date, all such retirements to be stated and included in "gross retirements of property" at the amount (estimated by the Company if not separately shown) at which the property retired was included at _____________, 1994 [*], as tangible property in utility plant 47 account on the books and records of the Company, if owned by the Company at said date, or at the cost thereof if constructed or acquired by the Company after said date, and (b) all other reductions made during such period in the amount at which bondable property owned by the Company on _______________, 1994 [*], or constructed or otherwise acquired by it after said date, was included as tangible property in utility plant account on the books and records of the Company at the beginning of such period, except any reduction resulting from the transfer of any portion of such amount to some other property account, tangible or intangible, of the Company. "Gross retirements of property" shall not include any reductions in the amounts included in utility plant account as "intangible property" or as "intangibles" on the books and records of the Company. Bonds shall be authenticated by the Trustee under this Section subject to the restrictions hereof and shall be delivered by it to or upon the written order of the President or a Vice- President of the Company upon receipt by the Trustee of the following: (a) A copy of a Resolution authorizing the execution and authentication of the bonds proposed to be authenticated and stating the principal amount thereof and the designation of the series in which to be authenticated and setting forth, either expressly or by reference to a Resolution theretofore adopted, the terms, provisions and characteristics of such bonds, all in accordance with and subject to the restrictions of Articles II and III hereof; (b) An Officers' Certificate setting forth (1) the gross expenditures for bondable property (other than purchased property) made by the Company in the period covered by the certificate (which shall begin on ______________, 1994 [*]), briefly describing such bondable property and identifying it as such within the definition thereof contained in this Section, and stating that said expenditures have been actually made, or a liability therefor incurred, by the Company, and (2) the gross expenditures for, and the fair value to the Company at the time of acquisition (as determined by an Engineer's Certificate signed by an Engineer or an Independent Engineer in accordance with the provisions of this Section) of, any purchased property acquired by the Company during the period covered by the certificate, a brief description of such purchased property (identifying the same as purchased property as defined above), the date of its acquisition, and the amount and character of the consideration paid therefor, and (3) the aggregate amount of such gross expenditures, if any, certified for or during the period covered by the certificate, to comply with the requirements of sub- paragraph (b) of Section 5.15 hereof, and (4) (a) the aggregate amount of gross retirements of property, as defined above, made during said period, and (b) the sum of 48 all amounts certified by the Company to the Trustee as expended during such period for the purposes specified in sub-paragraphs (b) and (c) of Section 5.15 hereof (excluding all amounts certified under said Section as a basis for the withdrawal of cash under said Section), and (c) the aggregate amount paid to the Trustee for or during said period to comply with the requirements of Section 5.15 hereof, and (d) the aggregate amount of all net considerations received by the Company during said period in connection with the release of property from the lien of this Indenture under the provisions of Article VIII hereof, and (5) a computation showing the net expenditures for bondable property, as defined above, made by the Company during such period which may be used as the basis for the authentication of additional bonds, and (6) that all such bondable property, including such purchased property, if any, has become subject to the lien of this Indenture and is not subject to any liens or encumbrances equal or prior in lien to this Indenture, except the lien of the First Mortgage Indenture, Excepted Encumbrances and Prepaid Liens, and (7) that no part of said net expenditures for bondable property has been previously used as a basis for the authentication of any bonds under this Indenture or as a basis for the withdrawal of deposited cash or any other moneys or the release of any property under any provision of this Indenture or has been made out of any insurance moneys or moneys received from the condemnation, sale or other disposition of any property of the Company subject to the lien of this Indenture or has been certified or used to comply with any maintenance or renewal requirement contained herein or in a supplemental indenture or has been certified or used to comply with the provisions respecting any sinking fund or analogous fund created hereafter pursuant to the terms of this Indenture or, in the alternative, that the provisions relating to any such fund then existing do not preclude the use of any such expenditures as a basis for the authentication of bonds hereunder, and (8) any other facts and data (not specifically required to be shown in some other manner) showing that the Company is entitled under the foregoing provisions of this Section to have authenticated the bonds requested to be authenticated; (c) An Engineer's Certificate signed by an Engineer certifying to the fair value to the Company, at a date within ninety days prior to the date of delivery to the Trustee of the application of the Company for the authentication of bonds, of the bondable property (other than purchased property if any be included in such bondable property) described in the certificate required by subparagraph (b) of this Section; (d) An Engineer's Certificate signed by an Engineer or an Independent Engineer (conforming to and as may be required by the provisions of this Section) certifying to 49 the fair value to the Company, at a date within ninety days prior to the date of delivery to the Trustee of the application of the Company for the authentication of bonds, of any purchased property described in the certificate required by subparagraph (b) of this Section and also its fair value to the Company at the time of its acquisition; and (e) The certificates, orders, opinions, supplemental indentures and/or other instruments, if any, required by Sections 4.05 and 4.06 hereof. "Bondable property" (other than purchased property and land) may be sufficiently described other than in the granting clauses for any purpose of this Indenture by stating the descriptive name or title of the account or accounts (and subdivisions thereof applicable thereto) under or pursuant to a standard classification of accounts in general use to which the expenditures made for such property are applicable or have been charged or allocated and the amounts thereof. SECTION 4.04. Issuance of Bonds Upon Deposit of Cash With Trustee; Withdrawal or Application of Deposited Cash. Bonds of any series (other than bonds of Series A, B, D, E, F, X, Y-1 through Y-8 and Z) may be executed by the Company and be delivered to the Trustee for authentication, from time to time, in the manner and subject to the limitations provided in this Section and in Articles II and III hereof, and shall be authenticated by the Trustee and delivered by it to or upon the written order of the President or a Vice-President of the Company, upon receipt by the Trustee of the following: (a) A copy of a Resolution authorizing the execution and authentication of the bonds proposed to be authenticated and stating the principal amount thereof and the designation of the series in which to be authenticated and setting forth, either expressly or by reference to a Resolution theretofore adopted, the terms, provisions and characteristics of such bonds, all in accordance with and subject to the restrictions of Articles II and III hereof; (b) An amount of cash equal to the principal amount of the bonds requested to be authenticated; and (c) The certificate, orders, opinions, supplemental indentures and/or other instruments, if any, required by Sections 4.05 and 4.06 hereof. Cash received by the Trustee under the provisions of this Section is sometimes referred to in this Indenture as "deposited cash." Whenever the Company shall be entitled to the authentication and delivery of bonds under the provisions of either Section 4.02 hereof or Section 4.03 hereof and the Trustee shall have in its possession deposited cash equal to the 50 principal amount of such bonds, the Trustee shall, on the request signed by the President or a Vice President of the Company evidenced by a Resolution and in lieu of the authentication and delivery of such bonds, pay over to the Company, on the written order of its President or a Vice-President, an amount of deposited cash equal to the principal amount of such bonds, but only upon receipt by the Trustee of an Officers' Certificate stating that the Company is not then in default under any provision of this Indenture and of the certificate or certificates, order or orders, opinion or opinions and other instruments (if any) of the character required to be given for the authentication and delivery of such bonds (excepting only the certificates, orders, opinions, supplemental indentures and/or other instruments, if any, required by Section 4.05 and by sub- divisions (a) to (e), inclusive, of Section 4.06) but with such changes or differences as may be appropriate or required by reason of the fact that the Company's application is for the withdrawal of deposited cash instead of for the authentication of bonds. All cash received by the Trustee under the provisions of this Section shall, until paid out as aforesaid, be held by it as part of the Trust Estate, except that all or any part of such cash may, upon the written direction of the Company, be applied by the Trustee to the purchase or redemption of bonds, upon the terms and conditions set forth in Section 8.06 hereof, and all such cash remaining on deposit with the Trustee at the end of three years from the date of deposit of the same shall be so applied by the Trustee. SECTION 4.05. Net Earnings Certificate. (a) No bonds shall be authenticated and delivered by the Trustee under the provisions of Sections 4.03 or 4.04 hereof, and (b) no bonds bearing a higher rate of interest than the bonds for or on account of the payment, cancellation, redemption or discharge of which they are authenticated shall be authenticated and delivered by the Trustee under the provisions of Section 4.02 hereof more than five years prior to the maturity of the bonds for or on account of the payment, cancellation, redemption or discharge of which they are authenticated, except, in each case, upon receipt by the Trustee of a certificate (a "Net Earnings Certificate") signed by the President or a Vice-President of the Company, by the Treasurer or an Assistant Treasurer of the Company and by an accountant, whose qualifications shall conform to the requirements of this Section. The Net Earnings Certificate shall show that for a period of twelve consecutive calendar months ending within ninety days next preceding the authentication and delivery by the Trustee of any such bonds hereunder the net earnings, as hereinafter defined, of the Company shall have been a sum at least equal to twice the interest for one year (1) on all the bonds to be Outstanding under this Indenture immediately after such authentication and (2) on all other indebtedness then secured by a lien equal or prior to the lien of this Indenture on any part of the Company's property (excepting any such indebtedness the evidences of which shall then be held in pledge 51 by the Trustee hereunder or by the trustee under any mortgage constituting a lien equal or prior to the lien of this Indenture on any part of the Company's property, and excepting Prepaid Liens). The accountant signing such Net Earnings Certificate shall be an independent public accountant, selected by the Company and approved by the Trustee in the exercise of reasonable care, if (a) the aggregate principal amount of the bonds then proposed to be authenticated hereunder and of other bonds authenticated and delivered hereunder since the commencement of the then current calendar year (other than bonds with respect to which a Net Earnings Certificate is not required by this Indenture or with respect to which a certificate of an independent public accountant has previously been furnished) is ten per centum (10%) or more of the aggregate principal amount of all bonds at the time outstanding hereunder and (b) the twelve consecutive calendar months for which the net earnings of the Company shall be stated in such Net Earnings Certificate are the period covered by an annual report required to be filed by the Company. In every other case, the accountant signing such Net Earnings Certificate may be an accountant who is the chief accounting officer or other accounting officer or employee of the Company. The "net earnings" of the Company shall for any period mean the earnings of the Company, computed in accordance with generally accepted accounting principles, determined by deducting from the total gross earnings and income of the Company derived from all sources for such period, all operating expenses of the Company for such period including current maintenance and repairs, rentals, insurance, taxes other than taxes on income, and all charges or provisions for depreciation, retirements, renewals, replacements and/or amortization; and by making such adjustments, if any, of the resulting amount as may be necessary to comply with the provisions as to net earnings hereinafter contained in this Section. Not more than ten per centum (10%) of the net earnings as finally determined shall consist of the aggregate of (a) net non-operating income, (b) net operating revenues derived from the operation by the Company of any properties other than electric utility properties and (c) net revenues from any properties not owned by the Company. No dividends or interest received by the Company from any subsidiary or affiliated company shall be included in the net earnings of the Company except to the extent that such dividends or interest were earned by the paying company in the current or the next preceding fiscal year of such company. No profits or losses resulting from the sale or other disposition of capital assets shall be included in computing the net earnings of the Company. In case any property owned by the Company at the time of the authentication of bonds under this Indenture shall not have been owned by it during any part of any such period or shall have been owned by it only during a part of such period, then and in every such case the net earnings or net loss of such property during 52 said period (including net earnings or net loss during such part thereof as shall have preceded the acquisition of said property by the Company) shall be included in computing the net earnings or net loss of the Company for such period. In case any property owned by the Company during any part of any such period shall not be owned by the Company at the time of the authentication of bonds hereunder, the net earnings or the net loss of the Company from such property during such period shall be excluded in computing the net earnings or net loss of the Company. In computing the net earnings of the Company for any period pursuant to the provisions of this Section, the amounts to be deducted from the total gross earnings and income as charges or provisions for depreciation, retirements, renewals and replacements and/or amortization, shall be not less in the aggregate than an amount equal to the Required Percentage of the arithmetical average of the amount of depreciable property of the Company at the beginning, and the amount thereof at the end, of such period. SECTION 4.06. Documents to be Delivered. No bonds shall be authenticated and delivered by the Trustee under the provisions of Sections 4.01, 4.02, 4.03 or 4.04 hereof except upon receipt by the Trustee of the following: (a) An Opinion of Counsel stating each public service commission or other governmental agency, if any, of the United States of America or of any state or states thereof then having or claiming to have jurisdiction over the issuance of bonds under this Indenture by the Company, and also stating the principal amount of the bonds then requested to be authenticated with respect to which a certificate or order of any such public service commission or governmental agency is required or claimed to be required; and a certified copy of each such certificate or order, shown by said opinion to be required, together with an Opinion of Counsel to the effect that such certificates or orders are sufficient to authorize or permit the issuance of the bonds requested to be authenticated; (b) An Opinion of Counsel stating that any recording or other tax or taxes required by law in connection with the issuance of such bonds or for the effectiveness of the lien of this Indenture as security for such bonds have been paid, or that no such tax or taxes are required by law to be paid, and stating further that such bonds have been duly authorized to be issued and will be, when authenticated and issued, the legal and binding obligations of the Company secured by this Indenture; (c) An Officers' Certificate stating that the Company is not then (and will not be, after giving effect to such authentication and delivery) in default under any provision of this Indenture, and stating the aggregate principal amount of all bonds of all series and also the aggregate principal amount of all bonds of any particular series, of 53 which any bonds then requested to be authenticated are a part, which will be outstanding under this Indenture upon the authentication and issue of the bonds then requested to be authenticated; (d) An Opinion of Counsel that, upon the authentication and issue of the bonds then requested to be authenticated, the aggregate principal amount of all bonds of all series that will be outstanding under this Indenture, as shown by the certificate provided for in subdivision (c) of this Section 4.06, will not exceed the amount which at that time may be lawfully outstanding hereunder nor exceed any limitation then existing upon the indebtedness of the Company under its Amended and Restated Certificate of Incorporation and amendments thereto or, to the best of such counsel's knowledge, under any contract, indenture or other instrument to which the Company is a party or under any applicable law, and that the aggregate principal amount of all bonds of any particular series, of which any bonds then requested to be authenticated are a part, will not exceed the maximum principal amount, if any, fixed with respect to the bonds of such series; (e) In case of the first authentication of bonds of any series (other than an issuance under the provisions of Section 4.01 hereof), a supplemental indenture, executed as provided in Article XVI hereof, (1) setting forth the form and substance of the bonds of said series and the terms, provisions and characteristics thereof, and (2) limiting the aggregate principal amount of bonds of such series that may be outstanding at any one time to an amount stated in such supplemental indenture, unless such supplemental indenture be accompanied by an Opinion of Counsel to the effect that such limitation is not required by law or by this Indenture, and (3) containing such other provisions, not inconsistent with the provisions of this Indenture, as may be deemed necessary or appropriate in the premises and as shall be satisfactory to the Trustee; (f) In case of an application for the authentication of bonds under the provisions of Section 4.03 hereof or in case of an application for the withdrawal of deposited cash under the provisions of Section 4.04 hereof on account of expenditures for bondable property, (1) an Opinion of Counsel stating that the Company has substantially good title to any such bondable property included in the certificate provided for in subdivision (b) of said Section 4.03 or in said Section 4.04 (unless such bondable property shall have been covered by an Opinion of Counsel theretofore filed with the Trustee), and that such bondable property is subject to the lien of this Indenture and is not subject to any liens or encumbrances equal or prior in lien to the lien of this Indenture, except the lien of the First Mortgage 54 Indenture, Excepted Encumbrances and Prepaid Liens, and (2) all such deeds, conveyances, transfers or instruments of further assurance as may be necessary for the purpose of effectually subjecting such bondable property to the direct lien and operation of this Indenture, together with an Opinion of Counsel that the same are sufficient for the purpose, or an Opinion of Counsel that no such deeds, conveyances, transfers or instruments are necessary for such purpose; (g) An Officers' Certificate stating that in the opinion of the officers signing the certificate all conditions and requirements of this Indenture relating to the authentication and delivery of the bonds requested to be authenticated and delivered have been complied with; or, in the case of an application for the withdrawal of deposited cash under the provisions of Section 4.04 hereof, that all conditions and requirements of this Indenture relating to the withdrawal of cash requested to be withdrawn have been complied with; and (h) An Opinion of Counsel stating that in such counsel's opinion all conditions and requirements of this Indenture relating to the authentication and delivery of the bonds requested to be authenticated and delivered have been complied with; or, in the case of an application for the withdrawal of deposited cash under the provisions of Section 4.04 hereof, that in his or her opinion all conditions and requirements of this Indenture relating to the withdrawal of cash requested to be withdrawn have been complied with. To the extent any of the foregoing opinions relate to enforceability, counsel may express that such opinion is limited by the following: (i) the rights of any governmental entity under any statutory lien provisions; (ii) principles of equity which may limit the availability of certain equitable remedies; and (iii) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, and other laws applicable to creditors' rights or the collection of debtors' obligations generally. Such opinions may also be expressed to be further subject to the qualification that the enforceability of certain of the remedial, waiver and other provisions of this Indenture is limited by all applicable constitutional, legislative, judicial and administrative provisions, statutes, regulations, decisions, rulings and other laws in addition to those described in the immediately preceding sentence; provided, however, that such laws do not, in such counsel's opinion, substantially interfere with the practical realization of the benefits expressed in this Indenture except for the economic consequences of any procedural delay which may result from such laws. 55 ARTICLE V PARTICULAR COVENANTS OF THE COMPANY SECTION 5.01. Seizin and Warranty. The Company hereby covenants that it is lawfully seized and possessed of all the Trust Estate except any portions of the Trust Estate constituting a leasehold estate and as to these the Company has a valid and subsisting leasehold interest; that it will warrant and defend unto the Trustee, its successors and assigns, for the benefit of the holders of the bonds, the Trust Estate and the lien and interest of the Trustee thereon and therein under this Indenture against all claims and demands of any person whomsoever; that it will maintain and preserve the lien of this Indenture so long as any of the bonds authenticated hereunder are Outstanding; that it has good right and lawful authority to mortgage and pledge the Trust Estate, as provided in and by this Indenture; and that said Trust Estate is not subject to any Prior Lien except Excepted Encumbrances and Prepaid Liens or the lien of the First Mortgage Indenture. SECTION 5.02. Payment of Principal, Premium and Interest; Maintenance of Office. (a) The Company hereby covenants that it will duly and punctually pay the principal of and premium, if any, and interest on all the bonds Outstanding hereunder, according to the terms thereof and of this Indenture, and that so long as any of such bonds shall remain Outstanding and unpaid, it will not directly or indirectly extend or assent to the extension of the time for the payment of any bond or claim for interest of or upon any such bond, and will not directly or indirectly be a party to any arrangement therefor, either by purchasing or refunding or in any manner keeping alive such bond or claim for interest, or otherwise, and that in case the payment of any such bond or claim for interest shall be so extended by or with or without the consent of the Company, then, anything contained in this Indenture to the contrary notwithstanding, such bond or claim for interest so extended shall not be entitled, in case of default hereunder, to any benefit of or from this Indenture, except after the prior payment in full of the principal of all bonds and claims for interest as shall not have been so extended. (b) The Company hereby covenants that it will keep an office or agency, while any of the bonds issued hereunder are Outstanding, at any and all places (i) at which the principal of or interest on and premium, if any, on any of said bonds may be payable, (ii) where bonds entitled to be registered, transferred, exchanged, or converted may be presented or surrendered for registration, transfer, exchange or conversion and (iii) where notices, presentations and demands to or upon the Company in respect of such bonds as may be payable at such places or in respect of this Indenture may be given or made. The Company will from time to time give the Trustee written notice of the location of such office or offices or agency or agencies, and in case the 57 Company shall fail to maintain such office or offices or agency or agencies or to give the Trustee written notice of the location thereof, then in addition to any other remedy or right arising as a result of the violation of the covenants contained in this Section, the Company agrees that any such notice, presentation or demand in respect of said bonds or of this Indenture may be given or made, unless other provision is expressly made herein, to or upon the Trustee at its principal corporate trust office, and the Company hereby authorizes such presentation and demand to be made to and such notice to be served on the Trustee in either of such events and the principal of and interest and premium, if any, on said bonds shall in such event be payable at said office of the Trustee. Unless otherwise provided in a supplemental indenture or in any notice of redemption pursuant to Section 7.02 hereof, the principal of or interest on and premium, if any, on any bonds issued hereunder shall be payable at the principal corporate trust office of the Trustee. SECTION 5.03. Regarding Paying Agent; Funds in Trust. (a) The Company hereby covenants that, if it shall appoint a paying agent other than the Trustee, it will cause such paying agent to execute and deliver to the Trustee an instrument in which it shall agree with the Trustee, subject to the provisions of this Section, (1) that such paying agent shall hold in trust for the benefit of the bondholders or the Trustee all sums held by such paying agent for the payment of the principal of or interest (and premium, if any) on the bonds; and (2) that such paying agent shall give the Trustee notice of any default by the Company or by any other Obligor in the making of any such payment to or through such paying agent. Such paying agent shall not be obligated to segregate such sums from other funds of such paying agent except to the extent required by law. (b) The Company hereby covenants that, if the Company acts as its own paying agent, it will, on or before each due date of each installment of principal or interest (and premium, if any) on the bonds, set aside and segregate and hold in trust for the benefit of the bondholders a sum sufficient to pay such principal or interest (and premium, if any) so becoming due on the bonds and will notify the Trustee of such action, or of any failure to take such action. (c) Anything in this Section to the contrary notwithstanding, the Company may at any time, for the purpose of obtaining a release or satisfaction of this Indenture or for any other reason, pay or cause to be paid to the Trustee all sums held in trust by it or any paying agent as required by this Section, such sums to be held by the Trustee upon the trusts contained in this Indenture. (d) Anything in this Section to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section is subject to the provisions of Section 11.03 hereof. 57 SECTION 5.04. Limitations on Liens; Payment of Taxes. (a) The Company hereby covenants that it will pay all taxes and assessments and other governmental charges lawfully levied or assessed upon the Trust Estate, or upon any part thereof or upon any income therefrom, or upon the interest of the Trustee in the Trust Estate, when the same shall become due. (b) The Company hereby covenants that it will not suffer any lien to be hereafter created upon the Trust Estate, or any part thereof, or the income therefrom, prior or equal to the lien hereof other than the Excepted Encumbrances, Prepaid Liens and the lien of the First Mortgage Indenture, and other than, in the case of property hereafter acquired by the Company, vendors' liens, purchase money mortgages or trust deeds incurred or executed in connection with such acquisition and any lien thereon at the time of acquisition. (c) The Company hereby covenants that, within 120 days or such shorter period as may be required by law after any lawful claim or demand for payment for labor, materials, supplies or other objects, which if unpaid would or might be given precedence over the lien of this Indenture as a lien or charge upon any of the Trust Estate or the income thereof, the Company will pay or cause to be discharged or make adequate provision to satisfy or discharge the same. (d) The Company hereby covenants that it will duly observe and conform in all material respects to all valid requirements of any governmental authority relative to any of the Trust Estate, and all covenants, terms and conditions upon or under which any of the Trust Estate is held. (e) The Company hereby covenants that it will comply in all material respects with all valid laws of the United States of America and of any state or states thereof applicable to the Company and to the right of the Company to transact business under any such laws, and with all lawful ordinances, rules, orders and regulations of any commission, board or public authority having jurisdiction in the Trust Estate, in such form and manner as counsel may advise. (f) The Company hereby covenants that it will do and perform all matters or things necessary or expedient to be done or observed by reason of any law of the United States of America, or any state thereof, or any other competent authority, for the purpose of creating, performing and maintaining the trust hereby created for the security of the payment of the bonds authenticated hereunder to, and perform all the obligations hereby imposed upon, the Company. (g) The Company hereby covenants that books of record and account will be kept in which full, true and correct entries will be made of all dealings or transactions of, or in relation to, the plants, properties, business and affairs of the Company, 58 such books, records and accounts to be kept, unless in the course of contest in good faith, in accordance with the valid orders, rules and regulations of each regulatory body that may from time to time have jurisdiction in respect thereof and with which the Company is compelled to comply by any valid provision of law, and such books, records and accounts shall at all reasonable times be open to the inspection of such reputable accountants or other agent of recognized standing as the Trustee may from time to time designate. Nothing in this Section contained, however, shall require the Company to observe or conform to any requirement of governmental authority or to cause to be paid or discharged, or to make provision for, any such lien or charge, or any claim or demand, or to pay any such tax, assessment or governmental charge, so long as the validity thereof shall be contested by it in good faith and by appropriate legal proceedings, and nothing in this Section shall require the Company to pay, discharge or make provision for any tax, assessment or other governmental charge, or any claim or demand, the validity of which shall not be so contested if adequate security for the payment of such tax, assessment or other governmental charge, or any claim or demand, and for any damages which may reasonably be anticipated from failure to pay the same shall be given to the Trustee; and that, save as aforesaid, it will not suffer any matter or thing whereby the lien hereof might or could be impaired in contravention of the provisions hereof. SECTION 5.05. To Insure. The Company hereby covenants that it will keep the Trust Estate insured against loss or damage, to the extent that property of similar character is usually so insured by companies similarly situated and operating like properties, to a reasonable amount by insurance companies believed by the Company to be responsible; any loss (except as to materials and supplies and except any particular loss of less than the lesser of Four Million Dollars ($4,000,000) and two per centum (2%) of the bonds Outstanding hereunder on the date of such particular loss) to be made payable to the Trustee as its interest may appear, or to the trustee or other holder of a Prior Lien, if required by the terms thereof; or that it will, in lieu of or supplementing such insurance, in whole or in part, adopt and comply with some other method or plan of protection against loss or damage, to provide for the payment, consistent with industry practice, to the Trustee, or to the trustee or other holder of a Prior Lien, if required by the terms thereof; to the extent provided in such method or plan, in cash, of the amount made available under such method or plan by reason of loss or damage to property (except as to materials and supplies and except any particular loss less than the lesser of Four Million Dollars ($4,000,000) and two per centum (2%) of the bonds Outstanding hereunder on the date of such particular loss). The Company further covenants that it will, in each year on or before April 1, deliver to the Trustee a statement of all such policies of insurance or other methods or plans of 59 insurance and will promptly advise the Trustee of any cancellation or other change affecting such policies or methods or plans of insurance. Such statement shall be signed by the President or a Vice-President or the Treasurer of the Company and shall certify that all property of the Company required by this Section to be insured is insured in the manner and to the extent herein provided and that loss under such insurance is made payable as hereinabove provided. All cash received by the Trustee pursuant to the provisions of this Section, except payments received on account of any loss of materials or supplies or on account of any particular loss of less than the lesser of Four Million Dollars ($4,000,000) and two per centum (2%) of the bonds Outstanding hereunder on the date of such particular loss, shall, subject to the requirements of any Prior Lien, be held by the Trustee as a part of the Trust Estate, and, subject as aforesaid, shall be disposed of as provided in Section 8.06 hereof. The Trustee shall pay over to the Company, by endorsement or otherwise, any payment received by it on account of any loss of materials or supplies or on account of any particular loss of less than the lesser of Four Million Dollars ($4,000,000) and two per centum (2%) of the bonds Outstanding hereunder on the date of such particular loss upon receipt by the Trustee of an Officers' Certificate to the effect that such payment represents the proceeds of insurance on account of loss of materials or supplies or on account of a particular loss of less than the lesser of Four Million Dollars ($4,000,000) and two per centum (2%) of the bonds Outstanding hereunder on the date of such particular loss. All such cash received by the Company shall be applied by it to the rebuilding, renewal or replacement of property or to the acquisition of additional property that will become subject to the lien of this Indenture. Any cash received by the Trustee pursuant to the provisions of this Section and not so applied within twelve (12) months after its receipt by the Trustee, or in respect of which notice in writing of intention to apply the same to the work of rebuilding or renewal then in progress and uncompleted shall not have been given to the Trustee by the Company within such twelve (12) months, or which the Company shall at any time notify the Trustee in writing is not to be so applied, shall thereafter, and may at any time subsequent to the receipt thereof by the Trustee, be withdrawn, used or applied in the manner and for the purposes and subject to the conditions provided in Section 8.06 hereof. SECTION 5.06. To Maintain Property, etc. The Company hereby covenants, subject to the last paragraph of Section 5.13 hereof, that: (a) it will at all times maintain, preserve and keep the Trust Estate in good repair, working order and condition and equipped with suitable equipment and appliances; (b) it will make regular charges to expense for the establishment of a reasonably adequate reserve or reserves for depreciation, and 60 from time to time will make all needful and proper repairs, retirements, renewals and replacements of the Trust Estate; (c) it will not charge to its property, plant and equipment accounts any expenditures which are properly chargeable to maintenance or repairs or to any other expense account in accordance with generally accepted accounting principles; and (d) it will promptly classify as retired all property that has permanently ceased to be used or useful in the Company's business. Nothing in this Section or elsewhere in this Indenture contained shall be construed to prevent the Company from ceasing to operate or maintain any of its plants or any other property, if, in the judgment of the Company, it is advisable not to operate or maintain the same or if the Company intends to sell or otherwise dispose of the same and within a reasonable time endeavors to effectuate such a sale or other disposition; provided, however, that the operation or maintenance of such plant or plants or any other property shall not be essential to the maintenance and continued operation of the rest of the Trust Estate and the security afforded by this Indenture will not be substantially impaired by the termination of such operation. SECTION 5.07. To Maintain Corporate Existence and Franchises. The Company hereby covenants that it will, subject to the provisions of Articles VIII and XIII hereof and except as herein otherwise provided or permitted either expressly or by implication, at all times maintain its corporate existence and right to carry on business and will use its reasonable efforts to procure, maintain, preserve and renew all the rights, powers, privileges and franchises owned by it as shall be required for such purpose; provided that the Company may amend, surrender, abandon or otherwise terminate any right, permit, privilege or franchise, whenever the Company shall, contemporaneously or as a part of the same transaction, obtain or shall previously have obtained a new and, in the opinion of a majority of the Board of Directors, an equally advantageous right, permit, privilege or franchise under which the Company may continue to perform the service and conduct the business theretofore performed or conducted under or by virtue of the right, permit, privilege or franchise amended, surrendered, abandoned or terminated, or whenever the right, permit, privilege or franchise to be amended, surrendered, abandoned or terminated can no longer be profitably exercised or availed of or shall not be essential to the maintenance and continued use of the rest of the Trust Estate, and consequently the security afforded by this Indenture would not be substantially impaired. SECTION 5.08. Repayment of Advances made by a Receiver, etc. The Company hereby covenants that, if it shall fail to perform any of the covenants contained in Sections 5.04, 5.05, clause (b) in the first paragraph of Section 5.06, Sections 5.07, 5.09 or 5.13 hereof, any receiver or trustee appointed by any court, as herein provided, may make advances to perform the same in its behalf; and all sums so advanced shall be at once repayable by the Company, and shall bear interest at the prime 61 commercial loan rate charged by the Company's primary bank to large corporate borrowers on the date such advance is made until paid, and shall be secured hereby, having the benefit of the lien hereby created in priority to the indebtedness evidenced by the bonds issued hereunder, but no such advance shall be deemed to relieve the Company from, or constitute a waiver of any default hereunder. SECTION 5.09. To Record and File Indenture and Supplemental Indenture. The Company hereby covenants that it will cause this Indenture and all indentures and instruments supplemental hereto or notices in respect thereof to be promptly recorded and filed and re-recorded and re-filed in such manner and in such places as may be provided by law in order to make effective the lien intended to be created hereby or thereby and in order fully to preserve and protect the security of the bondholders and all rights of the Trustee, and that it will pay or cause to be paid any mortgage recording tax and filing fees in connection with such recording and filing, and that it will do and perform all matters or things necessary or expedient to be done or observed by reason of any law of the United States of America, or of any state or states thereof, or any other competent authority, for the purpose of creating, performing and maintaining the trust hereby created for the security of the payment of the bonds, and to perform all the obligations hereby imposed upon the Company. SECTION 5.10. To Furnish Opinions of Counsel as to Recording. The Company hereby covenants that it will furnish to the Trustee (a copy of which will be available to any holder of bonds upon request): (i) promptly, and in any event within ten (10) Business Days after the execution and delivery of this Indenture and of each supplemental indenture, an Opinion of Counsel either stating that, in the opinion of such counsel, this Indenture or such supplemental indenture and any appropriate Uniform Commercial Code financing statements have been properly recorded and filed, so as to make effective the lien intended to be created hereby or thereby and fully to preserve and protect the security of the bondholders and all rights of the Trustee, and reciting the details of such action, or stating that, in the opinion of such counsel, no such action is necessary to make such lien effective. The Company shall have complied with this subsection (i) if (1) the Opinion of Counsel herein required to be delivered to the Trustee shall state that this Indenture or such supplemental indenture has been received for record or filing in each jurisdiction in which it is required to be recorded or filed and that, in the Opinion of Counsel (if such is the case), upon such receipt for record or filing the lien intended to be created by this Indenture or such supplemental indenture is effective and fully preserves and protects such security and rights as 62 aforesaid, and (2) such opinion is delivered to the Trustee, notwithstanding the ten (10) Business Day period mentioned above, within such time, following the date of the execution and delivery of this Indenture or such supplemental indenture, as shall be practicable having due regard to the number and distance of the jurisdictions in which this Indenture or such supplemental indenture is required to be recorded or filed; and (ii) On or before April 1 of each year, beginning April 1, ____ [***], an Opinion of Counsel either stating that, in the opinion of such counsel, such action has been taken, since the date of the most recent Opinion of Counsel furnished pursuant to this subsection (ii) or of the initial Opinion of Counsel furnished pursuant to subsection (i) of this Section, whichever is later, with respect to the recording, filing, re-recording and re-filing of this Indenture and each notice with respect thereto and of each supplemental indenture and of any appropriate Uniform Commercial Code financing statements, as is necessary to maintain the lien thereof and so to preserve and protect such security and rights, and reciting the details of such action, or stating that, in the opinion of such counsel, no such action is necessary to maintain such lien and so to preserve and protect such security and rights. In rendering the aforementioned Opinions of Counsel, counsel may rely on the property descriptions contained in this Indenture or a certificate of an appropriate officer of the Company as to the jurisdictions in which the bondable property intended to be subject to the lien of this Indenture is located. Such counsel may also rely upon and qualify any such Opinion of Counsel in the manner described in Sections 1.02 (pertaining to "title") and 4.06 hereof to the extent such counsel deems it necessary to do so and may rely upon the same type of abstracts, affidavits, certificates, statements and investigations as mentioned in the definition of "title" contained in this Indenture. SECTION 5.11. Further Advances and After-acquired Property. The Company hereby covenants that it will execute and deliver such supplemental indenture or indentures and such further instruments and do such further acts as the Trustee shall require (a) for accomplishing the purposes of this Indenture, (b) to convey to the Trustee any property, both real and personal, now held or hereafter acquired, made or constructed, intended to be subject to the lien hereof, or (c) to transfer to any new trustee or co-trustees, the estate, powers, instruments or funds held in trust hereunder. SECTION 5.12. To Appoint a Trustee to Fill Vacancies. The Company hereby covenants that, whenever necessary to avoid or fill a vacancy in the office of Trustee, the Company will in the manner provided in Section 14.17 hereof appoint a Trustee so that 63 there shall be at all times a Trustee hereunder eligible pursuant to the TIA to act as such, with a combined capital and surplus of at least Fifty Million Dollars ($50,000,000). SECTION 5.13. Periodic Examinations as to Maintenance. The Trustee may, and, if so requested in writing by the holders of not less than a majority in principal amount of the bonds then Outstanding and upon being furnished by the Company with the necessary funds therefor, shall, cause an inspection of the Trust Estate to be made by an Independent Engineer, for the purpose of determining the matters hereinafter provided to be set forth in the report of such Independent Engineer, and that the Company will grant such Independent Engineer access to the properties, books and records of the Company for the purpose of such inspection; but no such inspection shall be made within five years from the date of filing with the Trustee of the report of any such inspection previously made hereunder. Such Independent Engineer, within a reasonable time from the date of its appointment, shall file with the Trustee and the Company an Engineer's Certificate signed by such Independent Engineer stating whether or not the Trust Estate (other than property which has been retired) is in general being maintained in good physical condition and in a state of good operating efficiency for the purposes of the Company and whether or not all of the Trust Estate that is no longer used or useful in the Company's business has been duly recorded as retired on the books of the Company. If such certificate shall state that the Trust Estate (other than property which has been retired) in general is not being so maintained, it shall state clearly the character and extent and the estimated cost of making good such deficiency and the estimated time reasonably necessary to make good such deficiency, and, if it shall state that there is a portion of the Trust Estate that is no longer used or useful in the Company's business and has not been recorded as retired on the books of the Company, it shall briefly describe such property and shall state the aggregate retirement which should be recorded on the books in respect of such property. Said certificate shall be open to inspection by any bondholder at any reasonable time. Such certificate may be modified by a supplemental certificate signed and filed by the Independent Engineer with the Trustee and with the Company. If the Company, within thirty (30) days after the filing of the certificate of such Independent Engineer, objects in writing, delivered to the Trustee, to the findings of such Independent Engineer as to the character and extent of such maintenance deficiency and/or to the property which should be retired upon the books of the Company, then the character and extent of such maintenance deficiency, if any, and/or the property, if any, so to be retired upon the books of the Company shall be forthwith referred to a board consisting of three arbitrators selected in the following manner: The Trustee, within ten (10) days after the expiration of said period of thirty (30) days, shall name one arbitrator and give notice of 64 such selection to the Company. Within ten (10) days after receipt of such notice, the Company shall name one arbitrator and give notice of such selection to the Trustee, and failure so to do shall entitle the Trustee to name an arbitrator on behalf of the Company. The two thus selected shall, within ten (10) days after the appointment of the arbitrator representing the Company, select a third arbitrator, but if said arbitrators are unable, within said ten (10) days, to agree upon such third arbitrator, then, upon the election of either the Company or the Trustee, any District Judge of the United States of America for the District in which the Trustee has its principal corporate trust office may appoint such third arbitrator, upon application to said District Judge by either party after five days' notice thereof to the other party. The board of arbitrators so chosen shall immediately proceed to hear and determine all matters stated in the certificate which are in dispute, after giving to the Trustee and the Company not less than five days' notice in writing of the time and place of such hearing; and at the time and place appointed they shall proceed summarily to hear and dispose of the matters in dispute unless in their judgment the hearing should be postponed to a later day or days, of which postponement like notice shall be given, unless such notice is waived by both parties, in which case the hearing may proceed at an earlier agreed date. The written decision of a majority of such arbitrators shall be filed as soon as practicable with the Trustee and a copy thereof delivered to the Company, and shall be binding upon the Trustee, the Company and the bondholders. The Company covenants and agrees that, if such certificate shall state that such a maintenance deficiency exists, the Company will with all reasonable speed make such repairs and/or do such other maintenance work as may be necessary to make good such deficiency as shall exist at the time of such certificate or at the time of such decision of arbitrators, as the case may be; whereupon such Independent Engineer (or, in the case of such Independent Engineer's refusal or inability to act, some other Independent Engineer) shall file with the Trustee and the Company an Engineer's Certificate signed by such Independent Engineer stating that such deficiency has been made good. The Company further covenants and agrees that, if such certificate shall state that there has not been recorded as retired on the books of the Company a portion of the Trust Estate which is no longer used or useful in the Company's business, the Company will forthwith make appropriate entries on its books recording the retirement of such property and will file with the Trustee an Officers' Certificate stating that such entries have been made. All expenses incurred under this Section, including (without limitation) the reasonable compensation of the Independent Engineer and of the arbitrators, if any shall be appointed, shall be borne by the Company. 65 In the event that any regulatory authority having jurisdiction over the Company shall determine that the expenditures for repairs and maintenance necessary to make good any such maintenance deficiency as shall have been so determined would be excessive or shall, by order or regulation, prohibit, in whole or in part, such expenditures for repairs and maintenance, then, upon filing with the Trustee a certified copy of such determination, order or regulation, as the case may be, the Company shall, so long as such determination, order or regulation remains in effect, be relieved from compliance with the covenants contained in this Section, in regard to the maintenance of the Trust Estate, to the extent such expenditures for repairs and maintenance shall have been held excessive or shall be prohibited. SECTION 5.14. Annual Statement by Officers as to Default. The Company will deliver to the Trustee not less often than annually, commencing on April 1, 199_ [***], during which any bonds are Outstanding, a written statement signed by the principal executive officer, principal financial officer or principal accounting officer of the Company stating that (1) a review of the activities of the Company during such year and of performance under this Indenture and under the terms of the bonds has been made under his or her supervision; and (2) to the best of his or her knowledge, based on such review, the Company has fulfilled all its obligations under this Indenture and has complied with all conditions and covenants on its part contained in this Indenture through such year, or, if there has been a default in the fulfillment of any such obligation, covenant or condition, specifying each such default known to him or her and the nature and status thereof. For the purpose of this Section 5.14, default and compliance shall be determined without regard to any grace period or requirement of notice provided pursuant to the terms of this Indenture. SECTION 5.15. Maintenance and Renewal. The Company covenants and agrees that during each calendar year, so long as any bonds issued under and secured by this Indenture shall be Outstanding, it will, except as otherwise provided in this Section, expend for one or more of the following purposes: (a) The maintenance and repair of the electric utility properties of the Company upon which this Indenture is or shall be a lien; (b) The construction or acquisition of bondable property upon which this Indenture is a second lien, subject only to the lien of the First Mortgage Indenture, Excepted Encumbrances and Prepaid Liens; or 66 (c) The retirement, through purchase or payment, of bonds issued under and secured by this Indenture, or redemption of any bonds issued under and secured by this Indenture that are subject to redemption; amounts which shall not be less in the aggregate than (i) during each whole calendar year, the Required Percentage of the arithme- tical average of the amount of depreciable property of the Company at the beginning, and the amount thereof at the end, of such calendar year, and (ii) during each portion, less than the whole, of a calendar year, one-twelfth, multiplied by the number of whole months included in such portion of a calendar year, of the Required Percentage of the arithmetical average of the amount of depreciable property of the Company at the beginning, and the amount thereof at the end, of such portion of a calendar year. The term "Required Percentage" shall mean two and one-half per centum (2.50%) per annum, or such other percentage as at any time or from time to time hereafter, upon application of the Company, is authorized or approved by the Securities and Exchange Commission, or any successor commission thereto, under the Public Utility Holding Company Act of 1935, as amended. The term "amount of depreciable property" shall mean as of any date the amount of bondable property included at such date in plant accounts on the books of the Company and which is depreciable. Amounts included in plant acquisition adjustment accounts, or accounts of similar purpose, shall not be included in the amount of depreciable property if adequate provision for their amortization is made by current charges to income or surplus. The amount of any bonds purchased, paid or redeemed shall be deemed to be the principal amount thereof for purposes of Sections 4.02, 5.15(c) and 8.06 hereof. If in any calendar year the total expenditures for one or more of the foregoing purposes shall be in excess of the amount required by this Section to be expended in such year, the Company shall be entitled to be credited to the extent of such excess on account of amounts required under the provisions of this Section to be expended in any subsequent calendar year or years. For the purposes of this Section the __________ months' period beginning _____________, 1994 [*] and ending December 31, 1995 shall be deemed to be a calendar year. Gross expenditures made by the Company on or after ___________, 1994 [*] for bondable property may be certified to comply with the provisions of subparagraph (b) of this Section. No expenditures which shall have been made the basis for the authentication of bonds or the withdrawal of deposited cash or any other moneys or the release of property, under any provision of this Indenture, or which shall have been made with cash applied pursuant to any provision of this Section or of Section 4.04 or Section 8.06 hereof or which shall have been made out of any insurance moneys or moneys received from the condemnation, sale or other disposition of any of the Company's property subject to the lien of this Indenture or out of cash 67 withdrawn under any provision of this Indenture, and no expen- ditures which shall have been previously used or certified or applied to comply with any requirement of this Section or with any other provision of this Indenture, shall be certified or be applied for the purpose of complying with this Section. On or before the first day of April in each year, beginning with April 1, 199_ [***], the Company shall deliver to the Trustee an Officers' Certificate setting forth in reasonable detail (1) the amount of depreciable property of the Company at the beginning, and the amount thereof at the end, of the calendar year next preceding, the arithmetical average of those amounts, and the amount which is equal to the Required Percentage of such arithmetical average; (2) the amounts expended during such preceding calendar year for any one or more of the purposes specified in subparagraphs (a), (b) and (c) of this Section which the Company desires and is entitled to have applied to the requirements of this Section for such year; and (3) such excess amounts, if any, as may have been expended for any one or more of such purposes in any preceding calendar year or years (not prior to __________, 1994 [*]), which the Company desires, and is entitled, to have applied to the requirements of this Section for the calendar year next preceding the date of such certificate; and stating that no part of the amounts expended which the Company desires to have applied to the requirements of this Section for such year has been made the basis for the authentication of bonds or the withdrawal of deposited cash or any other moneys or the release of property, under any provision of this Indenture, or has been made with cash applied pursuant to any provision of this Section or of Section 4.04 or Section 8.06 hereof or has been made out of any insurance moneys or moneys received from the condemnation, sale or other disposition of any of the Company's property subject to the lien of this Indenture or out of cash withdrawn under any provision of this Indenture or has been previously used or certified or applied to comply with any requirement of this Section or with any other provision of this Indenture. If in any calendar year, the expenditures of the Company for any one or more of the purposes set forth in subparagraphs (a), (b) and (c) of this Section shall be less than the amount required by this Section to be expended for such purpose or purposes during such calendar year and if the Company shall not be entitled to take credit for such calendar year in the amount of such deficiency on account of excess expenditures made in some preceding year or years the Company shall pay in cash to the Trustee on or before April 1st next succeeding the expiration of such calendar year the amount of any remaining deficiency. All sums received by the Trustee under this Section shall be held by it as a part of the Trust Estate until paid out as hereinafter provided. In case the expenditures made by the Company for the purpose specified in subparagraph (b) of this Section shall, in any calendar year, exceed the amount required to be expended and certified to comply with the requirements of 68 this Section for such year, any cash theretofore paid to the Trustee under the provisions of this Section and not withdrawn or applied under the provisions of Section 8.06 hereof, may be withdrawn by the Company upon delivery to the Trustee of an Officers' Certificate certifying the expenditures made for said purpose during such calendar year and showing that they were in excess of the expenditures required by this Section to be made in such calendar year and requesting the payment to or on the order of the Company of an amount of cash equal to the excess of said expenditures. Any sums received by the Trustee under this Section and not withdrawn under the provisions of this paragraph may be withdrawn or applied in accordance with the provisions of Section 8.06 hereof. No expenditures certified or applied to the require- ments of this Section, and no bonds retired (by purchase, payment or redemption) through expenditures certified or applied to the requirements of this Section, shall be available as a basis for the authentication of bonds or the withdrawal of deposited cash or any other moneys or the release of property under, or to comply with, any provision of this Indenture. SECTION 5.16. To Comply With Indenture. The Company covenants that it will not issue, or permit to be issued, any bonds hereby secured in any manner other than in accordance with the provisions of this Indenture, and will not suffer or permit any default to occur under this Indenture. ARTICLE VI BONDHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE SECTION 6.01. Company to Furnish Lists of Names and Addresses of Bondholders. The Company covenants and agrees that it will furnish or cause to be furnished to the Trustee between March 15 and April 1 and between September 15 and October 1 in each year beginning with the first such period after the date of this Indenture, and at such other times as the Trustee may request in writing, a list in such form as the Trustee may reasonably require containing all the information in the possession or control of the Company or of its paying agents, as to the names and addresses of the holders of bonds obtained since the date as of which the next previous list, if any, was furnished. Any such list may be dated as of a date not more than fifteen (15) days prior to the time such information is furnished or caused to be furnished, and need not include information received after such date; and, provided, that the Company need not furnish or cause to be furnished any such list with respect to bonds with respect to which the Trustee maintains the books for the registration and transfer of bonds as provided for in Section 2.05 hereof. 69 SECTION 6.02. Current Lists of Bondholders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the holders of bonds (1) contained in the most recent list furnished to it as provided in Section 6.01 hereof, (2) received by it in the capacity of paying agent hereunder, or (3) filed with it within two preceding years pursuant to Section 313(c)(2) of the TIA. The Trustee may (1) destroy any list furnished to it as provided in Section 6.01 hereof upon receipt of a new list so furnished; (2) destroy any information received by it as paying agent upon delivering to itself as Trustee, not earlier than forty-five (45) days after an interest payment date of the bonds, a list containing the names and addresses of the holders of bonds obtained from such information since the delivery of the next previous list, if any; (3) destroy any list delivered to itself as Trustee which was compiled from information received by it as paying agent upon the receipt of a new list so delivered; and (4) destroy any information received by it pursuant to the provisions of paragraph (2) of subsection (c) of Section 313 of the TIA, but not until two years after such information has been filed with it. (b) The Company, the Trustee and any paying agent shall not be held accountable by reason of any disclosure of information or the mailing of any material required to be disclosed or mailed by the TIA. SECTION 6.03. Company's Covenants as to Filing Reports. The Company shall file with the Trustee and the Securities and Exchange Commission, and shall cause to be transmitted to the holders of bonds, such information, documents and other reports, and such summaries thereof, as may be required pursuant to Section 314 of the TIA at the times and in the manner provided pursuant thereto; provided that any such information, documents or reports required to be filed with the Securities and Exchange Commission pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934, as amended, shall be filed with the Trustee within 15 days after the same is so required to be filed with said Commission. SECTION 6.04. Trustee's Reports. (a) The Trustee shall transmit, on or before April 1 in each year beginning with the year 199_ [***], so long as any bonds of any series are Outstanding to the bondholders and to the Company, such reports as may be required pursuant to, and in the manner required by, Section 313 of the TIA. (b) A copy of each such report shall, at the time of such transmission to bondholders, be filed with each stock exchange upon which the bonds are listed and also with the Securities and Exchange Commission. The Company will notify the Trustee when any bonds are listed on any stock exchange. (c) The provisions of this Section which have been made specifically applicable to the Trustee shall apply to the Trustee and, if a separate or co-trustee is appointed pursuant to 70 Section 14.18 hereof, to any separate or co-trustee to the extent consistent with the rights, powers, duties and obligations conferred or imposed upon such separate or co-trustee by the supplemental indenture appointing such separate or co-trustee. Notwithstanding any of the provisions of this Section which require any separate or co-trustee appointed pursuant to Section 14.18 hereof to transmit reports to the bondholders and to file such reports with each stock exchange upon which the bonds are listed and also with the Securities and Exchange Commission, such separate or co-trustee may, if it or he or she so elects, furnish to the Trustee all information concerning such separate or co-trustee which such separate or co-trustee is required to report, and the Trustee shall transmit and file such information, in accordance with the provisions of this Section, on behalf and at the expense of such separate or co-trustee; provided, however, that, subject to the provisions of Article XIV hereof, the Trustee shall not be responsible for the accuracy or completeness of any such information or for the failure of any such separate or co-trustee to report or to furnish any such information. In the event that any such separate or co-trustee shall elect to furnish information to the Trustee in accordance with the provisions of this subsection (c), the information required pursuant to this Section shall be furnished to the Trustee in writing not less than fifteen (15) days before the report is required to be made by the Trustee or within sixty (60) days after the taking by any such separate or co-trustee of any action required to be reported, as the case may be. (d) For the purpose of this Section, all bonds which have been authenticated and delivered and not returned to the Trustee and cancelled shall be deemed to be Outstanding. ARTICLE VII REDEMPTION AND PURCHASE OF BONDS SECTION 7.01. Exercise of Option to Redeem. Such of the bonds of any series issued and authenticated hereunder as are, by their terms, redeemable before maturity may, at the option of the Company or pursuant to the requirements of this Indenture (including any supplemental indentures), be redeemed at such times, in such amounts and at such prices as may be specified herein or therein and in accordance with the provisions of the succeeding Sections of this Article. SECTION 7.02. Notice of Redemption. If less than all the bonds of any series are to be redeemed, the particular bonds to be redeemed shall be selected by the Trustee from the bonds of such series which have not previously been called for redemption, by such method as the Trustee shall deem fair and appropriate. Notwithstanding the foregoing, special provisions for the selection of the particular bonds to be redeemed within a particular series may be provided by a supplemental indenture to this Indenture. 71 Unless otherwise provided as to a particular series of bonds, notice of intention to redeem to the holder of any bond which is to be redeemed in whole or part shall be mailed by or on behalf of the Company not less than thirty (30) days before the date fixed for redemption to such holder at his or her last address appearing upon the registry books. Failure to duly give such notice to the holder of any bond designated for redemption in whole or part shall not affect the validity of the proceedings for the redemption of any other bond. The Trustee, upon a request signed by the President or a Vice President of the Company evidenced by a Resolution delivered to the Trustee at least five business days prior to the date on which notice of redemption must first be published or mailed (unless a shorter notice shall be accepted by the Trustee as sufficient) shall, for and on behalf and at the expense of and in the name of the Company, call for redemption bonds secured hereby (whether or not the Trustee shall hold at the time of such call cash sufficient for such redemption). Once notice of redemption is given (and accepted by the holder, in the case of a redemption pursuant to Section 4.01B(c) hereof), the bonds called for redemption shall become due and payable on the redemption date specified in such notice. Any notice of redemption mailed to holders of bonds shall specify the offices or agencies of the Company where the bonds may be surrendered for redemption and payment and that, unless the Company defaults in making the redemption payment, interest shall cease to accrue on and after the redemption date. Notwithstanding the foregoing, with respect to a redemption pursuant to Section 4.01B(c) hereof, there shall be mailed by or on behalf and at the expense of the Company not less than thirty (30) days before the date fixed for redemption an offer to redeem in the manner set forth above to the holders of bonds set forth in Section 4.01B(c). Any such holder electing to have his or her bonds redeemed by the Company pursuant to said Section shall so notify the Company five business days prior to the date fixed for redemption, and the Company shall redeem such bonds in the manner set forth in this Article. SECTION 7.03. Deposit of Cash to Redeem. If the Company shall complete the giving of the required notice of its intention to redeem any bonds so redeemable, the Company shall, and it hereby covenants that it will, on or before the date fixed for redemption as specified in such notice, deposit with the Trustee, irrevocably in trust for the purpose, a sum of cash sufficient to redeem all such bonds so to be redeemed on such date or irrevocably direct the Trustee to apply from cash held by it, available to be used for the redemption of bonds, a sum of cash sufficient to redeem such bonds. If the Company shall fail so to 72 deposit or direct the application of the cash for the redemption of said bonds, such failure shall constitute a default under this Indenture and the said bonds so called for redemption shall immediately become due and payable, and the holders of said bonds shall be entitled to receive and the Company shall be obligated to pay the redemption price of said bonds, including accrued interest, and thereupon and without the lapse of any period of time all the remedies provided for in Article IX hereof with respect to a default in the payment of principal of bonds Outstanding hereunder shall be available to and enforceable by the Trustee. SECTION 7.04. Payment of Bonds Called for Redemption and Cessation of Lien. All cash deposited by the Company with the Trustee for the redemption of bonds or which the Company directs shall be applied by the Trustee to the redemption of bonds shall, subject to the provisions of Section 11.03 hereof, no longer be a part of the Trust Estate, but shall be held in trust solely for account of the holders of the bonds so to be redeemed, and shall be paid to them, upon presentation and surrender of said bonds properly endorsed for transfer. On or after the date fixed for redemption, if the cash necessary for the redemption of the bonds to be redeemed shall be held by the Trustee for such purpose, such bonds shall cease to bear interest and shall cease to be entitled to the lien of this Indenture, and, as respects the Company's liability thereon, such bonds shall be deemed to have been paid. If any bond shall be called for redemption in part only, the notice of redemption shall specify the principal amount thereof to be redeemed, and such bond shall be presented for cancellation properly endorsed for transfer at or after the date fixed for the redemption of said bond so called for redemption, and thereupon the payment with respect to said bond shall be made upon surrender of said bond so endorsed, and bonds for the unpaid balance of the principal amount of the bond so presented and surrendered shall be executed by the Company and authenticated and delivered by the Trustee without charge therefor to the holder thereof. SECTION 7.05. Bonds to be Cancelled. All bonds issued hereunder paid, retired or redeemed under any of the provisions of this Indenture or purchased by the Trustee as provided in Section 8.06 hereof shall forthwith be cancelled by the Trustee. ARTICLE VIII POSSESSION, USE AND RELEASE OF MORTGAGED PROPERTY SECTION 8.01. Company to Possess Property Until Default; Disposal of Certain Property Without Release. Prior to the occurrence of any default, as defined in Section 9.01, and after default if such default shall have been cured, or shall have been waived as provided in Section 9.03, the Company shall be suffered and permitted by the Trustee to remain in full 73 possession, enjoyment and control of all the properties, rights, privileges and franchises hereby mortgaged (other than any cash and securities deposited or pledged hereunder) and shall be permitted to manage and operate the same, and subject always to the observance of the covenants in this Indenture with respect thereto, to receive, receipt for, take, use, enjoy and dispose of all rents, tolls, earnings, surplus, profits, revenues and income thereof, to modify and/or terminate its contracts, rights, permits, privileges and/or franchises and to make changes in the location of its lines, structures and equipment in the same manner and with the same effect as if this Indenture had not been made. The Company may at all times and from time to time so long as it shall remain in possession of the Trust Estate, without any release by the Trustee: (i) demolish, dismantle, tear down or use for scrap any property in the Trust Estate, or abandon any thereof other than land and interests in land, provided that such action is, in the opinion of the President or a Vice President of the Company (or of the Board of Directors where such action is material to the Company), in the best interests of the Company and the value and utility of the Trust Estate as an entirety and the security for the bonds will not thereby be impaired; (ii) sell or otherwise dispose of, free from the lien of this Indenture, any part of the Trust Estate which, in the opinion of the President or a Vice President of the Company (or of the Board of Directors where such action is material to the Company), shall have become old, worn out, obsolete, inadequate, unfit, unnecessary or unadapted for use in the operation of the Company; (iii) abandon, terminate, cancel, release or make alterations in or substitutions of any and all leases and rights-of-way grants, provided that such action is, in the opinion of the President or a Vice President of the Company (or of the Board of Directors where such action is material to the Company), in the best interests of the Company; (iv) surrender or assent to the modification of any right, power, franchise, license, governmental consent or permit which it may hold or under which it may be operating, provided that such surrender or modification is, in the opinion of the President or a Vice President of the Company (or of the Board of Directors where such action is material to the Company), in the best interests of the Company; and (v) grant rights-of-way and easements over or in respect of any property-owned by the Company, provided that such grant will not, in the opinion of the President or a Vice President of the Company (or of the Board of Directors where such action is material to the Company), materially 74 impair the usefulness of such property in the conduct of the Company's business and will not be unduly prejudicial to the interests of the holders of the bonds. SECTION 8.02. Trustee to Release Property Upon Certain Conditions. The Company may at any time and from time to time so long as it remains in possession of the Trust Estate sell or otherwise dispose of any other property of the Company (including pledged securities) which shall be subject to the lien of this Indenture (but as to securities pledged under this Indenture pursuant to the provisions of Article XV hereof, subject to the provisions of any instrument executed for the purpose of or in connection with the subjecting of such securities to the lien hereof) and the Trustee shall release the same from the lien hereof upon receipt by the Trustee of the following: 1. A copy of a Resolution reasonably identifying, and requesting the release of, the property to be released; 2. An Engineer's Certificate, which shall be made and signed by an Independent Engineer if required by the provisions of Section 314(d) of the TIA, which certificate: (a) shall state that the Company has sold or otherwise disposed of, or has contracted to sell or otherwise dispose of, the property to be released, describing the same in reasonable detail and stating the fair value thereof, as of a date within ninety days prior to the delivery of such certificate to the Trustee, as determined by such Engineer or Independent Engineer, as the case may be; (b) shall show, in reasonable detail, the amount and character of the consideration to be received by the Company for the property to be released, which consideration (subject to the provisions of this Section) may be cash, purchase money obligations secured by first lien upon the property to be released, or other property constituting bondable property as defined in Section 4.03 hereof; (c) if all or any part of such consideration shall consist of purchase money obligations secured by first lien upon the property to be released, shall state that such purchase money obligations are subject to no liens of record for the payment of cash except the lien of the First Mortgage Indenture, Excepted Encumbrances and Prepaid Liens and, if the property to be released is electric utility property, that the principal amount of such purchase money obligations does not exceed sixty- six and two-thirds per centum (66-2/3%) of the fair value of such property (as stated in such certificate) and that such purchase money obligations constitute the entire amount of the purchase money obligations secured 75 by lien upon such property and that the principal amount of all such purchase money obligations, together with the principal amount of all other purchase money obligations, if any, then held by the Trustee and secured by lien upon electric utility property previously released, does not exceed in the aggregate fifteen per centum (15%) of the principal amount of the bonds then outstanding under this Indenture; (d) if all or any part of the consideration to be received by the Company for the property to be released shall consist of other property, shall reasonably identify such property and shall state the fair value to the Company of such property as of a date within ninety days prior to the delivery of such certificate to the Trustee, as determined by the Engineer or Independent Engineer, as the case may be, signing the certificate, and that such property constitutes bondable property as defined in Section 4.03 hereof; (e) shall show the consideration to be received by the Company for the property to be released, taking any purchase money obligations included in such consideration at their face value and any property included in such consideration at the fair value thereof to the Company as shown by said certificate, is not less than the fair value (as shown by said certificate) of the property to be released; and (f) shall state that the retention of the property to be released is no longer desirable in the conduct of the business of the Company or that other property to be acquired, in the case of exchange, is not less suited to the needs of the business of the Company than the property to be released, and in each case, that the security afforded by this Indenture as to the remaining Trust Estate will not be impaired by such release. 3. Any cash or purchase money obligations stated in said certificate to have been or to be received in consideration for the property requested to be released, or the certificate of the trustee under any mortgage constituting a prior lien upon the property to be released stating that it has received such cash or purchase money obligations; and, if real estate or other property is included in the consideration for the property to be released, such deeds or other instruments of conveyance, assignment, transfer or release as are sufficient, in the Opinion of Counsel, to subject the same to the lien of this Indenture with at least the same degree of priority which it possessed as a lien on the property to be released, or an Opinion of Counsel to the effect that no deeds or other instruments of conveyance, assignment or transfer are necessary to subject the same to the lien of this Indenture in the manner stated; 76 4. An Opinion of Counsel stating in effect that in his or her opinion any purchase money obligations included in such consideration and the mortgage or other instrument securing the same are valid instruments and that such mortgage or other instrument constitutes a first lien upon the property released subject to no liens or encumbrances prior in lien thereto except Excepted Encumbrances and Prepaid Liens, and that all conditions and requirements of this Indenture relating to the release of the property requested to be released have been complied with; and 5. A certified copy of a certificate or order of each public service commission or other governmental agency of the United States of America, or of any state or states thereof, if any, then having jurisdiction over the Trust Estate, together with an Opinion of Counsel to the effect that such certificates or orders are such as are required to be obtained in connection with the sale, exchange or other disposition of the property to be released and that no certificate, consent or authorization of any other commission or agency is required therefor or for the release of said property, or, in the alternative, an Opinion of Counsel to the effect that no certificate, consent or authorization of any such commission or agency is required in the premises. In rendering the aforementioned Opinions of Counsel, counsel may, to the extent such counsel deems necessary, express the same qualifications and assumptions permitted in connection with the Opinions of Counsel to be given pursuant to Section 4.06 hereof and may rely upon the same type of abstracts, affidavits, certificates, statements and investigations as mentioned in the definition of "title" contained in this Indenture. Any new property acquired by the Company by exchange, purchase, or otherwise, to take the place of any property released from the lien of this Indenture, shall forthwith and without further conveyance be and become subject to the lien and be covered by this Indenture, but if requested by the Trustee the Company shall convey the same to the Trustee by proper deeds upon the trusts and for the purposes of this Indenture. SECTION 8.03. Eminent Domain. If any property is taken by condemnation proceedings, the Trustee may accept any award made therein, if approved by the Company as representing its full value, and, if such award is accepted by the Trustee, it shall, if requested by the President or a Vice President of the Company evidenced by a Resolution, execute and deliver a release of the property so taken upon receipt by the Trustee of the consideration therefor, after deducting from the amount thereof the amount of any assessments levied on property of the Company in connection with such condemnation proceedings unless some other disposition thereof is required under the First Mortgage Indenture or in connection with a Prior Lien. In any such proceedings the Trustee 77 may be represented by counsel, who may be counsel for the Company, and either the Company or the Trustee may appeal from any judgment, order or decree in such proceedings. SECTION 8.04. Rights of Purchaser of Released Property. No purchaser in good faith of property purporting to be released hereunder shall be bound to ascertain the authority of the Trustee to execute the release or to inquire as to any facts required by the provisions hereof for the exercise of such authority; nor shall any purchaser of machinery or equipment be under obligation to ascertain or inquire into the existence of any fact on which any such sale is hereby authorized. SECTION 8.05. Receiver or Trustee May Exercise Company's Rights. In case any of the Trust Estate shall be in the possession of a receiver or trustee appointed in judicial proceedings, the powers hereinbefore conferred upon the Company with respect to the sale or other disposition of property covered by this Indenture may be exercised by such receiver or trustee and, in any such event, the certificates provided by this Article to be executed by officers of the Company shall be executed by such receiver or trustee; and if the Trustee shall be in possession of any of the Trust Estate under any provision of this Indenture, then such powers may be exercised by the Trustee in its discretion. SECTION 8.06. Withdrawal, Use and Application of Cash Deposited with Trustee. All cash received by the Trustee as proceeds of released property or of property taken by the power of eminent domain or as insurance money, and all other cash received by the Trustee which, under any other provisions of this Indenture, are required to be paid out or disposed of under the provisions of this Article, shall be paid over from time to time by the Trustee to the Company, at its request, to reimburse the Company to the extent of one hundred per centum of net expenditures for bondable property (as defined in Section 4.03 hereof) upon which this Indenture is a second lien subject only to the lien of the First Mortgage Indenture, Excepted Encumbrances and Prepaid Liens made by it at any time on or subsequent to __________, 1994 [*], which have not been used as the basis for the authentication of bonds or the withdrawal of deposited cash hereunder, and whether prior or subsequent to the receipt of such cash by the Trustee, or (b) expenditures for repairs or replacements of or substitutions for property damaged or destroyed as a result of hazards or risks insured against (to the extent that insurance moneys arising from such loss are then held by the Trustee). Such payments shall be made by the Trustee upon receipt by it of: (1) A request in writing signed by the President or a Vice-President and by the Treasurer or an Assistant Treasurer of the Company for the payment of the amount of cash stated therein; 78 (2) An Officers' Certificate setting forth: (a) that on or subsequent to __________, 1994, the Company has acquired bondable property (as defined in Section 4.03 hereof), briefly describing the same and separately describing any purchased property, and showing the gross and the net expenditures (as defined in Section 4.03 hereof) therefor, and that such net expenditures were usable, but have not been used, as a basis for the authentication of bonds under this Indenture, or has made certain repairs or replacements of or substitutions for property damaged or destroyed as a result of hazards or risks insured against (describing the same with reasonable detail), and that such bondable property or such repairs, replacements or substitutions, as the case may be, are subject to the lien of this Indenture and are not subject to any liens or encumbrances equal or prior in lien to this Indenture except the lien of the First Mortgage Indenture, Excepted Encumbrances and Prepaid Liens; (b) that the Company has made net expenditures for such bondable property, or has made expenditures for repairs or replacements of or substitutions for property damaged or destroyed as a result of hazards or risks insured against, in the amount specified in the certificate; (c) that no part of any such net expenditures for such bondable property or of any such expenditures for repairs or replacements of or substitutions for property damaged or destroyed as a result of hazards or risks insured against, as the case may be, has been previously used as a basis for the authentication of any bonds or for the withdrawal of deposited cash or any other moneys or for the release of any property under any provision of this Indenture or has been made out of insurance moneys or out of the proceeds of the sale, condemnation or other disposition of any property of the Company subject to the lien of this Indenture, or has been used or applied or certified to the Trustee to comply with any maintenance or renewal requirements contained in this Indenture or to comply with the provisions respecting any sinking fund or analogous fund created hereafter pursuant to the terms of this Indenture, or, in the alternative, that the provisions relating to any such fund do not preclude the use of any such expenditures as a basis for the withdrawal of cash under this Section; (d) that the Company is not, to the knowledge of the officers signing the certificate, in default in any of the terms, covenants or conditions of this Indenture; and (e) that in the opinion of the officers signing the certificate, all conditions and requirements of this Indenture relating to the withdrawal of the cash requested to be withdrawn have been complied with. 79 (3) (a) An Engineer's Certificate signed by an Engineer (conforming to the requirements of Section 4.03 hereof) certifying to the fair value to the Company, at a date within ninety days prior to the date of the delivery of such certificate to the Trustee, of the bondable property (except purchased property if any be included in such bondable property and except repairs or replacements of or substitutions for property damaged or destroyed as a result of hazards or risks insured against) described in the certificate required by subparagraph (2) above and on account of which cash is requested to be withdrawn; and (b) An Engineer's Certificate signed by an Engineer or an Independent Engineer (conforming to and as may be required by the provisions of Section 4.03 hereof) certifying to the fair value to the Company, at a date within ninety days prior to the date of the delivery of such certificate to the Trustee, of any purchased property (on account of which cash is requested to be withdrawn) described in the certificate required by subparagraph (2) above and also the fair value to the Company of such purchased property at the time of its acquisition; (4) An Opinion of Counsel (a) stating that in his or her opinion the Company has acquired substantially good title to, and has lawful power to own, any bondable property described in the certificate required by subparagraph (2) above (unless the bondable property described in such certificate shall have been covered by an Opinion of Counsel theretofore filed with the Trustee) and that such bondable property is subject to the lien of this Indenture and is not subject to any liens or encumbrances equal or prior in lien to this Indenture, except the lien of the First Mortgage Indenture, Excepted Encumbrances and Prepaid Liens, and (b) stating that in his or her opinion all conditions and requirements of this Indenture relating to the withdrawal of the cash requested to be withdrawn have been complied with; and (5) All such deeds, conveyances, transfers or instruments of further assurance as may be necessary for the purpose of effectually subjecting such bondable property to the direct lien and operation of this Indenture, together with an Opinion of Counsel that the same are sufficient for the purpose, or an Opinion of Counsel that no such deeds, conveyances, transfers or instruments are necessary for such purpose. In rendering the aforementioned Opinions of Counsel, counsel may, to the extent such counsel deems necessary, express the same qualifications and assumptions permitted in connection with the Opinions of Counsel given pursuant to Section 4.06 hereof. All or any part of any such cash in the hands of the Trustee and not theretofore paid over or requested to be paid over to reimburse the Company as aforesaid shall, in accordance with a request in writing signed by the President or a Vice-President and by the Treasurer or an Assistant Treasurer of the Company, be 80 applied by the Trustee (i) to the redemption of bonds of any series specified in such request (if they are then redeemable) issued hereunder and Outstanding or (ii) to the purchase of such bonds at not exceeding their current redemption price if they are then redeemable, or, if they are not then redeemable, at not exceeding the price at which they are next thereafter redeemable, or, if they are never redeemable, at not exceeding 110% of the principal amount thereof and accrued interest. Any bonds redeemed or purchased pursuant to the foregoing provisions hereof shall be cancelled and destroyed by the Trustee and a certificate of such destruction shall be delivered to the Company and no other bonds shall be issued, nor shall any deposited cash or any other moneys be withdrawn, under any provision of this Indenture by reason of the redemption or purchase and cancellation of such bonds, nor shall such bonds be applied or certified for the purpose of complying with any maintenance or renewal requirements or any other provisions of this Indenture. The Company covenants and agrees that it will from time to time upon request of the Trustee immediately pay to the Trustee, to be held and disposed of pursuant to the provisions of this Section and Article VII hereof, an amount in cash equal to the accrued interest and the premium, if any, paid or required to be paid by the Trustee in purchasing or redeeming bonds of the Company pursuant to the provisions of this Section. The provisions of this Section shall not apply to any cash at any time deposited with the Trustee hereunder for the purpose of purchasing, redeeming and/or discharging any obligations secured by any mortgage equal or prior in lien to this Indenture upon any property now or hereafter owned by the Company, but all such cash shall be held and applied by the Trustee to the purposes for which the same were deposited and in accordance with the terms and provisions under which the same were deposited. ARTICLE IX REMEDIES IN EVENT OF DEFAULT SECTION 9.01. Defaults. The following events are hereby defined for all purposes of this Indenture (except where the term is otherwise defined for specific purposes) as "defaults": (a) Failure to pay the principal or premium, if any, of any bond hereby secured when the same shall become due and payable, whether at maturity, as therein expressed, upon redemption, or by declaration or otherwise; (b) Failure to pay interest upon any bond hereby secured for a period of sixty (60) days after such interest shall have become due and payable; 81 (c) Failure to pay interest upon or principal or premium, if any, whether at maturity, as therein expressed, or by declaration, or otherwise, of any bonds issued under the First Mortgage Indenture continued beyond the period of grace, if any, specified in the First Mortgage Indenture; (d) Failure to pay any installment of any sinking fund for a period of sixty (60) days after the same shall have become due and payable; (e) The entry by a court of competent jurisdiction of an order or decree under the Federal Bankruptcy Code or any other applicable federal or state law of a similar nature that (i) is an order for relief against the Company in an involuntary case or proceeding, (ii) appoints a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of or for the Company or any substantial part of its property or (iii) orders the liquidation of the Company or winding up of its affairs; and in the case of (i), (ii) or (iii) the order or decree remains unstayed and in effect for ninety (90) days; or (f) The commencement by the Company of a voluntary case, or the institution by it of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization, arrangement or relief under the Federal Bankruptcy Code or any other applicable Federal or State law of a similar nature, or the consent or acquiescence by it to the filing of any such petition or the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action; or (g) Failure to perform any other covenant, condition or agreement contained herein or in any supplemental indenture or in any bond issued hereunder for a period of ninety (90) days following the mailing by the Trustee to the Company of a written demand that such failure be cured, such failure not having been cured in the meantime. The Trustee may, and if requested in writing so to do by the holders of a majority in principal amount of the bonds then Outstanding as provided in Article X, shall, make such demand. SECTION 9.02. Notice of Defaults. The Trustee and, if a separate or co-trustee is appointed pursuant to Section 14.18 hereof, such separate or co-trustee shall, within ninety (90) days after the occurrence thereof, give to the bondholders, in the 82 manner and to the extent provided in Section 6.04(a) hereof, notice of all defaults known to the Trustee or to such separate or co-trustee, as the case may be, unless such defaults shall have been cured before the giving of such notice (the term "defaults" for the purposes of this Section being hereby defined to be the events specified in subsections (a), (b), (c), (d), (e), (f) and (g) of Section 9.01 hereof, provided that, except in the case of default in the payment of the principal of, premium, if any, or interest on any of the bonds hereby secured, or in the payment of any sinking or purchase fund installment, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trustee committee of directors and/or Responsible Officers, of the Trustee in good faith determine that the withholding of such notice is in the interests of the bondholders and any separate or co-trustee shall be protected in withholding such notice if and so long as such separate or co-trustee in good faith determines that the withholding of such notice is in the interests of the bondholders. SECTION 9.03. Acceleration of Maturity Date. Upon the occurrence of a default, the Trustee may, and upon the written request of the holders of a majority in principal amount of the bonds then Outstanding shall, by notice in writing mailed or delivered to the Company, declare the principal of all the bonds then Outstanding and the interest accrued thereon to be due and payable immediately; and upon any such declaration the same shall become and be immediately due and payable, anything contained in this Indenture or in said bonds to the contrary notwithstanding. This provision is, however, subject to the condition that if at any time after the principal of the bonds shall have been declared due and payable, the holders of a majority in aggregate principal amount of all bonds then Outstanding, by written notice to the Company and to the Trustee, may rescind such declaration and annul such default and its consequences (except defaults under subparagraphs (a) and (b) of Section 9.01 hereof), but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default, or shall impair any right consequent thereon. SECTION 9.04. Right of Entry and Application of Proceeds Received by Trustee. Upon the occurrence of a default, the Company, upon demand of the Trustee (which demand the Trustee shall not be obligated to make), shall (if at the time such action shall be lawful) forthwith surrender to the Trustee the actual possession of and the Trustee (if at the time such action shall be lawful), by its agents or attorneys, may forthwith enter into and upon all or any part of the Trust Estate, and may exclude the Company, its agents and attorneys, wholly therefrom and may use, operate, manage, and control the same, and conduct the business thereof, by agents or attorneys, for the benefit of the holders of the bonds issued hereunder, to the fullest extent authorized by law. Upon every such entry, the Trustee may, from time to time, at the expense of the Trust Estate and of the Company, maintain, restore and insure or keep insured, the tools, machinery, 83 equipment, plants or other properties, buildings and structures of which possession shall be taken as aforesaid; and likewise may, from time to time, at the expense of the Trust Estate and of the Company, make all necessary or proper repairs, renewals, replacements, alterations, additions, betterments and improvements thereto and thereon, as to the Trustee may seem judicious. The Trustee, in case of such entry, shall have the right to manage the Trust Estate and to carry on the business and to exercise all the rights, privileges and franchises of the Company, either in the name of the Company or otherwise as the Trustee shall deem best. In such case the Trustee shall be entitled to collect and receive all tolls, rents, revenues, issues, earnings, income, products and profits of the Trust Estate and of every part thereof whether accrued at or before the time of such entry or accruing thereafter, and out of the same pay all proper costs and expenses of operating the Trust Estate and of conducting the business thereof, and of all repairs, maintenance, renewals, replacements, alterations, additions, betterments and improvements and all payments which may be made for taxes, assessments, insurance and other proper charges upon the Trust Estate, or any part thereof, as well as reasonable compensation for its own services and for the services of all counsel, agents and attorneys properly engaged and employed by it, and all other expenses and liabilities incurred without negligence or bad faith on the part of the Trustee and disbursements made by the Trustee hereunder. The Trustee shall apply the remainder of the cash arising as aforesaid after payment of the costs and expenses provided for in the preceding sentence, subject to the provisions of Section 5.02 hereof, first to the payment of the installments of interest which are due and unpaid (and accrued interest thereon pursuant to Section 9.09 hereof), in the order of their maturity, and next, if the principal of any of said bonds is due, to the payment of the principal (and accrued interest thereon pursuant to Section 9.09 hereof) pro rata without any preference or priority whatever, except as aforesaid. Whenever all that is then due upon such bonds and installments of interest and under any of the terms of this Indenture, notwithstanding any acceleration initiated pursuant to Section 9.03 hereof, shall have been paid and all defaults cured or waived, the Trustee shall surrender possession of the Trust Estate to the Company, its successors or assigns; the same right of entry, however, to exist upon any subsequent default. SECTION 9.05. Power of Sale Upon Default. Upon the occurrence of a default, the Trustee shall, in its discretion, be entitled with or without entry, either personally or by its agent or attorneys, to sell, in the manner provided in Section 9.06 hereof and subject to the provisions of applicable law in the jurisdiction in which the Trust Estate is situated, all and singular the Trust Estate, including all shares of stock and all bonds or other securities then pledged hereunder, or, in its discretion, the Trustee may forthwith proceed to protect and enforce its rights and the rights of the holders of the bonds 84 under this Indenture by a suit or suits in equity or at law, for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or for the foreclosure of this Indenture by nonjudicial exercise of the Trustee's power of sale in the manner provided in Section 9.06 hereof and as otherwise provided herein, for interest, principal or premium, or for the enforcement of any other appropriate legal or equitable remedy, as the Trustee, being advised by counsel, shall deem most effectual in support of any of its rights or duties hereunder. The court may appoint a special master to make any sale under or by virtue of the power of sale herein contained, or by virtue of judicial proceedings, or of any judgment or decree of foreclosure. SECTION 9.06. Notice of Sale and Manner of Making Same. In the event of any sale under or by virtue of the power of sale herein contained, or by virtue of judicial proceedings, or by virtue of any judgment or decree of foreclosure and sale thereunder, the whole of the Trust Estate, excluding all stocks, bonds and other securities which may be pledged under this Indenture, shall be sold in one parcel, as an entirety, unless such sale as an entirety be impracticable by reason of some statute or other cause, or unless the holders of a majority in aggregate principal amount of all the bonds then Outstanding shall in writing direct the Trustee to cause said Trust Estate, or any part thereof, to be sold in parcels; in which case, so far as lawfully may be, the sales shall be made in such parcels as may be specified in such direction. Notice of any sale or sales made under the power of sale herein conferred shall state the time and place when and where the same is to made, and shall contain a brief description of the properties to be sold, and shall be published once in each week (in each case upon any day of the week) for four consecutive weeks prior to such sale in at least one Daily Newspaper of general circulation in each of the cities in which the principal of any of the bonds is payable; and in such other manner as may be required by law in the jurisdictions in which the Trust Estate is situated, and such other notice shall also be given as may be required to comply with any applicable statute, rule of law or order or rule of any court. The Trustee may adjourn any sale under the power of sale herein contained, or cause the same to be adjourned, from time to time, by announcement at the time and place fixed for such sale or sales; and, without further notice or publication, such sale may be made at the time and place to which the same shall be so adjourned, unless otherwise provided by law. In case of any sale of the Trust Estate, or any part thereof, under the provisions of this Indenture, the whole of the principal of the bonds, together with accrued interest thereon, if not previously due, shall become immediately due and payable, anything contained in the bonds or in this Indenture to the contrary notwithstanding. Upon the completion of any sale or sales, the Trustee shall execute and deliver to the accepted purchaser or purchasers a deed or deeds of the properties sold, or shall execute and 85 deliver, in conjunction with the deed or deeds of the court officer conducting such sale, a conveyance of the interests of the Trustee in such properties. The Trustee and its successors and assigns are hereby appointed the true and lawful attorney or attorneys irrevocably by the Company in its name and stead to make, execute and deliver all necessary deeds and acts of conveyance, sale, assignment and transfer of such properties, and to substitute one or more persons or corporations with like power, the Company hereby ratifying and confirming all that its said attorney, attorneys or substitutes shall lawfully do or cause to be done by virtue hereof. Nevertheless, the Company shall, if so requested by the Trustee, ratify and confirm such sale by executing and delivering to the Trustee, or to such purchaser or purchasers, all such proper assignments, deeds, conveyances and releases as may be designated in such request. In any deeds or instruments of conveyance, sale or transfer executed by the Trustee under this Article, the recitals therein of default, demand that sale be made, notice of sale, postponement of sale, terms of sale, sale, purchaser, payment of purchase money and any other fact or facts affecting the legality or validity of such sale, shall be effectual and conclusive proof of the facts related therein as against the Company, its successors and assigns and all other persons. Any such sale made under or by virtue of this Indenture, either under the power of sale hereby granted and conferred or under or by virtue of judicial proceedings, shall divest all right, title, interest, estate, claim and demand whatsoever, either at law or in equity, of the Company in, of or to the properties sold and every part thereof and shall be a perpetual bar, both at law and in equity, against the Company, its successors and assigns, and against any and all persons claiming or who may claim the properties sold, or any part thereof, from, through or under the Company, its successors or assigns, respectively. SECTION 9.06A. Operation of Power of Sale. Upon the occurrence of a default, should the Trustee determine in its discretion or be directed pursuant to the terms hereof to foreclose by exercise of the nonjudicial power of sale herein contained, (a) The Trustee shall cause to be recorded, published and delivered to the Company such notice of default and notice of Trustee's intention to sell the Trust Estate, as may be required under the provisions of applicable law in the jurisdiction(s) in which the Trust Estate is situated ("Notice of Trustee's Sale"). The Trustee shall, without demand on the Company, after lapse of such time as may then be required by applicable law and after recordation of such Notice of Trustee's Sale having been given as and if required by applicable law, sell the Trust Estate at the time and place of sale fixed by it in said Notice of Trustee's Sale, either as a whole, or in separate lots or parcels or items as the Trustee shall deem expedient pursuant to the terms hereof, and in such order as it may determine, at public 86 auction to the highest bidder for cash in lawful money of the United States payable at the time of sale. The Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including, without limitation, the Company, the Trustee or the bondholders, may purchase at such sale and, if permitted by applicable law, may credit the amount of the bid against the amount of any indebtedness secured hereby and held by such purchaser. (b) Subject to the provisions hereof and that of applicable law, the Trustee may postpone the sale of all or any portion of the Trust Estate by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement or subsequently noticed sale, and without further notice make such sale at the time fixed by the last postponement, or may, in its discretion, give a new notice of sale. (c) It is the express understanding and intent of the parties that as to any personal property interests conveyed to the Trustee as security under this Indenture, the Trustee may, consistent with its rights and obligations hereunder and under applicable law, proceed as to both real and personal property interests within the Trust Estate in accordance with the provisions of this Indenture and its rights and remedies under applicable law in respect to real property, and treat both real and personal property interests of the Trust Estate as one parcel or package or security. SECTION 9.07. Application of Proceeds of Sale. In case of any sale of the Trust Estate, or any part thereof, whether under the power of sale hereby granted or pursuant to judicial proceedings, the purchase money, proceeds or avails, together with any other sums which may then be held by or be payable to the Trustee under any of the provisions of this Indenture as part of the security hereunder, other than sums held in trust for the payment or redemption of bonds or for the payment of interest thereon, shall be applied, subject to the provisions of applicable law in the jurisdiction in which the Trust Estate is situated, subject to the provisions of Section 5.02 hereof, as follows: FIRST. To the payment of all taxes, assessments, governmental charges, Excepted Encumbrances and Prior Liens permitted under the Indenture, and of all the costs, expenses, fees, and other charges of such sale, and a reasonable compensation to the Trustee, its agents and attorneys, and to the payment of all expenses and liabilities incurred without negligence or bad faith on the part of the Trustee and advances or disbursements made by the Trustee in connection with the management or administration of the trusts hereby created; 87 SECOND. To the payment in full of the amount then due and unpaid either for principal or interest, or for both principal and interest (and accrued interest thereon pursuant to Section 9.09 hereof) upon the bonds issued hereunder then Outstanding, and in case such proceeds shall be insufficient to pay in full the whole amount so due and unpaid, then to the payment thereof ratably, according to the aggregate of such principal and the accrued and unpaid interest, without preference or priority of any one series over any other series of bonds, or of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, except as to the difference, if any, in the respective rates of such interest; THIRD. To the payment of any premium (and accrued interest thereon pursuant to Section 9.09 hereof) on any bonds called for redemption and with respect to which default was made in the payment of the redemption price, ratably and without preference or priority of any one series over any other, except as to the rates of premium; and FOURTH. The remainder, if any, shall be paid over to the Company, its successors or assigns, or to whomsoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct. Before making any such payment, the Trustee may fix a date for the distribution of such cash and may require the presentation of the several bonds and their surrender if fully paid or for proper notation if only partly paid. SECTION 9.08. Purchaser at Sale May Use Bonds as Payment. In case of any sale of the Trust Estate or any part thereof, subject to the applicable law in the jurisdictions in which the Trust Estate or such part thereof is situated, the purchaser, for the purpose of making settlement or payment for the property purchased, shall be entitled to apply towards the payment of the purchase price plus the portion of the principal of any bonds issued under this Indenture plus the portion of any matured claims for interest to which such bonds and claims for interest would be entitled upon a distribution among the bondholders of the proceeds of such sale, after making deductions allowable under the terms hereof for the costs and expenses of the sale, or otherwise; but such bonds and claims for interest so applied in payment by the purchaser shall be deemed to be paid only to the extent so applied. At any such sale, the Trustee or any holder of any bond may bid for and purchase such Trust Estate or any part thereof, and may make payment therefor, as aforesaid, and, upon compliance with the terms of sale, may hold, retain and dispose of such properties without further accountability. The receipt of the Trustee, or of the court officer conducting such sale, shall be sufficient discharge for the purchase money to any purchaser of the Trust Estate, or any part thereof, sold as aforesaid; and no such purchaser, or its representatives, grantees or assigns, upon 88 becoming entitled to and receiving such receipt, shall be bound to see to the application of such purchase money upon or for any trust or purpose of this Indenture or be answerable in any manner whatsoever for any loss, misapplication or non-application of any such purchase money, or any part thereof. SECTION 9.09. Principal and Interest Payable to Trustee After Default; Proofs of Claim; Judgments. In case default shall be made in the payment of any installment of interest on any bond issued hereunder when and as such interest shall become due and payable, and any such default shall continue for a period of sixty (60) days, or in case default shall be made in the payment of the principal of or premium, if any, on any such bond when and as the same shall become due and payable, whether at the maturity of said bond or pursuant to notice of redemption or by declaration, as authorized by this Indenture, or by a sale of the Trust Estate, as hereinbefore provided, or otherwise, then, upon demand of the Trustee, the Company will pay to the Trustee, for the benefit of the holders of the bonds and claims for interest hereby secured then Outstanding, the principal of all such bonds then due and payable, together with any premium due thereon, and the whole amount then due and payable for interest on such bonds, with interest upon the overdue principal and premium, if any, and installments of interest at the same rates borne by the respective bonds which are overdue and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and, in case the Company shall fail to pay the same forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled to recover judgment against the Company or any other obligor on the bonds (and in the case of the pendency of any receivership, insolvency, bankruptcy, reorganization or other similar proceedings affecting the Company or any other obligor on the bonds, its creditors or its property) for the whole amount of such principal, premium and interest remaining unpaid, as well as judgment for any sums that may be payable hereunder for fees, charges, expenses and liabilities (incurred without negligence or bad faith on the part of the Trustee) of the Trustee hereunder and of the holders of the bonds. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and of the bondholders allowed in any judicial proceedings relative to the Company or any other obligor on the bonds or its creditors, or its property. In case of any receivership, insolvency, bankruptcy, reorganization or other similar proceedings affecting the Company or its property, the Trustee, irrespective of whether the principal of the bonds shall then be due and payable and irrespective of whether the Trustee shall have made any demand for such payment, shall be entitled and empowered either in its own name or as trustee of an express trust or as attorney in fact for the holders of the bonds, or in any one or more of such capacities, to file a proof of claim 89 for the whole amount of principal and interest (with interest upon such overdue principal and installments of interest at the same rates borne by the bonds which are overdue) which may be or become owing and unpaid in respect of the bonds and for any additional amount (including the reasonable compensation, expenses, disbursements and advances of the Trustee) which may be or become payable by the Company hereunder, without regard to or deduction for any amount which may have been or which may thereafter be received, collected or realized by the Trustee from or out of the Trust Estate any part thereof or from or out of the proceeds thereof or any part thereof and to take such other action including participating as a member in any official creditors committee appointed in the matter to have the claims of the Trustee and the holders allowed in such judicial proceedings; but nothing in this Indenture contained shall authorize the Trustee to accept or consent to any composition of plan of reorganization on behalf of any bondholder. The Trustee, to the extent permitted by law, shall be entitled to sue and recover judgment or to file and prove such claim as aforesaid either before or after or during the pendency of any proceedings for the enforcement of the lien of this Indenture upon the Trust Estate, and its right to recover such judgment or to file and prove such claim or claims shall not be affected by nor be prejudicial to any entry or sale hereunder, or by or to the exercise of any powers conferred by any of the provisions of this Indenture, or by or to the foreclosure of the lien hereof; and in case of a sale of any of the Trust Estate and of the application of the proceeds of sale to the payment of the debt hereby secured, the Trustee in its own name and as trustee of an express trust shall be entitled to enforce payment of and to receive all amounts then remaining due and unpaid (whether at stated maturity or otherwise) upon any and all the bonds then Outstanding hereunder, for the benefit of the holders thereof, and the Trustee shall be entitled to recover judgment for any portion of the debt remaining unpaid, with interest. No recovery of any such judgment by the Trustee and no levy of any execution upon any such judgment upon any of the Trust Estate or upon any other property shall in any manner or to any extent affect the lien of this Indenture upon the Trust Estate or any part thereof, or any rights, powers or remedies of the Trustee hereunder, or any lien, rights, powers or remedies of the holders of the said bonds, but such lien, rights, powers and remedies of the Trustee and of the bondholders shall continue unimpaired as before. Any cash collected by the Trustee under this Section shall be applied by the Trustee, subject to the provisions of Section 5.02 hereof, first, to the payment of the costs and expenses of the proceedings resulting in the collection of such cash, second, to the payment of the fees, charges, expenses and liabilities (incurred without negligence or bad faith on the part of the Trustee) of the Trustee hereunder and of the holders of the bonds, and third, to the payment of the amounts then due and unpaid (whether at stated maturity or otherwise) upon the bonds 90 issued hereunder then Outstanding and claims for interest, respectively, without any preference or priority of any kind (except as to the difference, if any, in the respective rates of such interest and premium, if any), but ratably according to the amounts due and payable upon such bonds and claims for interest, respectively, at the date fixed by the Trustee for the distribution of such cash, on presentation of the several bonds and their surrender if fully paid or for proper notation if only partly paid. All rights of action vested in the Trustee pursuant to the provisions of this Indenture may be enforced by the Trustee without the possession of any of the bonds or the production thereof at any trial or other proceedings relating thereto; and any suit or proceedings instituted by the Trustee shall be brought in its name, as Trustee, and any recovery of judgment shall be for the equal benefit, in accordance with the provisions of this Indenture, of the holders of the Outstanding bonds entitled thereto. SECTION 9.10. Majority of Bondholders Entitled to Direct Trustee. Anything contained in this Indenture to the contrary notwithstanding, the holders of not less than a majority in aggregate principal amount of the bonds Outstanding hereunder, from time to time, shall have the right, by an instrument or concurrent instruments in writing, executed as provided in Article X hereof and delivered to the Trustee, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or of exercising any trust or power conferred upon the Trustee under this Indenture; provided, however, that such directions shall not be inconsistent with the terms of this Indenture and that the Trustee shall have the right to decline to follow any such direction if the Trustee shall be advised by counsel that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith shall by Responsible Officers determine that the action or proceeding so directed would involve the Trustee in personal liability or be unjustly prejudicial to the non-assenting bondholders; and provided further that the Trustee shall not be required to exercise the power of entry into or upon all or any part of the Trust Estate conferred by Section 9.04 hereof or the power of sale conferred by Section 9.05 hereunder. SECTION 9.11. Remedies Cumulative and Not Waived by Failure to Act. Except as herein expressly provided to the contrary, no remedy herein conferred upon or reserved to the Trustee or to the holders of the bonds is intended to be exclusive of any other remedy, but every remedy herein provided 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. Every power and remedy given by this Indenture to the Trustee or to holders of the bonds may, subject to the provisions of Section 9.12 hereof, be exercised from time to time and as often as may be deemed expedient. No delay or omission by the 91 Trustee or by any holder of any bond to exercise any right or power arising from any default shall impair any such right or power or shall be construed to be a waiver of any default or an acquiescence therein. In case the Trustee shall have proceeded to enforce any right under this Indenture by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned because of waiver, or for any other reason, or shall have been determined adversely, then, and in each and every such case, the Company and the Trustee shall severally and respectively be restored to their former positions and rights hereunder in respect of the Trust Estate, and all rights, remedies and powers of the Trustee shall continue as though no such proceedings had been taken. SECTION 9.12. Rights of Bondholders to Sue. No holder of any bond shall have the right to institute any suit, action or proceeding at law or in equity upon, or in respect of, this Indenture, or for the execution of any trust or power hereof, or for any other remedy under or upon this Indenture, unless (a) the holders of not less than twenty per centum (20%) in aggregate principal amount of all the bonds Outstanding hereunder shall previously have given to the Trustee written notice of the occurrence of a default and (b) the holders of not less than twenty per centum (20%) in aggregate principal amount of all the bonds then Outstanding hereunder shall have tendered to the Trustee reasonable indemnity against all costs, expenses and liabilities which might be incurred in or by reason of such action, suit or proceeding and shall have requested the Trustee in writing to take action in respect of such default, and the Trustee shall have declined to take such action or shall have failed so to do within thirty (30) days thereafter, and (c) no directions inconsistent with such written request shall have been given pursuant to Section 9.10 hereof, it being understood and intended that no holder of any bond shall have any right in any manner whatever to affect, disturb or prejudice the lien of this Indenture by his or her action, or to enforce any right hereunder, except in the manner herein provided, and that all proceedings hereunder with respect to the lien hereof or to the Trust Estate shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all holders of bonds Outstanding hereunder. Nothing contained in this Article or elsewhere in this Indenture shall affect or impair the right of any bondholder, which is absolute and unconditional, to enforce the payment of the principal of and premium, if any, and interest on his or her bonds at and after the maturity thereof as therein expressed or as accelerated by call for redemption thereof, or the obligation of the Company, which is also absolute and unconditional, to pay the principal of and premium, if any, and interest on each of the bonds issued hereunder to the respective holders at the time and place expressed in said bonds and in said notice of redemption, if any. 92 ARTICLE X EVIDENCE OF RIGHTS OF BONDHOLDERS SECTION 10.01. Execution of Requests, etc. by Bondholders. Any request, declaration, or other instrument, which this Indenture may require or permit to be signed and executed by the bondholders, may be in any number of concurrent instruments of similar tenor and may be signed or executed by such bondholders in person or by attorneys appointed in writing. Proof of the execution of any such request or other instrument, or of a writing appointing any such attorney, or of the holding by any person of the bonds, shall be sufficient for any purpose of this Indenture if made in the following manner: (a) The fact and date of the execution by any person of such request or other instrument or writing may be proved by a witness or by a certificate acknowledged before a notary public or other officer authorized to take acknowledgments; and (b) The ownership of registered bonds shall be proved by the registry books as hereinbefore provided. Any request, consent or vote of the holder of any bond shall bind all future holders and owners of said bond or of any bond issued in exchange or substitution for said bond, in respect of anything done or suffered by the Company or the Trustee in pursuance thereof. SECTION 10.02. Registered Holders Treated as Absolute Owners. The Company and the Trustee may deem and treat the person in whose name any bond is registered as the absolute owner of such bond for the purpose of receiving payment of or on account of the principal of and interest on such bond and for all other purposes; and all such payments so made to any such registered holder or upon his or her order shall be valid and effectual to satisfy and discharge the liability upon such bond to the extent of the sum or sums so paid, and neither the Company nor the Trustee shall be affected by any notice to the contrary. Neither the Company nor the Trustee shall be bound to recognize any person as the holder of a bond Outstanding under this Indenture unless and until his or her bond is submitted for inspection, if required, and his or her title thereto satisfactorily established, if disputed. ARTICLE XI DEFEASANCE SECTION 11.01. Release and Discharge of Indenture. If the Company, its successors or assigns, shall pay and discharge or provide for the payment and discharge of the entire indebtedness 93 on all bonds at the time Outstanding hereunder in any one or more of the following ways, namely: (a) by paying or causing to be paid the principal of, and the premium, if any, and interest on bonds, at the time and in the manner therein and herein expressed; or (b) by delivering all then Outstanding bonds to the Trustee for cancellation and by delivering to the Trustee a written order of the Company to cancel any bonds held by the Trustee in uncancelled form under any of the terms hereof; or (c) by irrevocably depositing with the Trustee, in trust for the pro rata benefit of the holders thereof, at or prior to maturity, cash sufficient, or U.S. Government Obligations the principal of and the interest on which will provide cash sufficient without reinvestment (as established by an Officers' Certificate delivered to the Trustee accompanied by a report of an independent certified public accountant setting forth the calculations upon which such Officers' Certificate is based), to pay the principal of, and the premium, if any, on, bonds at maturity together with interest thereon to maturity; provided that: (i) the Company shall have instructed the Trustee to make the Funds so deposited immediately available to the holders of the bonds upon such maturity for the payment of which at maturity the same shall have been so deposited, and (ii) either (aa) a notice of such availability shall have been given by the Trustee to the holders of all bonds in accordance with Article VII hereof, or (bb) provision satisfactory to the Trustee shall have been made for the giving of such notice, or (d) by irrevocably depositing with the Trustee, in trust, cash sufficient, or U.S. Government Obligations the principal of and the interest on which will provide cash sufficient without reinvestment (as established by an Officers' Certificate delivered to the Trustee accompanied by a report of an independent certified public accountant setting forth the calculations upon which such Officers' Certificate is based), to redeem the bonds Outstanding hereunder, together with interest accrued on such bonds to the date fixed for redemption, provided that: (i) notice of the redemption of such bonds shall have been duly given in accordance with Article VII hereof and the date fixed for redemption shall have passed, or (ii) the Company shall have instructed the Trustee to make such Funds immediately available to the holders of such bonds upon such redemption and either (aa) 94 notice of the redemption of such bonds (stating that such Funds are so available) shall have been duly given in accordance with Article VII hereof, or (bb) provision satisfactory to the Trustee shall have been made for the giving of such notice; and if the Company shall also (1) pay or cause to be paid all other sums payable hereunder by the Company or make provision satisfactory to the Trustee for the payment thereof, (2) duly perform and comply with all covenants, agreements, terms and conditions on the part of the Company contained in this Indenture until the date such defeasance becomes effective, (3) in the case of paragraphs (c) or (d) above, deliver to the Trustee an Opinion of Counsel stating that the holders of the bonds will not recognize income, gain or loss for federal income tax purposes as a result of the deposit and defeasance referred to below and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred, and in the case of legal defeasance (as defined below) only, such Opinion of Counsel shall be based on a ruling of the Internal Revenue Service or other change in applicable federal income tax law, and (4) deliver to the Trustee an Officers' Certificate and Opinion of Counsel stating that the foregoing conditions have been complied with; then and in that case the Company may at its election specified in an Officers' Certificate delivered with the Opinions of Counsel and Officers' Certificate delivered pursuant to clauses (3) and (4) above (provided that if no such Officers' Certificate is delivered, the Company shall be deemed to have elected a covenant defeasance, to the Trustee either (a) be released from its obligations to comply with any of the covenants contained in this Indenture, other than the covenants contained in Sections 5.02, 5.07 and 14.10 (and any non-compliance shall not be a default hereunder, and the rights of the Trustee with respect to a default under Sections 9.01(a), (b), (c), (d) or (e) shall survive such covenant defeasance) ("covenant defeasance") or (b) have this Indenture and all supplemental indentures cancelled and surrendered by the Trustee ("legal defeasance") upon the request and at the expense of the Company and shall in any event, cease and become void (except that the Company's obligations under Section 5.02(b) and 14.10 shall survive) and the Trustee shall execute and deliver to the Company such deeds or releases as shall be requisite to satisfy the lien hereof, and reconvey to the Company the estate and title hereby conveyed and assigned, and deliver to the Company any property subject to the lien of this Indenture which may then be in the possession of the Trustee. 95 SECTION 11.02. Defeasance of a Series of Bonds. If the Company, its successors or assigns, shall pay and discharge or provide for the payment and discharge of the entire indebtedness on all bonds of a particular series at the time Outstanding hereunder in either of the following ways, namely: (a) by irrevocably depositing with the Trustee, in trust for the pro rata benefit of the holders thereof, prior to maturity, cash sufficient, or U.S. Government Obligations the principal of and the interest on which will provide cash sufficient without reinvestment (as established by an Officers' Certificate delivered to the Trustee accompanied by a report of an independent certified public accountant setting forth the calculations upon which such Officers' Certificate is based), to pay the principal of, and premium, if any, on the bonds of such series Outstanding hereunder at maturity together with interest thereon to maturity; provided that: (i) the Company shall have instructed the Trustee to make the Funds so deposited immediately available to the holders of the bonds of such series upon such maturity for the payment of which at maturity the same shall have been so deposited, and (ii) either (aa) a notice of such availability shall have been given by the Trustee to the holders of all bonds of such series in accordance with Article VII, or (bb) provision satisfactory to the Trustee shall have been made for the giving of such notice, or (b) by irrevocably depositing with the Trustee, in trust, cash sufficient, or U.S. Government Obligations the principal of and the interest on which will provide cash sufficient without reinvestment (as established by an Officers' Certificate delivered to the Trustee accompanied by a report of an independent certified public accountant setting forth the calculations upon which such Officers' Certificate is based), to redeem the bonds of such series Outstanding hereunder, together with interest accrued on such bonds to the date fixed for redemption, provided that: (i) notice of the redemption of the bonds of such series shall have been duly given in accordance with Article VII and the date fixed for redemption shall have passed, or (ii) the Company shall have instructed the Trustee to make such Funds immediately available to the holders of the bonds of such series upon such redemption and either (aa) notice of the redemption of such bonds (stating that such Funds are so available) shall have been duly given in accordance with Article VII, or (bb) provision satisfactory to the Trustee shall have been made for the giving of such notice; 96 and if the Company shall also (1) pay or cause to be paid all other sums payable hereunder by the Company with respect to such series or make provisions satisfactory to the Trustee for the payment thereof, (2) duly perform and comply with all covenants, agreements, terms and conditions on the part of the Company contained in this Indenture with respect to such series until the date such defeasance becomes effective, (3) deliver to the Trustee an Opinion of Counsel stating that the holders of the bonds will not recognize income, gain or loss for federal income tax purposes as a result of the deposit and defeasance referred to below and will be subject to federal income tax on the same amount and in the manner and at the same times as would have been the case if such deposit and defeasance had not occurred, and in the case of legal defeasance for such series (as defined below) only, such Opinion of Counsel shall be based on a ruling of the Internal Revenue Service or other change in applicable federal income tax law, and (4) deliver to the Trustee an Officer's Certificate and Opinion of Counsel stating that the foregoing conditions have been complied with; then and in that case the Company may at its election specified in an Officers' Certificate delivered with the Opinions of Counsel and Officers' Certificate delivered pursuant to clauses (3) and (4) above (provided that if no such Officers' Certificate is delivered, the Company shall be deemed to have elected a covenant defeasance) to the Trustee either (a) be released from its obligations to comply with any of the covenants contained in this Indenture with respect to such series, other than the covenants contained in Sections 5.02, 5.07 and 14.10 (and any non-compliance shall not be a default hereunder with respect to such series, and the rights of the Trustee with respect to a default under Sections 9.01(a), (b), (c), (d) or (e) shall survive such covenant defeasance) ("covenant defeasance") or (b) be deemed to have been discharged from all obligations in respect of the bonds of such series ("legal defeasance for such series"), this Indenture shall cease to be of further effect with respect to the bonds of such series and the Trustee, on demand of the Company and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the bonds of such series. SECTION 11.03. Payment of Deposited Cash to Company. The U.S. Government Obligations and cash deposited with the Trustee pursuant to Sections 11.01 or 11.02 hereof and principal or interest payments on any such U.S. Government Obligations shall be held in trust, shall not be sold or reinvested, and shall be 97 applied by it in accordance with the provisions of the bonds and this Indenture, to the payment, either directly or through any paying agent as the Trustee may determine, to the persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such cash or U.S. Government Obligations were deposited; provided that, upon delivery to the Trustee of an Officers' Certificate (accompanied by the report of an independent certified public accountant setting forth the calculations upon which such Officers' Certificate is based) establishing that the cash and U.S. Government Obligations on deposit following the taking of the proposed action will be sufficient for the purposes described in Sections 11.01 or 11.02 hereof, as the case may be, any cash received from principal or interest payments on U.S. Government Obligations deposited with the Trustee or the proceeds of any sale of such U.S. Government Obligations, if not then needed for such purpose, shall, upon receipt by the Trustee of an Officers' Certificate requesting same, be reinvested in other U.S. Government Obligations or disposed of as requested in such Officers' Certificate. In case the owner of any bond entitled to payment hereunder at any time Outstanding hereunder shall not, within two years after the maturity date of such bond, or if such bond shall have been called for redemption, then within two years after the date fixed for redemption of such bond, claim the amount on deposit with the Trustee or other depositary for the payment of such bond, the Trustee or other depositary shall pay over to, or to the order of, the Company the amount so deposited, upon receipt of a request signed by the President or a Vice-President of the Company, and thereupon the Trustee or other depositary shall be released from any and all further liability with respect to the payment of such bond and the holder of said bond shall be entitled (subject to any applicable statute of limitations) to look only to the Company as an unsecured creditor for the payment thereof; provided, however, that the Trustee or other depositary before being required to make any such payment may, at the expense of the Company, cause notice that said cash has not been so called for and that after a date named therein any unclaimed balance then remaining will be returned to the Company, to be published once a week for two consecutive weeks (not necessarily on the same day in each week), in a Daily Newspaper of general circulation in each of the cities wherein any of such bonds are expressed to be payable. ARTICLE XII IMMUNITY OF INCORPORATORS, OFFICERS, SHAREHOLDERS AND DIRECTORS SECTION 12.01. Exemption from Personal Liability. No recourse under or upon any obligation, covenant or agreement contained in this Indenture (including any supplemental indenture) or in any bond hereby secured, or because of the creation of any indebtedness hereby secured, or under any judgment obtained against the Company, or by the enforcement of any assessment or penalty, or by any legal or equitable proceedings by virtue of any 98 constitution or statute or rule of law, or otherwise, or under any circumstances, under or independent of this Indenture, or any supplemental indenture, shall be had against any incorporator, shareholder, officer or director of the Company or of any predecessor or successor company, as such, either directly or through the Company or any predecessor or successor company, under any rule of law, statute or constitution or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise; it being expressly agreed and understood that this Indenture and the obligations hereby secured, are solely corporate obligations, and that no such personal liability shall attach to, or be incurred by, such incorporators, shareholders, officers or directors of the Company or of any predecessor or successor company, or any of them, as such, because of the incurring of the indebtedness hereby authorized, or under or by reason of any of the obligations, covenants or agreements contained in this Indenture or in any of the bonds hereby secured, or implied therefrom, and that any and all such personal liability of every name and nature, and any and all such rights and claims against every such incorporator, shareholder, officer or director, as such, whether arising at common law or in equity, or created by rule of law, statute, constitution or otherwise, are expressly released and waived as a condition of, and as part of the consideration for, the execution of this Indenture and the issue of the bonds and interest obligations secured hereby. ARTICLE XIII CONSOLIDATIONS, MERGERS, TRANSFERS AND SALES SECTION 13.01. Merger, Consolidation or Sale. Subject to the provisions of this Article, nothing contained in this Indenture shall prevent any lawful consolidation of the Company with or merger with or into any other corporation, or any conveyance, transfer or lease, subject to the lien of this Indenture, of all or substantially all of the Trust Estate, as an entirety, to any corporation lawfully entitled to acquire or lease or operate the same. The Company covenants and agrees that such consolidation, merger, conveyance, transfer or lease shall be upon such terms as fully to preserve and in no respect to impair the lien or priority of lien of this Indenture upon the property then subject hereto, or the security afforded hereby, or any of the rights or powers of the Trustee or the bondholders hereunder, that any such lease shall be made expressly subject to immediate termination by the Company or by the Trustee at any time during the continuance of a default specified in Section 9.01 hereof, and also by a purchaser of the property so leased at any sale thereof hereunder, whether such sale be made under the power of sale hereby conferred or under judicial proceedings, and that the provisions and conditions of this Section and the execution of the supplemental indenture provided for in this Section shall be a condition to any such consolidation, merger, conveyance, transfer or lease. The corporation formed by such consolidation, or into 99 which the Company shall have been merged, or acquiring all or substantially all of the Trust Estate as an entirety as aforesaid, shall execute and deliver to the Trustee hereunder (and cause to be recorded) a supplemental indenture satisfactory to the Trustee in and by which such corporation shall assume the due and punctual payment of the principal of, premium, if any, and interest on all the bonds issued hereunder according to their tenor, and the due and punctual performance of all the covenants and agreements of this Indenture to be kept or performed by the Company (subject to the provisions of Section 13.03 hereof), and shall make appropriate covenants to protect the lien and priority of lien of this Indenture, the security afforded hereby, and the rights and powers of the Trustee and bondholders hereunder. Any lessee under any such lease shall expressly assume such obligations by instrument in writing satisfactory to the Trustee. The property of the other corporation with which the Company shall consolidate or merge or to which all or substantially all the Trust Estate shall be conveyed or transferred shall not be subject to any lien (other than the lien of the First Mortgage Indenture and liens which, if they existed upon property of the Company, would constitute Excepted Encumbrances) which after such consolidation, merger, conveyance or transfer will be equal or prior to the lien of this Indenture on the property owned by such corporation, upon completion of such consolidation, merger, conveyance or transfer, unless (i) the amount of obligations outstanding under and secured by any such lien or liens prior to the lien hereof shall not exceed sixty-six and two-thirds per centum (66-2/3%), and (ii) the amount of obligations outstanding under and secured by any such lien or liens equal or prior to the lien hereof shall not exceed one-hundred per centum (100%), of the value of the property (which, if owned by the Company, would constitute bondable property as defined in Section 4.03 hereof) of such other corporation and unless the net earnings, determined as provided in Section 4.05 hereof, derived from the operation of the property of such other corporation during a period of twelve consecutive calendar months ending within ninety days next preceding the date of such consolidation, merger or conveyance shall have been a sum at least equal to twice the interest for one year on all obligations outstanding under and secured by such equal or prior lien or liens at the time of such consolidation, merger or conveyance, except obligations for the payment or redemption of which the necessary funds shall have been deposited with the trustee under such equal or prior lien or liens or with the Trustee hereunder, together with instructions to apply such funds to the payment or redemption of such obligations and, until so applied, to hold such funds irrevocably in trust for such purposes (but subject to any applicable provision in the instrument creating such lien or liens for the return of any unclaimed cash to the Company). SECTION 13.02. Successor to Succeed to Rights of Company. In case the Company shall be consolidated with or merged into any other corporation, or shall convey or transfer, subject to the lien of this Indenture, all, or substantially all, the 100 Trust Estate, as an entirety, the successor corporation formed by such consolidation, or into which the Company shall have been merged, or which shall have received a conveyance or transfer, as aforesaid (such corporation being hereinafter called the successor corporation), shall succeed to and be substituted for the Company under this Indenture with the same effect as if it had been named herein and may thereafter, subject to all the terms, conditions and restrictions in this Indenture prescribed, exercise all the powers and rights which the Company might or could exercise prior to such consolidation, merger or sale, either in the name of such successor corporation, or of the Company, and may, without in any way limiting the generality of the foregoing, issue bonds hereunder to the extent and for the purposes herein provided with respect to the issuance of bonds by the Company and may also issue any bonds which the Company was entitled to issue but had not issued hereunder; and any act, proceeding, resolution or certificate by any of the terms of this Indenture required or provided to be done, taken or performed, or made or executed, by any board, committee, officer or employee of the Company may be done, taken and performed, or made and executed, with like force and effect, by the corresponding board, committee, officer or employee of such successor corporation. All the bonds so issued shall in all respects have the same legal rank and security as the bonds theretofore or thereafter issued in accordance with the terms of this Indenture as though all of said bonds had been issued at the date of the execution hereof. As a condition precedent to the execution by such successor corporation and the authentication and delivery by the Trustee of any such additional bonds or the withdrawal, use or application of cash or the release of property on the basis of bondable property of such successor corporation, or the certification of bondable property of such successor corporation under any of the provisions of this Indenture, the supplemental indenture with the Trustee to be executed and caused to be recorded by the successor corporation as provided in this Article XIII, or a subsequent supplemental indenture, shall contain a conveyance or transfer and mortgage in terms sufficient to subject to the lien hereof (a) all property owned or thereafter acquired by such successor corporation (except property of a character similar to that excluded from the lien of this Indenture) or (b) such property as such successor corporation is making the basis for the issuance of bonds or the withdrawal, use or application of cash or the release of property hereunder or is certifying pursuant to any of the provisions of this Indenture, and the lien created thereby shall have similar force, effect and standing as the lien of this Indenture would have if the Company itself should acquire or construct such property and request the authentication of bonds or the withdrawal, use or application of cash or the release of property or certify bondable property hereunder. The Trustee may receive and rely upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence, subject to the provisions of Article XIV hereof, that any consolidation, merger, conveyance, transfer or lease and any 101 supplemental indenture or, in the case of certain leases, any written instrument, executed in connection therewith, comply with the foregoing conditions and provisions of Section 13.01 hereof and of this Section. SECTION 13.03. Limitation of After-Acquired Clauses. In case the Company, pursuant to this Article, shall be consolidated with or merged into any other corporation or shall convey or transfer all or substantially all of the Trust Estate as an entirety subject to the lien of this Indenture, this Indenture (unless the supplemental indenture executed pursuant to Section 13.01 or 13.02 hereof by the successor corporation, or a subsequent indenture, conveys and mortgages upon the trusts herein declared all its property then owned or thereafter acquired, except property of a character similar to that excluded from the lien of this Indenture) shall not become or be a lien upon any of the properties or franchises of the successor corporation except (a) those acquired by it from the Company and property appurtenant thereto and property which the successor corporation shall thereafter acquire or construct which shall form an integral part or be essential to the use or operation of any property then or thereafter subject to the lien hereof; and (b) the property additions to or about the plants or properties of the successor corporation made and used by it as the basis for the authentication and delivery of additional bonds or the withdrawal, use or application of cash or the release of property under this Indenture or certified as property additions pursuant to any of the provisions of this Indenture; and (c) such franchises, repairs, renewals, replacements and additional property as may be acquired, made or constructed by the successor corporation (1) to maintain, renew and preserve the franchises covered by this Indenture, or (2) to maintain the property mortgaged and intended to be mortgaged hereunder as an operating system or systems in good repair, working order and condition, or (3) in a rebuilding or renewal of property subject to the lien hereof damaged or destroyed, or (4) in replacement of or substitution for machinery, apparatus, equipment, frames, towers, poles, wire, pipe, tools, implements or furniture, or any other fixtures or personalty, subject to the lien hereof, which shall have become old, inadequate, obsolete, worn out, unfit, unadapted, unserviceable, undesirable or unnecessary for use in the operation of the property mortgaged and intended to be mortgaged hereunder. ARTICLE XIV CONCERNING THE TRUSTEE SECTION 14.01. Capital and Surplus Requirement. There shall at all times be a Trustee under this Indenture that shall be a bank, trust company, corporation or other person eligible pursuant to the TIA to act as such, having a combined capital and surplus of at least Fifty Million Dollars ($50,000,000). If the Trustee publishes reports of condition at least annually, pursuant 102 to law or to the requirements of its supervising or examining authority, then for the purposes of this Section and Section 5.12 hereof the combined capital and surplus of the Trustee shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. SECTION 14.02. Acceptance of Trust and Duties by Trustee. Notwithstanding any provisions contained in the Indenture to the contrary, the Trustee hereby accepts the trust created herein. The Trustee and, if a separate or co-trustee is appointed pursuant to Section 14.18 hereof, such separate or co-trustee, undertakes, prior to default and after the curing of all defaults which may have occurred, to perform such duties and only such duties as are specifically set forth in this Indenture, and in case of default (which has not been cured) to exercise such of the rights and powers vested in it by this Indenture, and to use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. For the purpose of this Section 14.02 and of Section 14.03 hereof a default shall be deemed cured when the act or omission or other event giving rise to such default shall have been cured, remedied or terminated. The Trustee, upon receipt of evidence furnished to it by or on behalf of the Company pursuant to any provision of this Indenture, will examine the same to determine whether or not such evidence conforms to the requirements of this Indenture. SECTION 14.03. Limitation on Liability of Trustee. Notwithstanding any provisions contained in the Indenture to the contrary, no provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that (a) prior to default hereunder, and after the curing of all such defaults which may have occurred, the Trustee shall not be liable except for the performance of such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee, but the duties and obligations of the Trustee, prior to default and after the curing of all defaults which may have occurred, shall be determined solely by the express provisions of this Indenture; and (b) prior to default hereunder, and after the curing of all such defaults which may have occurred, and in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions conforming to the requirements of this Indenture; and 103 (c) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Trustee unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (d) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders of not less than a majority in principal amount of the bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture or with respect to any directions or notice from the Secured Obligation Holder (as defined in section 4.01C hereof) in connection with redemption, rescission thereof or any other action in respect of the bonds of Series X. No provision of this Indenture shall require the Trustee to advance or 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 is reasonable ground for believing that the repayment of such funds or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Article. SECTION 14.04. Recitals are by Company Alone. The recitals contained herein and in the bonds (except the Trustee's authentication certificate) shall be taken as the statements of the Company and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the condition, genuineness, validity or value of the Trust Estate or any part thereof, or as to the title of the Company thereto, or to the validity or adequacy of the security afforded thereby and hereby, or as to the validity of this Indenture or of the bonds issued hereunder. The Trustee shall be under no responsibility or duty with respect to the disposition of any bonds authenticated and delivered hereunder or the application of the proceeds thereof or the application of any cash paid to the Company under any of the provisions hereof. SECTION 14.05. Exemption of Trustee from Personal Liability in Case of Entry. In case of entry upon the Trust Estate, the Trustee, and any separate or co-trustee, shall not be personally liable for debts contracted or liability or damages incurred in the management or operation of said property. SECTION 14.06. Trustee may Rely on Documents, etc. To the extent permitted by Sections 14.02 and 14.03 hereof: 104 (1) the Trustee may rely and shall be protected in acting upon, or in failing to take action as a result of, any Resolution, Officers' Certificate, Engineer's Certificate, Net Earnings Certificate, Opinion of Counsel, resolution, certificate, opinion, statement, notice, request, consent, order, appraisal, report, bond, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; and (2) the Trustee may consult with counsel (who may be of counsel to the Company) and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel; and (3) the Trustee shall be under no obligation to exercise any of the trusts or powers hereof at the request, order or direction of any of the bondholders, pursuant to the provisions of this Indenture, unless such bondholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred by it in compliance with such request or direction; and (4) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, bond or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit; and (5) the Trustee may perform any duties hereunder either directly or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence of any agent or attorney appointed with due care by it hereunder; and (6) the Trustee shall not be liable for any action taken by it in good faith and believed by it to have been authorized or within the discretion or powers conferred upon it by this Indenture; and the Trustee shall not be charged with knowledge of any default or any fact, the occurrence of which would require the Trustee to take action unless a Responsible Officer shall have actual knowledge thereof. SECTION 14.07. Trustee's Responsibility for Selection of Experts. The Trustee shall not be under any responsibility for the selection or acceptance of any Engineer, Accountant or other expert for any of the purposes expressed in this Indenture, except that nothing in this Section contained shall relieve the Trustee of its obligation to exercise reasonable care with respect to the selection or acceptance of independent experts who may furnish certificates to the Trustee pursuant to any provision of this Indenture. 105 The Trustee may accept any Resolution as conclusive evidence of the adoption of such Resolution. SECTION 14.08. Trustee may be Bondholder, etc. Subject to the provisions of Sections 14.13 and 14.14 hereof and to the provisions of applicable law in the jurisdictions in which the Trust Estate is situated, the Trustee, in its individual or any other capacity, may become the holder, owner or pledgee of bonds secured hereby, and may otherwise deal with the Company with the same rights it would have if it were not Trustee. SECTION 14.09. Cash to be Held in Trust. Subject to the provisions of Section 11.03 hereof, all cash received by the Trustee, whether as Trustee or paying agent, shall, until withdrawn, used or applied as herein provided, be held in trust for the purposes for which they were paid but need not be segregated from other funds except to the extent required by law. The Trustee may allow and credit to the Company, in the absence of any default, interest on any cash received by it hereunder at such rate, if any, as may be agreed upon with the Company from time to time and as may be permitted by law. SECTION 14.10. Trustee Compensation and Reimbursement. The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation for all services rendered by it in the execution of the trusts hereby created and in the exercise and performance of any of the powers and duties hereunder of the Trustee, which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust, and the Company will reimburse the Trustee for all appropriate advances made by the Trustee in connection with the performance of its duties hereunder and administration of the Trusts created hereby and will pay to the Trustee from time to time its expenses and disbursements (including the reasonable compensation and the expenses and disbursements of persons not regularly in its employ and, to the extent not prohibited by law, of its counsel). The Company also covenants to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Trustee, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending against any claim of liability in the premises. The obligations of the Company to the Trustee under this Section shall survive discharge of this Indenture and resignation or removal of the Trustee and shall constitute additional indebtedness secured hereby. Such additional indebtedness shall be secured by a lien prior to that of the bonds upon the Trust Estate, including all property or funds held or collected by the Trustee as such. If, and to the extent that, the Trustee and its counsel and other persons not regularly in its employ do not receive compensation for services rendered, reimbursement of its or their advances, expenses and disbursements, or indemnity, as herein 106 provided, as the result of allowances made in any reorganization, bankruptcy, receivership, liquidation or other proceeding or by any plan of reorganization or readjustment of obligations of the Company, the Trustee shall be entitled, in priority to the holders of the bonds, to receive any distributions of any securities, dividends or other disbursements which would otherwise be made to the holders of bonds in any such proceeding or proceedings and the Trustee is hereby constituted and appointed, irrevocably, the attorney-in-fact for the holders of the bonds and each of them to collect and receive, in their name, place and stead, such distributions, dividends or other disbursements, to deduct therefrom the amounts due to the Trustee, its counsel and other persons not regularly in its employ on account of services rendered, advances, expenses and disbursements made or incurred, or indemnity, and to pay and distribute the balance, pro rata, in accordance with the provisions of this Indenture, to the holders of the bonds. The Trustee shall have a lien upon any securities or other consideration to which the holders of bonds may become entitled pursuant to any such plan of reorganization or readjustment of obligations, or in any such proceeding or proceedings. SECTION 14.11. Certificate of Officers of Company to Constitute Proof. Whenever in the administration of the trusts of this Indenture, prior to a default hereunder and after the curing of all defaults which may have occurred, the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the President or Vice-President and the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Company and delivered to the Trustee, and such certificate shall be full warrant to the Trustee for any action taken or suffered by it under the provisions of this Indenture upon the faith thereof. SECTION 14.12. Trustee to Have Power to Give Notices. Whenever it is provided in this Indenture that the Trustee shall take any action upon the happening of a specified event or upon the fulfillment of any condition or upon the request of the Company or of bondholders, the Trustee taking such action shall have full power to give any and all notices and to do any and all acts and things incidental to such action. SECTION 14.13. Trustee Acquiring Conflicting Interest. If the Trustee has or shall acquire a conflicting interest within the meaning of the TIA, the Trustee shall either eliminate such interest or resign, and absent the elimination of such interest or resignation may be removed, to the extent and in the manner provided by, and subject to the provisions of, the TIA and this Indenture. 107 SECTION 14.14. Preferential Collection of Claims Against the Company if Trustee Becomes a Creditor. The Trustee shall be subject to the provisions of Section 311 of the TIA. SECTION 14.15. Trustee may Resign. The Trustee may at any time resign and be discharged of the trusts hereby created by giving at least thirty (30) days written notice to the Company specifying the day upon which such resignation shall take effect and thereafter publishing notice thereof in one Daily Newspaper of general circulation in New York, New York and in each of the cities in which the principal of any of the bonds then Outstanding shall be payable, once in each of three consecutive calendar weeks, not necessarily on the same day in each week, and such resignation shall take effect upon the day specified in Section 14.17 hereof. This Section shall not be applicable to resignations pursuant to Section 14.13 hereof. SECTION 14.16. Trustee may be Removed. The Trustee may be removed at any time by an instrument or concurrent instruments in writing filed with the Trustee and signed and acknowledged by the holders of a majority in principal amount of the bonds then Outstanding hereunder or by their attorneys-in-fact duly authorized and upon payment to such Trustee of all amounts owing to it hereunder. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of Section 14.01 hereof, then the Trustee shall resign immediately in the manner and with the effect specified in Section 14.15 hereof; and, in the event that the Trustee does not resign immediately in such case, then it may be removed forthwith by an instrument or concurrent instruments in writing filed with the Trustee and either (a) signed by the President or a Vice-President of the Company with its corporate seal attested by its Secretary or an Assistant Secretary or (b) signed and acknowledged by the holders of a majority in principal amount of the bonds then Outstanding hereunder or by their attorneys-in-fact duly authorized. SECTION 14.17. Appointment of Successor Trustee. 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 under Section 14.22 hereof. In case at any time the Trustee shall resign or shall be removed or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or if a receiver of the Trustee or of its property shall be appointed, or if any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, a vacancy shall be deemed to exist in the office of Trustee, and a successor or successors may be appointed by the holders of a majority in principal amount of the bonds then Outstanding hereunder, by an instrument or concurrent instruments in writing signed and acknowledged by such bondholders or by their attorneys-in-fact duly authorized, and delivered to 108 such new trustee, notification thereof being given to the Company and the retiring trustee; provided, nevertheless, that until a new trustee shall be appointed by the bondholders as aforesaid, the Company, by instrument executed by order of its Board of Directors, by its President or a Vice-President, may appoint a trustee to fill such vacancy until a new trustee shall be appointed by the bondholders as herein authorized. The Company shall publish notice of any such appointment made by it in the manner provided in Section 14.15 hereof. Any new trustee appointed by the Company shall, immediately and without further act, be superseded by a Trustee appointed by the bondholders, as above provided. If in a proper case no appointment of a successor Trustee shall be made pursuant to the foregoing provisions of this Section within six months after a vacancy shall have occurred in the office of Trustee, the holder of any bond Outstanding hereunder or any retiring trustee may apply to any court of competent jurisdiction to appoint a successor trustee. Said court may thereupon after such notice, if any, as such court may deem proper and prescribe, appoint a successor trustee. If the Trustee resigns and a successor has not been appointed by the Company or the bondholders or, if appointed, has not accepted the appointment within thirty (30) days after such resignation, the resigning trustee may apply to any court of competent jurisdiction for the appointment of a successor trustee. Any trustee appointed under the provisions of this Section in succession to the Trustee shall be a bank, trust company, corporation or other person eligible under Sections 5.12 and 14.01 hereof. Any trustee which has resigned or been removed shall nevertheless retain the lien upon the Trust Estate, including all property or funds held or collected by the trustee as such, to secure the amounts due to such trustee as compensation, reimbursement, expenses, disbursements and indemnity and retain the rights afforded to it by Section 14.10 hereof. SECTION 14.18. Separate Trustee or Co-trustee may be Appointed. At any time or times, for the purpose of conforming to any legal requirements, restrictions or conditions in any state or jurisdiction in which any part of the Trust Estate may be located, the Company and the Trustee shall have power to appoint, and, upon the request of the Trustee, the Company shall for such purpose join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to appoint, another corporation or one or more persons approved by the Trustee, to act either as separate trustee or trustees, or as co-trustee or co-trustees jointly with the Trustee, of all or any of the property subject to the lien hereof. In the event that the Company shall not have joined in such appointment within fifteen (15) days after the receipt by it of a request so to do, the 109 Trustee alone shall have power to make such appointment. Any separate or co-trustee appointed hereunder need not satisfy the requirements under Sections 5.12 and 14.01. SECTION 14.19. Conditions Upon Appointment of Separate Trustee or Co-trustee or Successor Trustee. Every separate trustee, every co-trustee and every successor trustee, other than any trustee which may be appointed as successor to the Trustee actually executing this Indenture, shall, to the extent permitted by law, but to such extent only, be appointed subject to the following provisions and conditions, namely: (1) The rights, powers, duties and obligations conferred or imposed upon trustees hereunder or any of them shall be conferred or imposed upon and exercised or performed by the Trustee or by the Trustee and such separate trustee or separate trustees or co-trustee or co-trustees jointly, as shall be provided in the instruments and agreements appointing such separate trustee or separate trustees or co-trustee or co-trustees, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such separate trustee or separate trustees or co-trustee or co-trustees. (2) The bonds secured hereby shall be authenticated and delivered, and all powers, duties, obligations and rights, conferred upon the Trustee in respect of the custody of all bonds and of all cash and securities pledged or deposited hereunder, shall be exercised solely by the Trustee actually executing this Indenture, or its successor in the trust hereunder. (3) The Company and the Trustee, at any time by an instrument in writing executed by them jointly, may accept the resignation of or remove any separate trustee or co-trustee appointed under Section 14.18 hereof or otherwise, and, upon the request of the Trustee, the Company shall, for such purpose, join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to make effective such resignation or removal. In the event that the Company shall not have joined in such action within fifteen (15) days after the receipt by it of a request so to do, the Trustee alone shall have power to accept such resignation or to remove any such separate trustee or co-trustee. A successor to a separate trustee or co-trustee so resigned or removed may be appointed in the manner provided in Section 14.18 hereof. No trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder. 110 SECTION 14.20. Notices to Trustee. Any notice, request or other writing, by or on behalf of the holders of the bonds, delivered to the Trustee actually executing this Indenture, or its successor in the trust hereunder, shall be deemed to have been delivered to all of the then trustees or co-trustees as effectually as if delivered to each of them. Every instrument appointing any trustee or trustees, other than a successor to the Trustee actually executing this Indenture, shall refer to this Indenture and the conditions in this Article expressed, and upon the acceptance in writing by such trustee or trustees or co-trustee or co-trustees, he, they or it shall be vested with the estates or property specified in such instrument, either jointly with the Trustee actually executing this Indenture, or its successor, or separately, as may be provided therein, subject to all the trusts, conditions and provisions of this Indenture; and every such instrument shall be filed with the Trustee actually executing this Indenture, or its successor in the trust hereunder. SECTION 14.21. Trustee as Agent. Any separate trustee or trustees, or any co-trustee or co-trustees, may at any time by an instrument in writing constitute the Trustee, or its successor in the trust hereunder, his, her, their or its agent or attorney-in-fact, with full power and authority, to the extent which may be permitted by law, to do all acts and things and exercise any and all discretion authorized or permitted by him, her, them or it, for and in behalf of him, her, them or it, and in his, her, their or its name. In case any separate trustee or trustees or co-trustee or co-trustees, or a successor to any of them, shall die, become incapable of acting, resign or be removed, all the estates, property, rights, powers, trusts, duties and obligations of said separate trustee or co-trustee, so far as permitted by law, shall vest in and be exercised by the Trustee, or its successor in the trust hereunder, without the appointment of a new trustee or successor to such separate trustee or co- trustee. SECTION 14.22. Successor Trustee to Execute Acceptance and Become Vested with Estate. Any successor trustee appointed hereunder shall execute, acknowledge and deliver to his, her or its predecessor trustee, and also to the Company, an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of his, her or its predecessor in trust hereunder, with like effect as if originally named as trustee herein; but the trustee ceasing to act shall nevertheless, on the written request signed by the President or a Vice President of the Company, or of the successor trustee, or of the holders of ten per centum (10%) in principal amount of the bonds then Outstanding hereunder, execute, acknowledge and deliver such instruments of conveyance and further assurance and do such other things as may reasonably be required for more fully and certainly vesting and confirming in 111 such successor trustee all the right, title and interest of the Trustee to which he or she or it succeeds, in and to the Trust Estate and such rights, powers, trusts, duties and obligations, and the trustee ceasing to act shall also, upon like request, and subject to its rights under the last paragraph of Section 14.17, pay over, assign and deliver to the successor trustee any cash or other property subject to the lien of this Indenture, including any pledged securities which may then be in his, her or its possession. Should any deed, conveyance or instrument in writing from the Company be required by the new trustee for more fully and certainly vesting in and confirming to such new trustee such estates, properties, rights, powers, trusts and duties, any and all such deeds, conveyances and instruments in writing shall, on request, be executed, acknowledged and delivered by the Company. SECTION 14.23. Consolidation or Merger of Trustee. Any corporation into which the Trustee may be merged or with which it may be consolidated or any corporation resulting from any merger or consolidation to which the Trustee shall be a party or any corporation to which substantially all the corporate trust business of the Trustee may be transferred, provided such corporation shall be eligible under the provisions of Sections 5.12 and 14.01 hereof and qualified under Section 14.13 hereof, shall be the successor trustee under this Indenture, without the execution or filing of any paper or the performance of any further act on the part of any other parties hereto, anything herein to the contrary notwithstanding. In case any of the bonds contemplated to be issued hereunder shall have been authenticated but not delivered, any successor to the Trustee may, subject to the same terms and conditions as though such successor had itself authenticated such bonds, adopt the certificate of authentication of the original Trustee or of any successor to it as trustee hereunder, and deliver the said bonds so authenticated and in case any of said bonds shall not have been authenticated any successor to the Trustee may authenticate such bonds either in the name of any predecessor hereunder or in the name of the successor trustee, and in all such cases such certificate shall have the full force which is anywhere in said bonds or in this Indenture provided that the certificate of the Trustee shall have; provided, however, that the right to authenticate bonds in the name of the original Trustee shall apply only to its successor or successors by merger or consolidation as aforesaid. ARTICLE XV CONCERNING PLEDGED SECURITIES SECTION 15.01. Pledged Securities Deposited with Trustee. The Company may deliver to the Trustee and the Trustee may receive from time to time bonds, certificates for shares of stock, debentures, notes and/or other securities or obligations, and all such bonds, certificates for shares of stock, debentures, notes and/or securities or obligations so received shall be held by the Trustee as a part of the Trust Estate. The Trustee shall 112 be under no obligation to accept a certificate for any shares of stock or any bonds, debentures, notes or other securities or obligations, or to cause or permit a transfer thereof to be made to it, if, in the opinion of the Trustee, such acceptance or transfer would involve it in, or render it liable to be subjected to, any liability or expense, unless the Trustee shall be indemnified by the Company to its satisfaction for so doing. All certificates for shares of stock shall at the time of the delivery thereof be duly endorsed for transfer or accompanied by appropriate instruments of assignment and transfer duly executed in blank. The Trustee, from time to time, may, but shall be under no obligation to, transfer into its name as Trustee, or into the name or names of its nominee or nominees, any or all such shares of stock pledged hereunder and may cause all or any securities held by it hereunder to be registered in its name or in the name of its nominee or nominees. The bonds or obligations which may be pledged or deposited under any provision of this Indenture may be in temporary or definitive form and may be in such denomination or denominations as the Company may elect, and if bonds, may be coupon bonds, registered or unregistered as to principal, or registered bonds without coupons. All coupon obligations which may be pledged or deposited with the Trustee under any provision of this Indenture shall, except as hereinafter provided, have attached thereto at the time of such pledge or deposit all unmatured interest coupons thereunto appertaining, and all registered obligations without coupons and all coupon obligations registered as to principal shall be duly endorsed by the registered owner thereof or by his or her attorney thereunto duly authorized, or shall be accompanied by duly executed assignment or transfer powers. If any unmatured coupon or coupons appertaining to any such coupon obligation shall be missing at the time of such pledge or deposit, the Trustee may, nevertheless, accept such obligation without such coupon or coupons in case a sum of cash equal to the face amount of the missing coupon or coupons shall be deposited with the Trustee hereunder. SECTION 15.02. Voting. Prior to the occurrence of any default, as defined in Section 9.01 hereof, and after default if such default shall have been cured, or shall have been waived as provided in Section 9.03 hereof, the Company shall have the right, except as hereinafter limited, to vote any shares of stock pledged hereunder with the same force and effect as though such shares were not so pledged; and from time to time, in case said shares of stock pledged hereunder shall have been transferred into the name of the Trustee or its nominee or nominees, the Trustee, upon a request signed by the President or a Vice President of the Company, evidenced by a Resolution delivered to the Trustee, shall execute and deliver, or cause to be executed and delivered, to the Company proper proxies for voting said stock. During the continuance of a default, the Trustee shall vote any shares of stock pledged hereunder in accordance with the directions of the issuer thereof unless otherwise directed by holders of at least a majority in principal amount of all bonds Outstanding hereunder. 113 The Company shall not use or vote or permit to be used or voted any stock pledged hereunder for any purpose contrary to its covenants herein contained or otherwise inconsistent with the provisions or purposes of this Indenture. SECTION 15.03. Income Before Event of Default. Prior to the occurrence of any default, and after default if such default shall have been cured, or shall have been waived as provided in Section 9.03 hereof, the Company shall be entitled to receive, when and as paid, all interest paid on any obligations pledged hereunder and all cash dividends paid or declared out of earnings or surplus derived from operations in respect of any stock pledge hereunder; and from time to time, upon a request signed by the President or a Vice President of the Company, the Trustee shall forthwith deliver to it as they mature the coupons for such interest, in order that the Company may receive payment thereof for its own use, and shall deliver to the Company, if necessary, suitable orders in favor of the Company or its designated nominee or nominees, for the payment of such interest and such cash dividends, and the Company may collect such interest and dividends, and the Trustee shall at once pay over to the Company any such interest or dividends which may have been collected or received by it; provided, however, that: (1) The Company shall not sell, assign or transfer any coupon or right to such interest or dividends delivered or assigned to it; (2) The Company shall not collect any such coupons or interest by legal proceedings or by the enforcement of any security thereof without the prior written consent of the Trustee, nor in any manner which the Trustee shall deem prejudicial to the bonds issued hereunder; (3) Until actually paid or discharged, every such coupon or right to interest or dividends shall in all respects remain subject to the lien of this Indenture; and (4) If any such coupons so delivered to the Company shall not forthwith be paid or cancelled, the Company shall return the same to the Trustee, subject to the right to have the same redelivered to the Company for payment or cancellation, and in case of payment or cancellation of any such coupon or claim for interest, the Company shall, upon demand, furnish to the Trustee satisfactory evidence thereof. Prior to the occurrence of any default, and after default if such default shall have been cured, or shall have been waived as provided in Section 9.03 hereof, the Trustee may pay over to the Company any interest received by it on any bond or other security pledged hereunder, or any cash dividend received on any share of stock pledged hereunder, if satisfied that such interest or cash dividend was paid or declared out of earnings or surplus derived from operations; and upon being furnished by the 114 Company with a certificate of an accountant or firm of accountants (who or which may be in the employ of or under retainer by the Company) selected by the Company and satisfactory to the Trustee showing that such interest or cash dividend was paid or declared out of earnings or surplus derived from operations or that there were such earnings or surplus available for the purpose, as shown by the books of the company paying or declaring such interest or dividend, shall pay over such interest or cash dividend to the Company. Such accountant's certificate shall also contain the statements required by Section 1.03(a). Prior to the occurrence of any default, and after default if such default shall have been cured, or shall have been waived as provided in Section 9.03, the Trustee shall be under no obligation to make any investigation and shall incur no liability to any bondholder or the Company on account of any action it may take, or refrain from taking, in the premises. SECTION 15.04. Payments Upon Dissolution, etc. of Issuer of Pledged Securities. The Trustee shall be entitled to receive all cash paid on account of the principal of any bonds or other securities held in pledge by it, and all stock dividends on any shares of stock so held in pledge, and all cash at any time payable in respect of shares of stock, bonds or other securities so held in pledge, on dissolution, liquidation, reorganization, merger or consolidation of the issuer thereof, or derived from any sale, condemnation or other disposition of the property of such issuer, and all securities issued in respect of any securities held in pledge upon any reorganization, recapitalization, merger or consolidation of the issuer thereof or otherwise issued in exchange for the pledged securities. The shares of stock and all cash so received shall be held by the Trustee, in trust, as additional security for the payment of the principal of and interest on the bonds issued under this Indenture, and such cash shall be disposed of by the Trustee pursuant to the provisions of Section 8.06. SECTION 15.05. Renewal and Refunding. Prior to the occurrence of any default, and after default if such default shall have been cured, or shall have been waived as provided in Section 9.03 hereof, the Trustee, upon the written request signed by the President or a Vice President of the Company, shall consent to the extension or renewal at the same or a lower or a higher rate of interest or dividend of any securities which may then be held by the Trustee in pledge hereunder, and shall consent to the extension or renewal of any mortgages or liens securing such securities; but if the Company shall then be in default hereunder, the Trustee may, subject to the provisions of Article XIV hereof, give such consent without the request of the Company; and, in any case, the Trustee shall, prior to the occurrence of any default, and after default if such default shall have been cured, or shall have been waived as provided in Section 9.03 hereof, do and perform all acts and things which may be requisite and necessary to give effect to any such renewal or extension so consented to, including the delivery and exchange of pledged securities or the 115 presentation of the same for appropriate endorsement; and the Trustee, upon the written request signed by the President or a Vice President of the Company, may, prior to the occurrence of any default, and after default if such default shall have been cured, or shall have been waived as provided in Section 9.03 hereof, consent to the exercise by the Company of any other right, power or remedy, with respect to such securities, to which the Company may be entitled as owner thereof, including the consent to any plan of reorganization or recapitalization and the acceptance of new or different securities thereunder in exchange for the pledged securities and including also the cancellation of any securities or shares of the stock of a corporation which has conveyed its property to the Company and subjected it to the lien hereof, provided that the exercise of such right, power or remedy, as requested by the Company, shall not, in the Opinion of Counsel, be prejudicial to the bonds hereby secured; and the Company covenants that in exercising any such right, power or remedy, if permitted so to do by the Trustee, it will not in any way act prejudicially to the interests or rights of the Trustee or the holders or registered owners of the bonds. SECTION 15.06. Pledged Securities Not Basis of Issuance. Nothing in this Article contained shall authorize the authentication of bonds or the withdrawal of cash in lieu thereof under any provision of this Indenture on account of the pledge hereunder of any securities whatsoever. ARTICLE XVI SUPPLEMENTAL INDENTURES SECTION 16.01. Supplemental Indentures to be Executed for Specified Purposes. The Company and the Trustee, from time to time and at any time, may enter into one or more supplemental indentures hereto, upon receipt by the Trustee of a Resolution authorizing the execution thereof and requesting the Trustee to execute the same, for any one or more of the following purposes: (a) To describe more fully or to amplify or correct the description of any property hereby conveyed or pledged or intended to be conveyed or pledged, or to assign, convey, mortgage, pledge, transfer and set over unto the Trustee, subject to such liens or other encumbrances, if any, as shall be therein specifically described, additional property of the Company, for the equal and proportionate benefit and security, except as otherwise expressly provided herein, of the holders and owners of all bonds at any time issued and Outstanding under this Indenture; (b) To specify definitive limitations on the total authorized amount of any additional series of bonds issued hereunder; 116 (c) To provide additional or other restrictions and limitations upon the issue of any new series of bonds or additional covenants and undertakings of the Company with respect thereto; (d) To set forth the form and substance of any additional bonds, and the terms, provisions and conditions thereof; (e) To provide the terms and conditions of the exchange of bonds of one series for bonds of another series, or of the exchange of bonds of one denomination for bonds of another denomination of the same series; (f) To provide that the principal of the bonds may be converted at the option of the holders into capital stock or other securities of the Company, and to set forth the terms and conditions of such conversion; (g) To provide for a special sinking, purchase, improvement or other analogous fund for the benefit or retirement of the bonds of any or all series to be issued on or subsequent to the date thereof; (h) To evidence the succession of another corporation to the Company, or successive successions, and the assumption by such successor corporation of the covenants and obligations of the Company under this Indenture, and to evidence the appointment of a separate trustee or a co-trustee or the succession of a new trustee to any trustee hereunder; (i) To provide the terms and conditions for the issuance of the bonds of any series in book entry form; (j) To otherwise add to, change, alter, modify, vary or eliminate any of the terms, provisions, restrictions or conditions of this Indenture; provided, however, that any such addition, changes, alterations, modifications, variations or eliminations made in a supplemental indenture pursuant to this clause which would adversely affect or diminish the rights of the holders of any bonds then Outstanding against the Company or its property shall be expressly stated in such supplemental indenture to become effective only with respect to bonds issued on or subsequent to the date of such supplemental indenture; and (k) For any other purpose not inconsistent with the terms of this Indenture and which shall not impair the security of the same, including the purpose of supplying any omission, curing any ambiguity or curing, correcting or supplementing any defective or inconsistent provision contained herein or in any supplemental indenture. 117 Any supplemental indenture authorized by the provisions of this Section may be executed by the Company and the Trustee without the consent of the holders of any of the bonds at the time Outstanding or the publication or mailing of notice, notwithstanding any of the provisions of Section 16.02 hereof. SECTION 16.02. Modification of Indenture with Consent of Bondholders. With the consent of the holders of not less than sixty-six and two-thirds per centum (66-2/3%) in principal amount of the bonds at the time Outstanding or their attorneys-in-fact duly authorized, and, if the rights of the holders of one or more but less than all series of bonds at the time Outstanding are to be adversely affected, then by the affirmative vote of the holders of not less than sixty-six and two-thirds per centum (66-2/3%) in principal amount of the bonds the rights of the holders of which are adversely affected, the Company, when authorized by a Resolution, and the Trustee may from time to time and at any time enter into a supplemental indenture for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or modifying the rights and obligations of the Company and the rights of the holders of any of the bonds; provided, however, that no such supplemental indenture shall (1) extend the maturity of any of the bonds or reduce the rate or extend the time of payment of interest thereon, or reduce the amount of the principal thereof, or reduce any premium payable on the redemption thereof, without the consent of the holder of each bond so affected, or (2) permit the creation of any lien, not otherwise permitted, prior to or on a parity with the lien of this Indenture, without the consent of the holders of all the bonds then Outstanding, or (3) reduce the aforesaid percentage of the principal amount of bonds the holders of which are required to approve any such supplemental indenture, without the consent of the holders of all the bonds then Outstanding, or (4) affect or impair the rights of the holder of any bond contained in the last paragraph of Section 9.12 hereof, without the consent of the holders of all the bonds then Outstanding, or (5) alter or create redemption and/or sinking fund requirements with respect to an Outstanding series of bonds, without the consent of the holder of each bond so affected, or (6) amend Section 4.01B(a) or (b) with respect to Series A without the consent of the holders of 66-2/3% aggregate principal amount of bonds of Series A, or (7) amend Section 4.01B(c) with respect to Series A, without the unanimous consent of the initial beneficial owners of the bonds of Series A who continue to hold such bonds, or (8) permit the deprivation of any non-assenting holder of any bond of a lien upon the Trust Estate for the security of such holder's bond (subject only to Excepted Encumbrances and Prepaid Liens and the liens of the First Mortgage Indenture). For the purposes of this Section, bonds shall be deemed to be affected by a supplemental indenture if such supplemental indenture adversely affects or diminishes the rights of holders thereof against the Company or against its property. 118 Upon the written request signed by the President or a Vice President of the Company, accompanied by a Resolution authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of bondholders as aforesaid (the instrument or instruments evidencing such consent to be dated within one year of such request), the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion but shall not be obligated to enter into such supplemental indenture. It shall not be necessary for the consent of the bondholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Prior to the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Company shall publish a notice, setting forth in general terms the substance of such supplemental indenture, at least once in one Daily Newspaper of general circulation in each city in which the principal of any of the bonds shall be payable, or shall mail such notice, first class, postage prepaid, and registered if the Company so elects, to each holder of bonds at the last address of such holder appearing on the registry books, such publication or mailing, as the case may be, to be made not less than thirty (30) days prior to such execution. Any failure of the Company to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 16.03. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions of this Article, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, duties and obligations under this Indenture of the Company, the Trustee and all holders of bonds Outstanding thereunder shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 16.04. Opinion of Counsel as Evidence of Compliance. The Trustee may receive an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to the provisions of this Article complies with the requirements of this Article. SECTION 16.05. Notations on Bonds; Provision for New Bonds. Bonds authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this 119 Article may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If such supplemental indenture shall so provide, new bonds, so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture, may be prepared by the Company, authenticated by the Trustee and delivered without cost to the holders of bonds then Outstanding, upon surrender of such bonds, in equal aggregate principal amounts. SECTION 16.06. Supplemental Indenture to Conform to Trust Indenture Act of 1939. Any supplemental indenture executed pursuant to the provisions of this Article shall conform with the requirements of the TIA, as then in force. ARTICLE XVII BONDHOLDERS' MEETINGS SECTION 17.01. Meeting Called for Specified Purposes. A meeting of bondholders may be called at any time and from time to time pursuant to the provisions of this Article XVII for any of the following purposes: (1) to give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to consent to the waiving of any default hereunder and its consequences, or to take any other action authorized to be taken by bondholders pursuant to any of the provisions of Article IX; (2) to remove the Trustee and appoint a successor trustee pursuant to the provisions of Article XIV; (3) to consent to the execution of a supplemental indenture pursuant to the provisions of Section 16.02 hereof; or (4) to take any other action authorized to be taken by or on behalf of the holders of any specified aggregate principal amount of bonds under any other provision of this Indenture or under applicable law. SECTION 17.02. Meeting Called by Trustee. The Trustee may at any time call a meeting of bondholders to take any action specified in Section 17.01 hereof, to be held at such time and at such place as the Trustee shall determine. Notice of every meeting of the bondholders, setting forth the time and the place thereof and, in general terms, the business to be submitted, shall be mailed first class, postage prepaid, by the Trustee not less than thirty (30) days before such meeting to each registered holder of bonds at the last address of such holder appearing in the registry books. 120 SECTION 17.03. Meeting Called by Company or Bondholders. In case at any time the Company by written request signed by the President or a Vice President of the Company, or the holders of at least 20% in aggregate principal amount of the bonds then Outstanding, shall have requested the Trustee to call a meeting of bondholders setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 10 days after receipt of such request, then the Company, or the holders of bonds in the amount above specified, may determine the time and the place for such meeting and may call such meeting to take any action authorized in Section 17.01 hereof, by giving notice thereof as provided in Section 17.02 hereof. SECTION 17.04. Bondholders Entitled to Vote. To be entitled to vote at any meeting of bondholders a person shall (a) be a holder of one or more Outstanding bonds; or (b) be a person duly appointed by an instrument in writing as proxy for a holder of an Outstanding bond; and (c) be the holder of a bond which is one of a series directly affected by the business submitted to the meeting. Officers and representatives of the Company and its counsel, and representatives of the Trustee and its counsel may attend, and speak at, any meeting of bondholders but shall not be entitled to vote thereat. Attendance by bondholders may be in person or by proxy and, unless specifically prohibited by law, any such proxy shall remain in effect unless specifically revoked and shall be binding on any future holder of the bonds represented by such proxy, unless specifically revoked by any such future holder before being voted. SECTION 17.05. Regulations for Meeting. Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of bondholders, in regard to proof of the holding of bonds and of the appointment of proxies, and in regard to the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit. The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by bondholders as provided in Section 17.03 hereof, in which case the Company or the bondholders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the holders of a majority in principal amount of the bonds represented at the meeting and entitled to vote. Subject to the provisions of Section 17.04 hereof, at any meeting each bondholder or proxy shall be entitled to one vote for each $1,000 principal amount of bonds, provided, however, that no vote shall be cast or counted at any meeting in respect of any bonds challenged as not Outstanding and ruled by the chairman of 121 the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote other than by virtue of bonds held by him or instruments in writing as aforesaid duly designating him as the person to vote on behalf of other bondholders. At any meeting of bondholders, the presence of persons holding or representing bonds in an aggregate principal amount sufficient to take action upon the business for the transaction of which such meeting was called shall constitute a quorum. Any meeting of bondholders, duly called pursuant to the provisions of Section 17.02 or 17.03 hereof, may be adjourned from time to time by vote of persons representing a majority in aggregate principal amount of the bonds represented at the meeting and entitled to vote, whether or not a quorum shall be present, and the meeting may be held as so adjourned without further notice. SECTION 17.06. Bondholders' Vote by Written Ballot. The vote upon any resolution submitted to any meeting of bondholders shall be by written ballots on which shall be subscribed the signatures of the holders of bonds or of their representatives by proxy and the series and identifying number or numbers of the bonds held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes, who shall count all votes cast at a meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record, at least in duplicate, of the proceedings of each meeting of bondholders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts, setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 17.02 hereof. Each copy of the record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be delivered to the Company and another to the Trustee, which latter copy shall be preserved by the Trustee and shall have attached thereto the ballots voted at the meeting. Any copy of the record so signed and verified shall be conclusive evidence of the matters therein stated. SECTION 17.07. Nothing Authorizes Hindrance or Delay of Rights of Trustee or Bondholders. Nothing contained in this Article XVII shall be deemed or construed to authorize or permit, by reason of any call of a meeting of bondholders or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to bondholders under any of the provisions of this Indenture or of the bonds. 122 ARTICLE XVIII MISCELLANEOUS PROVISIONS SECTION 18.01. Covenants for Sole Benefit of Parties and Bondholders; Severability. All the covenants, stipulations and agreements contained in this Indenture are and shall be for the sole and exclusive benefit of the parties hereto, their successors and assigns, and of the holders of the bonds hereby secured. If any provision of this Indenture, or the application of any provision to any person or circumstance, shall be held invalid or unenforceable, the remainder of this Indenture, or the application of such provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby. SECTION 18.02. Court may Require Bond for Costs, Under Certain Conditions. All parties to this Indenture agree, and each holder or owner of any bond by his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as such Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any bondholder, or group of bondholders, holding in the aggregate more than ten per centum (10%) in principal amount of the bonds Outstanding, or to any suit instituted by any bondholder for the enforcement of the payment of the principal of or interest on any bond, on or after the respective due dates expressed in such bond. SECTION 18.03. Provisions of Trust Indenture Act of 1939 to be Controlling. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed upon any person by Sections 310 to 317, inclusive, of the TIA, such imposed duties shall control. SECTION 18.04. Notice to the Company. Any notice to the Company under any provision of this Indenture shall be sufficiently given if served personally upon any officer of the Company or deposited in the mails addressed to the Company at its office at 303 North Oregon Street, El Paso, Texas 79901, or at such other address as may be designated for that purpose in a writing delivered to the Trustee by the Company. SECTION 18.05. Reference to Parties Includes Successors. Subject to the provisions of Article XIII hereof, whenever in this Indenture any of the parties hereto is referred to, such reference shall be deemed to include the successors and 123 assigns of such party, and all of the covenants, promises and agreements in this Indenture contained by or on behalf of the Company, or by or on behalf of the Trustee, shall bind and inure to the benefit of the respective successors and assigns of such parties, whether so expressed or not; but the provisions of this paragraph shall not be deemed to subject to the lien hereof, except to the extent in Article XIII hereof provided, the property of any successor corporation not acquired from the Company and not then subject to the lien hereof, unless it shall have expressly agreed that such shall be the case, in the manner provided in Article XIII hereof. SECTION 18.06. Headings Inserted for Convenience Only. The headings of the different Articles or Sections of this Indenture are inserted for convenience of reference, and are not to be taken to be any part of these provisions, or to control or affect the meaning, construction or effect of the same. SECTION 18.07. Cancellation and Cremation of Bonds. Whenever in this Indenture it is provided that the Trustee shall cancel any bonds, the Trustee may cancel and cremate such bonds and deliver a certificate of cremation thereof to the Company. SECTION 18.08. Execution in Counterparts. This Indenture may be simultaneously executed in any number of counterparts, and all said counterparts, executed and delivered each as an original, shall constitute but one and the same instrument. SECTION 18.09. Deposit of Securities in Lieu of Cash. Wherever in this Indenture the Company is permitted or required to deposit cash hereunder with the Trustee, the Company may deposit in lieu of cash an amount of U.S. Government Obligations of at least an equal face amount and having a then market value at least equal to the amount of cash in lieu of which such obligations are deposited; provided, however, that the Company shall not be entitled, less than ten days prior to or on any interest payment date, redemption date or maturity date of any bonds outstanding hereunder, to deposit any such obligations in lieu of the cash due to be paid on such date to the holders of bonds secured hereby and provided further that any deposit of Funds pursuant to Article XI be subject solely to said Article. The Company may at any time withdraw any cash on deposit hereunder with the Trustee by depositing hereunder with the Trustee in substitution therefor an amount of U.S. Government Obligations of at least an equal face amount and having a then market value at least equal to the amount of cash so withdrawn, provided, however, that the Company shall not be entitled, less than ten days prior to or on any interest payment date, redemption date or maturity date of any bonds outstanding hereunder or any time subsequent to such date, to withdraw any cash deposited hereunder for payment on such date to the holders of bonds secured hereby. Any obligations so deposited shall be held by the Trustee in all respects as would be held the cash for which such obligations are so substituted. Any 124 obligations so deposited shall be sold by the Trustee upon the written request signed by the President or a Vice President of the Company, at such prices as shall be fixed by the Company and approved by the Trustee, provided, however, that the Trustee, without any such request from the Company, shall be entitled, in its sole discretion and at such prices as may be approved by it, to sell at public or private sale any obligations so held by it in lieu of any cash which shall be payable, not more than ten days after the date of such sale, on an interest payment date, redemption date or maturity date of any bonds secured hereby. The Trustee shall not be liable for any loss or other expense incurred in connection with such sale. If the proceeds from any such sale shall be less than the amount of cash in lieu or for the withdrawal of which the obligations sold were deposited, or if the market value of any obligations so deposited hereunder shall, in the judgment of the Trustee, at any time be less than the amount of cash in lieu or for the withdrawal of which they were deposited, in either event the Company shall deposit hereunder with the Trustee cash sufficient to make up the deficiency; but the cash deposited to make up the deficiency in the market value of any obligations may at any time thereafter be withdrawn by the Company if at the time of withdrawal the market value of such obligations shall be not less than the amount of cash in lieu or for the withdrawal of which they were deposited. Except as otherwise provided in Article XI hereof, the Trustee shall collect from time to time all interest upon the deposited obligations as such interest matures and, so long as the Company shall not be in default hereunder, all such interest shall be paid by the Trustee to the Company as and when received. The proceeds of the sale of deposited obligations shall be paid out and applied by the Trustee in like manner and for like purposes as is provided in this Indenture in respect of the cash in lieu or for the withdrawal of which such obligations were deposited. The deposited obligations while held by the Trustee, and the proceeds of the sale thereof, until such proceeds are so paid out and applied, shall be held in accordance with the terms and provisions of this Indenture applicable to the cash in lieu of or in substitution for which such obligations were deposited. Notwithstanding the foregoing, the sufficiency of the amount of U.S. Government Obligations deposited by the Company with the Trustee pursuant to Article XI ereof shall be determined as set forth in said Article. SECTION 18.10. Termination. The Company or the Trustee may terminate this Indenture at any time on or after the date of maturity of that series of bonds issued or to be issued hereunder and secured by this Indenture which, of all the series of bonds issued hereunder, has the latest date of maturity; provided, however, that nothing in this Section shall affect or limit any of the rights or remedies of the Trustee or the bondholders prescribed in Article IX hereof or the obligations of the Company under Section 14.10. 125 IN WITNESS WHEREOF, said EL PASO ELECTRIC COMPANY has caused this Indenture to be executed in its corporate name by its President or one of its Vice-Presidents and its corporate seal to be hereunto affixed and to be attested by its Secretary or one of its Assistant Secretaries, and said IBJ SCHRODER BANK & TRUST COMPANY, to evidence its acceptance of the trust hereby created, has caused this Indenture to be executed in its corporate name by one of its Vice-Presidents and its corporate seal to be hereunto affixed and to be attested by one of its Assistant Secretaries, in several counterparts, all as of the day and year first above written. EL PASO ELECTRIC COMPANY By__________________________ (SEAL) Attest: __________________________ [Asst] Secretary Signed, sealed, acknowledged and delivered on behalf of El Paso Electric Company, in the presence of: _________________________ _________________________ 126 IBJ SCHRODER BANK & TRUST COMPANY, as Trustee and on behalf of the bondholders By___________________________ (SEAL) Attest: ___________________________ [Asst] Secretary Signed, sealed, acknowledged and delivered on behalf of IBJ Schroder Bank & Trust Company, in the presence of: _________________________ _________________________ 127 [for Texas purposes] THE STATE OF ________ COUNTY OF ______________ Before me personally appeared _____________________, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed said instrument in the capacity herein stated for the purposes and consideration therein expressed. (SEAL) _________________________ Notary Public in and for the State of ________ My commission expires: _________________________ 128 [for Texas purposes] THE STATE OF ________ COUNTY OF ______________ Before me personally appeared _____________________, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed said instrument in the capacity herein stated for the purposes and consideration therein expressed. (SEAL) _________________________ Notary Public in and for the State of ________ My commission expires: _________________________ 129 [for Arizona purposes] THE STATE OF ________ COUNTY OF ______________ Before me personally appeared ____________________ known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed said instrument in the capacity therein stated for the purposes and consideration therein expressed. (SEAL) _________________________ Notary Public in and for the State of ________ My commission expires: _________________________ 130 [for Arizona purposes] THE STATE OF ________ COUNTY OF ______________ Before me personally appeared ____________________ known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed said instrument in the capacity therein stated for the purposes and consideration therein expressed. (SEAL) _________________________ Notary Public in and for the State of ________ My commission expires: _________________________ 131 [For New Mexico purposes] THE STATE OF __________ COUNTY OF ____________ This instrument was acknowledged before me on this ___ day of ________, 199_, by _________________, as _____________ of El Paso Electric Company, a Texas corporation, on behalf of the corporation. (SEAL) ______________________________ Notary Public in and for the State of _________________ My commission expires: _______________________________ 132 [For New Mexico purposes] THE STATE OF __________ COUNTY OF ____________ This instrument was acknowledged before me on this ___ day of ________, 199_, by _________________, as _____________ of IBJ Schroder Bank & Trust Company, trustee under the foregoing instrument. (SEAL) ______________________________ Notary Public in and for the State of _________________ My commission expires: _______________________________ 133 Appendix A-1 (Form of face of bond of Series A) No. $ EL PASO ELECTRIC COMPANY Second Mortgage Bond, Series A __% Due ______ __, ____ El Paso Electric Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to _______________ or registered assigns, the principal sum of $____ Dollars on _______, ____, and to pay to the registered holder hereof interest on said sum from the date hereof at the rate of ____ per centum per annum, payable half- yearly on the ______ day of _______ and the _______ day of _______ in each year, commencing __________, 1994, until said principal sum is paid. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. The provisions of this bond are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been duly authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. 134 IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice-Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By______________________________ [Title] ATTEST: ________________________ [Asst.] Secretary 135 (Form of reverse side of bond of Series A) EL PASO ELECTRIC COMPANY SECOND MORTGAGE BOND, SERIES A ___% DUE ______ __, ____ The interest payable on this bond on any interest payment date will, subject to certain exceptions provided in the Indenture hereinafter mentioned, be paid to the person in whose name this bond is registered at the close of business on the record date, which shall be the ___________ or __________, as the case may be, next preceding such interest payment date, or, if such date shall be a legal holiday or a day on which banking institutions in New York, New York are authorized or required to close, the next preceding day which shall not be a legal holiday or a day on which such institutions are so authorized or required to close. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to IBJ Schroder Bank & Trust Company (herein sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (herein referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. The bonds of Series A, of which this bond is one, are not redeemable prior to __________, 1999. On or after that date, at the option of the Company and upon the notice and in the manner and with the effect provided in the Indenture, bonds of Series A may be redeemed by or on behalf of the Company, as a whole at any time, or in part from time to time, at the applicable general redemption price, expressed as a percentage of the principal amount of the bonds, stated in the following table under "General Redemption Price," together with accrued interest on such principal amount to the date fixed for redemption: 136 If redeemed If redeemed during the during the 12 months General 12 months General beginning Redemption beginning Redemption _______, 1999 Price* _______, 1999 Price* [Table to come based on Schedule B to the Plan] __________________ * Stated as a percentage of principal amount of the bonds. In addition to the foregoing redemption provisions, in certain circumstances specified in the Indenture, the Company may offer the initial beneficial owner hereof (if such owner continues to hold this bond) the election to have this bond redeemed by the Company at a redemption price equal to the principal amount of this bond, together with accrued interest to the date of redemption. In case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is transferable or exchangeable by the holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in New York, New York, but only in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to 137 the transferee, or the registered holder, as the case may be, in exchange herefor. The Company shall not register, exchange or transfer any bonds of this series during the period of ten days next preceding any designation of bonds of said Series to be redeemed, if applicable, and, as to any bonds selected for redemption, from and after the date of such selection. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. The bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. Trustee's Certificate of Authentication This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. IBJ SCHRODER BANK & TRUST COMPANY, as Trustee By______________________________ Authorized Signature 138 Appendix A-2 (Form of face of bond of Series B) No. $ EL PASO ELECTRIC COMPANY Second Mortgage Bond, Series B __% Due ______ __, ____ Reorganized El Paso Electric Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to _______________ or registered assigns, the principal sum of $____ Dollars on _______, ____, and to pay to the registered holder hereof interest on said sum from the date hereof at the rate of ____ per centum per annum, payable half-yearly on the ______ day of _______ and the _______ day of _______ in each year, commencing __________, 1994, until said principal sum is paid. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. The provisions of this bond are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been duly authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. 139 IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice-Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By______________________________ [Title] ATTEST: ________________________ [Asst.] Secretary 140 (Form of reverse side of bond of Series B) EL PASO ELECTRIC COMPANY SECOND MORTGAGE BOND, SERIES B ___% DUE ______ __, ____ The interest payable on this bond on any interest payment date will, subject to certain exceptions provided in the Indenture hereinafter mentioned, be paid to the person in whose name this bond is registered at the close of business on the record date, which shall be the ___________ or __________, as the case may be, next preceding such interest payment date, or, if such date shall be a legal holiday or a day on which banking institutions in New York, New York are authorized or required to close, the next preceding day which shall not be a legal holiday or a day on which such institutions are so authorized or required to close. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to IBJ Schroder Bank & Trust Company (herein sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (herein referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. On or after ________, 1994, at the option of the Company and upon the notice and in the manner and with the effect provided in the Indenture, bonds of Series B, of which this bond is one, may be redeemed by or on behalf of the Company, as a whole at any time, or in part from time to time, at the applicable general redemption price, expressed as a percentage of the principal amount of the bonds, stated in the following table under "General Redemption Price," together with accrued interest on such principal amount to the date fixed for redemption: 141 If redeemed If redeemed during the during the 12 months General 12 months General beginning Redemption beginning Redemption _______, 1994 Price* _______, 1994 Price* [table to come based on page 36 and Schedule C to the Plan] __________________ * Stated as a percentage of principal amount of the bonds. In case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is transferable or exchangeable by the holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in New York, New York, but only in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in exchange herefor. The Company shall not register, exchange or transfer any bonds of this series during the period of ten days next preceding any designation of bonds of said Series to be redeemed, if applicable, and, as to any bonds selected for redemption, from and after the date of such selection. The 142 Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. The bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. Trustee's Certificate of Authentication This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. IBJ SCHRODER BANK & TRUST COMPANY, as Trustee By______________________________ Authorized Signature 143 Appendix A-3 (Form of face of bond of Series D) No. $ EL PASO ELECTRIC COMPANY Second Mortgage Bond, Series D Floating Rate Due July 1, 2014 El Paso Electric Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to _______________________________, as trustee under the hereinafter mentioned Resolution (said trustee and any successor trustee under the Resolution being hereinafter called the "Pollution Control Trustee") or registered assigns, the principal sum of $____ Dollars on July 1, 2014, and to pay to the registered holder hereof interest on said sum as described below. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to IBJ Schroder Bank & Trust Company (hereinafter sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (hereinafter referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. The bonds of this Series have been issued to the Pollution Control Trustee to secure the obligations of the Company under a Loan Agreement (the "Loan Agreement"), dated as of December 1, 1983, between the Company and Maricopa County, Arizona Pollution Control Corporation (the "Issuer"), pursuant to 144 which the Company is obligated for the payment of the principal of, premium, if any, and interest due on the Annual Tender Pollution Control Revenue Bonds, 1983 Series A (El Paso Electric Company Palo Verde Project) (the "Pollution Control Bonds") issued by the Issuer pursuant to a Resolution adopted by the Issuer on December 16, 1983 (hereinafter called the "Resolution"). Except as hereinafter provided, interest on this bond is payable at the same rates and on the same dates as interest is payable on the Pollution Control Bonds pursuant to the terms thereof. The obligation of the Company to make payments with respect to the principal and interest on the bonds of this Series shall be fully or partially, as the case may be, satisfied and discharged to the extent that, at any time that any such payment shall be due, the Company shall have paid fully or partially the then due principal of and interest on the Pollution Control Bonds in accordance with the Resolution. Upon surrender for cancellation, at any time or from time to time, of bonds of this Series by the Pollution Control Trustee to the Trustee, the bonds surrendered shall be deemed fully paid and the obligations of the Company thereunder shall be terminated, and such bonds shall be cancelled. In the manner provided in the Indenture, the bonds of this Series shall be redeemed in whole by payment of the principal amount thereof plus accrued interest thereon to the redemption date, and plus the amount of any premiums due in respect of any of the Pollution Control Bonds, upon receipt by the Trustee and the Company of a written demand from the Pollution Control Trustee. Such demand shall also state that the principal amount of the Pollution Control Bonds then outstanding under the Resolution has been declared immediately due and payable pursuant to the provisions of the Loan Agreement, specifying the date from which unpaid interest on such Pollution Control Bonds has then accrued, and stating that such declaration of maturity has not been rescinded. The bonds of this Series shall be redeemed on or before the 180th day following receipt of the written demand as aforesaid as specified in a notice of redemption given pursuant to the Indenture, all other notice being waived by the Pollution Control Trustee. Such redemption shall be rescinded and become null and void for all purposes of the Indenture upon rescission of the aforesaid declaration of maturity under the Loan Agreement no later than the Business Day prior to the date fixed for redemption, and thereupon no redemption of the bonds of this Series and no payments in respect thereof shall be effected or required. 145 Notwithstanding the provisions of the previous paragraph, in case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is nontransferable except to effect transfer to any successor to the Pollution Control Trustee, but is exchangeable by the registered holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in New York, New York, any such permitted transfer or exchange to be made in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in exchange herefor. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. The bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been duly authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. 146 IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice-Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By______________________________ [Title] ATTEST: ________________________ [Asst.] Secretary Trustee's Certificate of Authentication This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. IBJ SCHRODER BANK & TRUST COMPANY, as Trustee By______________________________ Authorized Signature 147 Appendix A-4 (Form of face of bond of Series E) No. $ EL PASO ELECTRIC COMPANY Second Mortgage Bond, Series E Floating Rate Due December 1, 2014 El Paso Electric Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to MBank El Paso, National Association, as trustee under the hereinafter mentioned Trust Indenture (said trustee and any successor trustee under the Trust Indenture being hereinafter called the "Pollution Control Trustee") or registered assigns, the principal sum of $____ Dollars on December 1, 2014, and to pay to the registered holder hereof interest on said sum as described below. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to IBJ Schroder Bank & Trust Company (hereinafter sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (hereinafter referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. The bonds of this Series have been issued to the Pollution Control Trustee to secure the obligations of the Company under a Loan Agreement (the "Loan Agreement"), dated as of December 1, 1984, between the Company and Maricopa County, Arizona Pollution Control Corporation (the "Issuer"), pursuant to which the Company is obligated for the payment of the principal of, premium, if any, and interest due on the Adjustable Tender 148 Pollution Control Revenue Bonds, 1984 Series A (El Paso Electric Company Palo Verde Project) (the "Pollution Control Bonds") issued by the Issuer pursuant to a Trust Indenture dated as of December 1, 1984 (hereinafter called the "Trust Indenture") between the Issuer and the Pollution Control Trustee. Except as hereinafter provided, interest on this bond is payable at the same rates and on the same dates as interest is payable on the Pollution Control Bonds pursuant to the terms of the Trust Indenture. The obligation of the Company to make payments with respect to the principal and interest on the bonds of this Series shall be fully or partially, as the case may be, satisfied and discharged to the extent that, at any time that any such payment shall be due, the Company shall have paid fully or partially the then due principal of and interest on the Pollution Control Bonds in accordance with the Trust Indenture. Upon surrender for cancellation, at any time or from time to time, of bonds of this Series by the Pollution Control Trustee to the Trustee, the bonds surrendered shall be deemed fully paid and the obligations of the Company thereunder shall be terminated, and such bonds shall be cancelled. In the manner provided in the Indenture, the bonds of this Series shall be redeemed in whole by payment of the principal amount thereof plus accrued interest thereon to the redemption date, upon receipt by the Trustee and the Company of a written demand from the Pollution Control Trustee. Such demand shall also state that the principal amount of the Pollution Control Bonds then outstanding under the Trust Indenture has been declared immediately due and payable pursuant to the provisions of the Loan Agreement, specifying the date from which unpaid interest on such Pollution Control Bonds has then accrued, and stating that such declaration of maturity has not been rescinded. The bonds of this Series shall be redeemed on or before the 180th day following receipt of the written demand as aforesaid as specified in a notice of redemption given pursuant to the Indenture, all other notice being waived by the Pollution Control Trustee. Such redemption shall be rescinded and become null and void for all purposes of the Indenture upon rescission of the aforesaid declaration of maturity under the Loan Agreement no later than the Business Day prior to the date fixed for redemption, and thereupon no redemption of the bonds of this Series and no payments in respect thereof shall be effected or required. 149 Notwithstanding the provisions of the previous paragraph, in case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is nontransferable except to effect transfer to any successor to the Pollution Control Trustee, but is exchangeable by the registered holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in New York, New York, any such permitted transfer or exchange to be made in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in exchange herefor. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. The bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been duly authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. 150 IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice-Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By______________________________ [Title] ATTEST: ________________________ [Asst.] Secretary Trustee's Certificate of Authentication This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. IBJ SCHRODER BANK & TRUST COMPANY, as Trustee By______________________________ Authorized Signature 151 Appendix A-5 (Form of face of bond of Series F) No. $ EL PASO ELECTRIC COMPANY Second Mortgage Bond, Series F Floating Rate Due August 1, 2015 El Paso Electric Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to Continental Bank, National Association, as trustee under the hereinafter mentioned Trust Indenture (said trustee and any successor trustee under the Trust Indenture being hereinafter called the "Pollution Control Trustee") or registered assigns, the principal sum of $____ Dollars on August 1, 2015, and to pay to the registered holder hereof interest on said sum as described below. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to IBJ Schroder Bank & Trust Company (hereinafter sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (hereinafter referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. The bonds of this Series have been issued to the Pollution Control Trustee to secure the obligations of the Company under a Loan Agreement (the "Loan Agreement"), dated as of August 1, 1985, between the Company and Maricopa County, Arizona Pollution Control Corporation (the "Issuer"), pursuant to which the Company is obligated for the payment of the principal of, premium, if any, and interest due on the Pollution Control 152 Refunding Revenue Bonds, 1985 Series A (El Paso Electric Company Palo Verde Project) (the "Pollution Control Bonds") issued by the Issuer pursuant to a Trust Indenture dated as of August 1, 1985 (hereinafter called the "Trust Indenture") between the Issuer and the predecessor to the Pollution Control Trustee. Except as hereinafter provided, interest on this bond is payable at the same rates and on the same dates as interest is payable on the Pollution Control Bonds pursuant to the terms of the Trust Indenture. The obligation of the Company to make payments with respect to the principal and interest on the bonds of this Series shall be fully or partially, as the case may be, satisfied and discharged to the extent that, at any time that any such payment shall be due, the Company shall have paid fully or partially the then due principal of and interest on the Pollution Control Bonds in accordance with the Trust Indenture. Upon surrender for cancellation, at any time or from time to time, of bonds of this Series by the Pollution Control Trustee to the Trustee, the bonds surrendered shall be deemed fully paid and the obligations of the Company thereunder shall be terminated, and such bonds shall be cancelled. In the manner provided in the Indenture, the bonds of this Series shall be redeemed in whole by payment of the principal amount thereof plus accrued interest thereon to the redemption date, upon receipt by the Trustee and the Company of a written demand from the Pollution Control Trustee. Such demand shall also state that the principal amount of the Pollution Control Bonds then outstanding under the Trust Indenture has been declared immediately due and payable pursuant to the provisions of the Loan Agreement, specifying the date from which unpaid interest on such Pollution Control Bonds has then accrued, and stating that such declaration of maturity has not been rescinded. The bonds of this Series shall be redeemed on or before the 180th day following receipt of the written demand as aforesaid as specified in a notice of redemption given pursuant to the Indenture, all other notice being waived by the Pollution Control Trustee. Such redemption shall be rescinded and become null and void for all purposes of the Indenture upon rescission of the aforesaid declaration of maturity under the Loan Agreement no later than the Business Day prior to the date fixed for redemption, and thereupon no redemption of the bonds of this Series and no payments in respect thereof shall be effected or required. 153 Notwithstanding the provisions of the previous paragraph, in case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is nontransferable except to effect transfer to any successor to the Pollution Control Trustee, but is exchangeable by the registered holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in New York, New York, any such permitted transfer or exchange to be made in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in exchange herefor. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. The bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been duly authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. 154 IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice-Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By______________________________ [Title] ATTEST: ________________________ [Asst.] Secretary Trustee's Certificate of Authentication This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. IBJ SCHRODER BANK & TRUST COMPANY, as Trustee By______________________________ Authorized Signature 155 Appendix A-6 (Form of face of bond of Series X) No. $ EL PASO ELECTRIC COMPANY Second Mortgage Bond, Series X Floating Rate Due ______ __, _____ El Paso Electric Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to New York, New York, as Agent under the Term Loan Agreement hereinafter described, or registered assigns, the principal sum of $____ Dollars on the date set forth on the Notes referred to below and to pay to the registered holder hereof interest on said sum as described below. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to IBJ Schroder Bank & Trust Company (hereinafter sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (hereinafter referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. The bonds of this Series have been issued to ____________, as Agent for the creditors (the "Creditors") named in the Term Loan Agreement dated as of ____________, 1994 (the "Term Loan Agreement"), to partially secure the payment of the principal of and interest due on the Class 3A Secured Notes (the "Notes") executed by the Company and payable to the Creditors, or order, in the aggregate principal amount of $________ in accordance with the terms set forth in the Term Loan Agreement. 156 Except as hereinafter provided, interest on this bond accrues and is payable at the same rates (determined on a weighted average basis if more than one rate is in effect with respect to the Notes) and on the same dates as interest is payable on the Notes under the terms of the Term Loan Agreement, which provides for floating rate loans (all as provided for in the Term Loan Agreement). The obligation of the Company to make payments with respect to the principal and interest on the bonds of this Series shall be fully or partially, as the case may be, satisfied and discharged to the extent that, at any time that any such payment shall be due, the Company shall have paid fully or partially the then due principal of and interest on the Notes which the bonds of this Series secure; provided that any payments of principal of or interest on any of the Notes will be deemed to have been applied pro rata among all the Notes. Upon surrender for cancellation, at any time or from time to time, of bonds of this Series by the Agent to the Trustee, the bonds surrendered shall be deemed fully paid and the obligations of the Company thereunder shall be terminated, and such bonds shall be cancelled. In the manner provided in the Indenture, the bonds of this Series shall be redeemed in whole by payment of the principal amount thereof plus accrued interest thereon to the redemption date, upon receipt by the Trustee and the Company of a written demand from the Agent. Such demand shall also state that the principal amount of the Notes which the bonds of this Series secure then outstanding under the Term Loan Agreement has been declared immediately due and payable pursuant to the provisions of the Term Loan Agreement, specifying the date from which unpaid interest on such Notes has then accrued, and stating that such declaration of maturity has not been rescinded. The bonds of this Series shall be redeemed on the fifth business day following receipt of the written demand as aforesaid. Upon the occurrence of certain Events of Default under the Term Loan Agreement, the bonds of this Series shall be redeemed on the business day following receipt by the Trustee of notice from the Agent of such Event of Default; the Agent shall give notice to the Trustee of such Events of Default and of the declaration of maturity as a consequence thereof but failure to give such notice shall not affect the rights of the Agent. Such redemption shall be rescinded and become null and void for all purposes of the Indenture upon rescission in writing of the aforesaid declaration of maturity under the Term Loan Agreement received by the Trustee no later than the Business Day prior to the date fixed for 157 redemption, and thereupon no redemption of the bonds of this Series and no payments in respect thereof shall be effected or required. Notwithstanding the provisions of the previous paragraph, in case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is nontransferable except to effect transfer to any successor to the Agent under the Term Loan Agreement, but is exchangeable by the registered holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in New York, New York, any such permitted transfer or exchange to be made in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in exchange herefor. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. The bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been duly authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. 158 IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice-Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By______________________________ [Title] ATTEST: ________________________ [Asst.] Secretary Trustee's Certificate of Authentication This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. IBJ SCHRODER BANK & TRUST COMPANY, as Trustee By______________________________ Authorized Signature 159 Appendix A-7 (Form of face of bond of Series Y-1) No. $ EL PASO ELECTRIC COMPANY Second Mortgage Bond, Series Y-1 Floating Rate Due ______ __, ____ El Paso Electric Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to Citibank, N.A., or registered assigns, the principal sum of $____ Dollars on the dates set forth in the Notes referred to below and to pay to the registered holder hereof interest on said sum as described below. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to IBJ Schroder Bank & Trust Company (hereinafter sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (hereinafter referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. The bonds of this Series have been issued to Citibank, N.A., as the institution named in the Term Loan Agreement dated as of __________________, 1994 (the "Term Loan Agreement"), to secure the payment of the principal of and interest due on $___________ of Class 5A Secured Notes due _________, ____ (the "Note"), executed by the Company and payable to such institution, or order, in the principal amount set forth in the Term Loan Agreement. 160 Except as hereinafter provided, interest on this bond accrues and is payable at the same rates (determined on a weighted average basis if more than one rate is in effect with respect to the Note) and on the same dates as interest is payable on the Note under the terms of the Term Loan Agreement, which provides for floating rate loans (all as provided for in the Term Loan Agreement). The obligation of the Company to make payments with respect to the principal and interest on the bonds of this Series shall be fully or partially, as the case may be, satisfied and discharged to the extent that, at any time that any such payment shall be due, the Company shall have paid fully or partially the then due principal of and interest on the Note which the bonds of this Series secure. Upon surrender for cancellation, at any time or from time to time, of bonds of this Series by the holder hereof to the Trustee, the bonds surrendered shall be deemed fully paid and the obligations of the Company thereunder shall be terminated, and such bonds shall be cancelled. In the manner provided in the Indenture, the bonds of this Series shall be redeemed in whole by payment of the principal amount thereof plus accrued interest thereon to the redemption date, upon receipt by the Trustee and the Company of a written demand from the holder hereof. Such demand shall also state that the principal amount of the Note which the bonds of this Series secure then outstanding under the Term Loan Agreement has been declared immediately due and payable pursuant to the provisions of the Term Loan Agreement, specifying the date from which unpaid interest on such Note has then accrued, and stating that such declaration of maturity has not been rescinded. The bonds of this Series shall be redeemed on the fifth business day following receipt of the written demand as aforesaid. Upon the occurrence of certain Events of Default under the Term Loan Agreement, the bonds of this Series shall be redeemed on the business day following receipt by the Trustee of notice from the holder hereof of such Event of Default; the holder hereof shall give notice to the Trustee of such Events of Default and of the declaration of maturity as a consequence thereof but failure to give such notice shall not affect the rights of the holder hereof. Such redemption shall be rescinded and become null and void for all purposes of the Indenture upon rescission in writing of the aforesaid declaration of maturity under the Term Loan Agreement received by the Trustee no later than the Business Day prior to the date fixed for redemption, and thereupon no redemption of the bonds of this Series and no payments in respect thereof shall be effected or required. 161 Notwithstanding the provisions of the previous paragraph, in case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is nontransferable except to effect transfer to any successors or assigns of the holder hereof under the Term Loan Agreement, but is exchangeable by the registered holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in New York, New York, any such permitted transfer or exchange to be made in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in exchange herefor. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. The bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been duly authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. 162 IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice-Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By______________________________ [Title] ATTEST: ________________________ [Asst.] Secretary Trustee's Certificate of Authentication This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. IBJ SCHRODER BANK & TRUST COMPANY, as Trustee By______________________________ Authorized Signature 163 Appendix A-8 (Form of face of bond of Series Y-2) No. $ EL PASO ELECTRIC COMPANY Second Mortgage Bond, Series Y-2 Floating Rate Due ______ __, ____ El Paso Electric Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to Credit Suisse, or registered assigns, the principal sum of $____ Dollars on the dates set forth in the Notes referred to below and to pay to the registered holder hereof interest on said sum as described below. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to IBJ Schroder Bank & Trust Company (hereinafter sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (hereinafter referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. The bonds of this Series have been issued to Credit Suisse, as the institution named in the Term Loan Agreement dated as of __________________, 1994 (the "Term Loan Agreement"), to secure the payment of the principal of and interest due on $___________ of Class 5B Secured Notes due _________, ____ (the "Note"), executed by the Company and payable to such institution, or order, in the principal amount set forth in the Term Loan Agreement. 164 Except as hereinafter provided, interest on this bond accrues and is payable at the same rates (determined on a weighted average basis if more than one rate is in effect with respect to the Note) and on the same dates as interest is payable on the Note under the terms of the Term Loan Agreement, which provides for floating rate loans (all as provided for in the Term Loan Agreement). The obligation of the Company to make payments with respect to the principal and interest on the bonds of this Series shall be fully or partially, as the case may be, satisfied and discharged to the extent that, at any time that any such payment shall be due, the Company shall have paid fully or partially the then due principal of and interest on the Note which the bonds of this Series secure. Upon surrender for cancellation, at any time or from time to time, of bonds of this Series by the holder hereof to the Trustee, the bonds surrendered shall be deemed fully paid and the obligations of the Company thereunder shall be terminated, and such bonds shall be cancelled. In the manner provided in the Indenture, the bonds of this Series shall be redeemed in whole by payment of the principal amount thereof plus accrued interest thereon to the redemption date, upon receipt by the Trustee and the Company of a written demand from the holder hereof. Such demand shall also state that the principal amount of the Note which the bonds of this Series secure then outstanding under the Term Loan Agreement has been declared immediately due and payable pursuant to the provisions of the Term Loan Agreement, specifying the date from which unpaid interest on such Note has then accrued, and stating that such declaration of maturity has not been rescinded. The bonds of this Series shall be redeemed on the fifth business day following receipt of the written demand as aforesaid. Upon the occurrence of certain Events of Default under the Term Loan Agreement, the bonds of this Series shall be redeemed on the business day following receipt by the Trustee of notice from the holder hereof of such Event of Default; the holder hereof shall give notice to the Trustee of such Events of Default and of the declaration of maturity as a consequence thereof but failure to give such notice shall not affect the rights of the holder hereof. Such redemption shall be rescinded and become null and void for all purposes of the Indenture upon rescission in writing of the aforesaid declaration of maturity under the Term Loan Agreement received by the Trustee no later than the Business Day prior to the date fixed for redemption, and thereupon no redemption of the bonds of this Series and no payments in respect thereof shall be effected or required. 165 Notwithstanding the provisions of the previous paragraph, in case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is nontransferable except to effect transfer to any successors or assigns of the holder hereof under the Term Loan Agreement, but is exchangeable by the registered holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in New York, New York, any such permitted transfer or exchange to be made in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in exchange herefor. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. The bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been duly authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. 166 IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice-Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By______________________________ [Title] ATTEST: ________________________ [Asst.] Secretary Trustee's Certificate of Authentication This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. IBJ SCHRODER BANK & TRUST COMPANY, as Trustee By______________________________ Authorized Signature 167 Appendix A-9 (Form of face of bond of Series Y-3) No. $ EL PASO ELECTRIC COMPANY Second Mortgage Bond, Series Y-3 Floating Rate Due ______ __, ____ El Paso Electric Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to Westpac Banking Corporation, or registered assigns, the principal sum of $____ Dollars on the dates set forth in the Notes referred to below and to pay to the registered holder hereof interest on said sum as described below. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to IBJ Schroder Bank & Trust Company (hereinafter sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (hereinafter referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. The bonds of this Series have been issued to Westpac Banking Corporation, as the institution named in the Term Loan Agreement dated as of __________________, 1994 (the "Term Loan Agreement"), to secure the payment of the principal of and interest due on $___________ of Class 5C Secured Notes due _________, ____ (the "Note"), executed by the Company and payable to such institution, or order, in the principal amount set forth in the Term Loan Agreement. 168 Except as hereinafter provided, interest on this bond accrues and is payable at the same rates (determined on a weighted average basis if more than one rate is in effect with respect to the Note) and on the same dates as interest is payable on the Note under the terms of the Term Loan Agreement, which provides for floating rate loans (all as provided for in the Term Loan Agreement). The obligation of the Company to make payments with respect to the principal and interest on the bonds of this Series shall be fully or partially, as the case may be, satisfied and discharged to the extent that, at any time that any such payment shall be due, the Company shall have paid fully or partially the then due principal of and interest on the Note which the bonds of this Series secure. Upon surrender for cancellation, at any time or from time to time, of bonds of this Series by the holder hereof to the Trustee, the bonds surrendered shall be deemed fully paid and the obligations of the Company thereunder shall be terminated, and such bonds shall be cancelled. In the manner provided in the Indenture, the bonds of this Series shall be redeemed in whole by payment of the principal amount thereof plus accrued interest thereon to the redemption date, upon receipt by the Trustee and the Company of a written demand from the holder hereof. Such demand shall also state that the principal amount of the Note which the bonds of this Series secure then outstanding under the Term Loan Agreement has been declared immediately due and payable pursuant to the provisions of the Term Loan Agreement, specifying the date from which unpaid interest on such Note has then accrued, and stating that such declaration of maturity has not been rescinded. The bonds of this Series shall be redeemed on the fifth business day following receipt of the written demand as aforesaid. Upon the occurrence of certain Events of Default under the Term Loan Agreement, the bonds of this Series shall be redeemed on the business day following receipt by the Trustee of notice from the holder hereof of such Event of Default; the holder hereof shall give notice to the Trustee of such Events of Default and of the declaration of maturity as a consequence thereof but failure to give such notice shall not affect the rights of the holder hereof. Such redemption shall be rescinded and become null and void for all purposes of the Indenture upon rescission in writing of the aforesaid declaration of maturity under the Term Loan Agreement received by the Trustee no later than the Business Day prior to the date fixed for redemption, and thereupon no redemption of the bonds of this Series and no payments in respect thereof shall be effected or required. 169 Notwithstanding the provisions of the previous paragraph, in case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is nontransferable except to effect transfer to any successors or assigns of the holder hereof under the Term Loan Agreement, but is exchangeable by the registered holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in New York, New York, any such permitted transfer or exchange to be made in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in exchange herefor. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. The bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been duly authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. 170 IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice-Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By______________________________ [Title] ATTEST: ________________________ [Asst.] Secretary Trustee's Certificate of Authentication This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. IBJ SCHRODER BANK & TRUST COMPANY, as Trustee By______________________________ Authorized Signature 171 Appendix A-10 (Form of face of bond of Series Y-4) No. $ EL PASO ELECTRIC COMPANY Second Mortgage Bond, Series Y-4 Floating Rate Due ______ __, ____ El Paso Electric Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to Canadian Imperial Bank of Commerce, or registered assigns, the principal sum of $____ Dollars on the dates set forth in the Notes referred to below and to pay to the registered holder hereof interest on said sum as described below. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to IBJ Schroder Bank & Trust Company (hereinafter sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (hereinafter referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. The bonds of this Series have been issued to Canadian Imperial Bank of Commerce, as the institution named in the Term Loan Agreement dated as of __________________, 1994 (the "Term Loan Agreement"), to secure the payment of the principal of and interest due on $___________ of Secured Notes due _________, ____ (the "Note"), executed by the Company and payable to such institution, or order, in the principal amount set forth in the Term Loan Agreement. 172 Except as hereinafter provided, interest on this bond accrues and is payable at the same rates (determined on a weighted average basis if more than one rate is in effect with respect to the Note) and on the same dates as interest is payable on the Note under the terms of the Term Loan Agreement, which provides for floating rate loans (all as provided for in the Term Loan Agreement). The obligation of the Company to make payments with respect to the principal and interest on the bonds of this Series shall be fully or partially, as the case may be, satisfied and discharged to the extent that, at any time that any such payment shall be due, the Company shall have paid fully or partially the then due principal of and interest on the Note which the bonds of this Series secure. Upon surrender for cancellation, at any time or from time to time, of bonds of this Series by the holder hereof to the Trustee, the bonds surrendered shall be deemed fully paid and the obligations of the Company thereunder shall be terminated, and such bonds shall be cancelled. In the manner provided in the Indenture, the bonds of this Series shall be redeemed in whole by payment of the principal amount thereof plus accrued interest thereon to the redemption date, upon receipt by the Trustee and the Company of a written demand from the holder hereof. Such demand shall also state that the principal amount of the Note which the bonds of this Series secure then outstanding under the Term Loan Agreement has been declared immediately due and payable pursuant to the provisions of the Term Loan Agreement, specifying the date from which unpaid interest on such Note has then accrued, and stating that such declaration of maturity has not been rescinded. The bonds of this Series shall be redeemed on the fifth business day following receipt of the written demand as aforesaid. Upon the occurrence of certain Events of Default under the Term Loan Agreement, the bonds of this Series shall be redeemed on the business day following receipt by the Trustee of notice from the holder hereof of such Event of Default; the holder hereof shall give notice to the Trustee of such Events of Default and of the declaration of maturity as a consequence thereof but failure to give such notice shall not affect the rights of the holder hereof. Such redemption shall be rescinded and become null and void for all purposes of the Indenture upon rescission in writing of the aforesaid declaration of maturity under the Term Loan Agreement received by the Trustee no later than the Business Day prior to the date fixed for redemption, and thereupon no redemption of the bonds of this Series and no payments in respect thereof shall be effected or required. 173 Notwithstanding the provisions of the previous paragraph, in case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is nontransferable except to effect transfer to any successors or assigns of the holder hereof under the Term Loan Agreement, but is exchangeable by the registered holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in New York, New York, any such permitted transfer or exchange to be made in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in exchange herefor. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. The bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been duly authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. 174 IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice-Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By______________________________ [Title] ATTEST: ________________________ [Asst.] Secretary Trustee's Certificate of Authentication This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. IBJ SCHRODER BANK & TRUST COMPANY, as Trustee By______________________________ Authorized Signature 175 Appendix A-11 (Form of face of bond of Series Y-5) No. $ EL PASO ELECTRIC COMPANY Second Mortgage Bond, Series Y-5 Floating Rate Due ______ __, ____ El Paso Electric Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to _________, as Agent under the Reimbursement Agreement hereinafter described, or registered assigns, the principal sum of up to $____ Dollars on the dates set forth in the Reimbursement Agreement and to pay to the registered holder hereof interest on said sum as described below. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to IBJ Schroder Bank & Trust Company (hereinafter sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (hereinafter referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. The bonds of this Series have been issued to ____________, as Agent for the provider of a letter of credit to the Company and certain creditors pursuant to a Class 5(a) Reimbursement Agreement dated as of ____________, 1994 between the Company and such institutions, as amended from time to time (the "Reimbursement Agreement"), to secure the payment of principal and interest due (which shall also, for purposes hereof, include letter of credit commissions) thereunder (the 176 "Obligations") of the Company that may be outstanding from time to time under the Reimbursement Agreement. The principal amount of this bond shall be deemed to equal the Commitment under the Reimbursement Agreement. Except as hereinafter provided, interest on this bond accrues and is payable at the same rates (determined on a weighted average basis if more than one rate or letter of credit commission is in effect with respect to the Obligations) and on the same dates as interest and letter of credit commissions are payable under the terms of the Reimbursement Agreement, which provides for floating rate loans (all as provided for in the Reimbursement Agreement). The obligation of the Company to make payments with respect to the principal and interest on the bonds of this Series shall be fully or partially, as the case may be, satisfied and discharged to the extent that, at any time that any such payment shall be due, the Company shall have paid fully or partially the then due principal of and interest on the Obligations which the bonds of this Series secure. Upon surrender for cancellation, at any time or from time to time, of bonds of this Series by the Agent to the Trustee, the bonds surrendered shall be deemed fully paid and the obligations of the Company thereunder shall be terminated, and such bonds shall be cancelled. In the manner provided in the Indenture, the bonds of this Series shall be redeemed in whole by payment of the principal amount thereof plus accrued interest thereon to the redemption date, upon receipt by the Trustee and the Company of a written demand from the Agent. Such demand shall also state that the principal amount of the Obligations which the bonds of this Series secure then outstanding under the Reimbursement Agreement has been declared immediately due and payable pursuant to the provisions of the Reimbursement Agreement, specifying the date from which unpaid interest on such Obligations has then accrued, and stating that such declaration of maturity has not been rescinded. The bonds of this Series shall be redeemed on the fifth business day following receipt of the written demand as aforesaid. Upon the occurrence of certain Events of Default under the Reimbursement Agreement, the bonds of this Series shall be redeemed on the fifth business day following receipt by the Trustee of notice from the Agent of such Event of Default; the Agent shall give notice to the Trustee of such Events of Default and of the declaration of maturity as a consequence thereof but failure to give such notice shall not affect the rights of the Agent. Such redemption shall be rescinded and become null and 177 void for all purposes of the Indenture upon rescission in writing of the aforesaid declaration of maturity under the Reimbursement Agreement received by the Trustee no later than the Business Day prior to the date fixed for redemption, and thereupon no redemption of the bonds of this Series and no payments in respect thereof shall be effected or required. Notwithstanding the provisions of the previous paragraph, in case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is nontransferable except to effect transfer to any successor to the Agent under the Reimbursement Agreement, but is exchangeable by the registered holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in New York, New York, any such permitted transfer or exchange to be made in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in exchange herefor. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. The bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. 178 This bond shall not be valid or become obligatory for any purpose unless and until it shall have been duly authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice-Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By______________________________ [Title] ATTEST: ________________________ [Asst.] Secretary Trustee's Certificate of Authentication This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. IBJ SCHRODER BANK & TRUST COMPANY, as Trustee By______________________________ Authorized Signature 179 Appendix A-12 (Form of face of bond of Series Y-6) No. $ EL PASO ELECTRIC COMPANY Second Mortgage Bond, Series Y-6 Floating Rate Due ______ __, ____ El Paso Electric Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to Credit Suisse, as Agent under the Reimbursement Agreement hereinafter described, or registered assigns, the principal sum of up to $____ Dollars on the dates set forth in the Reimbursement Agreement and to pay to the registered holder hereof interest on said sum as described below. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to IBJ Schroder Bank & Trust Company (hereinafter sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (hereinafter referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. The bonds of this Series have been issued to Credit Suisse, as Agent for the provider of a letter of credit to the Company and certain creditors pursuant to a Class 5(b) Reimbursement Agreement dated as of ____________, 1994 between the Company and such institutions, as amended from time to time (the "Reimbursement Agreement"), to secure the payment of principal and interest due (which shall also, for purposes hereof, include letter of credit commissions) thereunder (the 180 "Obligations") of the Company that may be outstanding from time to time under the Reimbursement Agreement. The principal amount of this bond shall be deemed to equal the Commitments under the Reimbursement Agreement. Except as hereinafter provided, interest on this bond accrues and is payable at the same rates (determined on a weighted average basis if more than one rate or letter of credit commission is in effect with respect to the Obligations) and on the same dates as interest and letter of credit commissions are payable under the terms of the Reimbursement Agreement, which provides for floating rate loans (all as provided for in the Reimbursement Agreement). The obligation of the Company to make payments with respect to the principal and interest on the bonds of this Series shall be fully or partially, as the case may be, satisfied and discharged to the extent that, at any time that any such payment shall be due, the Company shall have paid fully or partially the then due principal of and interest on the Obligations which the bonds of this Series secure. Upon surrender for cancellation, at any time or from time to time, of bonds of this Series by the Agent to the Trustee, the bonds surrendered shall be deemed fully paid and the obligations of the Company thereunder shall be terminated, and such bonds shall be cancelled. In the manner provided in the Indenture, the bonds of this Series shall be redeemed in whole by payment of the principal amount thereof plus accrued interest thereon to the redemption date, upon receipt by the Trustee and the Company of a written demand from the Agent. Such demand shall also state that the principal amount of the Obligations which the bonds of this Series secure then outstanding under the Reimbursement Agreement has been declared immediately due and payable pursuant to the provisions of the Reimbursement Agreement, specifying the date from which unpaid interest on such Obligations has then accrued, and stating that such declaration of maturity has not been rescinded. The bonds of this Series shall be redeemed on the fifth business day following receipt of the written demand as aforesaid. Upon the occurrence of certain Events of Default under the Reimbursement Agreement, the bonds of this Series shall be redeemed on the fifth business day following receipt by the Trustee of notice from the Agent of such Event of Default; the Agent shall give notice to the Trustee of such Events of Default and of the declaration of maturity as a consequence thereof but failure to give such notice shall not affect the rights of the Agent. Such redemption shall be rescinded and become null and 181 void for all purposes of the Indenture upon rescission in writing of the aforesaid declaration of maturity under the Reimbursement Agreement received by the Trustee no later than the Business Day prior to the date fixed for redemption, and thereupon no redemption of the bonds of this Series and no payments in respect thereof shall be effected or required. Notwithstanding the provisions of the previous paragraph, in case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is nontransferable except to effect transfer to any successor to the Agent under the Reimbursement Agreement, but is exchangeable by the registered holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in New York, New York, any such permitted transfer or exchange to be made in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in exchange herefor. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. The bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. 182 This bond shall not be valid or become obligatory for any purpose unless and until it shall have been duly authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice-Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By______________________________ [Title] ATTEST: ________________________ [Asst.] Secretary Trustee's Certificate of Authentication This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. IBJ SCHRODER BANK & TRUST COMPANY, as Trustee By______________________________ Authorized Signature 183 Appendix A-13 (Form of face of bond of Series Y-7) No. $ EL PASO ELECTRIC COMPANY Second Mortgage Bond, Series Y-7 Floating Rate Due ______ __, ____ El Paso Electric Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to _________, as Agent under the Reimbursement Agreement hereinafter described, or registered assigns, the principal sum of up to $____ Dollars on the dates set forth in the Reimbursement Agreement and to pay to the registered holder hereof interest on said sum as described below. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to IBJ Schroder Bank & Trust Company (hereinafter sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (hereinafter referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. The bonds of this Series have been issued to ____________, as Agent for the provider of a letter of credit to the Company and certain creditors pursuant to a Class 5(c) Reimbursement Agreement dated as of ____________, 1994 between the Company and such institutions, as amended from time to time (the "Reimbursement Agreement"), to secure the payment of principal and interest due (which shall also, for purposes hereof, include letter of credit commissions) thereunder (the 184 "Obligations") of the Company that may be outstanding from time to time under the Reimbursement Agreement. The principal amount of this bond shall be deemed to equal the Commitments under the Reimbursement Agreement. Except as hereinafter provided, interest on this bond accrues and is payable at the same rates (determined on a weighted average basis if more than one rate or letter of credit commission is in effect with respect to the Obligations) and on the same dates as interest and letter of credit commissions payable under the terms of the Reimbursement Agreement, which provides for floating rate loans (all as provided for in the Reimbursement Agreement). The obligation of the Company to make payments with respect to the principal and interest on the bonds of this Series shall be fully or partially, as the case may be, satisfied and discharged to the extent that, at any time that any such payment shall be due, the Company shall have paid fully or partially the then due principal of and interest on the Obligations which the bonds of this Series secure. Upon surrender for cancellation, at any time or from time to time, of bonds of this Series by the Agent to the Trustee, the bonds surrendered shall be deemed fully paid and the obligations of the Company thereunder shall be terminated, and such bonds shall be cancelled. In the manner provided in the Indenture, the bonds of this Series shall be redeemed in whole by payment of the principal amount thereof plus accrued interest thereon to the redemption date, upon receipt by the Trustee and the Company of a written demand from the Agent. Such demand shall also state that the principal amount of the Obligations which the bonds of this Series secure then outstanding under the Reimbursement Agreement has been declared immediately due and payable pursuant to the provisions of the Reimbursement Agreement, specifying the date from which unpaid interest on such Obligations has then accrued, and stating that such declaration of maturity has not been rescinded. The bonds of this Series shall be redeemed on the fifth business day following receipt of the written demand as aforesaid. Upon the occurrence of certain Events of Default under the Reimbursement Agreement, the bonds of this Series shall be redeemed on the fifth business day following receipt by the Trustee of notice from the Agent of such Event of Default; the Agent shall give notice to the Trustee of such Events of Default and of the declaration of maturity as a consequence thereof but failure to give such notice shall not affect the rights of the Agent. Such redemption shall be rescinded and become null and 185 void for all purposes of the Indenture upon rescission in writing of the aforesaid declaration of maturity under the Reimbursement Agreement received by the Trustee no later than the Business Day prior to the date fixed for redemption, and thereupon no redemption of the bonds of this Series and no payments in respect thereof shall be effected or required. Notwithstanding the provisions of the previous paragraph, in case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is nontransferable except to effect transfer to any successor to the Agent under the Reimbursement Agreement, but is exchangeable by the registered holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in New York, New York, any such permitted transfer or exchange to be made in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in exchange herefor. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. The bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. 186 This bond shall not be valid or become obligatory for any purpose unless and until it shall have been duly authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice-Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By______________________________ [Title] ATTEST: ________________________ [Asst.] Secretary Trustee's Certificate of Authentication This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. IBJ SCHRODER BANK & TRUST COMPANY, as Trustee By______________________________ Authorized Signature 187 Appendix A-14 (Form of face of bond of Series Y-8) No. $ EL PASO ELECTRIC COMPANY Second Mortgage Bond, Series Y-8 Floating Rate Due ______ __, ____ El Paso Electric Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to _________, as Agent under the Reimbursement Agreement hereinafter described, or registered assigns, the principal sum of up to $____ Dollars on _______, ____, and to pay to the registered holder hereof interest on said sum as described below. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to IBJ Schroder Bank & Trust Company (hereinafter sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (hereinafter referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. The bonds of this Series have been issued to ____________, as Agent for the provider of a letter of credit to the Company and certain creditors pursuant to a Class 11 Reimbursement Agreement dated as of ____________, 1994 between the Company and such institution, as amended from time to time (the "Reimbursement Agreement"), to secure the payment of principal and interest due (which shall also, for purposes hereof, include letter of credit commissions) thereunder (the 188 "Obligations") of the Company that may be outstanding from time to time under the Reimbursement Agreement. The principal amount of this bond shall be deemed to equal the Commitment under the Reimbursement Agreement. Except as hereinafter provided, interest on this bond accrues and is payable at the same rates (determined on a weighted average basis if more than one rate or letter of credit commission is in effect with respect to the Obligations) and on the same dates as interest and letter of credit commissions are payable under the terms of the Reimbursement Agreement, which provides for floating rate loans (all as provided for in the Reimbursement Agreement). The obligation of the Company to make payments with respect to the principal and interest on the bonds of this Series shall be fully or partially, as the case may be, satisfied and discharged to the extent that, at any time that any such payment shall be due, the Company shall have paid fully or partially the then due principal of and interest on the Obligations which the bonds of this Series secure. Upon surrender for cancellation, at any time or from time to time, of bonds of this Series by the Agent to the Trustee, the bonds surrendered shall be deemed fully paid and the obligations of the Company thereunder shall be terminated, and such bonds shall be cancelled. In the manner provided in the Indenture, the bonds of this Series shall be redeemed in whole by payment of the principal amount thereof plus accrued interest thereon to the redemption date, upon receipt by the Trustee and the Company of a written demand from the Agent. Such demand shall also state that the principal amount of the Obligations which the bonds of this Series secure then outstanding under the Reimbursement Agreement has been declared immediately due and payable pursuant to the provisions of the Reimbursement Agreement, specifying the date from which unpaid interest on such Obligations has then accrued, and stating that such declaration of maturity has not been rescinded. The bonds of this Series shall be redeemed on the fifth business day following receipt of the written demand as aforesaid. Upon the occurrence of certain Events of Default under the Reimbursement Agreement, the bonds of this Series shall be redeemed on the fifth business day following receipt by the Trustee of notice from the Agent of such Event of Default; the Agent shall give notice to the Trustee of such Events of Default and of the declaration of maturity as a consequence thereof but failure to give such notice shall not affect the rights of the Agent. Such redemption shall be rescinded and become null and 189 void for all purposes of the Indenture upon rescission in writing of the aforesaid declaration of maturity under the Reimbursement Agreement received by the Trustee no later than the Business Day prior to the date fixed for redemption, and thereupon no redemption of the bonds of this Series and no payments in respect thereof shall be effected or required. Notwithstanding the provisions of the previous paragraph, in case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is nontransferable except to effect transfer to any successor to the Agent under the Reimbursement Agreement, but is exchangeable by the registered holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in New York, New York, any such permitted transfer or exchange to be made in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in exchange herefor. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. The bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. 190 This bond shall not be valid or become obligatory for any purpose unless and until it shall have been duly authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice-Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By______________________________ [Title] ATTEST: ________________________ [Asst.] Secretary Trustee's Certificate of Authentication This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. IBJ SCHRODER BANK & TRUST COMPANY, as Trustee By______________________________ Authorized Signature 191 Appendix A-15 (Form of face of bond of Series Z) No. $ EL PASO ELECTRIC COMPANY Second Mortgage Bond, Series Z Floating Rate Due ______ __, ____ El Paso Electric Company, a Texas corporation (hereinafter called the "Company"), for value received, hereby promises to pay to _________, as Agent under the Term Loan Agreement hereinafter described, or registered assigns, the principal sum of $____ Dollars on the dates set forth in the Notes referred to below and to pay to the registered holder hereof interest on said sum as described below. Both the principal of and the interest on this bond shall be payable at the principal office or agency of the Company in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts provided that, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the registration books of the Trustee. This bond is one of the bonds issued and to be issued from time to time under and in accordance with and all secured by an indenture dated as of _________, 1994, given by the Company to IBJ Schroder Bank & Trust Company (hereinafter sometimes referred to as the "Trustee"), and indentures supplemental thereto, heretofore or hereafter executed, to which indenture and indentures supplemental thereto (hereinafter referred to collectively as the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the limitations on such rights. By the terms of the Indenture, the bonds to be secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided. The bonds of this Series have been issued to ____________, as Agent for the institutions named in the Term Loan Agreement dated as of ____________, 1994 (the "Term Loan Agreement"), to secure the payment of the principal of and interest due on $_________ of Class 6A Secured Notes due __________, ____ (the "Notes"), executed by the Company and payable to such institutions, or order, in the principal amounts set opposite their respective names in the Term Loan Agreement. 192 Except as hereinafter provided, interest on this bond accrues and is payable at the same rates (determined on a weighted average basis if more than one rate is in effect with respect to the Notes) and on the same dates as interest is payable on the Notes under the terms of the Credit Agreement, which provides for floating rate loans (all as provided for in the Term Loan Agreement). The obligation of the Company to make payments with respect to the principal and interest on the bonds of this Series shall be fully or partially, as the case may be, satisfied and discharged to the extent that, at any time that any such payment shall be due, the Company shall have paid fully or partially the then due principal of and interest on the Notes which the bonds of this Series secure. Upon surrender for cancellation, at any time or from time to time, of bonds of this Series by the Agent to the Trustee, the bonds surrendered shall be deemed fully paid and the obligations of the Company thereunder shall be terminated, and such bonds shall be cancelled. In the manner provided in the Indenture, the bonds of this Series shall be redeemed in whole by payment of the principal amount thereof plus accrued interest thereon to the redemption date, upon receipt by the Trustee and the Company of a written demand from the Agent. Such demand shall also state that the principal amount of the Notes which the bonds of this Series secure then outstanding under the Term Loan Agreement has been declared immediately due and payable pursuant to the provisions of the Term Loan Agreement, specifying the date from which unpaid interest on such Notes has then accrued, and stating that such declaration of maturity has not been rescinded. The bonds of this Series shall be redeemed on the fifth business day following receipt of the written demand as aforesaid. Upon the occurrence of certain Events of Default under the Term Loan Agreement, the bonds of this Series shall be redeemed on the fifth business day following receipt by the Trustee of notice from the Agent of such Event of Default; the Agent shall give notice to the Trustee of such Events of Default and of the declaration of maturity as a consequence thereof but failure to give such notice shall not affect the rights of the Agent. Such redemption shall be rescinded and become null and void for all purposes of the Indenture upon rescission in writing of the aforesaid declaration of maturity under the Term Loan Agreement received by the Trustee no later than the Business Day prior to the date fixed for redemption, and thereupon no redemption of the bonds of this Series and no payments in respect thereof shall be effected or required. 193 Notwithstanding the provisions of the previous paragraph, in case of certain defaults as specified in the Indenture, the principal of this bond may be declared or may become due and payable in the manner and with the effect provided in the Indenture. No recourse shall be had for the payment of the principal of or premium, if any, or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, director or officer, past, present or future, as such, of the Company, or of any predecessor or successor company, either directly or through the Company, or such predecessor or successor company, or otherwise, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture. This bond is nontransferable except to effect transfer to any successor to the Agent under the Term Loan Agreement, but is exchangeable by the registered holder hereof, in person or by attorney duly authorized, at the corporate trust office of the Trustee, in New York, New York, any such permitted transfer or exchange to be made in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this bond and the payment of any stamp tax or other governmental charge, and upon any such transfer or exchange a new registered bond or bonds of the same series and maturity date and for the same aggregate principal amount, in authorized denominations, will be issued to the transferee, or the registered holder, as the case may be, in exchange herefor. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner for the purpose of receiving payment and for all other purposes. The bond shall be deemed to be governed by and construed in accordance with the laws of the State of New York. This bond shall not be valid or become obligatory for any purpose unless and until it shall have been duly authenticated by the execution by or on behalf of the Trustee or its successor in trust under the Indenture of the certificate hereon. 194 IN WITNESS WHEREOF, El Paso Electric Company has caused this bond to be executed in its name by the manual or facsimile signature of its President or one of its Vice-Presidents, and its corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. Dated: ______________ EL PASO ELECTRIC COMPANY By______________________________ [Title] ATTEST: ________________________ [Asst.] Secretary Trustee's Certificate of Authentication This is one of the bonds of the series designated therein, described in the within-mentioned Indenture. IBJ SCHRODER BANK & TRUST COMPANY, as Trustee By______________________________ Authorized Signature EX-99 5 FORM OF REORG EPE SR. DEBT SECURITIES INDENTURE 1 EXHIBIT A-15 ======================================================= EL PASO ELECTRIC COMPANY and UNITED STATES TRUST COMPANY OF NEW YORK, Trustee ___________________ INDENTURE Dated as of ____________, 1994 ___________________ Senior Debt Securities ======================================================= 2 TABLE OF CONTENTS* __________ Page RECITALS OF THE COMPANY. . . . . . . . . . . . . . . . . . . . 1 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION. . . . . . . . . . 1 SECTION 101. Definitions. . . . . . . . . . . . . . . . . . . 1 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . 2 Authenticating Agent. . . . . . . . . . . . . . . . . . . 2 Board of Directors. . . . . . . . . . . . . . . . . . . . 2 Board Resolution. . . . . . . . . . . . . . . . . . . . . 2 Business Day. . . . . . . . . . . . . . . . . . . . . . . 2 Change in Control . . . . . . . . . . . . . . . . . . . . 2 Commission. . . . . . . . . . . . . . . . . . . . . . . . 3 Company . . . . . . . . . . . . . . . . . . . . . . . . . 3 Company Request" or "Company Order. . . . . . . . . . . . 3 Corporate Trust Office. . . . . . . . . . . . . . . . . . 3 Corporation . . . . . . . . . . . . . . . . . . . . . . . 3 Defaulted Interest. . . . . . . . . . . . . . . . . . . . 3 Depositary. . . . . . . . . . . . . . . . . . . . . . . . 3 Discharged. . . . . . . . . . . . . . . . . . . . . . . . 4 Event of Default. . . . . . . . . . . . . . . . . . . . . 4 Exchange Act. . . . . . . . . . . . . . . . . . . . . . . 4 Global Security . . . . . . . . . . . . . . . . . . . . . 4 Holder. . . . . . . . . . . . . . . . . . . . . . . . . . 4 Indenture . . . . . . . . . . . . . . . . . . . . . . . . 4 interest. . . . . . . . . . . . . . . . . . . . . . . . . 4 Interest Payment Date . . . . . . . . . . . . . . . . . . 4 Maturity. . . . . . . . . . . . . . . . . . . . . . . . . 4 Mortgage. . . . . . . . . . . . . . . . . . . . . . . . . 4 Mortgage Inentures. . . . . . . . . . . . . . . . . . . . 5 Officers' Certificate . . . . . . . . . . . . . . . . . . 5 Opinion of Counsel. . . . . . . . . . . . . . . . . . . . 5 Original Issue Discount Security. . . . . . . . . . . . . 5 Outstanding . . . . . . . . . . . . . . . . . . . . . . . 5 Paying Agent. . . . . . . . . . . . . . . . . . . . . . . 6 Person. . . . . . . . . . . . . . . . . . . . . . . . . . 6 Place of Payment. . . . . . . . . . . . . . . . . . . . . 6 Predecessor Security. . . . . . . . . . . . . . . . . . . 6 Redemption Date . . . . . . . . . . . . . . . . . . . . . 7 Redemption Price. . . . . . . . . . . . . . . . . . . . . 7 Regular Record Date . . . . . . . . . . . . . . . . . . . 7 Responsible Officer . . . . . . . . . . . . . . . . . . . 7 ________________ * Note: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture. 3 Securities. . . . . . . . . . . . . . . . . . . . . . . . 7 Security Register" and "Security Registrar. . . . . . . . 7 Significant Subsidiary. . . . . . . . . . . . . . . . . . 7 Special Record Date . . . . . . . . . . . . . . . . . . . 7 Stated Maturity . . . . . . . . . . . . . . . . . . . . . 7 Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . 7 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 8 Total Capital . . . . . . . . . . . . . . . . . . . . . . 8 Trust Indenture Act . . . . . . . . . . . . . . . . . . . 8 U.S. Government Obligations . . . . . . . . . . . . . . . 8 Vice President. . . . . . . . . . . . . . . . . . . . . . 9 SECTION 102. Compliance Certificates and Opinions . . . . . . 9 SECTION 103. Form of Documents Delivered to Trustee . . . . . 9 SECTION 104. Acts of Holders. . . . . . . . . . . . . . . . . 10 SECTION 105. Notices, Etc., to Trustee and Company. . . . . . 12 SECTION 106. Notice to Holders; Waiver. . . . . . . . . . . . 12 SECTION 107. Conflict with Trust Indenture Act. . . . . . . . 12 SECTION 108. Effect of Headings and Table of Contents . . . . 13 SECTION 109. Successors and Assigns . . . . . . . . . . . . . 13 SECTION 110. Separability Clause. . . . . . . . . . . . . . . 13 SECTION 111. Benefits of Indenture. . . . . . . . . . . . . . 13 SECTION 112. Governing Law. . . . . . . . . . . . . . . . . . 13 SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . 13 SECTION 114. Incorporators, Stockholders, Officers and Directors of the Company Exempt from Individual Liability . . . . . . . . . . . . . . 13 SECTION 115. Counterparts . . . . . . . . . . . . . . . . . . 14 SECTION 116. Currency Exchange. . . . . . . . . . . . . . . . 14 4 ARTICLE TWO SECURITY FORMS. . . . . . . . . . . . 14 SECTION 201. Forms Generally. . . . . . . . . . . . . . . . . 14 SECTION 202. Form of Face of Security . . . . . . . . . . . . 15 SECTION 203. Form of Reverse of Security. . . . . . . . . . . 17 SECTION 204. Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . . . . . 22 ARTICLE THREE THE SECURITIES. . . . . . . . . . . . 22 SECTION 301. Amount Unlimited; Issuable in Series . . . . . . 22 SECTION 301A. Initial Issuance of Securities . . . . . . . . . 25 SECTION 302. Denominations. . . . . . . . . . . . . . . . . . 26 SECTION 303. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . . . . 26 SECTION 304. Temporary Securities . . . . . . . . . . . . . . 28 SECTION 305. Registration, Registration of Transfer and Exchange . . . . . . . . . . . . . . . . . . . . 28 SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . . . . . . . . . . . . 30 SECTION 307. Payment of Interest; Interest Rights Preserved. . . . . . . . . . . . . . . . . . . . 31 SECTION 308. Persons Deemed Owners. . . . . . . . . . . . . . 32 SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . 33 SECTION 310. Computation of Interest. . . . . . . . . . . . . 33 5 ARTICLE FOUR SATISFACTION AND DISCHARGE. . . . . . . . . 33 SECTION 401. Satisfaction and Discharge of Indenture. . . . . 33 SECTION 402. Application of Trust Money . . . . . . . . . . . 35 SECTION 403. Satisfaction, Discharge and Defeasance of Securities of any Series . . . . . . . . . . . . 36 ARTICLE FIVE REMEDIES . . . . . . . . . . . . . 39 SECTION 501. Events of Default. . . . . . . . . . . . . . . . 39 SECTION 502. Acceleration of Maturity; Rescission and Annulment. . . . . . . . . . . . . . . . . . . . 41 SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . . . . . . . . 43 SECTION 504. Trustee May File Proofs of Claim . . . . . . . . 44 SECTION 505. Trustee May Enforce Claims Without Possession of Securities. . . . . . . . . . . . . . . . . . 45 SECTION 506. Application of Money Collected . . . . . . . . . 45 SECTION 507. Limitation on Suits. . . . . . . . . . . . . . . 46 SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest. . . . . . . . . 47 SECTION 509. Restoration of Rights and Remedies . . . . . . . 47 SECTION 510. Rights and Remedies Cumulative . . . . . . . . . 47 SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . 48 SECTION 512. Control by Holders . . . . . . . . . . . . . . . 48 SECTION 513. Waiver of Past Defaults. . . . . . . . . . . . . 49 SECTION 514. Undertaking for Costs. . . . . . . . . . . . . . 49 SECTION 515. Waiver of Stay or Extension Laws . . . . . . . . 50 6 ARTICLE SIX THE TRUSTEE . . . . . . . . . . . . 50 SECTION 601. Certain Duties and Responsibilities. . . . . . . 50 SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . 51 SECTION 603. Certain Rights of Trustee. . . . . . . . . . . . 52 SECTION 604. Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . . . . 53 SECTION 605. May Hold Securities. . . . . . . . . . . . . . . 53 SECTION 606. Money Held in Trust. . . . . . . . . . . . . . . 53 SECTION 607. Compensation and Reimbursement . . . . . . . . . 54 SECTION 608. Disqualification; Conflicting Interests. . . . . 54 SECTION 609. Corporate Trustee Required; Eligibility. . . . . 55 SECTION 610. Resignation and Removal; Appointment of Successor. . . . . . . . . . . . . . . . . . . . 55 SECTION 611. Acceptance of Appointment by Successor . . . . . 57 SECTION 612. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . 58 SECTION 613. Preferential Collection of Claims Against Company. . . . . . . . . . . . . . . . . . . . . 58 SECTION 614. Authenticating Agents. . . . . . . . . . . . . . 58 SECTION 615. Appointment of Separate or Co-Trustee. . . . . . 60 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY. . . 61 SECTION 701. Company to Furnish Trustee Names and Addresses of Holders . . . . . . . . . . . . . . . . . . . 61 SECTION 702. Preservation of Information; Communications to Holders. . . . . . . . . . . . . . . . . . . . . 61 7 SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . 61 SECTION 704. Reports by Company . . . . . . . . . . . . . . . 62 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, SALE OR LEASE . . . 62 SECTION 801. Company May Consolidate, Etc., Only on Certain Terms. . . . . . . . . . . . . . . . . . 62 SECTION 802. Successor Corporation to be Substituted. . . . . 63 ARTICLE NINE SUPPLEMENTAL INDENTURES . . . . . . . . . 64 SECTION 901. Supplemental Indentures without Consent of Holders. . . . . . . . . . . . . . . . . . . . . 64 SECTION 902. Supplemental Indentures with Consent of Holders. . . . . . . . . . . . . . . . . . . . . 65 SECTION 903. Execution of Supplemental Indentures . . . . . . 66 SECTION 904. Effect of Supplemental Indentures. . . . . . . . 67 SECTION 905. Conformity with Trust Indenture Act. . . . . . . 67 SECTION 906. Reference in Securities to Supplemental Indentures . . . . . . . . . . . . . . . . . . . 67 ARTICLE TEN COVENANTS. . . . . . . . . . . . . 67 SECTION 1001. Payment of Principal, Premium and Interest. . . 67 SECTION 1002. Maintenance of Office or Agency . . . . . . . . 67 SECTION 1003. Money for Securities Payments to Be Held in Trust. . . . . . . . . . . . . . . . . . . . 68 SECTION 1004. Corporate Existence . . . . . . . . . . . . . . 69 SECTION 1005. Maintenance of Properties . . . . . . . . . . . 70 8 SECTION 1006. Payment of Taxes and Other Claims . . . . . . . 70 SECTION 1007. Statement by Officers as to Default . . . . . . 70 SECTION 1008. Defeasance of Certain Obligations . . . . . . . 70 SECTION 1009. Waiver of Certain Covenants . . . . . . . . . . 72 SECTION 1010. Notice to Trustee.. . . . . . . . . . . . . . . 72 SECTION 1011. To Insure.. . . . . . . . . . . . . . . . . . . 73 SECTION 1012. Limitations on Liens. . . . . . . . . . . . . . 73 SECTION 1013. Purchase of Securities Upon Change in Control.. . . . . . . . . . . . . . . . . . . . 75 ARTICLE ELEVEN REDEMPTION OF SECURITIES . . . . . . . . . 77 SECTION 1101. Applicability of Article. . . . . . . . . . . . 77 SECTION 1102. Election to Redeem; Notice to Trustee . . . . . 78 SECTION 1103. Selection by Trustee of Securities to Be Redeemed . . . . . . . . . . . . . . . . . . 78 SECTION 1104. Notice of Redemption. . . . . . . . . . . . . . 79 SECTION 1105. Deposit of Redemption Price . . . . . . . . . . 79 SECTION 1106. Securities Payable on Redemption Date . . . . . 80 SECTION 1107. Securities Redeemed in Part . . . . . . . . . . 80 ARTICLE TWELVE SINKING FUNDS. . . . . . . . . . . . 80 SECTION 1201. Applicability of Article. . . . . . . . . . . . 80 SECTION 1202. Satisfaction of Sinking Fund Payments with Securities. . . . . . . . . . . . . . . . . . . 81 SECTION 1203. Redemption of Securities for Sinking Fund . . . 81 9 APPENDIX A-1 Form of Series A Senior Notes APPENDIX A-2 Form of Class 13 Senior Notes 10 INDENTURE, dated as of ____________, 1994, between EL PASO ELECTRIC COMPANY, a corporation duly organized and existing under the laws of the State of Texas (herein called the "Company"), having its principal office in El Paso, Texas and UNITED STATES TRUST COMPANY OF NEW YORK, a corporation duly organized and existing under the laws of New York, as Trustee (herein called the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of certain of its senior unsecured debentures, notes or other evidences of indebtedness (herein called the "Securities"), to be issued in one or more series as in this Indenture provided. The Company is entering into this Indenture pursuant to the terms of that Modified Third Amended Plan of Reorganization (the "Plan"), dated August 27, 1993 and corrected on September 15, 1993, of the Company filed in the United States Bankruptcy Court, Western District of Texas, Chapter 11 Case No. 92-10148-FM. All things necessary to make this Indenture a valid and binding agreement of the Company, enforceable in accordance with its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof (or the issuance thereof under Section 301A hereof), it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, or by Commission rule or regulation under the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; 11 (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as applied in the United States, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of such computation; (4) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; and (5) references to "Sections" herein, unless otherwise denominated, are references to specified sections of this Indenture. "Act", when used with respect to any Holder, has the meaning specified in Section 104. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Authenticating Agent" means any Person authorized to authenticate and deliver Securities on behalf of the Trustee pursuant to Section 614. "Board of Directors" means either the board of directors of the Company or any duly authorized committee of that Board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day", when used with respect to any Place of Payment, means each day which is not a Saturday, a Sunday or a day on which banking institutions or trust companies in that Place of Payment are authorized or obligated by law or executive order to remain closed. "Change in Control" with respect to the Company shall mean such time as (i) any "person" or "group" (each as defined in Section 13(d) and Section 14(d) of the Exchange Act), excluding 12 the Company and its affiliates, becomes the "beneficial owner" (as defined in Rule 13d-3 and 13d-5 of the Exchange Act) or thirty-five percent (35%) or more of the common stock of the Company or (ii) any such "person" or "group" other than the Company and its affiliates acquires, or obtains the right to acquire, the right to elect two-thirds of the members of the Board of Directors of the Company. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, as amended, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor corporation. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its President or a Vice President, or, if authorized by a power of attorney executed by any of such officers, by such other person as may be authorized in such power of attorney and delivered to the Trustee. "Corporate Trust Office" means the principal corporate trust office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which at the date hereof is 114 West 47th Street, New York, New York 10036; Attention: Corporate Trust and Agency Division. "Corporation" includes corporations, associations, companies and business trusts. "Defaulted Interest" has the meaning specified in Section 307. "Depositary" means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or more Global Securities, the Person designated as Depositary by the Company pursuant to Section 301, which must be a clearing agency registered under the Securities Exchange Act of 1934, as amended, and, if so provided pursuant to Section 301 with respect to the Securities of a series, any successor to such Person. If at any time there is more than one such Person, "Depositary" shall mean, with respect to any series of Securities, the qualifying entity which has been appointed with respect to the Securities of that series. 13 "Discharged" means, with respect to the Securities of any series, the discharge of the entire indebtedness represented by, and obligations of the Company under, the Securities of such series and the satisfaction of all the obligations of the Company under this Indenture relating to the Securities of such series, except (A) the rights of Holders of the Securities of such series to receive, from the trust fund described in Section 403 hereof, payment of the principal of and interest and premium, if any, on the Securities of such series when such payments are due, (B) the Company's obligations with respect to the Securities of such series with respect to registration, transfer, exchange and maintenance of a Place of Payment and (C) the rights, powers, trusts, duties, protections and immunities of the Trustee under this Indenture. "Event of Default" has the meaning specified in Section 501. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Global Security" means a Security evidencing all or part of a series of Securities, issued to the Depositary for such series or its nominee and registered in the name of such Depositary or nominee. "Holder" means a Person in whose name a Security is registered in the Security Register. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of particular series of Securities established as contemplated by Section 301. "interest", when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity. "Interest Payment Date", when used with respect to any Security, means the Stated Maturity of an instalment of interest on such Security. "Maturity", when used with respect to any Security, means the date on which the principal of such Security or an instalment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "Mortgage" means any mortgage, deed of trust, pledge, lien, security interest or other encumbrance. 14 "Mortgage Indentures" means the two indentures to be entered into by the Company pursuant to the Plan referred to in the Recitals hereto relating to the First Mortgage Bonds and Second Mortgage Bonds of the Company, and any extension, renewal, replacement or refunding thereof. "Officers' Certificate" means a certificate signed by the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee, provided, that in respect of Section 1007, Officers' Certificate means a certificate signed by the principal executive officer, principal financial officer or principal accounting officer of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may be an employee of or counsel to the Company, acceptable to the Trustee. "Original Issue Discount Security" means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502. "Outstanding", when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (i) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities, or portions thereof, for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and (iii) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; 15 provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, (a) the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the Maturity thereof pursuant to Section 502, and (b) Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned as described in (b) above 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 Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Trustee in accordance with such advice. Upon request of the Trustee, the Company shall furnish to the Trustee promptly an Officers' Certificate listing and identifying all Securities, if any, known by the Company to be owned or held by or for the account of any of the above- described persons; and, subject to Section 601, the Trustee shall be entitled to accept such Officers' Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purpose of any such determination. "Paying Agent" means any Person (other than the Company or any Subsidiary or Affiliate of the Company with respect to the Securities issued pursuant to Section 301A) authorized by the Company to pay the principal of (and premium, if any) or interest on any Securities on behalf of the Company, which initially shall be the Trustee. "Person" means and includes any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment", when used with respect to the Securities of any series, means the place or places where the principal of (and premium, if any) and interest, if any, on the Securities of that series are payable as specified in or as contemplated by Section 301. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the 16 purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Redemption Date", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture, exclusive of accrued and unpaid interest. "Regular Record Date" for the interest payable on any Interest Payment Date on the Securities of any series means the date specified for that purpose as contemplated by Section 301. "Responsible Officer", when used with respect to the Trustee, means any vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller or any assistant controller or any other officer of the Trustee, which in each case is assigned to its Corporate Trust Department, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Securities" has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture. "Security Register" and "Security Registrar" have the respective meanings specified in Section 305. "Significant Subsidiary" means any Subsidiary of the Company that would be considered a "significant subsidiary" under Rule 1-02 of Regulation S-X under the Securities Exchange Act of 1934, as amended. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307. "Stated Maturity", when used with respect to any Security or any instalment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such instalment of principal or interest is due and payable. "Subsidiary" of the Company means a corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of 17 directors or other persons performing similar functions are at the time directly or indirectly owned or controlled by the Company, one or more of the other subsidiaries of the Company or any combination thereof. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series. "Total Capital" means, as at any date, the sum for the Company and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) the amount of capital stock (excluding treasury stock and capital stock subscribed for and unissued and preferred stock mandatorily redeemable in cash or redeemable in cash at the option of the holder thereof), plus (b) the amount of surplus and retained earnings (or, in the case of a surplus or retained earnings deficit, minus the amount of such deficit). "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended and in force on the date of this Indenture, provided, however, that, in the event the Trust Indenture Act is amended after such date, "Trust Indenture Act" shall mean, to the extent required by such amendment, the Trust Indenture Act of 1939, as so amended. "U.S. Government Obligations" means direct obligations of the United States for the payment of which its full faith and credit is pledged, or obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States and the payment of which is unconditionally guaranteed by the United States, which are not callable or redeemable by the issuer thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of a holder of a depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depository receipt. 18 "Vice President", when used with respect to the Company or the Trustee, means any vice president or assistant vice president, whether or not designated by a number or a word or words added before or after the title "vice president" or "assistant vice president". SECTION 102. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than the Officers' Certificate delivered pursuant to Section 1007) shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person 19 may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 104. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. Without limiting the generality of the foregoing, unless otherwise established in or pursuant to a Board Resolution or set forth or determined in an Officers' Certificate, or established in one or more indentures supplemental hereto, pursuant to Section 301, a Holder, including a Depositary that is a Holder of a Global Security, may make, give or take, by a proxy, or proxies, duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders, and a Depositary that is a Holder of a Global 20 Security may provide its proxy or proxies to the beneficial owners of interests in any such Global Security through such Depositary's standing instructions and customary practices. (b) The fact and date of the execution by any Person of any such instrument, writing or proxy may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument, writing or proxy acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument, writing or proxy, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient, and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section. (c) The ownership of Securities shall be proved by the Security Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. (e) The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to take any action under this Indenture by vote or consent. Such record date shall be the later of 30 days prior to the first solicitation of such consent or vote or the date of the most recent list of Holders furnished to the Trustee pursuant to Section 701 prior to such solicitation. If a record date is fixed, those Persons who were Holders of Securities at such record date (or their duly designated proxies), and only those Persons, shall be entitled to take such action by vote or consent or to revoke any vote or consent previously given, whether or not such Persons continue to be Holders after such record date; provided, however, that unless such vote or consent is obtained from the Holders (or their duly designated proxies) of the requisite principal amount of Outstanding Securities prior to the date which is the 90th day after such record date, any such vote or consent previously given shall automatically and without further action by any Holder be cancelled and of no further effect. 21 SECTION 105. Notices, Etc., to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be delivered to, made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if delivered, made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at 303 North Oregon Street, El Paso, Texas 79901, or at any other address previously furnished in writing to the Trustee by the Company. SECTION 106. Notice to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his or her address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. SECTION 107. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. 22 SECTION 108. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 109. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. SECTION 110. Separability Clause. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 111. Benefits of Indenture. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any Paying Agent or Authenticating Agent hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 112. Governing Law. This Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York. SECTION 113. Legal Holidays. In any case where any Interest Payment Date, Redemption Date or Maturity of any Security shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of the Securities) payment of interest, if any, or principal (and premium, if any) need not be made at such Place of Payment on such date, but such payment may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at Maturity. SECTION 114. Incorporators, Stockholders, Officers and Directors of the Company Exempt from Individual Liability. No recourse for the payment of the principal of (and premium, if any) or interest, if any, on any Security and no recourse under or upon any obligation, covenant or agreement of the Company in this Indenture or in any supplemental indenture, 23 or in any Security, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby waived and released as a condition of and as a consideration for, the execution of this Indenture and the issuance of the Securities. SECTION 115. Counterparts. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 116. Currency Exchange. If, in determining whether the Holders of the requisite principal amount of Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, it becomes necessary to determine the principal amount of Securities of any series denominated in any coin or currency other than that of the United States of America, such principal amount shall be computed by converting such coin or currency into coin or currency of the United States of America based upon the rate of exchange in effect at the office of (i) a major financial institution chosen by the Trustee or (ii) the Trustee in New York, New York on the date of initial issuance of such series of Securities. ARTICLE TWO SECURITY FORMS SECTION 201. Forms Generally. The Securities of each series (other than Securities of Series A and Class 13 for which forms of Securities are set forth in Appendices A-1 and A-2) shall be in substantially the form set forth in this Article, or in such other form as shall be established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officer or officers executing such Securities, as evidenced by the officer's 24 or officers' execution of the Securities. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by an authorized officer of the Company, and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 303 for the authentication and delivery of such Securities. The Trustee's certificates of authentication shall be in substantially the form set forth in this Article. The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officer or officers executing such Securities, as evidenced by the officer's or officers' execution of such Securities. SECTION 202. Form of Face of Security. [Insert any legend required by the United States Internal Revenue Code and the regulations thereunder] [If this Security is a Global Security, insert - THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS GLOBAL SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES HEREINAFTER DESCRIBED AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY NOMINEE TO A SUCCESSOR OF THE DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR.] [INSERT LEGENDS REQUIRED BY THE DEPOSITARY] EL PASO ELECTRIC COMPANY [Title of the Security] No. __________ $__________ EL PASO ELECTRIC COMPANY, a corporation duly organized and existing under the laws of the State of Texas (herein called the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to ___________________________________, or registered assigns, the principal sum of ________________________ Dollars on _________________________________ [If the Security is to bear interest prior to Maturity, insert --, and to pay interest thereon from ________, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semiannually on ____________ and ___________ in each year, commencing ________, at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment [If applicable insert --, and, subject to the terms of 25 the Indenture, at the rate per annum provided in the title hereof on any overdue principal and premium and (to the extent that the payment of such interest shall be legally enforceable) on any overdue instalment of interest]. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the _______ or ________ (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture]. [If the Security is not to bear interest prior to Maturity, insert -- The principal of this Security shall not bear interest except in the case of a default in payment of principal upon acceleration, upon redemption or at Stated Maturity and in such case the overdue principal of this Security shall bear interest at the rate of [yield to maturity]% per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such default in payment to the date payment of such principal has been made or duly provided for. Interest on any overdue principal shall be payable on demand. Any such interest on any overdue principal that is not so paid on demand shall bear interest at the rate of [yield to maturity]% per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such demand for payment to the date payment of such interest has been made or duly provided for, and such interest shall also be payable on demand.] Payment of the principal of (and premium, if any) and interest[, if any,] on this Security will be made at the office or agency of the Company maintained for that purpose in ________, in [such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts--or state other currency]; [If this Security is not a Global Security, insert -- provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register] [If this Security is a Global Security, insert applicable manner of payment]. 26 Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: [Seal] EL PASO ELECTRIC COMPANY By______________________________________ [Title] [If more than one officer is to sign -- By_____________________________________] [Title] SECTION 203. Form of Reverse of Security. EL PASO ELECTRIC COMPANY [Title of the Security] This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of _________, 1994 (herein called the "Indenture"), between the Company and United States Trust Company of New York, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof [, limited in aggregate principal amount to $________]. [If applicable, insert -- This security is not subject to redemption prior to maturity.] [If applicable, insert -- The Securities of this series are subject to redemption upon not less than 30 or more than 60 days' notice by mail to the Holders of such Securities at their addresses in the Security Register for such series, [if applicable, insert -- (1) on __________ in any 27 year commencing with the year ____ and ending with the year ____ through operation of the sinking fund for this series at a Redemption Price equal to 100% of the principal amount, and (2)] at any time [on or after ___________, 19__], as a whole or in part, at the election of the Company, at the following Redemption Prices (expressed as percentages of the principal amount): If redeemed [on or before _____________, ___%, and if redeemed] during the 12-month period beginning ___________, of the years indicated: Redemption Redemption Year Price Year Price and thereafter at a Redemption Price equal to ___% of the principal amount, together in the case of any such redemption [if applicable, insert -- (whether through operation of the sinking fund or otherwise)] with accrued and unpaid interest to the Redemption Date, but interest instalments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.] [If applicable, insert -- The Securities of this series are subject to redemption upon not less than 30 or more than 60 days' notice by mail to the Holders of such Securities at their addresses in the Security Register for such series, (1) on ____________ in any year commencing with the year ____ and ending with the year ____ through operation of the sinking fund for this series at the Redemption Prices for redemption through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below, and (2) at any time [on or after ____________], as a whole or in part, at the election of the Company, at the Redemption Prices for redemption otherwise than through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below: If redeemed during the 12-month period beginning ______________ of the years indicated: Redemption Price For Redemption Redemption Price For Through Operation Redemption Otherwise of the Than Through Operation Year Sinking Fund of the Sinking Fund 28 and thereafter at a Redemption Price equal to ___% of the principal amount, together in the case of any such redemption (whether through operation of the sinking fund or otherwise) with accrued and unpaid interest to the Redemption Date, but interest instalments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.] [If applicable, insert -- Notwithstanding the foregoing, the Company may not, prior to _________, redeem any Securities of this series as contemplated by [Clause (2) of] the preceding paragraph as a part of, or in anticipation of, any refunding operation by the application, directly or indirectly, of moneys borrowed having an interest cost to the Company (calculated in accordance with generally accepted financial practice) of less than ___% per annum.] [The sinking fund for this series provides for the redemption on _________ in each year beginning with the year ____ and ending with the year ____ of [not less than] __________ [("mandatory sinking fund") and, at the option of the Company, not more than __________] aggregate principal amount of Securities of this series. [Securities of this series acquired or redeemed by the Company otherwise than through [mandatory] sinking fund payments may be credited against subsequent [mandatory] sinking fund payments otherwise required to be made in the order in which they become due.]] [In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.] The Indenture contains provisions for defeasance of (a) the entire indebtedness of this Security and (b) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein. [If the Security is not an Original Issue Discount Security, insert -- If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.] [If the Security is an Original Issue Discount Security, insert -- If an Event of Default with respect to Securities of this series shall occur and be continuing, an amount of principal of the Securities of this series (the "Acceleration Amount") may be declared due and payable in the manner and with the effect provided in the Indenture. In case of 29 a declaration of acceleration on or before ________, __ or on _____________ in any year, the Acceleration Amount per ______ principal amount at Stated Maturity of the Securities shall be equal to the amount set forth in respect of such date below: Acceleration Amount per _______ principal amount at Stated Date of declaration Maturity and in case of a declaration of acceleration on any other date, the Acceleration Amount shall be equal to the Acceleration Amount as of the next preceding date set forth in the table above, plus accrued original issue discount (computed in accordance with the method used for calculating the amount of original issue discount that accrues for Federal income tax purposes) from such next preceding date to the date of declaration at the yield to maturity. For the purpose of this computation the yield to maturity is ___%. Upon payment (i) of the Acceleration Amount so declared due and payable and (ii) of interest on any overdue principal and overdue interest (in each case to the extent that the payment of such interest shall be legally enforceable), all of the Company's obligations in respect of the payment of the principal of and interest, if any, on the Securities of this series shall terminate.] The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than 50% in principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. 30 No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the times, place and rate, and in the coin or currency, herein prescribed. [If this Security is a Global Security, insert -- This Security shall be exchangeable for Securities registered in the names of Persons other than the Depositary with respect to such series or its nominee only as provided in this paragraph. This Security shall be so exchangeable if (x) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for such series or at any time ceases to be a clearing agency registered as such under the Securities Exchange Act of 1934, as amended, and the Company is unable to obtain the services of a successor depositary, (y) the Company executes and delivers to the Trustee an Officers' Certificate providing that this Security shall be so exchangeable or (z) there shall have occurred and be continuing an Event of Default with respect to the Securities of such series. Securities so issued in exchange for this Security shall be of the same series, having the same interest rate, if any, and maturity and having the same terms as this Security, in authorized denominations and in the aggregate having the same principal amount as this Security and registered in such names as the Depositary for such Global Security shall direct.] As provided in the Indenture and subject to certain limitations therein set forth, the transfer of [If this Security is a Global Security, insert -- a Security of the series of which this Security is a part] [If this Security is not a Global Security, insert -- this Security] is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of (and premium, if any) and interest, if any, on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities of [If this Security is a Global Security insert -- the series of which this Security is a part] [If this Security is not a Global Security, insert -- this series] are issuable only in registered form without coupons in denominations of $__________ and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. 31 No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. This Security shall be governed by and construed in accordance with the laws of the State of New York. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. SECTION 204. Form of Trustee's Certificate of Authentication. The Trustee's certificate of authentication on all Securities shall be in substantially the following form: This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture. UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee By____________________________ Authorized Officer ARTICLE THREE THE SECURITIES SECTION 301. Amount Unlimited; Issuable in Series. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series and shall be (except as may be provided in any applicable supplemental indenture) direct, unsecured obligations of the Company and rank without preference or priority among themselves and pari passu with all other unsecured indebtedness of the Company except that the Securities will rank prior to any 32 indebtedness of the Company expressly made subordinate hereto. Except with respect to the series of Securities created in Section 301A, there shall be established in or pursuant to a Board Resolution, and, subject to Section 303, set forth or determined in the manner provided, in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series: (1) the title of the Securities of the series (which shall distinguish the Securities of the series from all other Securities); (2) any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Sections 304, 305, 306, 906, or 1107 and except for any Securities which, pursuant to Section 303, are deemed never to have been authenticated and delivered hereunder); (3) the Person to whom any interest on a Security of the series shall be payable, if other than the Person in whose name the Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest; (4) the date or dates on which the principal of the Securities of the series is payable; (5) the rate or rates at which the Securities of the series shall bear interest, if any, the date or dates from which such interest shall accrue, the Interest Payment Dates on which such interest shall be payable and the Regular Record Date for the interest payable on any Interest Payment Date; (6) the place or places, if any, in addition to or in the place of the Trustee's Corporate Trust Office where the principal of (and premium, if any) and interest, if any, on Securities of the series shall be payable and where such Securities may be registered or transferred; (7) the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Company; (8) the obligation, if any, of the Company to redeem or purchase Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof, and the period or periods within which, the price 33 or prices at which and the terms and conditions upon which Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation; (9) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Securities of the series shall be issuable; (10) if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502; (11) if other than such coin or currency of the United States of America as at the time of payment is legal tender for payment of public or private debts, the coin or currency, including composite currencies such as the European Currency Unit, in which payment of the principal of (and premium, if any) and interest, if any, on the Securities of the series shall be payable; (12) if the principal of (and premium, if any) or interest, if any, on the Securities of the series are to be payable, at the election of the Company or a Holder thereof, in a coin or currency other than that in which the Securities are stated to be payable, the period or periods within which, and the terms and conditions upon which, such election may be made; (13) if the amount of payments of principal of (and premium, if any) or interest, if any, on the Securities of the series may be determined with reference to an index based on a coin or currency other than that in which the Securities are stated to be payable, the manner in which such amounts shall be determined; (14) any provisions permitted by this Indenture relating to Events of Default or covenants of the Company with respect to such series of Securities; (15) if the Securities of the series shall be issued in whole or in part in the form of one or more Global Securities, (i) whether beneficial owners of interests in any such Global Security may exchange such interests for Securities of such series of like tenor and of authorized form and denomination and the circumstances under which any such changes may occur, if other than in the manner provided in Section 305 and (ii) the Depositary for such Global Security or Securities; (16) if any security is provided for the securities, the terms pertaining to such security; and 34 (17) any other terms of the series, including the covenants to be applicable to Securities of such series (which terms shall not be inconsistent with the provisions of this Indenture). All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to Section 301A, the Board Resolution referred to above and (subject to Section 303) set forth in the Officers' Certificate referred to above or in any such indenture supplemental hereto. All Securities of any one series need not be issued at one time, and unless otherwise provided, a series may be reopened for issuances of additional Securities of such series or to establish additional terms of such series of Securities. If any of the terms of the series, including the form of Security of such series, are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary or other authorized officer of the Company, and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 303 for the authentication and delivery of such series of Securities. SECTION 301A. Initial Issuance of Securities. There shall be, and are hereby created, two new series of Securities, each known as and titled as, and subject to the maximum aggregate principal amount, set forth in the table below. Maximum Principal Series Designation Amount Series A __% Senior Notes due ____ $________ Class 13 __% Senior Notes due 2003 $________ The Securities of the two series set forth above shall be issued in substantially the forms thereof attached as Appendices A-1 and A-2, respectively. All Securities of said series shall be due and payable as set forth in the respective form of Security, shall bear interest from the date thereof, at the rate set forth in the respective form of Security, payable semiannually on the ___ day of ______ and the ___ day of ______ in each year, and shall be payable, both as to principal and interest, at the office or agency of the Paying Agent in New York, New York, in any coin or currency of the United States of America as at the time of payment is legal tender for public and private debt, provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. 35 The Securities of Series A and Class 13 are redeemable, at the option of the Company and upon the notice and in the manner and with the effect provided in this Indenture, at the times and at the Redemption Prices set forth in the respective forms of Securities. SECTION 302. Denominations. The Securities of each series shall be issuable in registered form without coupons, except as otherwise expressly provided in a Board Resolution or a supplemental indenture hereto, in such denominations as shall be specified as contemplated by Section 301. In the absence of any such provisions with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof. SECTION 303. Execution, Authentication, Delivery and Dating. The Securities shall be executed on behalf of the Company by its President or one of its Vice Presidents, under its corporate seal reproduced thereon, and which need not be attested. The Securities of any series shall be executed by such additional officer, if any, as shall be specified pursuant to Section 301. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signature of any individual who was at any time the proper officer of the Company shall bind the Company, notwithstanding that such individual has ceased to hold such office prior to the authentication and delivery of such Securities or did not hold such office at the date of authentication of such Securities. At any time and from time to time on and after the execution and delivery of this Indenture, the Company may deliver Securities of any series (including those Securities created by Section 301A) executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order, but subject to the provisions hereof, shall authenticate and deliver such Securities. If the form or terms of the Securities of the series have been established in or pursuant to one or more Board Resolutions as permitted by Sections 201 and 301, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating, (a) if the form of such Securities has been established by or pursuant to Board Resolution as permitted by Section 201, that such form has been established in conformity with the provisions of this Indenture; 36 (b) if the terms of such Securities have been established by or pursuant to Board Resolution as permitted by Section 301, that such terms have been established in conformity with the provisions of this Indenture; and (c) that all conditions precedent to the authentication and delivery of such Securities have been complied with and that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting the enforcement of creditors' rights and to general equity principles. If such form or terms have been so established, the Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties, protections or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee, or if the Trustee determines that such authentication may not be lawfully made or if the Trustee reasonably determines that such authentication would be prejudicial to the Holders of the Outstanding Securities. With respect to the series of Securities created by Section 301A, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel to the effect of clause (c) above. Notwithstanding the provisions of Section 301 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Officers' Certificate otherwise required pursuant to Section 301 or the Company Order and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or prior to the time of authentication of each Security of such series if such documents are delivered at or prior to the time of authentication upon original issuance of the first Security of such series to be issued. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, 37 that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 309 together with an Officers' Certificate (which need not comply with Section 102 and need not be accompanied by an Opinion of Counsel) stating that such Security has never been issued and sold by the Company, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture. SECTION 304. Temporary Securities. Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officer or officers executing such Securities may determine, as evidenced by their execution of such Securities. If temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of the same series and of like tenor of authorized denominations. Until so exchanged the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series. SECTION 305. Registration, Registration of Transfer and Exchange. The Company shall cause to be kept at the Corporate Trust Office a register (the register maintained in such office and in any other office or agency of the Company in a Place of Payment being herein sometimes collectively referred to as the "Security Register") in which, subject to such reasonable regulations as it or the Trustee may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby initially appointed "Security 38 Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. In the event that the Trustee shall cease to be the Security Registrar with respect to the Securities, it shall have the right to examine the Security Register at all reasonable times. Upon surrender for registration of transfer of any Security of any series at the office or agency in a Place of Payment for that series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor. At the option of the Holder, any Security or Securities of any series, other than a Global Security, may be exchanged for other Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Notwithstanding the foregoing, except as otherwise specified as contemplated by Section 301, a Global Security of any series shall be exchangeable pursuant to this Section for Securities registered in the names of Persons other than the Depositary with respect to such series or its nominee only as provided in this paragraph. A Global Security shall be exchangeable pursuant to this Section if (x) such Depositary notifies the Company that it is unwilling or unable to continue as Depositary for such series or at any time ceases to be a clearing agency registered as such under the Exchange Act, and the Company is unable to obtain the services of a successor depositary (y) the Company executes and delivers to the Trustee an Officers' Certificate providing that such Global Security shall be so exchangeable or (z) there shall have occurred and be continuing an Event of Default with respect to the Securities of such series. Securities so issued in exchange for a Global Security shall be of the same series, of like tenor, in authorized denominations and in the aggregate having the same principal amount as the Global Security to be exchanged, and shall be registered in such names as the Depositary for such Global Security shall direct. 39 Except as otherwise provided herein, a Global Security may not be transferred except as a whole by the Depositary to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any nominee to a successor of such Depositary or a nominee of such successor. Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made to the Holder for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Sections 304, 906 or 1107 not involving any transfer. The Company shall not be required (i) to issue, register the transfer of or exchange Securities of any series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities of that series selected for redemption under Section 1103 and ending at the close of business on the day of such mailing, (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part or (iii) to register the transfer or exchange of any Security which, in accordance with its terms, has been surrendered for repayment at the option of the Holder, except the portion, if any, of such Security not to be so repaid. SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities. If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding. 40 In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 307. Payment of Interest; Interest Rights Preserved. Interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. Any interest on any Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make 41 arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Securities of such series at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). (2) The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. SECTION 308. Persons Deemed Owners. The Company and the Trustee and any agent of the Company or the Trustee may treat the Person in whose name a Security is registered as the owner of such Security for the purpose of receiving payment of principal of (and premium, if any) and (subject to Section 307) interest, if any, on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. All such payments so made to any such person, or upon such person's order, shall be valid, and, to the extent of the sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Security. 42 No holder of any beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Company, the Trustee, and any agent of the Corporation or the Trustee as the owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall impair, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary as holder of any Security. SECTION 309. Cancellation. All Securities surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever and may deliver to the Trustee (or to any Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold, and all Securities so delivered shall be promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of as directed by a Company Order or, in the absence of such Company Order, shall be destroyed and the Trustee shall provide to the Company, if requested by the Company, a certificate of destruction. SECTION 310. Computation of Interest. Except as otherwise specified as contemplated by Section 301 for Securities of any series, interest, if any, on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months. ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture. This Indenture shall upon Company Request cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, on the 91st day after the date when 43 (1) either (A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, or (iv) are deemed paid and discharged pursuant to Section 403, as applicable, and the Company, in the case of (i), (ii), (iii) or (iv) above, has irrevocably deposited or caused to be irrevocably deposited with the Trustee as trust funds in trust for the purpose of discharging the Securities as described herein an amount of (a) money in the currency or units of currency in which such Securities are payable, or (b) in the case of (ii) or (iii) above and (except as provided in an indenture supplemental hereto) if no Securities of any series Outstanding are subject to repurchase at the option of Holders (I) U.S. Government Obligations (denominated in the same currency or units of currency in which such Securities are payable) which through the payment of interest and principal in respect thereof in accordance with their terms and without consideration of the proceeds of any reinvest- ment thereof will provide not later than one day before the Stated Maturity or Redemption Date, as the case may be, money in an amount, or (II) a combination of money and U.S. Government Obligations as provided in (I) above, in each case, sufficient to pay and discharge (as verified by a nationally recognized firm of independent certified public accountants) the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest, if any, to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; 44 (3) such defeasance shall not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument to which the Company is a party or by which it is bound; (4) the Company has delivered to the Trustee an Officers' Certificate stating that the deposit made by the Company, pursuant to its election hereunder, was not made by the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (5) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that (a) all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with, and (b) such satisfaction and discharge through any method provided herein will not result in a breach or violation of, or constitute a default under this Indenture or any other material agreement or instrument to which the Company is a party or by which it is bound. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 607, the obligations of the Trustee to any Authenticating Agent under Section 614 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section or if money or U.S. Government Obligations shall have been deposited with or received by the Trustee pursuant to Section 403, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive. SECTION 402. Application of Trust Money. (a) Subject to the provisions of the last paragraph of Section 1003, all money or U.S. Government Obligations deposited with the Trustee pursuant to Section 401, 403 or 1008 and all money received by the Trustee in respect of U.S. Government Obligations deposited with the Trustee pursuant to Section 401, 403 or 1008, shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent), to the persons entitled thereto, of the principal (and premium, if any) and interest, if any, for whose payment such money has been deposited with or received by the Trustee or to make mandatory sinking fund payments or analogous payments as contemplated by Section 401, 403 or 1008. (b) The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against U.S. Government Obligations deposited pursuant 45 to Section 401, 403 or 1008 or the interest and principal received in respect of such obligations other than any payable by or on behalf of Holders. (c) The Trustee shall deliver or pay to the Company from time to time upon Company Request any U.S. Government Obligations or money held by it as provided in Section 401, 403 or 1008 which, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof delivered to the Trustee, are then in excess of the amount thereof which then would have been required to be deposited for the purpose for which such U.S. Government Obligations or money was deposited or received. This provision shall not authorize the sale by the Trustee of any U.S. Government Obligations held under this Indenture. SECTION 403. Satisfaction, Discharge and Defeasance of Securities of any Series. The Company shall be deemed to have Discharged the entire indebtedness on all the Outstanding Securities of any series on the 91st day after the date of the deposit referred to in subparagraph (e) hereof, and the provisions of this Indenture, as it relates to such Outstanding Securities of such series, shall no longer be in effect (and the Trustee, at the expense of the Company, shall at Company Request execute proper instruments acknowledging the same), except as to: (a) the rights of Holders of Securities of such series to receive, from the trust funds described in subparagraph (e) hereof, (i) payment of the principal of (and premium, if any) and each instalment of principal of (and premium, if any) or interest, if any, on the Outstanding Securities of such series on the Stated Maturity of such principal or instalment of principal or interest or to and including the Redemption Date irrevocably designated by the Company pursuant to subparagraph (i) hereof and (ii) the benefit of any mandatory sinking fund payments applicable to the Securities of such series on the day of which such payments are due and payable in accordance with the terms of this Indenture and the Securities of such series; (b) the Company's obligations with respect to such Securities of such series under Sections 305, 306, 1002 and 1003 and, if the Company shall have irrevocably designated a Redemption Date pursuant to subparagraph (i) hereof, Sections 1101, 1104 and 1106 as they apply to such Redemption Date; (c) the Company's obligations with respect to the Trustee under Section 607; and (d) the rights, powers, privileges and immunities of the Trustee hereunder and the duties of the Trustee under 46 Section 402 and, if the Company shall have irrevocably designated a Redemption Date pursuant to subparagraph (i) hereof, Article Eleven and the duty of the Trustee to authenticate Securities of such series on registration of transfer or exchange; provided that, the following conditions shall have been satisfied: (e) the Company has irrevocably deposited or caused to be irrevocably deposited (except as provided in Section 402(c) and the last paragraph of Section 1003) with the Trustee as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Securities of such series, (i) money, in the currency or units of currency in which such Securities are payable, in an amount, or (ii) (except as provided in a supplemental indenture or Board Resolution with respect to such series) if Securities of such series are not subject to repurchase at the option of Holders, (A) U.S. Government Obligations (denominated in the same currency or units of currency in which such Securities are payable) which through the payment of interest and principal in respect thereof in accordance with their terms and without consideration of the proceeds of any reinvestment thereof will provide not later than one day before the due date of any payment referred to in clause (x) or (y) of this subparagraph (e) cash in an amount or (B) a combination of cash and U.S. Government Obligations as provided in (A) above, sufficient, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge (x) the principal of (and premium, if any) and each instalment of principal (and premium, if any) and interest, if any, on the Outstanding Securities of such series on the Stated Maturity of such principal or instalment of principal or interest or to and including the Redemption Date irrevocably designated by the Company pursuant to subparagraph (i) hereof and (y) any mandatory sinking fund payments applicable to the Securities of such series on the day on which such payments are due and payable in accordance with the terms of this Indenture and of the Securities of such series; (f) the Company has delivered to the Trustee an Opinion of Counsel to the effect that such provision would not cause any Outstanding Securities of such series then listed on any national securities exchange to be delisted as a result thereof; (g) no Event of Default or event which with notice or lapse of time would become an Event of Default (including by reason of such deposit) with respect to the Securities of 47 such series shall have occurred and be continuing on the date of such deposit or during the period ending on the 91st day after such date; (h) the Company has delivered to the Trustee unqualified opinions, in form and substance satisfactory to the Trustee, of independent counsel selected by the Company, of nationally recognized standing in the field of federal tax law, as to (i) below, and in the field of federal securities law, as to (ii) below, to the effect that (i) Holders of the Securities will not recognize income, gain or loss for Federal income tax purposes as a result of the deposit, defeasance and discharge and will be subject to Federal income tax on the same amounts and in the same manner and at the same times as would have been the case if that deposit, defeasance and discharge had not occurred and (ii) the defeasance trust is not, or is registered as, an investment company under the Investment Company Act of 1940; (i) if the Company has deposited or caused to be deposited money or U.S. Government Obligations to pay or discharge the principal of (and premium, if any) and interest, if any, on the Outstanding Securities of a series to and including a Redemption Date on which all of the Outstanding Securities of such series are to be redeemed, such Redemption Date shall be irrevocably designated by a Board Resolution delivered to the Trustee on or prior to the date of deposit of such money or U.S. Government Obligations, and such Board Resolution shall be accompanied by an irrevocable Company Request that the Trustee give notice of such redemption in the name and at the expense of the Company not less than 30 nor more than 60 days prior to such Redemption Date in accordance with Section 1104; (j) such defeasance shall not result in a breach or violation, or constitute a default under, this Indenture or any other material agreement or instrument to which the Company is a party or by which it is bound; (k) the Company has delivered to the Trustee an Officers' Certificate stating that the deposit made by the Company, pursuant to its election hereunder, was not made by the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (l) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that (a) all conditions precedent herein provided for relating to the satisfaction and discharge of the Securities have been complied with, and (b) such satisfaction and discharge through any method provided herein will not result in a breach or violation of, or 48 constitute a default under this Indenture or any other material agreement or instrument to which the Company is a party or by which it is bound. ARTICLE FIVE REMEDIES SECTION 501. Events of Default. "Event of Default", wherever used herein with respect to Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be affected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body), unless such event is expressly made inapplicable with respect to such series in or pursuant to a Board Resolution or supplemental indenture under which Securities of such series are issued, as the case may be, as contemplated by Section 301: (1) default in the payment of any interest upon any Security of that series when it becomes due and payable, and continuance of such default for a period of 30 days; or (2) default in the payment of the principal of (or premium, if any, on) any Security of that series at its Maturity; or (3) default in the payment of any sinking fund instalment with respect to that series required pursuant to Article Twelve hereof or such series of Securities, and continuance of such default for a period of 60 days; or (4) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of series of Securities other than that series), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or 49 (5) a default under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company or by any Subsidiary (including a default with respect to Securities of any series other than that series), any guarantee by the Company or by any Subsidiary of indebtedness for money borrowed, or any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company (including this Indenture) or by any Subsidiary, which default shall have resulted in (i) a failure by the Company or any Subsidiary to make any payment of principal of $5,000,000 or more under any instrument evidencing such indebtedness in excess of $40,000,000 at the later of stated maturity or upon the expiration of any applicable period of grace, which amount remains unpaid for 20 Business Days thereafter, or (ii) such indebtedness in an aggregate principal amount exceeding $10,000,000 becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such acceleration having been rescinded or annulled within a period of 20 Business Days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series a written notice specifying such default and requiring the Company to cause such acceleration to be rescinded or annulled and stating that such notice is a "Notice of Default" hereunder; provided, however, that, subject to the provisions of Sections 601 and 602, the Trustee shall not be deemed to have knowledge of such default unless either (A) a Responsible Officer of the Trustee shall have actual knowledge of such default or (B) the Trustee shall have received written notice thereof from the Company, from any Holder, from the holder of any such indebtedness or from the trustee under any such mortgage, indenture or other instrument; and provided, further, that if such default under such indenture or instrument shall be remedied or cured by the Company or waived by the holders of such indebtedness, then the Event of Default hereunder by reason thereof shall be deemed likewise to have been remedied, cured or waived without further action upon the part of the Trustee or any of the Holders; or (6) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company or any Significant Subsidiary in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company or any Significant Subsidiary a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any Significant Subsidiary under applicable Federal or State law, appointing a custodian, receiver, 50 liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Significant Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 90 consecutive days; or (7) the commencement by the Company or any Significant Subsidiary of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company or any Significant Subsidiary in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or any Significant Subsidiary or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company or any Significant Subsidiary in furtherance of any such action; or (8) any other Event of Default provided in the supplemental indenture or provided in or pursuant to the Board Resolution under which such series of Securities is issued or in the form of Security for such series. SECTION 502. Acceleration of Maturity; Rescission and Annulment. If an Event of Default with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee may or upon the request of the Holders of not less than 25% in aggregate principal amount of the Outstanding Securities of that series shall declare the principal amount (or, if any of the Securities of that series are Original Issue Discount Securities, such portion of the principal amount of such Securities as may be specified in the terms thereof) of all of the Securities of that series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable. 51 At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities of that series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (1) the Company has paid or deposited with the Trustee a sum sufficient to pay (A) all overdue interest, if any, on all Securities of that series, (B) the principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Securities, (C) to the extent that payment of such interest is lawful, interest upon any overdue interest at the rate or rates prescribed therefor in such Securities, and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default with respect to Securities of that series, other than the non-payment of the principal of and accrued interest on Securities of that series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513. No such rescission shall affect any subsequent default or impair any right consequent thereon. In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or of any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company and the Trustee shall be restored respectively to their former rights and positions thereunder. For all purposes under this Indenture, if a portion of the principal of any Original Issue Discount Securities shall have been accelerated and declared due and payable pursuant to the provisions hereof, then, from and after such declaration, unless such declaration has been rescinded and annulled, the principal amount of such Original Issue Discount Securities shall 52 be deemed, for all purposes hereunder, to be such portion of the principal thereof as shall be due and payable as a result of such acceleration, and payment of such portion of the principal thereof as shall be due and payable as a result of such acceleration, together with interest, if any, thereon and all other amounts owing thereunder, shall constitute payment in full of such Original Issue Discount Securities. Upon receipt by the Trustee of any written notice declaring such an acceleration, or rescission and annulment thereof, with respect to Securities of a series all or part of which is represented by a Global Security, a record date shall be established for determining Holders of Outstanding Securities of such series entitled to join in such notice, which record date shall be at the close of business on the day the Trustee receives such notice. The Holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to join in such notice, whether or not such Holders remain Holders after such record date; provided, that unless such declaration of acceleration, or rescission and annulment, as the case may be, shall have become effective by virtue of the requisite percentage having joined in such notice prior to the day which is 90 days after such record date, such declaration of acceleration, or rescission and annulment, as the case may be, shall automatically and without further action by a Holder be canceled and of no further effect. Nothing in this paragraph shall prevent a Holder, or a proxy of a Holder, from giving, after expiration of such 90-day period, a new written notice of declaration of acceleration, or rescission or annulment thereof, as the case may be, which has been canceled pursuant to the proviso to the preceding sentence, in which event a new record date shall be established pursuant to the provisions of this Section 502. SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if (1) default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof, the Company will, upon written demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal (and premium, if any) and interest, if any, and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal (and premium, if any) and on any overdue interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such 53 further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated. If any Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Holders of not less than 25% in aggregate principal amount of the Outstanding Securities of that series shall deem most effectual to protect and enforce any such rights whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 504. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and (ii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; 54 and any custodian, receiver, assignee, trustee, liquidator, conservator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 505. Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. SECTION 506. Application of Money Collected. Any money collected by the Trustee pursuant to this Article shall be applied in the following order with respect to the Securities of any series, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 607; SECOND: In case the principal and premium, if any, of the Securities of such series in respect of which moneys have been collected shall not have become and be then due and payable, to the payment of interest, if any, on the Securities of such series in default in the order of the maturity of the instalments of such interest, with interest (to the extent that such interest has been collected by the Trustee and to the extent permitted by law) upon the overdue 55 instalments of interest at the rate prescribed therefor in such Securities, such payments to be made ratably to the Persons entitled thereto, without discrimination or preference; THIRD: In case the principal or premium, if any, of the Securities of such series in respect of which moneys have been collected shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon all the Securities of such series for principal and premium, if any, and interest, if any, with interest upon the overdue principal and premium, if any, and (to the extent that such interest has been collected by the Trustee and to the extent permitted by law) upon overdue instalments of interest at the rate prescribed therefor in the Securities of such series; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Securities of such series, then to the payment of such principal and any premium and interest, without preference or priority of principal over interest, or of interest over principal or premium, or of any instalment of interest over any other instalment of interest, or of any Security of such series over any other Security of such series, ratably to the aggregate of such principal and any premium and accrued and unpaid interest; and FOURTH: To the payment of the remainder, if any, to the Company or any other Person lawfully entitled thereto. SECTION 507. Limitation on Suits. No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series; (2) the Holders of not less than 25% in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and 56 (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of that series; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders. SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of (and premium, if any) and (subject to Section 307) interest, if any, on such Security on the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. SECTION 509. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 510. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. 57 SECTION 511. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 512. Control by Holders. The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series, provided that (1) such direction shall not be in conflict with any rule of law or with this Indenture, and (2) subject to the provisions of Section 315 of the Trust Indenture Act, the Trustee need not take the actions or forbearances specified in or pursuant to 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 by its board of directors, the executive committee, or a trust committee of directors or Responsible Officers of the Trustee shall determine that the action or proceeding so directed may not lawfully be taken, would involve the Trustee in personal liability or would be unduly prejudicial to the interests of Holders of the Securities so affected 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 forbearance are duly prejudical to such Holders, and (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. Prior to taking any action hereunder, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. Upon receipt by the Trustee of any written notice directing the time, method or place of conducting any such proceeding or exercising any such trust or power, with respect to Securities of a series all or part of which is represented by a Global Security, a record date shall be established for 58 determining Holders of Outstanding Securities of such series entitled to join in such notice, which record date shall be at the close of business on the day the Trustee receives such notice. The Holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to join in such notice, whether or not such Holders remain Holders after such record date; provided, that unless Holders of a majority in principal amount of the Outstanding Securities of such series shall have joined in such notice prior to the day which is 90 days after such record date, such notice shall automatically and without further action by any Holder be canceled and of no further effect. Nothing in this paragraph shall prevent a Holder, or a proxy of a Holder, from giving, after expiration of such 90-day period, a new notice identical to a notice which has been canceled pursuant to the proviso to the preceding sentence, in which event a new record date shall be established pursuant to the provisions of this Section 512. SECTION 513. Waiver of Past Defaults. The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such series waive any past default hereunder with respect to such series and its consequences, except a default (1) in the payment of the principal of (or premium, if any) or interest, if any, on any Security of such series, or (2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. In the case of any such waiver, the Company, the Trustee and the Holders of the Outstanding Securities shall be restored to their former positions and rights hereunder, respectively. SECTION 514. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant 59 in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest, if any, on any Security on or after the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on or after the Redemption Date). SECTION 515. Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the exercise of any power herein granted to the Trustee, but will suffer and permit the exercise of every such power as though no such law had been enacted. ARTICLE SIX THE TRUSTEE SECTION 601. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default with respect to the Securities of any series, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. 60 (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct, except that (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Securities of any series, determined as provided in Section 512, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such series; and (4) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it (including without limitation any such indemnity with respect to environmental liabilities). (d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. SECTION 602. Notice of Defaults. Within 90 days after the date upon which the Trustee has actual knowledge or is informed by the Company in writing of any default hereunder with respect to the Securities of any series, the Trustee shall transmit by mail to all Holders of Securities of each series, as their names and addresses appear in the Security Register, notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; 61 provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest, if any, on any Security of such series or in the payment of any sinking fund instalment with respect to Securities, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the best interest of the Holders of Securities; and provided, further, that in the case of any default of the character specified in Section 501(4) with respect to Securities, no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Securities of such series. SECTION 603. Certain Rights of Trustee. Subject to the provisions of Section 601: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officers' Certificate or any other certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order or as otherwise expressly provided herein and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to expend or risk its own funds or to exercise, at the request, direction, order or demand of any of the Holders, any of the rights or powers vested in it by this Indenture pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable 62 security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction (including without limitation any such indemnity with respect to environmental liabilities); (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled upon reasonable request to examine the books, records and premises of the Company, personally or by agent or attorney; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, consultants or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent, consultant or attorney appointed with due care by it hereunder. SECTION 604. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of Securities or the proceeds thereof. SECTION 605. May Hold Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent. SECTION 606. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company. 63 SECTION 607. Compensation and Reimbursement. The Company agrees (1) to pay to the Trustee from time to time such compensation as is agreed upon in writing, or, if no such agreement exists, reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee, its officers, directors, agents and employees for, and to hold them harmless against, any loss, liability or expense incurred without negligence or bad faith on their part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending themselves against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. As security for the performance of the obligations of the Company under this Section the Trustee shall have a lien prior to the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of (and premium, if any) or interest, if any, on particular Securities. The obligation of the Company under this Section to compensate and indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. SECTION 608. Disqualification; Conflicting Interests. If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, and absent the elimination of such interest or resignation may be removed, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. 64 SECTION 609. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be a bank, trust company, corporation or other Person eligible pursuant to the Trust Indenture Act to act as such, having a combined capital and surplus of at least $50,000,000. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of its supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. The Company may not, nor may any Affiliate of the Company, serve as Trustee. SECTION 610. Resignation and Removal; Appointment of Successor. (a) 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 in accordance with the applicable requirements of Section 611. (b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 611 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (c) The Trustee may be removed at any time (including without limitation a time when any of the events set forth in subclause (d) below shall have occurred) with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with Section 608 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or (2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any such Holder, or 65 (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company by a Board Resolution may remove the Trustee with respect to all Securities, (ii) the Company shall remove the Trustee with respect to all Securities if requested by Act of the Holders of a majority in principal amount of all Outstanding Securities, or (iii) subject to Section 514, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 611. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 611, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 611, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series by mailing written notice of such event by first-class mail, postage prepaid, to all Holders of Securities of such series as their names and addresses 66 appear in the Security Register. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office. If the Company fails to mail such notice within 10 days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Company. SECTION 611. Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder subject nevertheless to its lien, if any, provided for in Section 607. (b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee 67 shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. (c) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be. (d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 612. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. SECTION 613. Preferential Collection of Claims Against Company. The Trustee shall be subject to the provisions of Section 311 of the Trust Indenture Act. SECTION 614. Authenticating Agents. From time to time the Trustee, in its sole discretion, may appoint one or more Authenticating Agents with respect to one or more series of Securities with power to act on the Trustee's behalf and subject to its direction in the authentication and delivery of Securities of such series or in connection with transfers and exchanges under Sections 304, 305, 306, and 1107 as 68 fully to all intents and purposes as though the Authenticating Agent had been expressly authorized by those Sections of this Indenture to authenticate and deliver Securities of such series. For all purposes of this Indenture, the authentication and delivery of Securities by an Authenticating Agent pursuant to this Section shall be deemed to be authentication and delivery of such Securities "by the Trustee". Each such Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by Federal, State or District of Columbia authority. If such corporation publishes reports of condition at least annually pursuant to law or the requirements of such authority, then for the purposes of this Section the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which any Authenticating Agent may be merged or with which it may be consolidated, or any corpora- tion resulting from any merger or consolidation or to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate trust business of any Authenticating Agent, shall be the successor of the Authenticating Agent hereunder, if such successor corporation is otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the parties hereto or the Authenticating Agent or such successor corporation. An Authenticating Agent may resign at any time by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall mail notice of such appointment to all Holders of Securities of the series with respect to which such Authenti- cating Agent will serve, as the names and addresses of such Holders appear on the Security Register. Any successor Authenticating Agent, upon acceptance of its appointment hereunder, shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. 69 The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section, and the Trustee shall be entitled to be reimbursed for such payments pursuant to Section 607. If an appointment with respect to one or more series of Securities is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternate certificate of authentication in the following form: This is one of the Securities of the series designated herein referred to in the within-mentioned Indenture. UNITED STATES TRUST COMPANY OF NEW YORK, __________________________________ As Trustee __________________________________ As Authenticating Agent __________________________________ Authorized Officer SECTION 615. Appointment of Separate or Co-Trustee. The Trustee may and, upon the request of the Holders of more than 66-2/3% in aggregate principal amount of all Outstanding Securities, shall by an instrument in writing delivered to the Company and to each Holder of Outstanding Securities, appoint a bank, trust company, corporation or other Person (which meets the eligibility criteria of the Trustee of Section 609) to act as separate trustee or co-trustee with respect to the Securities in a jurisdiction where the Trustee is disqualified from acting or for any other purpose deemed by the Trustee or by such Holders to be advantageous to their respective interests, such separate trustee or co-trustee to exercise only such rights and to have only such duties as shall be specified in the instrument of appointment. The Company will pay the reasonable compensation and expenses of such separate trustee or co-trustee and, if requested by the Trustee, such separate trustee or co-trustee or the Holders of more than 66-2/3% in aggregate principal amount of all Outstanding Securities, the Company will enter into a supplemental indenture, satisfactory in substance and form to the Trustee, such separate trustee or co- trustee and each such Holder, confirming the rights and duties of such separate trustee or co-trustee. 70 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 701. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee with respect to the Securities of each series (a) semi-annually, not later than 15 days after each Regular Record Date, or, in the case of any series of Securities on which semi-annual interest is not payable, not more than 15 days after such semi-annual dates as may be specified by the Trustee, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date or semi-annual date, as the case may be, to the extent such information is in the possession or control of the Company or any Paying Agent, and (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; provided, however, that so long as the Trustee is Security Registrar for any series of Securities, no such list shall be required to be furnished with respect to any such series. SECTION 702. Preservation of Information; Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished. (b) Every Holder of Securities agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to the names and addresses of Holders made pursuant to the Trust Indenture Act. SECTION 703. Reports by Trustee. (a) Within 60 days after the first May 15 which occurs not less than 60 days following the first date of issuance of Securities of any series under this Indenture and within 60 days after May 15 in every year thereafter, the Trustee shall transmit 71 by mail to all Holders, as their names and addresses appear in the Security Register, such reports as may be required pursuant to Section 313(a) of the Trust Indenture Act. (b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Securities are listed, with the Commission and with the Company. The Company will notify the Trustee when any Securities are listed on any stock exchange. SECTION 704. Reports by Company. The Company shall file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to Section 314 of the Trust Indenture Act at the times and in the manner provided pursuant thereto; provided that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission. If the Company is not subject to the requirements of such Section 13 or 15(d), the Company will file with the Trustee, within 15 days after it would have been required to file with the Commission, financial statements, including any notes thereto (and with respect to annual reports, an auditors' report by a firm of established national reputation), comparable to that which the Company would have been required to include in such annual or other reports if the Company were subject to the requirements of such Section 13 or 15(d). ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, SALE OR LEASE SECTION 801. Company May Consolidate, Etc., Only on Certain Terms. The Company shall not consolidate with or merge into any other corporation or convey, sell, assign, transfer or lease its properties and assets substantially as an entirety to any Person, and the Company shall not permit any Person to consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless: (1) in case the Company shall consolidate with or merge into another corporation or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an 72 entirety shall be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest, if any, on all the Securities and the performance of every covenant or other agreement of this Indenture on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Company or a Subsidiary as a result of such transaction as having been incurred by the Company or such Subsidiary at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; (3) if, as a result of any such consolidation or merger or such conveyance, transfer or lease, properties or assets of the Company would become subject to a mortgage, pledge, lien, security interest or other encumbrance which would not be permitted by this Indenture, the Company or such successor corporation or Person, as the case may be, shall take such steps as shall be necessary effectively to secure the Securities equally and ratably with (or prior to) all indebtedness secured thereby; and (4) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 802. Successor Corporation to be Substituted. Upon any consolidation by the Company with or merger by the Company into any other corporation or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety in accordance with Section 801, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor corporation shall be relieved of all obligations and covenants under this Indenture and the Securities. 73 ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures without Consent of Holders. Without the consent of any Holders, the Company and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another corporation to the Company and the assumption by any such successor of the covenants or other agreements of the Company herein and in the Securities; (2) to add to the covenants of the Company for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company; (3) to add any additional Events of Default; (4) to add to or change any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons, or to permit or facilitate the issuance of Securities in uncertificated form, or to permit or facilitate the issuance of extendible Securities; (5) to add to, change or eliminate any of the provisions of this Indenture, provided that any such addition, change or elimination shall become effective only as to the Securities of any series created by such supplemental indenture and Securities of any series subsequently created to which such addition, change or elimination is made applicable by the subsequent supplemental indenture creating such series; (6) to secure the Securities; (7) to establish the form or terms of Securities of any series as permitted by Sections 201 and 301; (8) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 611(b); 74 (9) to provide for any rights of the Holders of Securities of any series to require the repurchase of Securities of such series by the Company; (10) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture, provided such action shall not adversely affect the interests of the Holders of Securities of any series in any material respect; or (11) to modify, alter, amend or supplement this Indenture in any other respect which is not materially adverse to Holders, which does not involve a change described in clause (1), (2) or (3) of Section 902 hereof and which, in the judgment of the Trustee, is not to the prejudice of the Trustee, including, without limitation, to provide for the duties, responsibilities and compensation of the Trustee as a transfer agent in the event one registered Security of any series is issued in the aggregate principal amount of all Outstanding Securities of such series in which Holders will hold an interest. SECTION 902. Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than 50% in principal amount of the Outstanding Securities of all series affected by such supplemental indenture (voting as one class), by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by or pursuant to a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) change the Stated Maturity of the principal of, or any instalment of principal of or interest, if any, on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502, or change any Place of Payment where, or the coin or currency in which, any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or 75 (2) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or (3) modify any of the provisions of this Section or Section 513 or Section 1009, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby, provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to "the Trustee" and concomitant changes in this Section, or the deletion of this proviso, in accordance with the requirements of Sections 611(b) and 901(8). A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 903. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. SECTION 904. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. 76 SECTION 905. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. SECTION 906. Reference in Securities to Supplemental Indentures. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series. ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal, Premium and Interest. The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of (and premium, if any) and interest, if any, on the Securities of that series in accordance with the terms of the Securities and this Indenture. An installment of principal and premium, if any, and interest shall be considered paid on the due date if the Trustee or Paying Agent holds on that date money, as provided below, designated for and sufficient to pay the installment and is not prohibited from paying such money to the Holders of the Securities pursuant to the terms of this Indenture. SECTION 1002. Maintenance of Office or Agency. The Company will maintain in each Place of Payment for any series of Securities an office or agency where Securities of that series may be presented or surrendered for payment, where Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and, in such event, the Trustee shall act as the Company's agent to receive all such presentations, surrenders, notices and demands. 77 The Company may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. SECTION 1003. Money for Securities Payments to Be Held in Trust. If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on, in case the payment referred to below is made in same day funds, or in all other cases, prior to, each due date of the principal of (and premium, if any) or interest, if any, on any of the Securities of that series, irrevocably segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest, if any, so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, on, in case the payment referred to below is made in same day funds, or in all other cases, prior to, each due date of the principal of (and premium, if any) or interest, if any, on any Securities of that series, irrevocably deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure so to act. The Company will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest, if any, on Securities of that series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; 78 (2) give the Trustee notice of any default by the Company (or any other obligor upon the Securities of that series) in the making of any payment of principal (and premium, if any) or interest, if any, on the Securities of that series; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest, if any, on any Security of any series and remaining unclaimed for three years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published twice, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in each Place of Payment, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 1004. Corporate Existence. Subject to Article Eight, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and will use its best efforts to do or cause to be done all things necessary to preserve and keep in full force and effect its rights (charter and statutory), licenses, permits, approvals and franchises; provided, however, that the Company shall not be required to preserve any such right or franchise if the Board of Directors 79 shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Holders. SECTION 1005. Maintenance of Properties. The Company will cause all properties used or useful in the conduct of its business or the business of any Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the operation or maintenance of any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any Subsidiary and not disadvantageous in any material respect to the Holders. SECTION 1006. Payment of Taxes and Other Claims. The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon the Company or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary, and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Company or any Subsidiary; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings. SECTION 1007. Statement by Officers as to Default. The Company will deliver to the Trustee on or before May 15 in each year, an Officers' Certificate stating that in the course of the performance by each signer of his duties as an officer of the Company he would normally have knowledge of any default by the Company in the performance and observance of any of the covenants contained in Sections 1001 to 1006 (without regard to any period of grace or requirement of notice provided hereunder), stating whether or not he has knowledge of any such default and, if so, specifying each such default of which such signer has knowledge and the nature thereof. SECTION 1008. Defeasance of Certain Obligations. 80 The Company may omit to comply with any term, provision or condition set forth in Sections 801, 1005 and 1006 with respect to the Securities of any series, provided that the following conditions shall have been satisfied: (1) The Company has deposited or caused to be irrevocably deposited (except as provided in Section 402(c) and the last paragraph of Section 1003) with the Trustee (specifying that each deposit is pursuant to this Section 1008) as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Securities of such series, (i) money in the currency or units of currency in which such Securities are payable in an amount, or (ii) (except as provided in a supplemental indenture with respect to such series) if Securities of such series are not subject to repurchase at the option of Holders, (A) U.S. Government Obligations (denominated in the same currency or units of currency in which such Securities are payable) which through the payment of interest and principal in respect thereof in accordance with their terms and without consideration of the proceeds of any reinvestment thereof will provide not later than one day before the due date of any payment referred to in clause (x) or (y) of this subparagraph (1) money in an amount, or (B) a combination of money and U.S. Government Obligations as provided in (A) above sufficient (as verified by a nationally recognized firm of independent certified public accountants) to pay and discharge (x) the principal of (and premium, if any) and each instalment of principal (and premium, if any) and interest, if any, on the Outstanding Securities of such series on the Stated Maturity of such principal or instalment of principal or interest or to and including the Redemption Date irrevocably designated by the Company pursuant to subparagraph (4) of this Section and (y) any mandatory sinking fund payments applicable to the Securities of such series on the day on which payments are due and payable in accordance with the terms of the Indenture and of the Securities of such series; (2) No Event of Default or event which with notice or lapse of time would become an Event of Default (including by reason of such deposit) with respect to the Securities of such series shall have occurred and be continuing on the date of such deposit; (3) The Company shall have delivered to the Trustee unqualified opinions, in form and substance satisfactory to the Trustee, of independent counsel, selected by the Company and satisfactory to the Trustee, of nationally recognized standing in the field of federal tax law, as to (i) below and in the field of federal securities law, as to (iii) below, to the effect (i) that Holders of the Securities of such series will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and 81 defeasance of certain obligations; (ii) that such provision would not cause any outstanding Securities of such series then listed on any national securities exchange to be delisted as a result thereof; and (iii) that the defeasance trust is not, or is registered as, an investment company under the Investment Company Act of 1940; (4) Such defeasance shall not result in a breach or violation, or constitute a default under, this Indenture or any other material agreement or instrument to which the Company is a party or by which it is bound; (5) The Company has delivered to the Trustee an Officers' Certificate stating that the deposit made by the Company, pursuant to its election hereunder, was not made by the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (6) If the Company has deposited or caused to be deposited money or U.S. Government Obligations to pay or discharge the principal of (and premium, if any) and interest, if any, on the Outstanding Securities of a series to and including a Redemption Date on which all of the Outstanding Securities of such series are to be redeemed, such Redemption Date shall be irrevocably designated by a Board Resolution delivered to the Trustee on or prior to the date of deposit of such money or U.S. Government Obligations, and such Board Resolution shall be accompanied by an irrevocable Company Request that the Trustee give notice of such redemption in the name and at the expense of the Company not less than 30 nor more than 60 days prior to such Redemption Date in accordance with Section 1104. SECTION 1009. Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any term, provision or condition set forth in Sections 1004 and 1005, inclusive, with respect to the Securities of any series if before the time for such compliance the Holders of at least 50% in principal amount of the Outstanding Securities of such series shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect. SECTION 1010. Notice to Trustee. The Company will promptly give notice to the Trustee of (1) an Event of Default under any of Sections 501(5), (6) or (7), or (2) a default specified in clause (i) of Section 501(5) 82 without regard to the 20 Business Day period of grace specified therein, or (3) a default specified in clause (ii) of Section 501(5) for which all applicable grace periods and notice under the underlying documentation have passed or been given, as the case may be, but which the indebtedness in respect thereof has not been declared due and payable prior to the date on which it would otherwise have become due and payable. SECTION 1011. To Insure. The Company will keep its electric utility properties insured against loss or damage, to the extent that property of similar character is usually so insured by companies similarly situated and operating like properties, to a reasonable amount by insurance companies believed by the Company to be responsible; or that it will, in lieu of or supplementing such insurance, in whole or in part, adopt and comply with some other method or plan of protection against loss or damage consistent with industry practice. SECTION 1012. Limitations on Liens. Except as provided in this Section, neither the Company nor any Significant Subsidiary will, so long as any Securities created under Section 301A remain outstanding, create, assume, incur or suffer to be created or to exist any Mortgage upon its property or assets of any character now owned or hereafter acquired for the benefit of any indebtedness for money borrowed without effective provision being made, in each such instance, in and by the instrument creating such Mortgage, whereby all of the Securities created under Section 301A and then outstanding and any other indebtedness for money borrowed ranking equally with the Securities and similarly entitled by any pre-existing agreement to be secured shall (so long as any such Mortgage shall exist) be directly secured by such instrument at least equally and ratably with the other indebtedness to be issued thereunder; provided, however, that this restriction shall not apply as follows: (1) to any Mortgage created by or arising out of or under the Mortgage Indentures; (2) to Prepaid Liens and Excepted Encumbrances (as such terms are defined in Section 1.02 of each of the Mortgage Indentures) and to easements and similar encumbrances (including minor title defects) which easements and similar encumbrances, in the opinion of management of the Company, do not materially impair the use of the Company's property or assets; (3) to (a) any Mortgage existing on property at the time of its acquisition, whether by purchase, consolidation, merger or in any other manner whatever or the assumption of any such Mortgage as part of the purchase price of such 83 property, to purchase money Mortgages, (b) to purchase money liens or the entering into of conditional sale or other title retention agreements in connection with the acquisition of additional property, or (c) any Mortgage to secure indebtedness for money borrowed issued in exchange for or to renew or refund any indebtedness for money borrowed secured by any purchase money or other Mortgage or lien described in clauses (a) or (b) above or to renew or refund any such renewal or refunding obligations, provided that such Mortgage or agreement does not extend to any property of the Company except the property originally acquired, replacements thereof and fixed improvements erected thereon; provided, further, that the amount of the indebtedness secured by a purchase money Mortgage or other purchase money liens, as permitted by clauses (a), (b) or (c) above, may not exceed the cost of the property acquired, as determined under the Federal Energy Regulatory Commission Uniform System of Accounts; (4) to (i) liens and charges incidental to construc- tion or current operations which have not been filed or asserted or the payment of which has been adequately secured or which, in the reasonable opinion of management of the Company, are not significant in amount; (ii) pledges or deposits to secure performance in connection with bids, tenders, contracts (other than contracts for the payment or guarantee of money); (iii) the pledge or deposit of any assets as security for any purpose at any time required by law or governmental regulation as a condition to the transaction of any business or the exercise of any privilege, license or right, or for the purpose of securing a stay or discharge or bond or for any other purpose in the course of legal proceedings in which the Company is a party or other deposits to secure public or statutory obligations of the Company; (iv) pledges or deposits to secure obligations under workmen's compensation laws or similar legislation, including liens or judgments thereunder which are not currently dischargeable; (v) farm-out or carried working interest agreements for development by the Company or others of non-producing leases or non-producing portions of oil or gas producing property; (vi) participations in joint operating agreements and unitization agreements and operations covering oil and gas producing properties; and (vii) an oil or gas royalty, overriding royalty or production payment (to the extent not constituting the economic equivalent of secured indebtedness); (5) to any Mortgage as security for (i) the Securities or (ii) the Securities of Series A-I, the terms of which are specified in the Plan; (6) to the granting, creating, assuming, incurring or suffering to be created or to exist any Mortgage upon any of the Company's property or assets of any character now owned or hereafter acquired as additional security by operation of 84 after-acquired property provisions for the benefit of any indebtedness for money borrowed or other indebtedness which is then already secured by a Mortgage upon any property or assets of the Company; (7) to Mortgages on any property of the Company which Mortgages exist on the date of the original issuance by the Company of the applicable series of Securities issued pursuant to this Indenture; (8) to Mortgages on property of a Subsidiary which secure indebtedness owing by such Subsidiary to the Company or a Subsidiary; (9) to Mortgages on the property of the Company in favor of the United States of America or any State thereof, or any department, agency, instrumentality or political subdivision of the United States of America or any State thereof, to secure partial, progress, advance or other payments pursuant to any contract or statute; (10) to any Mortgage created, assumed, incurred, or suffered to be created or exist for the sole purpose of extending, renewing, replacing or refunding, in whole or in part, any Mortgage permitted by this Section, or any extension, renewal, replacement or refunding of any Mortgage securing indebtedness of the Company on the date of this Indenture; provided, however, that the principal amount of indebtedness secured thereby shall not exceed the principal amount of indebtedness so secured at the time of such extension, renewal, replacement or refunding or, in the case of a credit facility, the amount of the loan commitment existing under the credit facility to be extended, renewed, replaced or refunded; (11) to any sale or financing of accounts receivable by the Company and its Subsidiaries; and (12) to Mortgages not otherwise permitted, if, at the time of, and after giving effect to, the creation or assumption of any such Mortgage, the aggregate of all obligations of the Company secured by any Mortgage not otherwise permitted hereby does not exceed 5% of Total Capital at such time. SECTION 1013. Purchase of Securities Upon Change in Control. (a) Upon the occurrence of a Change in Control, the Securities created under Section 301A shall be purchased by the Company, at the option of the Holder thereof, in whole or in part in integral multiples of aggregate principal amount of $1,000, on a date that is not earlier than 45 days nor later than 90 days from the date the Change in Control Notice referred to below is given to the Holders or such later date as may be necessary for 85 the Company to comply with requirements under the Exchange Act or the Public Utility Holding Company Act of 1935, as amended, (such date, or such later date, being the "Change in Control Purchase Date"), at a purchase price in cash (the "Change in Control Purchase Price") equal to 100% of the sum of the principal amount of such Securities, plus accrued and unpaid interest to the Change in Control Purchase Date, subject to satisfaction by or on behalf of the Holder of the requirements set forth in paragraph (b) below. (b) Within 30 days after the occurrence of a Change in Control, the Company shall give written notice of such Change in Control (a "Change in Control Notice") and of its offer (the "Change in Control Offer") to purchase Securities created under Section 301A as specified herein to the Trustee and to each Holder of such Securities at his address appearing on the Security Register, by first-class mail, postage prepaid. The Change in Control Notice shall contain all instructions and materials determined by the Company to be necessary to enable such Holders to have their Securities repurchased, shall include a form of Change in Control Purchase Notice to be completed by the Holder and shall state or include: (i) that a Change in Control has occurred and the circumstances and events causing the Change in Control and the date such Change in Control is deemed to have occurred for purposes of this Section; (ii) the date by which a Holder must give a Change in Control Purchase Notice; (iii) the Change in Control Purchase Price; (iv) the Change in Control Purchase Date, or if such date is not known due to regulatory or other legal requirements, an undertaking to notify the Holder of such date when it is known; (v) that Securities to be repurchased shall, on the Change in Control Purchase Date, become due and payable at the Change in Control Purchase Price and from and after such date (unless the Company shall default in the payment of the Change in Control Purchase Price) such Securities shall cease to accrue interest; and (vi) the procedures a Holder must follow to exercise rights under this Section and a brief description of those rights and the procedures for withdrawing a Change in Control Purchase Notice. (c) Holders electing to have Securities repurchased under paragraph (a) above will be required to surrender such Securities to the Trustee at the address specified in the notice by the close of business at least five Business Days prior to the Change in Control Purchase Date. 86 (d) Upon receipt by any Paying Agent of a Change in Control Purchase Notice, the Holder of the Security in respect of which such Change in Control Purchase Notice was given shall thereafter be entitled to receive solely the Change in Control Purchase Price with respect to such Security. Such Change in Control Purchase Price shall be paid to such Holder promptly following the later of the Business Day following the Change in Control Purchase Date (provided the conditions in (b) above have been satisfied) and the time of delivery of such Security to the relevant Paying Agent at the office of such Paying Agent by the Holder thereof in the manner required by (b) above. (e) On or prior to the Change in Control Purchase Date, the Company shall deposit with the Trustee or with a Paying Agent (or if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Change in Control Purchase Price of all the Securities or portions thereof which are to be purchased on that date. (f) Any Security that is to be purchased only in part shall be surrendered to a Paying Agent at the office of such Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing), and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge, one or more new Securities of any authorized denomination as requested by such Holder in the aggregate principal amount of the Security so surrendered that is not purchased. (g) The Company shall comply with any applicable tender offer rules, including Rule 14e-1 under the Exchange Act, in connection with a Change in Control Offer. (h) No Securities may be purchased hereunder if there has occurred and is continuing an Event of Default. ARTICLE ELEVEN REDEMPTION OF SECURITIES SECTION 1101. Applicability of Article. Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 301 for Securities of any series) in accordance with this Article. 87 SECTION 1102. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities shall be evidenced by an Officers' Certificate. In case of any redemption at the election of the Company of less than all the Securities of any series, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities of such series to be redeemed. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction. SECTION 1103. Selection by Trustee of Securities to Be Redeemed. If less than all the Securities of any series are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Securities of that series or any integral multiple thereof) of the principal amount of Securities of such series of a denomination larger than the minimum authorized denomination for Securities of that series. Securities shall be excluded from eligibility for selection for redemption if they are identified by registration and certificate number in a written statement signed by an authorized officer of the Company and delivered to the Security Registrar at least 60 days prior to the Redemption Date as being owned of record and beneficially by, and not pledged or hypothecated by either (a) the Company or (b) an entity specifically identified in such written statement which is an Affiliate of the Company. The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. 88 SECTION 1104. Notice of Redemption. Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at his address appearing in the Security Register. All notices of redemption shall state: (1) the Redemption Date, (2) the Redemption Price, (3) the identification, including complete original name and series designation of the series of Securities to be redeemed and CUSIP number, (4) in the case of partial redemption, the principal amounts of the particular Securities to be redeemed, (5) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and that, unless the Company shall default in payment of the Redemption Price, interest thereon will cease to accrue on and after said date, (6) the place or places where such Securities are to be surrendered for payment of the Redemption Price, including the name and telephone number of a contact person, and (7) that the redemption is for a sinking fund, if such is the case. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name of and at the expense of the Company. SECTION 1105. Deposit of Redemption Price. On, in the case of same day funds, or, in all other cases at least one Business Day prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities which are to be redeemed on that date (to the extent that such amounts are not already on deposit at such time in accordance with the provisions of Section 401, 403 or 1008). 89 SECTION 1106. Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued and unpaid interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued and unpaid interest to the Redemption Date; provided, however, that instalments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security. SECTION 1107. Securities Redeemed in Part. Any Security (including any Global Security) which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered; provided, that if a Global Security is so surrendered, the new Global Security shall be in a denomination equal to the unredeemed portion of the principal of the Global Security so surrendered. ARTICLE TWELVE SINKING FUNDS SECTION 1201. Applicability of Article. The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 301 for Securities of such series. 90 The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an "optional sinking fund payment". If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 1202. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series. SECTION 1202. Satisfaction of Sinking Fund Payments with Securities. In lieu of making all or any part of any mandatory sinking fund payment with respect to any series of Securities in cash, the Company may at its option (a) deliver to the Trustee Securities of such series theretofore purchased or otherwise acquired (except upon redemption pursuant to the mandatory sinking fund) by the Company or receive credit for Securities of such series (not previously so credited) theretofore purchased or otherwise acquired (except as aforesaid) by the Company and delivered to the Trustee for cancellation pursuant to Section 309, (b) receive credit for optional sinking fund payments (not previously so credited) made pursuant to this Section, or (c) receive credit for Securities of such series (not previously so credited) redeemed by the Company through any optional redemption provision contained in the terms of such series. Securities so delivered or credited shall be received or credited by the Trustee at the sinking fund Redemption Price specified in such Securities. SECTION 1203. Redemption of Securities for Sinking Fund. Not less than 60 or more than 90 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officers' Certificate specifying (a) the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, (b) whether or not the Company intends to exercise its right, if any, to make an optional sinking fund payment with respect to such series on the next ensuing sinking fund payment date and, if so, the amount of such optional sinking fund payment, and (c) the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 1202, and will also deliver to the Trustee any Securities to be so delivered. Such written statement shall be irrevocable and upon its receipt by the Trustee the Company shall become unconditionally obligated to make all the cash payments or payments therein referred to, if any, on or before the next succeeding sinking fund payment date. Failure of the Company, on or before any such 60th day, to deliver such written statement 91 and Securities specified in this paragraph, if any, shall not constitute a default but shall constitute, on and as of such date, the irrevocable election of the Company (i) that the mandatory sinking fund payment for such series due on the next succeeding sinking fund payment date shall be paid entirely in cash without the option to deliver or credit Securities of such series in respect therefor and (ii) that the Company will make no optional sinking fund payment with respect to such series as provided in this Section. Not less than 30 days before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 1103 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 1105, 1106 and 1107. The Trustee shall not redeem or cause to be redeemed any Security of a series with sinking fund moneys or mail any notice of redemption of Securities of such series by operation of the sinking fund during the continuance of a default in payment of interest with respect to Securities of that series or an Event of Default with respect to the Securities of that series except that, where the mailing of notice of redemption of any Securities shall theretofore have been made, the Trustee shall redeem or cause to be redeemed such Securities, provided that it shall have received from the Company a sum sufficient for such redemption. Except as aforesaid, any moneys in the sinking fund for such series at the time when any such default or Event of Default, shall occur, and any moneys thereafter paid into the sinking fund, shall, during the continuance of such default or Event of Default, be deemed to have been collected under Article Five and held for the payment of all such Securities. In case such Event of Default shall have been waived as provided in Section 513 or the default or Event of Default cured on or before the 60th day preceding the sinking fund payment date, such moneys shall thereafter be applied on the next succeeding sinking fund payment date in accordance with this Section to the redemption of such Securities. 92 * * * * This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. [Seal] EL PASO ELECTRIC COMPANY By_____________________________________ Attest: _________________________ [Seal] UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee By_____________________________________ Attest: _________________________ 93 STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On the ____ day of _________, 1994, before me personally came _________________, to me known, who, being by me duly sworn, did depose and say that he is a ______________ of El Paso Electric Company, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. _____________________________ STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On the ____ day of _________, 1994, before me personally came ____________, to me known, who, being by me duly sworn, did depose and say that he is a ______________ of United States Trust Company of New York, the Trustee described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. _____________________________ 94 Appendix A-1 EL PASO ELECTRIC COMPANY Series A ___% Senior Notes due ______ No. __________ $__________ EL PASO ELECTRIC COMPANY, a corporation duly organized and existing under the laws of the State of Texas (herein called the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to ___________________________________, or registered assigns, the principal sum of ________________________ Dollars on _________________________________, and to pay interest thereon from ________, 1994, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semiannually on ____________ and ___________ in each year, commencing ________, at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment, and, subject to the terms of the Indenture, at the rate per annum equal to __% [2.0% above stated rate] on any overdue principal and premium and (to the extent that the payment of such interest shall be legally enforceable) on any overdue instalment of interest. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the _______ or ________ (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payment of the principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in New York, New York in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. 95 Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: [Seal] EL PASO ELECTRIC COMPANY By______________________________________ [Title] 96 EL PASO ELECTRIC COMPANY Series A ___% Senior Notes due _____ This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of _________, 1994 (herein called the "Indenture"), between the Company and United States Trust Company of New York (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to $________. The Securities of this series are subject to redemption upon not less than 30 or more than 60 days' notice by mail to the Holders of such Securities at their addresses in the Security Register for such series, at any time, as a whole or in part, at the election of the Company, at the following Redemption Prices (expressed as percentages of the principal amount): If redeemed during the 12-month period beginning ___________, of the years indicated: Redemption Redemption Year Price Year Price [table to come based upon Schedule C to the Plan with adjustments prior to Year 4 as detailed in the Plan] , together in the case of any such redemption with accrued and unpaid interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture. In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. 97 The Indenture provides that, subject to certain conditions, if a Change in Control (as such term is defined in the Indenture) occurs, the Company shall be required to make an offer to purchase this Security. In the event of the repurchase, pursuant to an offer to purchase, of this Security in part only, a new Security for the unrepurchased portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. The Indenture contains provisions for defeasance of (a) the entire indebtedness of this Security and (b) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein. If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than 50% in principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of (and premium, if any) and interest, if any, on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar 98 duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities of this series are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. This Security shall be governed by and construed in accordance with the laws of the State of New York. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture. UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee By____________________________ Authorized Officer 99 Appendix A-2 EL PASO ELECTRIC COMPANY Class 13 ___% Senior Notes due 2003 No. __________ $__________ EL PASO ELECTRIC COMPANY, a corporation duly organized and existing under the laws of the State of Texas (herein called the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to ___________________________________, or registered assigns, the principal sum of ________________________ Dollars on _________________________________, and to pay interest thereon from ________, 1994, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semiannually on ____________ and ___________ in each year, commencing ________, at the rate per annum provided in the title hereof, until the principal hereof is paid or made available for payment, and, subject to the terms of the Indenture, at the rate per annum equal to __% [2.0% above stated rate] on any overdue principal and premium and (to the extent that the payment of such interest shall be legally enforceable) on any overdue instalment of interest. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the _______ or ________ (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payment of the principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in New York, New York, in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. 100 Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: [Seal] EL PASO ELECTRIC COMPANY By______________________________________ [Title] 101 EL PASO ELECTRIC COMPANY Class 13 ___% Senior Notes due 2003 This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of _________, 1994 (herein called the "Indenture"), between the Company and United States Trust Company of New York (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to $________. The Securities of this series are subject to redemption upon not less than 30 or more than 60 days' notice by mail to the Holders of such Securities at their addresses in the Security Register for such series, at any time, as a whole or in part, at the election of the Company, at the following Redemption Prices (expressed as percentages of the principal amount): If redeemed during the 12-month period beginning ___________, of the years indicated: Redemption Redemption Year Price Year Price [table to come based upon Schedule C to the Plan with adjustments prior to Year 4 as detailed in the Plan] , together in the case of any such redemption with accrued and unpaid interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture. In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. 102 The Indenture provides that, subject to certain conditions, if a Change in Control (as such term is defined in the Indenture) occurs, the Company shall be required to make an offer to purchase this Security. In the event of the repurchase, pursuant to an offer to purchase, of this Security in part only, a new Security for the unrepurchased portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. The Indenture contains provisions for defeasance of (a) the entire indebtedness of this Security and (b) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein. If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than 50% in principal amount of the Securities at the time Outstanding of all series to be affected (voting as a class). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Security at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of (and premium, if any) and interest, if any, on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar 103 duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities of this series are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. This Security shall be governed by and construed in accordance with the laws of the State of New York. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture. UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee By____________________________ Authorized Officer EX-99 6 FORMS OF REORGANIZED EPE LOC & REIMBURSEMENT AGT 1 EXHIBIT A-20 LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT Dated as of , 199[ ] among EL PASO ELECTRIC COMPANY, CITIBANK, N.A., as Issuing Bank, THE CREDITORS Specified Herein and CITIBANK, N.A., as Agent for such Creditors 2 TABLE OF CONTENTS Section Page Preliminary Statements............................ 1 ARTICLE I DEFINITIONS 1.01 Certain Defined Terms....................... 3 1.02 Computation of Time Periods................. 15 1.03 Accounting Terms............................ 15 1.04 Interpretation.............................. 15 ARTICLE II AMOUNT AND TERMS OF THE LETTER OF CREDIT 2.01 The Letter of Credit........................ 15 2.02 Issuing the Letter of Credit................ 16 2.03 Drawing Fee................................. 16 2.04 Commissions................................. 16 2.05 Reimbursement on the Date of the Draw....... 16 2.06 Tender Advances............................. 17 2.07 Interest on Advances........................ 18 2.08 Reimbursement of Issuing Bank, Etc.......... 21 2.09 Prepayments; Reinstatement of Letter of Credit Amounts............................ 22 2.10 Additional Interest......................... 24 2.11 Increased Costs............................. 24 2.12 Payments and Computations................... 26 2.13 Payments on Non-Business Days............... 27 2.14 Extension of the Stated Termination Date...................................... 28 2.15 Evidence of Debt............................ 28 2.16 Obligations Absolute........................ 28 2.17 U.S. Taxes.................................. 30 2.18 Applicable Lending Office................... 32 2.19 Net Payments................................ 32 2.20 Reinstatement of the Letter of Credit....... 32 ARTICLE III CONDITIONS OF ISSUANCE 3.01 Conditions Precedent to Issuance of the Letter of Credit.......................... 32 3.02 Additional Conditions Precedent to Issuance of the Letter of Credit.......... 36 3.03 Conditions Precedent to Each Tender Advance............................ 36 ARTICLE IV REPRESENTATIONS AND WARRANTIES 4.01 Representations and Warranties of the Company........................... 37 i 3 Section Page ARTICLE V COVENANTS OF THE COMPANY 5.01 Affirmative Covenants...................... 40 5.02 Negative Covenants......................... 45 ARTICLE VI EVENTS OF DEFAULT 6.01 Events of Default.......................... 49 6.02 Upon an Event of Default................... 51 ARTICLE VII SECURITY 7.01 Issuance and Pledge of Bonds............... 52 7.02 Application of Moneys...................... 53 7.03 Rights of Bondholders...................... 53 7.04 The Agent's Duties......................... 53 ARTICLE VIII THE AGENT, THE CREDITORS AND THE ISSUING BANK 8.01 Authorization and Action................... 54 8.02 Reliance, Etc. ............................ 54 8.03 The Agent, the Issuing Bank and Affiliates............................... 55 8.04 Bank Credit Decision....................... 55 8.05 Indemnification............................ 55 8.06 Successor Agent............................ 56 8.07 Issuing Bank............................... 56 ARTICLE IX MISCELLANEOUS 9.01 Amendments, Etc. .......................... 57 9.02 Notices, Etc. ............................. 58 9.03 No Waiver; Remedies........................ 58 9.04 Rights of Setoff and Subrogation........... 58 9.05 Indemnification............................ 60 9.06 Issuing Bank and Creditors................. 61 9.07 Costs, Expenses and Taxes.................. 62 9.08 Purchase Option............................ 63 9.09 Binding Effect; Assignments and Participations........................... 63 9.10 Further Assurances......................... 65 9.11 Severability............................... 65 9.12 Headings................................... 65 9.13 Governing Law.............................. 65 9.14 Submission to Jurisdiction................. 66 ii 4 9.15 Waiver of Trial by Jury.................... 66 9.16 Counterparts............................... 66 9.17 Integration................................ 66 9.18 Survival................................... 67 SCHEDULE I - Liens EXHIBIT A - Form of Letter of Credit with Annexes A through I thereto attached iii 5 LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT, dated as of [ ], 199[ ], among EL PASO ELECTRIC COMPANY, a Texas corporation (the "Company"), CITIBANK, N.A., ("Citibank") as issuing bank (the "Issuing Bank"), the Creditors (as hereinafter defined) and Citibank, as agent for the Creditors (the "Agent"). PRELIMINARY STATEMENTS: (1) The Company requested the City of Farmington, New Mexico (the "Issuer") to refund the Issuer's $35,440,000 Pollution Control Revenue Bonds, 1981 Series A (El Paso Electric Company Four Corners Project) by the issuance, pursuant to Ordinance No. 83-807 and Resolution No. 83-403, both adopted November 22, 1983 (collectively, the "Original Ordinance"), naming The State National Bank of El Paso as trustee (the "Original Trustee"), of $35,805,000 aggregate principal amount of the Issuer's Annual Tender Pollution Control Refunding Revenue Bonds, 1983 Series A (El Paso Electric Company Four Corners Project) (the "Original Bonds"), to various purchasers. (2) The Issuer and the Company entered into an Installment Sale Agreement, dated as of November 1, 1983 (the "Original Installment Sale Agreement"), which the Issuer assigned to the Original Trustee to secure the payment of the Original Bonds, and pursuant to which, among other things, the Company was required to furnish a letter of credit in connection with its payment obligations under the Original Installment Sale Agreement. (3) The Original Trustee and the Company entered into a Tender Agreement dated as of November 1, 1983 pursuant to which, among other things, the Company was required to furnish a letter of credit in connection with its obligation to purchase Original Bonds pursuant to subsection 3 of Section 2.08 of the Original Ordinance. (4) The Company and Citibank entered into a Letter of Credit and Reimbursement Agreement dated as of November 1, 1983, as amended by the Amendment, dated as of May 30, 1991, the Deferral Agreement, dated as of December 30, 1991, the Second Amendment, dated as of September 28, 1993, and , dated as of , in each case between the Company and Citibank (such agreement as so amended, the "Original Reimbursement Agreement"), pursuant to which Citibank issued its Irrevocable Letter of Credit dated December 6, 1983 (the "Original Letter of Credit") in respect of certain of the Company's payment obligations relating to the Original Bonds. (5) On January 8, 1992, the Company commenced a voluntary case (the "Bankruptcy Case") under chapter 11 of the Bankruptcy Code (as hereinafter defined) (Case No. 92-10148-FM) in the Bankruptcy Court (as hereinafter defined), and thereafter has continued to operate its business and manage its assets as a debtor-in-possession. 6 (6) The Company desires to restructure its outstanding indebtedness and, in connection therewith, the Company has requested the Issuer to, and the Issuer has agreed to, refund (the "Refunding") the Original Bonds by issuing Pollution Control Refunding Revenue Bonds (El Paso Electric Company Four Corners Project), 199 Series (the "Bonds") pursuant to the Indenture of Trust dated as of , 199 , a form of which has been filed with the Bankruptcy Court in accordance with Section 7.6 of the Plan of Reorganization (as hereinafter defined) (as such Indenture may be amended, supplemented and modified from time to time, the "Indenture"), naming [ ] as trustee (the "Trustee"). (7) In connection with the Refunding, the Issuer and the Company have entered into a Loan Agreement, dated as of , 199 (as the same may be amended, supplemented and modified from time to time, the "Loan Agreement"), which the Issuer has assigned to the Trustee to secure payment of the Bonds, and pursuant to which, among other things, in connection with the initial delivery of the Bonds, the Company is required to furnish a letter of credit in connection with its payment obligations under the Loan Agreement. [(8) In connection with the Refunding, the Trustee and the Company have entered into a Tender Agreement, dated as of , 199 , pursuant to which, among other things, the Company is required to furnish a letter of credit in connection with its obligation to purchase Bonds pursuant to Section 2.02 of the Indenture and redeem Bonds pursuant to Section 3.01 of the Indenture.] (9) In connection with the Refunding and in consideration therefor and as set forth in the Plan of Reorganization, the Company and Citibank have agreed to enter into this Letter of Credit and Reimbursement Agreement (as amended, modified and supplemented from time to time, this "Agreement") and the Related Documents (as defined herein) pursuant to which Citibank will issue, in substantially the form of Exhibit A, a letter of credit (such letter of credit and any successor letter of credit as provided for in such letter of credit being the "Letter of Credit"), in the amount of $[ ]* (the "Commitment") of which [$35,805,000]** shall support the payment of principal of the Bonds and $[ ] shall support the payment of interest on the Bonds for up to [ ] days computed at [14%]*** per annum on the principal thereof. _________________ * Not to exceed face amount of Original Letter of Credit. ** Not to exceed the portion of the Original Letter of Credit available to pay principal on the Original Bonds. *** To be set at a market rate as determined by the Remarketing Agent, but not to exceed 14% per annum. 7 (10) On [ , ], an order was entered by the court having jurisdiction over the Bankruptcy Case (the "Bankruptcy Court") confirming the Plan of Reorganization, which Plan of Reorganization provided, among other things, for the Company to enter into this Agreement. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained in the Plan of Reorganization and herein and in order to induce the Issuing Bank to issue the Letter of Credit, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Affiliate" means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term "control" (including the terms "controlling," "controlled by" and "under common control with") of a Person means the possession, direct or indirect, of the power to vote 5% or more of the Voting Stock of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise. "Agent Payment Notice" has the meaning assigned to that term in Section 2.08(a)(ii). "Agreement" has the meaning assigned to that term in Preliminary Statement (9). "Alternate Base Rate" means a fluctuating interest rate per annum as shall be in effect from time to time which rate per annum shall at all times be equal to the higher of: (i) the rate of interest announced publicly by Citibank in New York, New York, from time to time as Citibank's base rate, each change in such rate to be effective as of Citibank's opening of business on the date such change occurs (extensions of credit made by Citibank may bear interest at rates below, equal to or above such rate); or (ii) 1/2 of one percent above the latest three-week moving average of secondary market morning offering rates in the United States for three-month certificates 8 of deposit of major United States money market banks, such three-week moving average being determined weekly on each Monday (or, if any such day is not a Business Day, on the next succeeding Business Day) for the three-week period ending on the previous Friday by the Agent on the basis of such rates reported by certificate of deposit dealers to and published by the Federal Reserve Bank of New York or, if such publication shall be suspended or terminated, on the basis of quotations for such rates received by the Agent from three New York certificate of deposit dealers of recognized standing, in either case adjusted to the nearest 1/4 of one percent or, if there is no nearest 1/4 of one percent, to the next higher 1/4 of one percent. "Alternate Base Rate Advance" means a Tender Advance bearing interest as provided in Section 2.07(a). "Available Amount" in effect at any time means the maximum amount available to be drawn at such time under the Letter of Credit, the determination of such maximum amount to assume compliance with all conditions for drawing and no reduction for (i) any amount drawn by an Interest Draft (unless such amount is not reinstated under the Letter of Credit) or (ii) any amount drawn by a Tender Draft or (iii) any amount not available to be drawn because Bonds are held by or for the account of the Company. "Banking Institution" means any financial institution subject to regulation under Regulation D of the Board of Governors of the Federal Reserve System and any other banking institution or trust company or similar organization incorporated or organized under the laws of a country other than the United States, or a political subdivision of a country other than the United States. "Bankruptcy Case" has the meaning assigned to that term in Preliminary Statement (5). "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as heretofore and hereafter amended, and codified as title 11 of the United States Code. "Bankruptcy Court" has the meaning assigned to that term in Preliminary Statement (10). "Bond Interest Amount" for any Payment Date with respect to each Bond, means an amount equal to the accrued interest on the principal amount of such Bond in accordance with its terms from and including the first day of the Quarterly Period for such Bond ending on such Payment Date to but excluding the earlier of (i) the Payment Date and (ii) the date such Bond ceases to be held by or for the account of the Issuing Bank or the Agent or any other nominee of the Issuing Bank. 9 "Bonds" has the meaning assigned to that term in Preliminary Statement (6). "Business Day" means any day of the year on which banks are not required or authorized to close in New York City and, if the applicable Business Day relates to any Eurodollar Advances, on which dealings are carried on the London interbank market. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, from time to time. "Capitalized Lease Obligation" means, with respect to any lease of property which, in accordance with GAAP, appears on the lessee's balance sheet as a capital lease, the amount of the liability which should appear on such balance sheet. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Commencement Date" means the earlier of (i) the Effective Date and (ii) December 31, 1994. "Commitment" has the meaning assigned to that term in Preliminary Statement (9). "Confirmation Order" means the order of the Bankruptcy Court confirming the Plan of Reorganization. "Consolidated Subsidiary" means, for any Person, each Subsidiary of such Person (whether now existing or hereafter created or acquired) the financial statements of which shall be (or should have been) consolidated with the financial statements of such Person in accordance with GAAP. "Contract Interest Amount" for any Payment Date means an amount equal to the interest that would have accrued on an amount equal to the purchase price paid for each Bond purchased by the Trustee or the Tender Agent on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank, from and including the first day of the Quarterly Period for each such Bond ending on such Payment Date to but excluding the earlier of (i) the Payment Date and (ii) the date such Bond ceases to be held by or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank, at an interest rate per annum equal at all times to the sum of (x) the Alternate Base Rate in effect from time to time plus (y) .50% per annum. "Creditors" means the banks listed on the signature pages hereof under the caption "Creditors" and any other Person which becomes a party hereto pursuant to Section 9.09(a). 10 "Credit Termination Date" means the earlier of (i) the day on which the Letter of Credit is surrendered by the Trustee to the Issuing Bank for cancellation and (ii) the Stated Termination Date. "Debt" of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (including, without limitation, all obligations, contingent or otherwise, of such Person in connection with acceptance facilities (other than acceptance facilities entered into in connection with normal course commercial trade transactions) and letter of credit facilities to the extent such letter of credit facilities support Debt), (b) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (c) all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person, (d) all Capitalized Lease Obligations of such Person, (e) all obligations of such Person to purchase, redeem, retire, defense or otherwise make any payment in respect of any capital stock of or other ownership or profit interest in such Person or any other Person or any warrants, rights or options to acquire such capital stock, valued, in the case of preferred stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (f) all Debt of others referred to in clauses (a) through (e) above guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (iv) otherwise to assure a creditor against loss, and (g) all Debt referred to in clauses (a) through (e) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt. In cases where recourse to any Person or any of its properties in respect of Debt is limited, the amount of such Debt of such Person for purposes hereof shall be so limited. "Default Rate" means a fluctuating interest rate equal to 2% per annum above the Alternate Base Rate in effect from time to time. 11 "EBITA" means, for any period, the sum, for the Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) net operating income (calculated before taxes, Interest Expense, extraordinary items and unusual non-cash, non-recurring items and income or loss attributable to equity in Affiliates) for such period plus (b) amortization (to the extent deducted in determining net operating income) for such period. "Effective Date" means the Effective Date (as defined therein) of the Plan of Reorganization. "Eligible Institution" means (i) a bank or trust company organized under the laws of the United States of America, of any state therein, of the District of Columbia, of any member country of the Organization for Economic Cooperation and Development or of any political subdivision of any such country, in each case, having assets in excess of $500,000,000, (ii) an insurance company organized under the laws of any state in the United States of America or of the District of Columbia having assets in excess of $500,000,000 or (iii) any other Person consented to by the Company, which consent shall not be unreasonably withheld. "Eligible Participant" has the meaning assigned to that term in Section 9.09(b). "Environmental Action" means any administrative, regulatory or judicial action, suit, demand, demand letter, claim, notice of non-compliance or violation, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law or any Environmental Permit including, without limitation, (a) any claim by any governmental or regulatory authority for enforcement, investigation, cleanup, removal, response, remedial or other actions or damages pursuant to any Environmental Law and (b) any claim by any Person seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment. "Environmental Law" means any federal, state or local law, rule, regulation, order, writ, judgment, injunction, decree, determination or award relating to the environment, health, safety or Hazardous Materials. "Environmental Permit" means any permit, approval, identification number, license or other authorization required under any Environmental Law. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. 12 "ERISA Affiliate" means any Person who for purposes of Title IV of ERISA is a member of the Company's controlled group, or under common control with the Company, within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended. "Eurodollar Advance" means any Tender Advance bearing interest at the Eurodollar Rate. "Eurodollar Rate" for any Interest Period for any Tender Advance means an interest rate per annum equal at all times during such Interest Period to the sum of (x) the LIBO Rate for such Interest Period plus (y) 1.50% per annum. "Event of Default" has the meaning assigned to that term in Section 6.01. "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it. "Final Approval" means any authorizations, consents, approvals, waivers, exceptions, variances, orders, licenses, exemptions, publications, filings, notices to and declarations of or with any governmental authority (other than routine reporting requirements the failure to comply with which will not affect the validity or enforceability of any of the Related Documents or have a Material Adverse Effect) or any other action in respect of any governmental authority that is in full force and effect and is not the subject of a pending appeal or reconsideration or other review, and the time in which to make an appeal or request the review or reconsideration of which has expired without any appeal or request for review or reconsideration having been taken or made. "Final Draft" has the meaning assigned to that term in the Letter of Credit. "Final Order" means an order of the Bankruptcy Court which (a) shall not have been reversed, stayed, modified or amended and the time to appeal from, or to seek review or rehearing of, shall have expired and as to which no appeal or petition for review, rehearing or certiorari is pending, or (b) if appealed from, shall have been affirmed and the time 13 to appeal from such affirmance or to seek review or rehearing thereof, shall have expired or no further hearing, appeal or petition for certiorari can be taken or granted. "First Mortgage Bond Indenture" means the Indenture dated as of between the Company and , as trustee, providing for the issuance by the Company of its first mortgage bonds. "First Mortgage Bonds" means bonds issued by the Company under the First Mortgage Bond Indenture. "First Mortgage Bonds, Series A/B" means collectively the First Mortgage Bonds, Series A and the First Mortgage Bonds, Series B, in each case, issued under the First Mortgage Bond Indenture. "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time. "Governmental Person" means any national, state or local government, any political subdivision or any government instrumentality, authority, body or entity, including the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, any central bank or any comparable authority. "Hazardous Materials" means (a) petroleum or petroleum products, asbestos in any form, radioactive or source material, (b) any substances defined as or included in the definition of "hazardous substances", "hazardous wastes", "hazardous materials", "extremely hazardous wastes", "restricted hazardous wastes", "toxic substances", "toxic pollutants", "contaminants" or "pollutants", or words of similar import, under any Environmental Law and (c) any other substance exposure to which is regulated under any Environmental Law. "Indemnified Party" has the meaning assigned to that term in Section 9.05. "Indenture" has the meaning assigned to that term in Preliminary Statement (6). "Interest Coverage Ratio" means, as at any date, the ratio of (a) EBITA for the period of four consecutive fiscal quarters ending on or most recently ended prior to such date to (b) Interest Expense for such period. "Interest Draft" has the meaning assigned to that term in the Letter of Credit. "Interest Expense" means, for any period, the sum, for the Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with 14 GAAP), of the following: (a) all interest in respect of Debt including, without limitation, interest capitalized during such period (whether or not actually paid during such period), including, without limitation, all commissions and fees (other than up-front fees), plus (b) the net amounts payable (or minus the net amounts receivable) under Interest Rate Protection Agreements accrued during such period (whether or not actually paid or received during such period). "Interest Period" has the meaning assigned to that term in Section 2.07(b). "Interest Rate Protection Agreement" means, for any Person, an interest rate swap, cap or collar agreement, interest rate future or option contracts or similar arrangement providing for the transfer or mitigation of interest risks either generally or under specific contingencies. "Investment Grade Rating" means a rating of BBB- or better (or equivalent rating) by any two of Moody's Investors Service, Inc., Standard & Poor's Corporation and Duff & Phelps, Inc. "Issuer" has the meaning assigned to that term in Preliminary Statement (1). "LC Payment Notice" has the meaning assigned to that term in Section 2.08(a)(ii). "Letter of Credit" has the meaning assigned to that term in Preliminary Statement (9). "Leverage Ratio" means, at any time, the ratio of Total Debt at such time to the sum of (a) Total Capital at such time plus (b) Total Debt at such time. "LIBO Rate" for any Interest Period means an interest rate per annum equal to the rate of interest per annum at which deposits in United States dollars are offered by the principal office of Citibank in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period for a period equal to such Interest Period. "Lien" means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property. "Loan Agreement" has the meaning assigned to that term in Preliminary Statement (7). 15 "Majority Creditors" means Creditors which have an aggregate Participation Percentage of more than 50%. "Material Adverse Effect" means a material adverse effect on (i) the property, business, operations, financial condition, liabilities or capitalization of the Company and its Subsidiaries taken as a whole, (ii) the ability of the Company to perform its obligations under any of the Related Documents, (iii) the validity or enforceability of any of the Related Documents, (iv) the rights and remedies of the Issuing Bank, the Creditors and the Agent or (v) the timely payment of the principal of or interest hereunder or other amounts payable in connection herewith. "Material Subsidiary" means, at any time, a Subsidiary of the Company (a) whose assets at such time exceed 10% of the assets of the Company and its Subsidiaries (on a consolidated basis) or (b) whose earnings at such time exceed 10% of the earnings of the Company and its Subsidiaries (on a consolidated basis). "Multiemployer Plan" means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions, such plan being maintained pursuant to one or more collective bargaining agreements. "Multiple Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the Company or an ERISA Affiliate and at least one Person other than the Company and its ERISA Affiliates or (ii) was so maintained and in respect of which the Company or an ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated. "Official Statement" means the Official Statement dated [ , 199 ] of the Issuer relating to the Bonds, together with the documents incorporated therein by reference. "Original Bonds" has the meaning assigned to that term in Preliminary Statement (1). "Original Installment Sale Agreement" has the meaning assigned to that term in Preliminary Statement (2). "Original Letter of Credit" has the meaning assigned to that term in Preliminary Statement (4). "Original Ordinance" has the meaning assigned to that term in Preliminary Statement (1). 16 "Original Reimbursement Agreement" has the meaning assigned to that term in Preliminary Statement (4). "Original Trustee" has the meaning assigned to that term in Preliminary Statement (1). "Partial Redemption Draft" has the meaning assigned to that term in the Letter of Credit. "Participant" has the meaning assigned to that term in Section 9.09(b). "Participation Percentage" means, as of any date of determination (i) with respect to a Creditor initially a party hereto, the percentage set forth opposite such Creditor's name on the signature pages hereof, except as provided in clause (iii) below, (ii) with respect to a Creditor that became a party hereto by operation of Section 9.09(a), the percentage participation interest assumed by such assignee Creditor as set forth in the instrument of assignment referred to in Section 9.09(a), except as provided in clause (iii) below, and (iii) with respect to any Creditor described in clause (i) or (ii) above that assigns a percentage of its interests in accordance with Section 9.09(a), its participation percentage as reduced by the percentage so assigned. "Payment Amount" has the meaning set forth in Section 2.05(c). "Payment Date" means the last day of each Quarterly Period. "Payment Period" has the meaning assigned to that term in Section 2.06. "PBGC" means the Pension Benefit Guaranty Corporation or any successor thereto. "Person" means an individual, a corporation, a partnership, an association, a business trust or any other entity or organization, including a Governmental Person. "Plan" means a Single Employer Plan or a Multiple Employer Plan. "Plan of Reorganization" means the Modified Third Amended Plan of Reorganization of the Debtor Providing for the Acquisition of El Paso Electric Company by Central and South West Corporation filed on August 27, 1993 (as corrected as of September 15, 1993). "Preliminary Official Statement" means the Preliminary Official Statement dated [ , 199 ] of the 17 Issuer relating to the Bonds, together with the documents incorporated therein by reference. "Quarterly Period" with respect to each Bond means the period commencing on the date such Bond is purchased by the Trustee or the Tender Agent on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank and ending on the first to occur of March 31, June 30, September 30 or December 31 thereafter, and, thereafter, each subsequent period commencing on the last day of the immediately preceding Quarterly Period and ending on the first to occur of March 31, June 30, September 30 or December 31 thereafter. "Refunding" has the meaning assigned to that term in Preliminary Statement (6). "Related Documents" has the meaning assigned to that term in Section 2.16. "Remarketing Agent's Agreement" means the remarketing agreement dated as of , 199[ ] between the Company and [ ]. "Second Mortgage Bond Indenture" means the Indenture dated as of between the Company and , as trustee, providing for the issuance by the Company of its second mortgage bonds. "Second Mortgage Bonds" means bonds issued by the Company under the Second Mortgage Bond Indenture. "Second Mortgage Bonds, Series [ ]" means the mortgage bonds at any time issued by the Company and outstanding pursuant to the Second Mortgage Bond Indenture. [To provide collateral security for the obligations of the Company related to this Agreement] "Second Mortgage Bonds, Series A" means the Second Mortgage Bonds, Series A issued under the Second Mortgage Bond Indenture. "Single Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the Company or an ERISA Affiliate and no Person other than the Company and its ERISA Affiliates or (ii) was so maintained and in respect of which the Company or an ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated. "Stated Termination Date" means [the earlier of (i) June 30, 2002 and (ii) the last day of the sixth month following 18 the seventh anniversary of the Effective Date, unless extended as provided in Section 2.14].* "Submission Date" means the date the form of this Agreement was filed with the Bankruptcy Court prior to the date creditors must have voted on the Plan of Reorganization in accordance with Section 7.6 of the Plan of Reorganization. "Subsidiary" means, with respect to any Person, any corporation, partnership or other entity of which at least a majority of the Voting Stock is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person. "Tender Advance" has the meaning assigned to that term in Section 2.06. "Tender Agent" has the meaning assigned to that term in the Indenture. "Tender Draft" has the meaning assigned to that term in the Letter of Credit. "Total Capital" means, as at any date, the sum for the Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) the amount of capital stock (excluding treasury stock and capital stock subscribed for and unissued and preferred stock mandatorily redeemable in cash or redeemable in cash at the option of the holder thereof), plus (b) the amount of surplus and retained earnings (or, in the case of a surplus or retained earnings deficit, minus the amount of such deficit). "Total Debt" means, as at any date, the aggregate amount of all Debt of the Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) (other than contingent obligations in connection with acceptance facilities and letters of credit). "Trustee" means [ ] and its successors and permitted assigns under the Indenture, as trustee and paying agent. "Voting Stock" means capital stock issued by a corporation, or equivalent interests in any other Person, the ___________________ * As adjusted in accordance with Sections 3.13 E and 3.15 of the Plan of Reorganization. 19 holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or Persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency. "Withdrawal Liability" has the meaning given such term under 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 means "to but excluding". SECTION 1.03. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP consistently applied, except as otherwise stated herein. SECTION 1.04. Interpretation. In this Agreement the singular includes the plural and the plural the singular; words importing any gender include the other genders; references to statutes are to be construed as including all statutory provisions consolidating, amending or replacing the statute referred to; references to "writing" include printing, typing, lithography and other means of reproducing words in a tangible visible form; references to sections (or any subdivision of a section), articles, schedules, annexes and exhibits are to those of this Agreement unless otherwise indicated; the words "including", "includes" and "include" shall be deemed to be followed by the words "without limitation"; references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications to such instruments but only to the extent such amendments and other modifications are not prohibited by the terms of this Agreement or any other Related Document; and references to Persons include their respective permitted successors and assigns and, in the case of Governmental Persons, Persons succeeding to their respective functions and capacities. ARTICLE II AMOUNT AND TERMS OF THE LETTER OF CREDIT SECTION 2.01. The Letter of Credit. The Issuing Bank agrees, on the terms and conditions hereinafter set forth, to issue the Letter of Credit to the Trustee on any Business Day during the period from the date hereof to and including [ , 199 ] in the amount of the Commitment to support the payment of principal of and interest on the Bonds as set forth in Preliminary Statement (9) and expiring on the Stated Termination Date, unless earlier terminated in accordance with the terms thereof. 20 SECTION 2.02. Issuing the Letter of Credit. The Letter of Credit shall be issued on at least two Business Days' notice from the Company to the Issuing Bank (which notice may be furnished prior to the execution and delivery hereof) specifying the Business Day of issuance thereof. On such Business Day specified by the Company in such notice and upon fulfillment of the applicable conditions set forth in Article III, the Issuing Bank will issue the Letter of Credit to the Trustee. SECTION 2.03. Drawing Fee. The Company hereby agrees to pay to the Agent, for the account of the Issuing Bank a drawing fee of $100 per draw, payable at the time of each draw under the Letter of Credit. SECTION 2.04. Commissions. (a) The Company hereby agrees to pay to the Agent, for the account of the Issuing Bank and the Creditors, a letter of credit commission on the Available Amount in effect from time to time (i) from the date of issuance of the Letter of Credit to but excluding the first anniversary of the Commencement Date, at the rate of 0.625% per annum, (ii) from the first anniversary of the Commencement Date to but excluding the second anniversary of the Commencement Date, at the rate of 0.75% per annum, (iii) from the second anniversary of the Commencement Date to but excluding the third anniversary of the Commencement Date, at the rate of 0.875% per annum, (iv) from the third anniversary of the Commencement Date to but excluding the fourth anniversary of the Commencement Date, at the rate of 1.00% per annum, (v) from the fourth anniversary of the Commencement Date to but excluding the fifth anniversary of the Commencement Date, at the rate of 1.125% per annum, (vi) from the fifth anniversary of the Commencement Date to but excluding the sixth anniversary of the Commencement Date, at the rate of 1.25% per annum, (vii) from the sixth anniversary of the Commencement Date to but excluding the seventh anniversary of the Commencement Date, at the rate of 1.625% per annum, and (viii) from the seventh anniversary of the Commencement Date to but excluding the eighth anniversary of the Commencement Date, at the rate of 2.00% per annum. The Letter of Credit commission shall be payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing on the last day of the quarter in which the Letter of Credit is issued, until the Credit Termination Date, and on the Credit Termination Date. Such letter of credit commission shall be paid by the Agent to the Issuing Bank and the Creditors as the Issuing Bank and the Creditors shall agree. (b) The Company hereby agrees to pay to the Agent, for the account of the Issuing Bank, upon each transfer by the Trustee of the Letter of Credit in accordance with its terms, a transfer commission equal to 1/4 of 1% of the Available Amount then in effect. SECTION 2.05. Reimbursement on the Date of the Draw. (a) Except as otherwise provided in subsections (b) and (c) of this Section 2.05 and subject to the provisions of Sections 2.06 21 and 2.07, the Company hereby agrees to pay to the Agent (i) on each date on which the Issuing Bank shall pay any amount under the Letter of Credit pursuant to any draft (including, without limitation, amounts in respect of any reinstatement of the interest component at the election of the Issuing Bank in its sole discretion notwithstanding any failure by the Company to reimburse the Issuing Bank or the Creditors for any previous drawing to pay interest on the Bonds), a sum equal to such amount so paid, plus (ii) on each day thereafter interest on any amount remaining unpaid by the Company to the Agent under clause (i) above, from the date of such draw until payment in full, at the Default Rate. (b) The Company shall have no obligation under Section 2.05(a) or Section 2.06 in the case of a Tender Draft to pay to the Agent, the Issuing Bank or any Creditor pursuant to this Agreement the amount paid by the Issuing Bank under the Letter of Credit if and to the extent the amount so paid under the Letter of Credit shall have been used to purchase Bonds to be held by or on behalf of and for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank pursuant to subsection (e) of Section 3.01 of the Indenture, subsection (e) of Section 9.01 of the Indenture or subsection (d) of Section 13.03 of the Indenture. Notwithstanding the foregoing, the obligations of the Company under this Agreement to pay to the Agent on behalf of the Issuing Bank and the Creditors any amounts in respect of the amounts paid by the Issuing Bank under the Letter of Credit referred to in the immediately preceding sentence shall continue to be effective or shall be reinstated, as the case may be, if at any time the purchase of the Bonds by or on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank with the proceeds of such amounts paid under the Letter of Credit is rescinded in whole or in part or some or all of the Bonds so purchased must otherwise be returned by the Issuing Bank, the Agent or any other nominee of the Issuing Bank. (c) The Company shall pay to the Agent, on each Payment Date the amount (the "Payment Amount") by which (i) the aggregate Contract Interest Amount for the Quarterly Period ending on such Payment Date exceeds (ii) the aggregate Bond Interest Amount for such Quarterly Period with respect to all Bonds held by or on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank during such Quarterly Period. Any amounts due pursuant to this Section 2.05(c) that are not paid when due shall bear interest from the date the same become due until such amounts are paid, payable on demand, at an interest rate equal to the Default Rate. SECTION 2.06. Tender Advances. Except as provided in Section 2.05(b), if the Issuing Bank shall make any payment under the Letter of Credit pursuant to a Tender Draft and the conditions set forth in Section 3.03(a) shall have been fulfilled, such payment shall constitute an advance made by the 22 Issuing Bank to the Company on the date and in the amount of such payment, each such advance being a "Tender Advance" and collectively the "Tender Advances". Except as otherwise provided in Section 2.09 or Section 6.02, each Tender Advance shall be payable in substantially equal quarterly installments on the last day of each calendar quarter, commencing on the last day of the calendar quarter in which the 90th day following the date of such Tender Advance occurs and continuing until the Stated Termination Date in effect on the date of such Tender Advance (each such approximately 90-day period being a "Payment Period"). SECTION 2.07. Interest on Advances. The Company shall pay interest on the unpaid principal amount of each Tender Advance from the date of such Tender Advance until such principal amount is paid in full at the applicable rate set forth below: (a) Alternate Base Rate. Except to the extent that the Company shall elect to pay interest on the unpaid principal of any Tender Advance for any Interest Period pursuant to subsection (c) of this Section 2.07, the Company shall pay interest on the unpaid principal of each Tender Advance from the date of such Tender Advance until the principal amount of such Tender Advance is paid in full, payable quarterly in arrears on the last day of each calendar quarter and on the date such Tender Advance is paid in full, at a fluctuating interest rate per annum in effect from time to time equal to .50% per annum above the Alternate Base Rate in effect from time to time. (b) Interest Periods. The Company may from time to time elect to have the interest on any Tender Advance determined and payable for a specified period (an "Interest Period" for such Tender Advance) in accordance with subsection (c) of this Section 2.07. The first day of an Interest Period for any Tender Advance shall be either the date such Tender Advance is made, the date the Company specifies as the first day of the Eurodollar Advance, or the last day of the then current Interest Period for a Eurodollar Advance. No Interest Period shall end after the Stated Termination Date. (c) Eurodollar Rate. The Company may from time to time elect to pay interest on any Tender Advance at the Eurodollar Rate for an Interest Period for such Tender Advance by notice delivered to the Agent, specifying the Tender Advance (which shall not be less than $1,000,000 unpaid principal amount during such Interest Period) and the first day and duration of such Interest Period, received by the Agent before 11:00 A.M. (New York City time) three Business Days prior to the first day of such Interest Period; provided that no more than four separate Interest Periods in respect of Eurodollar Advances may be outstanding at any one time. Such Interest 23 Period shall be of 1, 3 or 6 months' duration, at the Company's election; provided, however, that the Company may not select any Interest Period which ends after any principal repayment installment date unless, after giving effect to such selection, the aggregate unpaid principal amount of Eurodollar Advances having Interest Periods which end on or prior to such principal repayment installment date and Alternate Base Rate Advances shall be at least equal to the principal amount of the Tender Advances due and payable on and prior to such date. If the Company shall have made such election for any Tender Advance for any such Interest Period, the Company shall pay interest on such Tender Advance during such Interest Period, payable on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day which occurs during such Interest Period every three months from the first day of such Interest Period, at the Eurodollar Rate for such Interest Period for such Tender Advance. (d) Default Interest. The Company shall pay interest on the unpaid principal amount of any Tender Advance that is not paid when due and on the unpaid amount of all interest, and other amounts payable hereunder, that is not paid when due, payable on demand, at a rate per annum equal at all times to 2% per annum above the Alternate Base Rate in effect from time to time. Notwithstanding anything in this Agreement to the contrary, upon the occurrence and during the continuance of an Event of Default, the right of the Company to make an election in respect of the Eurodollar Rate pursuant to Section 2.07(c) shall terminate (i) automatically, in the case of an Event of Default under Section 6.01(a) or (ii) upon notice to the Company by the Bank, in all other cases; provided that no termination referred to in either of the preceding clauses (i) or (ii) shall affect any Eurodollar Advance during an Interest Period in effect for such Eurodollar Advance at the time such notice is received by the Company. (e) Illegality, Etc. Notwithstanding any other provision of this Agreement, if the Issuing Bank or any Creditor (which shall at the time be a Banking Institution) notifies the Company that the introduction of or any change in or in the interpretation of any law or regulation that occurs after the Submission Date makes it unlawful, or any central bank or other governmental authority asserts after the Submission Date that it is unlawful, for the Issuing Bank or any Creditor to perform its obligations to make, fund or maintain Eurodollar Advances hereunder (or participation interests therein), (i) the right of the Company to select the Eurodollar Rate for Tender Advances held by the Issuing Bank or such Creditor, as the case may be, and the obligation of the Issuing Bank and such Creditor, as the case may be, to 24 make or maintain Eurodollar Advances shall be suspended until the Issuing Bank or such Creditor, as the case may be, shall notify the Company that the circumstances causing such suspension no longer exist and (ii) the rate of interest on all such Tender Advances held by the Issuing Bank or such Creditor, as the case may be, shall thereupon be .50% per annum above the Alternate Base Rate in effect from time to time. (f) Interest Rate Protection. (i) If the Company shall fail to select the duration of any Interest Period for any Eurodollar Advance in accordance with the provisions contained in Section 2.07(c), the Agent will forthwith so notify the Company and the Creditors and such Eurodollar Advance will automatically, on the last day of the then existing Interest Period therefor, convert into an Alternate Base Rate Advance. (ii) On and after the date on which the unpaid principal amount of any Tender Advance shall be reduced, by payment or prepayment or otherwise, to less than $1,000,000, the rate of interest on the unpaid principal amount of such Tender Advance shall be .50% per annum above the Alternate Base Rate in effect from time to time and the right of the Company to select a different rate for such Tender Advance shall terminate; provided, however, that if and so long as the Company shall select for such Tender Advance the same Eurodollar Rate for and the same Interest Period as another Tender Advance or other Tender Advances and the aggregate unpaid principal amount of all such Tender Advances shall equal or exceed $1,000,000, the Company shall have the right to select such rate for such Interest Period for such Tender Advance. (g) Alternate Rate of Interest. In the event, and on each occasion, that, on the day two Business Days prior to the commencement of any Interest Period for a Eurodollar Advance, the Agent shall have determined (which determination shall be conclusive and binding upon the Company absent manifest error) that reasonable means do not exist for ascertaining the applicable Eurodollar Rate, the Agent shall, as soon as practicable thereafter, give written, facsimile or telegraphic notice of such determination to the Company, and any request by the Company for a Eurodollar Advance pursuant to subsection (c) of this Section 2.07 shall be deemed a request for an Alternate Base Rate Advance. After such notice shall have been given and until the circumstances giving rise to such notice no longer exist, each request for an Eurodollar Advance shall be deemed to be a request for an Alternate Base Rate Advance. (h) Majority Creditors' Costs for Eurodollar Advances. If, with respect to any Eurodollar Advances, the Majority Creditors notify the Agent that the Eurodollar Rate for any Interest Period for such Eurodollar Advances will not 25 adequately reflect the cost to such Majority Creditors of making, funding or maintaining their respective Eurodollar Advances for such Interest Period, the Agent shall forthwith so notify the Company and the Creditors, whereupon (i) each Eurodollar Advance will automatically, on the last day of the then existing Interest Period therefor, convert into an Alternate Base Rate Advance, and (ii) the obligation of the Creditors to make, or to convert Alternate Base Rate Advances into, Eurodollar Advances shall be suspended until the Agent shall notify the Company and the Creditors that the circumstances causing such suspension no longer exist. (i) Notice. Promptly after the determination of any interest rate provided for herein or any change therein, the Agent shall give notice thereof to the Company. SECTION 2.08. Reimbursement of Issuing Bank, Etc. (a) (i) The Issuing Bank hereby sells and transfers to each Creditor, and each Creditor hereby acquires from the Issuing Bank, an undivided interest and participation to the extent of such Creditor's Participation Percentage in and to (A) the Letter of Credit, including the obligations of the Issuing Bank under and in respect thereof and the Company's reimbursement and other obligations in respect thereof and (B) any Tender Advance made by the Issuing Bank hereunder, whether now existing or hereafter arising. (ii) If the Issuing Bank (A) shall not have been reimbursed in full for any payment made by the Issuing Bank under the Letter of Credit on the date of such payment or (B) shall make any Tender Advance to the Company, the Issuing Bank shall give the Agent prompt notice thereof (an "LC Payment Notice") no later than 12:00 noon (New York City time) on the next Business Day immediately succeeding the date of such payment by the Issuing Bank and the Agent shall give each Creditor prompt notice thereof (an "Agent Payment Notice") no later than two hours following the Agent's receipt of the LC Payment Notice at such Creditor's address referred to in Section 9.02. (iii) Upon receipt of an Agent Payment Notice, each Creditor severally agrees to pay to the Issuing Bank in accordance with clause (iv) below an amount equal to such Creditor's ratable portion (according to such Creditor's Participation Percentage as of the date of such Agent Payment Notice) of such unreimbursed amount or Tender Advance paid or made by the Issuing Bank, plus interest (if payment is not made in accordance with clause (iv)) on such amount at a rate per annum equal to the Federal Funds Rate from the date of payment by the Issuing Bank to the date of payment to the Issuing Bank by such Creditor. The failure of the Issuing Bank or the Agent to 26 give such LC Payment Notice or the Agent Payment Notice, as the case may be, shall not affect any Creditor's obligations pursuant to this subsection (a). (iv) Each such payment by a Creditor shall be made to the Agent for the account of the Issuing Bank at its address referred to in Section 9.02 in lawful money of the United States of America, in same day funds (1) not later than 2:30 p.m. (New York City time) on the day any such Agent Payment Notice is received by such Creditor, if such notice is received at or prior to 12:00 noon (New York City time) on a Business Day; (2) not later than 4:30 p.m. (New York City time) on the day any such Agent Payment Notice is received by such Creditor, if such notice is received after 12:00 noon (New York City time) but at or prior to 2:30 p.m. (New York City time) on a Business Day; or (3) not later than 12:00 noon (New York City time) on the Business Day next succeeding the day any such Agent Payment Notice is received by such Creditor, if such notice is received after 2:30 p.m. (New York City time) on a Business Day. Each Creditor's obligation to make each such payment to the Issuing Bank, and the Issuing Bank's right to receive the same, shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limiting the foregoing or Section 2.16, the occurrence or continuance of an Event of Default or the failure of any other Creditor to make any payment under this Section 2.08. Each Creditor further agrees that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. (b) The failure of any Creditor to make any payment to the Issuing Bank in accordance with subsection (a), above, shall not relieve any other Creditor of its obligation to make payment, but neither the Issuing Bank nor any Creditor shall be responsible for the failure of any other Creditor to make such payment. If any Creditor shall fail to make any payment to the Issuing Bank in accordance with subsection (a)(iv), above, then such Creditor agrees to pay to the Issuing Bank forthwith on demand such corresponding amount together with interest thereon for the first two days following the day upon which any such payment shall have been due and payable at the Federal Funds Rate and thereafter until the date such amount is repaid to the Issuing Bank at the Alternate Base Rate plus 1% per annum. (c) If any Creditor shall fail to make any payment to the Issuing Bank in accordance with subsection (a), above, then, in addition to other rights and remedies which the Issuing Bank may have, the Agent is hereby authorized, at the request of the Issuing Bank, to withhold and to apply to the payment of such amounts owing by such Creditor to the Issuing Bank and any related interest, that portion of any payments received by the Agent that would otherwise be payable to such Creditor. SECTION 2.09. Prepayments; Reinstatement of Letter of Credit Amounts. (a) The Company may, upon at least two Business Days' notice to the Agent stating the proposed date and principal 27 amount of the prepayment, and if such notice is given to the Agent the Company shall, prepay the amount outstanding under any Tender Advance in whole or in part (each such partial prepayment shall be in the minimum amount of $[ ]) with accrued interest to the date of such prepayment on the amount prepaid (any such prepayment shall be applied to outstanding Tender Advances in the inverse order of maturity); provided, however, that with respect to any prepayment of any Eurodollar Advance made on a day other than the last day of an Interest Period for such Eurodollar Advance, the Company shall pay to the Agent, in accordance with Section 2.11(b), an amount sufficient to compensate the Issuing Bank and any Creditor for any loss, cost, or expense incurred by it by reason of such prepayment on a day other than the last day of an Interest Period. (b) Prior to or simultaneously with the resale of Bonds acquired by the Trustee or the Tender Agent for the account of the Company with the proceeds of one or more draws under the Letter of Credit by one or more Tender Drafts, the Company shall or shall cause the Trustee on behalf of the Company to prepay the then outstanding Tender Advances (any such prepayment shall be applied to outstanding Tender Advances in the inverse order of maturity) by paying to the Agent an amount equal to the sum of (i) the aggregate principal amount of the Bonds being resold or to be resold plus (ii) the aggregate amount of accrued and unpaid interest on such Bonds which was paid by a drawing or drawings under such Tender Draft or Drafts. Such payments when accompanied by a certificate completed and signed by the Trustee in substantially the form of Annex F to the Letter of Credit shall be applied by the Agent in reimbursement of such drawings (and as prepayment of Tender Advances resulting from such drawings in the manner described above); provided, however, that if any prepayment of any Tender Advance that is a Eurodollar Advance is made on a day other than the last day of the Interest Period for such Eurodollar Advance, the Company shall pay to the Issuing Bank and any Creditor, in accordance with Section 2.11(b), an amount sufficient to compensate the Issuing Bank and any Creditor for any loss, cost, or expense incurred by it by reason of such prepayment on a day other than the last day of an Interest Period; provided further that, in the case of a prepayment certified to the Issuing Bank by the Trustee as a prepayment of a Tender Advance pursuant to this Section 2.09(b) and made on a date other than a date on which interest on such Tender Advance is scheduled to be paid hereunder, the Company may pay interest accrued on such Tender Advance to the date of prepayment on the next scheduled date for the payment of interest on such Tender Advance, or if such Tender Advance shall have been prepaid in whole, on the date which would have been the next such scheduled date in the absence of such prepayment. The Company irrevocably authorizes the Issuing Bank to rely on such certificate and to reinstate the Letter of Credit in accordance therewith. 28 (c) Upon the substitution of a letter of credit or other credit facility for the Letter of Credit as provided in Section 2.02(6) of the Indenture, all Tender Advances and accrued and unpaid interest thereon and all other outstanding amounts payable by the Company to the Issuing Bank, the Creditors and the Agent under this Agreement shall be paid in full on the date the Letter of Credit shall terminate as a result of such substitution. SECTION 2.10. Additional Interest. Subject to Section 2.11(e)(ii), the Company shall pay to the Issuing Bank and each Creditor additional interest on the unpaid principal amount of any Eurodollar Advance by the Issuing Bank or such Creditor, from the date of such Eurodollar Advance until such principal amount is paid in full, at an interest rate per annum equal at all times during each Interest Period for such Eurodollar Advance to the remainder obtained by subtracting (i) the LIBO Rate for the Interest Period for such Eurodollar Advance from (ii) the rate obtained by dividing such LIBO Rate by a percentage equal to 100% minus the reserve percentage applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for the Issuing Bank or such Creditor, as the case may be, with respect to liabilities or assets consisting of or including Eurocurrency liabilities having a term equal to such Interest Period, payable on each date on which interest is payable on such Eurodollar Advance. Such additional interest shall be determined by the Issuing Bank or such Creditor, as the case may be, and notified to the Company (with a copy to the Agent). SECTION 2.11. Increased Costs. (a) If due either to (i) the introduction after the Submission Date of, or any change (other than any change by way of imposition or increase of reserve requirements in the case of Eurodollar Advances referred to in Section 2.10), after the Submission Date, in or in the interpretation of, any law or regulation or (ii) the compliance by the Issuing Bank or any Creditor with any guideline or request issued or made after the Submission Date by any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to the Issuing Bank or any Creditor as a result of agreeing to make or making, funding or maintaining Eurodollar Advances, or reduction in the amount of any sum received in respect thereof, then the Company shall from time to time, promptly after demand by the Issuing Bank or such Creditor, as the case may be, pay to the Agent for the account of the Issuing Bank or such Creditor, as the case may be, additional amounts sufficient to reimburse the Issuing Bank or such Creditor, as the case may be, for such increased cost or 29 reduced amount. A certificate as to the amount of such increased cost or reduced amount, submitted to the Company (with a copy to the Agent) by the Issuing Bank or such Creditor, as the case may be, shall be conclusive and binding for all purposes, absent manifest error. (b) If, due to any change of interest rate on any Eurodollar Advance pursuant to Section 2.07(e) or 2.07(f), any prepayment pursuant to Section 2.09 of any Eurodollar Advance, any acceleration of maturity of the Tender Advances pursuant to Section 6.02, or for any other reason, a Eurodollar Advance is subject to a change of interest rate, or any payment of principal of any Eurodollar Advance is received, in each case other than on the last day of an Interest Period relating to such Eurodollar Advance, the Company shall, promptly upon demand by Issuing Bank or any Creditor (with a copy of such demand to the Agent), pay to the Agent for the account of the Issuing Bank or such Creditor, as the case may be, any amounts required to compensate the Issuing Bank or such Creditor, as the case may be, for any additional losses, costs or expenses which it may reasonably incur as a result of such change or payment, including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by the Issuing Bank or such Creditor, as the case may be, to fund or maintain such Eurodollar Advance but excluding loss of anticipated profit. A certificate setting forth the amount of such additional losses, costs or expenses, submitted by the Issuing Bank or such Creditor, as the case may be, to the Company (with a copy to the Agent), shall be conclusive and binding for all purposes, absent manifest error. (c) If after the Submission Date any change in any law or regulation or in the interpretation thereof by any court or administrative or governmental authority charged with the administration thereof shall either (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against letters of credit or guarantees issued by, or assets held by, or deposits in or for the account of, the Issuing Bank or any Creditor or (ii) impose on the Issuing Bank or any Creditor any other condition regarding this Agreement or the Letter of Credit, and the result of any event referred to in clause (i) or (ii) above shall be to increase the cost to the Issuing Bank or such Creditor of issuing or maintaining the Letter of Credit, then, upon demand by the Issuing Bank or such Creditor, the Company shall pay to the Agent for the account of the Issuing Bank and such Creditor, from time to time as specified by the Issuing Bank and such Creditor, additional amounts sufficient to compensate the Issuing Bank and such Creditor for such increased cost. A certificate as to the amount of such increased cost, submitted to the Company (with a copy to the Agent) by the Issuing Bank and such Creditor, shall be conclusive and binding for all purposes, absent manifest error. 30 (d) If the Issuing Bank or any Creditor determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law), issued or made after the Submission Date, affects the amount of capital required to be maintained by the Issuing Bank or any Creditor or any corporation controlling the Issuing Bank or such Creditor, as the case may be, and that the amount of such capital is increased by or based upon the existence of the Issuing Bank's or such Creditor's, as the case may be, commitment hereunder and other commitments of this type or the issuance of the Letter of Credit (or similar contingent obligations), then, upon demand by the Issuing Bank or such Creditor, as the case may be, the Company shall pay to the Agent for the account of the Issuing Bank or such Creditor, as the case may be, from time to time as specified by the Issuing Bank or such Creditor, as the case may be, additional amounts sufficient to compensate the Issuing Bank or such Creditor, as the case may be, or such corporation in the light of such circumstances, to the extent that the Issuing Bank or such Creditor, as the case may be, reasonably determines such increase in capital to be allocable to the existence of the Issuing Bank's or such Creditor's, as the case may be, commitment hereunder. A certificate as to such amounts submitted to the Company (with a copy to the Agent) by the Issuing Bank or such Creditor, as the case may be, shall be conclusive and binding for all purposes, absent manifest error. (e) Notwithstanding any other provision in this Section 2.11 to the contrary, (i) the Company is not responsible for, and is not required to reimburse the Issuing Bank or any Creditor for, any amounts that would otherwise be payable by the Company pursuant to subsection (a), (b), (c) or (d) of this Section 2.11 to the extent such amounts accrued 90 days or more prior to the date the Issuing Bank or any Creditor provides to the Company a certificate which sets forth such amounts owed to the Issuing Bank or such Creditor, as the case may be, by the Company pursuant to such subsections and (ii) the Company is responsible for, and is required to reimburse the Issuing Bank and any Creditor for, any amounts payable by the Company pursuant to Section 2.10 and this Section 2.11, only so long as the Issuing Bank or such Creditor is a Banking Institution. (f) In calculating any amounts required to be paid by the Company pursuant to this Section 2.11, the Issuing Bank or such Creditor, as the case may be, shall make all determinations and allocations on a reasonable basis. SECTION 2.12. Payments and Computations. (a) The Company shall make each payment hereunder not later than 12:00 noon (New York City time) (or, in the case of any payment required by Section 2.05(a), as soon as practicable after the Issuing Bank has made a payment under the Letter of Credit) on the day when due in lawful money of the United States of America to the Agent at its address referred to in Section 9.02 in same 31 day funds. The Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal, interest, fees or other amounts payable to the Issuing Bank and the Creditors to whom the same are payable at their respective addresses referred to in Section 9.02. (b) If, after the Agent has paid to the Issuing Bank or any Creditor any amount pursuant to subsection (a) above, such payment is rescinded or must otherwise be returned or must be paid over by the Agent or the Issuing Bank to any Person, whether pursuant to any bankruptcy or insolvency law, Section 9.04(c) or otherwise, the Issuing Bank or such Creditor, as the case may be, shall, at the request of the Agent or the Issuing Bank, promptly repay to the Agent or the Issuing Bank, as the case may be, an amount equal to such payment, together with any interest required to be paid by the Agent or the Issuing Bank with respect to such payment. (c) The Company hereby authorizes the Issuing Bank and each Creditor, if and to the extent payment is not made when due hereunder, to charge from time to time against any or all of the Company's accounts with the Issuing Bank and each Creditor any amount so due. (d) All computations of interest based on the Alternate Base Rate shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, and computations of the commissions hereunder and of interest based on the LIBO Rate shall be made by the Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or commitment fees are payable. Each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. SECTION 2.13. Payments on Non-Business Days. (a) Whenever any payment hereunder shall be stated to be due, or whenever the last day of any Interest Period, Payment Period or Quarterly Period would otherwise occur, on a day which is not a Business Day, such payment shall be made, and the last day of such Interest Period, Payment Period or Quarterly Period shall occur, on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or commission, as the case may be; provided, however, if such extension would cause such payment of interest on or principal of a Eurodollar Advance to be made, or the last day of an Interest Period for a Eurodollar Advance to occur, in the next following calendar month, such payment shall be made, and the last day of such Interest Period shall occur, on the next preceding Business Day. (b) Whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months 32 equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month. Notwithstanding anything to the contrary contained herein, each Interest Period that commences on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month. SECTION 2.14. Extension of the Stated Termination Date. The Company may request, at least 60 days but not more that 120 days before the Stated Termination Date, in a writing delivered to the Agent (such request shall be accompanied by a certificate from a duly authorized officer of the Company that the representations and warranties in Section 4.01 are true and correct as of the date of such request, before and after giving effect to such request, as though made on and as of the date of such request, and such request shall be irrevocable) that the Issuing Bank, each Creditor and the Agent extend for one year the then Stated Termination Date for purposes of this Agreement and the Letter of Credit. If the Company shall make such a request, the Agent shall, on or before 40 days before the then Stated Termination Date, notify the Company in writing whether or not the Issuing Bank, each Creditor and the Agent consent to such request and, if the Issuing Bank, each Creditor and the Agent do so consent, the conditions for such extension. If the Agent shall not so notify the Company, the Issuing Bank, each Creditor and the Agent shall be deemed not to have consented to such request. The Company acknowledges that none of the Issuing Bank, any Creditor or the Agent has any obligation to, and none of such entities has given any assurance, undertaking or commitment that it will, extend (or consider extending) the Letter of Credit as set forth in this Section 2.14. SECTION 2.15. Evidence of Debt. The Agent shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Company resulting from each drawing under the Letter of Credit and from each Tender Advance made from time to time hereunder and the amounts of principal and interest payable and paid from time to time hereunder. In any legal action or proceeding in respect of this Agreement, the entries made in such account or accounts shall, in the absence of manifest error, be conclusive evidence of the existence and amounts of the obligations of the Company therein recorded. SECTION 2.16. Obligations Absolute. (a) The obligations of the Company under this Agreement and any other agreement or instrument relating to the Letter of Credit shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement and such other agreement or instrument under all circumstances, including, without limitation, the following circumstances, and regardless of the use of proceeds of any drawing under the Letter of Credit or any defense to payment related thereto: 33 (i) any lack of validity or enforceability of this Agreement, the Letter of Credit, the Bonds, the Indenture, the Loan Agreement, the Second Mortgage Bonds, Series , the Second Mortgage Bond Indenture, the Remarketing Agent's Agreement, or any other agreement or instrument relating thereto (collectively, the "Related Documents"); (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Company in respect of the Letter of Credit or any other amendment or waiver of or any consent to departure from all or any of the Related Documents; (iii) the existence of any claim, set-off, defense or other right that the Company may have at any time against the Trustee or any other beneficiary or any transferee of the Letter of Credit (or any Persons or entities for whom the Trustee, any such beneficiary or any such transferee may be acting), the Issuing Bank, any Creditor, the Agent or any other Person or entity, whether in connection with this Agreement, the transactions contemplated hereby or by the other Related Documents or any unrelated transaction; (iv) any draft, statement or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (v) payment by the Issuing Bank under the Letter of Credit against presentation of a draft or certificate which does not comply with the terms of the Letter of Credit; (vi) any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any guarantee, for all or any of the obligations of the Company in respect of the Letter of Credit or any other Related Document; or (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company or a guarantor. (b) The obligations of each Creditor under Section 2.08 shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement (as the same may be amended from time to time) under all circumstances, including, without limitation, the following circumstances: (i) any lack of validity or enforceability of the Related Documents; (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of 34 the Company in respect of the Letter of Credit or any other amendment or waiver of or any consent to departure from all or any of the Related Documents entered into in accordance with this Agreement; (iii) the existence of any claim, set-off, defense or other right that the Company may have at any time against the Trustee or any other beneficiary or any transferee of the Letter of Credit (or any Persons or entities for whom the Trustee, any such beneficiary or any such transferee may be acting), the Issuing Bank, or any other Person or entity, whether in connection with this Agreement, the transactions contemplated hereby or by the other Related Documents or any unrelated transaction; (iv) any draft, statement or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (v) payment by the Issuing Bank under the Letter of Credit against presentation of a draft or certificate which does not comply with the terms of the Letter of Credit; (vi) any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any guarantee, for all or any of the obligations of the Company in respect of the Letter of Credit or any other Related Document; or (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company or a guarantor. (c) Without limiting the effect of subsections (a) or (b) above, or any other provision hereof, the Company and each Creditor agree with the Issuing Bank that the Issuing Bank is authorized to make payments under the Letter of Credit upon the presentation of the documents provided for therein and without regard to whether the Company has failed to fulfill any of its obligations with respect to any Related Document or any Event of Default or event which with the giving of notice or lapse of time or both would constitute an Event of Default or other default has occurred thereunder or hereunder. SECTION 2.17. U.S. Taxes. (a) The Company agrees to pay to the Issuing Bank and each Creditor with respect to any period during which it is not a U.S. Person such additional amounts as are necessary in order that the net payment of any amount due to such non-U.S. Person hereunder after deduction for or withholding in respect of any U.S. Tax imposed with respect to such payment (or in lieu thereof, payment of such U.S. Tax by 35 such non-U.S. Person), will not be less than the amount stated herein to be then due and payable, provided that the foregoing obligation to pay such additional amounts shall not apply: (i) to any payment to the Issuing Bank or any such Creditor hereunder unless the Issuing Bank or any such Creditor is, on the Submission Date (or on the date such Person becomes the successor to, or the assignee of, the Issuing Bank or any such Creditor as provided in Section 9.09) and on the date of any change in the applicable lending office of the Issuing Bank or any such Creditor after the date hereof, either entitled to submit a Form 1001 (relating to the Issuing Bank or any such Creditor and entitling it to a complete exemption from withholding on all interest to be received by it hereunder in respect of any Tender Advance or any other amount hereunder payable) or Form 4224 (relating to all interest to be received by the Issuing Bank or any such Creditor hereunder in respect of any Tender Advance or any other amount hereunder payable), or (ii) to any U.S. Tax imposed solely by reason of the failure by such non-U.S. Person to comply with applicable certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connections with the United States of America of such non-U.S. Person if such compliance is required by statute or regulation of the United States of America as a precondition to relief or exemption from such U.S. Tax. For the purposes of this Section 2.17(a), (w) "Form 1001" shall mean Form 1001 (Ownership, Exemption, or Reduced Rate Certificate) of the Department of the Treasury of the United States of America, (x) "Form 4224" shall mean Form 4224 (Exemption from Withholding of Tax on Income Effectively Connected with the Conduct of a Trade or Business in the United States) of the Department of the Treasury of the United States of America (or in relation to either such Form such successor and related forms as may from time to time be adopted by the relevant taxing authorities of the United States of America to document a claim to which such Form relates), (y) "U.S. Person" shall mean a citizen, national or resident of the United States of America, a corporation, partnership or other entity created or organized in or under any laws of the United States of America, or any estate or trust that is subject to Federal income taxation regardless of the source of its income and (z) "U.S. Taxes" shall mean any present or future tax, assessment or other charge or levy imposed by or on behalf of the United States of America or any taxing authority thereof or therein. (b) Within 30 days after paying any amount to the Issuing Bank or any such Creditor from which it is required by law to make any deduction or withholding, and within 30 days after it is required by law to remit such deduction or withholding to any relevant taxing or other authority, the 36 Company shall deliver to the Issuing Bank or such Creditor, as the case may be, evidence satisfactory to the Issuing Bank or such Creditor, as the case may be, of such deduction, withholding or payment (as the case may be). SECTION 2.18. Applicable Lending Office. If the Issuing Bank or any Creditor requests compensation from the Company under any of Section 2.11(a), 2.11(c), 2.11(d) or 2.17, the Issuing Bank or such Creditor, as the case may be, will designate a different applicable lending office for the portions of any Tender Advance or other amount due hereunder affected by the events giving rise to such request for compensation if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable opinion of the Issuing Bank or such Creditor, as the case may be, be disadvantageous to the Issuing Bank or such Creditor, as the case may be, except that the Issuing Bank or such Creditor, as the case may be, shall have no obligation to designate an applicable lending office located in the United States of America. SECTION 2.19. Net Payments. All payments under this Agreement to the Agent, the Issuing Bank, or any Creditor shall be made without set-off or counterclaim. SECTION 2.20. Reinstatement of the Letter of Credit. Upon delivery to the Agent of any Bonds purchased by the Trustee on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank accompanied by a certificate completed and signed by the Trustee in substantially the form of Annex G to the Letter of Credit pursuant to subsection (e) of Section 3.01 of the Indenture, subsection (e) of Section 9.01 of the Indenture, or subsection (d) of Section 13.03 of the Indenture with moneys drawn under the Letter of Credit, the amounts available to be drawn under the Letter of Credit shall be reinstated, without any further action by the Company or any party other than the Issuing Bank, in an amount equal to the amount of the moneys drawn under the Letter of Credit to purchase such Bonds; provided, however, if at any time any such purchase shall be rescinded, in whole or in part, or some or all of the Bonds so purchased must otherwise be returned by the Issuing Bank, the Agent or any other nominee of the Issuing Bank, in each case, for any reason, the amounts so reinstated shall not be available to be drawn until and unless the Company reimburses the Issuing Bank or the Creditors, as the case may be, for such amounts. ARTICLE III CONDITIONS OF ISSUANCE SECTION 3.01. Conditions Precedent to Issuance of the Letter of Credit. The obligation of the Issuing Bank to issue the Letter of Credit is subject to the satisfaction or waiver in writing by the Agent, in its sole discretion, of the following: 37 (i) the Agent shall have received on or before the date of the issuance of the Letter of Credit the following, each dated such day (unless otherwise indicated), in form and substance satisfactory to and in sufficient copies for each Creditor: (a) certified copies of the restated articles of incorporation and bylaws of the Company, a certified copy of the resolutions of the Board of Directors of the Company approving this Agreement, the form and content of the Letter of Credit, the other Related Documents and the other matters contemplated hereby and thereby, and of all other documents evidencing any other necessary corporate action; (b) a copy of a certificate of the Secretary of State of Texas dated a date reasonably close to the date of issuance of the Letter of Credit listing the articles of incorporation of the Company and each amendment thereto on file in his office and certifying that (A) such amendments are the only amendments to the Company's articles of incorporation on file in his office and (B) the Company is duly incorporated, validly existing and in good standing under the laws of such State; (c) a telegram from such Secretary of State or such other evidence satisfactory to the Agent certifying that the Company is duly incorporated, validly existing and in good standing under the laws of such State on the date of issuance of the Letter of Credit; (d) originals (or copies certified to be true copies by an appropriate officer of the Company or, in the case of the Issuer, by the county clerk of the Issuer) of all governmental and regulatory approvals (including, without limitation, approvals or orders of the Issuer and the Federal Energy Regulatory Commission and the New Mexico Public Service Commission approvals) legally required to be obtained on the Effective Date and on the date of issuance of the Letter of Credit for the Company to enter into this Agreement and the other Related Documents and to carry out the transactions contemplated hereby and thereby; (e) a certified transcript relating to the issuance of the Bonds; (f) a certificate of the Secretary of the Company certifying the incumbency and the names and true signatures of the officers of the Company authorized to sign this Agreement and the other documents to be delivered by it hereunder, together with a certificate of another officer of the Company as to the incumbency and specimen signature of the Secretary of the Company; (g) a certified copy of the Indenture and evidence satisfactory to the Agent that the Indenture has been duly adopted by the Issuer and accepted by the Trustee; 38 (h) the Second Mortgage Bonds, Series [ ], such series having been duly completed, executed and pledged to the Agent for its benefit and the benefit of the Issuing Bank and the Creditors by the Company; (i) evidence of the completion of all recordings and filings of or with respect to the Second Mortgage Bond Indenture that the Agent may deem necessary or desirable in order to perfect the security interest created thereby; (j) a certified copy of the Second Mortgage Bond Indenture; (k) a favorable opinion of Milbank, Tweed, Hadley & McCloy, New York counsel for the Company (or other New York counsel for the Company that is reasonably satisfactory to the Agent), in form and substance reasonably satisfactory to the Agent; (l) a favorable opinion of Vinson & Elkins, Texas counsel for the Company (or other Texas counsel for the Company that is reasonably satisfactory to the Agent), in form and substance reasonably satisfactory to the Agent; (m) a favorable opinion of Stoops & Burns, Arizona counsel for the Company (or other Arizona counsel for the Company that is reasonably satisfactory to the Agent), in form and substance reasonably satisfactory to the Agent; (n) a favorable opinion of Taichert, Wiggins, Virtue, Wilson & Najjar, New Mexico regulatory counsel for the Company (or other New Mexico regulatory counsel for the Company that is reasonably satisfactory to the Agent), in form and substance reasonably satisfactory to the Agent; (o) a favorable opinion of [Milbank, Tweed, Hadley & McCloy], federal regulatory counsel for the Company (or other federal regulatory counsel for the Company that is reasonably satisfactory to the Agent), in form and substance reasonably satisfactory to the Agent; (p) a favorable opinion of Mudge Rose Guthrie Alexander & Ferdon, bond counsel, in form and substance reasonably satisfactory to the Agent; (q) a favorable opinion of , counsel to the Issuer, or other counsel reasonably satisfactory to the Agent, in form and substance reasonably satisfactory to the Agent; (r) a favorable opinion of Shearman & Sterling, special counsel for the Issuing Bank, [to the extent required by the agencies rating the Bonds]; 39 (s) a certificate from the Issuer certifying that the resolutions approving the issuance of the Bonds, the execution and delivery of the Indenture and all documents delivered by the Issuer in connection with the issuance of the Bonds are in full force and effect; (t) a certificate of the Issuer, dated the date of issuance of the Letter of Credit, as to the incumbency of each of the persons executing and delivering the Indenture and any document to be delivered by the Issuer in connection therewith; (u) the Official Statement certified by the Secretary of the Company to be a true and correct copy thereof; (v) a certificate of the Trustee certifying the incumbency and signature specimens of officials of the Trustee authorized to make drawings, to execute and present certificates and drafts under the Letter of Credit and otherwise to communicate with the Issuing Bank regarding the Letter of Credit, upon which the Issuing Bank may rely until it receives a new such certificate; (w) written acknowledgment from the Trustee that it has received the Letter of Credit; (x) receipt from the Original Trustee under the Original Ordinance of the Original Letter of Credit and written acknowledgment from the Original Trustee that the Original Letter of Credit is of no further force and effect; (y) written evidence, satisfactory to the Agent, that the First Mortgage Bonds, Series A/B, and the Second Mortgage Bonds, Series A, have an Investment Grade Rating; and (z) a certificate of the chairman, president or chief financial officer of the Company, certifying (A) that the Effective Date has occurred as of the time of delivery thereof or will occur concurrently with the delivery thereof and (B) that, after giving effect to the transactions contemplated under the Plan of Reorganization: (x) no event has occurred and is continuing which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or the lapse of time or both; and (y) the representations and warranties made by the Company in Article IV hereof, and in each of the other Related Documents, shall be true on and as of the Effective Date with the same force and effect as if made on and as of such date (or, if such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date); and (ii) the following has occurred on or before the date of the issuance of the Letter of Credit: 40 (a) the Confirmation Order shall have been entered at least 10 days prior to the date hereof, no stay of such order shall be in effect and the Agent shall have received a certified copy of such order; (b) the Plan of Reorganization shall have been substantially consummated without waiver of any condition or other modification (other than waivers or modifications made in accordance with Section 6.6 of the Plan of Reorganization); (c) the Effective Date shall have occurred or shall occur substantially simultaneously with the delivery of this Agreement and of the other Related Documents; and (d) the Refunding shall have occurred or shall occur substantially simultaneously with the issuance of the Letter of Credit [and the delivery of the other Related Documents]. SECTION 3.02. Additional Conditions Precedent to Issuance of the Letter of Credit. The obligation of the Issuing Bank to issue the Letter of Credit shall be subject to the further conditions precedent that on the date of the issuance of the Letter of Credit (a) the following statements shall be true in all material respects and the Agent shall have received a certificate signed by a duly authorized officer of the Company, dated the date of such issuance, stating that: (i) The representations and warranties contained in Section 4.01 of this Agreement are correct on and as of the date of issuance of the Letter of Credit, before and after giving effect to such issuance, as though made on and as of such date; and (ii) No event has occurred and is continuing, or would result from such issuance of the Letter of Credit, which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both; and (b) the Agent shall have received such other approvals, opinions or documents as the Issuing Bank or any Creditor (through the Agent) may reasonably request. SECTION 3.03. Conditions Precedent to Each Tender Advance. (a) Each payment made by the Issuing Bank under the Letter of Credit pursuant to a Tender Draft shall constitute a Tender Advance hereunder only if on the date of such payment by the Issuing Bank the following statements shall be true in all material respects: (i) The representations and warranties contained in Section 4.01 of this Agreement are correct on and as of the date of such Tender Advance, before and after giving effect 41 to such Tender Advance and to the application of the proceeds therefrom, as though made on and as of such date; and (ii) No event has occurred and is continuing, or would result from such Tender Advance or from the application of the proceeds therefrom, which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both. (b) Unless the Company shall have previously advised the Issuing Bank in writing that one or more of the above statements in subsection (a) above is no longer true, the Company shall be deemed to have represented and warranted, on the date of each payment by the Issuing Bank under the Letter of Credit pursuant to a Tender Draft, that on the date of such payment the above statements are true. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Company. The Company represents and warrants as follows: (a) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Texas and is duly qualified to do business in, and is in good standing under the laws of the States of Texas, Arizona and New Mexico and has requisite corporate power and authority, and all governmental licenses, authorizations and approvals necessary, to conduct its business and to own its properties, except where the failure to have the same would not result in a Material Adverse Effect. (b) The execution, delivery and performance by the Company of this Agreement and the other Related Documents to which it is a party are within the Company's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Company's articles of incorporation or by-laws, which the Company has adopted pursuant to the Plan of Reorganization or (ii) any law, order, rule, regulation (including, without limitation, any order, rule or regulation of the Federal Energy Regulatory Commission, the New Mexico Public Service Commission or the Public Utility Commission of Texas, or Regulation G, T, U or X of the Board of Governors of the Federal Reserve System), writ, judgment, injunction or decree applicable to the Company or any contractual restriction binding on or affecting the Company or any Subsidiary, and do not result in or require the creation of any Lien of the Company or any Subsidiary (except as provided in or contemplated by this Agreement or the other Related Documents or the Plan of Reorganization) upon or with respect to any properties of the Company or any Subsidiary. 42 (c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Company of this Agreement or any other Related Document (including the issuance and pledge of the Second Mortgage Bonds, Series [ ] and the creation and perfection of the Liens on the property securing such Bonds) except for (i) those that have been duly obtained or made and are in full force and effect and are Final Approvals and (ii) the Confirmation Order. (d) This Agreement has been duly and validly executed by the Company and constitutes, and the other Related Documents when delivered hereunder will be, the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms. (e) There is no pending or overtly threatened action, investigation, proceeding or notification which has been instituted after the Effective Date affecting the Company or any of its Subsidiaries before any court, governmental agency or arbitrator which is reasonably likely to have a Material Adverse Effect. (f) Except for information contained in Annex B to the Official Statement describing the Issuing Bank, as to which no representation is made, the Official Statement was, the Preliminary Official Statement was, and any supplement or amendment to any thereof shall be, accurate in all material respects for the purposes for which its use is, was, or shall be, authorized; and the Official Statement did not as of its date of issue contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements made therein, in the light of the circumstances under which they are or were made, not misleading. (g) The Company and the ERISA Affiliates have fulfilled their respective obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and are in compliance with the presently applicable provisions of ERISA and the Code except where non-compliance would not have a Material Adverse Effect, and have not incurred any liability to the PBGC (other than to pay premiums under Section 4007 of ERISA) or any Plan or any Multiemployer Plan (other than to make contributions in the ordinary course of business). No reportable event, within the meaning of Section 4043 of ERISA, has occurred with respect to any Plan, except for any such event as to which the 30-day notice requirement has been waived by the PBGC. Schedule B (Actuarial Information) to the most recently filed annual report (Form 5500 Series) for each Plan is complete and accurate and fairly presents the funding status of such Plan, and since the date of such Schedule B there has been no change in such funding status that can reasonably be expected to have a Material Adverse Effect. 43 (h) The Second Mortgage Bonds, Series , (i) have been duly authorized, executed, authenticated, issued, pledged and delivered in the manner provided for in the Second Mortgage Bond Indenture and in compliance with all applicable law; (ii) constitute the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their terms and the terms of the Second Mortgage Bond Indenture except insofar as enforceability may be limited or otherwise affected by (a) bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application relating to or affecting the rights and remedies of creditors from time to time in effect and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law); (iii) are entitled to the security and benefits of the Second Mortgage Bond Indenture; (iv) are secured equally and ratably with and only with all other bonds issued and outstanding and which may hereafter and thereafter be issued and outstanding under the Second Mortgage Bond Indenture; (v) are secured by duly perfected Liens on and security interests in the collateral purported to secure such bonds in the Second Mortgage Bond Indenture which Liens are subordinated in priority only to the Liens and security interests granted under the First Mortgage Bond Indenture and securing outstanding First Mortgage Bonds; and (vi) constitute collateral security encumbered by valid, duly perfected Liens thereon and security interests therein securing the obligations of the Company under this Agreement as purported to be provided in such indenture and herein. The Company has executed, issued and delivered all Second Mortgage Bonds, Series to the Agent for its benefit and the ratable benefit of the Issuing Bank and the Creditors and has made all such duly perfected pledges thereof to the Agent for its benefit and the ratable benefit of the Issuing Bank and the Creditors as are required to be executed, issued, delivered and made under this Agreement and there are no other Liens on such Second Mortgage Bonds. (i) The Second Mortgage Bond Indenture creates a valid and perfected second Lien on the Company's property as described in the Second Mortgage Bond Indenture as collateral security for the Company's obligations under the Second Mortgage Bond Indenture and the Second Mortgage Bonds, Series [ ]. (j) No Material Adverse Effect has occurred since the Effective Date. (k) The operations and properties of the Company and each of its Subsidiaries comply in all material respects with all Environmental Laws, the Company and each of its Subsidiaries possess and are in compliance with all required Environmental Permits and no circumstances exist that are or would be reasonably likely to (i) form the basis of an Environmental Action against the Company or any of its 44 Subsidiaries or any of their properties or (ii) cause any such property to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law, except as would not be likely to have a Material Adverse Effect, and none of the properties of the Company or any of its Subsidiaries is listed or proposed for listing on the National Priorities or CERCLA List under CERCLA or any analogous state list. (l) The Indenture creates a valid, enforceable and perfected first priority security interest in the Trust Estate (as defined in the Indenture) for the benefit of the holders of the Bonds, as security for the Issuer's obligations of the holders of the Bonds under the Indenture and pursuant to the terms of the Bonds. (m) The Company is not a "holding company" as such term is defined in the Public Utility Holding Company Act of 1935, as amended, nor an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. (n) The Company and its Subsidiaries have filed all United States Federal and state income tax returns and all other material tax returns which are required to be filed by them, and have paid all taxes due pursuant to such returns or, to the extent deemed necessary or appropriate by the Company and such Subsidiary, provided reserves for the payment thereof, other than such taxes that the Company or any Subsidiary is contesting in good faith by appropriate legal proceedings. (o) Prior to the issuance of the Letter of Credit, the Confirmation Order has been entered and has not been reversed, amended (except as consented to by the Issuing Bank in its sole discretion), stayed, vacated or rescinded. The Agent, the Issuing Bank and each Creditor shall be entitled to enforce the remedies under this Agreement without further application to or order by the Bankruptcy Court. (p) The Company is in material compliance with all Environmental Laws and is not exposed to any costs or liabilities under any Environmental Laws except as would not be reasonably likely to result in a Material Adverse Effect on the Company. ARTICLE V COVENANTS OF THE COMPANY SECTION 5.01. Affirmative Covenants. So long as a drawing is available under the Letter of Credit or the Issuing Bank or any Creditor shall have any commitment hereunder or the Company shall have not paid in full all amounts payable by the 45 Company hereunder to the Agent, the Issuing Bank, or any Creditor, the Company agrees that, unless the Majority Creditors shall otherwise consent in writing: (a) Reporting Requirements. The Company shall deliver to the Agent and each Creditor: (i) as soon as available and in any event within 45 days after the end of each of the first three quarterly fiscal periods of each fiscal year of the Company, consolidated and consolidating statements of income, retained earnings and cash flow of the Company 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, and the related consolidated and consolidating balance sheets of the Company and its Consolidated Subsidiaries at the end of such period, setting forth in each case in comparative form the corresponding consolidated and consolidating figures for the corresponding period in the preceding fiscal year, accompanied by a certificate of a senior financial officer of the Company, which certificate shall state that said consolidated financial statements fairly present the consolidated financial condition and results of operations of the Company and its Consolidated Subsidiaries, and said consolidating financial statements fairly present the respective individual unconsolidated financial condition and results of operations of the Company and of each of its Consolidated Subsidiaries, in each case in accordance with GAAP, consistently applied, as at the end of, and for, such period (subject to normal year-end audit adjustments); (ii) as soon as available and in any event within 90 days after the end of each fiscal year of the Company, consolidated and consolidating statements of income, retained earnings and cash flow of the Company and its Consolidated Subsidiaries for such fiscal year and the related consolidated and consolidating balance sheets of the Company and its Consolidated Subsidiaries as at the end of such fiscal year, setting forth in each case in comparative form the corresponding consolidated and consolidating figures for the preceding fiscal year, and accompanied (i) in the case of said consolidated statements and balance sheet of the Company, by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that said consolidated financial statements fairly present the consolidated financial condition and results of operations of the Company and its Consolidated Subsidiaries as at the end of, and for, such fiscal year in accordance with GAAP, consistently applied, and a certificate of such accountants stating 46 that, in making the examination necessary for their opinion, they obtained no knowledge, except as specifically stated, of any failure by the Company to comply with Section 5.02(a), (b) or (e)(xi), and (ii) in the case of said consolidating statements and balance sheets, by a certificate of a senior financial officer of the Company, which certificate shall state that said consolidating financial statements fairly present the respective individual unconsolidated financial condition and results of operations of the Company and of each of its Consolidated Subsidiaries, in each case in accordance with GAAP, consistently applied, as at the end of, and for, such fiscal year; (iii) as soon as available copies of all proxy statements, material reports and registration statements which the Company or any of its Subsidiaries files with the Securities and Exchange Commission or any national securities exchange (other than filings made pursuant to the Public Utility Holding Company Act of 1935, as amended, public offerings of securities under employee benefit plans, customer stock purchase plans or dividend reinvestment plans); (iv) as soon as possible and in any event within two days after the Company has knowledge of the occurrence of each Event of Default continuing on the date of such statement, a statement from the chief financial officer of the Company setting forth details of such Event of Default and the action that the Company has taken and proposes to take with respect thereto; (v) at the time the Company furnishes each set of financial statements pursuant to paragraph (i) or (ii) above, a certificate of a senior financial officer of the Company setting forth in reasonable detail the computations necessary to determine whether the Company is in compliance with subsections (a), (b) and (e)(xi) of Section 5.02 as of the end of the respective quarterly fiscal period or fiscal year and stating that no event has occurred or is continuing which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or the lapse of time or both or, if any such event has occurred and is continuing, a statement as to the nature thereof and the action that the Company has taken or proposes to take with respect thereto; and (vi) such other financial data and information of the Company or any of its Subsidiaries as the Agent, the Issuing Bank or any Creditor may from time to time reasonably request. 47 (b) Litigation. The Company will promptly give to the Agent notice of all actions, suits, investigations, litigation or legal or arbitral proceedings, and of all proceedings by or before any governmental or regulatory authority or agency (and any material development in respect of such legal or other proceedings), in each case, known to the Company, which is reasonably likely to have a Material Adverse Effect. (c) Preservation of Corporate Existence, Etc. The Company shall (i) preserve and maintain its corporate existence in the state of its incorporation and qualify and remain qualified as a foreign corporation in each jurisdiction in which such qualification is reasonably necessary in view of its business, and (ii) pay and discharge, and cause its Subsidiaries to pay and discharge, all taxes, assessments and governmental charges upon its income and its properties prior to the date on which penalties are attached thereto, unless (A) such taxes, assessments and governmental charges shall be contested in good faith and by appropriate proceedings by the Company or its Subsidiaries and (B) the Company or any such Subsidiary shall set aside on its books adequate reserves therefor to the extent required by GAAP. Nothing contained in this clause (c) of Section 5.01 shall be deemed to prohibit any transaction permitted by clause (c) of Section 5.02. (d) Maintenance of Insurance, Etc. The Company shall, and shall cause its Subsidiaries to, maintain insurance with responsible insurance companies or associations or through its own program of self-insurance in such amounts, with such deductibles, and covering such risks as is usually carried by companies engaged in similar business. (e) Compliance with Laws, Etc. The Company shall comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA, except where the failure to so comply would not have a Material Adverse Effect. (f) Compliance with Environmental Laws. The Company shall comply, and cause each of its Subsidiaries and all lessees and other Persons occupying or operating on its properties to comply, in all material respects, with all Environmental Laws and Environmental Permits applicable to its operations and properties; obtain and renew all Environmental Permits necessary for its operations and properties; and conduct, and cause each of its Subsidiaries to conduct, any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action required under any Environmental Law to remove and clean up all Hazardous Materials from any of its properties, in accordance with the requirements of all Environmental Laws; 48 provided, however, that neither the Company nor any of its Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and reserves, where required by GAAP, are being maintained with respect to such circumstances. (g) Visitation Rights. The Company shall, at any reasonable time and from time to time, permit the Agent, the Issuing Bank, any Creditor or any agents or representatives of any thereof, to examine and make copies of and abstracts from the records and books of account of, and examine the properties of, the Company and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Company and any of its Subsidiaries with any of their officers or directors and with their independent certified public accountants. (h) Maintenance of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted; provided that this subsection (h) shall not prevent the sale of any properties permitted by subsection (c) of Section 5.02. (i) Lien. The Company shall maintain the Lien created or purported to be created by the Second Mortgage Bond Indenture for the benefit of the Agent and the ratable benefit of the Issuing Bank and the Creditors and defend, preserve and protect such Lien against all claims of all Persons. (j) Redemption or Defeasance of Bonds or Substitution of Credit Facility. The Company shall use its best efforts to cause the Trustee, upon redemption or defeasance of less than all of the Bonds pursuant to the Indenture, to furnish to the Issuing Bank notice in the form of Annex A to the Letter of Credit, and, upon a redemption or defeasance of all the Bonds pursuant to the Indenture or upon substitution of a Credit Facility (as defined in the Indenture) for the Letter of Credit, to surrender the Letter of Credit to the Issuing Bank for cancellation. (k) Bond Rating. The Company shall exercise its best efforts to cause the Bonds to have a rating by Moody's Investors Service, Inc. or by Standard & Poor's Corporation. (l) Remarketing. The Company shall take all steps that are necessary or appropriate to cause any Bonds acquired by the Trustee on behalf of and for the account of the Company or the Issuing Bank, the Agent or any other nominee of the Issuing Bank to be remarketed (in the case of Bonds acquired on behalf of or for the account of the Issuing Bank, the 49 Agent or any other nominee of the Issuing Bank, to the extent the Issuing Bank requests that such Bonds be remarketed), including (without limitation) preparing such disclosure and other documents as are required to remarket the Bonds. (m) Registration of Bonds. The Company shall cause all Bonds which it (or any of its Affiliates) acquires, or which are acquired for its (or any of its Affiliates) account, to be registered forthwith in accordance with the Indenture in the name of the Company (or such Affiliate). (n) Maintain Books and Records. The Company shall keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied. (o) Additional Documents. As promptly as practicable (but in any event not later than 30 days) after the Effective Date, the Company will furnish to the Agent, (i) certified copies of recorded counterparts of the First Mortgage Bond Indenture and evidencing the filing thereof and (ii) certified copies of all notices filed with respect to the First Mortgage Bond Indenture. (p) Creation of Subsidiaries. The Company shall not, and shall not permit any of its Subsidiaries to, create any Subsidiaries of the Company or make any investment in any Person except in compliance with the Public Utility Holding Company Act of 1935, as amended, and the regulations and orders of the Securities and Exchange Commission thereunder. SECTION 5.02. Negative Covenants. So long as a drawing is available under the Letter of Credit or the Issuing Bank shall have any commitment hereunder or the Company shall have not paid in full all amounts payable by the Company hereunder to the Agent, the Issuing Bank, or any Creditor, the Company agrees that, without the written consent of the Majority Creditors: (a) Total EBITA to Interest Coverage Ratio. The Company shall not permit the Interest Coverage Ratio to be less than 1.40 to 1 at any time on or after the last day of the first full fiscal quarter of the Company commencing after the Effective Date. (b) Leverage Ratio. The Company shall not permit the Leverage Ratio to exceed 0.68 to 1 at any time on or after the last day of the first full fiscal quarter of the Company commencing after the Effective Date. (c) Prohibition of Fundamental Changes. The Company shall not, and will not permit any of its Subsidiaries to, enter into any transaction of merger, consolidation, amalgamation, liquidation or dissolution; provided that the Company or any of its Subsidiaries may merge or consolidate 50 with any other Person if (i) in any such transaction in which the Company is a party, the Company is the surviving corporation, (ii) in any such transaction in which the Company is not a party, the surviving corporation shall be a Subsidiary of the Company and (iii) after giving effect thereto no Event of Default would exist hereunder. The Company will not, and will not permit any of its Subsidiaries to, convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or substantially all of its business or assets or assets (excluding (i) accounts receivable, (ii) obsolete or worn-out tools, equipment or other property no longer used or useful in its business and (iii) inventory or other property sold or disposed of in the ordinary course of business and on ordinary business terms) which in the aggregate have a net book value in excess of $50,000,000, whether now owned or hereafter acquired, to any other Person. Notwithstanding the foregoing provisions of this subsection (c): (1) any Subsidiary of the Company may be merged or consolidated with or into: (A) the Company if the Company shall be the continuing or surviving corporation or (B) any other Subsidiary of the Company; and (2) any Subsidiary of the Company may sell, lease, transfer or otherwise dispose of any or all of its property (upon voluntary liquidation or otherwise) to the Company or a Subsidiary of the Company. (d) Compliance with ERISA. The Company shall not (i) enter into any non-exempt prohibited transaction (as defined in Section 4975 of the Code and in Section 406 of ERISA) involving any Plan which may result in any liability of the Company to any Person which (in the reasonable opinion of the Agent) will have a Material Adverse Effect or (ii) allow or suffer to exist any other event or condition known to the Company which results in any liability of the Company or any of its Subsidiaries to the PBGC, or in any Withdrawal Liability to any Multiemployer Plan, which (in the reasonable opinion of the Agent) will have a Material Adverse Effect. For purposes of this Section 5.02(d), "liability" shall not include termination insurance premiums payable under Section 4007 of ERISA. Upon request of the Agent, the Company shall promptly furnish to the Agent a copy of Schedule B (Actuarial Information) to the most recently filed annual report (Form 5500 Series) of any Plan. (e) Limitation on Liens. The Company shall not, nor will it permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with respect to any of its property, whether now owned or hereafter acquired, except: 51 (i) Liens created pursuant to the Related Documents or pursuant to the First Mortgage Bond Indenture or the Second Mortgage Bond Indenture; (ii) Liens created or otherwise in existence on the Effective Date or contemplated by the Plan of Reorganization; (iii) Liens imposed by any governmental authority for taxes, assessments or charges not yet due or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Company or the affected Subsidiaries, as the case may be, in accordance with GAAP; (iv) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith and by appropriate proceedings; (v) pledges or deposits under worker's compensation, unemployment insurance and other social security legislation; (vi) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (vii) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business and encumbrances consisting of zoning restrictions, easements, licenses, restrictions on the use of property or minor imperfections in title thereto which, in the aggregate, are not material in amount, and which do not in any case materially detract from the value of the property subject thereto, render title to the property encumbered thereby unmarketable, materially adversely affect the use of such property for its present purposes or interfere with the ordinary conduct of the business of the Company or any of its Subsidiaries; (viii) Liens on property of any corporation which becomes a Subsidiary of the Company after the date of this Agreement, provided that such Liens are in existence at the time such corporation becomes a Subsidiary of the Company and were not created in anticipation thereof, provided further that such Liens shall not extend to cover any property of the Company or any of its other Subsidiaries and such Liens shall not 52 cover property of such Subsidiary other than property of the types covered by the terms of such Liens at the time such Subsidiary is acquired; (ix) Liens upon real and/or tangible personal property acquired after the Effective Date (by purchase, construction or otherwise) by the Company or any of its Subsidiaries, each of which Liens either (A) existed on such property before the time of its acquisition and was not created in anticipation thereof, or (B) was created solely for the purpose of securing Debt representing, or incurred to finance, refinance or refund, the cost (including the cost of construction) of such property; provided that no such Lien shall extend to or cover any property of the Company or such Subsidiary other than the property so acquired and improvements thereon; (x) banker's liens, rights of set-off and Liens on documents presented under commercial letters of credit, in each case granted to banks in accordance with customary banking practices or arising by operation of law; (xi) additional Liens upon real and/or personal property created after the date hereof, provided that, on the date each such Lien is incurred, the lower of (1) the fair market value of all property subject to Liens permitted by this paragraph (xi) and not otherwise permitted by this subsection (i) or (2) the aggregate amount of all obligations secured by Liens permitted by this paragraph (xi) and not otherwise permitted by this subsection (i) shall not exceed 5% of Total Capital on such date; and (xii) any extension, renewal or replacement of the foregoing, provided, however, that the Liens permitted hereunder shall not be spread to cover any additional Debt or property (other than a substitution of like property). (f) Change in Nature of Business. The Company shall not make, or permit any of its Subsidiaries to make, any material change in the nature of its business as carried on at the date hereof. (g) Optional Redemptions. The Company shall not initiate an optional redemption of any Bonds unless the First Mortgage Bonds, Series [ ], and the Second Mortgage Bonds, Series [ ], shall each have an Investment Grade Rating and such bonds have not been placed, with possible negative consequences, on any watch list. (h) Related Documents. The Company shall not, subject to specific rights contained in such agreements, amend, or consent to the amendment of, any of the Related Documents, 53 which amendment would adversely affect the Agent, the Issuing Bank or any Creditor; provided that the Second Mortgage Bond Indenture may be amended in accordance with its terms; and provided further that the consent of the Agent, the Issuing Bank or such Creditor, as the case may be, may not be unreasonably withheld. (i) Appointment. The Company shall not appoint any successor to the Trustee or any Remarketing Agent (as defined in the Indenture) or other agent appointed pursuant to the Indenture or any additional Remarketing Agents or other such agents with respect to the Bonds without the consent of the Majority Creditors; provided that the consent of the Majority Creditors may not be unreasonably withheld. (j) Bond Interest Term. The Company shall not cause the Trustee to select a Bond Interest Term Rate (as defined in the Indenture) for any Bond. ARTICLE VI EVENTS OF DEFAULT SECTION 6.01. Events of Default. The occurrence of any of the following events shall be an "Event of Default" hereunder: (a) The Company shall fail to pay any amount payable under any provision of Article II or any other provision of this Agreement within two days after the same becomes due and payable; or (b) Any representation, warranty or certification made, or deemed made, by the Company in any Related Document by the Company (or any of its officers), or any certificate furnished to the Agent, the Issuing Bank or any Creditor pursuant to the provisions thereof, shall prove to have been false or misleading as of the time made or furnished in any material respect; or (c) The Company shall default in the performance of any of its obligations under clause (a)(iv) of Section 5.01 or clauses (a), (b), (c) or (f) of Section 5.02; or a consensual Lien shall be created by the Company or any of its Subsidiaries in violation of Section 5.02(e); or the Company shall default in its performance of any of its other obligations under this Agreement or in any other Related Document and such default in the performance of any such other obligation shall continue unremedied for a period of 15 days after notice thereof to the Company by the Agent; or (d) The Company or any of its Subsidiaries shall default in the payment when due of any principal of or any interest on any Debt aggregating $10,000,000 or more, or fail 54 to observe or perform any material term, covenant or agreement contained in any agreement by which it is bound, evidencing or securing Debt, in an aggregate amount of $10,000,000 or more, or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt, after the giving of any required notice and for such period of time as would permit the holder or holders thereof or of any obligations issued thereunder to accelerate the maturity thereof, unless such failure or event or condition shall have been cured by the Company or such Subsidiary, as the case may be, or effectively waived by such holder or holders; or (e) There shall remain in force, undischarged, unsatisfied and unstayed, for more than 30 days, whether or not consecutive, any final judgment against the Company or any of its Material Subsidiaries that, together with other outstanding final judgments, undischarged, against the Company and all of its Material Subsidiaries exceeds in the aggregate $10,000,000 (for the purposes hereof, the term "final judgment" shall mean a judgment which is not subject to appeal); or (f) The Company or any of its Material Subsidiaries shall make a general assignment for the benefit of creditors, or admit in writing its inability to pay or generally fail to pay its debts as they mature or become due, or shall petition or apply for the appointment of a trustee or other custodian, liquidator or receiver of the Company or any of its Material Subsidiaries, as the case may be, or any substantial part of its respective assets; or the Company or any of its Material Subsidiaries shall commence any case or other proceeding relating to the Company or any of its Material Subsidiaries under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, or the Company or any of its Material Subsidiaries shall take any action to authorize or in furtherance of any of the foregoing; or if any such petition or application shall be filed or any such case or other proceeding shall be commenced against the Company or any of its Material Subsidiaries and the Company or any of its Material Subsidiaries shall indicate its approval thereof, consent thereto or acquiescence therein or such petition or application shall not be dismissed on or before the 60th day after the filing thereof; or (g) A decree or order is entered appointing any trustee, custodian, liquidator or receiver or adjudicating the Company or any of its Material Subsidiaries bankrupt or insolvent, or approving a petition in any such case or other proceeding, or a decree or order for relief is entered in respect of the Company or any of its Material Subsidiaries in an involuntary case under federal bankruptcy laws as now or hereafter reconstituted; or 55 (h) There shall have been asserted against the Company by a Governmental Person or other Person, a written complaint, claim or demand asserting any claims or liabilities, whether accrued, absolute or contingent, based on or arising from the presence, release or disposal of Hazardous Materials by the Company or any of its Subsidiaries that is reasonably likely to be determined adversely to the Company or any of its Subsidiaries, and the amount thereof (either individually or in the aggregate) would, in such event, have a Material Adverse Effect (after deducting any portion thereof that is reasonably expected to be paid by other creditworthy Persons); or (i) The Confirmation Order shall be (i) reversed, revoked or vacated in whole or in part by any Final Order of a court of competent jurisdiction, or (ii) modified in a manner or subjected to a stay that adversely affects the Company's ability to perform any of its obligations hereunder, as determined by the Agent in its sole discretion; or (j) Central and South West Corporation shall cease directly or indirectly, to own (or otherwise shall cease, directly or indirectly, to control the voting rights of) at least 51% of the Voting Stock of the Company; or (k) Any "Event of Default" under and as defined in the Related Documents shall have occurred and be continuing; or (l) Any regulatory approval as set forth in Section 3.01(d) or required to consummate the Plan of Reorganization shall be rescinded if such rescission can not be appealed by the Company and has a Material Adverse Effect on the Company; or (m) Any material provision of this Agreement or any other Related Document shall at any time cease to be a valid, binding obligation of the Company enforceable against the Company, or any such agreement shall be declared to be null and void, or the validity or enforceability thereof shall be contested by the Company, or a proceeding shall be commenced by any Governmental Person having jurisdiction over the Company seeking to establish the invalidity or unenforceability thereof, or the Company shall deny that it has any further liability or obligation under this Agreement or any other Related Document after delivery thereof or the Second Mortgage Bond Indenture shall for any reason (other than pursuant to the terms thereof) cease to create a valid and perfected second priority Lien on the Company's property purported to be secured thereby. SECTION 6.02. Upon an Event of Default. If any Event of Default shall have occurred and be continuing, (A) the Issuing Bank shall at the request, or may with the consent, of the Majority Creditors (i) if the Letter of Credit shall not have 56 been issued, by notice to the Company, declare the obligation of the Issuing Bank to issue the Letter of Credit to be terminated, whereupon the same shall forthwith terminate, or, (ii) if the Letter of Credit shall have been issued, give notice to the Trustee pursuant to Section 9.01 of the Indenture that an Event of Default hereunder has occurred and is continuing and, if a drawing to pay interest on the Bonds shall have been made under the Letter of Credit (other than such a drawing in respect of the payment of interest upon scheduled or accelerated maturity, or redemption, of the Bonds), and not reimbursed, notify the Trustee prior to the fifteenth day following such drawing that the Issuing Bank has not been reimbursed for such drawing and that interest in the amount of such drawing will not be reinstated, and (B) the Agent shall at the request, or may with the consent, of the Majority Creditors (i) declare the Tender Advances, all interest thereon and all other amounts payable hereunder or in respect thereof, to be forthwith due and payable, whereupon the Tender Advances, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest, or further notice of any kind, all of which are hereby expressly waived by the Company and (ii) exercise all rights and remedies in respect of the Second Mortgage Bonds, Series [ ] pledged as security hereunder; provided, however, that in the event of the occurrence of an Event of Default pursuant to subsections (f) or (g) of Section 6.01, (A) the obligation of the Issuing Bank to issue the Letter of Credit shall automatically be terminated and (B) the Tender Advances, all interest thereon and all other amounts payable hereunder or in respect thereof shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Company. ARTICLE VII SECURITY SECTION 7.01. Issuance and Pledge of Bonds. Concurrently with the execution of this Agreement, the Company shall execute, issue and deliver to the Agent for its benefit and the ratable benefit of the Issuing Bank and each Creditor the Second Mortgage Bonds, Series [ ] as security for the payment of all obligations of the Company now or hereafter existing under this Agreement in respect of principal, interest and Letter of Credit commissions payable pursuant to Section 2.04(a), pursuant to and on the terms of this Agreement and of the Second Mortgage Bond Indenture. The Company hereby pledges to the Agent and grants to the Agent, in each case, for its benefit and the ratable benefit of the Issuing Bank and each Creditor a security interest in the Second Mortgage Bonds Series [ ] and all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in 57 exchange for any or all of such Bonds and proceeds of any and all of the foregoing. The Second Mortgage Bond, Series [ ] shall be registered in the name of the Agent or such nominee or nominees as the Agent shall direct. SECTION 7.02. Application of Moneys. Any moneys received by the Agent, the Issuing Bank or any Creditor on account of the Second Mortgage Bonds, Series [ ] shall be applied as follows: (a) moneys received on account of principal of the Second Mortgage Bonds, Series [ ] shall be applied to the payment of any unpaid principal of the Tender Advances or drawings under the Letter of Credit then due and owing hereunder and (b) moneys received on account of interest on the Second Mortgage Bonds, Series [ ] shall be applied to the payment of any accrued and unpaid interest then due and owing hereunder and Letter of Credit commissions then due and owing under Section 2.04(a). SECTION 7.03. Rights of Bondholders. The Agent, as holder of the Second Mortgage Bonds, Series [ ] for its benefit and the ratable benefit of the Issuing Bank and the Creditors, shall have all the rights (including, without limitation, voting rights) provided to holders of bonds in the Second Mortgage Bond Indenture and shall have only such rights. Without limiting the generality of the foregoing, (a) the Second Mortgage Bonds, Series [ ] may not be sold, assigned, pledged or otherwise transferred by the Bank, whether pursuant to the Uniform Commercial Code after an Event of Default or otherwise except in connection with any assignment of the Agent's rights and obligations under this Agreement as provided for herein and (b) no payment of principal of or interest on the Second Mortgage Bonds, Series [ ], or any other amount payable thereunder, shall be demanded or received except if, and to the extent that, the corresponding payment remains unpaid hereunder. To the extent that moneys recovered from the Second Mortgage Bonds, Series [ ] are insufficient to pay in full the amount of principal and interest and other amounts due hereunder, the Company shall remain liable for any such deficiency under the terms of this Agreement. SECTION 7.04. The Agent's Duties. The powers conferred on the Agent hereunder are solely to protect its interest in the collateral, including, without limitation, the Second Mortgage Bonds, Series [ ], and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any collateral in its possession and the accounting for moneys actually received by it hereunder, the Agent shall have no duty as to any collateral, as toascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any collateral, whether or not the Agent, the Issuing Bank or any Creditor has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any parties or any other rights 58 pertaining to any collateral. The Agent shall be deemed to have exercised reasonable care in the custody and preservation of any collateral in its possession if such collateral is accorded treatment substantially equal to that which the Agent accords its own property. ARTICLE VIII THE AGENT, THE CREDITORS AND THE ISSUING BANK SECTION 8.01. Authorization and Action. The Issuing Bank and each Creditor hereby appoint and authorize the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of amounts due under this Agreement), neither the Issuing Bank nor the Agent shall be required to exercise any discretion or take any action, but the Agent shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Creditors, and such instructions shall be binding upon all Creditors; provided, however, that neither the Issuing Bank nor the Agent shall be required to take any action which exposes the Issuing Bank or the Agent to personal liability or which is contrary to this Agreement or applicable law. The Agent agrees to give to the Issuing Bank and each Creditor prompt notice of each notice given to it by the Company and to give to each Creditor notice of each notice delivered to it by the Issuing Bank, in each case pursuant to the terms of this Agreement. SECTION 8.02. Reliance, Etc. Neither the Agent, the Issuing Bank nor any of their directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or any other Related Document, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent and the Issuing Bank: (i) may treat each Creditor as a Creditor hereunder until the Agent receives written notice of the assignment or transfer of the rights and obligations of any Creditor hereunder signed by such Creditor and including the agreement of the assignee or transferee to be bound hereby as it would have been if it had been an original Creditor party hereto, in form satisfactory to the Agent; (ii) may consult with legal counsel (including counsel for the Company), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Creditor and 59 shall not be responsible to any Creditor for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement or any other Related Document; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or any other Related Document on the part of the Company or any other party or to inspect the property (including the books and records) of the Company; (v) shall not be responsible to any Creditor for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Related Document or any other instrument or document furnished pursuant hereto or thereto; and (vi) shall incur no liability under or in respect of this Agreement or any other Related Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 8.03. The Agent, the Issuing Bank and Affiliates. The Agent and the Issuing Bank shall have the same rights and powers under this Agreement as any other Creditor and may exercise the same as though they were not the Issuing Bank and the Agent, respectively; and the term "Creditor" or "Creditors" shall, unless otherwise expressly indicated, include Citibank in its individual capacity. The Agent, the Issuing Bank and their respective Affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Company, any of its Subsidiaries and any Person who may do business with or own securities of the Company or any such Subsidiary, all as if Citibank was not the Agent or the Issuing Bank and without any duty to account therefor to the Creditors. SECTION 8.04. Bank Credit Decision. Each Creditor acknowledges that it has, independently and without reliance upon the Agent, the Issuing Bank or any other Creditor and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Creditor also acknowledges that it will, independently and without reliance upon the Agent, the Issuing Bank or any other Creditor and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. SECTION 8.05. Indemnification. The Creditors agree to indemnify the Agent and the Issuing Bank (to the extent not reimbursed by the Company), ratably according to the respective Participation Percentages, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or 60 asserted against the Agent or the Issuing Bank in any way relating to or arising out of this Agreement or any action taken or omitted by the Agent or the Issuing Bank under this Agreement, provided that no Creditor shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's or the Issuing Bank's gross negligence or willful misconduct. Without limitation of the foregoing, each Creditor agrees to reimburse the Agent and the Issuing Bank promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by the Agent or the Issuing Bank, as the case may be, in connection with the preparation, execution, delivery, administration (except normal administrative costs and fees and expenses of counsel related thereto prior to an Event of Default), modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any other Related Document, to the extent that the Agent or the Issuing Bank is not reimbursed for such expenses by the Company. SECTION 8.06. Successor Agent. Subject to the appointment and acceptance of a successor Agent as provided below, the Agent may resign at any time by giving written notice thereof to the Issuing Bank, the Creditors and the Company and may be removed at any time with or without cause by the Issuing Bank. Upon any such resignation or removal, the Issuing Bank shall have the right to appoint a successor Agent which shall be reasonably acceptable to the Majority Creditors. If no successor Agent shall have been so appointed by the Issuing Bank, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or the Majority Creditors' removal of the retiring Agent, then the retiring Agent may, on behalf of the Issuing Bank and the Creditors, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $250,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. SECTION 8.07. Issuing Bank. (a) All notices received by the Issuing Bank pursuant to this Agreement or any other Related Document (other than the Letter of Credit) shall be promptly delivered to the Agent for distribution to the Creditors. 61 (b) The Issuing Bank shall not amend or waive any provision or consent to the amendment or waiver of any Related Document without the consent of the Majority Creditors, provided, however, that any waiver or amendment of any provision of the Letter of Credit or consent to the amendment or waiver of the Letter of Credit shall require the written consent of all of the Creditors. (c) Upon receipt by the Issuing Bank from time to time of any amount pursuant to the terms of any Related Document (other than pursuant to the terms of this Agreement), the Issuing Bank shall promptly deliver to the Agent such amount. ARTICLE IX MISCELLANEOUS SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement nor consent to any departure by the Company therefrom shall in any event be effective unless the same shall be in writing and signed by the Majority Creditors, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by the Issuing Bank and all the Creditors, do any of the following: (a) waive any of the conditions specified in Article III, (b) increase the Participation Percentage of any Creditor or subject the Creditors to any additional obligations, (c) reduce the principal of, or interest on, any Tender Advance or any fees (other than fees payable solely to the Issuing Bank) or other amounts payable hereunder, (d) postpone any date fixed for any payment of principal of, or interest on, any Tender Advance or any fees (other than fees payable solely to the Issuing Bank) or other amounts payable hereunder, (e) change the aggregate unpaid principal amount of any Tender Advance or any other amount payable hereunder as a result of a draw on the Letter of Credit, or the number of Creditors, which shall be required for the Creditors or any of them to take any action hereunder, (f) amend this Section 9.01, (g) amend this Agreement in a manner intended to prefer one or more Creditors over any other Creditors, (h) amend the definition of "Majority Creditors", or (i) release any collateral, including, without limitation, the Second Mortgage Bonds, Series [ ]; provided further that no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Creditors required above to take such action, affect the rights or duties of the Agent under this Agreement; provided further that no amendment, waiver or consent shall, unless in writing and signed by the Issuing Bank in addition to the Creditors required above to take such action, affect the rights and duties of the Issuing Bank under this Agreement. 62 SECTION 9.02. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telecopier, telegraphic, telex or cable communication) and mailed, telecopied, telegraphed, telexed, cabled or delivered, if to the Company, at its address at, in the case of deliveries, at its street address at [303 North Oregon Street, El Paso, Texas 79901], in the case of mailings, to its mailing address at [P.O. Box 982, El Paso, Texas 79960], in the case of telex, to telex no. [5435710 (callback 915-543-5707)] and in the case of telecopier to [915-521-4754], in each case to the attention of the Secretary; if to the Issuing Bank, at its address at [399 Park Avenue, New York, New York 10043], Attention: [Energy West Department], telex no. [TLX 12-7773 NYWCGCB] and in the case of telecopier to [212-793-0642]; if to the Agent, at its address at [399 Park Avenue, New York, New York 10043], Attention: [Energy West Department], telex no. [TLX 12-7773 NYWCGCB] and in the case of telecopier to [212-793-0642]; if to any Creditor, at its address specified on the signature pages hereof; and if to the Trustee, in the case of deliveries, at its street address at [ , ], in the case of mailings, to its mailing address at P.O. Box , , , and in the case of telex, to telex no. , in each case to the attention of [Corporate Trust Department] or, as to each such entity, at such other place and/or address or number as shall be designated by such entity in a written notice to the other such entities. All such notices and communications shall, when mailed, telecopied, telegraphed, telexed or cabled, be effective when deposited in the mails, telecopied, delivered to the telegraph company, confirmed by telex answerback or delivered to the cable company, respectively, addressed as aforesaid, except that notices to the Agent or Issuing Bank pursuant to the provisions of Article II shall not be effective until received by the Agent or Issuing Bank, as the case may be. SECTION 9.03. No Waiver; Remedies. No failure on the part of the Issuing Bank, the Agent or any Creditor to exercise, and no delay in exercising, any right hereunder or under any Related Document shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 9.04. Rights of Setoff and Subrogation. (a) Upon the occurrence and during the continuance of any Event of Default, the Issuing Bank and each Creditor are hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and otherwise apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Issuing Bank or such Creditor, as the case may be, to or for the credit or the account of the Company against any and all 63 of the obligations of the Company now or hereafter existing under this Agreement, the Second Mortgage Bond Indenture or the Second Mortgage Bonds, Series [ ], whether or not the Issuing Bank or such Creditor, as the case may be, shall have made any demand hereunder or under such other documents and although such obligations may be contingent or unmatured. The Issuing Bank and each Creditor, as the case may be, agree promptly to notify the Company after any such set-off and application made by it, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Issuing Bank and each Creditor under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Issuing Bank and each Creditor may have. (b) If any Creditor shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise, but excluding all proceeds received by assignments or sales of participations in accordance with Section 9.04) on account of its participatory interests in any Tender Advances or other amounts payable by the Company due to a draw under the Letter of Credit (other than pursuant to Section 2.11 or 2.17) in excess of its ratable share of payments on account of such Tender Advances or such other amounts obtained by all the Creditors and the Issuing Bank, such Creditor shall forthwith purchase from the other Creditors and the Issuing Bank a participation in the portions of such Tender Advances or such other amounts, as the case may be, owing to them as shall be necessary to cause such purchasing Creditor to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Creditor, such purchase from the Issuing Bank or such Creditor shall be rescinded and the Issuing Bank or such Creditor shall repay to the purchasing Creditor the purchase price to the extent of such recovery together with an amount equal to the Issuing Bank's or such Creditor's ratable share (according to the proportion of (i) the amount of the Issuing Bank's or such Creditor's required repayment to (ii) the total amount so recovered from the purchasing Creditor) of any interest or other amount paid or payable by the purchasing Creditor in respect of the total amount so recovered. (c) Notwithstanding the foregoing, if any Creditor shall obtain any such excess payment involuntarily, such Creditor may, in lieu of purchasing participations from the Issuing Bank and other Creditors in accordance with subsection (b) above, on the date of receipt of such excess payment, return such excess payment to the Agent for distribution in accordance with Section 2.12. (d) The Company agrees that the Issuing Bank and the Creditors, as the case may be, shall be subrogated to all rights of the Trustee and the holders of the Bonds, to the extent of any payment made by the Issuing Bank pursuant to a drawing under the 64 Letter of Credit, provided that so long as the Bonds remain unpaid and held by Persons other than the Company or any Affiliate thereof, such right of subrogation shall in all respects be subordinate to the rights of the Trustee and the holders of the Bonds. SECTION 9.05. Indemnification. The Company hereby indemnifies and holds the Agent, the Issuing Bank, each Creditor and each Participant and each of their Affiliates and their officers, directors, employers, agents and advisors (each, an "Indemnified Party") harmless from and against any and all claims, damages, losses, liabilities, costs or expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party (except to the extent any claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct), in each case relating to or arising out of or in connection with or by reason of: (a) any inaccuracy or alleged inaccuracy in any material respect, or any untrue statement or alleged untrue statement of any material fact, contained in the Preliminary Official Statement, the Official Statement or any amendment or supplement to the Official Statement, or by reason of the omission or alleged omission to state therein a material fact necessary to make such statements, in the light of the circumstances under which they were made, not misleading; provided, however, that, in the case of any action or proceeding alleging an inaccuracy in a material respect, or an untrue statement, with respect to information supplied by and describing the Issuing Bank in the Preliminary Official Statement or the Official Statement (the "Bank Information"), (i) indemnification by the Company pursuant to this Section 9.05(a) shall be limited to the costs and expenses of the Issuing Bank (including reasonable fees and expenses of the Issuing Bank's counsel) of defending itself against such allegation, (ii) if in any such action or proceeding it is finally determined that the Issuing Bank Information contained an inaccuracy in a material respect or an untrue statement, then the Company shall not be required to indemnify the Issuing Bank pursuant to this Section 9.05(a) for any claims, damages, losses, liabilities, costs or expenses to the extent caused by such inaccuracy or untrue statement, and (iii) if any such action or proceeding shall be settled by the Issuing Bank without there being a final determination to the effect described in the preceding clause (ii), unless the Letter of Credit is wrongfully dishonored and such action or proceeding relates to such wrongful dishonor, then the Company shall be required to indemnify the Issuing Bank pursuant to this Section 9.05(a) for the 65 reasonable costs or expenses incurred in connection with such action or proceeding prior to such settlement and, if such action or proceeding is settled with the Company's consent, for the costs and expenses of such settlement; or (b) any representation, warranty or certification made or deemed made in this Agreement by the Company (or any of its officers), or any certificate furnished to the Agent, the Issuing Bank or any Creditor pursuant to the provisions hereof, proving to have been false or misleading as of the time made or furnished in any material respect; or (c) any case or proceeding pursuant to any bankruptcy, insolvency, reorganization, moratorium or similar law or any restructuring of the Company; or (d) any cost or liability under any Environmental Law arising out of the operation or assets of the Company; or (e) any event or occurrence set forth in Section 5.04 of the Loan Agreement; or (f) the execution and delivery or transfer of, or wrongful payment or wrongful failure to make payment under, the Letter of Credit; provided, however, that the Company shall not be required to indemnify any Indemnified Party pursuant to this Section 9.05 for any claims, damages, losses, liabilities, costs or expenses to the extent caused by (i) any Indemnified Party's willful misconduct or gross negligence in determining whether a draft or certificate presented under the Letter of Credit complied with the terms of the Letter of Credit or (ii) any Indemnified Party's wrongful failure to make lawful payment under the Letter of Credit after the presentation to it by the Trustee or a successor trustee under the Indenture of a draft and certificate strictly complying with the terms and conditions of the Letter of Credit. Nothing in this Section 9.05 is intended to limit the Company's obligations contained in Article II. Without prejudice to the survival of any other obligation of the Company hereunder, the indemnities and obligations of the Company contained in this Section 9.05 shall survive the payment in full of amounts payable by the Company pursuant to Article II and the termination of the Letter of Credit. SECTION 9.06. Issuing Bank and Creditors. As between the Issuing Bank, the Agent, and the Creditors on the one hand, and the Company on the other hand, the Company assumes all risks of the acts or omissions of the Trustee and any other beneficiary or transferee of the Letter of Credit with respect to its use of the Letter of Credit. Neither the Issuing Bank, the Agent, any Creditor, nor any Participant nor any of their Affiliates and their officers, directors, employers, agents and advisors shall 66 be liable or responsible for: (a) the use which may be made of the Letter of Credit or any acts or omissions of the Trustee and any other beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing Bank against presentation of documents that do not comply with the terms of the Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under the Letter of Credit, except that the Company shall have a claim against the Issuing Bank, and the Issuing Bank shall be liable to the Company, to the extent of any direct, but not consequential, damages suffered by the Company which the Company proves were caused by (i) the Issuing Bank's willful misconduct or gross negligence in determining whether a draft or certificate presented under the Letter of Credit complies with the terms of the Letter of Credit or (ii) the Issuing Bank's willful failure to make lawful payment under the Letter of Credit after the presentation to it by the Trustee or a successor trustee under the Indenture of a draft and certificate strictly complying with the terms and conditions of the Letter of Credit. In furtherance and not in limitation of the foregoing, the Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary. SECTION 9.07. Costs, Expenses and Taxes. The Company agrees to pay on demand all costs and expenses of the Agent, the Issuing Bank and each Creditor in connection with the preparation, execution, delivery, filing, recording, administration (except normal administrative costs and fees and expenses of counsel related thereto prior to an Event of Default), modification and amendment of this Agreement and any other documents which may be delivered in connection with this Agreement including transfer of the Letter of Credit in accordance with its terms and any other documents which may be delivered in connection with this Agreement, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Agent, the Issuing Bank and each Creditor, and local counsel who may be retained by said counsel, with respect thereto, with respect to advising the Agent, the Issuing Bank or any such Creditor as to its rights and responsibilities, or the perfection or preservation of rights or interests, under this Agreement, any other Related Document and such other documents which may be delivered in connection with this Agreement, with respect to negotiations with the Company or with other creditors of the Company, any Person controlling the Company or any of the Company's Subsidiaries arising out of any Event of Default or any events or circumstances that may give rise to an Event of Default and with respect to presenting claims in or otherwise participating in or monitoring any bankruptcy, insolvency or other similar proceeding involving creditor's rights generally 67 and any proceeding ancillary thereto or in connection with the negotiation of any restructuring or "work-out" (whether or not consummated). The Company further agrees to pay on demand all costs and expenses (including reasonable counsel fees and expenses) of the Agent, the Issuing Bank and each Creditor in connection with (i) the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, any other Related Document and any other documents which may be delivered in connection with this Agreement, including, without limitation, reasonable counsel fees and expenses in connection with the enforcement of rights under this Section 9.07, or (ii) any action or proceeding relating to a court order, injunction, or other process or decree restraining or seeking to restrain the Issuing Bank from paying any amount under the Letter of Credit. In addition, the Company shall pay any and all stamp and other administrative taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement, the Letter of Credit, any other Related Document or any such other documents, and agrees to save the Agent, the Issuing Bank and each Creditor harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees. SECTION 9.08. Purchase Option. (a) The Company acknowledges and consents to the effectiveness of the Indenture and the Letter of Credit, and agrees to take any and all actions as are necessary to ensure that the Issuing Bank shall have the benefit of the option to purchase Bonds contemplated therein. (b) The Issuing Bank may with the consent, or shall at the request, of the Majority Creditors exercise its right as set forth in Sections 3.01(e), 9.01(e) or 13.03(d) of the Indenture to purchase the Bonds. Upon any such purchase, the Agent shall notify all Creditors of their pro rata share (based on their Participation Percentage) of the purchase price of the Bonds so purchased and upon receipt of such notice each Creditor will pay to the Agent, for the benefit of the Issuing Bank, such Creditor's pro rata share of the purchase price. Any Bonds so purchased shall be held by the Issuing Bank or the Agent or any other nominee of the Issuing Bank, on behalf of all Creditors (the "Holder"). The Holder may with the consent, or shall at the request, of the Majority Creditors exercise its rights in respect of the Bonds. Upon the sale, remarketing or refunding of any Bonds so purchased, the Holder shall pay to the Agent for the ratable benefit of the Creditors the proceeds of such sale, remarketing or refunding. Upon receipt of such proceeds by the Agent, the Agent shall ratably reimburse the Creditors their share of such proceeds. SECTION 9.09. Binding Effect; Assignments and Participations. (a) This Agreement shall become effective when it shall have been executed by the Company, the Agent, the Issuing Bank and each Creditor and thereafter shall be binding upon and inure to the benefit of the Company, the Agent, the 68 Issuing Bank and each Creditor and their respective successors and assigns, except that the Company shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Agent, the Issuing Bank and each Creditor. The Issuing Bank and each Creditor, with the consent of the Issuing Bank, which consent shall not be unreasonably withheld, may assign to any Eligible Institution all or any part of, or any interest (undivided or divided) in, its rights, benefits and obligations (other than the Issuing Bank's obligation to issue the Letter of Credit) under this Agreement, and to the extent of that assignment such assignee shall have the same rights, benefits and obligations (other than the Issuing Bank's obligation to issue the Letter of Credit) against and to the Company hereunder as it would have had if such assignee were the Issuing Bank or such Creditor hereunder; provided that any such assignment shall not be in an amount less than $5,000,000. (b) The Issuing Bank and each Creditor may sell or agree to sell, to (i) any Eligible Institution (each such Eligible Institution being an "Eligible Participant") or (ii) one or more other Persons (each a "Restricted Participant"; and together with any Eligible Participants being referred to herein as a "Participant"), a participation in all or any part of the Letter of Credit, any Tender Advance or other amounts payable under this Agreement. Each Participant shall be entitled to the rights and benefits of the provisions of Section 5.01(a)(vi) with respect to its participation in the Letter of Credit or such Tender Advance or such other amounts as if (and the Company shall be directly obligated to such Participant under such provisions as if) such Participant were the "Creditor" for purposes of said Section, but, except as set forth below, shall not have any other rights or benefits under this Agreement or any other Related Document (the Participant's rights against the Creditor in respect of such participation to be those set forth in the agreements executed by the Creditor in favor of the Participant). All amounts payable by the Company to the Issuing Bank or any Creditor under Section 2.11 and 2.17 in respect of the Letter of Credit or any Tender Advance or other amounts payable under this Agreement shall be determined as if the Issuing Bank or any Creditor had not sold or agreed to sell any participations in the Letter of Credit or any Tender Advance or such other amounts, and as if the Issuing Bank or any Creditor were maintaining the Letter of Credit or any Tender Advance or such other amounts in the same way that it is maintaining the portion of the Letter of Credit or any Tender Advance or such other amounts in which no participations have been sold. In the case of an Eligible Participant, the Bank may agree with such Participant to take or refrain from taking action hereunder or under any Related Document as the Issuing Bank or any Creditor, as set forth in the agreement executed by the Bank and such Participant shall determine in favor of such Participant, with respect to taking or refraining from taking action hereunder or under any other Related Document. In no event shall the Issuing Bank or any Creditor agree with any Restricted Participant to take or refrain 69 from taking any action hereunder or under any other Related Document except that the Issuing Bank or any Creditor may agree with a Restricted Participant that it will not, without the consent of such Restricted Participant, agree to (i) extend the date fixed for the payment of principal of or interest on any Tender Advance or other amounts payable to such Restricted Participant, (ii) reduce the amount of any such payment of principal, (iii) reduce the rate at which interest is payable thereon to a level below the rate at which such Restricted Participant is entitled to receive such interest, (iv) alter the rights or obligations of the Company to prepay any Tender Advance or other amounts payable to such Restricted Participant or (v) release any collateral, including, without limitation, the Second Mortgage Bonds, Series [ ]. (c) Notwithstanding any other provision set forth in this Agreement, the Issuing Bank or any Creditor may at any time create a security interest in all or any portion of its rights under this Agreement (including, without limitation, the Advances owing to it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System. SECTION 9.10. Further Assurances. The Company agrees promptly to do such further acts and things, and to execute and deliver such additional instruments (including, without limitation, notices), at its own expense, as the Agent, the Issuing Bank or any Creditor may at any time reasonably request in order better to insure and confirm the Agent's, the Issuing Bank's or any Creditor's, as the case may be, rights, powers and remedies hereunder and under the other Related Documents (including in order to perfect or protect any pledge or security interest granted or purported to be granted hereby or to enable the Agent, the Issuing Bank or any Creditor, as the case may be, to exercise or enforce its rights and remedies in respect hereof). SECTION 9.11. Severability. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. SECTION 9.12. 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 9.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICT OF LAW PRINCIPLES. 70 SECTION 9.14. Submission to Jurisdiction. THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OR OMISSIONS OF THE AGENT, THE ISSUING BANK OR ANY CREDITOR IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY RELATED DOCUMENT. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE COMPANY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE COMPANY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER RELATED DOCUMENTS. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF TEXAS. SECTION 9.15. Waiver of Trial by Jury. EACH OF THE COMPANY AND THE AGENT, THE ISSUING BANK AND EACH CREDITOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER RELATED DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE COMPANY ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER RELATED DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER RELATED DOCUMENT. SECTION 9.16. Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. SECTION 9.17. Integration. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AS TO THE SUBJECT MATTER OF THIS AGREEMENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO. 71 SECTION 9.18. Survival. The obligations of the Company under Sections 2.11, 2.17, 9.05, 9.14 and 9.15 shall survive the repayment of the Loans and the payment in full of all amounts payable by the Company under Section 9.07. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written. EL PASO ELECTRIC COMPANY By [Title] Issuing Bank CITIBANK, N.A. By Vice President Agent CITIBANK, N.A., as Agent By Vice President 72 Participation Percentage Creditors 100% CITIBANK, N.A. By Vice President [399 Park Avenue New York, New York 10043 Attention: Energy West Department Telex No. TLX 12-7773 NYWCGCB Telecopier (212) 793-0642] 73 EXHIBIT A FORM OF LETTER OF CREDIT IRREVOCABLE LETTER OF CREDIT No. [ ] , 199[ ]* [Name and Address of Trustee] Attention: Corporate Trust Department Dear Sirs: We hereby establish, at the request and for the account of El Paso Electric Company, a Texas corporation (the "Company"), in your favor, as Trustee under the Indenture of Trust, dated as of , 199 (the "Indenture") between the City of Farmington, New Mexico (the "Issuer") and you, pursuant to which [$35,805,000]* in aggregate principal amount of the Issuer's Pollution Control Refunding Revenue Bonds (El Paso Electric Company Four Corners Project), 19 Series (the "Bonds"), were issued, our Irrevocable Letter of Credit No. [ ], in the amount of $[ ]*** (as more fully described below), effective immediately and expiring at the close of banking business at our 111 Wall Street, New York, New York 10043 office on or such later date as we shall have agreed in writing (the "Stated Termination Date"), unless earlier terminated in accordance with the terms hereof. ________________ * To be dated the date of issuance of the Letter of Credit. ** In no event shall the principal amount of the Bonds exceed $35,805,000. *** In no event shall the face amount of this Letter of Credit exceed $39,176,637.50. 74 We hereby irrevocably authorize you to draw on us, in an aggregate amount not to exceed the amount of this Letter of Credit set forth above and in accordance with the terms and conditions and subject to the reductions in amount as hereinafter set forth, (1) in one or more drawings by one or more of your drafts, drawn on our 111 Wall Street, New York, New York 10043 office, payable at sight on a banking day (which shall be any day other than a Saturday, Sunday or public or bank holiday or the equivalent for banks generally under the laws of the State of New York (a "Banking Day")), accompanied by a completed certificate in substantially the form of Annex B attached hereto, which drafts and certificates shall be in writing and signed by you (any such draft accompanied by such certificate being your "Interest Draft"), an amount not exceeding $[ ]; (2) in one or more drawings by one or more of your drafts, drawn on our 111 Wall Street, New York, New York 10043 office, payable at sight on a Banking Day, accompanied by a completed certificate in substantially the form of Annex C attached hereto, which drafts and certificates shall be in writing and signed by you (any such draft accompanied by such certificate being your "Tender Draft"), an aggregate amount not exceeding $[ ]; (3) in one or more drawings by one or more of your drafts, drawn on our 111 Wall Street, New York, New York 10043 office, payable at sight on a Banking Day, accompanied by a completed certificate in substantially the form of Annex D attached hereto, which drafts and certificates shall be in writing and signed by you (any such draft accompanied by such certificate being your "Partial Redemption Draft"), an aggregate amount not exceeding $[ ]; and (4) in a single drawing by your draft, drawn on our 111 Wall Street, New York, New York 10043 office, payable at sight on a Banking Day, accompanied by a completed certificate in substantially the form of Annex E attached hereto, which draft and certificate shall be in writing and signed by you (such draft accompanied by such certificate being your "Final Draft"), an amount not exceeding $[ ]; provided that in no event will you have a right to make drawings under this Letter of Credit for the payment of the principal of, or interest on, Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company; provided further with respect to any such Bonds that were not so held by or for the account of the Company (or any Affiliate thereof) on the immediately preceding Record Date (as defined in the Indenture), you may, in accordance with the Indenture, draw on us by your Interest Draft under clause (1). Notwithstanding any other provision in this Letter of Credit, in no event will you have a right to make a drawing under this Letter of Credit for the payment of principal of or interest on Bonds in a "Bond Interest Term" (as defined in the Indenture). This Letter of Credit may not be drawn upon for the payment of any premium which may be payable in respect of the Bonds. 75 Upon our honoring any Interest Draft presented by you hereunder, the amount of this Letter of Credit and the amounts available to be drawn by you by any subsequent Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft shall be automatically decreased by an amount equal to the amount of such Interest Draft. If you shall not have received from us within 15 calendar days from the date of such drawing a notice from us to the effect that we have not been reimbursed for such drawing in the form of Annex H attached hereto appropriately completed, the amount of this Letter of Credit and the amounts from time to time available to be drawn by you by any Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft shall be automatically and irrevocably reinstated in the amount of such drawing, effective the 16th calendar day from the date of such drawing. The amount of this Letter of Credit shall be decreased upon our receipt of notice from you, in the form of Annex A hereto, of a redemption or defeasance of less than all the Bonds outstanding, by an amount equal to the amount stated in said notice and the amounts available to be drawn by you by any subsequent Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft shall be automatically decreased to the amounts stated in such notice. Upon our honoring any Tender Draft or Partial Redemption Draft, (i) the amount of this Letter of Credit and the amount available to be drawn by you by any subsequent Tender Draft, Partial Redemption Draft or Final Draft shall be automatically decreased by an amount equal to the amount of such Tender Draft or such Partial Redemption Draft and (ii) the amount available to be drawn by you by any Interest Draft shall be automatically decreased by an amount equal to the amount drawn under such draft in respect of accrued and unpaid interest. In the case of any Tender Draft, the amount from time to time available to be drawn by you by any Interest Draft, Tender Draft or Partial Redemption Draft and Final Draft shall be reinstated to the extent, but only to the extent, we received reimbursement from the Company for amounts drawn hereunder by such Tender Draft and we so notify you in writing. In addition, the amount available from time to time to be drawn by you by any Interest Draft, Tender Draft, Partial Redemption Draft and Final Draft shall be automatically reinstated, upon our receipt from you of the proceeds of the resale of any Bonds purchased and held on behalf of the Company with amounts drawn hereunder accompanied by a completed and signed certificate substantially in the form of Annex F, by an amount equal to the amount of the drawings made to purchase the Bonds so resold. Amounts received from you on behalf of the Company shall, if accompanied by a completed and signed certificate substantially in the form of Annex F from you, shall be applied to the extent of the amounts indicated therein in 76 reimbursement of unreimbursed drawings under your Tender Drafts. Amounts otherwise received from you on behalf of the Company shall first be applied in reimbursement of unreimbursed drawings made by your Interest Draft. Upon delivery to us (i) of all Bonds purchased by you on behalf of or for the account of the Bank pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture, or Section 13.03(d) of the Indenture with moneys drawn by a Tender Draft and (ii) a completed and signed certificate substantially in the form of Annex G, the Letter of Credit shall be reinstated in an amount equal to the amount of such Tender Draft used to purchase such Bonds so delivered; provided, however, if at any time any such purchase shall be rescinded, in whole or in part, or some or all of the Bonds so purchased must otherwise be returned by the Bank, in each case, for any reason, the amounts so reinstated shall not be available to be drawn until and unless the Company reimburses us for such amounts. Funds under this Letter of Credit are available to you against (1) your Interest Draft referring thereon to the number of this Letter of Credit accompanied by your written and completed certificate signed by you in substantially the form of Annex B thereto, (2) your Tender Draft referring thereon to the number of this Letter of Credit accompanied by your written and completed certificate signed by you in substantially the form of Annex C thereto, (3) your Partial Redemption Draft referring thereon to the number of this Letter of Credit accompanied by your written and completed certificate signed by you in substantially the form of Annex D thereto and (4) your Final Draft referring thereon to the number of this Letter of Credit accompanied by your written and completed certificate signed by you in substantially the form of Annex E thereto. Each such draft and certificate shall be dated the date of its presentation, and shall be presented at our office located at 111 Wall Street, New York, New York 10043, telex no.: 127001 CITIBANK NYK, Attention: NATS Letter of Credit Operations (or at any other office or number in the City and State of New York which may be designated by us by written notice delivered to you) on or before 12:00 Noon (New York City time), or by tested telex (or telecopier) on or before 10:00 A.M. (New York City time), on the day (which shall be a Banking Day) of our making funds available to you hereunder. If we receive any of your drafts and certificates at such office, all in strict conformity with the terms and conditions of this Letter of Credit, on or prior to the termination hereof and in any event not later than 12:00 Noon (New York City time), or if such drafts and certificates are presented by tested telex (or telecopier) not later than 10:00 A.M. (New York City time) on the Stated Termination Date, we will honor the same after presentation thereof on the same day in accordance with your payment instructions. If we receive any of your drafts and certificates at such office after 12:00 Noon (New York City time), or if such drafts and certificates are presented by tested telex (or telecopier) after 10:00 A.M. (New York City 77 time), on a Banking Day, we will honor the same after presentation thereof on the next succeeding Banking Day provided that such drafts and certificates conform with the terms and conditions of this Letter of Credit. If requested by you, payment under this Letter of Credit may be made by wire transfer of Federal Reserve Bank of New York funds to your account in a bank on the Federal Reserve wire system or by deposit of same day funds into a designated account that you maintain with us. This Letter of Credit shall automatically terminate upon the earliest of (i) our honoring your Final Draft presented hereunder, (ii) the date stated in any written notice we receive from you as the effective date of termination of this Letter of Credit, (iii) the date that you surrender the Letter of Credit to us, (iv) the provision of any substitution letter of credit or credit facility as provided in the Indenture, (v) the date on which we receive written notice from you that there is no longer any "Bond Outstanding" within the meaning of the Indenture, and (vi) the Stated Termination Date. This Letter of Credit is transferable in its entirety (but not in part) to any transferee who has succeeded you as Trustee under the Indenture and may be successively transferred. Transfer of the available balance under this Letter of Credit to such transferee shall be effected by the presentation to us of this Letter of Credit accompanied by a certificate in substantially the form of Annex I attached hereto, together with a fee equal to 1/4 of 1% of the "Available Amount". "Available Amount" means the maximum amount available to be drawn at such time under the Letter of Credit, the determination of such maximum amount to assume compliance with all conditions for drawing and no reduction for (i) any amount drawn by an Interest Draft (unless such amount is not reinstated under the Letter of Credit) or (ii) any amount drawn by a Tender Draft or (iii) any amount not available to be drawn because Bonds are held by or for the account of the Company (or any Affiliate thereof). Upon such presentation and payment we shall forthwith transfer the same to your transferee or, if so requested by your transferee, issue an irrevocable letter of credit to your transferee with provisions therein consistent with this Letter of Credit. This Letter of Credit sets forth in full our undertaking, and such undertaking shall not in any way be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein (including, without limitation, the Bonds), except only the certificates and the drafts referred to herein; and any such reference shall not be deemed to incorporate herein by reference any document, instrument or agreement except for such certificates and such drafts. 78 This Letter of Credit shall be governed by the laws of the State of New York, including the Uniform Commercial Code as in effect in the State of New York. Communications with respect to this Letter of Credit shall be in writing and shall be addressed to us at 11l Wall Street, New York, New York 10043, Attention: NATS Letter of Credit Operations, specifically referring to the number of this Letter of Credit. Very truly yours, CITIBANK, N.A. By Vice President 79 Annex A CERTIFICATE FOR THE REDUCTION OF AMOUNTS AVAILABLE UNDER IRREVOCABLE LETTER OF CREDIT NO. DATED , 199 The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Citibank, N.A. (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The Trustee hereby notifies you that on or prior to the date hereof $ principal amount of the Bonds have been redeemed and paid or have been defeased pursuant to the Indenture. (3) Following the redemption and payment or the defeasance referred to in paragraph (2) above, the aggregate principal amount of all of the Bonds Outstanding (as defined in the Indenture) is $ . (4) The maximum amount of interest, computed in accordance with the terms and conditions of the Bonds and the Indenture, which would accrue on the Bonds referred to in paragraph (3) above in any period of [ days] is $ . None of the Bonds referred to in paragraph (2) above were in a Bond Interest Term as of the date such Bonds were redeemed, paid or defeased pursuant to the Indenture. (5) The maximum amount available to be drawn by the Trustee under the Letter of Credit by any Interest Draft is reduced to $ (such amount being equal to the amount specified in paragraph (4) above) upon receipt by the Bank of this Certificate. (6) The maximum amount available to be drawn by the Trustee under the Letter of Credit by any Tender Draft is reduced to $ (such amount being equal to the sum of the amounts specified in paragraphs (3) and (4) above) upon receipt by the Bank of this Certificate. (7) The maximum amount available to be drawn by the Trustee under the Letter of Credit by any Partial Redemption Draft is reduced to $ (such amount being equal to the sum of the amounts specified in paragraphs (3) and (4) above) upon receipt by the Bank of this Certificate. 80 (8) The amount available to be drawn by the Trustee under the Letter of Credit by its Final Draft is reduced to $ (such amount being equal to the sum of the amounts specified in paragraphs (3) and (4) above) upon receipt by the Bank of this Certificate. (9) The amount of the Letter of Credit is reduced to $ (such amount being equal to the sum of the amounts specified in paragraph 8 above) upon receipt by the Bank of this Certificate. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate this day of , 19 . , as Trustee By [Name and Title] 81 Annex B CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF UP TO [ DAYS'] INTEREST ON THE CITY OF FARMINGTON, NEW MEXICO'S POLLUTION CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY FOUR CORNERS PROJECT), 199 SERIES (THE "BONDS") Irrevocable Letter of Credit No. The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Citibank, N.A. (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The Trustee is making a drawing under the Letter of Credit with respect to a payment of days' interest on the Bonds, which payment is due on the date on which this Certificate and the Interest Draft it accompanies are being presented to the Bank. None of the Bonds in respect of which the drawing is being made (i) were, on the Record Date (as defined in the Indenture) held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company or (ii) were on such date in a Bond Interest Term. (3) The amount of the Interest Draft accompanying this Certificate is equal to $ . It was computed in compliance with the terms and conditions of the Bonds and the Indenture and does not include any amount of interest on the Bonds which is included in any Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft presented on or prior to the date of this Certificate and does not exceed the amount available to be drawn by the Trustee under the Letter of Credit. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of the day of , 19 . , as Trustee By [Name and Title] 82 Annex C CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF PRINCIPAL OF AND UP TO [ DAYS'] INTEREST ON THE CITY OF FARMINGTON, NEW MEXICO'S POLLUTION CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY FOUR CORNERS PROJECT), 199 SERIES (THE "BONDS"), IN SUPPORT OF A TENDER (OTHER THAN A MANDATORY TENDER UPON TERMINATION OR EXPIRATION OF THE LETTER OF CREDIT) Irrevocable Letter of Credit No. The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Citibank, N.A. (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The Trustee is making a drawing under the Letter of Credit with respect to the payment, upon a tender of all or less than all of the Bonds which are Outstanding (as defined in the Indenture), of (i) the unpaid principal amount of the Bonds to be purchased either (a) as a result of a tender pursuant to the terms of Section 2.02 of the Indenture (other than Section 2.02(6) of the Indenture) or (b) as a result of a purchase of Bonds by the Bank pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture or Section 13.03(d) of the Indenture (in each case, other than Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company in each case, and (ii) the amount of interest (not exceeding [ days'] interest) accrued and unpaid thereon from the Interest Accrual Date (as defined in the Indenture) immediately preceding the date of purchase through the day immediately preceding the date of purchase thereof, which payment is due on the date on which this Certificate and the Tender Draft it accompanies are being presented to the Bank. (3) The amount of the Tender Draft accompanying this Certificate is equal to the sum of (i) $ being drawn in respect of the payment of unpaid principal of Bonds (other than Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company) to be purchased as a result of a tender of the type described above and 83 (ii) $ being drawn in respect of the payment of accrued and unpaid interest on such Bonds and does not include any amount of interest which is included in any Interest Draft, Tender Draft other than the Tender Draft accompanying this certificate, Partial Redemption Draft or Final Draft presented on or prior to the date of this Certificate. (4) The amount of the Tender Draft accompanying this Certificate was computed in compliance with the terms and conditions of the Bonds and the Indenture and does not exceed the amount available to be drawn by the Trustee under the Letter of credit. (5) None of the Bonds in respect of which a drawing is being made are in a Bond Interest Term. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of the day of , 19 . , as Trustee By [Name and Title] 84 Annex D CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF PRINCIPAL OF AND UP TO [ DAYS'] INTEREST ON THE CITY OF FARMINGTON, NEW MEXICO'S POLLUTION CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY FOUR CORNERS PROJECT), 199 SERIES (THE "BONDS"), UPON PARTIAL REDEMPTION Irrevocable Letter of Credit No. The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Citibank, N.A. (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The Trustee is making a drawing under the Letter of Credit with respect to the payment, upon redemption of less than all of the Bonds which are Outstanding (as defined in the Indenture), of the unpaid principal amount of and up to [ days'] accrued and unpaid interest to the redemption date on, Bonds to be redeemed pursuant to the terms of Section 3.01 of the Indenture (other than Bonds purchased by the Tender Agent or the Trustee on behalf of or for the account of the Bank, pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture or Section 13.03(d) of the Indenture and held by or on behalf of or for the account of the Bank or its nominee and Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or Tender Agent for the account of the Company). [The direction from the Company with respect to redemption was received by us no more than 60 days prior to the date of this certificate. We have evidence, as of the date of this certificate, from two of Moody's Investors Services, Inc., Standard & Poor's Corporation and Duff & Phelps, Inc. that the Company's First Mortgage Bonds, Series [ ], and Second Mortgage Bonds, Series [ ], each have a rating of BBB- or better (or equivalent) and such Bonds have not, as of the date of this certificate, been placed on any watch list.]* ________________ * To be used in case of an optional redemption. 85 (3) The amount of the Partial Redemption Draft accompanying this Certificate is equal to the sum of (i) $_________ being drawn in respect of the payment of unpaid principal of Bonds (other than Bonds purchased by the Trustee on behalf of or for the account of the Bank, pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture or Section 13.03(d) of the Indenture and then held by or on behalf of or for the account of the Bank or its nominee and Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or Tender Agent for the account of the Company to be redeemed, and (ii) $_________ being drawn in respect of the payment of accrued and unpaid interest on such Bonds and does not include any amount of interest which is included in any Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft presented on or prior to the date of this Certificate. (4) The amount of the Partial Redemption Draft accompanying this Certificate was computed in accordance with the terms and conditions of the Bonds and the Indenture and does not exceed the amount available to be drawn under the Letter of Credit. (5) This Certificate and the Partial Redemption Draft it accompanies are dated, and are being presented to the Bank on, the date on which the unpaid principal amount of and accrued and unpaid interest on, Bonds to be redeemed are due and payable under the Indenture upon redemption of less than all of the Bonds which are Outstanding (as defined in the Indenture). (6) None of the Bonds in respect of which a drawing is being made are in a Bond Interest Term. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of the day of , 19 . , as Trustee By [Name and Title] 86 Annex E CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF PRINCIPAL OF AND UP TO DAYS' INTEREST ON THE CITY OF FARMINGTON, NEW MEXICO'S POLLUTION CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY FOUR CORNERS PROJECT), 199 SERIES (THE "BONDS"), UPON STATED OR ACCELERATED MATURITY OR OPTIONAL OR MANDATORY REDEMPTION AS A WHOLE OR MANDATORY TENDER UPON TERMINATION OR EXPIRATION OF THE LETTER OF CREDIT Irrevocable Letter of Credit No. The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Citibank, N.A. (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The Trustee is making a drawing under the Letter of Credit (a) with respect to the payment, either at stated maturity, upon acceleration, as a result of a redemption in full pursuant to Section 3.01 of the Indenture [(the direction from the Company and notice to the Bondholders with respect to redemption was received and given by us no more than 60 days prior to the date of this Certificate and we had evidence, as of the date such notice was given by us to the Bondholders, from two of Moody's Investors Services, Inc., Standard & Poor's Corporation and Duff & Phelps, Inc. that the Company's First Mortgage Bonds, Series [ ], and Second Mortgage Bonds, Series [ ], each had a rating of BBB- or better (or equivalent) and such Bonds had not, as of such date, been placed on any watch list)]* or (b) as a result of a mandatory tender upon termination or expiration of the Letter of Credit or substitution of another credit facility for the Letter of Credit as contemplated by Section 2.02(6) of the Indenture, of the unpaid principal amount of and up to days' accrued and unpaid interest on, all of the Bonds which are Outstanding (as defined in the Indenture) (other than Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company), which payment is due on the date on which this Certificate and the Final Draft it accompanies are being presented to the Bank. ________________ * To be used in the case of an optional redemption. 87 (3) The amount of the Final Draft accompanying this Certificate is equal to the sum of (i) $ being drawn in respect of the payment of unpaid principal of Bonds (other than Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company) and (ii) $ being drawn in respect of the payment of accrued and unpaid interest on such Bonds and does not include any amount of interest on the Bonds which is included in any Interest Draft, Tender Draft or Partial Redemption Draft presented on or prior to the date of this Certificate. (4) The amount of the Final Draft accompanying this Certificate was computed in compliance with the terms and conditions of the Bonds and the Indenture and does not exceed the amount available to be drawn by the Trustee under the Letter of Credit. (5) None of the Bonds in respect of which the drawing is being made are in a Bond Interest Term. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of the day of , 19 . , as Trustee By [Name and Title] 88 Annex F CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE UNDER IRREVOCABLE LETTER OF CREDIT NO. , DATED , 199 The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Citibank, N.A. (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The amount of $ paid to you today by the Trustee on behalf of the Company is a payment made pursuant to Section 2.09(b) of the Letter of Credit and Reimbursement Agreement dated as of , 19 (the "Reimbursement Agreement") between the Company and the Bank for amounts drawn under the Letter of Credit and represents unreimbursed drawings under Tender Draft[s] dated [ ]. (3) The amount referred to in paragraph (2) represents the amount of Bonds which were purchased with proceeds of a draw on the Letter of Credit by a Tender Draft dated , 19 . $ represents amounts paid in respect of accrued interest on Bonds and $ represents amounts paid in respect of unpaid principal on Bonds. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate this day of , 19 . , as Trustee By [Name and Title] 89 Annex G CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE UNDER IRREVOCABLE LETTER OF CREDIT NO. , DATED , 199 The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Citibank, N.A. (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The Tender Agent has delivered to the Bank all Bonds purchased pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture, or Section 13.03(d) of the Indenture, as the case may be, with proceeds of a draw on the Letter of Credit by Tender Draft dated , 19 . (3) The amount of such Tender Draft used to purchase such Bonds which were not remarketed is $ . IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate this day of , 19 . , as Trustee By [Name and Title] 90 Annex H NOTICE THAT TRUSTEE'S RIGHT TO DRAW UNDER THE LETTER OF CREDIT BY AN INTEREST DRAFT HAS NOT BEEN REINSTATED [Name and Address of Trustee] Attention: Corporate Trust Department Irrevocable Letter of Credit No. Dear Sirs: You are hereby advised that El Paso Electric Company has not reimbursed us in an amount equal to the amount drawn by you under the Interest Draft dated , 19 . Therefore, the amount of our Irrevocable Letter of Credit No. and the amounts available to be drawn by you by an Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft (which available amounts have been decreased by an amount equal to the amount of such Interest Draft) shall not be reinstated in the amount of such Interest Draft. CITIBANK, N.A. 91 Annex I INSTRUCTION TO TRANSFER , 19 Citibank, N.A. 111 Wall Street New York, New York 10043 Attention: NATS Letter of Credit Operations Re: Irrevocable Letter of Credit No. Gentlemen: For value received, the undersigned beneficiary hereby irrevocably transfers to: [Name of Transferee] [Address] all rights of the undersigned beneficiary to draw under the above-captioned Letter of Credit (the "Letter of Credit"). The transferee has succeeded the undersigned as Trustee under the Indenture (as defined in the Letter of Credit). By this transfer, all rights of the undersigned beneficiary in the Letter of Credit are transferred to the transferee and the transferee shall hereafter have the sole rights as beneficiary thereof; provided, however, that no rights shall be deemed to have been transferred to the transferee until such transfer complies with the requirements of the Letter of Credit pertaining to transfers. 92 The Letter of Credit is returned herewith and in accordance therewith we ask that this transfer be effective and that you transfer the Letter of Credit to our transferee or that, if so requested by the transferee, you issue a new irrevocable letter of credit in favor of the transferee with provisions consistent with the Letter of Credit. Very truly yours, , as predecessor Trustee By [Name and Title] 1 LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT Dated as of , 199[ ] among EL PASO ELECTRIC COMPANY, CITIBANK, N.A., as Issuing Bank, THE CREDITORS Specified Herein and CITIBANK, N.A., as Agent for such Creditors 2 TABLE OF CONTENTS Section Page Preliminary Statements............................ 1 ARTICLE I DEFINITIONS 1.01 Certain Defined Terms....................... 3 1.02 Computation of Time Periods................. 15 1.03 Accounting Terms............................ 15 1.04 Interpretation.............................. 15 ARTICLE II AMOUNT AND TERMS OF THE LETTER OF CREDIT 2.01 The Letter of Credit........................ 16 2.02 Issuing the Letter of Credit................ 16 2.03 Drawing Fee................................. 16 2.04 Commissions................................. 16 2.05 Reimbursement on the Date of the Draw....... 17 2.06 Tender Advances............................. 18 2.07 Interest on Advances........................ 18 2.08 Reimbursement of Issuing Bank, Etc.......... 21 2.09 Prepayments; Reinstatement of Letter of Credit Amounts............................ 23 2.10 Additional Interest......................... 24 2.11 Increased Costs............................. 24 2.12 Payments and Computations................... 27 2.13 Payments on Non-Business Days............... 27 2.14 Extension of the Stated Termination Date...................................... 28 2.15 Evidence of Debt............................ 29 2.16 Obligations Absolute........................ 29 2.17 U.S. Taxes.................................. 31 2.18 Applicable Lending Office................... 32 2.19 Net Payments................................ 33 2.20 Reinstatement of the Letter of Credit....... 33 ARTICLE III CONDITIONS OF ISSUANCE 3.01 Conditions Precedent to Issuance of the Letter of Credit.......................... 33 3.02 Additional Conditions Precedent to Issuance of the Letter of Credit.......... 37 3.03 Conditions Precedent to Each Tender Advance............................ 38 (i) 3 Section Page ARTICLE IV REPRESENTATIONS AND WARRANTIES 4.01 Representations and Warranties of the Company........................... 38 ARTICLE V COVENANTS OF THE COMPANY 5.01 Affirmative Covenants...................... 42 5.02 Negative Covenants......................... 46 ARTICLE VI EVENTS OF DEFAULT 6.01 Events of Default.......................... 50 6.02 Upon an Event of Default................... 53 ARTICLE VII SECURITY 7.01 Issuance and Pledge of Bonds............... 54 7.02 Application of Moneys...................... 54 7.03 Rights of Bondholders...................... 54 7.04 The Agent's Duties......................... 55 ARTICLE VIII THE AGENT, THE CREDITORS AND THE ISSUING BANK 8.01 Authorization and Action................... 55 8.02 Reliance, Etc. ............................ 55 8.03 The Agent, the Issuing Bank and Affiliates............................... 56 8.04 Bank Credit Decision....................... 57 8.05 Indemnification............................ 57 8.06 Successor Agent............................ 57 8.07 Issuing Bank............................... 58 ARTICLE IX MISCELLANEOUS 9.01 Amendments, Etc. .......................... 58 9.02 Notices, Etc. ............................. 59 9.03 No Waiver; Remedies........................ 60 9.04 Rights of Setoff and Subrogation........... 60 9.05 Indemnification............................ 61 (ii) 4 Section Page 9.06 Issuing Bank and Creditors................. 63 9.07 Costs, Expenses and Taxes.................. 63 9.08 Purchase Option............................ 64 9.09 Binding Effect; Assignments and Participations........................... 65 9.10 Further Assurances......................... 66 9.11 Severability............................... 67 9.12 Headings................................... 67 9.13 Governing Law.............................. 67 9.14 Submission to Jurisdiction................. 67 9.15 Waiver of Trial by Jury.................... 67 9.16 Counterparts............................... 68 9.17 Integration................................ 68 9.18 Survival................................... 68 SCHEDULE I - Liens EXHIBIT A - Form of Letter of Credit with Annexes A through I thereto attached (iii) 5 LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT, dated as of [ ], 199[ ], among EL PASO ELECTRIC COMPANY, a Texas corporation (the "Company"), CITIBANK, N.A., ("Citibank") as issuing bank (the "Issuing Bank"), the Creditors (as hereinafter defined) and Citibank, as agent for the Creditors (the "Agent"). PRELIMINARY STATEMENTS: (1) The Company requested the Maricopa County, Arizona Pollution Control Corporation (the "Issuer") to issue, pursuant to the Resolution Authorizing Annual Tender Pollution Control Revenue Bonds adopted December 16, 1983 (such resolution as amended by Supplemental Resolution No. 1 adopted November 26, 1991 and , adopted , the "Original Resolution"), naming The State National Bank of El Paso as trustee (the "Original Trustee"), $63,500,000 aggregate principal amount of the Issuer's Annual Tender Pollution Control Revenue Bonds, 1983 Series A (El Paso Electric Company Palo Verde Project) (the "Original Bonds"), to various purchasers. (2) The Issuer and the Company entered into a Loan Agreement, dated as of December 1, 1983 (the "Original Loan Agreement"), which the Issuer assigned to the Original Trustee to secure the payment of the Original Bonds, and pursuant to which, among other things, the Company was required to furnish a letter of credit in connection with its payment obligations under the Original Loan Agreement. (3) The Original Trustee and the Company entered into a Tender Agreement dated as of December 1, 1983 pursuant to which, among other things, the Company was required to furnish a letter of credit in connection with its obligation to purchase Original Bonds pursuant to subsection 3 of Section 2.08 of the Original Resolution. (4) The Company and Citibank entered into a Letter of Credit and Reimbursement Agreement dated as of December 1, 1983, as amended by the Amendment, dated as of May 30, 1991, the Deferral Agreement, dated as of December 30, 1991, the Second Amendment, dated as of June 14, 1993, and , dated as of , in each case between the Company and Citibank (such agreement as so amended, the "Original Reimbursement Agreement"), pursuant to which Citibank issued its Irrevocable Letter of Credit dated December 29, 1983 (the "Original Letter of Credit") in respect of certain of the Company's payment obligations relating to the Original Bonds. (5) On January 8, 1992, the Company commenced a voluntary case (the "Bankruptcy Case") under chapter 11 of the Bankruptcy Code (as hereinafter defined) (Case No. 92-10148-FM) in the Bankruptcy Court (as hereinafter defined), and thereafter has continued to operate its business and manage its assets as a debtor-in-possession. 6 (6) The Company desires to restructure its outstanding indebtedness and, in connection therewith, the Company has requested the Issuer to, and the Issuer has agreed to, refund (the "Refunding") the Original Bonds by issuing Pollution Control Refunding Revenue Bonds (El Paso Electric Company Palo Verde Project), 199 Series (the "Bonds") pursuant to the Indenture of Trust dated as of __________, 199__ a form of which has been filed with the Bankruptcy Court in accordance with Section 7.6 of the Plan of Reorganization (as hereinafter defined) (as such Indenture may be amended, supplemented and modified from time to time, the "Indenture"), naming [ ] as trustee (the "Trustee"). (7) In connection with the Refunding, the Issuer and the Company have entered into a Loan Agreement, dated as of _________, 199__ (as the same may be amended, supplemented and modified from time to time, the "Loan Agreement"), which the Issuer has assigned to the Trustee to secure payment of the Bonds, and pursuant to which, among other things, in connection with the initial delivery of the Bonds, the Company is required to furnish a letter of credit in connection with its payment obligations under the Loan Agreement. [(8) In connection with the Refunding, the Trustee and the Company have entered into a Tender Agreement, dated as of , 199 , pursuant to which, among other things, the Company is required to furnish a letter of credit in connection with its obligation to purchase Bonds pursuant to Section 2.02 of the Indenture and redeem Bonds pursuant to Section 3.01 of the Indenture.] (9) In connection with the Refunding and in consideration therefor and as set forth in the Plan of Reorganization, the Company and Citibank have agreed to enter into this Letter of Credit and Reimbursement Agreement (as amended, modified and supplemented from time to time, this "Agreement") and the Related Documents (as defined herein) pursuant to which Citibank will issue, in substantially the form of Exhibit A, a letter of credit (such letter of credit and any successor letter of credit as provided for in such letter of credit being the "Letter of Credit"), in the amount of $[________]* (the "Commitment") of which [$63,500,000]** shall support the payment of principal of the Bonds and $[ ] shall support the payment of interest on the Bonds for up to [ ] days computed at [14%]*** per annum on the principal thereof. _________________ * Not to exceed face amount of Original Letter of Credit. ** Not to exceed the portion of the Original Letter of Credit available to pay principal on the Original Bonds. *** To be set at a market rate as determined by the Remarketing Agent, but not to exceed 14% per annum. 7 (10) On [ , ], an order was entered by the court having jurisdiction over the Bankruptcy Case (the "Bankruptcy Court") confirming the Plan of Reorganization, which Plan of Reorganization provided, among other things, for the Company to enter into this Agreement. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained in the Plan of Reorganization and herein and in order to induce the Issuing Bank to issue the Letter of Credit, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Affiliate" means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term "control" (including the terms "controlling," "controlled by" and "under common control with") of a Person means the possession, direct or indirect, of the power to vote 5% or more of the Voting Stock of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise. "Agent Payment Notice" has the meaning assigned to that term in Section 2.08(a)(ii). "Agreement" has the meaning assigned to that term in Preliminary Statement (9). "Alternate Base Rate" means a fluctuating interest rate per annum as shall be in effect from time to time which rate per annum shall at all times be equal to the higher of: (i) the rate of interest announced publicly by Citibank in New York, New York, from time to time as Citibank's base rate, each change in such rate to be effective as of Citibank's opening of business on the date such change occurs (extensions of credit made by Citibank may bear interest at rates below, equal to or above such rate); or 8 (ii) 1/2 of one percent above the latest three-week moving average of secondary market morning offering rates in the United States for three-month certificates of deposit of major United States money market banks, such three-week moving average being determined weekly on each Monday (or, if any such day is not a Business Day, on the next succeeding Business Day) for the three-week period ending on the previous Friday by the Agent on the basis of such rates reported by certificate of deposit dealers to and published by the Federal Reserve Bank of New York or, if such publication shall be suspended or terminated, on the basis of quotations for such rates received by the Agent from three New York certificate of deposit dealers of recognized standing, in either case adjusted to the nearest 1/4 of one percent or, if there is no nearest 1/4 of one percent, to the next higher 1/4 of one percent. "Alternate Base Rate Advance" means a Tender Advance bearing interest as provided in Section 2.07(a). "Available Amount" in effect at any time means the maximum amount available to be drawn at such time under the Letter of Credit, the determination of such maximum amount to assume compliance with all conditions for drawing and no reduction for (i) any amount drawn by an Interest Draft (unless such amount is not reinstated under the Letter of Credit) or (ii) any amount drawn by a Tender Draft or (iii) any amount not available to be drawn because Bonds are held by or for the account of the Company. "Banking Institution" means any financial institution subject to regulation under Regulation D of the Board of Governors of the Federal Reserve System and any other banking institution or trust company or similar organization incorporated or organized under the laws of a country other than the United States, or a political subdivision of a country other than the United States. "Bankruptcy Case" has the meaning assigned to that term in Preliminary Statement (5). "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as heretofore and hereafter amended, and codified as title 11 of the United States Code. "Bankruptcy Court" has the meaning assigned to that term in Preliminary Statement (10). 9 "Bond Interest Amount" for any Payment Date with respect to each Bond, means an amount equal to the accrued interest on the principal amount of such Bond in accordance with its terms from and including the first day of the Quarterly Period for such Bond ending on such Payment Date to but excluding the earlier of (i) the Payment Date and (ii) the date such Bond ceases to be held by or for the account of the Issuing Bank or the Agent or any other nominee of the Issuing Bank. "Bonds" has the meaning assigned to that term in Preliminary Statement (6). "Business Day" means any day of the year on which banks are not required or authorized to close in New York City and, if the applicable Business Day relates to any Eurodollar Advances, on which dealings are carried on the London interbank market. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, from time to time. "Capitalized Lease Obligation" means, with respect to any lease of property which, in accordance with GAAP, appears on the lessee's balance sheet as a capital lease, the amount of the liability which should appear on such balance sheet. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Commencement Date" means the earlier of (i) the Effective Date and (ii) December 31, 1994. "Commitment" has the meaning assigned to that term in Preliminary Statement (9). "Confirmation Order" means the order of the Bankruptcy Court confirming the Plan of Reorganization. "Consolidated Subsidiary" means, for any Person, each Subsidiary of such Person (whether now existing or hereafter created or acquired) the financial statements of which shall be (or should have been) consolidated with the financial statements of such Person in accordance with GAAP. "Contract Interest Amount" for any Payment Date means an amount equal to the interest that would have accrued on an amount equal to the purchase price paid for each Bond purchased by the Trustee or the Tender Agent on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank, from and including the first day of the Quarterly Period for each such Bond ending on such Payment Date to but excluding the earlier of (i) the Payment 10 Date and (ii) the date such Bond ceases to be held by or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank, at an interest rate per annum equal at all times to the sum of (x) the Alternate Base Rate in effect from time to time plus (y) .50% per annum. "Creditors" means the banks listed on the signature pages hereof under the caption "Creditors" and any other Person which becomes a party hereto pursuant to Section 9.09(a). "Credit Termination Date" means the earlier of (i) the day on which the Letter of Credit is surrendered by the Trustee to the Issuing Bank for cancellation and (ii) the Stated Termination Date. "Debt" of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (including, without limitation, all obligations, contingent or otherwise, of such Person in connection with acceptance facilities (other than acceptance facilities entered into in connection with normal course commercial trade transactions) and letter of credit facilities to the extent such letter of credit facilities support Debt), (b) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (c) all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person, (d) all Capitalized Lease Obligations of such Person, (e) all obligations of such Person to purchase, redeem, retire, defense or otherwise make any payment in respect of any capital stock of or other ownership or profit interest in such Person or any other Person or any warrants, rights or options to acquire such capital stock, valued, in the case of preferred stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (f) all Debt of others referred to in clauses (a) through (e) above guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (iv) otherwise to assure a creditor against loss, and (g) all Debt referred to in clauses (a) through (e) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on 11 property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt. In cases where recourse to any Person or any of its properties in respect of Debt is limited, the amount of such Debt of such Person for purposes hereof shall be so limited. "Default Rate" means a fluctuating interest rate equal to 2% per annum above the Alternate Base Rate in effect from time to time. "EBITA" means, for any period, the sum, for the Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) net operating income (calculated before taxes, Interest Expense, extraordinary items and unusual non-cash, non-recurring items and income or loss attributable to equity in Affiliates) for such period plus (b) amortization (to the extent deducted in determining net operating income) for such period. "Effective Date" means the Effective Date (as defined therein) of the Plan of Reorganization. "Eligible Institution" means (i) a bank or trust company organized under the laws of the United States of America, of any state therein, of the District of Columbia, of any member country of the Organization for Economic Cooperation and Development or of any political subdivision of any such country, in each case, having assets in excess of $500,000,000, (ii) an insurance company organized under the laws of any state in the United States of America or of the District of Columbia having assets in excess of $500,000,000 or (iii) any other Person consented to by the Company, which consent shall not be unreasonably withheld. "Eligible Participant" has the meaning assigned to that term in Section 9.09(b). "Environmental Action" means any administrative, regulatory or judicial action, suit, demand, demand letter, claim, notice of non-compliance or violation, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law or any Environmental Permit including, without limitation, (a) any claim by any governmental or regulatory authority for enforcement, investigation, cleanup, removal, response, remedial or other actions or damages pursuant to any Environmental Law and (b) any claim by any Person seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment. 12 "Environmental Law" means any federal, state or local law, rule, regulation, order, writ, judgment, injunction, decree, determination or award relating to the environment, health, safety or Hazardous Materials. "Environmental Permit" means any permit, approval, identification number, license or other authorization required under any Environmental Law. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "ERISA Affiliate" means any Person who for purposes of Title IV of ERISA is a member of the Company's controlled group, or under common control with the Company, within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended. "Eurodollar Advance" means any Tender Advance bearing interest at the Eurodollar Rate. "Eurodollar Rate" for any Interest Period for any Tender Advance means an interest rate per annum equal at all times during such Interest Period to the sum of (x) the LIBO Rate for such Interest Period plus (y) 1.50% per annum. "Event of Default" has the meaning assigned to that term in Section 6.01. "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it. "Final Approval" means any authorizations, consents, approvals, waivers, exceptions, variances, orders, licenses, exemptions, publications, filings, notices to and declarations of or with any governmental authority (other than routine reporting requirements the failure to comply with which will not affect the validity or enforceability of any of the Related Documents or have a Material Adverse Effect) or any other action in respect of any governmental authority that is in full force and effect and is not the subject of a pending appeal or reconsideration or other review, and the time in which to make an appeal or request 13 the review or reconsideration of which has expired without any appeal or request for review or reconsideration having been taken or made. "Final Draft" has the meaning assigned to that term in the Letter of Credit. "Final Order" means an order of the Bankruptcy Court which (a) shall not have been reversed, stayed, modified or amended and the time to appeal from, or to seek review or rehearing of, shall have expired and as to which no appeal or petition for review, rehearing or certiorari is pending, or (b) if appealed from, shall have been affirmed and the time to appeal from such affirmance or to seek review or rehearing thereof, shall have expired or no further hearing, appeal or petition for certiorari can be taken or granted. "First Mortgage Bond Indenture" means the Indenture dated as of between the Company and , as trustee, providing for the issuance by the Company of its first mortgage bonds. "First Mortgage Bonds" means bonds issued by the Company under the First Mortgage Bond Indenture. "First Mortgage Bonds, Series A/B" means collectively the First Mortgage Bonds, Series A and the First Mortgage Bonds, Series B, in each case, issued under the First Mortgage Bond Indenture. "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time. "Governmental Person" means any national, state or local government, any political subdivision or any government instrumentality, authority, body or entity, including the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, any central bank or any comparable authority. "Hazardous Materials" means (a) petroleum or petroleum products, asbestos in any form, radioactive or source material, (b) any substances defined as or included in the definition of "hazardous substances", "hazardous wastes", "hazardous materials", "extremely hazardous wastes", "restricted hazardous wastes", "toxic substances", "toxic pollutants", "contaminants" or "pollutants", or words of similar import, under any Environmental Law and (c) any other substance exposure to which is regulated under any Environmental Law. "Indemnified Party" has the meaning assigned to that term in Section 9.05. 14 "Indenture" has the meaning assigned to that term in Preliminary Statement (6). "Interest Coverage Ratio" means, as at any date, the ratio of (a) EBITA for the period of four consecutive fiscal quarters ending on or most recently ended prior to such date to (b) Interest Expense for such period. "Interest Draft" has the meaning assigned to that term in the Letter of Credit. "Interest Expense" means, for any period, the sum, for the Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) all interest in respect of Debt including, without limitation, interest capitalized during such period (whether or not actually paid during such period), including, without limitation, all commissions and fees (other than up-front fees), plus (b) the net amounts payable (or minus the net amounts receivable) under Interest Rate Protection Agreements accrued during such period (whether or not actually paid or received during such period). "Interest Period" has the meaning assigned to that term in Section 2.07(b). "Interest Rate Protection Agreement" means, for any Person, an interest rate swap, cap or collar agreement, interest rate future or option contracts or similar arrangement providing for the transfer or mitigation of interest risks either generally or under specific contingencies. "Investment Grade Rating" means a rating of BBB- or better (or equivalent rating) by any two of Moody's Investors Service, Inc., Standard & Poor's Corporation and Duff & Phelps, Inc. "Issuer" has the meaning assigned to that term in Preliminary Statement (1). "LC Payment Notice" has the meaning assigned to that term in Section 2.08(a)(ii). "Letter of Credit" has the meaning assigned to that term in Preliminary Statement (9). "Leverage Ratio" means, at any time, the ratio of Total Debt at such time to the sum of (a) Total Capital at such time plus (b) Total Debt at such time. "LIBO Rate" for any Interest Period means an interest rate per annum equal to the rate of interest per annum at which deposits in United States dollars are offered by the 15 principal office of Citibank in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period for a period equal to such Interest Period. "Lien" means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property. "Loan Agreement" has the meaning assigned to that term in Preliminary Statement (7). "Majority Creditors" means Creditors which have an aggregate Participation Percentage of more than 50%. "Material Adverse Effect" means a material adverse effect on (i) the property, business, operations, financial condition, liabilities or capitalization of the Company and its Subsidiaries taken as a whole, (ii) the ability of the Company to perform its obligations under any of the Related Documents, (iii) the validity or enforceability of any of the Related Documents, (iv) the rights and remedies of the Issuing Bank, the Creditors and the Agent or (v) the timely payment of the principal of or interest hereunder or other amounts payable in connection herewith. "Material Subsidiary" means, at any time, a Subsidiary of the Company (a) whose assets at such time exceed 10% of the assets of the Company and its Subsidiaries (on a consolidated basis) or (b) whose earnings at such time exceed 10% of the earnings of the Company and its Subsidiaries (on a consolidated basis). "Multiemployer Plan" means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions, such plan being maintained pursuant to one or more collective bargaining agreements. "Multiple Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the Company or an ERISA Affiliate and at least one Person other than the Company and its ERISA Affiliates or (ii) was so maintained and in respect of which the Company or an ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated. 16 "Official Statement" means the Official Statement dated [ , 199 ] of the Issuer relating to the Bonds, together with the documents incorporated therein by reference. "Original Bonds" has the meaning assigned to that term in Preliminary Statement (1). "Original Letter of Credit" has the meaning assigned to that term in Preliminary Statement (4). "Original Loan Agreement" has the meaning assigned to that term in Preliminary Statement (2). "Original Reimbursement Agreement" has the meaning assigned to that term in Preliminary Statement (4). "Original Resolution" has the meaning assigned to that term in Preliminary Statement (1). "Original Trustee" has the meaning assigned to that term in Preliminary Statement (1). "Partial Redemption Draft" has the meaning assigned to that term in the Letter of Credit. "Participant" has the meaning assigned to that term in Section 9.09(b). "Participation Percentage" means, as of any date of determination (i) with respect to a Creditor initially a party hereto, the percentage set forth opposite such Creditor's name on the signature pages hereof, except as provided in clause (iii) below, (ii) with respect to a Creditor that became a party hereto by operation of Section 9.09(a), the percentage participation interest assumed by such assignee Creditor as set forth in the instrument of assignment referred to in Section 9.09(a), except as provided in clause (iii) below, and (iii) with respect to any Creditor described in clause (i) or (ii) above that assigns a percentage of its interests in accordance with Section 9.09(a), its participation percentage as reduced by the percentage so assigned. "Payment Amount" has the meaning set forth in Section 2.05(c). "Payment Date" means the last day of each Quarterly Period. "Payment Period" has the meaning assigned to that term in Section 2.06. "PBGC" means the Pension Benefit Guaranty Corporation or any successor thereto. 17 "Person" means an individual, a corporation, a partnership, an association, a business trust or any other entity or organization, including a Governmental Person. "Plan" means a Single Employer Plan or a Multiple Employer Plan. "Plan of Reorganization" means the Modified Third Amended Plan of Reorganization of the Debtor Providing for the Acquisition of El Paso Electric Company by Central and South West Corporation filed on August 27, 1993 (as corrected as of September 15, 1993). "Preliminary Official Statement" means the Preliminary Official Statement dated [ , 199 ] of the Issuer relating to the Bonds, together with the documents incorporated therein by reference. "Quarterly Period" with respect to each Bond means the period commencing on the date such Bond is purchased by the Trustee or the Tender Agent on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank and ending on the first to occur of March 31, June 30, September 30 or December 31 thereafter, and, thereafter, each subsequent period commencing on the last day of the immediately preceding Quarterly Period and ending on the first to occur of March 31, June 30, September 30 or December 31 thereafter. "Refunding" has the meaning assigned to that term in Preliminary Statement (6). "Related Documents" has the meaning assigned to that term in Section 2.16. "Remarketing Agent's Agreement" means the remarketing agreement dated as of , 199[ ] between the Company and [ ]. "Second Mortgage Bond Indenture" means the Indenture dated as of between the Company and , as trustee, providing for the issuance by the Company of its second mortgage bonds. "Second Mortgage Bonds" means bonds issued by the Company under the Second Mortgage Bond Indenture. "Second Mortgage Bonds, Series [ ]" means the mortgage bonds at any time issued by the Company and outstanding pursuant to the Second Mortgage Bond Indenture. [To provide collateral security for the obligations of the Company related to this Agreement] 18 "Second Mortgage Bonds, Series A" means the Second Mortgage Bonds, Series A issued under the Second Mortgage Bond Indenture. "Single Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the Company or an ERISA Affiliate and no Person other than the Company and its ERISA Affiliates or (ii) was so maintained and in respect of which the Company or an ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated. "Stated Termination Date" means the earlier of (i) December 31, 1997 and (ii) the third anniversary of the Effective Date, unless extended as provided in Section 2.14. "Submission Date" means the date the form of this Agreement was filed with the Bankruptcy Court prior to the date creditors must have voted on the Plan of Reorganization in accordance with Section 7.6 of the Plan of Reorganization. "Subsidiary" means, with respect to any Person, any corporation, partnership or other entity of which at least a majority of the Voting Stock is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person. "Tender Advance" has the meaning assigned to that term in Section 2.06. "Tender Agent" has the meaning assigned to that term in the Indenture. "Tender Draft" has the meaning assigned to that term in the Letter of Credit. "Total Capital" means, as at any date, the sum for the Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) the amount of capital stock (excluding treasury stock and capital stock subscribed for and unissued and preferred stock mandatorily redeemable in cash or redeemable in cash at the option of the holder thereof), plus (b) the amount of surplus and retained earnings (or, in the case of a surplus or retained earnings deficit, minus the amount of such deficit). 19 "Total Debt" means, as at any date, the aggregate amount of all Debt of the Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) (other than contingent obligations in connection with acceptance facilities and letters of credit). "Trustee" means [ ] and its successors and permitted assigns under the Indenture, as trustee and paying agent. "Voting Stock" means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or Persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency. "Withdrawal Liability" has the meaning given such term under 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 means "to but excluding". SECTION 1.03. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP consistently applied, except as otherwise stated herein. SECTION 1.04. Interpretation. In this Agreement the singular includes the plural and the plural the singular; words importing any gender include the other genders; references to statutes are to be construed as including all statutory provisions consolidating, amending or replacing the statute referred to; references to "writing" include printing, typing, lithography and other means of reproducing words in a tangible visible form; references to sections (or any subdivision of a section), articles, schedules, annexes and exhibits are to those of this Agreement unless otherwise indicated; the words "including", "includes" and "include" shall be deemed to be followed by the words "without limitation"; references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications to such instruments but only to the extent such amendments and other modifications are not prohibited by the terms of this Agreement or any other Related Document; and references to Persons include their respective permitted successors and assigns and, in the case of Governmental Persons, Persons succeeding to their respective functions and capacities. 20 ARTICLE II AMOUNT AND TERMS OF THE LETTER OF CREDIT SECTION 2.01. The Letter of Credit. The Issuing Bank agrees, on the terms and conditions hereinafter set forth, to issue the Letter of Credit to the Trustee on any Business Day during the period from the date hereof to and including [ , 199 ] in the amount of the Commitment to support the payment of principal of and interest on the Bonds as set forth in Preliminary Statement (9) and expiring on the Stated Termination Date, unless earlier terminated in accordance with the terms thereof. SECTION 2.02. Issuing the Letter of Credit. The Letter of Credit shall be issued on at least two Business Days' notice from the Company to the Issuing Bank (which notice may be furnished prior to the execution and delivery hereof) specifying the Business Day of issuance thereof. On such Business Day specified by the Company in such notice and upon fulfillment of the applicable conditions set forth in Article III, the Issuing Bank will issue the Letter of Credit to the Trustee. SECTION 2.03. Drawing Fee. The Company hereby agrees to pay to the Agent, for the account of the Issuing Bank a drawing fee of $100 per draw, payable at the time of each draw under the Letter of Credit. SECTION 2.04. Commissions. (a) The Company hereby agrees to pay to the Agent, for the account of the Issuing Bank and the Creditors, a letter of credit commission on the Available Amount in effect from time to time (i) from the date of issuance of the Letter of Credit to but excluding the first anniversary of the Commencement Date, at the rate of .75% per annum, (ii) from the first anniversary of the Commencement Date to but excluding the second anniversary of the Commencement Date, at the rate of .875% per annum, (iii) from the second anniversary of the Commencement Date to but excluding the third anniversary of the Commencement Date, at the rate of 1.00% per annum, and (iv) if applicable pursuant to Section 2.14(a), from the third anniversary of the Commencement Date to but excluding the fourth anniversary of the Commencement Date, at the rate of 1.125% per annum. The Letter of Credit commission shall be payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing on the last day of the quarter in which the Letter of Credit is issued, until the Credit Termination Date, and on the Credit Termination Date. Such letter of credit commission shall be paid by the Agent to the Issuing Bank and the Creditors as the Issuing Bank and the Creditors shall agree. 21 (b) The Company hereby agrees to pay to the Agent, for the account of the Issuing Bank, upon each transfer by the Trustee of the Letter of Credit in accordance with its terms, a transfer commission equal to 1/4 of 1% of the Available Amount then in effect. SECTION 2.05. Reimbursement on the Date of the Draw. (a) Except as otherwise provided in subsections (b) and (c) of this Section 2.05 and subject to the provisions of Sections 2.06 and 2.07, the Company hereby agrees to pay to the Agent (i) on each date on which the Issuing Bank shall pay any amount under the Letter of Credit pursuant to any draft (including, without limitation, amounts in respect of any reinstatement of the interest component at the election of the Issuing Bank in its sole discretion notwithstanding any failure by the Company to reimburse the Issuing Bank or the Creditors for any previous drawing to pay interest on the Bonds), a sum equal to such amount so paid, plus (ii) on each day thereafter interest on any amount remaining unpaid by the Company to the Agent under clause (i) above, from the date of such draw until payment in full, at the Default Rate. (b) The Company shall have no obligation under Section 2.05(a) or Section 2.06 in the case of a Tender Draft to pay to the Agent, the Issuing Bank or any Creditor pursuant to this Agreement the amount paid by the Issuing Bank under the Letter of Credit if and to the extent the amount so paid under the Letter of Credit shall have been used to purchase Bonds to be held by or on behalf of and for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank pursuant to subsection (e) of Section 3.01 of the Indenture, subsection (e) of Section 9.01 of the Indenture or subsection (d) of Section 13.03 of the Indenture. Notwithstanding the foregoing, the obligations of the Company under this Agreement to pay to the Agent on behalf of the Issuing Bank and the Creditors any amounts in respect of the amounts paid by the Issuing Bank under the Letter of Credit referred to in the immediately preceding sentence shall continue to be effective or shall be reinstated, as the case may be, if at any time the purchase of the Bonds by or on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank with the proceeds of such amounts paid under the Letter of Credit is rescinded in whole or in part or some or all of the Bonds so purchased must otherwise be returned by the Issuing Bank, the Agent or any other nominee of the Issuing Bank. (c) The Company shall pay to the Agent, on each Payment Date the amount (the "Payment Amount") by which (i) the aggregate Contract Interest Amount for the Quarterly Period ending on such Payment Date exceeds (ii) the aggregate Bond Interest Amount for such Quarterly Period with respect to all Bonds held by or on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank during such Quarterly Period. Any amounts due pursuant to this Section 2.05(c) that 22 are not paid when due shall bear interest from the date the same become due until such amounts are paid, payable on demand, at an interest rate equal to the Default Rate. SECTION 2.06. Tender Advances. Except as provided in Section 2.05(b), if the Issuing Bank shall make any payment under the Letter of Credit pursuant to a Tender Draft and the conditions set forth in Section 3.03(a) shall have been fulfilled, such payment shall constitute an advance made by the Issuing Bank to the Company on the date and in the amount of such payment, each such advance being a "Tender Advance" and collectively the "Tender Advances". Except as otherwise provided in Section 2.09 or Section 6.02, each Tender Advance shall be payable in substantially equal quarterly installments on the last day of each calendar quarter, commencing on the last day of the calendar quarter in which the 90th day following the date of such Tender Advance occurs and continuing until the Stated Termination Date in effect on the date of such Tender Advance (each such approximately 90-day period being a "Payment Period"). SECTION 2.07. Interest on Advances. The Company shall pay interest on the unpaid principal amount of each Tender Advance from the date of such Tender Advance until such principal amount is paid in full at the applicable rate set forth below: (a) Alternate Base Rate. Except to the extent that the Company shall elect to pay interest on the unpaid principal of any Tender Advance for any Interest Period pursuant to subsection (c) of this Section 2.07, the Company shall pay interest on the unpaid principal of each Tender Advance from the date of such Tender Advance until the principal amount of such Tender Advance is paid in full, payable quarterly in arrears on the last day of each calendar quarter and on the date such Tender Advance is paid in full, at a fluctuating interest rate per annum in effect from time to time equal to .50% per annum above the Alternate Base Rate in effect from time to time. (b) Interest Periods. The Company may from time to time elect to have the interest on any Tender Advance determined and payable for a specified period (an "Interest Period" for such Tender Advance) in accordance with subsection (c) of this Section 2.07. The first day of an Interest Period for any Tender Advance shall be either the date such Tender Advance is made, the date the Company specifies as the first day of the Eurodollar Advance, or the last day of the then current Interest Period for a Eurodollar Advance. No Interest Period shall end after the Stated Termination Date. 23 (c) Eurodollar Rate. The Company may from time to time elect to pay interest on any Tender Advance at the Eurodollar Rate for an Interest Period for such Tender Advance by notice delivered to the Agent, specifying the Tender Advance (which shall not be less than $1,000,000 unpaid principal amount during such Interest Period) and the first day and duration of such Interest Period, received by the Agent before 11:00 A.M. (New York City time) three Business Days prior to the first day of such Interest Period; provided that no more than four separate Interest Periods in respect of Eurodollar Advances may be outstanding at any one time. Such Interest Period shall be of 1, 3 or 6 months' duration, at the Company's election; provided, however, that the Company may not select any Interest Period which ends after any principal repayment installment date unless, after giving effect to such selection, the aggregate unpaid principal amount of Eurodollar Advances having Interest Periods which end on or prior to such principal repayment installment date and Alternate Base Rate Advances shall be at least equal to the principal amount of the Tender Advances due and payable on and prior to such date. If the Company shall have made such election for any Tender Advance for any such Interest Period, the Company shall pay interest on such Tender Advance during such Interest Period, payable on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day which occurs during such Interest Period every three months from the first day of such Interest Period, at the Eurodollar Rate for such Interest Period for such Tender Advance. (d) Default Interest. The Company shall pay interest on the unpaid principal amount of any Tender Advance that is not paid when due and on the unpaid amount of all interest, and other amounts payable hereunder, that is not paid when due, payable on demand, at a rate per annum equal at all times to 2% per annum above the Alternate Base Rate in effect from time to time. Notwithstanding anything in this Agreement to the contrary, upon the occurrence and during the continuance of an Event of Default, the right of the Company to make an election in respect of the Eurodollar Rate pursuant to Section 2.07(c) shall terminate (i) automatically, in the case of an Event of Default under Section 6.01(a) or (ii) upon notice to the Company by the Bank, in all other cases; provided that no termination referred to in either of the preceding clauses (i) or (ii) shall affect any Eurodollar Advance during an Interest Period in effect for such Eurodollar Advance at the time such notice is received by the Company. (e) Illegality, Etc. Notwithstanding any other provision of this Agreement, if the Issuing Bank or any Creditor (which shall at the time be a Banking Institution) notifies the Company that the introduction of or any change 24 in or in the interpretation of any law or regulation that occurs after the Submission Date makes it unlawful, or any central bank or other governmental authority asserts after the Submission Date that it is unlawful, for the Issuing Bank or any Creditor to perform its obligations to make, fund or maintain Eurodollar Advances hereunder (or participation interests therein), (i) the right of the Company to select the Eurodollar Rate for Tender Advances held by the Issuing Bank or such Creditor, as the case may be, and the obligation of the Issuing Bank and such Creditor, as the case may be, to make or maintain Eurodollar Advances shall be suspended until the Issuing Bank or such Creditor, as the case may be, shall notify the Company that the circumstances causing such suspension no longer exist and (ii) the rate of interest on all such Tender Advances held by the Issuing Bank or such Creditor, as the case may be, shall thereupon be .50% per annum above the Alternate Base Rate in effect from time to time. (f) Interest Rate Protection. (i) If the Company shall fail to select the duration of any Interest Period for any Eurodollar Advance in accordance with the provisions contained in Section 2.07(c), the Agent will forthwith so notify the Company and the Creditors and such Eurodollar Advance will automatically, on the last day of the then existing Interest Period therefor, convert into an Alternate Base Rate Advance. (ii) On and after the date on which the unpaid principal amount of any Tender Advance shall be reduced, by payment or prepayment or otherwise, to less than $1,000,000, the rate of interest on the unpaid principal amount of such Tender Advance shall be .50% per annum above the Alternate Base Rate in effect from time to time and the right of the Company to select a different rate for such Tender Advance shall terminate; provided, however, that if and so long as the Company shall select for such Tender Advance the same Eurodollar Rate for and the same Interest Period as another Tender Advance or other Tender Advances and the aggregate unpaid principal amount of all such Tender Advances shall equal or exceed $1,000,000, the Company shall have the right to select such rate for such Interest Period for such Tender Advance. (g) Alternate Rate of Interest. In the event, and on each occasion, that, on the day two Business Days prior to the commencement of any Interest Period for a Eurodollar Advance, the Agent shall have determined (which determination shall be conclusive and binding upon the Company absent manifest error) that reasonable means do not exist for ascertaining the applicable Eurodollar Rate, the Agent shall, as soon as practicable thereafter, give written, facsimile or telegraphic notice of such determination to the Company, and any request by the Company for a Eurodollar Advance pursuant 25 to subsection (c) of this Section 2.07 shall be deemed a request for an Alternate Base Rate Advance. After such notice shall have been given and until the circumstances giving rise to such notice no longer exist, each request for an Eurodollar Advance shall be deemed to be a request for an Alternate Base Rate Advance. (h) Majority Creditors' Costs for Eurodollar Advances. If, with respect to any Eurodollar Advances, the Majority Creditors notify the Agent that the Eurodollar Rate for any Interest Period for such Eurodollar Advances will not adequately reflect the cost to such Majority Creditors of making, funding or maintaining their respective Eurodollar Advances for such Interest Period, the Agent shall forthwith so notify the Company and the Creditors, whereupon (i) each Eurodollar Advance will automatically, on the last day of the then existing Interest Period therefor, convert into an Alternate Base Rate Advance, and (ii) the obligation of the Creditors to make, or to convert Alternate Base Rate Advances into, Eurodollar Advances shall be suspended until the Agent shall notify the Company and the Creditors that the circumstances causing such suspension no longer exist. (i) Notice. Promptly after the determination of any interest rate provided for herein or any change therein, the Agent shall give notice thereof to the Company. SECTION 2.08. Reimbursement of Issuing Bank, Etc. (a) (i) The Issuing Bank hereby sells and transfers to each Creditor, and each Creditor hereby acquires from the Issuing Bank, an undivided interest and participation to the extent of such Creditor's Participation Percentage in and to (A) the Letter of Credit, including the obligations of the Issuing Bank under and in respect thereof and the Company's reimbursement and other obligations in respect thereof and (B) any Tender Advance made by the Issuing Bank hereunder, whether now existing or hereafter arising. (ii) If the Issuing Bank (A) shall not have been reimbursed in full for any payment made by the Issuing Bank under the Letter of Credit on the date of such payment or (B) shall make any Tender Advance to the Company, the Issuing Bank shall give the Agent prompt notice thereof (an "LC Payment Notice") no later than 12:00 noon (New York City time) on the next Business Day immediately succeeding the date of such payment by the Issuing Bank and the Agent shall give each Creditor prompt notice thereof (an "Agent Payment Notice") no later than two hours following the Agent's receipt of the LC Payment Notice at such Creditor's address referred to in Section 9.02. 26 (iii) Upon receipt of an Agent Payment Notice, each Creditor severally agrees to pay to the Issuing Bank in accordance with clause (iv) below an amount equal to such Creditor's ratable portion (according to such Creditor's Participation Percentage as of the date of such Agent Payment Notice) of such unreimbursed amount or Tender Advance paid or made by the Issuing Bank, plus interest (if payment is not made in accordance with clause (iv)) on such amount at a rate per annum equal to the Federal Funds Rate from the date of payment by the Issuing Bank to the date of payment to the Issuing Bank by such Creditor. The failure of the Issuing Bank or the Agent to give such LC Payment Notice or the Agent Payment Notice, as the case may be, shall not affect any Creditor's obligations pursuant to this subsection (a). (iv) Each such payment by a Creditor shall be made to the Agent for the account of the Issuing Bank at its address referred to in Section 9.02 in lawful money of the United States of America, in same day funds (1) not later than 2:30 p.m. (New York City time) on the day any such Agent Payment Notice is received by such Creditor, if such notice is received at or prior to 12:00 noon (New York City time) on a Business Day; (2) not later than 4:30 p.m. (New York City time) on the day any such Agent Payment Notice is received by such Creditor, if such notice is received after 12:00 noon (New York City time) but at or prior to 2:30 p.m. (New York City time) on a Business Day; or (3) not later than 12:00 noon (New York City time) on the Business Day next succeeding the day any such Agent Payment Notice is received by such Creditor, if such notice is received after 2:30 p.m. (New York City time) on a Business Day. Each Creditor's obligation to make each such payment to the Issuing Bank, and the Issuing Bank's right to receive the same, shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limiting the foregoing or Section 2.16, the occurrence or continuance of an Event of Default or the failure of any other Creditor to make any payment under this Section 2.08. Each Creditor further agrees that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. (b) The failure of any Creditor to make any payment to the Issuing Bank in accordance with subsection (a), above, shall not relieve any other Creditor of its obligation to make payment, but neither the Issuing Bank nor any Creditor shall be responsible for the failure of any other Creditor to make such payment. If any Creditor shall fail to make any payment to the Issuing Bank in accordance with subsection (a)(iv), above, then such Creditor agrees to pay to the Issuing Bank forthwith on demand such corresponding amount together with interest thereon for the first two days following the day upon which any such payment shall have been due and payable at the Federal Funds Rate and thereafter until the date such amount is repaid to the Issuing Bank at the Alternate Base Rate plus 1% per annum. 27 (c) If any Creditor shall fail to make any payment to the Issuing Bank in accordance with subsection (a), above, then, in addition to other rights and remedies which the Issuing Bank may have, the Agent is hereby authorized, at the request of the Issuing Bank, to withhold and to apply to the payment of such amounts owing by such Creditor to the Issuing Bank and any related interest, that portion of any payments received by the Agent that would otherwise be payable to such Creditor. SECTION 2.09. Prepayments; Reinstatement of Letter of Credit Amounts. (a) The Company may, upon at least two Business Days' notice to the Agent stating the proposed date and principal amount of the prepayment, and if such notice is given to the Agent the Company shall, prepay the amount outstanding under any Tender Advance in whole or in part (each such partial prepayment shall be in the minimum amount of $[ ]) with accrued interest to the date of such prepayment on the amount prepaid (any such prepayment shall be applied to outstanding Tender Advances in the inverse order of maturity); provided, however, that with respect to any prepayment of any Eurodollar Advance made on a day other than the last day of an Interest Period for such Eurodollar Advance, the Company shall pay to the Agent, in accordance with Section 2.11(b), an amount sufficient to compensate the Issuing Bank and any Creditor for any loss, cost, or expense incurred by it by reason of such prepayment on a day other than the last day of an Interest Period. (b) Prior to or simultaneously with the resale of Bonds acquired by the Trustee or the Tender Agent for the account of the Company with the proceeds of one or more draws under the Letter of Credit by one or more Tender Drafts, the Company shall or shall cause the Trustee on behalf of the Company to prepay the then outstanding Tender Advances (any such prepayment shall be applied to outstanding Tender Advances in the inverse order of maturity) by paying to the Agent an amount equal to the sum of (i) the aggregate principal amount of the Bonds being resold or to be resold plus (ii) the aggregate amount of accrued and unpaid interest on such Bonds which was paid by a drawing or drawings under such Tender Draft or Drafts. Such payments when accompanied by a certificate completed and signed by the Trustee in substantially the form of Annex F to the Letter of Credit shall be applied by the Agent in reimbursement of such drawings (and as prepayment of Tender Advances resulting from such drawings in the manner described above); provided, however, that if any prepayment of any Tender Advance that is a Eurodollar Advance is made on a day other than the last day of the Interest Period for such Eurodollar Advance, the Company shall pay to the Issuing Bank and any Creditor, in accordance with Section 2.11(b), an amount sufficient to compensate the Issuing Bank and any Creditor for any loss, cost, or expense incurred by it by reason of such prepayment on a day other than the last day of an Interest Period; provided further that, in the case of a prepayment certified to the Issuing Bank by the Trustee as a prepayment of a Tender Advance pursuant to this Section 2.09(b) 28 and made on a date other than a date on which interest on such Tender Advance is scheduled to be paid hereunder, the Company may pay interest accrued on such Tender Advance to the date of prepayment on the next scheduled date for the payment of interest on such Tender Advance, or if such Tender Advance shall have been prepaid in whole, on the date which would have been the next such scheduled date in the absence of such prepayment. The Company irrevocably authorizes the Issuing Bank to rely on such certificate and to reinstate the Letter of Credit in accordance therewith. (c) Upon the substitution of a letter of credit or other credit facility for the Letter of Credit as provided in Section 2.02(6) of the Indenture, all Tender Advances and accrued and unpaid interest thereon and all other outstanding amounts payable by the Company to the Issuing Bank, the Creditors and the Agent under this Agreement shall be paid in full on the date the Letter of Credit shall terminate as a result of such substitution. SECTION 2.10. Additional Interest. Subject to Section 2.11(e)(ii), the Company shall pay to the Issuing Bank and each Creditor additional interest on the unpaid principal amount of any Eurodollar Advance by the Issuing Bank or such Creditor, from the date of such Eurodollar Advance until such principal amount is paid in full, at an interest rate per annum equal at all times during each Interest Period for such Eurodollar Advance to the remainder obtained by subtracting (i) the LIBO Rate for the Interest Period for such Eurodollar Advance from (ii) the rate obtained by dividing such LIBO Rate by a percentage equal to 100% minus the reserve percentage applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for the Issuing Bank or such Creditor, as the case may be, with respect to liabilities or assets consisting of or including Eurocurrency liabilities having a term equal to such Interest Period, payable on each date on which interest is payable on such Eurodollar Advance. Such additional interest shall be determined by the Issuing Bank or such Creditor, as the case may be, and notified to the Company (with a copy to the Agent). SECTION 2.11. Increased Costs. (a) If due either to (i) the introduction after the Submission Date of, or any change (other than any change by way of imposition or increase of reserve requirements in the case of Eurodollar Advances referred to in Section 2.10), after the Submission Date, in or in the interpretation of, any law or regulation or (ii) the compliance by the Issuing Bank or any Creditor with any guideline or request 29 issued or made after the Submission Date by any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to the Issuing Bank or any Creditor as a result of agreeing to make or making, funding or maintaining Eurodollar Advances, or reduction in the amount of any sum received in respect thereof, then the Company shall from time to time, promptly after demand by the Issuing Bank or such Creditor, as the case may be, pay to the Agent for the account of the Issuing Bank or such Creditor, as the case may be, additional amounts sufficient to reimburse the Issuing Bank or such Creditor, as the case may be, for such increased cost or reduced amount. A certificate as to the amount of such increased cost or reduced amount, submitted to the Company (with a copy to the Agent) by the Issuing Bank or such Creditor, as the case may be, shall be conclusive and binding for all purposes, absent manifest error. (b) If, due to any change of interest rate on any Eurodollar Advance pursuant to Section 2.07(e) or 2.07(f), any prepayment pursuant to Section 2.09 of any Eurodollar Advance, any acceleration of maturity of the Tender Advances pursuant to Section 6.02, or for any other reason, a Eurodollar Advance is subject to a change of interest rate, or any payment of principal of any Eurodollar Advance is received, in each case other than on the last day of an Interest Period relating to such Eurodollar Advance, the Company shall, promptly upon demand by Issuing Bank or any Creditor (with a copy of such demand to the Agent), pay to the Agent for the account of the Issuing Bank or such Creditor, as the case may be, any amounts required to compensate the Issuing Bank or such Creditor, as the case may be, for any additional losses, costs or expenses which it may reasonably incur as a result of such change or payment, including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by the Issuing Bank or such Creditor, as the case may be, to fund or maintain such Eurodollar Advance but excluding loss of anticipated profit. A certificate setting forth the amount of such additional losses, costs or expenses, submitted by the Issuing Bank or such Creditor, as the case may be, to the Company (with a copy to the Agent), shall be conclusive and binding for all purposes, absent manifest error. (c) If after the Submission Date any change in any law or regulation or in the interpretation thereof by any court or administrative or governmental authority charged with the administration thereof shall either (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against letters of credit or guarantees issued by, or assets held by, or deposits in or for the account of, the Issuing Bank or any Creditor or (ii) impose on the Issuing Bank or any Creditor any other condition regarding this Agreement or the Letter of Credit, and the result of any event referred to in clause (i) or (ii) above shall be to increase the cost to the Issuing Bank or such Creditor of issuing or maintaining the Letter of Credit, then, 30 upon demand by the Issuing Bank or such Creditor, the Company shall pay to the Agent for the account of the Issuing Bank and such Creditor, from time to time as specified by the Issuing Bank and such Creditor, additional amounts sufficient to compensate the Issuing Bank and such Creditor for such increased cost. A certificate as to the amount of such increased cost, submitted to the Company (with a copy to the Agent) by the Issuing Bank and such Creditor, shall be conclusive and binding for all purposes, absent manifest error. (d) If the Issuing Bank or any Creditor determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law), issued or made after the Submission Date, affects the amount of capital required to be maintained by the Issuing Bank or any Creditor or any corporation controlling the Issuing Bank or such Creditor, as the case may be, and that the amount of such capital is increased by or based upon the existence of the Issuing Bank's or such Creditor's, as the case may be, commitment hereunder and other commitments of this type or the issuance of the Letter of Credit (or similar contingent obligations), then, upon demand by the Issuing Bank or such Creditor, as the case may be, the Company shall pay to the Agent for the account of the Issuing Bank or such Creditor, as the case may be, from time to time as specified by the Issuing Bank or such Creditor, as the case may be, additional amounts sufficient to compensate the Issuing Bank or such Creditor, as the case may be, or such corporation in the light of such circumstances, to the extent that the Issuing Bank or such Creditor, as the case may be, reasonably determines such increase in capital to be allocable to the existence of the Issuing Bank's or such Creditor's, as the case may be, commitment hereunder. A certificate as to such amounts submitted to the Company (with a copy to the Agent) by the Issuing Bank or such Creditor, as the case may be, shall be conclusive and binding for all purposes, absent manifest error. (e) Notwithstanding any other provision in this Section 2.11 to the contrary, (i) the Company is not responsible for, and is not required to reimburse the Issuing Bank or any Creditor for, any amounts that would otherwise be payable by the Company pursuant to subsection (a), (b), (c) or (d) of this Section 2.11 to the extent such amounts accrued 90 days or more prior to the date the Issuing Bank or any Creditor provides to the Company a certificate which sets forth such amounts owed to the Issuing Bank or such Creditor, as the case may be, by the Company pursuant to such subsections and (ii) the Company is responsible for, and is required to reimburse the Issuing Bank and any Creditor for, any amounts payable by the Company pursuant to Section 2.10 and this Section 2.11, only so long as the Issuing Bank or such Creditor is a Banking Institution. 31 (f) In calculating any amounts required to be paid by the Company pursuant to this Section 2.11, the Issuing Bank or such Creditor, as the case may be, shall make all determinations and allocations on a reasonable basis. SECTION 2.12. Payments and Computations. (a) The Company shall make each payment hereunder not later than 12:00 noon (New York City time) (or, in the case of any payment required by Section 2.05(a), as soon as practicable after the Issuing Bank has made a payment under the Letter of Credit) on the day when due in lawful money of the United States of America to the Agent at its address referred to in Section 9.02 in same day funds. The Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal, interest, fees or other amounts payable to the Issuing Bank and the Creditors to whom the same are payable at their respective addresses referred to in Section 9.02. (b) If, after the Agent has paid to the Issuing Bank or any Creditor any amount pursuant to subsection (a) above, such payment is rescinded or must otherwise be returned or must be paid over by the Agent or the Issuing Bank to any Person, whether pursuant to any bankruptcy or insolvency law, Section 9.04(c) or otherwise, the Issuing Bank or such Creditor, as the case may be, shall, at the request of the Agent or the Issuing Bank, promptly repay to the Agent or the Issuing Bank, as the case may be, an amount equal to such payment, together with any interest required to be paid by the Agent or the Issuing Bank with respect to such payment. (c) The Company hereby authorizes the Issuing Bank and each Creditor, if and to the extent payment is not made when due hereunder, to charge from time to time against any or all of the Company's accounts with the Issuing Bank and each Creditor any amount so due. (d) All computations of interest based on the Alternate Base Rate shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, and computations of the commissions hereunder and of interest based on the LIBO Rate shall be made by the Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or commitment fees are payable. Each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. SECTION 2.13. Payments on Non-Business Days. (a) Whenever any payment hereunder shall be stated to be due, or whenever the last day of any Interest Period, Payment Period or Quarterly Period would otherwise occur, on a day which is not a Business Day, such payment shall be made, and the last day of such Interest Period, Payment Period or Quarterly Period shall occur, on the next succeeding Business Day, and such extension of 32 time shall in such case be included in the computation of payment of interest or commission, as the case may be; provided, however, if such extension would cause such payment of interest on or principal of a Eurodollar Advance to be made, or the last day of an Interest Period for a Eurodollar Advance to occur, in the next following calendar month, such payment shall be made, and the last day of such Interest Period shall occur, on the next preceding Business Day. (b) Whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month. Notwithstanding anything to the contrary contained herein, each Interest Period that commences on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month. SECTION 2.14. Extension of the Stated Termination Date. (a) At least 60 but not more than 120 days before the initial Stated Termination Date, the Company may request in a writing delivered to the Agent (such request shall be accompanied by a certificate from a duly authorized officer of the Company that the representations and warranties in Section 4.01 are true and correct as of the date of such request, before and after giving effect to such request, as though made on and as of the date of such request, and such request shall be irrevocable) that the Issuing Bank, each Creditor and the Agent extend for one year the then Stated Termination Date for purposes of this Agreement and the Letter of Credit. If the Company shall make such request, the Issuing Bank shall so extend the Stated Termination Date of the Letter of Credit and the Issuing Bank, each Creditor and the Agent shall extend the Stated Termination Date for purposes of this Agreement, provided that on the date of such request by the Company the representations and warranties in Section 4.01 are true and correct, before and after giving effect to such request. The Agent shall notify the Company in writing within 40 days of receipt of such request whether (i) it has determined that the Company has not satisfied the condition to extension set forth in the proviso of the immediately preceding sentence or (ii) the Stated Termination Date has been so extended. (b) If the Stated Termination Date is extended as provided for in Section 2.14(a), the Company may thereafter request, at least 60 days but not more that 120 days before the then Stated Termination Date, in a writing delivered to the Agent (such request shall be accompanied by a certificate from a duly authorized officer of the Company that the representations and warranties in Section 4.01 are true and correct as of the date of such request, before and after giving effect to such request, as 33 though made on and as of the date of such request, and such request shall be irrevocable) that the Issuing Bank, each Creditor and the Agent extend for one year the then Stated Termination Date for purposes of this Agreement and the Letter of Credit. If the Company shall make such a request, the Agent shall, on or before 40 days before the then Stated Termination Date, notify the Company in writing whether or not the Issuing Bank, each Creditor and the Agent consent to such request and, if the Issuing Bank, each Creditor and the Agent do so consent, the conditions for such extension. If the Agent shall not so notify the Company, the Issuing Bank, each Creditor and the Agent shall be deemed not to have consented to such request. The Company acknowledges that none of the Issuing Bank, any Creditor or the Agent has any obligation to, and none of such entities has given any assurance, undertaking or commitment that it will, extend (or consider extending) the Letter of Credit as set forth in this Section 2.14(b). SECTION 2.15. Evidence of Debt. The Agent shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Company resulting from each drawing under the Letter of Credit and from each Tender Advance made from time to time hereunder and the amounts of principal and interest payable and paid from time to time hereunder. In any legal action or proceeding in respect of this Agreement, the entries made in such account or accounts shall, in the absence of manifest error, be conclusive evidence of the existence and amounts of the obligations of the Company therein recorded. SECTION 2.16. Obligations Absolute. (a) The obligations of the Company under this Agreement and any other agreement or instrument relating to the Letter of Credit shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement and such other agreement or instrument under all circumstances, including, without limitation, the following circumstances, and regardless of the use of proceeds of any drawing under the Letter of Credit or any defense to payment related thereto: (i) any lack of validity or enforceability of this Agreement, the Letter of Credit, the Bonds, the Indenture, the Loan Agreement, the Second Mortgage Bonds, Series , the Second Mortgage Bond Indenture, the Remarketing Agent's Agreement, or any other agreement or instrument relating thereto (collectively, the "Related Documents"); (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Company in respect of the Letter of Credit or any other amendment or waiver of or any consent to departure from all or any of the Related Documents; 34 (iii) the existence of any claim, set-off, defense or other right that the Company may have at any time against the Trustee or any other beneficiary or any transferee of the Letter of Credit (or any Persons or entities for whom the Trustee, any such beneficiary or any such transferee may be acting), the Issuing Bank, any Creditor, the Agent or any other Person or entity, whether in connection with this Agreement, the transactions contemplated hereby or by the other Related Documents or any unrelated transaction; (iv) any draft, statement or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (v) payment by the Issuing Bank under the Letter of Credit against presentation of a draft or certificate which does not comply with the terms of the Letter of Credit; (vi) any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any guarantee, for all or any of the obligations of the Company in respect of the Letter of Credit or any other Related Document; or (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company or a guarantor. (b) The obligations of each Creditor under Section 2.08 shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement (as the same may be amended from time to time) under all circumstances, including, without limitation, the following circumstances: (i) any lack of validity or enforceability of the Related Documents; (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Company in respect of the Letter of Credit or any other amendment or waiver of or any consent to departure from all or any of the Related Documents entered into in accordance with this Agreement; (iii) the existence of any claim, set-off, defense or other right that the Company may have at any time against the Trustee or any other beneficiary or any transferee of the Letter of Credit (or any Persons or entities for whom the Trustee, any such beneficiary or any such transferee may be acting), the Issuing Bank, or any other Person or entity, 35 whether in connection with this Agreement, the transactions contemplated hereby or by the other Related Documents or any unrelated transaction; (iv) any draft, statement or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (v) payment by the Issuing Bank under the Letter of Credit against presentation of a draft or certificate which does not comply with the terms of the Letter of Credit; (vi) any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any guarantee, for all or any of the obligations of the Company in respect of the Letter of Credit or any other Related Document; or (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company or a guarantor. (c) Without limiting the effect of subsections (a) or (b) above, or any other provision hereof, the Company and each Creditor agree with the Issuing Bank that the Issuing Bank is authorized to make payments under the Letter of Credit upon the presentation of the documents provided for therein and without regard to whether the Company has failed to fulfill any of its obligations with respect to any Related Document or any Event of Default or event which with the giving of notice or lapse of time or both would constitute an Event of Default or other default has occurred thereunder or hereunder. SECTION 2.17. U.S. Taxes. (a) The Company agrees to pay to the Issuing Bank and each Creditor with respect to any period during which it is not a U.S. Person such additional amounts as are necessary in order that the net payment of any amount due to such non-U.S. Person hereunder after deduction for or withholding in respect of any U.S. Tax imposed with respect to such payment (or in lieu thereof, payment of such U.S. Tax by such non-U.S. Person), will not be less than the amount stated herein to be then due and payable, provided that the foregoing obligation to pay such additional amounts shall not apply: (i) to any payment to the Issuing Bank or any such Creditor hereunder unless the Issuing Bank or any such Creditor is, on the Submission Date (or on the date such Person becomes the successor to, or the assignee of, the Issuing Bank or any such Creditor as provided in Section 9.09) and on the date of any change in the applicable lending office of the Issuing Bank or any such Creditor after the 36 date hereof, either entitled to submit a Form 1001 (relating to the Issuing Bank or any such Creditor and entitling it to a complete exemption from withholding on all interest to be received by it hereunder in respect of any Tender Advance or any other amount hereunder payable) or Form 4224 (relating to all interest to be received by the Issuing Bank or any such Creditor hereunder in respect of any Tender Advance or any other amount hereunder payable), or (ii) to any U.S. Tax imposed solely by reason of the failure by such non-U.S. Person to comply with applicable certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connections with the United States of America of such non-U.S. Person if such compliance is required by statute or regulation of the United States of America as a precondition to relief or exemption from such U.S. Tax. For the purposes of this Section 2.17(a), (w) "Form 1001" shall mean Form 1001 (Ownership, Exemption, or Reduced Rate Certificate) of the Department of the Treasury of the United States of America, (x) "Form 4224" shall mean Form 4224 (Exemption from Withholding of Tax on Income Effectively Connected with the Conduct of a Trade or Business in the United States) of the Department of the Treasury of the United States of America (or in relation to either such Form such successor and related forms as may from time to time be adopted by the relevant taxing authorities of the United States of America to document a claim to which such Form relates), (y) "U.S. Person" shall mean a citizen, national or resident of the United States of America, a corporation, partnership or other entity created or organized in or under any laws of the United States of America, or any estate or trust that is subject to Federal income taxation regardless of the source of its income and (z) "U.S. Taxes" shall mean any present or future tax, assessment or other charge or levy imposed by or on behalf of the United States of America or any taxing authority thereof or therein. (b) Within 30 days after paying any amount to the Issuing Bank or any such Creditor from which it is required by law to make any deduction or withholding, and within 30 days after it is required by law to remit such deduction or withholding to any relevant taxing or other authority, the Company shall deliver to the Issuing Bank or such Creditor, as the case may be, evidence satisfactory to the Issuing Bank or such Creditor, as the case may be, of such deduction, withholding or payment (as the case may be). SECTION 2.18. Applicable Lending Office. If the Issuing Bank or any Creditor requests compensation from the Company under any of Section 2.11(a), 2.11(c), 2.11(d) or 2.17, the Issuing Bank or such Creditor, as the case may be, will designate a different applicable lending office for the portions of any Tender Advance or other amount due hereunder affected by 37 the events giving rise to such request for compensation if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable opinion of the Issuing Bank or such Creditor, as the case may be, be disadvantageous to the Issuing Bank or such Creditor, as the case may be, except that the Issuing Bank or such Creditor, as the case may be, shall have no obligation to designate an applicable lending office located in the United States of America. SECTION 2.19. Net Payments. All payments under this Agreement to the Agent, the Issuing Bank, or any Creditor shall be made without set-off or counterclaim. SECTION 2.20. Reinstatement of the Letter of Credit. Upon delivery to the Agent of any Bonds purchased by the Trustee on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank accompanied by a certificate completed and signed by the Trustee in substantially the form of Annex G to the Letter of Credit pursuant to subsection (e) of Section 3.01 of the Indenture, subsection (e) of Section 9.01 of the Indenture, or subsection (d) of Section 13.03 of the Indenture with moneys drawn under the Letter of Credit, the amounts available to be drawn under the Letter of Credit shall be reinstated, without any further action by the Company or any party other than the Issuing Bank, in an amount equal to the amount of the moneys drawn under the Letter of Credit to purchase such Bonds; provided, however, if at any time any such purchase shall be rescinded, in whole or in part, or some or all of the Bonds so purchased must otherwise be returned by the Issuing Bank, the Agent or any other nominee of the Issuing Bank, in each case, for any reason, the amounts so reinstated shall not be available to be drawn until and unless the Company reimburses the Issuing Bank or the Creditors, as the case may be, for such amounts. ARTICLE III CONDITIONS OF ISSUANCE SECTION 3.01. Conditions Precedent to Issuance of the Letter of Credit. The obligation of the Issuing Bank to issue the Letter of Credit is subject to the satisfaction or waiver in writing by the Agent, in its sole discretion, of the following: (i) the Agent shall have received on or before the date of the issuance of the Letter of Credit the following, each dated such day (unless otherwise indicated), in form and substance satisfactory to and in sufficient copies for each Creditor: (a) certified copies of the restated articles of incorporation and bylaws of the Company, a certified copy of the resolutions of the Board of Directors of the Company approving this Agreement, the form and content of the Letter 38 of Credit, the other Related Documents and the other matters contemplated hereby and thereby, and of all other documents evidencing any other necessary corporate action; (b) a copy of a certificate of the Secretary of State of Texas dated a date reasonably close to the date of issuance of the Letter of Credit listing the articles of incorporation of the Company and each amendment thereto on file in his office and certifying that (A) such amendments are the only amendments to the Company's articles of incorporation on file in his office and (B) the Company is duly incorporated, validly existing and in good standing under the laws of such State; (c) a telegram from such Secretary of State or such other evidence satisfactory to the Agent certifying that the Company is duly incorporated, validly existing and in good standing under the laws of such State on the date of issuance of the Letter of Credit; (d) originals (or copies certified to be true copies by an appropriate officer of the Company or, in the case of the Issuer, by the county clerk of the Issuer) of all governmental and regulatory approvals (including, without limitation, approvals or orders of the Issuer and the Federal Energy Regulatory Commission and the New Mexico Public Service Commission approvals) legally required to be obtained on the Effective Date and on the date of issuance of the Letter of Credit for the Company to enter into this Agreement and the other Related Documents and to carry out the transactions contemplated hereby and thereby; (e) a certified transcript relating to the issuance of the Bonds; (f) a certificate of the Secretary of the Company certifying the incumbency and the names and true signatures of the officers of the Company authorized to sign this Agreement and the other documents to be delivered by it hereunder, together with a certificate of another officer of the Company as to the incumbency and specimen signature of the Secretary of the Company; (g) a certified copy of the Indenture and evidence satisfactory to the Agent that the Indenture has been duly adopted by the Issuer and accepted by the Trustee; (h) the Second Mortgage Bonds, Series [ ], such series having been duly completed, executed and pledged to the Agent for its benefit and the benefit of the Issuing Bank and the Creditors by the Company; 39 (i) evidence of the completion of all recordings and filings of or with respect to the Second Mortgage Bond Indenture that the Agent may deem necessary or desirable in order to perfect the security interest created thereby; (j) a certified copy of the Second Mortgage Bond Indenture; (k) a favorable opinion of Milbank, Tweed, Hadley & McCloy, New York counsel for the Company (or other New York counsel for the Company that is reasonably satisfactory to the Agent), in form and substance reasonably satisfactory to the Agent; (l) a favorable opinion of Vinson & Elkins, Texas counsel for the Company (or other Texas counsel for the Company that is reasonably satisfactory to the Agent), in form and substance reasonably satisfactory to the Agent; (m) a favorable opinion of Stoops & Burns, Arizona counsel for the Company (or other Arizona counsel for the Company that is reasonably satisfactory to the Agent), in form and substance reasonably satisfactory to the Agent; (n) a favorable opinion of Taichert, Wiggins, Virtue, Wilson & Najjar, New Mexico regulatory counsel for the Company (or other New Mexico regulatory counsel for the Company that is reasonably satisfactory to the Agent), in form and substance reasonably satisfactory to the Agent; (o) a favorable opinion of [Milbank, Tweed, Hadley & McCloy], federal regulatory counsel for the Company (or other federal regulatory counsel for the Company that is reasonably satisfactory to the Agent), in form and substance reasonably satisfactory to the Agent; (p) a favorable opinion of Mudge Rose Guthrie Alexander & Ferdon, bond counsel, in form and substance reasonably satisfactory to the Agent; (q) a favorable opinion of , counsel to the Issuer, or other counsel reasonably satisfactory to the Agent, in form and substance reasonably satisfactory to the Agent; (r) a favorable opinion of Shearman & Sterling, special counsel for the Issuing Bank, [to the extent required by the agencies rating the Bonds]; (s) a certificate of the Clerk of the Board of Supervisors of Maricopa County, Arizona certifying that the resolutions approving the issuance of the Bonds are in full force and effect; 40 (t) a certificate of the Secretary of the Board of Directors of the Issuer certifying that the resolutions approving the issuance of the Bonds, the execution and delivery of the Indenture and all documents delivered by the Issuer in connection with the issuance of the Bonds are in full force and effect; (u) the articles of incorporation of the Issuer (certified as of a recent date by the Arizona Corporation Commission); (v) a certificate of compliance of the Arizona Corporation Commission, dated as of a recent date, to the effect that the Issuer is in good standing and that franchise taxes have been paid; (w) a certificate of the Assistant Secretary of the Issuer, dated the date of issuance of the Letter of Credit, as to the incumbency of each of the officers of the Issuer and members of its board of directors, and the bylaws of the Issuer and that such bylaws are true, correct and complete copies thereof and are in full force and effect; (x) the Official Statement certified by the Secretary of the Company to be a true and correct copy thereof; (y) a certificate of the Trustee certifying the incumbency and signature specimens of officials of the Trustee authorized to make drawings, to execute and present certificates and drafts under the Letter of Credit and otherwise to communicate with the Issuing Bank regarding the Letter of Credit, upon which the Issuing Bank may rely until it receives a new such certificate; (z) written acknowledgment from the Trustee that it has received the Letter of Credit; (aa) receipt from the Original Trustee under the Original Resolution of the Original Letter of Credit and written acknowledgment from the Original Trustee that the Original Letter of Credit is of no further force and effect; (bb) written evidence, satisfactory to the Agent, that the First Mortgage Bonds, Series A/B, and the Second Mortgage Bonds, Series A, have an Investment Grade Rating; and (cc) a certificate of the chairman, president or chief financial officer of the Company, certifying (A) that the Effective Date has occurred as of the time of delivery thereof or will occur concurrently with the delivery thereof and (B) that, after giving effect to the transactions contemplated under the Plan of Reorganization: (x) no event has occurred and is continuing which constitutes an Event of Default or would constitute an Event of Default but for the 41 requirement that notice be given or the lapse of time or both; and (y) the representations and warranties made by the Company in Article IV hereof, and in each of the other Related Documents, shall be true on and as of the Effective Date with the same force and effect as if made on and as of such date (or, if such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date); and (ii) the following has occurred on or before the date of the issuance of the Letter of Credit: (a) the Confirmation Order shall have been entered at least 10 days prior to the date hereof, no stay of such order shall be in effect and the Agent shall have received a certified copy of such order; (b) the Plan of Reorganization shall have been substantially consummated without waiver of any condition or other modification (other than waivers or modifications made in accordance with Section 6.6 of the Plan of Reorganization); (c) the Effective Date shall have occurred or shall occur substantially simultaneously with the delivery of this Agreement and of the other Related Documents; and (d) the Refunding shall have occurred or shall occur substantially simultaneously with the issuance of the Letter of Credit [and the delivery of the other Related Documents]. SECTION 3.02. Additional Conditions Precedent to Issuance of the Letter of Credit. The obligation of the Issuing Bank to issue the Letter of Credit shall be subject to the further conditions precedent that on the date of the issuance of the Letter of Credit (a) the following statements shall be true in all material respects and the Agent shall have received a certificate signed by a duly authorized officer of the Company, dated the date of such issuance, stating that: (i) The representations and warranties contained in Section 4.01 of this Agreement are correct on and as of the date of issuance of the Letter of Credit, before and after giving effect to such issuance, as though made on and as of such date; and (ii) No event has occurred and is continuing, or would result from such issuance of the Letter of Credit, which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both; and (b) the Agent shall have received such other approvals, opinions or documents as the Issuing Bank or any Creditor (through the Agent) may reasonably request. 42 SECTION 3.03. Conditions Precedent to Each Tender Advance. (a) Each payment made by the Issuing Bank under the Letter of Credit pursuant to a Tender Draft shall constitute a Tender Advance hereunder only if on the date of such payment by the Issuing Bank the following statements shall be true in all material respects: (i) The representations and warranties contained in Section 4.01 of this Agreement are correct on and as of the date of such Tender Advance, before and after giving effect to such Tender Advance and to the application of the proceeds therefrom, as though made on and as of such date; and (ii) No event has occurred and is continuing, or would result from such Tender Advance or from the application of the proceeds therefrom, which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both. (b) Unless the Company shall have previously advised the Issuing Bank in writing that one or more of the above statements in subsection (a) above is no longer true, the Company shall be deemed to have represented and warranted, on the date of each payment by the Issuing Bank under the Letter of Credit pursuant to a Tender Draft, that on the date of such payment the above statements are true. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Company. The Company represents and warrants as follows: (a) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Texas and is duly qualified to do business in, and is in good standing under the laws of the States of Texas, Arizona and New Mexico and has requisite corporate power and authority, and all governmental licenses, authorizations and approvals necessary, to conduct its business and to own its properties, except where the failure to have the same would not result in a Material Adverse Effect. (b) The execution, delivery and performance by the Company of this Agreement and the other Related Documents to which it is a party are within the Company's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Company's articles of incorporation or by-laws, which the Company has adopted pursuant to the Plan of Reorganization or (ii) any law, order, rule, regulation (including, without limitation, any order, rule or regulation of the Federal Energy Regulatory 43 Commission, the New Mexico Public Service Commission or the Public Utility Commission of Texas, or Regulation G, T, U or X of the Board of Governors of the Federal Reserve System), writ, judgment, injunction or decree applicable to the Company or any contractual restriction binding on or affecting the Company or any Subsidiary, and do not result in or require the creation of any Lien of the Company or any Subsidiary (except as provided in or contemplated by this Agreement or the other Related Documents or the Plan of Reorganization) upon or with respect to any properties of the Company or any Subsidiary. (c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Company of this Agreement or any other Related Document (including the issuance and pledge of the Second Mortgage Bonds, Series [ ] and the creation and perfection of the Liens on the property securing such Bonds) except for (i) those that have been duly obtained or made and are in full force and effect and are Final Approvals and (ii) the Confirmation Order. (d) This Agreement has been duly and validly executed by the Company and constitutes, and the other Related Documents when delivered hereunder will be, the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms. (e) There is no pending or overtly threatened action, investigation, proceeding or notification which has been instituted after the Effective Date affecting the Company or any of its Subsidiaries before any court, governmental agency or arbitrator which is reasonably likely to have a Material Adverse Effect. (f) Except for information contained in Annex B to the Official Statement describing the Issuing Bank, as to which no representation is made, the Official Statement was, the Preliminary Official Statement was, and any supplement or amendment to any thereof shall be, accurate in all material respects for the purposes for which its use is, was, or shall be, authorized; and the Official Statement did not as of its date of issue contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements made therein, in the light of the circumstances under which they are or were made, not misleading. (g) The Company and the ERISA Affiliates have fulfilled their respective obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and are in compliance with the presently applicable provisions of ERISA and the Code except where non-compliance would not have a Material Adverse Effect, and have not incurred any 44 liability to the PBGC (other than to pay premiums under Section 4007 of ERISA) or any Plan or any Multiemployer Plan (other than to make contributions in the ordinary course of business). No reportable event, within the meaning of Section 4043 of ERISA, has occurred with respect to any Plan, except for any such event as to which the 30-day notice requirement has been waived by the PBGC. Schedule B (Actuarial Information) to the most recently filed annual report (Form 5500 Series) for each Plan is complete and accurate and fairly presents the funding status of such Plan, and since the date of such Schedule B there has been no change in such funding status that can reasonably be expected to have a Material Adverse Effect. (h) The Second Mortgage Bonds, Series , (i) have been duly authorized, executed, authenticated, issued, pledged and delivered in the manner provided for in the Second Mortgage Bond Indenture and in compliance with all applicable law; (ii) constitute the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their terms and the terms of the Second Mortgage Bond Indenture except insofar as enforceability may be limited or otherwise affected by (a) bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application relating to or affecting the rights and remedies of creditors from time to time in effect and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law); (iii) are entitled to the security and benefits of the Second Mortgage Bond Indenture; (iv) are secured equally and ratably with and only with all other bonds issued and outstanding and which may hereafter and thereafter be issued and outstanding under the Second Mortgage Bond Indenture; (v) are secured by duly perfected Liens on and security interests in the collateral purported to secure such bonds in the Second Mortgage Bond Indenture which Liens are subordinated in priority only to the Liens and security interests granted under the First Mortgage Bond Indenture and securing outstanding First Mortgage Bonds; and (vi) constitute collateral security encumbered by valid, duly perfected Liens thereon and security interests therein securing the obligations of the Company under this Agreement as purported to be provided in such indenture and herein. The Company has executed, issued and delivered all Second Mortgage Bonds, Series to the Agent for its benefit and the ratable benefit of the Issuing Bank and the Creditors and has made all such duly perfected pledges thereof to the Agent for its benefit and the ratable benefit of the Issuing Bank and the Creditors as are required to be executed, issued, delivered and made under this Agreement and there are no other Liens on such Second Mortgage Bonds. (i) The Second Mortgage Bond Indenture creates a valid and perfected second Lien on the Company's property as described in the Second Mortgage Bond Indenture as collateral 45 security for the Company's obligations under the Second Mortgage Bond Indenture and the Second Mortgage Bonds, Series [ ]. (j) No Material Adverse Effect has occurred since the Effective Date. (k) The operations and properties of the Company and each of its Subsidiaries comply in all material respects with all Environmental Laws, the Company and each of its Subsidiaries possess and are in compliance with all required Environmental Permits and no circumstances exist that are or would be reasonably likely to (i) form the basis of an Environmental Action against the Company or any of its Subsidiaries or any of their properties or (ii) cause any such property to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law, except as would not be likely to have a Material Adverse Effect, and none of the properties of the Company or any of its Subsidiaries is listed or proposed for listing on the National Priorities or CERCLA List under CERCLA or any analogous state list. (l) The Indenture creates a valid, enforceable and perfected first priority security interest in the Trust Estate (as defined in the Indenture) for the benefit of the holders of the Bonds, as security for the Issuer's obligations of the holders of the Bonds under the Indenture and pursuant to the terms of the Bonds. (m) The Company is not a "holding company" as such term is defined in the Public Utility Holding Company Act of 1935, as amended, nor an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. (n) The Company and its Subsidiaries have filed all United States Federal and state income tax returns and all other material tax returns which are required to be filed by them, and have paid all taxes due pursuant to such returns or, to the extent deemed necessary or appropriate by the Company and such Subsidiary, provided reserves for the payment thereof, other than such taxes that the Company or any Subsidiary is contesting in good faith by appropriate legal proceedings. (o) Prior to the issuance of the Letter of Credit, the Confirmation Order has been entered and has not been reversed, amended (except as consented to by the Issuing Bank in its sole discretion), stayed, vacated or rescinded. The Agent, the Issuing Bank and each Creditor shall be entitled to enforce the remedies under this Agreement without further application to or order by the Bankruptcy Court. 46 (p) The Company is in material compliance with all Environmental Laws and is not exposed to any costs or liabilities under any Environmental Laws except as would not be reasonably likely to result in a Material Adverse Effect on the Company. ARTICLE V COVENANTS OF THE COMPANY SECTION 5.01. Affirmative Covenants. So long as a drawing is available under the Letter of Credit or the Issuing Bank or any Creditor shall have any commitment hereunder or the Company shall have not paid in full all amounts payable by the Company hereunder to the Agent, the Issuing Bank, or any Creditor, the Company agrees that, unless the Majority Creditors shall otherwise consent in writing: (a) Reporting Requirements. The Company shall deliver to the Agent and each Creditor: (i) as soon as available and in any event within 45 days after the end of each of the first three quarterly fiscal periods of each fiscal year of the Company, consolidated and consolidating statements of income, retained earnings and cash flow of the Company 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, and the related consolidated and consolidating balance sheets of the Company and its Consolidated Subsidiaries at the end of such period, setting forth in each case in comparative form the corresponding consolidated and consolidating figures for the corresponding period in the preceding fiscal year, accompanied by a certificate of a senior financial officer of the Company, which certificate shall state that said consolidated financial statements fairly present the consolidated financial condition and results of operations of the Company and its Consolidated Subsidiaries, and said consolidating financial statements fairly present the respective individual unconsolidated financial condition and results of operations of the Company and of each of its Consolidated Subsidiaries, in each case in accordance with GAAP, consistently applied, as at the end of, and for, such period (subject to normal year-end audit adjustments); (ii) as soon as available and in any event within 90 days after the end of each fiscal year of the Company, consolidated and consolidating statements of income, retained earnings and cash flow of the Company and its Consolidated Subsidiaries for such fiscal year 47 and the related consolidated and consolidating balance sheets of the Company and its Consolidated Subsidiaries as at the end of such fiscal year, setting forth in each case in comparative form the corresponding consolidated and consolidating figures for the preceding fiscal year, and accompanied (i) in the case of said consolidated statements and balance sheet of the Company, by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that said consolidated financial statements fairly present the consolidated financial condition and results of operations of the Company and its Consolidated Subsidiaries as at the end of, and for, such fiscal year in accordance with GAAP, consistently applied, and a certificate of such accountants stating that, in making the examination necessary for their opinion, they obtained no knowledge, except as specifically stated, of any failure by the Company to comply with Section 5.02(a), (b) or (e)(xi), and (ii) in the case of said consolidating statements and balance sheets, by a certificate of a senior financial officer of the Company, which certificate shall state that said consolidating financial statements fairly present the respective individual unconsolidated financial condition and results of operations of the Company and of each of its Consolidated Subsidiaries, in each case in accordance with GAAP, consistently applied, as at the end of, and for, such fiscal year; (iii) as soon as available copies of all proxy statements, material reports and registration statements which the Company or any of its Subsidiaries files with the Securities and Exchange Commission or any national securities exchange (other than filings made pursuant to the Public Utility Holding Company Act of 1935, as amended, public offerings of securities under employee benefit plans, customer stock purchase plans or dividend reinvestment plans); (iv) as soon as possible and in any event within two days after the Company has knowledge of the occurrence of each Event of Default continuing on the date of such statement, a statement from the chief financial officer of the Company setting forth details of such Event of Default and the action that the Company has taken and proposes to take with respect thereto; (v) at the time the Company furnishes each set of financial statements pursuant to paragraph (i) or (ii) above, a certificate of a senior financial officer of the Company setting forth in reasonable detail the computations necessary to determine whether the Company is in compliance with subsections (a), (b) and (e)(xi) of Section 5.02 as of the end of the respective 48 quarterly fiscal period or fiscal year and stating that no event has occurred or is continuing which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or the lapse of time or both or, if any such event has occurred and is continuing, a statement as to the nature thereof and the action that the Company has taken or proposes to take with respect thereto; and (vi) such other financial data and information of the Company or any of its Subsidiaries as the Agent, the Issuing Bank or any Creditor may from time to time reasonably request. (b) Litigation. The Company will promptly give to the Agent notice of all actions, suits, investigations, litigation or legal or arbitral proceedings, and of all proceedings by or before any governmental or regulatory authority or agency (and any material development in respect of such legal or other proceedings), in each case, known to the Company, which is reasonably likely to have a Material Adverse Effect. (c) Preservation of Corporate Existence, Etc. The Company shall (i) preserve and maintain its corporate existence in the state of its incorporation and qualify and remain qualified as a foreign corporation in each jurisdiction in which such qualification is reasonably necessary in view of its business, and (ii) pay and discharge, and cause its Subsidiaries to pay and discharge, all taxes, assessments and governmental charges upon its income and its properties prior to the date on which penalties are attached thereto, unless (A) such taxes, assessments and governmental charges shall be contested in good faith and by appropriate proceedings by the Company or its Subsidiaries and (B) the Company or any such Subsidiary shall set aside on its books adequate reserves therefor to the extent required by GAAP. Nothing contained in this clause (c) of Section 5.01 shall be deemed to prohibit any transaction permitted by clause (c) of Section 5.02. (d) Maintenance of Insurance, Etc. The Company shall, and shall cause its Subsidiaries to, maintain insurance with responsible insurance companies or associations or through its own program of self-insurance in such amounts, with such deductibles, and covering such risks as is usually carried by companies engaged in similar business. (e) Compliance with Laws, Etc. The Company shall comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA, except where the failure to so comply would not have a Material Adverse Effect. 49 (f) Compliance with Environmental Laws. The Company shall comply, and cause each of its Subsidiaries and all lessees and other Persons occupying or operating on its properties to comply, in all material respects, with all Environmental Laws and Environmental Permits applicable to its operations and properties; obtain and renew all Environmental Permits necessary for its operations and properties; and conduct, and cause each of its Subsidiaries to conduct, any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action required under any Environmental Law to remove and clean up all Hazardous Materials from any of its properties, in accordance with the requirements of all Environmental Laws; provided, however, that neither the Company nor any of its Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and reserves, where required by GAAP, are being maintained with respect to such circumstances. (g) Visitation Rights. The Company shall, at any reasonable time and from time to time, permit the Agent, the Issuing Bank, any Creditor or any agents or representatives of any thereof, to examine and make copies of and abstracts from the records and books of account of, and examine the properties of, the Company and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Company and any of its Subsidiaries with any of their officers or directors and with their independent certified public accountants. (h) Maintenance of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted; provided that this subsection (h) shall not prevent the sale of any properties permitted by subsection (c) of Section 5.02. (i) Lien. The Company shall maintain the Lien created or purported to be created by the Second Mortgage Bond Indenture for the benefit of the Agent and the ratable benefit of the Issuing Bank and the Creditors and defend, preserve and protect such Lien against all claims of all Persons. (j) Redemption or Defeasance of Bonds or Substitution of Credit Facility. The Company shall use its best efforts to cause the Trustee, upon redemption or defeasance of less than all of the Bonds pursuant to the Indenture, to furnish to the Issuing Bank notice in the form of Annex A to the Letter of Credit, and, upon a redemption or defeasance of all the Bonds pursuant to the Indenture or upon substitution of a 50 Credit Facility (as defined in the Indenture) for the Letter of Credit, to surrender the Letter of Credit to the Issuing Bank for cancellation. (k) Bond Rating. The Company shall exercise its best efforts to cause the Bonds to have a rating by Moody's Investors Service, Inc. or by Standard & Poor's Corporation. (l) Remarketing. The Company shall take all steps that are necessary or appropriate to cause any Bonds acquired by the Trustee on behalf of and for the account of the Company or the Issuing Bank, the Agent or any other nominee of the Issuing Bank to be remarketed (in the case of Bonds acquired on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank, to the extent the Issuing Bank requests that such Bonds be remarketed), including (without limitation) preparing such disclosure and other documents as are required to remarket the Bonds. (m) Registration of Bonds. The Company shall cause all Bonds which it (or any of its Affiliates) acquires, or which are acquired for its (or any of its Affiliates) account, to be registered forthwith in accordance with the Indenture in the name of the Company (or such Affiliate). (n) Maintain Books and Records. The Company shall keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied. (o) Additional Documents. As promptly as practicable (but in any event not later than 30 days) after the Effective Date, the Company will furnish to the Agent, (i) certified copies of recorded counterparts of the First Mortgage Bond Indenture and evidencing the filing thereof and (ii) certified copies of all notices filed with respect to the First Mortgage Bond Indenture. (p) Creation of Subsidiaries. The Company shall not, and shall not permit any of its Subsidiaries to, create any Subsidiaries of the Company or make any investment in any Person except in compliance with the Public Utility Holding Company Act of 1935, as amended, and the regulations and orders of the Securities and Exchange Commission thereunder. SECTION 5.02. Negative Covenants. So long as a drawing is available under the Letter of Credit or the Issuing Bank shall have any commitment hereunder or the Company shall have not paid in full all amounts payable by the Company hereunder to the Agent, the Issuing Bank, or any Creditor, the Company agrees that, without the written consent of the Majority Creditors: 51 (a) Total EBITA to Interest Coverage Ratio. The Company shall not permit the Interest Coverage Ratio to be less than 1.40 to 1 at any time on or after the last day of the first full fiscal quarter of the Company commencing after the Effective Date. (b) Leverage Ratio. The Company shall not permit the Leverage Ratio to exceed 0.68 to 1 at any time on or after the last day of the first full fiscal quarter of the Company commencing after the Effective Date. (c) Prohibition of Fundamental Changes. The Company shall not, and will not permit any of its Subsidiaries to, enter into any transaction of merger, consolidation, amalgamation, liquidation or dissolution; provided that the Company or any of its Subsidiaries may merge or consolidate with any other Person if (i) in any such transaction in which the Company is a party, the Company is the surviving corporation, (ii) in any such transaction in which the Company is not a party, the surviving corporation shall be a Subsidiary of the Company and (iii) after giving effect thereto no Event of Default would exist hereunder. The Company will not, and will not permit any of its Subsidiaries to, convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or substantially all of its business or assets or assets (excluding (i) accounts receivable, (ii) obsolete or worn-out tools, equipment or other property no longer used or useful in its business and (iii) inventory or other property sold or disposed of in the ordinary course of business and on ordinary business terms) which in the aggregate have a net book value in excess of $50,000,000, whether now owned or hereafter acquired, to any other Person. Notwithstanding the foregoing provisions of this subsection (c): (1) any Subsidiary of the Company may be merged or consolidated with or into: (A) the Company if the Company shall be the continuing or surviving corporation or (B) any other Subsidiary of the Company; and (2) any Subsidiary of the Company may sell, lease, transfer or otherwise dispose of any or all of its property (upon voluntary liquidation or otherwise) to the Company or a Subsidiary of the Company. (d) Compliance with ERISA. The Company shall not (i) enter into any non-exempt prohibited transaction (as defined in Section 4975 of the Code and in Section 406 of ERISA) involving any Plan which may result in any liability of the Company to any Person which (in the reasonable opinion of the Agent) will have a Material Adverse Effect or (ii) allow or suffer to exist any other event or condition known to the Company which results in any liability of the Company or any of its Subsidiaries to the PBGC, or in any 52 Withdrawal Liability to any Multiemployer Plan, which (in the reasonable opinion of the Agent) will have a Material Adverse Effect. For purposes of this Section 5.02(d), "liability" shall not include termination insurance premiums payable under Section 4007 of ERISA. Upon request of the Agent, the Company shall promptly furnish to the Agent a copy of Schedule B (Actuarial Information) to the most recently filed annual report (Form 5500 Series) of any Plan. (e) Limitation on Liens. The Company shall not, nor will it permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with respect to any of its property, whether now owned or hereafter acquired, except: (i) Liens created pursuant to the Related Documents or pursuant to the First Mortgage Bond Indenture or the Second Mortgage Bond Indenture; (ii) Liens created or otherwise in existence on the Effective Date or contemplated by the Plan of Reorganization; (iii) Liens imposed by any governmental authority for taxes, assessments or charges not yet due or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Company or the affected Subsidiaries, as the case may be, in accordance with GAAP; (iv) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith and by appropriate proceedings; (v) pledges or deposits under worker's compensation, unemployment insurance and other social security legislation; (vi) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (vii) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business and encumbrances consisting of zoning restrictions, easements, licenses, restrictions on the use of property or minor imperfections in title thereto which, in the aggregate, are not material in amount, and which do not in any case materially detract from the 53 value of the property subject thereto, render title to the property encumbered thereby unmarketable, materially adversely affect the use of such property for its present purposes or interfere with the ordinary conduct of the business of the Company or any of its Subsidiaries; (viii) Liens on property of any corporation which becomes a Subsidiary of the Company after the date of this Agreement, provided that such Liens are in existence at the time such corporation becomes a Subsidiary of the Company and were not created in anticipation thereof, provided further that such Liens shall not extend to cover any property of the Company or any of its other Subsidiaries and such Liens shall not cover property of such Subsidiary other than property of the types covered by the terms of such Liens at the time such Subsidiary is acquired; (ix) Liens upon real and/or tangible personal property acquired after the Effective Date (by purchase, construction or otherwise) by the Company or any of its Subsidiaries, each of which Liens either (A) existed on such property before the time of its acquisition and was not created in anticipation thereof, or (B) was created solely for the purpose of securing Debt representing, or incurred to finance, refinance or refund, the cost (including the cost of construction) of such property; provided that no such Lien shall extend to or cover any property of the Company or such Subsidiary other than the property so acquired and improvements thereon; (x) banker's liens, rights of set-off and Liens on documents presented under commercial letters of credit, in each case granted to banks in accordance with customary banking practices or arising by operation of law; (xi) additional Liens upon real and/or personal property created after the date hereof, provided that, on the date each such Lien is incurred, the lower of (1) the fair market value of all property subject to Liens permitted by this paragraph (xi) and not otherwise permitted by this subsection (i) or (2) the aggregate amount of all obligations secured by Liens permitted by this paragraph (xi) and not otherwise permitted by this subsection (i) shall not exceed 5% of Total Capital on such date; and (xii) any extension, renewal or replacement of the foregoing, provided, however, that the Liens permitted hereunder shall not be spread to cover any additional Debt or property (other than a substitution of like property). 54 (f) Change in Nature of Business. The Company shall not make, or permit any of its Subsidiaries to make, any material change in the nature of its business as carried on at the date hereof. (g) Optional Redemptions. The Company shall not initiate an optional redemption of any Bonds unless the First Mortgage Bonds, Series [ ], and the Second Mortgage Bonds, Series [ ], shall each have an Investment Grade Rating and such bonds have not been placed, with possible negative consequences, on any watch list. (h) Related Documents. The Company shall not, subject to specific rights contained in such agreements, amend, or consent to the amendment of, any of the Related Documents, which amendment would adversely affect the Agent, the Issuing Bank or any Creditor; provided that the Second Mortgage Bond Indenture may be amended in accordance with its terms; and provided further that the consent of the Agent, the Issuing Bank or such Creditor, as the case may be, may not be unreasonably withheld. (i) Appointment. The Company shall not appoint any successor to the Trustee or any Remarketing Agent (as defined in the Indenture) or other agent appointed pursuant to the Indenture or any additional Remarketing Agents or other such agents with respect to the Bonds without the consent of the Majority Creditors; provided that the consent of the Majority Creditors may not be unreasonably withheld. (j) Bond Interest Term. The Company shall not cause the Trustee to select a Bond Interest Term Rate (as defined in the Indenture) for any Bond. ARTICLE VI EVENTS OF DEFAULT SECTION 6.01. Events of Default. The occurrence of any of the following events shall be an "Event of Default" hereunder: (a) The Company shall fail to pay any amount payable under any provision of Article II or any other provision of this Agreement within two days after the same becomes due and payable; or (b) Any representation, warranty or certification made, or deemed made, by the Company in any Related Document by the Company (or any of its officers), or any certificate furnished to the Agent, the Issuing Bank or any Creditor pursuant to the provisions thereof, shall prove to have been false or misleading as of the time made or furnished in any material respect; or 55 (c) The Company shall default in the performance of any of its obligations under clause (a)(iv) of Section 5.01 or clauses (a), (b), (c) or (f) of Section 5.02; or a consensual Lien shall be created by the Company or any of its Subsidiaries in violation of Section 5.02(e); or the Company shall default in its performance of any of its other obligations under this Agreement or in any other Related Document and such default in the performance of any such other obligation shall continue unremedied for a period of 15 days after notice thereof to the Company by the Agent; or (d) The Company or any of its Subsidiaries shall default in the payment when due of any principal of or any interest on any Debt aggregating $10,000,000 or more, or fail to observe or perform any material term, covenant or agreement contained in any agreement by which it is bound, evidencing or securing Debt, in an aggregate amount of $10,000,000 or more, or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt, after the giving of any required notice and for such period of time as would permit the holder or holders thereof or of any obligations issued thereunder to accelerate the maturity thereof, unless such failure or event or condition shall have been cured by the Company or such Subsidiary, as the case may be, or effectively waived by such holder or holders; or (e) There shall remain in force, undischarged, unsatisfied and unstayed, for more than 30 days, whether or not consecutive, any final judgment against the Company or any of its Material Subsidiaries that, together with other outstanding final judgments, undischarged, against the Company and all of its Material Subsidiaries exceeds in the aggregate $10,000,000 (for the purposes hereof, the term "final judgment" shall mean a judgment which is not subject to appeal); or (f) The Company or any of its Material Subsidiaries shall make a general assignment for the benefit of creditors, or admit in writing its inability to pay or generally fail to pay its debts as they mature or become due, or shall petition or apply for the appointment of a trustee or other custodian, liquidator or receiver of the Company or any of its Material Subsidiaries, as the case may be, or any substantial part of its respective assets; or the Company or any of its Material Subsidiaries shall commence any case or other proceeding relating to the Company or any of its Material Subsidiaries under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, or the Company or any of its Material Subsidiaries shall take any action to authorize or in furtherance of any of the foregoing; or if any such petition or application shall be filed or any such case or other proceeding shall be 56 commenced against the Company or any of its Material Subsidiaries and the Company or any of its Material Subsidiaries shall indicate its approval thereof, consent thereto or acquiescence therein or such petition or application shall not be dismissed on or before the 60th day after the filing thereof; or (g) A decree or order is entered appointing any trustee, custodian, liquidator or receiver or adjudicating the Company or any of its Material Subsidiaries bankrupt or insolvent, or approving a petition in any such case or other proceeding, or a decree or order for relief is entered in respect of the Company or any of its Material Subsidiaries in an involuntary case under federal bankruptcy laws as now or hereafter reconstituted; or (h) There shall have been asserted against the Company by a Governmental Person or other Person, a written complaint, claim or demand asserting any claims or liabilities, whether accrued, absolute or contingent, based on or arising from the presence, release or disposal of Hazardous Materials by the Company or any of its Subsidiaries that is reasonably likely to be determined adversely to the Company or any of its Subsidiaries, and the amount thereof (either individually or in the aggregate) would, in such event, have a Material Adverse Effect (after deducting any portion thereof that is reasonably expected to be paid by other creditworthy Persons); or (i) The Confirmation Order shall be (i) reversed, revoked or vacated in whole or in part by any Final Order of a court of competent jurisdiction, or (ii) modified in a manner or subjected to a stay that adversely affects the Company's ability to perform any of its obligations hereunder, as determined by the Agent in its sole discretion; or (j) Central and South West Corporation shall cease directly or indirectly, to own (or otherwise shall cease, directly or indirectly, to control the voting rights of) at least 51% of the Voting Stock of the Company; or (k) Any "Event of Default" under and as defined in the Related Documents shall have occurred and be continuing; or (l) Any regulatory approval as set forth in Section 3.01(d) or required to consummate the Plan of Reorganization shall be rescinded if such rescission can not be appealed by the Company and has a Material Adverse Effect on the Company; or (m) Any material provision of this Agreement or any other Related Document shall at any time cease to be a valid, binding obligation of the Company enforceable against the Company, or any such agreement shall be declared to be null 57 and void, or the validity or enforceability thereof shall be contested by the Company, or a proceeding shall be commenced by any Governmental Person having jurisdiction over the Company seeking to establish the invalidity or unenforceability thereof, or the Company shall deny that it has any further liability or obligation under this Agreement or any other Related Document after delivery thereof or the Second Mortgage Bond Indenture shall for any reason (other than pursuant to the terms thereof) cease to create a valid and perfected second priority Lien on the Company's property purported to be secured thereby. SECTION 6.02. Upon an Event of Default. If any Event of Default shall have occurred and be continuing, (A) the Issuing Bank shall at the request, or may with the consent, of the Majority Creditors (i) if the Letter of Credit shall not have been issued, by notice to the Company, declare the obligation of the Issuing Bank to issue the Letter of Credit to be terminated, whereupon the same shall forthwith terminate, or, (ii) if the Letter of Credit shall have been issued, give notice to the Trustee pursuant to Section 9.01 of the Indenture that an Event of Default hereunder has occurred and is continuing and, if a drawing to pay interest on the Bonds shall have been made under the Letter of Credit (other than such a drawing in respect of the payment of interest upon scheduled or accelerated maturity, or redemption, of the Bonds), and not reimbursed, notify the Trustee prior to the fifteenth day following such drawing that the Issuing Bank has not been reimbursed for such drawing and that interest in the amount of such drawing will not be reinstated, and (B) the Agent shall at the request, or may with the consent, of the Majority Creditors (i) declare the Tender Advances, all interest thereon and all other amounts payable hereunder or in respect thereof, to be forthwith due and payable, whereupon the Tender Advances, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest, or further notice of any kind, all of which are hereby expressly waived by the Company and (ii) exercise all rights and remedies in respect of the Second Mortgage Bonds, Series [ ] pledged as security hereunder; provided, however, that in the event of the occurrence of an Event of Default pursuant to subsections (f) or (g) of Section 6.01, (A) the obligation of the Issuing Bank to issue the Letter of Credit shall automatically be terminated and (B) the Tender Advances, all interest thereon and all other amounts payable hereunder or in respect thereof shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Company. 58 ARTICLE VII SECURITY SECTION 7.01. Issuance and Pledge of Bonds. Concurrently with the execution of this Agreement, the Company shall execute, issue and deliver to the Agent for its benefit and the ratable benefit of the Issuing Bank and each Creditor the Second Mortgage Bonds, Series [ ] as security for the payment of all obligations of the Company now or hereafter existing under this Agreement in respect of principal, interest and Letter of Credit commissions payable pursuant to Section 2.04(a), pursuant to and on the terms of this Agreement and of the Second Mortgage Bond Indenture. The Company hereby pledges to the Agent and grants to the Agent, in each case, for its benefit and the ratable benefit of the Issuing Bank and each Creditor a security interest in the Second Mortgage Bonds Series [ ] and all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Bonds and proceeds of any and all of the foregoing. The Second Mortgage Bond, Series [ ] shall be registered in the name of the Agent or such nominee or nominees as the Agent shall direct. SECTION 7.02. Application of Moneys. Any moneys received by the Agent, the Issuing Bank or any Creditor on account of the Second Mortgage Bonds, Series [ ] shall be applied as follows: (a) moneys received on account of principal of the Second Mortgage Bonds, Series [ ] shall be applied to the payment of any unpaid principal of the Tender Advances or drawings under the Letter of Credit then due and owing hereunder and (b) moneys received on account of interest on the Second Mortgage Bonds, Series [ ] shall be applied to the payment of any accrued and unpaid interest then due and owing hereunder and Letter of Credit commissions then due and owing under Section 2.04(a). SECTION 7.03. Rights of Bondholders. The Agent, as holder of the Second Mortgage Bonds, Series [ ] for its benefit and the ratable benefit of the Issuing Bank and the Creditors, shall have all the rights (including, without limitation, voting rights) provided to holders of bonds in the Second Mortgage Bond Indenture and shall have only such rights. Without limiting the generality of the foregoing, (a) the Second Mortgage Bonds, Series [ ] may not be sold, assigned, pledged or otherwise transferred by the Bank, whether pursuant to the Uniform Commercial Code after an Event of Default or otherwise except in connection with any assignment of the Agent's rights and obligations under this Agreement as provided for herein and (b) no payment of principal of or interest on the Second Mortgage Bonds, Series [ ], or any other amount payable thereunder, shall be demanded or received except if, and to the extent that, the corresponding payment remains unpaid hereunder. To the extent that moneys recovered from the Second Mortgage Bonds, Series [ ] 59 are insufficient to pay in full the amount of principal and interest and other amounts due hereunder, the Company shall remain liable for any such deficiency under the terms of this Agreement. SECTION 7.04. The Agent's Duties. The powers conferred on the Agent hereunder are solely to protect its interest in the collateral, including, without limitation, the Second Mortgage Bonds, Series [ ], and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any collateral in its possession and the accounting for moneys actually received by it hereunder, the Agent shall have no duty as to any collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any collateral, whether or not the Agent, the Issuing Bank or any Creditor has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any collateral. The Agent shall be deemed to have exercised reasonable care in the custody and preservation of any collateral in its possession if such collateral is accorded treatment substantially equal to that which the Agent accords its own property. ARTICLE VIII THE AGENT, THE CREDITORS AND THE ISSUING BANK SECTION 8.01. Authorization and Action. The Issuing Bank and each Creditor hereby appoint and authorize the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of amounts due under this Agreement), neither the Issuing Bank nor the Agent shall be required to exercise any discretion or take any action, but the Agent shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Creditors, and such instructions shall be binding upon all Creditors; provided, however, that neither the Issuing Bank nor the Agent shall be required to take any action which exposes the Issuing Bank or the Agent to personal liability or which is contrary to this Agreement or applicable law. The Agent agrees to give to the Issuing Bank and each Creditor prompt notice of each notice given to it by the Company and to give to each Creditor notice of each notice delivered to it by the Issuing Bank, in each case pursuant to the terms of this Agreement. 60 SECTION 8.02. Reliance, Etc. Neither the Agent, the Issuing Bank nor any of their directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or any other Related Document, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent and the Issuing Bank: (i) may treat each Creditor as a Creditor hereunder until the Agent receives written notice of the assignment or transfer of the rights and obligations of any Creditor hereunder signed by such Creditor and including the agreement of the assignee or transferee to be bound hereby as it would have been if it had been an original Creditor party hereto, in form satisfactory to the Agent; (ii) may consult with legal counsel (including counsel for the Company), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Creditor and shall not be responsible to any Creditor for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement or any other Related Document; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or any other Related Document on the part of the Company or any other party or to inspect the property (including the books and records) of the Company; (v) shall not be responsible to any Creditor for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Related Document or any other instrument or document furnished pursuant hereto or thereto; and (vi) shall incur no liability under or in respect of this Agreement or any other Related Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 8.03. The Agent, the Issuing Bank and Affiliates. The Agent and the Issuing Bank shall have the same rights and powers under this Agreement as any other Creditor and may exercise the same as though they were not the Issuing Bank and the Agent, respectively; and the term "Creditor" or "Creditors" shall, unless otherwise expressly indicated, include Citibank in its individual capacity. The Agent, the Issuing Bank and their respective Affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Company, any of its Subsidiaries and any Person who may do business with or own securities of the Company or any such Subsidiary, all as if Citibank was not the Agent or the Issuing Bank and without any duty to account therefor to the Creditors. 61 SECTION 8.04. Bank Credit Decision. Each Creditor acknowledges that it has, independently and without reliance upon the Agent, the Issuing Bank or any other Creditor and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Creditor also acknowledges that it will, independently and without reliance upon the Agent, the Issuing Bank or any other Creditor and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. SECTION 8.05. Indemnification. The Creditors agree to indemnify the Agent and the Issuing Bank (to the extent not reimbursed by the Company), ratably according to the respective Participation Percentages, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent or the Issuing Bank in any way relating to or arising out of this Agreement or any action taken or omitted by the Agent or the Issuing Bank under this Agreement, provided that no Creditor shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's or the Issuing Bank's gross negligence or willful misconduct. Without limitation of the foregoing, each Creditor agrees to reimburse the Agent and the Issuing Bank promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by the Agent or the Issuing Bank, as the case may be, in connection with the preparation, execution, delivery, administration (except normal administrative costs and fees and expenses of counsel related thereto prior to an Event of Default), modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any other Related Document, to the extent that the Agent or the Issuing Bank is not reimbursed for such expenses by the Company. SECTION 8.06. Successor Agent. Subject to the appointment and acceptance of a successor Agent as provided below, the Agent may resign at any time by giving written notice thereof to the Issuing Bank, the Creditors and the Company and may be removed at any time with or without cause by the Issuing Bank. Upon any such resignation or removal, the Issuing Bank shall have the right to appoint a successor Agent which shall be reasonably acceptable to the Majority Creditors. If no successor Agent shall have been so appointed by the Issuing Bank, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or the Majority Creditors' removal of the retiring Agent, then the retiring Agent may, on behalf of the Issuing Bank and the Creditors, appoint a 62 successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $250,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. SECTION 8.07. Issuing Bank. (a) All notices received by the Issuing Bank pursuant to this Agreement or any other Related Document (other than the Letter of Credit) shall be promptly delivered to the Agent for distribution to the Creditors. (b) The Issuing Bank shall not amend or waive any provision or consent to the amendment or waiver of any Related Document without the consent of the Majority Creditors, provided, however, that any waiver or amendment of any provision of the Letter of Credit or consent to the amendment or waiver of the Letter of Credit shall require the written consent of all of the Creditors. (c) Upon receipt by the Issuing Bank from time to time of any amount pursuant to the terms of any Related Document (other than pursuant to the terms of this Agreement), the Issuing Bank shall promptly deliver to the Agent such amount. ARTICLE IX MISCELLANEOUS SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement nor consent to any departure by the Company therefrom shall in any event be effective unless the same shall be in writing and signed by the Majority Creditors, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by the Issuing Bank and all the Creditors, do any of the following: (a) waive any of the conditions specified in Article III, (b) increase the Participation Percentage of any Creditor or subject the Creditors to any additional obligations, (c) reduce the principal of, or interest on, any Tender Advance or any fees (other than fees payable solely to the Issuing Bank) or other amounts payable hereunder, (d) postpone any date fixed for any payment of principal of, or interest on, any Tender Advance or any fees 63 (other than fees payable solely to the Issuing Bank) or other amounts payable hereunder, (e) change the aggregate unpaid principal amount of any Tender Advance or any other amount payable hereunder as a result of a draw on the Letter of Credit, or the number of Creditors, which shall be required for the Creditors or any of them to take any action hereunder, (f) amend this Section 9.01, (g) amend this Agreement in a manner intended to prefer one or more Creditors over any other Creditors, (h) amend the definition of "Majority Creditors", or (i) release any collateral, including, without limitation, the Second Mortgage Bonds, Series [ ]; provided further that no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Creditors required above to take such action, affect the rights or duties of the Agent under this Agreement; provided further that no amendment, waiver or consent shall, unless in writing and signed by the Issuing Bank in addition to the Creditors required above to take such action, affect the rights and duties of the Issuing Bank under this Agreement. SECTION 9.02. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telecopier, telegraphic, telex or cable communication) and mailed, telecopied, telegraphed, telexed, cabled or delivered, if to the Company, at its address at, in the case of deliveries, at its street address at [303 North Oregon Street, El Paso, Texas 79901], in the case of mailings, to its mailing address at [P.O. Box 982, El Paso, Texas 79960], in the case of telex, to telex no. [5435710 (callback 915-543-5707)] and in the case of telecopier to [915-521-4754], in each case to the attention of the Secretary; if to the Issuing Bank, at its address at [399 Park Avenue, New York, New York 10043], Attention: [Energy West Department], telex no. [TLX 12-7773 NYWCGCB] and in the case of telecopier to [212-793-0642]; if to the Agent, at its address at [399 Park Avenue, New York, New York 10043], Attention: [Energy West Department], telex no. [TLX 12-7773 NYWCGCB] and in the case of telecopier to [212-793-0642]; if to any Creditor, at its address specified on the signature pages hereof; and if to the Trustee, in the case of deliveries, at its street address at [ , ], in the case of mailings, to its mailing address at P.O. Box , , , and in the case of telex, to telex no. , in each case to the attention of [Corporate Trust Department] or, as to each such entity, at such other place and/or address or number as shall be designated by such entity in a written notice to the other such entities. All such notices and communications shall, when mailed, telecopied, telegraphed, telexed or cabled, be effective when deposited in the mails, telecopied, delivered to the telegraph company, confirmed by telex answerback or delivered to the cable company, respectively, addressed as aforesaid, except that notices to the Agent or Issuing Bank pursuant to the provisions of Article II shall not be effective until received by the Agent or Issuing Bank, as the case may be. 64 SECTION 9.03. No Waiver; Remedies. No failure on the part of the Issuing Bank, the Agent or any Creditor to exercise, and no delay in exercising, any right hereunder or under any Related Document shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 9.04. Rights of Setoff and Subrogation. (a) Upon the occurrence and during the continuance of any Event of Default, the Issuing Bank and each Creditor are hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and otherwise apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Issuing Bank or such Creditor, as the case may be, to or for the credit or the account of the Company against any and all of the obligations of the Company now or hereafter existing under this Agreement, the Second Mortgage Bond Indenture or the Second Mortgage Bonds, Series [ ], whether or not the Issuing Bank or such Creditor, as the case may be, shall have made any demand hereunder or under such other documents and although such obligations may be contingent or unmatured. The Issuing Bank and each Creditor, as the case may be, agree promptly to notify the Company after any such set-off and application made by it, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Issuing Bank and each Creditor under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Issuing Bank and each Creditor may have. (b) If any Creditor shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise, but excluding all proceeds received by assignments or sales of participations in accordance with Section 9.04) on account of its participatory interests in any Tender Advances or other amounts payable by the Company due to a draw under the Letter of Credit (other than pursuant to Section 2.11 or 2.17) in excess of its ratable share of payments on account of such Tender Advances or such other amounts obtained by all the Creditors and the Issuing Bank, such Creditor shall forthwith purchase from the other Creditors and the Issuing Bank a participation in the portions of such Tender Advances or such other amounts, as the case may be, owing to them as shall be necessary to cause such purchasing Creditor to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Creditor, such purchase from the Issuing Bank or such Creditor shall be rescinded and the Issuing Bank or such Creditor shall repay to the purchasing Creditor the purchase price to the extent of such recovery together with an amount 65 equal to the Issuing Bank's or such Creditor's ratable share (according to the proportion of (i) the amount of the Issuing Bank's or such Creditor's required repayment to (ii) the total amount so recovered from the purchasing Creditor) of any interest or other amount paid or payable by the purchasing Creditor in respect of the total amount so recovered. (c) Notwithstanding the foregoing, if any Creditor shall obtain any such excess payment involuntarily, such Creditor may, in lieu of purchasing participations from the Issuing Bank and other Creditors in accordance with subsection (b) above, on the date of receipt of such excess payment, return such excess payment to the Agent for distribution in accordance with Section 2.12. (d) The Company agrees that the Issuing Bank and the Creditors, as the case may be, shall be subrogated to all rights of the Trustee and the holders of the Bonds, to the extent of any payment made by the Issuing Bank pursuant to a drawing under the Letter of Credit, provided that so long as the Bonds remain unpaid and held by Persons other than the Company or any Affiliate thereof, such right of subrogation shall in all respects be subordinate to the rights of the Trustee and the holders of the Bonds. SECTION 9.05. Indemnification. The Company hereby indemnifies and holds the Agent, the Issuing Bank, each Creditor and each Participant and each of their Affiliates and their officers, directors, employers, agents and advisors (each, an "Indemnified Party") harmless from and against any and all claims, damages, losses, liabilities, costs or expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party (except to the extent any claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct), in each case relating to or arising out of or in connection with or by reason of: (a) any inaccuracy or alleged inaccuracy in any material respect, or any untrue statement or alleged untrue statement of any material fact, contained in the Preliminary Official Statement, the Official Statement or any amendment or supplement to the Official Statement, or by reason of the omission or alleged omission to state therein a material fact necessary to make such statements, in the light of the circumstances under which they were made, not misleading; provided, however, that, in the case of any action or proceeding alleging an inaccuracy in a material respect, or an untrue statement, with respect to information supplied by and describing the Issuing Bank in the Preliminary Official Statement or the Official Statement (the "Bank Information"), 66 (i) indemnification by the Company pursuant to this Section 9.05(a) shall be limited to the costs and expenses of the Issuing Bank (including reasonable fees and expenses of the Issuing Bank's counsel) of defending itself against such allegation, (ii) if in any such action or proceeding it is finally determined that the Issuing Bank Information contained an inaccuracy in a material respect or an untrue statement, then the Company shall not be required to indemnify the Issuing Bank pursuant to this Section 9.05(a) for any claims, damages, losses, liabilities, costs or expenses to the extent caused by such inaccuracy or untrue statement, and (iii) if any such action or proceeding shall be settled by the Issuing Bank without there being a final determination to the effect described in the preceding clause (ii), unless the Letter of Credit is wrongfully dishonored and such action or proceeding relates to such wrongful dishonor, then the Company shall be required to indemnify the Issuing Bank pursuant to this Section 9.05(a) for the reasonable costs or expenses incurred in connection with such action or proceeding prior to such settlement and, if such action or proceeding is settled with the Company's consent, for the costs and expenses of such settlement; or (b) any representation, warranty or certification made or deemed made in this Agreement by the Company (or any of its officers), or any certificate furnished to the Agent, the Issuing Bank or any Creditor pursuant to the provisions hereof, proving to have been false or misleading as of the time made or furnished in any material respect; or (c) any case or proceeding pursuant to any bankruptcy, insolvency, reorganization, moratorium or similar law or any restructuring of the Company; or (d) any cost or liability under any Environmental Law arising out of the operation or assets of the Company; or (e) any event or occurrence set forth in Section 5.04 of the Loan Agreement; or (f) the execution and delivery or transfer of, or wrongful payment or wrongful failure to make payment under, the Letter of Credit; provided, however, that the Company shall not be required to indemnify any Indemnified Party pursuant to this Section 9.05 for any claims, damages, losses, liabilities, costs or expenses to the extent caused by (i) any Indemnified Party's willful misconduct or gross negligence in determining whether a draft or certificate presented under the Letter of Credit complied with the terms of the Letter of Credit or (ii) any Indemnified Party's wrongful failure to make lawful payment under the Letter of Credit after the presentation to it by the Trustee or a successor trustee under the Indenture of a draft and certificate strictly complying with the terms and conditions of the Letter of Credit. 67 Nothing in this Section 9.05 is intended to limit the Company's obligations contained in Article II. Without prejudice to the survival of any other obligation of the Company hereunder, the indemnities and obligations of the Company contained in this Section 9.05 shall survive the payment in full of amounts payable by the Company pursuant to Article II and the termination of the Letter of Credit. SECTION 9.06. Issuing Bank and Creditors. As between the Issuing Bank, the Agent, and the Creditors on the one hand, and the Company on the other hand, the Company assumes all risks of the acts or omissions of the Trustee and any other beneficiary or transferee of the Letter of Credit with respect to its use of the Letter of Credit. Neither the Issuing Bank, the Agent, any Creditor, nor any Participant nor any of their Affiliates and their officers, directors, employers, agents and advisors shall be liable or responsible for: (a) the use which may be made of the Letter of Credit or any acts or omissions of the Trustee and any other beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing Bank against presentation of documents that do not comply with the terms of the Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under the Letter of Credit, except that the Company shall have a claim against the Issuing Bank, and the Issuing Bank shall be liable to the Company, to the extent of any direct, but not consequential, damages suffered by the Company which the Company proves were caused by (i) the Issuing Bank's willful misconduct or gross negligence in determining whether a draft or certificate presented under the Letter of Credit complies with the terms of the Letter of Credit or (ii) the Issuing Bank's willful failure to make lawful payment under the Letter of Credit after the presentation to it by the Trustee or a successor trustee under the Indenture of a draft and certificate strictly complying with the terms and conditions of the Letter of Credit. In furtherance and not in limitation of the foregoing, the Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary. SECTION 9.07. Costs, Expenses and Taxes. The Company agrees to pay on demand all costs and expenses of the Agent, the Issuing Bank and each Creditor in connection with the preparation, execution, delivery, filing, recording, administration (except normal administrative costs and fees and expenses of counsel related thereto prior to an Event of Default), modification and amendment of this Agreement and any other documents which may be delivered in connection with this Agreement including transfer of the Letter of Credit in accordance with its terms and any other documents which may be 68 delivered in connection with this Agreement, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Agent, the Issuing Bank and each Creditor, and local counsel who may be retained by said counsel, with respect thereto, with respect to advising the Agent, the Issuing Bank or any such Creditor as to its rights and responsibilities, or the perfection or preservation of rights or interests, under this Agreement, any other Related Document and such other documents which may be delivered in connection with this Agreement, with respect to negotiations with the Company or with other creditors of the Company, any Person controlling the Company or any of the Company's Subsidiaries arising out of any Event of Default or any events or circumstances that may give rise to an Event of Default and with respect to presenting claims in or otherwise participating in or monitoring any bankruptcy, insolvency or other similar proceeding involving creditor's rights generally and any proceeding ancillary thereto or in connection with the negotiation of any restructuring or "work-out" (whether or not consummated). The Company further agrees to pay on demand all costs and expenses (including reasonable counsel fees and expenses) of the Agent, the Issuing Bank and each Creditor in connection with (i) the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, any other Related Document and any other documents which may be delivered in connection with this Agreement, including, without limitation, reasonable counsel fees and expenses in connection with the enforcement of rights under this Section 9.07, or (ii) any action or proceeding relating to a court order, injunction, or other process or decree restraining or seeking to restrain the Issuing Bank from paying any amount under the Letter of Credit. In addition, the Company shall pay any and all stamp and other administrative taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement, the Letter of Credit, any other Related Document or any such other documents, and agrees to save the Agent, the Issuing Bank and each Creditor harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees. SECTION 9.08. Purchase Option. (a) The Company acknowledges and consents to the effectiveness of the Indenture and the Letter of Credit, and agrees to take any and all actions as are necessary to ensure that the Issuing Bank shall have the benefit of the option to purchase Bonds contemplated therein. (b) The Issuing Bank may with the consent, or shall at the request, of the Majority Creditors exercise its right as set forth in Sections 3.01(e), 9.01(e) or 13.03(d) of the Indenture to purchase the Bonds. Upon any such purchase, the Agent shall notify all Creditors of their pro rata share (based on their Participation Percentage) of the purchase price of the Bonds so purchased and upon receipt of such notice each Creditor will pay to the Agent, for the benefit of the Issuing Bank, such Creditor's pro rata share of the purchase price. Any Bonds so 69 purchased shall be held by the Issuing Bank or the Agent or any other nominee of the Issuing Bank, on behalf of all Creditors (the "Holder"). The Holder may with the consent, or shall at the request, of the Majority Creditors exercise its rights in respect of the Bonds. Upon the sale, remarketing or refunding of any Bonds so purchased, the Holder shall pay to the Agent for the ratable benefit of the Creditors the proceeds of such sale, remarketing or refunding. Upon receipt of such proceeds by the Agent, the Agent shall ratably reimburse the Creditors their share of such proceeds. SECTION 9.09. Binding Effect; Assignments and Participations. (a) This Agreement shall become effective when it shall have been executed by the Company, the Agent, the Issuing Bank and each Creditor and thereafter shall be binding upon and inure to the benefit of the Company, the Agent, the Issuing Bank and each Creditor and their respective successors and assigns, except that the Company shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Agent, the Issuing Bank and each Creditor. The Issuing Bank and each Creditor, with the consent of the Issuing Bank, which consent shall not be unreasonably withheld, may assign to any Eligible Institution all or any part of, or any interest (undivided or divided) in, its rights, benefits and obligations (other than the Issuing Bank's obligation to issue the Letter of Credit) under this Agreement, and to the extent of that assignment such assignee shall have the same rights, benefits and obligations (other than the Issuing Bank's obligation to issue the Letter of Credit) against and to the Company hereunder as it would have had if such assignee were the Issuing Bank or such Creditor hereunder; provided that any such assignment shall not be in an amount less than $5,000,000. (b) The Issuing Bank and each Creditor may sell or agree to sell, to (i) any Eligible Institution (each such Eligible Institution being an "Eligible Participant") or (ii) one or more other Persons (each a "Restricted Participant"; and together with any Eligible Participants being referred to herein as a "Participant"), a participation in all or any part of the Letter of Credit, any Tender Advance or other amounts payable under this Agreement. Each Participant shall be entitled to the rights and benefits of the provisions of Section 5.01(a)(vi) with respect to its participation in the Letter of Credit or such Tender Advance or such other amounts as if (and the Company shall be directly obligated to such Participant under such provisions as if) such Participant were the "Creditor" for purposes of said Section, but, except as set forth below, shall not have any other rights or benefits under this Agreement or any other Related Document (the Participant's rights against the Creditor in respect of such participation to be those set forth in the agreements executed by the Creditor in favor of the Participant). All amounts payable by the Company to the Issuing Bank or any Creditor under Section 2.11 and 2.17 in respect of the Letter of Credit or any Tender Advance or other amounts payable under this 70 Agreement shall be determined as if the Issuing Bank or any Creditor had not sold or agreed to sell any participations in the Letter of Credit or any Tender Advance or such other amounts, and as if the Issuing Bank or any Creditor were maintaining the Letter of Credit or any Tender Advance or such other amounts in the same way that it is maintaining the portion of the Letter of Credit or any Tender Advance or such other amounts in which no participations have been sold. In the case of an Eligible Participant, the Bank may agree with such Participant to take or refrain from taking action hereunder or under any Related Document as the Issuing Bank or any Creditor, as set forth in the agreement executed by the Bank and such Participant shall determine in favor of such Participant, with respect to taking or refraining from taking action hereunder or under any other Related Document. In no event shall the Issuing Bank or any Creditor agree with any Restricted Participant to take or refrain from taking any action hereunder or under any other Related Document except that the Issuing Bank or any Creditor may agree with a Restricted Participant that it will not, without the consent of such Restricted Participant, agree to (i) extend the date fixed for the payment of principal of or interest on any Tender Advance or other amounts payable to such Restricted Participant, (ii) reduce the amount of any such payment of principal, (iii) reduce the rate at which interest is payable thereon to a level below the rate at which such Restricted Participant is entitled to receive such interest, (iv) alter the rights or obligations of the Company to prepay any Tender Advance or other amounts payable to such Restricted Participant or (v) release any collateral, including, without limitation, the Second Mortgage Bonds, Series [ ]. (c) Notwithstanding any other provision set forth in this Agreement, the Issuing Bank or any Creditor may at any time create a security interest in all or any portion of its rights under this Agreement (including, without limitation, the Advances owing to it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System. SECTION 9.10. Further Assurances. The Company agrees promptly to do such further acts and things, and to execute and deliver such additional instruments (including, without limitation, notices), at its own expense, as the Agent, the Issuing Bank or any Creditor may at any time reasonably request in order better to insure and confirm the Agent's, the Issuing Bank's or any Creditor's, as the case may be, rights, powers and remedies hereunder and under the other Related Documents (including in order to perfect or protect any pledge or security interest granted or purported to be granted hereby or to enable the Agent, the Issuing Bank or any Creditor, as the case may be, to exercise or enforce its rights and remedies in respect hereof). 71 SECTION 9.11. Severability. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. SECTION 9.12. 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 9.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICT OF LAW PRINCIPLES. SECTION 9.14. Submission to Jurisdiction. THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OR OMISSIONS OF THE AGENT, THE ISSUING BANK OR ANY CREDITOR IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY RELATED DOCUMENT. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE COMPANY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE COMPANY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER RELATED DOCUMENTS. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF TEXAS. SECTION 9.15. Waiver of Trial by Jury. EACH OF THE COMPANY AND THE AGENT, THE ISSUING BANK AND EACH CREDITOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER RELATED DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE COMPANY ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF 72 EACH OTHER RELATED DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER RELATED DOCUMENT. SECTION 9.16. Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. SECTION 9.17. Integration. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AS TO THE SUBJECT MATTER OF THIS AGREEMENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO. SECTION 9.18. Survival. The obligations of the Company under Sections 2.11, 2.17, 9.05, 9.14 and 9.15 shall survive the repayment of the Loans and the payment in full of all amounts payable by the Company under Section 9.07. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written. EL PASO ELECTRIC COMPANY By [Title] Issuing Bank CITIBANK, N.A. By Vice President Agent CITIBANK, N.A., as Agent By Vice President 73 Participation Percentage Creditors 100% CITIBANK, N.A. By Vice President [399 Park Avenue New York, New York 10043 Attention: Energy West Department Telex No. TLX 12-7773 NYWCGCB Telecopier (212) 793-0642] 74 EXHIBIT A FORM OF LETTER OF CREDIT IRREVOCABLE LETTER OF CREDIT No. [ ] , 199[ ]* [Name and Address of Trustee] Attention: Corporate Trust Department Dear Sirs: We hereby establish, at the request and for the account of El Paso Electric Company, a Texas corporation (the "Company"), in your favor, as Trustee under the Indenture of Trust, dated as of , 199 (the "Indenture") between Maricopa County, Arizona Pollution Control Corporation (the "Issuer") and you, pursuant to which [$63,500,000]** in aggregate principal amount of the Issuer's Pollution Control Refunding Revenue Bonds (El Paso Electric Company Palo Verde Project), 19 Series (the "Bonds"), were issued, our Irrevocable Letter of Credit No. [________], in the amount of $[ ]*** (as more fully described below), effective immediately and expiring at the close of banking business at our 111 Wall Street, New York, New York 10043 office on or such later date as we shall have agreed in writing (the "Stated Termination Date"), unless earlier terminated in accordance with the terms hereof. ________________ * To be dated the date of issuance of the Letter of Credit. ** In no event shall the principal amount of the Bonds exceed $63,500,000. *** In no event shall the face amount of this Letter of Credit exceed $69,294,375. 75 We hereby irrevocably authorize you to draw on us, in an aggregate amount not to exceed the amount of this Letter of Credit set forth above and in accordance with the terms and conditions and subject to the reductions in amount as hereinafter set forth, (1) in one or more drawings by one or more of your drafts, drawn on our 111 Wall Street, New York, New York 10043 office, payable at sight on a banking day (which shall be any day other than a Saturday, Sunday or public or bank holiday or the equivalent for banks generally under the laws of the State of New York (a "Banking Day")), accompanied by a completed certificate in substantially the form of Annex B attached hereto, which drafts and certificates shall be in writing and signed by you (any such draft accompanied by such certificate being your "Interest Draft"), an amount not exceeding $[ ]; (2) in one or more drawings by one or more of your drafts, drawn on our 111 Wall Street, New York, New York 10043 office, payable at sight on a Banking Day, accompanied by a completed certificate in substantially the form of Annex C attached hereto, which drafts and certificates shall be in writing and signed by you (any such draft accompanied by such certificate being your "Tender Draft"), an aggregate amount not exceeding $[ ]; (3) in one or more drawings by one or more of your drafts, drawn on our 111 Wall Street, New York, New York 10043 office, payable at sight on a Banking Day, accompanied by a completed certificate in substantially the form of Annex D attached hereto, which drafts and certificates shall be in writing and signed by you (any such draft accompanied by such certificate being your "Partial Redemption Draft"), an aggregate amount not exceeding $[________]; and (4) in a single drawing by your draft, drawn on our 111 Wall Street, New York, New York 10043 office, payable at sight on a Banking Day, accompanied by a completed certificate in substantially the form of Annex E attached hereto, which draft and certificate shall be in writing and signed by you (such draft accompanied by such certificate being your "Final Draft"), an amount not exceeding $[ ]; provided that in no event will you have a right to make drawings under this Letter of Credit for the payment of the principal of, or interest on, Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company; provided further with respect to any such Bonds that were not so held by or for the account of the Company (or any Affiliate thereof) on the immediately preceding Record Date (as defined in the Indenture), you may, in accordance with the Indenture, draw on us by your Interest Draft under clause (1). Notwithstanding any other provision in this Letter of Credit, in no event will you have a right to make a drawing under this Letter of Credit for the payment of principal of or interest on Bonds in a "Bond Interest Term" (as defined in the Indenture). This Letter of Credit may not be drawn upon for the payment of any premium which may be payable in respect of the Bonds. 76 Upon our honoring any Interest Draft presented by you hereunder, the amount of this Letter of Credit and the amounts available to be drawn by you by any subsequent Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft shall be automatically decreased by an amount equal to the amount of such Interest Draft. If you shall not have received from us within 15 calendar days from the date of such drawing a notice from us to the effect that we have not been reimbursed for such drawing in the form of Annex H attached hereto appropriately completed, the amount of this Letter of Credit and the amounts from time to time available to be drawn by you by any Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft shall be automatically and irrevocably reinstated in the amount of such drawing, effective the 16th calendar day from the date of such drawing. The amount of this Letter of Credit shall be decreased upon our receipt of notice from you, in the form of Annex A hereto, of a redemption or defeasance of less than all the Bonds outstanding, by an amount equal to the amount stated in said notice and the amounts available to be drawn by you by any subsequent Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft shall be automatically decreased to the amounts stated in such notice. Upon our honoring any Tender Draft or Partial Redemption Draft, (i) the amount of this Letter of Credit and the amount available to be drawn by you by any subsequent Tender Draft, Partial Redemption Draft or Final Draft shall be automatically decreased by an amount equal to the amount of such Tender Draft or such Partial Redemption Draft and (ii) the amount available to be drawn by you by any Interest Draft shall be automatically decreased by an amount equal to the amount drawn under such draft in respect of accrued and unpaid interest. In the case of any Tender Draft, the amount from time to time available to be drawn by you by any Interest Draft, Tender Draft or Partial Redemption Draft and Final Draft shall be reinstated to the extent, but only to the extent, we received reimbursement from the Company for amounts drawn hereunder by such Tender Draft and we so notify you in writing. In addition, the amount available from time to time to be drawn by you by any Interest Draft, Tender Draft, Partial Redemption Draft and Final Draft shall be automatically reinstated, upon our receipt from you of the proceeds of the resale of any Bonds purchased and held on behalf of the Company with amounts drawn hereunder accompanied by a completed and signed certificate substantially in the form of Annex F, by an amount equal to the amount of the drawings made to purchase the Bonds so resold. Amounts received from you on behalf of the Company shall, if accompanied by a completed and signed certificate substantially in the form of Annex F from you, shall be applied to the extent of the amounts indicated therein in reimbursement of unreimbursed drawings under your Tender Drafts. 77 Amounts otherwise received from you on behalf of the Company shall first be applied in reimbursement of unreimbursed drawings made by your Interest Draft. Upon delivery to us (i) of all Bonds purchased by you on behalf of or for the account of the Bank pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture, or Section 13.03(d) of the Indenture with moneys drawn by a Tender Draft and (ii) a completed and signed certificate substantially in the form of Annex G, the Letter of Credit shall be reinstated in an amount equal to the amount of such Tender Draft used to purchase such Bonds so delivered; provided, however, if at any time any such purchase shall be rescinded, in whole or in part, or some or all of the Bonds so purchased must otherwise be returned by the Bank, in each case, for any reason, the amounts so reinstated shall not be available to be drawn until and unless the Company reimburses us for such amounts. Funds under this Letter of Credit are available to you against (1) your Interest Draft referring thereon to the number of this Letter of Credit accompanied by your written and completed certificate signed by you in substantially the form of Annex B thereto, (2) your Tender Draft referring thereon to the number of this Letter of Credit accompanied by your written and completed certificate signed by you in substantially the form of Annex C thereto, (3) your Partial Redemption Draft referring thereon to the number of this Letter of Credit accompanied by your written and completed certificate signed by you in substantially the form of Annex D thereto and (4) your Final Draft referring thereon to the number of this Letter of Credit accompanied by your written and completed certificate signed by you in substantially the form of Annex E thereto. Each such draft and certificate shall be dated the date of its presentation, and shall be presented at our office located at 111 Wall Street, New York, New York 10043, telex no.: 127001 CITIBANK NYK, Attention: NATS Letter of Credit Operations (or at any other office or number in the City and State of New York which may be designated by us by written notice delivered to you) on or before 12:00 Noon (New York City time), or by tested telex (or telecopier) on or before 10:00 A.M. (New York City time), on the day (which shall be a Banking Day) of our making funds available to you hereunder. If we receive any of your drafts and certificates at such office, all in strict conformity with the terms and conditions of this Letter of Credit, on or prior to the termination hereof and in any event not later than 12:00 Noon (New York City time), or if such drafts and certificates are presented by tested telex (or telecopier) not later than 10:00 A.M. (New York City time) on the Stated Termination Date, we will honor the same after presentation thereof on the same day in accordance with your payment instructions. If we receive any of your drafts and certificates at such office after 12:00 Noon (New York City time), or if such drafts and certificates are presented by tested telex (or telecopier) after 10:00 A.M. (New York City time), on a Banking Day, we will honor the same after 78 presentation thereof on the next succeeding Banking Day provided that such drafts and certificates conform with the terms and conditions of this Letter of Credit. If requested by you, payment under this Letter of Credit may be made by wire transfer of Federal Reserve Bank of New York funds to your account in a bank on the Federal Reserve wire system or by deposit of same day funds into a designated account that you maintain with us. This Letter of Credit shall automatically terminate upon the earliest of (i) our honoring your Final Draft presented hereunder, (ii) the date stated in any written notice we receive from you as the effective date of termination of this Letter of Credit, (iii) the date that you surrender the Letter of Credit to us, (iv) the provision of any substitution letter of credit or credit facility as provided in the Indenture, (v) the date on which we receive written notice from you that there is no longer any "Bond Outstanding" within the meaning of the Indenture, and (vi) the Stated Termination Date. This Letter of Credit is transferable in its entirety (but not in part) to any transferee who has succeeded you as Trustee under the Indenture and may be successively transferred. Transfer of the available balance under this Letter of Credit to such transferee shall be effected by the presentation to us of this Letter of Credit accompanied by a certificate in substantially the form of Annex I attached hereto, together with a fee equal to 1/4 of 1% of the "Available Amount". "Available Amount" means the maximum amount available to be drawn at such time under the Letter of Credit, the determination of such maximum amount to assume compliance with all conditions for drawing and no reduction for (i) any amount drawn by an Interest Draft (unless such amount is not reinstated under the Letter of Credit) or (ii) any amount drawn by a Tender Draft or (iii) any amount not available to be drawn because Bonds are held by or for the account of the Company (or any Affiliate thereof). Upon such presentation and payment we shall forthwith transfer the same to your transferee or, if so requested by your transferee, issue an irrevocable letter of credit to your transferee with provisions therein consistent with this Letter of Credit. This Letter of Credit sets forth in full our undertaking, and such undertaking shall not in any way be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein (including, without limitation, the Bonds), except only the certificates and the drafts referred to herein; and any such reference shall not be deemed to incorporate herein by reference any document, instrument or agreement except for such certificates and such drafts. 79 This Letter of Credit shall be governed by the laws of the State of New York, including the Uniform Commercial Code as in effect in the State of New York. Communications with respect to this Letter of Credit shall be in writing and shall be addressed to us at 11l Wall Street, New York, New York 10043, Attention: NATS Letter of Credit Operations, specifically referring to the number of this Letter of Credit. Very truly yours, CITIBANK, N.A. By Vice President 80 Annex A CERTIFICATE FOR THE REDUCTION OF AMOUNTS AVAILABLE UNDER IRREVOCABLE LETTER OF CREDIT NO. DATED , 199 The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Citibank, N.A. (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The Trustee hereby notifies you that on or prior to the date hereof $ principal amount of the Bonds have been redeemed and paid or have been defeased pursuant to the Indenture. (3) Following the redemption and payment or the defeasance referred to in paragraph (2) above, the aggregate principal amount of all of the Bonds Outstanding (as defined in the Indenture) is $ . (4) The maximum amount of interest, computed in accordance with the terms and conditions of the Bonds and the Indenture, which would accrue on the Bonds referred to in paragraph (3) above in any period of [ days] is $ . None of the Bonds referred to in paragraph (2) above were in a Bond Interest Term as of the date such Bonds were redeemed, paid or defeased pursuant to the Indenture. (5) The maximum amount available to be drawn by the Trustee under the Letter of Credit by any Interest Draft is reduced to $ (such amount being equal to the amount specified in paragraph (4) above) upon receipt by the Bank of this Certificate. (6) The maximum amount available to be drawn by the Trustee under the Letter of Credit by any Tender Draft is reduced to $ (such amount being equal to the sum of the amounts specified in paragraphs (3) and (4) above) upon receipt by the Bank of this Certificate. (7) The maximum amount available to be drawn by the Trustee under the Letter of Credit by any Partial Redemption Draft is reduced to $ (such amount being equal to the sum of the amounts specified in paragraphs (3) and (4) above) upon receipt by the Bank of this Certificate. 81 (8) The amount available to be drawn by the Trustee under the Letter of Credit by its Final Draft is reduced to $ (such amount being equal to the sum of the amounts specified in paragraphs (3) and (4) above) upon receipt by the Bank of this Certificate. (9) The amount of the Letter of Credit is reduced to $ (such amount being equal to the sum of the amounts specified in paragraph 8 above) upon receipt by the Bank of this Certificate. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate this day of , 19 . , as Trustee By [Name and Title] 82 Annex B CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF UP TO [ DAYS'] INTEREST ON THE MARICOPA COUNTY, ARIZONA POLLUTION CONTROL CORPORATION'S POLLUTION CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY PALO VERDE PROJECT), 199 SERIES (THE "BONDS") Irrevocable Letter of Credit No. The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Citibank, N.A. (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The Trustee is making a drawing under the Letter of Credit with respect to a payment of days' interest on the Bonds, which payment is due on the date on which this Certificate and the Interest Draft it accompanies are being presented to the Bank. None of the Bonds in respect of which the drawing is being made (i) were, on the Record Date (as defined in the Indenture) held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company or (ii) were on such date in a Bond Interest Term. (3) The amount of the Interest Draft accompanying this Certificate is equal to $ . It was computed in compliance with the terms and conditions of the Bonds and the Indenture and does not include any amount of interest on the Bonds which is included in any Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft presented on or prior to the date of this Certificate and does not exceed the amount available to be drawn by the Trustee under the Letter of Credit. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of the day of , 19 . , as Trustee By [Name and Title] 83 Annex C CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF PRINCIPAL OF AND UP TO [ DAYS'] INTEREST ON THE MARICOPA COUNTY, ARIZONA POLLUTION CONTROL CORPORATION'S POLLUTION CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY PALO VERDE PROJECT), 199 SERIES (THE "BONDS"), IN SUPPORT OF A TENDER (OTHER THAN A MANDATORY TENDER UPON TERMINATION OR EXPIRATION OF THE LETTER OF CREDIT) Irrevocable Letter of Credit No. The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Citibank, N.A. (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The Trustee is making a drawing under the Letter of Credit with respect to the payment, upon a tender of all or less than all of the Bonds which are Outstanding (as defined in the Indenture), of (i) the unpaid principal amount of the Bonds to be purchased either (a) as a result of a tender pursuant to the terms of Section 2.02 of the Indenture (other than Section 2.02(6) of the Indenture) or (b) as a result of a purchase of Bonds by the Bank pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture or Section 13.03(d) of the Indenture (in each case, other than Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company in each case, and (ii) the amount of interest (not exceeding [ days'] interest) accrued and unpaid thereon from the Interest Accrual Date (as defined in the Indenture) immediately preceding the date of purchase through the day immediately preceding the date of purchase thereof, which payment is due on the date on which this Certificate and the Tender Draft it accompanies are being presented to the Bank. (3) The amount of the Tender Draft accompanying this Certificate is equal to the sum of (i) $ being drawn in respect of the payment of unpaid principal of Bonds (other than Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company) to be purchased as a result of a tender of the type described above and (ii) $ being drawn in respect of the payment of accrued and unpaid 84 interest on such Bonds and does not include any amount of interest which is included in any Interest Draft, Tender Draft other than the Tender Draft accompanying this certificate, Partial Redemption Draft or Final Draft presented on or prior to the date of this Certificate. (4) The amount of the Tender Draft accompanying this Certificate was computed in compliance with the terms and conditions of the Bonds and the Indenture and does not exceed the amount available to be drawn by the Trustee under the Letter of credit. (5) None of the Bonds in respect of which a drawing is being made are in a Bond Interest Term. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of the day of , 19__. , as Trustee By [Name and Title] 85 Annex D CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF PRINCIPAL OF AND UP TO [ DAYS'] INTEREST ON THE MARICOPA COUNTY, ARIZONA POLLUTION CONTROL CORPORATION'S POLLUTION CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY PALO VERDE PROJECT), 199 SERIES (THE "BONDS"), UPON PARTIAL REDEMPTION Irrevocable Letter of Credit No. The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Citibank, N.A. (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The Trustee is making a drawing under the Letter of Credit with respect to the payment, upon redemption of less than all of the Bonds which are Outstanding (as defined in the Indenture), of the unpaid principal amount of and up to [ days'] accrued and unpaid interest to the redemption date on, Bonds to be redeemed pursuant to the terms of Section 3.01 of the Indenture (other than Bonds purchased by the Tender Agent or the Trustee on behalf of or for the account of the Bank, pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture or Section 13.03(d) of the Indenture and held by or on behalf of or for the account of the Bank or its nominee and Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or Tender Agent for the account of the Company). [The direction from the Company with respect to redemption was received by us no more than 60 days prior to the date of this certificate. We have evidence, as of the date of this certificate, from two of Moody's Investors Services, Inc., Standard & Poor's Corporation and Duff & Phelps, Inc. that the Company's First Mortgage Bonds, Series [ ], and Second Mortgage Bonds, Series [ ], each have a rating of BBB- or better (or equivalent) and such Bonds have not, as of the date of this certificate, been placed on any watch list.]* _______________ * To be used in case of an optional redemption. 86 (3) The amount of the Partial Redemption Draft accompanying this Certificate is equal to the sum of (i) $________ being drawn in respect of the payment of unpaid principal of Bonds (other than Bonds purchased by the Trustee on behalf of or for the account of the Bank, pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture or Section 13.03(d) of the Indenture and then held by or on behalf of or for the account of the Bank or its nominee and Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or Tender Agent for the account of the Company to be redeemed, and (ii) $_________ being drawn in respect of the payment of accrued and unpaid interest on such Bonds and does not include any amount of interest which is included in any Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft presented on or prior to the date of this Certificate. (4) The amount of the Partial Redemption Draft accompanying this Certificate was computed in accordance with the terms and conditions of the Bonds and the Indenture and does not exceed the amount available to be drawn under the Letter of Credit. (5) This Certificate and the Partial Redemption Draft it accompanies are dated, and are being presented to the Bank on, the date on which the unpaid principal amount of and accrued and unpaid interest on, Bonds to be redeemed are due and payable under the Indenture upon redemption of less than all of the Bonds which are Outstanding (as defined in the Indenture). (6) None of the Bonds in respect of which a drawing is being made are in a Bond Interest Term. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of the day of , 19 . , as Trustee By [Name and Title] 87 Annex E CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF PRINCIPAL OF AND UP TO DAYS' INTEREST ON THE MARICOPA COUNTY, ARIZONA POLLUTION CONTROL CORPORATION'S POLLUTION CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY PALO VERDE PROJECT), 199 SERIES (THE "BONDS"), UPON STATED OR ACCELERATED MATURITY OR OPTIONAL OR MANDATORY REDEMPTION AS A WHOLE OR MANDATORY TENDER UPON TERMINATION OR EXPIRATION OF THE LETTER OF CREDIT Irrevocable Letter of Credit No. The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Citibank, N.A. (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The Trustee is making a drawing under the Letter of Credit (a) with respect to the payment, either at stated maturity, upon acceleration, as a result of a redemption in full pursuant to Section 3.01 of the Indenture [(the direction from the Company and notice to the Bondholders with respect to redemption was received and given by us no more than 60 days prior to the date of this Certificate and we had evidence, as of the date such notice was given by us to the Bondholders, from two of Moody's Investors Services, Inc., Standard & Poor's Corporation and Duff & Phelps, Inc. that the Company's First Mortgage Bonds, Series [ ], and Second Mortgage Bonds, Series [ ], each had a rating of BBB- or better (or equivalent) and such Bonds had not, as of such date, been placed on any watch list)]* or (b) as a result of a mandatory tender upon termination or expiration of the Letter of Credit or substitution of another credit facility for the Letter of Credit as contemplated by Section 2.02(6) of the Indenture, of the unpaid principal amount of and up to __ days' accrued and unpaid interest on, all of the Bonds which are Outstanding (as defined in the Indenture) (other than Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the _______________ * To be used in the case of an optional redemption. 88 account of the Company), which payment is due on the date on which this Certificate and the Final Draft it accompanies are being presented to the Bank. (3) The amount of the Final Draft accompanying this Certificate is equal to the sum of (i) $ being drawn in respect of the payment of unpaid principal of Bonds (other than Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company) and (ii) $ being drawn in respect of the payment of accrued and unpaid interest on such Bonds and does not include any amount of interest on the Bonds which is included in any Interest Draft, Tender Draft or Partial Redemption Draft presented on or prior to the date of this Certificate. (4) The amount of the Final Draft accompanying this Certificate was computed in compliance with the terms and conditions of the Bonds and the Indenture and does not exceed the amount available to be drawn by the Trustee under the Letter of Credit. (5) None of the Bonds in respect of which the drawing is being made are in a Bond Interest Term. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of the day of , 19 . , as Trustee By [Name and Title] 89 Annex F CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE UNDER IRREVOCABLE LETTER OF CREDIT NO. , DATED _________, 199 The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Citibank, N.A. (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The amount of $ paid to you today by the Trustee on behalf of the Company is a payment made pursuant to Section 2.09(b) of the Letter of Credit and Reimbursement Agreement dated as of , 19 (the "Reimbursement Agreement") between the Company and the Bank for amounts drawn under the Letter of Credit and represents unreimbursed drawings under Tender Draft[s] dated [ ]. (3) The amount referred to in paragraph (2) represents the amount of Bonds which were purchased with proceeds of a draw on the Letter of Credit by a Tender Draft dated , 19 . $ represents amounts paid in respect of accrued interest on Bonds and $ represents amounts paid in respect of unpaid principal on Bonds. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate this day of , 19 . , as Trustee By [Name and Title] 90 Annex G CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE UNDER IRREVOCABLE LETTER OF CREDIT NO. , DATED _________, 199 The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Citibank, N.A. (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The Tender Agent has delivered to the Bank all Bonds purchased pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture, or Section 13.03(d) of the Indenture, as the case may be, with proceeds of a draw on the Letter of Credit by Tender Draft dated , 19 . (3) The amount of such Tender Draft used to purchase such Bonds which were not remarketed is $ . IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate this day of , 19 . , as Trustee By [Name and Title] 91 Annex H NOTICE THAT TRUSTEE'S RIGHT TO DRAW UNDER THE LETTER OF CREDIT BY AN INTEREST DRAFT HAS NOT BEEN REINSTATED [Name and Address of Trustee] Attention: Corporate Trust Department Irrevocable Letter of Credit No. Dear Sirs: You are hereby advised that El Paso Electric Company has not reimbursed us in an amount equal to the amount drawn by you under the Interest Draft dated , 19 . Therefore, the amount of our Irrevocable Letter of Credit No. and the amounts available to be drawn by you by an Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft (which available amounts have been decreased by an amount equal to the amount of such Interest Draft) shall not be reinstated in the amount of such Interest Draft. CITIBANK, N.A. 92 Annex I INSTRUCTION TO TRANSFER , 19 Citibank, N.A. 111 Wall Street New York, New York 10043 Attention: NATS Letter of Credit Operations Re: Irrevocable Letter of Credit No. Gentlemen: For value received, the undersigned beneficiary hereby irrevocably transfers to: [Name of Transferee] [Address] all rights of the undersigned beneficiary to draw under the above-captioned Letter of Credit (the "Letter of Credit"). The transferee has succeeded the undersigned as Trustee under the Indenture (as defined in the Letter of Credit). By this transfer, all rights of the undersigned beneficiary in the Letter of Credit are transferred to the transferee and the transferee shall hereafter have the sole rights as beneficiary thereof; provided, however, that no rights shall be deemed to have been transferred to the transferee until such transfer complies with the requirements of the Letter of Credit pertaining to transfers. The Letter of Credit is returned herewith and in accordance therewith we ask that this transfer be effective and that you transfer the Letter of Credit to our transferee or that, if so requested by the transferee, you issue a new irrevocable letter of credit in favor of the transferee with provisions consistent with the Letter of Credit. Very truly yours, , as predecessor Trustee By [Name and Title] 1 LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT Dated as of , 199[ ] among EL PASO ELECTRIC COMPANY, CREDIT SUISSE, as Issuing Bank, THE CREDITORS Specified Herein and CREDIT SUISSE, as Agent for such Creditors 2 TABLE OF CONTENTS Section Page Preliminary Statements............................ 1 ARTICLE I DEFINITIONS 1.01 Certain Defined Terms....................... 3 1.02 Computation of Time Periods................. 15 1.03 Accounting Terms............................ 15 1.04 Interpretation.............................. 15 ARTICLE II AMOUNT AND TERMS OF THE LETTER OF CREDIT 2.01 The Letter of Credit........................ 16 2.02 Issuing the Letter of Credit................ 16 2.03 Drawing Fee................................. 17 2.04 Commissions................................. 17 2.05 Reimbursement on the Date of the Draw....... 17 2.06 Tender Advances............................. 18 2.07 Interest on Advances........................ 19 2.08 Reimbursement of Issuing Bank, Etc.......... 22 2.09 Prepayments; Reinstatement of Letter of Credit Amounts............................ 24 2.10 Additional Interest......................... 25 2.11 Increased Costs............................. 26 2.12 Payments and Computations................... 28 2.13 Payments on Non-Business Days............... 29 2.14 Extension of the Stated Termination Date...................................... 29 2.15 Evidence of Debt............................ 30 2.16 Obligations Absolute........................ 31 2.17 U.S. Taxes.................................. 33 2.18 Applicable Lending Office................... 34 2.19 Net Payments................................ 34 2.20 Reinstatement of the Letter of Credit....... 35 ARTICLE III CONDITIONS OF ISSUANCE 3.01 Conditions Precedent to Issuance of the Letter of Credit.......................... 35 3.02 Additional Conditions Precedent to Issuance of the Letter of Credit.......... 39 3.03 Conditions Precedent to Each Tender Advance............................ 40 i 3 Section Page ARTICLE IV REPRESENTATIONS AND WARRANTIES 4.01 Representations and Warranties of the Company........................... 40 ARTICLE V COVENANTS OF THE COMPANY 5.01 Affirmative Covenants...................... 44 5.02 Negative Covenants......................... 50 ARTICLE VI EVENTS OF DEFAULT 6.01 Events of Default.......................... 54 6.02 Upon an Event of Default................... 56 ARTICLE VII SECURITY 7.01 Issuance and Pledge of Bonds............... 57 7.02 Application of Moneys...................... 58 7.03 Rights of Bondholders...................... 58 7.04 The Agent's Duties......................... 58 ARTICLE VIII THE AGENT, THE CREDITORS AND THE ISSUING BANK 8.01 Authorization and Action................... 59 8.02 Reliance, Etc. ............................ 59 8.03 The Agent, the Issuing Bank and Affiliates............................... 60 8.04 Bank Credit Decision....................... 60 8.05 Indemnification............................ 61 8.06 Successor Agent............................ 61 8.07 Issuing Bank............................... 62 ii 4 Section Page ARTICLE IX MISCELLANEOUS 9.01 Amendments, Etc. .......................... 62 9.02 Notices, Etc. ............................. 63 9.03 No Waiver; Remedies........................ 64 9.04 Rights of Setoff and Subrogation........... 64 9.05 Indemnification............................ 65 9.06 Issuing Bank and Creditors................. 67 9.07 Costs, Expenses and Taxes.................. 68 9.08 Purchase Option............................ 69 9.09 Binding Effect; Assignments and Participations........................... 69 9.10 Further Assurances......................... 71 9.11 Severability............................... 71 9.12 Headings................................... 71 9.13 Governing Law.............................. 71 9.14 Submission to Jurisdiction................. 71 9.15 Waiver of Trial by Jury.................... 72 9.16 Counterparts............................... 72 9.17 Integration................................ 72 9.18 Survival................................... 73 SCHEDULE I - Liens EXHIBIT A - Form of Letter of Credit with Annexes A through I thereto attached ADDENDUM TO REIMBURSEMENT AGREEMENT iii 5 LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT, dated as of [ ], 199[ ], among EL PASO ELECTRIC COMPANY, a Texas corporation (the "Company"), CREDIT SUISSE ("Credit Suisse") as issuing bank (the "Issuing Bank"), the Creditors (as hereinafter defined) and Credit Suisse, as agent for the Creditors (the "Agent"). PRELIMINARY STATEMENTS: (1) The Company requested the Maricopa County, Arizona Pollution Control Corporation (the "Issuer") to issue, pursuant to the Indenture of Trust, dated as of December 1, 1984 (such indenture as amended by Supplemental Indenture No. 1, dated as of May 1, 1985 and Supplemental Trust Indenture No. 2, dated as of June 1, 1986, the "Original Indenture") naming MBank El Paso as trustee (the "Original Trustee"), $37,100,000 aggregate principal amount of the Issuer's Pollution Control Refunding Revenue Bonds, 1984 Series E (El Paso Electric Company Palo Verde Project) (the "Original Bonds"), to various purchasers. (2) The Issuer and the Company entered into a Loan Agreement, dated as of December 1, 1984 (the "Original Loan Agreement"), which the Issuer assigned to the Original Trustee to secure the payment of the Original Bonds, and pursuant to which, among other things, the Company was required to furnish a letter of credit in connection with its payment obligations under the Original Loan Agreement. (3) Pursuant to the terms of the Original Indenture and the Original Loan Agreement, the Company was required to furnish a letter of credit in connection with its obligation to purchase Original Bonds pursuant to the Original Indenture. (4) The Company and Credit Suisse entered into a Letter of Credit and Reimbursement Agreement dated as of June 1, 1986 (the "Original Reimbursement Agreement"), pursuant to which Credit Suisse issued its Irrevocable Letter of Credit dated June 18, 1986 (the "Original Letter of Credit") in respect of certain of the Company's payment obligations relating to the Original Bonds. (5) Canadian Imperial Bank of Commerce ("CIBC") and Credit Suisse entered into a Sale and Participation Agreement dated as of December 31, 1986, as amended, pursuant to which Credit Suisse sold and CIBC purchased an interest in the Original Reimbursement Agreement, the Original Letter of Credit and the Related Documents (as defined in the Original Reimbursement Agreement). 6 (6) On January 8, 1992, the Company commenced a voluntary case (the "Bankruptcy Case") under chapter 11 of the Bankruptcy Code (as hereinafter defined) (Case No. 92-10148-FM) in the Bankruptcy Court (as hereinafter defined), and thereafter has continued to operate its business and manage its assets as a debtor-in-possession. (7) The Company desires to restructure its outstanding indebtedness and, in connection therewith, the Company has requested the Issuer to, and the Issuer has agreed to, refund (the "Refunding") the Original Bonds by issuing Pollution Control Refunding Revenue Bonds (El Paso Electric Company Palo Verde Project), 199 Series (the "Bonds") pursuant to the Indenture of Trust dated as of , 199 a form of which has been filed with the Bankruptcy Court in accordance with Section 7.6 of the Plan of Reorganization (as hereinafter defined) (as such Indenture may be amended, supplemented and modified from time to time, the "Indenture"), naming [ ] as trustee (the "Trustee"). (8) In connection with the Refunding, the Issuer and the Company have entered into a Loan Agreement, dated as of , 199 (as the same may be amended, supplemented and modified from time to time, the "Loan Agreement"), which the Issuer has assigned to the Trustee to secure payment of the Bonds, and pursuant to which, among other things, in connection with the initial delivery of the Bonds, the Company is required to furnish a letter of credit in connection with its payment obligations under the Loan Agreement. [(9) In connection with the Refunding, the Trustee and the Company have entered into a Tender Agreement, dated as of , 199 , pursuant to which, among other things, the Company is required to furnish a letter of credit in connection with its obligation to purchase Bonds pursuant to Section 2.02 of the Indenture and redeem Bonds pursuant to Section 3.01 of the Indenture.] (10) In connection with the Refunding and in consideration therefor and as set forth in the Plan of Reorganization, the Company, Credit Suisse and CIBC have agreed to enter into this Letter of Credit and Reimbursement Agreement (as amended, modified and supplemented from time to time, this "Agreement") and the Related Documents (as defined herein) pursuant to which Credit Suisse will issue, in substantially the form of Exhibit A, a letter of credit (such letter of credit and any successor letter of credit as provided for in such letter of 7 credit being the "Letter of Credit"), in the amount of $[ ]* (the "Commitment") of which [$37,100,000** shall support the payment of principal of the Bonds and $[ ] shall support the payment of interest on the Bonds for up to [ ] days computed at [14%]*** per annum on the principal thereof and CIBC will become a Creditor hereunder. (11) On [ , ], an order was entered by the court having jurisdiction over the Bankruptcy Case (the "Bankruptcy Court") confirming the Plan of Reorganization, which Plan of Reorganization provided, among other things, for the Company to enter into this Agreement. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained in the Plan of Reorganization and herein and in order to induce the Issuing Bank to issue the Letter of Credit, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Affiliate" means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term "control" (including the terms "controlling," "controlled by" and "under common control with") of a Person means the possession, direct or indirect, of the power to vote 5% or more of the Voting Stock of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise. ________________ * No to exceed face amount of Original Letter of Credit. ** Not to exceed the portion of the Original Letter of Credit available to pay principal on the Original Bonds. *** To be set at a market rate as determined by the Remarketing Agent, but not to exceed 14% per annum. 8 "Agent Payment Notice" has the meaning assigned to that term in Section 2.08(a)(ii). "Agreement" has the meaning assigned to that term in Preliminary Statement (9). "Alternate Base Rate" means a fluctuating interest rate per annum as shall be in effect from time to time which rate per annum shall at all times be equal to the higher of: (i) the rate of interest announced publicly by Credit Suisse in New York, New York, from time to time as Credit Suisse's base rate, each change in such rate to be effective as of Credit Suisse's opening of business on the date such change occurs (extensions of credit made by Credit Suisse may bear interest at rates below, equal to or above such rate); or (ii) the Federal Funds Rate plus .50 percent. "Alternate Base Rate Advance" means a Tender Advance bearing interest as provided in Section 2.07(a). "Available Amount" in effect at any time means the maximum amount available to be drawn at such time under the Letter of Credit, the determination of such maximum amount to assume compliance with all conditions for drawing and no reduction for (i) any amount drawn by an Interest Draft (unless such amount is not reinstated under the Letter of Credit) or (ii) any amount drawn by a Tender Draft or (iii) any amount not available to be drawn because Bonds are held by or for the account of the Company. "Banking Institution" means any financial institution subject to regulation under Regulation D of the Board of Governors of the Federal Reserve System and any other banking institution or trust company or similar organization incorporated or organized under the laws of a country other than the United States, or a political subdivision of a country other than the United States. "Bankruptcy Case" has the meaning assigned to that term in Preliminary Statement (5). "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as heretofore and hereafter amended, and codified as title 11 of the United States Code. "Bankruptcy Court" has the meaning assigned to that term in Preliminary Statement (10). 9 "Bond Interest Amount" for any Payment Date with respect to each Bond, means an amount equal to the accrued interest on the principal amount of such Bond in accordance with its terms from and including the first day of the Quarterly Period for such Bond ending on such Payment Date to but excluding the earlier of (i) the Payment Date and (ii) the date such Bond ceases to be held by or for the account of the Issuing Bank or the Agent or any other nominee of the Issuing Bank. "Bonds" has the meaning assigned to that term in Preliminary Statement (6). "Business Day" means any day of the year on which banks are not required or authorized to close in New York City and, if the applicable Business Day relates to any Eurodollar Advances, on which dealings are carried on the London interbank market. "Capitalized Lease Obligation" means, with respect to any lease of property which, in accordance with GAAP, appears on the lessee's balance sheet as a capital lease, the amount of the liability which should appear on such balance sheet. "CERCLA" means the Comprehensive Environmental Response, Compensation, and Liability Act, as amended from time to time. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Commencement Date" means the earlier of (i) the Effective Date and (ii) December 31, 1994. "Commitment" has the meaning assigned to that term in Preliminary Statement (9). "Confirmation Order" means the order of the Bankruptcy Court confirming the Plan of Reorganization. "Consolidated Subsidiary" means, for any Person, each Subsidiary of such Person (whether now existing or hereafter created or acquired) the financial statements of which shall be (or should have been) consolidated with the financial statements of such Person in accordance with GAAP. "Contract Interest Amount" for any Payment Date means an amount equal to the interest that would have accrued on an amount equal to the purchase price paid for each Bond purchased by the Trustee or the Tender Agent on behalf of or for the account of the Issuing Bank, the Agent or any other 10 nominee of the Issuing Bank, from and including the first day of the Quarterly Period for each such Bond ending on such Payment Date to but excluding the earlier of (i) the Payment Date and (ii) the date such Bond ceases to be held by or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank, at an interest rate per annum equal at all times to the sum of (x) the Alternate Base Rate in effect from time to time plus (y) .50% per annum. "Creditors" means the banks (including CIBC) listed on the signature pages hereof under the caption "Creditors" and any other Person which becomes a party hereto pursuant to Section 9.09(a). "Credit Termination Date" means the earlier of (i) the day on which the Letter of Credit is surrendered by the Trustee to the Issuing Bank for cancellation and (ii) the Stated Termination Date. "Debt" of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (including, without limitation, all obligations, contingent or otherwise, of such Person in connection with acceptance facilities (other than acceptance facilities entered into in connection with normal course trade transactions) and letter of credit facilities to the extent such letter of credit facilities support Debt), (b) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (c) all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person, (d) all Capitalized Lease Obligations of such Person, (e) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any capital stock of or other ownership or profit interest in such Person or any other Person or any warrants, rights or options to acquire such capital stock, valued, in the case of preferred stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (f) all Debt of others referred to in clauses (a) through (e) above guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay 11 for property or services irrespective of whether such property is received or such services are rendered) or (iv) otherwise to assure a creditor against loss, and (g) all Debt referred to in clauses (a) through (e) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt. In cases where recourse to any Person or any of its properties in respect of Debt is limited, the amount of such Debt of such Person for purposes hereof shall be so limited. "Default Rate" means a fluctuating interest rate equal to 2% per annum above the Alternate Base Rate in effect from time to time. "EBITA" means, for any period, the sum, for the Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) net operating income (calculated before taxes, Interest Expense, extraordinary items and unusual non-cash, non-recurring items and income or loss attributable to equity in Affiliates) for such period plus (b) amortization (to the extent deducted in determining net operating income) for such period. "Effective Date" means the Effective Date (as defined therein) of the Plan of Reorganization. "Eligible Institution" means (i) a bank or trust company organized under the laws of the United States of America, of any state therein, of the District of Columbia, of any member country of the Organization for Economic Cooperation and Development or of any political subdivision of any such country, in each case, having assets in excess of $500,000,000, (ii) an insurance company organized under the laws of any state in the United States of America or of the District of Columbia having assets in excess of $500,000,000 or (iii) any other Person consented to by the Company, which consent shall not be unreasonably withheld. "Eligible Participant" has the meaning assigned to that term in Section 9.09(b). "Environmental Action" means any administrative, regulatory or judicial action, suit, demand, demand letter, claim, notice of non-compliance or violation, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law or any Environmental Permit including, without limitation, (a) any claim by any 12 governmental or regulatory authority for enforcement, investigation, cleanup, removal, response, remedial or other actions or damages pursuant to any Environmental Law and (b) any claim by any Person seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment. "Environmental Law" means any federal, state or local law, rule, regulation, order, writ, judgment, injunction, decree, determination or award relating to the environment, health, safety or Hazardous Materials. "Environmental Permit" means any permit, approval, identification number, license or other authorization required under any Environmental Law. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "ERISA Affiliate" means any Person who for purposes of Title IV of ERISA is a member of the Company's controlled group, or under common control with the Company, within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended. "Eurodollar Advance" means any Tender Advance bearing interest at the Eurodollar Rate. "Eurodollar Rate" for any Interest Period for any Tender Advance means an interest rate per annum equal at all times during such Interest Period to the sum of (x) the LIBO Rate for such Interest Period plus (y) 1.50% per annum. "Event of Default" has the meaning assigned to that term in Section 6.01. "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it. 13 "Final Approval" means any authorizations, consents, approvals, waivers, exceptions, variances, orders, licenses, exemptions, publications, filings, notices to and declarations of or with any governmental authority (other than routine reporting requirements the failure to comply with which will not affect the validity or enforceability of any of the Related Documents or have a Material Adverse Effect) or any other action in respect of any governmental authority that is in full force and effect and is not the subject of a pending appeal or reconsideration or other review, and the time in which to make an appeal or request the review or reconsideration of which has expired without any appeal or request for review or reconsideration having been taken or made. "Final Draft" has the meaning assigned to that term in the Letter of Credit. "Final Order" means an order of the Bankruptcy Court which (a) shall not have been reversed, stayed, modified or amended and the time to appeal from, or to seek review or rehearing of, shall have expired and as to which no appeal or petition for review, rehearing or certiorari is pending, or (b) if appealed from, shall have been affirmed and the time to appeal from such affirmance or to seek review or rehearing thereof, shall have expired or no further hearing, appeal or petition for certiorari can be taken or granted. "First Mortgage Bond Indenture" means the Indenture dated as of between the Company and , as trustee, providing for the issuance by the Company of its first mortgage bonds. "First Mortgage Bonds" means bonds issued by the Company under the First Mortgage Bond Indenture. "First Mortgage Bonds, Series A/B" means, collectively, the First Mortgage Bonds, Series A and the First Mortgage Bonds, Series B, in each case issued under the First Mortgage Bond Indenture. "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time. "Governmental Person" means any national, state or local government, any political subdivision or any government instrumentality, authority, body or entity, including the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, any central bank or any comparable authority. 14 "Hazardous Materials" means (a) petroleum or petroleum products, asbestos in any form, radioactive or source material, (b) any substances defined as or included in the definition of "hazardous substances", "hazardous wastes", "hazardous materials", "extremely hazardous wastes", "restricted hazardous wastes", "toxic substances", "toxic pollutants", "contaminants" or "pollutants", or words of similar import, under any Environmental Law and (c) any other substance exposure to which is regulated under any Environmental Law. "Indemnified Party" has the meaning assigned to that term in Section 9.05. "Indenture" has the meaning assigned to that term in Preliminary Statement (6). "Interest Coverage Ratio" means, as at any date, the ratio of (a) EBITA for the period of four consecutive fiscal quarters ending on or most recently ended prior to such date to (b) Interest Expense for such period. "Interest Draft" has the meaning assigned to that term in the Letter of Credit. "Interest Expense" means, for any period, the sum, for the Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) all interest in respect of Debt including, without limitation, interest capitalized during such period (whether or not actually paid during such period), including, without limitation, all commissions and fees (other than up-front fees), plus (b) the net amounts payable (or minus the net amounts receivable) under Interest Rate Protection Agreements accrued during such period (whether or not actually paid or received during such period). "Interest Period" has the meaning assigned to that term in Section 2.07(b). "Interest Rate Protection Agreement" means, for any Person, an interest rate swap, cap or collar agreement, interest rate future or option contracts or similar arrangement providing for the transfer or mitigation of interest risks either generally or under specific contingencies. "Investment Grade Rating" means a rating of BBB- or better (or equivalent rating) by any two of Moody's Investors Service, Inc., Standard & Poor's Corporation and Duff & Phelps, Inc. 15 "Issuer" has the meaning assigned to that term in Preliminary Statement (1). "LC Payment Notice" has the meaning assigned to that term in Section 2.08(a)(ii). "Letter of Credit" has the meaning assigned to that term in Preliminary Statement (9). "Leverage Ratio" means, at any time, the ratio of Total Debt at such time to the sum of (a) Total Capital at such time plus (b) Total Debt at such time. "LIBO Rate" for any Interest Period means an interest rate per annum equal to the rate of interest per annum at which deposits in United States dollars are offered by the principal office of Credit Suisse in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period for a period equal to such Interest Period. "Lien" means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property. "Loan Agreement" has the meaning assigned to that term in Preliminary Statement (7). "Majority Creditors" means Creditors which have an aggregate Participation Percentage of more than 50%. "Material Adverse Effect" means a material adverse effect on (i) the property, business, operations, financial condition, liabilities or capitalization of the Company and its Subsidiaries taken as a whole, (ii) the ability of the Company to perform its obligations under any of the Related Documents, (iii) the validity or enforceability of any of the Related Documents, (iv) the rights and remedies of the Issuing Bank, the Creditors and the Agent or (v) the timely payment of the principal of or interest hereunder or other amounts payable in connection herewith. "Material Subsidiary" means, at any time, a Subsidiary of the Company (a) whose assets at such time exceed 10% of the assets of the Company and its Subsidiaries (on a consolidated basis) or (b) whose earnings at such time exceed 10% of the earnings of the Company and its Subsidiaries (on a consolidated basis). 16 "Multiemployer Plan" means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions, such plan being maintained pursuant to one or more collective bargaining agreements. "Multiple Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the Company or an ERISA Affiliate and at least one Person other than the Company and its ERISA Affiliates or (ii) was so maintained and in respect of which the Company or an ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated. "Official Statement" means the Official Statement dated [ , 199 ] of the Issuer relating to the Bonds, together with the documents incorporated therein by reference. "Original Bonds" has the meaning assigned to that term in Preliminary Statement (1). "Original Indenture" has the meaning assigned to that term in Preliminary Statement (1). "Original Letter of Credit" has the meaning assigned to that term in Preliminary Statement (4). "Original Loan Agreement" has the meaning assigned to that term in Preliminary Statement (2). "Original Reimbursement Agreement" has the meaning assigned to that term in Preliminary Statement (4). "Original Trustee" has the meaning assigned to that term in Preliminary Statement (1). "Partial Redemption Draft" has the meaning assigned to that term in the Letter of Credit. "Participant" has the meaning assigned to that term in Section 9.09(b). "Participation Percentage" means, as of any date of determination (i) with respect to a Creditor initially a party hereto, the percentage set forth opposite such Creditor's name on the signature pages hereof, except as provided in clause (iii) below, (ii) with respect to a 17 Creditor that became a party hereto by operation of Section 9.09(a), the percentage participation interest assumed by such assignee Creditor as set forth in the instrument of assignment referred to in Section 9.09(a), except as provided in clause (iii) below, and (iii) with respect to any Creditor described in clause (i) or (ii) above that assigns a percentage of its interests in accordance with Section 9.09(a), its participation percentage as reduced by the percentage so assigned. "Payment Amount" has the meaning set forth in Section 2.05(c). "Payment Date" means the last day of each Quarterly Period. "Payment Period" has the meaning assigned to that term in Section 2.06. "PBGC" means the Pension Benefit Guaranty Corporation or any successor thereto. "Person" means an individual, a corporation, a partnership, an association, a business trust or any other entity or organization, including a Governmental Person. "Plan" means a Single Employer Plan or a Multiple Employer Plan. "Plan of Reorganization" means the Modified Third Amended Plan of Reorganization of the Debtor Providing for the Acquisition of El Paso Electric Company by Central and South West Corporation filed on August 27, 1993 (as corrected as of September 15, 1993). "Preliminary Official Statement" means the Preliminary Official Statement dated [ , 199 ] of the Issuer relating to the Bonds, together with the documents incorporated therein by reference. "Quarterly Period" with respect to each Bond means the period commencing on the date such Bond is purchased by the Trustee or the Tender Agent on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank and ending on the first to occur of March 31, June 30, September 30 or December 31 thereafter, and, thereafter, each subsequent period commencing on the last day of the immediately preceding Quarterly Period and ending on the first to occur of March 31, June 30, September 30 or December 31 thereafter. "Refunding" has the meaning assigned to that term in Preliminary Statement (6). 18 "Related Documents" has the meaning assigned to that term in Section 2.16. "Remarketing Agent's Agreement" means the remarketing agreement dated as of , 199[ ] between the Company and [ ]. "Second Mortgage Bond Indenture" means the Indenture dated as of between the Company and , as trustee, providing for the issuance by the Company of its second mortgage bonds. "Second Mortgage Bonds" means bonds issued by the Company under the Second Mortgage Bond Indenture. "Second Mortgage Bonds, Series A" means the Second Mortgage Bonds, Series A issued under the Second Mortgage Bond Indenture. "Second Mortgage Bonds, Series Y-6" means the mortgage bonds at any time issued by the Company and outstanding pursuant to the Second Mortgage Bond Indenture, which provide collateral security for the obligations of the Company for principal, interest and letter of credit commissions under this Agreement. "Single Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the Company or an ERISA Affiliate and no Person other than the Company and its ERISA Affiliates or (ii) was so maintained and in respect of which the Company or an ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated. "Stated Termination Date" means the earlier of (i) December 31, 1998 and (ii) the last day of the fourth month following the fourth anniversary of the Effective Date, unless extended as provided in Section 2.14. "Submission Date" means the date the form of this Agreement was filed with the Bankruptcy Court prior to the date creditors must have voted on the Plan of Reorganization in accordance with Section 7.6 of the Plan of Reorganization. "Subsidiary" means, with respect to any Person, any corporation, partnership or other entity of which at least a majority of the Voting Stock is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person. 19 "Tender Advance" has the meaning assigned to that term in Section 2.06. "Tender Agent" has the meaning assigned to that term in the Indenture. "Tender Draft" has the meaning assigned to that term in the Letter of Credit. "Total Capital" means, as at any date, the sum for the Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) the amount of capital stock (excluding treasury stock and capital stock subscribed for and unissued and preferred stock mandatorily redeemable in cash or redeemable in cash at the option of the holder thereof), plus (b) the amount of surplus and retained earnings (or, in the case of a surplus or retained earnings deficit, minus the amount of such deficit). "Total Debt" means, as at any date, the aggregate amount of all Debt of the Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) (other than contingent obligations in connection with acceptance facilities and letters of credit). "Trustee" means [ ] and its successors and permitted assigns under the Indenture, as trustee and paying agent. "Voting Stock" means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or Persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency. "Withdrawal Liability" has the meaning given such term under 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 means "to but excluding". 20 SECTION 1.03. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP consistently applied, except as otherwise stated herein. SECTION 1.04. Interpretation. In this Agreement the singular includes the plural and the plural the singular; words importing any gender include the other genders; references to statutes are to be construed as including all statutory provisions consolidating, amending or replacing the statute referred to; references to "writing" include printing, typing, lithography and other means of reproducing words in a tangible visible form; references to sections (or any subdivision of a section), articles, schedules, annexes and exhibits are to those of this Agreement unless otherwise indicated; the words "including", "includes" and "include" shall be deemed to be followed by the words "without limitation"; references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications to such instruments but only to the extent such amendments and other modifications are not prohibited by the terms of this Agreement or any other Related Document; and references to Persons include their respective permitted successors and assigns and, in the case of Governmental Persons, Persons succeeding to their respective functions and capacities. ARTICLE II AMOUNT AND TERMS OF THE LETTER OF CREDIT SECTION 2.01. The Letter of Credit. The Issuing Bank agrees, on the terms and conditions hereinafter set forth, to issue the Letter of Credit to the Trustee on any Business Day during the period from the date hereof to and including [ , 199 ] in the amount of the Commitment to support the payment of principal of and interest on the Bonds as set forth in Preliminary Statement (9) and expiring on the Stated Termination Date, unless earlier terminated in accordance with the terms thereof. SECTION 2.02. Issuing the Letter of Credit. The Letter of Credit shall be issued on at least two Business Days' notice from the Company to the Issuing Bank (which notice may be furnished prior to the execution and delivery hereof) specifying the Business Day of issuance thereof. On such Business Day specified by the Company in such notice and upon fulfillment of the applicable conditions set forth in Article III, the Issuing Bank will issue the Letter of Credit to the Trustee. 21 SECTION 2.03. Drawing Fee. The Company hereby agrees to pay to the Agent, for the account of the Issuing Bank a drawing fee of $100 per draw, payable at the time of each draw under the Letter of Credit. SECTION 2.04. Commissions. (a) The Company hereby agrees to pay to the Agent, for the account of the Issuing Bank and the Creditors, a letter of credit commission on the Available Amount in effect from time to time (i) from the date of issuance of the Letter of Credit to but excluding the first anniversary of the Commencement Date, at the rate of .75% per annum, (ii) from the first anniversary of the Commencement Date to but excluding the second anniversary of the Commencement Date, at the rate of .875% per annum, (iii) from the second anniversary of the Commencement Date to but excluding the third anniversary of the Commencement Date, at the rate of 1.00% per annum, (iv) from the third anniversary of the Commencement Date to but excluding the fourth anniversary of the Commencement Date, at the rate of 1.125% per annum, (v) from the fourth anniversary of the Commencement Date to but excluding the Stated Termination Date, at the rate of 1.25% per annum, (vi) if applicable pursuant to Section 2.14(a), from the initial Stated Termination Date to but excluding the fifth anniversary of the Commencement Date, at the rate of 1.25% per annum, and (vii) if applicable pursuant to Section 2.14(a), from the fifth anniversary of the Commencement Date to but excluding the then current Stated Termination Date, at the rate of 1.375% per annum. The Letter of Credit commission shall be payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing on the last day of the quarter in which the Letter of Credit is issued, until the Credit Termination Date, and on the Credit Termination Date. Such letter of credit commission shall be paid by the Agent to the Issuing Bank and the Creditors as the Issuing Bank and the Creditors have agreed prior to the time each such Creditor becomes a party hereto. (b) The Company hereby agrees to pay to the Agent, for the account of the Issuing Bank, upon each transfer by the Trustee of the Letter of Credit in accordance with its terms, a transfer commission equal to 1/4 of 1% of the Available Amount then in effect. SECTION 2.05. Reimbursement on the Date of the Draw. (a) Except as otherwise provided in subsections (b) and (c) of this Section 2.05 and subject to the provisions of Sections 2.06 and 2.07, the Company hereby agrees to pay to the Agent (i) on each date on which the Issuing Bank shall pay any amount under the Letter of Credit pursuant to any draft (including, without limitation, amounts in respect of any reinstatement of the interest component at the election of the Issuing Bank in its sole discretion notwithstanding any failure by the Company to reimburse the Issuing Bank or the Creditors for any previous 22 drawing to pay interest on the Bonds), a sum equal to such amount so paid, plus (ii) on each day thereafter interest on any amount remaining unpaid by the Company to the Agent under clause (i) above, from the date of such draw until payment in full, at the Default Rate. (b) The Company shall have no obligation under Section 2.05(a) or Section 2.06 in the case of a Tender Draft to pay to the Agent, the Issuing Bank or any Creditor pursuant to this Agreement the amount paid by the Issuing Bank under the Letter of Credit if and to the extent the amount so paid under the Letter of Credit shall have been used to purchase Bonds to be held by or on behalf of and for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank pursuant to subsection (e) of Section 3.01 of the Indenture, subsection (e) of Section 9.01 of the Indenture or subsection (d) of Section 13.03 of the Indenture. Notwithstanding the foregoing, the obligations of the Company under this Agreement to pay to the Agent on behalf of the Issuing Bank and the Creditors any amounts in respect of the amounts paid by the Issuing Bank under the Letter of Credit referred to in the immediately preceding sentence shall continue to be effective or shall be reinstated, as the case may be, if at any time the purchase of the Bonds by or on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank with the proceeds of such amounts paid under the Letter of Credit is rescinded in whole or in part or some or all of the Bonds so purchased must otherwise be returned by the Issuing Bank, the Agent or any other nominee of the Issuing Bank. (c) The Company shall pay to the Agent, on each Payment Date the amount (the "Payment Amount") by which (i) the aggregate Contract Interest Amount for the Quarterly Period ending on such Payment Date exceeds (ii) the aggregate Bond Interest Amount for such Quarterly Period with respect to all Bonds held by or on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank during such Quarterly Period. Any amounts due pursuant to this Section 2.05(c) that are not paid when due shall bear interest from the date the same become due until such amounts are paid, payable on demand, at an interest rate equal to the Default Rate. SECTION 2.06. Tender Advances. Except as provided in Section 2.05(b), if the Issuing Bank shall make any payment under the Letter of Credit pursuant to a Tender Draft and the conditions set forth in Section 3.03(a) shall have been fulfilled, such payment shall constitute an advance made by the Issuing Bank to the Company on the date and in the amount of such payment, each such advance being a "Tender Advance" and collectively the "Tender Advances". 23 Except as otherwise provided in Section 2.09 or Section 6.02, each Tender Advance shall be payable in substantially equal quarterly installments on the last day of each calendar quarter, commencing on the last day of the calendar quarter in which the 90th day following the date of such Tender Advance occurs and continuing until the Stated Termination Date in effect on the date of such Tender Advance (each such approximately 90-day period being a "Payment Period"). SECTION 2.07. Interest on Advances. The Company shall pay interest on the unpaid principal amount of each Tender Advance from the date of such Tender Advance until such principal amount is paid in full at the applicable rate set forth below: (a) Alternate Base Rate. Except to the extent that the Company shall elect to pay interest on the unpaid principal of any Tender Advance for any Interest Period pursuant to subsection (c) of this Section 2.07, the Company shall pay interest on the unpaid principal of each Tender Advance from the date of such Tender Advance until the principal amount of such Tender Advance is paid in full, payable quarterly in arrears on the last day of each calendar quarter and on the date such Tender Advance is paid in full, at a fluctuating interest rate per annum in effect from time to time equal to .50% per annum above the Alternate Base Rate in effect from time to time. (b) Interest Periods. The Company may from time to time elect to have the interest on any Tender Advance determined and payable for a specified period (an "Interest Period" for such Tender Advance) in accordance with subsection (c) of this Section 2.07. The first day of an Interest Period for any Tender Advance shall be either the date such Tender Advance is made, the date the Company specifies as the first day of the Eurodollar Advance, or the last day of the then current Interest Period for a Eurodollar Advance. No Interest Period shall end after the Stated Termination Date. (c) Eurodollar Rate. The Company may from time to time elect to pay interest on any Tender Advance at the Eurodollar Rate for an Interest Period for such Tender Advance by notice delivered to the Agent, specifying the Tender Advance (which shall not be less than $1,000,000 unpaid principal amount during such Interest Period) and the first day and duration of such Interest Period, received by the Agent before 11:00 A.M. (New York City time) three Business Days prior to the first day of such Interest Period; provided that no more than four separate Interest Periods in respect of Eurodollar Advances may be outstanding at any one time. Such Interest Period shall be of 1, 3 or 6 months' duration, at the Company's election; provided, 24 however, that the Company may not select any Interest Period which ends after any principal repayment installment date unless, after giving effect to such selection, the aggregate unpaid principal amount of Eurodollar Advances having Interest Periods which end on or prior to such principal repayment installment date and Alternate Base Rate Advances shall be at least equal to the principal amount of the Tender Advances due and payable on and prior to such date. If the Company shall have made such election for any Tender Advance for any such Interest Period, the Company shall pay interest on such Tender Advance during such Interest Period, payable on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day which occurs during such Interest Period every three months from the first day of such Interest Period, at the Eurodollar Rate for such Interest Period for such Tender Advance. (d) Default Interest. The Company shall pay interest on the unpaid principal amount of any Tender Advance that is not paid when due and on the unpaid amount of all interest, and other amounts payable hereunder, that is not paid when due, payable on demand, at a rate per annum equal at all times to 2% per annum above the Alternate Base Rate in effect from time to time. Notwithstanding anything in this Agreement to the contrary, upon the occurrence and during the continuance of an Event of Default, the right of the Company to make an election in respect of the Eurodollar Rate pursuant to Section 2.07(c) shall terminate (i) automatically, in the case of an Event of Default under Section 6.01(a) or (ii) upon notice to the Company by the Bank, in all other cases; provided that no termination referred to in either of the preceding clauses (i) or (ii) shall affect any Eurodollar Advance during an Interest Period in effect for such Eurodollar Advance at the time any notice is received by the Company. (e) Illegality, Etc. Notwithstanding any other provision of this Agreement, if the Issuing Bank or any Creditor (which shall at the time be a Banking Institution) notifies the Company that the introduction of or any change in or in the interpretation of any law or regulation that occurs after the Submission Date makes it unlawful, or any central bank or other governmental authority asserts after the Submission Date that it is unlawful, for the Issuing Bank or any Creditor to perform its obligations to make, fund or maintain Eurodollar Advances hereunder (or participation interests therein), (i) the right of the Company to select the Eurodollar Rate for Tender Advances held by the Issuing Bank or such Creditor, as the case may be, and the obligation of the Issuing Bank and such 25 Creditor, as the case may be, to make or maintain Eurodollar Advances shall be suspended until the Issuing Bank or such Creditor, as the case may be, shall notify the Company that the circumstances causing such suspension no longer exist and (ii) the rate of interest on all such Tender Advances held by the Issuing Bank or such Creditor, as the case may be, shall thereupon be .50% per annum above the Alternate Base Rate in effect from time to time. (f) Interest Rate Protection. (i) If the Company shall fail to select the duration of any Interest Period for any Eurodollar Advance in accordance with the provisions contained in Section 2.07(c), the Agent will forthwith so notify the Company and the Creditors and such Eurodollar Advance will automatically, on the last day of the then existing Interest Period therefor, convert into an Alternate Base Rate Advance. (ii) On and after the date on which the unpaid principal amount of any Tender Advance shall be reduced, by payment or prepayment or otherwise, to less than $1,000,000, the rate of interest on the unpaid principal amount of such Tender Advance shall be .50% per annum above the Alternate Base Rate in effect from time to time and the right of the Company to select a different rate for such Tender Advance shall terminate; provided, however, that if and so long as the Company shall select for such Tender Advance the same Eurodollar Rate for and the same Interest Period as another Tender Advance or other Tender Advances and the aggregate unpaid principal amount of all such Tender Advances shall equal or exceed $1,000,000, the Company shall have the right to select such rate for such Interest Period for such Tender Advance. (g) Alternate Rate of Interest. In the event, and on each occasion, that, on the day two Business Days prior to the commencement of any Interest Period for a Eurodollar Advance, the Agent shall have determined (which determination shall be conclusive and binding upon the Company absent manifest error) that reasonable means do not exist for ascertaining the applicable Eurodollar Rate, the Agent shall, as soon as practicable thereafter, give written, facsimile or telegraphic notice of such determination to the Company, and any request by the Company for a Eurodollar Advance pursuant to subsection (c) of this Section 2.07 shall be deemed a request for an Alternate Base Rate Advance. After such notice shall have been given and until the circumstances giving rise to such notice no longer exist, each request for an Eurodollar Advance shall be deemed to be a request for an Alternate Base Rate Advance. 26 (h) Majority Creditors' Costs for Eurodollar Advances. If, with respect to any Eurodollar Advances, the Majority Creditors notify the Agent that the Eurodollar Rate for any Interest Period for such Eurodollar Advances will not adequately reflect the cost to such Majority Creditors of making, funding or maintaining their respective Eurodollar Advances for such Interest Period, the Agent shall forthwith so notify the Company and the Creditors, whereupon (i) each Eurodollar Advance will automatically, on the last day of the then existing Interest Period therefor, convert into an Alternate Base Rate Advance, and (ii) the obligation of the Creditors to make, or to convert Alternate Base Rate Advances into, Eurodollar Advances shall be suspended until the Agent shall notify the Company and the Creditors that the circumstances causing such suspension no longer exist. (i) Notice. Promptly after the determination of any interest rate provided for herein or any change therein, the Agent shall give notice thereof to the Company. SECTION 2.08. Reimbursement of Issuing Bank, Etc. (a) (i) The Issuing Bank hereby sells and transfers to each Creditor, and each Creditor hereby acquires from the Issuing Bank, an undivided interest and participation to the extent of such Creditor's Participation Percentage in and to (A) the Letter of Credit, including the obligations of the Issuing Bank under and in respect thereof and the Company's reimbursement and other obligations in respect thereof and (B) any Tender Advance made by the Issuing Bank hereunder, whether now existing or hereafter arising. (ii) If the Issuing Bank (A) shall not have been reimbursed in full for any payment made by the Issuing Bank under the Letter of Credit on the date of such payment or (B) shall make any Tender Advance to the Company, the Issuing Bank shall give the Agent prompt notice thereof (an "LC Payment Notice") no later than 12:00 noon (New York City time) on the next Business Day immediately succeeding the date of such payment by the Issuing Bank and the Agent shall give each Creditor prompt notice thereof (an "Agent Payment Notice") no later than two hours following the Agent's receipt of the LC Payment Notice at such Creditor's address referred to in Section 9.02. (iii) Upon receipt of an Agent Payment Notice, each Creditor severally agrees to pay to the Issuing Bank in accordance with clause (iv) below an amount equal to such Creditor's ratable portion (according to such Creditor's Participation Percentage as of the date of such Agent Payment 27 Notice) of such unreimbursed amount or Tender Advance paid or made by the Issuing Bank, plus interest (if payment is not made in accordance with clause (iv)) on such amount at a rate per annum equal to the Federal Funds Rate from the date of payment by the Issuing Bank to the date of payment to the Issuing Bank by such Creditor. The failure of the Issuing Bank or the Agent to give such LC Payment Notice or the Agent Payment Notice, as the case may be, shall not affect any Creditor's obligations pursuant to this subsection (a). (iv) Each such payment by a Creditor shall be made to the Agent for the account of the Issuing Bank at its address referred to in Section 9.02 in lawful money of the United States of America, in same day funds (1) not later than 2:30 p.m. (New York City time) on the day any such Agent Payment Notice is received by such Creditor, if such notice is received at or prior to 12:00 noon (New York City time) on a Business Day; (2) not later than 4:30 p.m. (New York City time) on the day any such Agent Payment Notice is received by such Creditor, if such notice is received after 12:00 noon (New York City time) but at or prior to 2:30 p.m. (New York City time) on a Business Day; or (3) not later than 12:00 noon (New York City time) on the Business Day next succeeding the day any such Agent Payment Notice is received by such Creditor, if such notice is received after 2:30 p.m. (New York City time) on a Business Day. Each Creditor's obligation to make each such payment to the Issuing Bank, and the Issuing Bank's right to receive the same, shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limiting the foregoing or Section 2.16, the occurrence or continuance of an Event of Default or the failure of any other Creditor to make any payment under this Section 2.08. Each Creditor further agrees that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. (b) The failure of any Creditor to make any payment to the Issuing Bank in accordance with subsection (a), above, shall not relieve any other Creditor of its obligation to make payment, but neither the Issuing Bank nor any Creditor shall be responsible for the failure of any other Creditor to make such payment. If any Creditor shall fail to make any payment to the Issuing Bank in accordance with subsection (a)(iv), above, then such Creditor agrees to pay to the Issuing Bank forthwith on demand such corresponding amount together with interest thereon for the first two days following the day upon which any such payment shall have been due and payable at the Federal Funds Rate and thereafter until the date such amount is repaid to the Issuing Bank at the Alternate Base Rate plus 1% per annum. 28 (c) If any Creditor shall fail to make any payment to the Issuing Bank in accordance with subsection (a), above, then, in addition to other rights and remedies which the Issuing Bank may have, the Agent is hereby authorized, at the request of the Issuing Bank, to withhold and to apply to the payment of such amounts owing by such Creditor to the Issuing Bank and any related interest, that portion of any payments received by the Agent that would otherwise be payable to such Creditor. SECTION 2.09. Prepayments; Reinstatement of Letter of Credit Amounts. (a) The Company may, upon at least two Business Days' notice to the Agent stating the proposed date and principal amount of the prepayment, and if such notice is given to the Agent the Company shall, prepay the amount outstanding under any Tender Advance in whole or in part (each such partial prepayment shall be in the minimum amount of $[ ]) with accrued interest to the date of such prepayment on the amount prepaid (any such prepayment shall be applied to outstanding Tender Advances in the inverse order of maturity); provided, however, that with respect to any prepayment of any Eurodollar Advance made on a day other than the last day of an Interest Period for such Eurodollar Advance, the Company shall pay to the Agent, in accordance with Section 2.11(b), an amount sufficient to compensate the Issuing Bank and any Creditor for any loss, cost, or expense incurred by it by reason of such prepayment on a day other than the last day of an Interest Period. (b) Prior to or simultaneously with the resale of Bonds acquired by the Trustee or the Tender Agent for the account of the Company with the proceeds of one or more draws under the Letter of Credit by one or more Tender Drafts, the Company shall or shall cause the Trustee on behalf of the Company to prepay the then outstanding Tender Advances (any such prepayment shall be applied to outstanding Tender Advances in the inverse order of maturity) by paying to the Agent an amount equal to the sum of (i) the aggregate principal amount of the Bonds being resold or to be resold plus (ii) the aggregate amount of accrued and unpaid interest on such Bonds which was paid by a drawing or drawings under such Tender Draft or Drafts. Such payments when accompanied by a certificate completed and signed by the Trustee in substantially the form of Annex F to the Letter of Credit shall be applied by the Agent in reimbursement of such drawings (and as prepayment of Tender Advances resulting from such drawings in the manner described above); provided, however, that if any prepayment of any Tender Advance that is a Eurodollar Advance is made on a day other than the last day of the Interest Period for such Eurodollar Advance, the Company shall pay to the Issuing Bank and any Creditor, in accordance with Section 2.11(b), an amount sufficient to compensate the Issuing Bank and any Creditor for 29 any loss, cost, or expense incurred by it by reason of such prepayment on a day other than the last day of an Interest Period; provided further that, in the case of a prepayment certified to the Issuing Bank by the Trustee as a prepayment of a Tender Advance pursuant to this Section 2.09(b) and made on a date other than a date on which interest on such Tender Advance is scheduled to be paid hereunder, the Company may pay interest accrued on such Tender Advance to the date of prepayment on the next scheduled date for the payment of interest on such Tender Advance, or if such Tender Advance shall have been prepaid in whole, on the date which would have been the next such scheduled date in the absence of such prepayment. The Company irrevocably authorizes the Issuing Bank to rely on such certificate and to reinstate the Letter of Credit in accordance therewith. (c) Upon the substitution of a letter of credit or other credit facility for the Letter of Credit as provided in Section 2.02(6) of the Indenture, all Tender Advances and accrued and unpaid interest thereon and all other outstanding amounts payable by the Company to the Issuing Bank, the Creditors and the Agent under this Agreement shall be paid in full on the date the Letter of Credit shall terminate as a result of such substitution. SECTION 2.10. Additional Interest. Subject to Section 2.11(e)(ii), the Company shall pay to the Issuing Bank and each Creditor additional interest on the unpaid principal amount of any Eurodollar Advance by the Issuing Bank or such Creditor, from the date of such Eurodollar Advance until such principal amount is paid in full, at an interest rate per annum equal at all times during each Interest Period for such Eurodollar Advance to the remainder obtained by subtracting (i) the LIBO Rate for the Interest Period for such Eurodollar Advance from (ii) the rate obtained by dividing such LIBO Rate by a percentage equal to 100% minus the reserve percentage applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for the Issuing Bank or such Creditor, as the case may be, with respect to liabilities or assets consisting of or including Eurocurrency liabilities having a term equal to such Interest Period, payable on each date on which interest is payable on such Eurodollar Advance. Such additional interest shall be determined by the Issuing Bank or such Creditor, as the case may be, and notified to the Company (with a copy to the Agent). 30 SECTION 2.11. Increased Costs. (a) If due either to (i) the introduction after the Submission Date of, or any change (other than any change by way of imposition or increase of reserve requirements in the case of Eurodollar Advances referred to in Section 2.10), after the Submission Date, in or in the interpretation of, any law or regulation or (ii) the compliance by the Issuing Bank or any Creditor with any guideline or request issued or made after the Submission Date by any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to the Issuing Bank or any Creditor as a result of agreeing to make or making, funding or maintaining Eurodollar Advances, or reduction in the amount of any sum received in respect thereof, then the Company shall from time to time, promptly after demand by the Issuing Bank or such Creditor, as the case may be, pay to the Agent for the account of the Issuing Bank or such Creditor, as the case may be, additional amounts sufficient to reimburse the Issuing Bank or such Creditor, as the case may be, for such increased cost or reduced amount. A certificate as to the amount of such increased cost or reduced amount, submitted to the Company (with a copy to the Agent) by the Issuing Bank or such Creditor, as the case may be, shall be conclusive and binding for all purposes, absent manifest error. (b) If, due to any change of interest rate on any Eurodollar Advance pursuant to Section 2.07(e) or 2.07(f), any prepayment pursuant to Section 2.09 of any Eurodollar Advance, any acceleration of maturity of the Tender Advances pursuant to Section 6.02, or for any other reason, a Eurodollar Advance is subject to a change of interest rate, or any payment of principal of any Eurodollar Advance is received, in each case other than on the last day of an Interest Period relating to such Eurodollar Advance, the Company shall, promptly upon demand by Issuing Bank or any Creditor (with a copy of such demand to the Agent), pay to the Agent for the account of the Issuing Bank or such Creditor, as the case may be, any amounts required to compensate the Issuing Bank or such Creditor, as the case may be, for any additional losses, costs or expenses which it may reasonably incur as a result of such change or payment, including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by the Issuing Bank or such Creditor, as the case may be, to fund or maintain such Eurodollar Advance but excluding loss of anticipated profit. A certificate setting forth the amount of such additional losses, costs or expenses, submitted by the Issuing Bank or such Creditor, as the case may be, to the Company (with a copy to the Agent), shall be conclusive and binding for all purposes, absent manifest error. 31 (c) If after the Submission Date any change in any law or regulation or in the interpretation thereof by any court or administrative or governmental authority charged with the administration thereof shall either (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against letters of credit or guarantees issued by, or assets held by, or deposits in or for the account of, the Issuing Bank or any Creditor or (ii) impose on the Issuing Bank or on any Creditor any other condition regarding this Agreement or the Letter of Credit, and the result of any event referred to in clause (i) or (ii) above shall be to increase the cost to the Issuing Bank or any Creditor of issuing or maintaining, or (in the case of such Creditor) acquiring a participation in, the Letter of Credit, then, upon demand by the Issuing Bank or such Creditor, the Company shall pay to the Agent for the account of the Issuing Bank or such Creditor, from time to time as specified by the Issuing Bank or such Creditor, additional amounts sufficient to compensate the Issuing Bank or such Creditor for such increased cost. A certificate as to the amount of such increased cost, submitted to the Company (with a copy to the Agent) by the Issuing Bank or such Creditor, shall be conclusive and binding for all purposes, absent manifest error. (d) If the Issuing Bank or any Creditor determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law), issued or made after the Submission Date, affects the amount of capital required to be maintained by the Issuing Bank or any Creditor or any corporation controlling the Issuing Bank or such Creditor, as the case may be, and that the amount of such capital is increased by or based upon the existence of the Issuing Bank's or such Creditor's, as the case may be, commitment hereunder and other commitments of this type or the issuance of the Letter of Credit (or similar contingent obligations), then, upon demand by the Issuing Bank or such Creditor, as the case may be, the Company shall pay to the Agent for the account of the Issuing Bank or such Creditor, as the case may be, from time to time as specified by the Issuing Bank or such Creditor, as the case may be, additional amounts sufficient to compensate the Issuing Bank or such Creditor, as the case may be, or such corporation in the light of such circumstances, to the extent that the Issuing Bank or such Creditor, as the case may be, reasonably determines such increase in capital to be allocable to the existence of the Issuing Bank's or such Creditor's, as the case may be, commitment hereunder. A certificate as to such amounts submitted to the Company (with a copy to the Agent) by the Issuing Bank or such Creditor, as the case may be, shall be conclusive and binding for all purposes, absent manifest error. 32 (e) Notwithstanding any other provision in this Section 2.11 to the contrary, (i) the Company is not responsible for, and is not required to reimburse the Issuing Bank or any Creditor for, any amounts that would otherwise be payable by the Company pursuant to subsection (a), (b), (c) or (d) of this Section 2.11 to the extent such amounts accrued 90 days or more prior to the date the Issuing Bank or any Creditor provides to the Company a certificate which sets forth such amounts owed to the Issuing Bank or such Creditor, as the case may be, by the Company pursuant to such subsections and (ii) the Company is responsible for, and is required to reimburse the Issuing Bank and any Creditor for, any amounts payable by the Company pursuant to Section 2.10 and this Section 2.11, only so long as the Issuing Bank or such Creditor is a Banking Institution. (f) In calculating any amounts required to be paid by the Company pursuant to this Section 2.11, the Issuing Bank or such Creditor, as the case may be, shall make all determinations and allocations on a reasonable basis. SECTION 2.12. Payments and Computations. (a) The Company shall make each payment hereunder not later than 12:00 noon (New York City time) (or, in the case of any payment required by Section 2.05(a), as soon as practicable after the Issuing Bank has made a payment under the Letter of Credit) on the day when due in lawful money of the United States of America to the Agent at its address referred to in Section 9.02 in same day funds. The Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal, interest, fees or other amounts payable to the Issuing Bank and the Creditors to whom the same are payable at their respective addresses referred to in Section 9.02. (b) If, after the Agent has paid to the Issuing Bank or any Creditor any amount pursuant to subsection (a) above, such payment is rescinded or must otherwise be returned or must be paid over by the Agent or the Issuing Bank to any Person, whether pursuant to any bankruptcy or insolvency law, Section 9.04(c) or otherwise, the Issuing Bank or such Creditor, as the case may be, shall, at the request of the Agent or the Issuing Bank, promptly repay to the Agent or the Issuing Bank, as the case may be, an amount equal to such payment, together with any interest required to be paid by the Agent or the Issuing Bank with respect to such payment. (c) The Company hereby authorizes the Issuing Bank and each Creditor, if and to the extent payment is not made when due hereunder, to charge from time to time against any or all of the Company's accounts with the Issuing Bank and each Creditor any amount so due. 33 (d) All computations of interest based on the Alternate Base Rate shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, and computations of the commissions hereunder and of interest based on the LIBO Rate shall be made by the Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or commitment fees are payable. Each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. SECTION 2.13. Payments on Non-Business Days. (a) Whenever any payment hereunder shall be stated to be due, or whenever the last day of any Interest Period, Payment Period or Quarterly Period would otherwise occur, on a day which is not a Business Day, such payment shall be made, and the last day of such Interest Period, Payment Period or Quarterly Period shall occur, on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or commission, as the case may be; provided, however, if such extension would cause such payment of interest on or principal of a Eurodollar Advance to be made, or the last day of an Interest Period for a Eurodollar Advance to occur, in the next following calendar month, such payment shall be made, and the last day of such Interest Period shall occur, on the next preceding Business Day. (b) Whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month. Notwithstanding anything to the contrary contained herein, each Interest Period that commences on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month. SECTION 2.14. Extension of the Stated Termination Date. (a) At least 60 but not more than 120 days before the initial Stated Termination Date, the Company may request in a writing delivered to the Agent (such request shall be accompanied by a certificate from a duly authorized officer of the Company that the representations and warranties in Section 4.01 are true and correct as of the date of such request, before and after giving effect to such request, as though made on and as of the date of such request, and such request shall be irrevocable) that the Issuing Bank, each Creditor and the Agent extend for one year the then Stated Termination Date for 34 purposes of this Agreement and the Letter of Credit. If the Company shall make such request, the Issuing Bank shall so extend the Stated Termination Date of the Letter of Credit and the Issuing Bank, each Creditor and the Agent shall extend the Stated Termination Date for purposes of this Agreement, provided that on the date of such request by the Company the representations and warranties in Section 4.01 are true and correct, before and after giving effect to such request. The Agent shall notify the Company in writing within 40 days of receipt of such request whether (i) it has determined that the Company has not satisfied the condition to extension set forth in the proviso of the immediately preceding sentence or (ii) the Stated Termination Date has been so extended. (b) If the Stated Termination Date is extended as provided for in Section 2.14(a), the Company may thereafter request, at least 60 days but not more than 120 days before the then Stated Termination Date, in a writing delivered to the Agent (such request shall be accompanied by a certificate from a duly authorized officer of the Company that the representations and warranties in Section 4.01 are true and correct as of the date of such request, before and after giving effect to such request, as though made on and as of the date of such request, and such request shall be irrevocable) that the Issuing Bank, each Creditor and the Agent extend for one year the then Stated Termination Date for purposes of this Agreement and the Letter of Credit. If the Company shall make such a request, the Agent shall, on or before 40 days before the then Stated Termination Date, notify the Company in writing whether or not the Issuing Bank, each Creditor and the Agent consent to such request and, if the Issuing Bank, each Creditor and the Agent do so consent, the conditions for such extension. If the Agent shall not so notify the Company, the Issuing Bank, each Creditor and the Agent shall be deemed not to have consented to such request. The Company acknowledges that none of the Issuing Bank, any Creditor or the Agent has any obligation to, and none of such entities has given any assurance, undertaking or commitment that it will, extend (or consider extending) the Letter of Credit as set forth in this Section 2.14(b). SECTION 2.15. Evidence of Debt. The Agent shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Company resulting from each drawing under the Letter of Credit and from each Tender Advance made from time to time hereunder and the amounts of principal and interest payable and paid from time to time hereunder. In any legal action or proceeding in respect of this Agreement, the entries made in such account or accounts shall, in the absence of manifest error, be conclusive evidence of the existence and amounts of the obligations of the Company therein recorded. 35 SECTION 2.16. Obligations Absolute. (a) The obligations of the Company under this Agreement and any other agreement or instrument relating to the Letter of Credit shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement and such other agreement or instrument under all circumstances, including, without limitation, the following circumstances, and regardless of the use of proceeds of any drawing under the Letter of Credit or any defense to payment related thereto: (i) any lack of validity or enforceability of this Agreement, the Letter of Credit, the Bonds, the Indenture, the Loan Agreement, the Second Mortgage Bonds, Series , the Second Mortgage Bond Indenture, the Remarketing Agent's Agreement, or any other agreement or instrument relating thereto (collectively, the "Related Documents"); (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Company in respect of the Letter of Credit or any other amendment or waiver of or any consent to departure from all or any of the Related Documents; (iii) the existence of any claim, set-off, defense or other right that the Company may have at any time against the Trustee or any other beneficiary or any transferee of the Letter of Credit (or any Persons or entities for whom the Trustee, any such beneficiary or any such transferee may be acting), the Issuing Bank, any Creditor, the Agent or any other Person or entity, whether in connection with this Agreement, the transactions contemplated hereby or by the other Related Documents or any unrelated transaction; (iv) any draft, statement or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (v) payment by the Issuing Bank under the Letter of Credit against presentation of a draft or certificate which does not comply with the terms of the Letter of Credit; (vi) any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any guarantee, for all or any of the obligations of the Company in respect of the Letter of Credit or any other Related Document; or (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might 36 otherwise constitute a defense available to, or a discharge of, the Company or a guarantor. (b) The obligations of each Creditor under Section 2.08 shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement (as the same may be amended from time to time) under all circumstances, including, without limitation, the following circumstances: (i) any lack of validity or enforceability of the Related Documents; (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Company in respect of the Letter of Credit or any other amendment or waiver of or any consent to departure from all or any of the Related Documents entered into in accordance with this Agreement; (iii) the existence of any claim, set-off, defense or other right that the Company may have at any time against the Trustee or any other beneficiary or any transferee of the Letter of Credit (or any Persons or entities for whom the Trustee, any such beneficiary or any such transferee may be acting), the Issuing Bank, or any other Person or entity, whether in connection with this Agreement, the transactions contemplated hereby or by the other Related Documents or any unrelated transaction; (iv) any draft, statement or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (v) payment by the Issuing Bank under the Letter of Credit against presentation of a draft or certificate which does not comply with the terms of the Letter of Credit; (vi) any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any guarantee, for all or any of the obligations of the Company in respect of the Letter of Credit or any other Related Document; or (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company or a guarantor. 37 (c) Without limiting the effect of subsections (a) or (b) above, or any other provision hereof, the Company and each Creditor agree with the Issuing Bank that the Issuing Bank is authorized to make payments under the Letter of Credit upon the presentation of the documents provided for therein and without regard to whether the Company has failed to fulfill any of its obligations with respect to any Related Document or any Event of Default or event which with the giving of notice or lapse of time or both would constitute an Event of Default or other default has occurred thereunder or hereunder. SECTION 2.17. U.S. Taxes. (a) The Company agrees to pay to the Issuing Bank and each Creditor with respect to any period during which it is not a U.S. Person such additional amounts as are necessary in order that the net payment of any amount due to such non-U.S. Person hereunder after deduction for or withholding in respect of any U.S. Tax imposed with respect to such payment (or in lieu thereof, payment of such U.S. Tax by such non-U.S. Person), will not be less than the amount stated herein to be then due and payable, provided that the foregoing obligation to pay such additional amounts shall not apply: (i) to any payment to the Issuing Bank or any such Creditor hereunder unless the Issuing Bank or any such Creditor is, on the Submission Date (or on the date such Person becomes the successor to, or the assignee of, the Issuing Bank or any such Creditor as provided in Section 9.09) and on the date of any change in the applicable lending office of the Issuing Bank or any such Creditor after the date hereof, either entitled to submit a Form 1001 (relating to the Issuing Bank or any such Creditor and entitling it to a complete exemption from withholding on all interest to be received by it hereunder in respect of any Tender Advance or any other amount hereunder payable) or Form 4224 (relating to all interest to be received by the Issuing Bank or any such Creditor hereunder in respect of any Tender Advance or any other amount hereunder payable), or (ii) to any U.S. Tax imposed solely by reason of the failure by such non-U.S. Person to comply with applicable certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connections with the United States of America of such non-U.S. Person if such compliance is required by statute or regulation of the United States of America as a precondition to relief or exemption from such U.S. Tax. 38 For the purposes of this Section 2.17(a), (w) "Form 1001" shall mean Form 1001 (Ownership, Exemption, or Reduced Rate Certificate) of the Department of the Treasury of the United States of America, (x) "Form 4224" shall mean Form 4224 (Exemption from Withholding of Tax on Income Effectively Connected with the Conduct of a Trade or Business in the United States) of the Department of the Treasury of the United States of America (or in relation to either such Form such successor and related forms as may from time to time be adopted by the relevant taxing authorities of the United States of America to document a claim to which such Form relates), (y) "U.S. Person" shall mean a citizen, national or resident of the United States of America, a corporation, partnership or other entity created or organized in or under any laws of the United States of America, or any estate or trust that is subject to Federal income taxation regardless of the source of its income and (z) "U.S. Taxes" shall mean any present or future tax, assessment or other charge or levy imposed by or on behalf of the United States of America or any taxing authority thereof or therein. (b) Within 30 days after paying any amount to the Issuing Bank or any such Creditor from which it is required by law to make any deduction or withholding, and within 30 days after it is required by law to remit such deduction or withholding to any relevant taxing or other authority, the Company shall deliver to the Issuing Bank or such Creditor, as the case may be, evidence satisfactory to the Issuing Bank or such Creditor, as the case may be, of such deduction, withholding or payment (as the case may be). SECTION 2.18. Applicable Lending Office. If the Issuing Bank or any Creditor requests compensation from the Company under any of Section 2.11(a), 2.11(c), 2.11(d) or 2.17, the Issuing Bank or such Creditor, as the case may be, will designate a different applicable lending office for the portions of any Tender Advance or other amount due hereunder affected by the events giving rise to such request for compensation if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable opinion of the Issuing Bank or such Creditor, as the case may be, be disadvantageous to the Issuing Bank or such Creditor, as the case may be, except that the Issuing Bank or such Creditor, as the case may be, shall have no obligation to designate an applicable lending office located in the United States of America. SECTION 2.19. Net Payments. All payments under this Agreement to the Agent, the Issuing Bank, or any Creditor shall be made without set-off or counterclaim. 39 SECTION 2.20. Reinstatement of the Letter of Credit. Upon delivery to the Agent of any Bonds purchased by the Trustee on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank pursuant to subsection (e) of Section 3.01 of the Indenture, subsection (e) of Section 9.01 of the Indenture, or subsection (d) of Section 13.03 of the Indenture with moneys drawn under the Letter of Credit, the amounts available to be drawn under the Letter of Credit shall be reinstated, without any further action by the Company or any party other than the Issuing Bank, in an amount equal to the amount of the moneys drawn under the Letter of Credit to purchase such Bonds; provided, however, if at any time any such purchase shall be rescinded, in whole or in part, or some or all of the Bonds so purchased must otherwise be returned by the Issuing Bank, the Agent or any other nominee of the Issuing Bank, in each case, for any reason, the amounts so reinstated shall not be available to be drawn until and unless the Company reimburses the Issuing Bank or the Creditors, as the case may be, for such amounts. ARTICLE III CONDITIONS OF ISSUANCE SECTION 3.01. Conditions Precedent to Issuance of the Letter of Credit. The obligation of the Issuing Bank to issue the Letter of Credit is subject to the satisfaction or waiver in writing by the Agent, in its sole discretion, of the following: (i) the Agent shall have received on or before the date of the issuance of the Letter of Credit the following, each dated such day (unless otherwise indicated), in form and substance satisfactory to and in sufficient copies for each Creditor: (a) certified copies of the restated articles of incorporation and bylaws of the Company, a certified copy of the resolutions of the Board of Directors of the Company approving this Agreement, the form and content of the Letter of Credit, the other Related Documents and the other matters contemplated hereby and thereby, and of all other documents evidencing any other necessary corporate action; (b) a copy of a certificate of the Secretary of State of Texas dated a date reasonably close to the date of issuance of the Letter of Credit listing the articles of incorporation of the Company and each amendment thereto on file in his office and certifying that (A) such amendments are the only amendments to the Company's articles of incorporation on file in his office and (B) the Company is duly incorporated, validly existing and in good standing under the laws of such State; 40 (c) a telegram from such Secretary of State or such other evidence satisfactory to the Agent certifying that the Company is duly incorporated, validly existing and in good standing under the laws of such State on the date of issuance of the Letter of Credit; (d) originals (or copies certified to be true copies by an appropriate officer of the Company or, in the case of the Issuer, by the county clerk of the Issuer) of all governmental and regulatory approvals (including, without limitation, approvals or orders of the Issuer and the Federal Energy Regulatory Commission and the New Mexico Public Service Commission approvals) legally required to be obtained on the Effective Date and on the date of issuance of the Letter of Credit for the Company to enter into this Agreement and the other Related Documents and to carry out the transactions contemplated hereby and thereby; (e) a certified transcript relating to the issuance of the Bonds; (f) a certificate of the Secretary of the Company certifying the incumbency and the names and true signatures of the officers of the Company authorized to sign this Agreement and the other documents to be delivered by it hereunder, together with a certificate of another officer of the Company as to the incumbency and specimen signature of the Secretary of the Company; (g) a certified copy of the Indenture and evidence satisfactory to the Agent that the Indenture has been duly adopted by the Issuer and accepted by the Trustee; (h) the Second Mortgage Bonds, Series Y-6, such series having been duly completed, executed and pledged to the Agent for its benefit and the benefit of the Issuing Bank and the Creditors by the Company; (i) evidence of the completion of all recordings and filings of or with respect to the Second Mortgage Bond Indenture that the Agent may deem necessary or desirable in order to perfect the security interest created thereby; (j) a certified copy of the Second Mortgage Bond Indenture; (k) a favorable opinion of Milbank, Tweed, Hadley & McCloy, New York counsel for the Company (or other New York counsel for the Company that is reasonably satisfactory to the Agent and the Creditors), in form and substance reasonably satisfactory to the Agent and the Creditors; 41 (l) a favorable opinion of Vinson & Elkins, Texas counsel for the Company (or other Texas counsel for the Company that is reasonably satisfactory to the Agent and the Creditors), in form and substance reasonably satisfactory to the Agent and the Creditors; (m) a favorable opinion of Stoops & Burns, Arizona counsel for the Company (or other Arizona counsel for the Company that is reasonably satisfactory to the Agent and the Creditors), in form and substance reasonably satisfactory to the Agent and the Creditors; (n) a favorable opinion of Taichert, Wiggins, Virtue, Wilson & Najjar, New Mexico regulatory counsel for the Company (or other New Mexico regulatory counsel for the Company that is reasonably satisfactory to the Agent and the Creditors), in form and substance reasonably satisfactory to the Agent and the Creditors; (o) a favorable opinion of [Milbank, Tweed, Hadley & McCloy], federal regulatory counsel for the Company (or other federal regulatory counsel for the Company that is reasonably satisfactory to the Agent and the Creditors), in form and substance reasonably satisfactory to the Agent and the Creditors; (p) a favorable opinion of Mudge Rose Guthrie Alexander & Ferdon, bond counsel, in form and substance reasonably satisfactory to the Agent and the Creditors; (q) a favorable opinion of , counsel to the Issuer (or other counsel for the Issuer that is reasonably satisfactory to the Agent and the Creditors), in form and substance reasonably satisfactory to the Agent and the Creditors; (r) a favorable opinion of Milbank, Tweed, Hadley & McCloy, special counsel for the Issuing Bank, [to the extent required by the agencies rating the Bonds]; (s) a certificate of the Clerk of the Board of Supervisors of Maricopa County, Arizona certifying that the resolutions approving the issuance of the Bonds are in full force and effect; (t) a certificate of the Secretary of the Board of Directors of the Issuer certifying that the resolutions approving the issuance of the Bonds, the execution and delivery of the Indenture and all documents delivered by the Issuer in connection with the issuance of the Bonds are in full force and effect; 42 (u) the articles of incorporation of the Issuer (certified as of a recent date by the Arizona Corporation Commission); (v) a certificate of compliance of the Arizona Corporation Commission, dated as of a recent date, to the effect that the Issuer is in good standing and that franchise taxes have been paid; (w) a certificate of the Assistant Secretary of the Issuer, dated the date of issuance of the Letter of Credit, as to the incumbency of each of the officers of the Issuer and members of its board of directors, and the bylaws of the Issuer and that such bylaws are true, correct and complete copies thereof and are in full force and effect; (x) the Official Statement certified by the Secretary of the Company to be a true and correct copy thereof; (y) a certificate of the Trustee certifying the incumbency and signature specimens of officials of the Trustee authorized to make drawings, to execute and present certificates and drafts under the Letter of Credit and otherwise to communicate with the Issuing Bank regarding the Letter of Credit, upon which the Issuing Bank may rely until it receives a new such certificate; (z) written acknowledgment from the Trustee that it has received the Letter of Credit; (aa) receipt from the Original Trustee under the Original Indenture of the Original Letter of Credit and written acknowledgment from the Original Trustee that the Original Letter of Credit is of no further force and effect; (bb) written evidence, satisfactory to the Agent, that the First Mortgage Bonds, Series A/B, and the Second Mortgage Bonds, Series A, have an Investment Grade Rating; and (cc) a certificate of the chairman, president or chief financial officer of the Company, certifying (A) that the Effective Date has occurred as of the time of delivery thereof or will occur concurrently with the delivery thereof and (B) that, after giving effect to the transactions contemplated under the Plan of Reorganization: (x) no event has occurred and is continuing which constitutes an Event of Default or would constitute an Event of Default but for the requirement 43 that notice be given or the elapse of time or both; and (y) the representations and warranties made by the Company in Article IV hereof, and in each of the other Related Documents, shall be true on and as of the Effective Date with the same force and effect as if made on and as of such date (or, if such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date); and (ii) the following has occurred on or before the date of the issuance of the Letter of Credit: (a) the Confirmation Order shall have been entered at least 10 days prior to the date hereof, no stay of such order shall be in effect and the Agent shall have received a certified copy of such order; (b) the Plan of Reorganization shall have been substantially consummated without waiver of any condition or other modification (other than waivers or modifications made in accordance with Section 6.6 of the Plan of Reorganization); (c) the Effective Date shall have occurred or shall occur substantially simultaneously with the delivery of this Agreement and of the other Related Documents; and (d) the Refunding shall have occurred or shall occur substantially simultaneously with the issuance of the Letter of Credit [and the delivery of the other Related Documents]. SECTION 3.02. Additional Conditions Precedent to Issuance of the Letter of Credit. The obligation of the Issuing Bank to issue the Letter of Credit shall be subject to the further conditions precedent that on the date of the issuance of the Letter of Credit (a) the following statements shall be true in all material respects and the Agent shall have received a certificate signed by a duly authorized officer of the Company, dated the date of such issuance, stating that: (i) The representations and warranties contained in Section 4.01 of this Agreement are correct on and as of the date of issuance of the Letter of Credit, before and after giving effect to such issuance, as though made on and as of such date; and (ii) No event has occurred and is continuing, or would result from such issuance of the Letter of Credit, which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both; 44 and (b) the Agent shall have received such other approvals, opinions or documents as the Issuing Bank or any Creditor (through the Agent) may reasonably request. SECTION 3.03. Conditions Precedent to Each Tender Advance. (a) Each payment made by the Issuing Bank under the Letter of Credit pursuant to a Tender Draft shall constitute a Tender Advance hereunder only if on the date of such payment by the Issuing Bank the following statements shall be true in all material respects: (i) The representations and warranties contained in Section 4.01 of this Agreement are correct on and as of the date of such Tender Advance, before and after giving effect to such Tender Advance and to the application of the proceeds therefrom, as though made on and as of such date; and (ii) No event has occurred and is continuing, or would result from such Tender Advance or from the application of the proceeds therefrom, which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both. (b) Unless the Company shall have previously advised the Issuing Bank in writing that one or more of the above statements in subsection (a) above is no longer true, the Company shall be deemed to have represented and warranted, on the date of each payment by the Issuing Bank under the Letter of Credit pursuant to a Tender Draft, that on the date of such payment the above statements are true. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Company. The Company represents and warrants as follows: (a) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Texas and is duly qualified to do business in, and is in good standing under the laws of the States of Texas, Arizona and New Mexico and has requisite corporate power and authority, and all governmental licenses, authorizations and approvals necessary, to conduct its business and to own its properties, except where the failure to have the same would not result in a Material Adverse Effect. 45 (b) The execution, delivery and performance by the Company of this Agreement and the other Related Documents to which it is a party are within the Company's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Company's articles of incorporation or by-laws, which the Company has adopted pursuant to the Plan of Reorganization or (ii) any law, order, rule, regulation (including, without limitation, any order, rule or regulation of the Federal Energy Regulatory Commission, the New Mexico Public Service Commission or the Public Utility Commission of Texas, or Regulation G, T, U or X of the Board of Governors of the Federal Reserve System), writ, judgment, injunction or decree applicable to the Company or any contractual restriction binding on or affecting the Company or any Subsidiary, and do not result in or require the creation of any Lien of the Company or any Subsidiary (except as provided in or contemplated by this Agreement or the other Related Documents or the Plan of Reorganization) upon or with respect to any properties of the Company or any Subsidiary. (c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Company of this Agreement or any other Related Document (including the issuance and pledge of the Second Mortgage Bonds, Series Y-6 and the creation and perfection of the Liens on the property securing such Bonds) except for (i) those that have been duly obtained or made and are in full force and effect and are Final Approvals and (ii) the Confirmation Order. (d) This Agreement has been duly and validly executed by the Company and constitutes, and the other Related Documents when delivered hereunder will be, the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms. (e) There is no pending or overtly threatened action, investigation, proceeding or notification which has been instituted after the Effective Date affecting the Company or any of its Subsidiaries before any court, governmental agency or arbitrator which is reasonably likely to have a Material Adverse Effect. (f) Except for information contained in Annex B to the Official Statement describing the Issuing Bank, as to which no representation is made, the Official Statement was, the Preliminary Official Statement was, and any 46 supplement or amendment to any thereof shall be, accurate in all material respects for the purposes for which its use is, was, or shall be, authorized; and the Official Statement did not as of its date of issue contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements made therein, in the light of the circumstances under which they are or were made, not misleading. (g) The Company and the ERISA Affiliates have fulfilled their respective obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and are in compliance with the presently applicable provisions of ERISA and the Code except where non-compliance would not have a Material Adverse Effect, and have not incurred any liability to the PBGC (other than to pay premiums under Section 4007 of ERISA) or any Plan or any Multiemployer Plan (other than to make contributions in the ordinary course of business). No reportable event, within the meaning of Section 4043 of ERISA, has occurred with respect to any Plan, except for any such event as to which the 30-day notice requirement has been waived by the PBGC. Schedule B (Actuarial Information) to the most recently filed annual report (Form 5500 Series) for each Plan is complete and accurate and fairly presents the funding status of such Plan, and since the date of such Schedule B there has been no change in such funding status that can reasonably be expected to have a Material Adverse Effect. (h) The Second Mortgage Bonds, Series Y-6, (i) have been duly authorized, executed, authenticated, issued, pledged and delivered in the manner provided for in the Second Mortgage Bond Indenture and in compliance with all applicable law; (ii) constitute the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their terms and the terms of the Second Mortgage Bond Indenture except insofar as enforceability may be limited or otherwise affected by (a) bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application relating to or affecting the rights and remedies of creditors from time to time in effect and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law); (iii) are entitled to the security and benefits of the Second Mortgage Bond Indenture; (iv) are secured equally and ratably with and only with all other bonds issued and outstanding and which may hereafter and thereafter be issued and outstanding under the Second Mortgage Bond Indenture; (v) are secured by duly perfected Liens on and security interests in the collateral purported to secure such bonds in the Second 47 Mortgage Bond Indenture which Liens are subordinated in priority only to the Liens and security interests granted under the First Mortgage Bond Indenture and securing outstanding First Mortgage Bonds; and (vi) constitute collateral security encumbered by valid, duly perfected Liens thereon and security interests therein securing the obligations of the Company under this Agreement as purported to be provided in such indenture and herein. The Company has executed, issued and delivered all Second Mortgage Bonds, Series Y-6 to the Agent for its benefit and the ratable benefit of the Issuing Bank and the Creditors and has made all such duly perfected pledges thereof to the Agent for its benefit and the ratable benefit of the Issuing Bank and the Creditors as are required to be executed, issued, delivered and made under this Agreement and there are no other Liens on such Second Mortgage Bonds. (i) The Second Mortgage Bond Indenture creates a valid and perfected second Lien on the Company's property as described in the Second Mortgage Bond Indenture as collateral security for the Company's obligations under the Second Mortgage Bond Indenture and the Second Mortgage Bonds, Series Y-6. (j) No Material Adverse Effect has occurred since the Effective Date. (k) The operations and properties of the Company and each of its Subsidiaries comply in all material respects with all Environmental Laws, the Company and each of its Subsidiaries possess and are in compliance with all required Environmental Permits and no circumstances exist that are or would be reasonably likely to (i) form the basis of an Environmental Action against the Company or any of its Subsidiaries or any of their properties or (ii) cause any such property to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law, except as would not be likely to have a Material Adverse Effect on the Company, and none of the properties of the Company or any of its Subsidiaries is listed or proposed for listing on the National Priorities or CERCLA List under CERCLA or any analogous state list. (l) The Indenture creates a valid, enforceable and perfected first priority security interest in the Trust Estate (as defined in the Indenture) for the benefit of the holders of the Bonds, as security for the Issuer's obligations of the holders of the Bonds under the Indenture and pursuant to the terms of the Bonds. 48 (m) The Company is not a "holding company" as such term is defined in the Public Utility Holding Company Act of 1935, as amended, nor an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. (n) The Company and its Subsidiaries have filed all United States Federal and state income tax returns and all other material tax returns which are required to be filed by them, and have paid all taxes due pursuant to such returns or, to the extent deemed necessary or appropriate by the Company and such Subsidiary, provided reserves for the payment thereof, other than such taxes that the Company or any Subsidiary is contesting in good faith by appropriate legal proceedings. (o) Prior to the issuance of the Letter of Credit, the Confirmation Order has been entered and has not been reversed, amended (except as consented to by the Issuing Bank in its sole discretion), stayed, vacated or rescinded. The Agent, the Issuing Bank and each Creditor shall be entitled to enforce the remedies under this Agreement without further application to or order by the Bankruptcy Court. (p) The operations and properties of the Company and each of its Subsidiaries comply in all material respects with all Environmental Laws, the Company and each of its Subsidiaries possess and are in compliance with all Environmental Permits and no circumstances exist that are or would be reasonable likely to (i) form the basis of an Environmental Action against the Company or any of its Subsidiaries or any of their properties, or (ii) cause any such property to be subject to any restriction on ownership, occupancy, use or transferability under any Environmental Law, except as could not be likely to have a Material Adverse Effect and none of the property of the Company or any of its Subsidiaries is listed or proposed for listing on the National Priority List under CERCLA or any analogous state list. ARTICLE V COVENANTS OF THE COMPANY SECTION 5.01. Affirmative Covenants. So long as a drawing is available under the Letter of Credit or the Issuing Bank or any Creditor shall have any commitment hereunder or the Company shall have not paid in full all amounts payable by the 49 Company hereunder to the Agent, the Issuing Bank, or any Creditor, the Company agrees that, unless the Majority Creditors shall otherwise consent in writing: (a) Reporting Requirements. The Company shall deliver to the Agent and each Creditor: (i) as soon as available and in any event within 45 days after the end of each of the first three quarterly fiscal periods of each fiscal year of the Company, consolidated and consolidating statements of income, retained earnings and cash flow of the Company 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, and the related consolidated and consolidating balance sheets of the Company and its Consolidated Subsidiaries at the end of such period, setting forth in each case in comparative form the corresponding consolidated and consolidating figures for the corresponding period in the preceding fiscal year, accompanied by a certificate of a senior financial officer of the Company, which certificate shall state that said consolidated financial statements fairly present the consolidated financial condition and results of operations of the Company and its Consolidated Subsidiaries, and said consolidating financial statements fairly present the respective individual unconsolidated financial condition and results of operations of the Company and of each of its Consolidated Subsidiaries, in each case in accordance with GAAP, consistently applied, as at the end of, and for, such period (subject to normal year-end audit adjustments); (ii) as soon as available and in any event within 90 days after the end of each fiscal year of the Company, consolidated and consolidating statements of income, retained earnings and cash flow of the Company and its Consolidated Subsidiaries for such fiscal year and the related consolidated and consolidating balance sheets of the Company and its Consolidated Subsidiaries as at the end of such fiscal year, setting forth in each case in comparative form the corresponding consolidated and consolidating figures for the preceding fiscal year, and accompanied (i) in the case of said consolidated statements and balance sheet of the Company, by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that said consolidated financial statements fairly present the consolidated financial 50 condition and results of operations of the Company and its Consolidated Subsidiaries as at the end of, and for, such fiscal year in accordance with GAAP, consistently applied, and a certificate of such accountants stating that, in making the examination necessary for their opinion, they obtained no knowledge, except as specifically stated, of any failure by the Company to comply with Section 5.02(a), (b) or (e)(xi), and (ii) in the case of said consolidating statements and balance sheets, by a certificate of a senior financial officer of the Company, which certificate shall state that said consolidating financial statements fairly present the respective individual unconsolidated financial condition and results of operations of the Company and of each of its Consolidated Subsidiaries, in each case in accordance with GAAP, consistently applied, as at the end of, and for, such fiscal year; (iii) as soon as available copies of all proxy statements, material reports and registration statements which the Company or any of its Subsidiaries files with the Securities and Exchange Commission or any national securities exchange (other than filings made pursuant to the Public Utility Holding Company Act of 1935, as amended, public offerings of securities under employee benefit plans, customer stock purchase plans or dividend reinvestment plans); (iv) as soon as possible and in any event within two days after the Company has knowledge of the occurrence of each Event of Default continuing on the date of such statement, a statement from the chief financial officer of the Company setting forth details of such Event of Default and the action that the Company has taken and proposes to take with respect thereto; (v) at the time the Company furnishes each set of financial statements pursuant to paragraph (i) or (ii) above, a certificate of a senior financial officer of the Company setting forth in reasonable detail the computations necessary to determine whether the Company is in compliance with subsections (a), (b) and (e)(xi) of Section 5.02 as of the end of the respective quarterly fiscal period or fiscal year and stating that no event has occurred or is continuing which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or the lapse of time 51 or both or, if any such event has occurred and is continuing, a statement as to the nature thereof and the action that the Company has taken or proposes to take with respect thereto; and (vi) such other financial data and information of the Company or any of its Subsidiaries as the Agent, the Issuing Bank or any Creditor may from time to time reasonably request. (b) Litigation. The Company will promptly give to the Agent notice of all actions, suits, investigations, litigation or legal or arbitral proceedings, and of all proceedings by or before any governmental or regulatory authority or agency (and any material development in respect of such legal or other proceedings), in each case, known to the Company, which is reasonably likely to have a Material Adverse Effect. (c) Preservation of Corporate Existence, Etc. The Company shall (i) preserve and maintain its corporate existence in the state of its incorporation and qualify and remain qualified as a foreign corporation in each jurisdiction in which such qualification is reasonably necessary in view of its business, and (ii) pay and discharge, and cause its Subsidiaries to pay and discharge, all taxes, assessments and governmental charges upon its income and its properties prior to the date on which penalties are attached thereto, unless (A) such taxes, assessments and governmental charges shall be contested in good faith and by appropriate proceedings by the Company or its Subsidiaries and (B) the Company or any such Subsidiary shall set aside on its books adequate reserves therefor to the extent required by GAAP. Nothing contained in this clause (c) of Section 5.01 shall be deemed to prohibit any transaction permitted by clause (c) of Section 5.02. (d) Maintenance of Insurance, Etc. The Company shall, and shall cause its Subsidiaries to, maintain insurance with responsible insurance companies or associations or through its own program of self-insurance in such amounts, with such deductibles, and covering such risks as is usually carried by companies engaged in similar business. (e) Compliance with Laws, Etc. The Company shall comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA, except where the failure to so comply would not have a Material Adverse Effect. 52 (f) Compliance with Environmental Laws. The Company shall comply, and cause each of its Subsidiaries and all lessees and other Persons occupying or operating on its properties to comply, in all material respects, with all Environmental Laws and Environmental Permits applicable to its operations and properties; obtain and renew all Environmental Permits necessary for its operations and properties; and conduct, and cause each of its Subsidiaries to conduct, any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action required under any Environmental Law to remove and clean up all Hazardous Materials from any of its properties, in accordance with the requirements of all Environmental Laws; provided, however, that neither the Company nor any of its Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and reserves, where required by GAAP, are being maintained with respect to such circumstances. (g) Visitation Rights. The Company shall, at any reasonable time and from time to time, permit the Agent, the Issuing Bank, any Creditor or any agents or representatives of any thereof, to examine and make copies of and abstracts from the records and books of account of, and examine the properties of, the Company and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Company and any of its Subsidiaries with any of their officers or directors and with their independent certified public accountants. (h) Maintenance of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted; provided that this subsection (h) shall not prevent the sale of any properties permitted by subsection (c) of Section 5.02. (i) Lien. The Company shall maintain the Lien created or purported to be created by the Second Mortgage Bond Indenture for the benefit of the Agent and the ratable benefit of the Issuing Bank and the Creditors and defend, preserve and protect such Lien against all claims of all Persons. (j) Redemption or Defeasance of Bonds or Substitution of Credit Facility. The Company shall use its best efforts to cause the Trustee, upon redemption or defeasance of less than all of the Bonds pursuant to the 53 Indenture, to furnish to the Issuing Bank notice in the form of Annex A to the Letter of Credit, and, upon a redemption or defeasance of all the Bonds pursuant to the Indenture or upon substitution of a Credit Facility (as defined in the Indenture) for the Letter of Credit, to surrender the Letter of Credit to the Issuing Bank for cancellation. (k) Bond Rating. The Company shall exercise its best efforts to cause the Bonds to have a rating by Moody's Investors Service, Inc. or by Standard & Poor's Corporation. (l) Remarketing. The Company shall take all steps that are necessary or appropriate to cause any Bonds acquired by the Trustee on behalf of and for the account of the Company or the Issuing Bank, the Agent or any other nominee of the Issuing Bank to be remarketed (in the case of Bonds acquired on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank, to the extent the Issuing Bank requests that such Bonds be remarketed), including (without limitation) preparing such disclosure and other documents as are required to remarket the Bonds. (m) Registration of Bonds. The Company shall cause all Bonds which it (or any of its Affiliates) acquires, or which are acquired for its (or any of its Affiliates) account, to be registered forthwith in accordance with the Indenture in the name of the Company (or such Affiliate). (n) Maintain Books and Records. The Company shall keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied. (o) Additional Documents. As promptly as practicable (but in any event not later than 30 days) after the Effective Date, the Company will furnish to the Agent, (i) certified copies of the recorded counterparts of the First Mortgage Bond Indenture and evidencing the filing thereof and (ii) certified copies of all notices filed with respect to the First Mortgage Bond Indenture. (p) Creation of Subsidiaries. The Company shall not, and shall not permit any of its Subsidiaries to, create any Subsidiaries of the Company or make any investment in any Person except in compliance with the Public Utility Holding Company Act of 1935, as amended, and the regulations and orders of the Securities and Exchange Commission thereunder. 54 SECTION 5.02. Negative Covenants. So long as a drawing is available under the Letter of Credit or the Issuing Bank shall have any commitment hereunder or the Company shall have not paid in full all amounts payable by the Company hereunder to the Agent, the Issuing Bank, or any Creditor, the Company agrees that, without the written consent of the Majority Creditors: (a) Total EBITA to Interest Coverage Ratio. The Company shall not permit the Interest Coverage Ratio to be less than 1.40 to 1 at any time on or after the last day of the first full fiscal quarter of the Company commencing after the Effective Date. (b) Leverage Ratio. The Company shall not permit the Leverage Ratio to exceed 0.68 to 1 at any time on or after the last day of the first full fiscal quarter of the Company commencing after the Effective Date. (c) Prohibition of Fundamental Changes. The Company shall not, and will not permit any of its Subsidiaries to, enter into any transaction of merger, consolidation, amalgamation, liquidation or dissolution; provided that the Company or any of its Subsidiaries may merge or consolidate with any other Person if (i) in any such transaction in which the Company is a party, the Company is the surviving corporation, (ii) in any such transaction in which the Company is not a party, the surviving corporation shall be a Subsidiary of the Company and (iii) after giving effect thereto no Event of Default would exist hereunder. The Company will not, and will not permit any of its Subsidiaries to, convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or substantially all of its business or assets or assets (excluding (i) accounts receivable, (ii) obsolete or worn-out tools, equipment or other property no longer used or useful in its business and (iii) inventory or other property sold or disposed of in the ordinary course of business and on ordinary business terms) which in the aggregate have a net book value in excess of $50,000,000, whether now owned or hereafter acquired, to any other Person. Notwithstanding the foregoing provisions of this subsection (c): (1) any Subsidiary of the Company may be merged or consolidated with or into: (A) the Company if the Company shall be the continuing or surviving corporation or (B) any other Subsidiary of the Company; and 55 (2) any Subsidiary of the Company may sell, lease, transfer or otherwise dispose of any or all of its property (upon voluntary liquidation or otherwise) to the Company or a Subsidiary of the Company. (d) Compliance with ERISA. The Company shall not (i) enter into any non-exempt prohibited transaction (as defined in Section 4975 of the Code and in Section 406 of ERISA) involving any Plan which may result in any liability of the Company to any Person which (in the reasonable opinion of the Agent) will have a Material Adverse Effect or (ii) allow or suffer to exist any other event or condition known to the Company which results in any liability of the Company or any of its Subsidiaries to the PBGC, or in any Withdrawal Liability to any Multiemployer Plan, which (in the reasonable opinion of the Agent) will have a Material Adverse Effect. For purposes of this Section 5.02(d), "liability" shall not include termination insurance premiums payable under Section 4007 of ERISA. Upon request of the Agent, the Company shall promptly furnish to the Agent a copy of Schedule B (Actuarial Information) to the most recently filed annual report (Form 5500 Series) of any Plan. (e) Limitation on Liens. The Company shall not, nor will it permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with respect to any of its property, whether now owned or hereafter acquired, except: (i) Liens created pursuant to the Related Documents or pursuant to the First Mortgage Bond Indenture or the Second Mortgage Bond Indenture; (ii) Liens created or otherwise in existence on the Effective Date or contemplated by the Plan of Reorganization; (iii) Liens imposed by any governmental authority for taxes, assessments or charges not yet due or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Company or the affected Subsidiaries, as the case may be, in accordance with GAAP; (iv) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith and by appropriate proceedings; 56 (v) pledges or deposits under worker's compensation, unemployment insurance and other social security legislation; (vi) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (vii) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business and encumbrances consisting of zoning restrictions, easements, licenses, restrictions on the use of property or minor imperfections in title thereto which, in the aggregate, are not material in amount, and which do not in any case materially detract from the value of the property subject thereto, render title to the property encumbered thereby unmarketable, materially adversely affect the use of such property for its present purposes or interfere with the ordinary conduct of the business of the Company or any of its Subsidiaries; (viii) Liens on property of any corporation which becomes a Subsidiary of the Company after the date of this Agreement, provided that such Liens are in existence at the time such corporation becomes a Subsidiary of the Company and were not created in anticipation thereof, provided further that such Liens shall not extend to cover any property of the Company or any of its other Subsidiaries and such Liens shall not cover property of such Subsidiary other than property of the types covered by the terms of such Liens at the time such Subsidiary is acquired; (ix) Liens upon real and/or tangible personal property acquired after the Effective Date (by purchase, construction or otherwise) by the Company or any of its Subsidiaries, each of which Liens either (A) existed on such property before the time of its acquisition and was not created in anticipation thereof, or (B) was created solely for the purpose of securing Debt representing, or incurred to finance, refinance or refund, the cost (including the cost of construction) of such property; provided that no such Lien shall extend to or cover any property of the Company or such Subsidiary other than the property so acquired and improvements thereon; 57 (x) banker's liens, rights of set-off and Liens on documents presented under commercial letters of credit, in each case granted to banks in accordance with customary banking practices or arising by operation of law; (xi) additional Liens upon real and/or personal property created after the date hereof, provided that on the date each such Lien is incurred, the lower of (1) the fair market value of all property subject to Liens permitted by this paragraph (xi) and not otherwise permitted by this subsection (e) or (2) the aggregate amount of all obligations secured by Liens permitted by this paragraph (xi) and not otherwise permitted by this subsection (e) shall not exceed 5% of Total Capital on such date; and (xii) any extension, renewal or replacement of the foregoing, provided, however, that the Liens permitted hereunder shall not be spread to cover any additional Debt or property (other than a substitution of like property). (f) Change in Nature of Business. The Company shall not make, or permit any of its Subsidiaries to make, any material change in the nature of its business as carried on at the date hereof. (g) Optional Redemptions. The Company shall not optionally redeem any Bonds unless the First Mortgage Bonds, Series A/B, and the Second Mortgage Bonds, Series A, shall each have an Investment Grade Rating and such bonds have not been placed, with possible negative consequences, on any watch list. (h) Related Documents. The Company shall not, subject to specific rights contained in such agreements, amend, or consent to the amendment of, any of the Related Documents, which amendment would adversely affect the Agent, the Issuing Bank or any Creditor; provided that the Second Mortgage Bond Indenture may be amended in accordance with its terms; and provided further that the consent of the Agent, the Issuing Bank or such Creditor, as the case may be, may not be unreasonably withheld. (i) Appointment. The Company shall not appoint any successor to the Trustee or any Remarketing Agent (as defined in the Indenture) or other agent appointed pursuant to the Indenture or any additional Remarketing Agents or other such agents with respect to the Bonds without the consent of the Majority Creditors; provided that the consent of the Majority Creditors may not be unreasonably withheld. 58 (j) Bond Interest Term. The Company shall not cause the Trustee to select a Bond Interest Term Rate (as defined in the Indenture) for any Bond. ARTICLE VI EVENTS OF DEFAULT SECTION 6.01. Events of Default. The occurrence of any of the following events shall be an "Event of Default" hereunder: (a) The Company shall fail to pay any amount payable under any provision of Article II or any other provision of this Agreement within two days after the same becomes due and payable; or (b) Any representation, warranty or certification made, or deemed made, by the Company in any Related Document by the Company (or any of its officers), or any certificate furnished to the Agent, the Issuing Bank or any Creditor pursuant to the provisions thereof, shall prove to have been false or misleading as of the time made or furnished in any material respect; or (c) The Company shall default in the performance of any of its obligations under clause (a)(vi) of Section 5.01 or clauses (a), (b), (c) or (f) of Section 5.02; or a consensual Lien shall be created by the Company or any of its Subsidiaries in violation of Section 5.02(e); or the Company shall default in its performance of any of its other obligations under this Agreement or in any other Related Document and such default in the performance of any such other obligation shall continue unremedied for a period of 15 days after notice thereof to the Company by the Agent; or (d) The Company or any of its Subsidiaries shall default in the payment when due of any principal of or any interest on any Debt aggregating $10,000,000 or more, or fail to observe or perform any material term, covenant or agreement contained in any agreement by which it is bound, evidencing or securing Debt, in an aggregate amount of $10,000,000 or more, or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt, after the giving of any required notice and for such period of time as would permit the holder or holders thereof or of any obligations issued thereunder to accelerate the maturity thereof, unless such failure or event or condition shall have been cured by the Company or such Subsidiary, as the case may be, or effectively waived by such holder or holders; or 59 (e) There shall remain in force, undischarged, unsatisfied and unstayed, for more than 30 days, whether or not consecutive, any final judgment against the Company or any of its Material Subsidiaries that, together with other outstanding final judgments, undischarged, against the Company and all of its Material Subsidiaries exceeds in the aggregate $10,000,000 (for the purposes hereof, the term "final judgment" shall mean a judgment which is not subject to appeal); or (f) The Company or any of its Material Subsidiaries shall make a general assignment for the benefit of creditors, or admit in writing its inability to pay or generally fail to pay its debts as they mature or become due, or shall petition or apply for the appointment of a trustee or other custodian, liquidator or receiver of the Company or any of its Material Subsidiaries, as the case may be, or any substantial part of its respective assets; or the Company or any of its Material Subsidiaries shall commence any case or other proceeding relating to the Company or any of its Material Subsidiaries under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, or the Company or any of its Material Subsidiaries shall take any action to authorize or in furtherance of any of the foregoing; or if any such petition or application shall be filed or any such case or other proceeding shall be commenced against the Company or any of its Material Subsidiaries and the Company or any of its Material Subsidiaries shall indicate its approval thereof, consent thereto or acquiescence therein or such petition or application shall not be dismissed on or before the 60th day after the filing thereof; or (g) A decree or order is entered appointing any trustee, custodian, liquidator or receiver or adjudicating the Company or any of its Material Subsidiaries bankrupt or insolvent, or approving a petition in any such case or other proceeding, or a decree or order for relief is entered in respect of the Company or any of its Material Subsidiaries in an involuntary case under federal bankruptcy laws as now or hereafter reconstituted; or (h) There shall have been asserted against the Company by a Governmental Person or other Person, a written complaint, claim or demand asserting any claims or liabilities, whether accrued, absolute or contingent, based on or arising from the presence, release or disposal of Hazardous Materials by the Company or any of its Subsidiaries that is reasonably likely to be determined adversely to the Company or any of its Subsidiaries, and 60 the amount thereof (either individually or in the aggregate) would, in such event, have a Material Adverse Effect (after deducting any portion thereof that is reasonably expected to be paid by other creditworthy Persons); or (i) The Confirmation Order shall be (i) reversed, revoked or vacated in whole or in part by any Final Order of a court of competent jurisdiction, or (ii) modified in a manner or subjected to a stay that adversely affects the Company's ability to perform any of its obligations hereunder, as determined by the Agent in its sole discretion; or (j) Central and South West Corporation shall cease directly or indirectly, to own (or otherwise shall cease, directly or indirectly, to control the voting rights of) at least 51% of the Voting Stock of the Company; or (k) Any "Event of Default" under and as defined in the Related Documents shall have occurred and be continuing; or (l) Any regulatory approval as set forth in Section 3.01(d) or required to consummate the Plan of Reorganization shall be rescinded if such rescission can not be appealed by the Company and has a Material Adverse Effect on the Company; or (m) Any material provision of this Agreement or any other Related Document shall at any time cease to be a valid, binding obligation of the Company enforceable against the Company, or any such agreement shall be declared to be null and void, or the validity or enforceability thereof shall be contested by the Company, or a proceeding shall be commenced by any Governmental Person having jurisdiction over the Company seeking to establish the invalidity or unenforceability thereof, or the Company shall deny that it has any further liability or obligation under this Agreement or any other Related Document after delivery thereof or the Second Mortgage Bond Indenture shall for any reason (other than pursuant to the terms thereof) cease to create a valid and perfected second priority Lien on the Company's property purported to be secured thereby. SECTION 6.02. Upon an Event of Default. If any Event of Default shall have occurred and be continuing, (A) the Issuing Bank shall at the request, or may with the consent, of the Majority Creditors (i) if the Letter of Credit shall not have been issued, by notice to the Company, declare the obligation of the Issuing Bank to issue the Letter of Credit to 61 be terminated, whereupon the same shall forthwith terminate, or, (ii) if the Letter of Credit shall have been issued, give notice to the Trustee pursuant to Section 9.01 of the Indenture that an Event of Default hereunder has occurred and is continuing and, if a drawing to pay interest on the Bonds shall have been made under the Letter of Credit (other than such a drawing in respect of the payment of interest upon scheduled or accelerated maturity, or redemption, of the Bonds), and not reimbursed, notify the Trustee prior to the fifteenth day following such drawing that the Issuing Bank has not been reimbursed for such drawing and that interest in the amount of such drawing will not be reinstated, and (B) the Agent shall at the request, or may with the consent, of the Majority Creditors (i) declare the Tender Advances, all interest thereon and all other amounts payable hereunder or in respect thereof, to be forthwith due and payable, whereupon the Tender Advances, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest, or further notice of any kind, all of which are hereby expressly waived by the Company and (ii) exercise all rights and remedies in respect of the Second Mortgage Bonds, Series Y-6 pledged as security hereunder; provided, however, that in the event of the occurrence of an Event of Default pursuant to subsections (f) or (g) of Section 6.01, (A) the obligation of the Issuing Bank to issue the Letter of Credit shall automatically be terminated and (B) the Tender Advances, all interest thereon and all other amounts payable hereunder or in respect thereof shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Company. ARTICLE VII SECURITY SECTION 7.01. Issuance and Pledge of Bonds. Concurrently with the execution of this Agreement, the Company shall execute, issue and deliver to the Agent for its benefit and the ratable benefit of the Issuing Bank and each Creditor the Second Mortgage Bonds, Series Y-6 as security for the payment of all obligations of the Company now or hereafter existing under this Agreement in respect of principal and interest (which shall also, for the purposes thereof, consist of letter of credit commissions), pursuant to and on the terms of this Agreement and of the Second Mortgage Bond Indenture. The Company hereby pledges to the Agent and grants to the Agent, in each case, for its benefit and the ratable benefit of the Issuing Bank and each Creditor a security interest in the Second Mortgage Bonds Series Y-6 and all interest, cash, instruments and other property from time to time received, 62 receivable or otherwise distributed in respect of or in exchange for any or all of such Bonds and proceeds of any and all of the foregoing. The Second Mortgage Bond, Series Y-6 shall be registered in the name of the Agent or such nominee or nominees as the Agent shall direct. SECTION 7.02. Application of Moneys. Any moneys received by the Agent, the Issuing Bank or any Creditor on account of the Second Mortgage Bonds, Series Y-6 shall be applied as follows: (a) moneys received on account of principal of the Second Mortgage Bonds, Series Y-6 shall be applied to the payment of any unpaid principal of the Tender Advances or drawings under the Letter of Credit then due and owing hereunder and (b) moneys received on account of interest on the Second Mortgage Bonds, Series Y-6 shall be applied to the payment of any accrued and unpaid interest then due and owing hereunder. SECTION 7.03. Rights of Bondholders. The Agent, as holder of the Second Mortgage Bonds, Series Y-6 for its benefit and the ratable benefit of the Issuing Bank and the Creditors, shall have all the rights (including, without limitation, voting rights) provided to holders of bonds in the Second Mortgage Bond Indenture and shall have only such rights. Without limiting the generality of the foregoing, (a) the Second Mortgage Bonds, Series Y-6 may not be sold, assigned, pledged or otherwise transferred by the Agent (except to a successor Agent appointed in accordance with Section 8.06 to be held as security as provided in this Article VII), whether pursuant to the Uniform Commercial Code after an Event of Default or otherwise except in connection with any assignment of the Agent's rights and obligations under this Agreement as provided for herein and (b) no payment of principal of or interest on the Second Mortgage Bonds, Series Y-6, or any other amount payable thereunder, shall be demanded or received except if, and to the extent that, the corresponding payment remains unpaid hereunder. To the extent that moneys recovered from the Second Mortgage Bonds, Series Y-6 are insufficient to pay in full the amount of principal and interest and other amounts due hereunder, the Company shall remain liable for any such deficiency under the terms of this Agreement. SECTION 7.04. The Agent's Duties. The powers conferred on the Agent hereunder are solely to protect its interest in the collateral, including, without limitation, the Second Mortgage Bonds, Series Y-6, and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any collateral in its possession and the accounting for moneys actually received by it hereunder, the Agent shall have no duty as to any collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any 63 collateral, whether or not the Agent, the Issuing Bank or any Creditor has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any collateral. The Agent shall be deemed to have exercised reasonable care in the custody and preservation of any collateral in its possession if such collateral is accorded treatment substantially equal to that which the Agent accords its own property. ARTICLE VIII THE AGENT, THE CREDITORS AND THE ISSUING BANK SECTION 8.01. Authorization and Action. The Issuing Bank and each Creditor hereby appoint and authorize the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of amounts due under this Agreement), neither the Issuing Bank nor the Agent shall be required to exercise any discretion or take any action, but the Agent shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Creditors, and such instructions shall be binding upon all Creditors; provided, however, that neither the Issuing Bank nor the Agent shall be required to take any action which exposes the Issuing Bank or the Agent to personal liability or which is contrary to this Agreement or applicable law. The Agent agrees to give to the Issuing Bank and each Creditor prompt notice of each notice given to it by the Company and to give to each Creditor notice of each notice delivered to it by the Issuing Bank, in each case pursuant to the terms of this Agreement. SECTION 8.02. Reliance, Etc. Neither the Agent, the Issuing Bank nor any of their directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or any other Related Document, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent and the Issuing Bank: (i) may treat each Creditor as a Creditor hereunder until the Agent receives written notice of the assignment or transfer of the rights and obligations of any Creditor hereunder signed by such Creditor and including the agreement of the assignee or transferee to be bound hereby as it would have been if it had been an original Creditor party hereto, in 64 form satisfactory to the Agent; (ii) may consult with legal counsel (including counsel for the Company), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Creditor and shall not be responsible to any Creditor for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement or any other Related Document; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or any other Related Document on the part of the Company or any other party or to inspect the property (including the books and records) of the Company; (v) shall not be responsible to any Creditor for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Related Document or any other instrument or document furnished pursuant hereto or thereto; and (vi) shall incur no liability under or in respect of this Agreement or any other Related Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 8.03. The Agent, the Issuing Bank and Affiliates. The Agent and the Issuing Bank shall have the same rights and powers under this Agreement as any other Creditor and may exercise the same as though they were not the Issuing Bank and the Agent, respectively; and the term "Creditor" or "Creditors" shall, unless otherwise expressly indicated, include Credit Suisse in its individual capacity. The Agent, the Issuing Bank and their respective Affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Company, any of its Subsidiaries and any Person who may do business with or own securities of the Company or any such Subsidiary, all as if Credit Suisse was not the Agent or the Issuing Bank and without any duty to account therefor to the Creditors. SECTION 8.04. Bank Credit Decision. Each Creditor acknowledges that it has, independently and without reliance upon the Agent, the Issuing Bank or any other Creditor and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Creditor also acknowledges that it will, independently and without reliance upon the Agent, the 65 Issuing Bank or any other Creditor and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. SECTION 8.05. Indemnification. The Creditors agree to indemnify the Agent and the Issuing Bank (to the extent not reimbursed by the Company), ratably according to the respective Participation Percentages, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent or the Issuing Bank in any way relating to or arising out of this Agreement or any action taken or omitted by the Agent or the Issuing Bank under this Agreement, provided that no Creditor shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's or the Issuing Bank's gross negligence or willful misconduct. Without limitation of the foregoing, each Creditor agrees to reimburse the Agent and the Issuing Bank promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by the Agent or the Issuing Bank, as the case may be, in connection with the preparation, execution, delivery, administration (except normal administrative costs and fees and expenses of counsel related thereto prior to an Event of Default), modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any other Related Document, to the extent that the Agent or the Issuing Bank is not reimbursed for such expenses by the Company. SECTION 8.06. Successor Agent. Subject to the appointment and acceptance of a successor Agent as provided below, the Agent may resign at any time by giving written notice thereof to the Issuing Bank, the Creditors and the Company and may be removed at any time with or without cause by the Issuing Bank. Upon any such resignation or removal, the Issuing Bank shall have the right to appoint a successor Agent which shall be reasonably acceptable to the Majority Creditors. If no successor Agent shall have been so appointed by the Issuing Bank, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or the Majority Creditors' removal of the retiring Agent, then the retiring Agent may, on behalf of the Issuing Bank and the Creditors, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $250,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor 66 Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. SECTION 8.07. Issuing Bank. (a) All notices received by the Issuing Bank pursuant to this Agreement or any other Related Document (other than the Letter of Credit) shall be promptly delivered to the Agent for distribution to the Creditors. (b) The Issuing Bank shall not amend or waive any provision or consent to the amendment or waiver of any Related Document without the consent of the Majority Creditors, provided, however, that any waiver or amendment of any provision of the Letter of Credit or consent to the amendment or waiver of the Letter of Credit shall require the written consent of all of the Creditors. (c) Upon receipt by the Issuing Bank from time to time of any amount pursuant to the terms of any Related Document (other than pursuant to the terms of this Agreement), the Issuing Bank shall promptly deliver to the Agent such amount. ARTICLE IX MISCELLANEOUS SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement nor consent to any departure by the Company therefrom shall in any event be effective unless the same shall be in writing and signed by the Majority Creditors, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by the Issuing Bank and all the Creditors, do any of the following: (a) waive any of the conditions specified in Article III, (b) increase the amount of the Letter of Credit or the Participation Percentage of any Creditor or subject the Creditors to any additional obligations, (c) reduce the principal of, or interest on, any Tender Advance or any fees (other than fees payable solely to the Issuing Bank) or other amounts payable hereunder, (d) extend the expiration date of the Letter of Credit (except as provided in Section 2.14(a) hereof) or postpone any date fixed for any payment of principal of, or interest on, any Tender Advance or any fees (other than fees payable solely to the Issuing Bank) or other amounts 67 payable hereunder, (e) change the aggregate unpaid principal amount of any Tender Advance or any other amount payable hereunder as a result of a draw on the Letter of Credit, or the number of Creditors, which shall be required for the Creditors or any of them to take any action hereunder, (f) amend this Section 9.01, (g) amend this Agreement in a manner intended to prefer one or more Creditors over any other Creditors, (h) amend the definition of "Majority Creditors", or (i) release any collateral, including, without limitation, the Second Mortgage Bonds, Series Y-6; provided further that no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Creditors required above to take such action, affect the rights or duties of the Agent under this Agreement; provided further that no amendment, waiver or consent shall, unless in writing and signed by the Issuing Bank in addition to the Creditors required above to take such action, affect the rights and duties of the Issuing Bank under this Agreement. SECTION 9.02. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telecopier, telegraphic, telex or cable communication) and mailed, telecopied, telegraphed, telexed, cabled or delivered, if to the Company, at its address at, in the case of deliveries, at its street address at [303 North Oregon Street, El Paso, Texas 79901], in the case of mailings, to its mailing address at [P.O. Box 982, El Paso, Texas 79960], in the case of telex, to telex no. [5435710 (callback 915-543-5707)] and in the case of telecopier to [915-521-4754], in each case to the attention of the Secretary; if to the Issuing Bank, at its address at [___________________________], Attention: [_____________], telex no. [_______________] and in the case of telecopier to [___________]; if to the Agent, at its address at [_____________________________], Attention: [_____________], telex no. [_________________] and in the case of telecopier to [_________________]; if to any Creditor, at its address specified on the signature pages hereof; and if to the Trustee, in the case of deliveries, at its street address at [ , ], in the case of mailings, to its mailing address at P.O. Box , , , and in the case of telex, to telex no. , in each case to the attention of [Corporate Trust Department] or, as to each such entity, at such other place and/or address or number as shall be designated by such entity in a written notice to the other such entities. All such notices and communications shall, when mailed, telecopied, telegraphed, telexed or cabled, be effective when deposited in the mails, telecopied, delivered to the telegraph company, confirmed by telex answerback or delivered to the cable company, respectively, addressed as 68 aforesaid, except that notices to the Agent or Issuing Bank pursuant to the provisions of Article II shall not be effective until received by the Agent or Issuing Bank, as the case may be. SECTION 9.03. No Waiver; Remedies. No failure on the part of the Issuing Bank, the Agent or any Creditor to exercise, and no delay in exercising, any right hereunder or under any Related Document shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 9.04. Rights of Setoff and Subrogation. (a) Upon the occurrence and during the continuance of any Event of Default, the Issuing Bank and each Creditor are hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and otherwise apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Issuing Bank or such Creditor, as the case may be, to or for the credit or the account of the Company against any and all of the obligations of the Company now or hereafter existing under this Agreement, the Second Mortgage Bond Indenture or the Second Mortgage Bonds, Series Y-6, whether or not the Issuing Bank or such Creditor, as the case may be, shall have made any demand hereunder or under such other documents and although such obligations may be contingent or unmatured. The Issuing Bank and each Creditor, as the case may be, agree promptly to notify the Company after any such set-off and application made by it, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Issuing Bank and each Creditor under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Issuing Bank and each Creditor may have. (b) If any Creditor shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise, but excluding all proceeds received by assignments or sales of participations in accordance with Section 9.04) on account of its participatory interests in any Tender Advances or other amounts payable by the Company due to a draw under the Letter of Credit (other than pursuant to Section 2.11 or 2.17) in excess of its ratable share of payments on account of such Tender Advances or such other amounts obtained by all the Creditors and the Issuing Bank, such Creditor shall forthwith purchase from the other Creditors and the Issuing Bank a participation in the portions 69 of such Tender Advances or such other amounts, as the case may be, owing to them as shall be necessary to cause such purchasing Creditor to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Creditor, such purchase from the Issuing Bank or such Creditor shall be rescinded and the Issuing Bank or such Creditor shall repay to the purchasing Creditor the purchase price to the extent of such recovery together with an amount equal to the Issuing Bank's or such Creditor's ratable share (according to the proportion of (i) the amount of the Issuing Bank's or such Creditor's required repayment to (ii) the total amount so recovered from the purchasing Creditor) of any interest or other amount paid or payable by the purchasing Creditor in respect of the total amount so recovered. (c) Notwithstanding the foregoing, if any Creditor shall obtain any such excess payment involuntarily, such Creditor may, in lieu of purchasing participations from the Issuing Bank and other Creditors in accordance with subsection (b) above, on the date of receipt of such excess payment, return such excess payment to the Agent for distribution in accordance with Section 2.12. (d) The Company agrees that the Issuing Bank and the Creditors, as the case may be, shall be subrogated to all rights of the Trustee and the holders of the Bonds, to the extent of any payment made by the Issuing Bank pursuant to a drawing under the Letter of Credit, provided that so long as the Bonds remain unpaid and held by Persons other than the Company or any Affiliate thereof, such right of subrogation shall in all respects be subordinate to the rights of the Trustee and the holders of the Bonds. SECTION 9.05. Indemnification. The Company hereby indemnifies and holds the Agent, the Issuing Bank, each Creditor and each Participant and each of their Affiliates and their officers, directors, employers, agents and advisors (each, an "Indemnified Party") harmless from and against any and all claims, damages, losses, liabilities, costs or expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party (except to the extent any claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct), in each case relating to or arising out of or in connection with or by reason of: (a) any inaccuracy or alleged inaccuracy in any material respect, or any untrue statement or alleged untrue statement of any material fact, contained in the Preliminary Official Statement, the Official Statement or 70 any amendment or supplement to the Official Statement, or by reason of the omission or alleged omission to state therein a material fact necessary to make such statements, in the light of the circumstances under which they were made, not misleading; provided, however, that, in the case of any action or proceeding alleging an inaccuracy in a material respect, or an untrue statement, with respect to information supplied by and describing the Issuing Bank in the Preliminary Official Statement or the Official Statement (the "Bank Information"), (i) indemnification by the Company pursuant to this Section 9.05(a) shall be limited to the costs and expenses of the Issuing Bank (including reasonable fees and expenses of the Issuing Bank's counsel) of defending itself against such allegation, (ii) if in any such action or proceeding it is finally determined that the Issuing Bank Information contained an inaccuracy in a material respect or an untrue statement, then the Company shall not be required to indemnify the Issuing Bank pursuant to this Section 9.05(a) for any claims, damages, losses, liabilities, costs or expenses to the extent caused by such inaccuracy or untrue statement, and (iii) if any such action or proceeding shall be settled by the Issuing Bank without there being a final determination to the effect described in the preceding clause (ii), unless the Letter of Credit is wrongfully dishonored and such action or proceeding relates to such wrongful dishonor, then the Company shall be required to indemnify the Issuing Bank pursuant to this Section 9.05(a) for the reasonable costs or expenses incurred in connection with such action or proceeding prior to such settlement and, if such action or proceeding is settled with the Company's consent, for the costs and expenses of such settlement; or (b) any representation, warranty or certification made or deemed made in this Agreement by the Company (or any of its officers), or any certificate furnished to the Agent, the Issuing Bank or any Creditor pursuant to the provisions hereof, proving to have been false or misleading as of the time made or furnished in any material respect; or (c) any case or proceeding pursuant to any bankruptcy, insolvency, reorganization, moratorium or similar law or any restructuring of the Company; or (d) any cost or liability under any Environmental Law arising out of the operation or assets of the Company; or (e) any event or occurrence set forth in Section 5.04 of the Loan Agreement; or 71 (f) the execution and delivery or transfer of, or wrongful payment or wrongful failure to make payment under, the Letter of Credit; provided, however, that the Company shall not be required to indemnify any Indemnified Party pursuant to this Section 9.05 for any claims, damages, losses, liabilities, costs or expenses to the extent caused by (i) any Indemnified Party's willful misconduct or gross negligence in determining whether a draft or certificate presented under the Letter of Credit complied with the terms of the Letter of Credit or (ii) any Indemnified Party's wrongful failure to make lawful payment under the Letter of Credit after the presentation to it by the Trustee or a successor trustee under the Indenture of a draft and certificate strictly complying with the terms and conditions of the Letter of Credit. Nothing in this Section 9.05 is intended to limit the Company's obligations contained in Article II. Without prejudice to the survival of any other obligation of the Company hereunder, the indemnities and obligations of the Company contained in this Section 9.05 shall survive the payment in full of amounts payable by the Company pursuant to Article II and the termination of the Letter of Credit. SECTION 9.06. Issuing Bank and Creditors. As between the Issuing Bank, the Agent, and the Creditors on the one hand, and the Company on the other hand, the Company assumes all risks of the acts or omissions of the Trustee and any other beneficiary or transferee of the Letter of Credit with respect to its use of the Letter of Credit. Neither the Issuing Bank, the Agent, any Creditor, nor any Participant nor any of their Affiliates and their officers, directors, employers, agents and advisors shall be liable or responsible for: (a) the use which may be made of the Letter of Credit or any acts or omissions of the Trustee and any other beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing Bank against presentation of documents that do not comply with the terms of the Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under the Letter of Credit, except that the Company shall have a claim against the Issuing Bank, and the Issuing Bank shall be liable to the Company, to the extent of any direct, but not consequential, damages suffered by the Company which the Company proves were caused by (i) the Issuing Bank's willful misconduct or gross negligence in determining whether a draft or certificate presented under the Letter of Credit complies with the terms of the Letter of Credit or (ii) the Issuing 72 Bank's willful failure to make lawful payment under the Letter of Credit after the presentation to it by the Trustee or a successor trustee under the Indenture of a draft and certificate strictly complying with the terms and conditions of the Letter of Credit. In furtherance and not in limitation of the foregoing, the Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary. SECTION 9.07. Costs, Expenses and Taxes. The Company agrees to pay on demand all costs and expenses of the Agent, the Issuing Bank and each Creditor in connection with the preparation, execution, delivery, filing, recording, administration (except normal administrative costs and fees and expenses of counsel related thereto prior to an Event of Default), modification and amendment of this Agreement and any other documents which may be delivered in connection with this Agreement including transfer of the Letter of Credit in accordance with its terms and any other documents which may be delivered in connection with this Agreement, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Agent, the Issuing Bank and each Creditor, and local counsel who may be retained by said counsel, with respect thereto, with respect to advising the Agent, the Issuing Bank or any such Creditor as to its rights and responsibilities, or the perfection or preservation of rights or interests, under this Agreement, any other Related Document and such other documents which may be delivered in connection with this Agreement, with respect to negotiations with the Company or with other creditors of the Company, any Person controlling the Company or any of the Company's Subsidiaries arising out of any Event of Default or any events or circumstances that may give rise to an Event of Default and with respect to presenting claims in or otherwise participating in or monitoring any bankruptcy, insolvency or other similar proceeding involving creditor's rights generally and any proceeding ancillary thereto or in connection with the negotiation of any restructuring or "work-out" (whether or not consummated). The Company further agrees to pay on demand all costs and expenses (including reasonable counsel fees and expenses) of the Agent, the Issuing Bank and each Creditor in connection with (i) the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, any other Related Document and any other documents which may be delivered in connection with this Agreement, including, without limitation, reasonable counsel fees and expenses in connection with the enforcement of rights under this Section 9.07, or (ii) any action or proceeding relating to a court order, injunction, or other process or decree restraining or seeking to restrain the Issuing Bank from paying any amount under the Letter of Credit. In addition, the Company shall pay any and all stamp and other 73 administrative taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement, the Letter of Credit, any other Related Document or any such other documents, and agrees to save the Agent, the Issuing Bank and each Creditor harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees. SECTION 9.08. Purchase Option. (a) The Company acknowledges and consents to the effectiveness of the Indenture and the Letter of Credit, and agrees to take any and all actions as are necessary to ensure that the Issuing Bank shall have the benefit of the option to purchase Bonds contemplated therein. (b) The Issuing Bank may with the consent, or shall at the request, of the Majority Creditors exercise its right as set forth in Sections 3.01(e), 9.01(e) or 13.03(d) of the Indenture to purchase the Bonds. Upon any such purchase, the Agent shall notify all Creditors of their pro rata share (based on their Participation Percentage) of the purchase price of the Bonds so purchased and upon receipt of such notice each Creditor will pay to the Agent, for the benefit of the Issuing Bank, such Creditor's pro rata share of the purchase price. Any Bonds so purchased shall be held by the Issuing Bank or the Agent or any other nominee of the Issuing Bank, on behalf of all Creditors (the "Holder"). The Holder may with the consent, or shall at the request, of the Majority Creditors exercise its rights in respect of the Bonds. Upon the sale, remarketing or refunding of any Bonds so purchased, the Holder shall pay to the Agent for the ratable benefit of the Creditors the proceeds of such sale, remarketing or refunding. Upon receipt of such proceeds by the Agent, the Agent shall ratably reimburse the Creditors their share of such proceeds. SECTION 9.09. Binding Effect; Assignments and Participations. (a) This Agreement shall become effective when it shall have been executed by the Company, the Agent, the Issuing Bank and each Creditor and thereafter shall be binding upon and inure to the benefit of the Company, the Agent, the Issuing Bank and each Creditor and their respective successors and assigns, except that the Company shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Agent, the Issuing Bank and each Creditor. The Issuing Bank and each Creditor, with the consent of the Issuing Bank, which consent shall not be unreasonably withheld, may assign to any Eligible Institution all or any part of, or any interest (undivided or divided) in, its rights, benefits and obligations (other than the Issuing Bank's obligation to issue the Letter of Credit) under this Agreement, and to the extent of that assignment such assignee 74 shall have the same rights, benefits and obligations (other than the Issuing Bank's obligation to issue the Letter of Credit) against and to the Company hereunder as it would have had if such assignee were the Issuing Bank or such Creditor hereunder; provided that any such assignment shall not be in an amount less than $5,000,000. (b) The Issuing Bank and each Creditor may sell or agree to sell, to (i) any Eligible Institution (each such Eligible Institution being an "Eligible Participant") or (ii) one or more other Persons (each a "Restricted Participant"; and together with any Eligible Participants being referred to herein as a "Participant"), a participation in all or any part of the Letter of Credit, any Tender Advance or other amounts payable under this Agreement. Each Participant shall be entitled to the rights and benefits of the provisions of Section 5.01(a)(vi) with respect to its participation in the Letter of Credit or such Tender Advance or such other amounts as if (and the Company shall be directly obligated to such Participant under such provisions as if) such Participant were the "Creditor" for purposes of said Section, but, except as set forth below, shall not have any other rights or benefits under this Agreement or any other Related Document (the Participant's rights against the Creditor in respect of such participation to be those set forth in the agreements executed by the Creditor in favor of the Participant). All amounts payable by the Company to the Issuing Bank or any Creditor under Section 2.11 and 2.17 in respect of the Letter of Credit or any Tender Advance or other amounts payable under this Agreement shall be determined as if the Issuing Bank or any Creditor had not sold or agreed to sell any participations in the Letter of Credit or any Tender Advance or such other amounts, and as if the Issuing Bank or any Creditor were maintaining the Letter of Credit or any Tender Advance or such other amounts in the same way that it is maintaining the portion of the Letter of Credit or any Tender Advance or such other amounts in which no participations have been sold. In the case of an Eligible Participant, the Issuing Bank may agree with such Participant to take or refrain from taking action hereunder or under any Related Document as the Issuing Bank or any Creditor, as set forth in the agreement executed by the Bank and such Participant, with respect to taking or refraining from taking action hereunder or under any other Related Document. In no event shall the Issuing Bank or any Creditor agree with any Restricted Participant to take or refrain from taking any action hereunder or under any other Related Document except that the Issuing Bank or any Creditor may agree with a Restricted Participant that it will not, without the consent of such Restricted Participant, agree to (i) extend the date fixed for the payment of principal of or interest on any Tender Advance or other amounts payable to such Restricted Participant, (ii) reduce the amount of any such payment of principal, (iii) reduce the rate at which interest 75 is payable thereon to a level below the rate at which such Restricted Participant is entitled to receive such interest, (iv) alter the rights or obligations of the Company to prepay any Tender Advance or other amounts payable to such Restricted Participant or (v) release any collateral, including, without limitation, the Second Mortgage Bonds, Series Y-6. (c) Notwithstanding any other provision set forth in this Agreement, the Issuing Bank or any Creditor may at any time create a security interest in all or any portion of its rights under this Agreement (including, without limitation, the Advances owing to it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System. SECTION 9.10. Further Assurances. The Company agrees promptly to do such further acts and things, and to execute and deliver such additional instruments (including, without limitation, notices), at its own expense, as the Agent, the Issuing Bank or any Creditor may at any time reasonably request in order better to insure and confirm the Agent's, the Issuing Bank's or any Creditor's, as the case may be, rights, powers and remedies hereunder and under the other Related Documents (including in order to perfect or protect any pledge or security interest granted or purported to be granted hereby or to enable the Agent, the Issuing Bank or any Creditor, as the case may be, to exercise or enforce its rights and remedies in respect hereof). SECTION 9.11. Severability. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. SECTION 9.12. 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 9.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICT OF LAW PRINCIPLES. SECTION 9.14. Submission to Jurisdiction. THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR 76 RELATING TO THIS AGREEMENT, ANY RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OR OMISSIONS OF THE AGENT, THE ISSUING BANK OR ANY CREDITOR IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY RELATED DOCUMENT. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE COMPANY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE COMPANY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER RELATED DOCUMENTS. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF TEXAS. SECTION 9.15. Waiver of Trial by Jury. EACH OF THE COMPANY AND THE AGENT, THE ISSUING BANK AND EACH CREDITOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER RELATED DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE COMPANY ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER RELATED DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE ISSUING BANK, THE AGENT AND EACH CREDITOR ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER RELATED DOCUMENT. SECTION 9.16. Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. SECTION 9.17. Integration. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AS TO THE SUBJECT MATTER OF THIS AGREEMENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO. 77 SECTION 9.18. Survival. The obligations of the Company under Sections 2.11, 2.17, 9.05, 9.14 and 9.15 shall survive the repayment of the Loans and the payment in full of all amount payable by the Company under Section 9.07. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written. EL PASO ELECTRIC COMPANY By [Title] Issuing Bank CREDIT SUISSE By Vice President Agent CREDIT SUISSE, as Agent By Vice President Participation Percentage Creditors 100% CREDIT SUISSE By Vice President ____________________________ ____________________________ Attention: _________________ Telex No. __________________ Telecopier _________________ 78 EXHIBIT A FORM OF LETTER OF CREDIT IRREVOCABLE LETTER OF CREDIT No. [ ] , 199[ ]* [Name and Address of Trustee] Attention: Corporate Trust Department Dear Sirs: We hereby establish, at the request and for the account of El Paso Electric Company, a Texas corporation (the "Company"), in your favor, as Trustee under the Indenture of Trust, dated as of , 199 (the "Indenture") between Maricopa County, Arizona Pollution Control Corporation (the "Issuer") and you, pursuant to which [$37,100,000]** in aggregate principal amount of the Issuer's Pollution Control Refunding Revenue Bonds (El Paso Electric Company Palo Verde Project), 19 Series Y-6 (the "Bonds"), were issued, our Irrevocable Letter of Credit No. [ ], in the amount of $[ ]*** (as more fully described below), effective immediately and expiring at the close of banking business at our [_____________________________] office on or such later date as we shall have agreed in writing (the "Stated Termination Date"), unless earlier terminated in accordance with the terms hereof. We hereby irrevocably authorize you to draw on us, in an aggregate amount not to exceed the amount of this Letter of Credit set forth above and in accordance with the terms and conditions and subject to the reductions in amount as hereinafter set forth, (1) in one or more drawings by one or more of your drafts, drawn on our [_________________] office, _______________ * To be dated the date of issuance of the Letter of Credit. ** In no event shall the principal amount of the Bonds exceed $37,100,000. *** In no event shall the face amount of this Letter of Credit exceed $40,454,459. 79 payable at sight on a banking day (which shall be any day other than a Saturday, Sunday or public or bank holiday or the equivalent for banks generally under the laws of the State of New York (a "Banking Day")), accompanied by a completed certificate in substantially the form of Annex B attached hereto, which drafts and certificates shall be in writing and signed by you (any such draft accompanied by such certificate being your "Interest Draft"), an amount not exceeding $[ ]; (2) in one or more drawings by one or more of your drafts, drawn on our [___________________] office, payable at sight on a Banking Day, accompanied by a completed certificate in substantially the form of Annex C attached hereto, which drafts and certificates shall be in writing and signed by you (any such draft accompanied by such certificate being your "Tender Draft"), an aggregate amount not exceeding $[ ]; (3) in one or more drawings by one or more of your drafts, drawn on our [_____________________] office, payable at sight on a Banking Day, accompanied by a completed certificate in substantially the form of Annex D attached hereto, which drafts and certificates shall be in writing and signed by you (any such draft accompanied by such certificate being your "Partial Redemption Draft"), an aggregate amount not exceeding $[ ]; and (4) in a single drawing by your draft, drawn on our [__________________] office, payable at sight on a Banking Day, accompanied by a completed certificate in substantially the form of Annex E attached hereto, which draft and certificate shall be in writing and signed by you (such draft accompanied by such certificate being your "Final Draft"), an amount not exceeding $[ ]; provided that in no event will you have a right to make drawings under this Letter of Credit for the payment of the principal of, or interest on, Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company; provided further with respect to any such Bonds that were not so held by or for the account of the Company (or any Affiliate thereof) on the immediately preceding Record Date (as defined in the Indenture), you may, in accordance with the Indenture, draw on us by your Interest Draft under clause (1). Notwithstanding any other provision in this Letter of Credit, in no event will you have a right to make a drawing under this Letter of Credit for the payment of principal of or interest on Bonds in a "Bond Interest Term" (as defined in the Indenture). This Letter of Credit may not be drawn upon for the payment of any premium which may be payable in respect of the Bonds. Upon our honoring any Interest Draft presented by you hereunder, the amount of this Letter of Credit and the amounts available to be drawn by you by any subsequent Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft shall be automatically decreased by an amount equal to the amount of such Interest Draft. If you shall not have received from us within 15 calendar days from the date of such drawing a notice 80 from us to the effect that we have not been reimbursed for such drawing in the form of Annex H attached hereto appropriately completed, the amount of this Letter of Credit and the amounts from time to time available to be drawn by you by any Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft shall be automatically and irrevocably reinstated in the amount of such drawing, effective the 16th calendar day from the date of such drawing. The amount of this Letter of Credit shall be decreased upon our receipt of notice from you, in the form of Annex A hereto, of a redemption or defeasance of less than all the Bonds outstanding, by an amount equal to the amount stated in said notice and the amounts available to be drawn by you by any subsequent Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft shall be automatically decreased to the amounts stated in such notice. Upon our honoring any Tender Draft or Partial Redemption Draft, (i) the amount of this Letter of Credit and the amount available to be drawn by you by any subsequent Tender Draft, Partial Redemption Draft or Final Draft shall be automatically decreased by an amount equal to the amount of such Tender Draft or such Partial Redemption Draft and (ii) the amount available to be drawn by you by any Interest Draft shall be automatically decreased by an amount equal to the amount drawn under such draft in respect of accrued and unpaid interest. In the case of any Tender Draft, the amount from time to time available to be drawn by you by any Interest Draft, Tender Draft or Partial Redemption Draft and Final Draft shall be reinstated to the extent, but only to the extent, we received reimbursement from the Company for amounts drawn hereunder by such Tender Draft and we so notify you in writing. In addition, the amount available from time to time to be drawn by you by any Interest Draft, Tender Draft, Partial Redemption Draft and Final Draft shall be automatically reinstated, upon our receipt from you of the proceeds of the resale of any Bonds purchased and held on behalf of the Company with amounts drawn hereunder accompanied by a completed and signed certificate substantially in the form of Annex F, by an amount equal to the amount of the drawings made to purchase the Bonds so resold. Amounts received from you on behalf of the Company shall, if accompanied by a completed and signed certificate substantially in the form of Annex F from you, shall be applied to the extent of the amounts indicated therein in reimbursement of unreimbursed drawings under your Tender Drafts. Amounts otherwise received from you on behalf of the Company shall first be applied in reimbursement of unreimbursed drawings made by your Interest Draft. 81 Upon delivery to us (i) of all Bonds purchased by you on behalf of or for the account of the Bank pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture, or Section 13.03(d) of the Indenture with moneys drawn by a Tender Draft and (ii) a completed and signed certificate substantially in the form of Annex G, the Letter of Credit shall be reinstated in an amount equal to the amount of such Tender Draft used to purchase such Bonds so delivered; provided, however, if at any time any such purchase shall be rescinded, in whole or in part, or some or all of the Bonds so purchased must otherwise be returned by the Bank, in each case, for any reason, the amounts so reinstated shall not be available to be drawn until and unless the Company reimburses us for such amounts. Funds under this Letter of Credit are available to you against (1) your Interest Draft referring thereon to the number of this Letter of Credit accompanied by your written and completed certificate signed by you in substantially the form of Annex B thereto, (2) your Tender Draft referring thereon to the number of this Letter of Credit accompanied by your written and completed certificate signed by you in substantially the form of Annex C thereto, (3) your Partial Redemption Draft referring thereon to the number of this Letter of Credit accompanied by your written and completed certificate signed by you in substantially the form of Annex D thereto and (4) your Final Draft referring thereon to the number of this Letter of Credit accompanied by your written and completed certificate signed by you in substantially the form of Annex E thereto. Each such draft and certificate shall be dated the date of its presentation, and shall be presented at our office located at [_________________], telex no.: [____________], Attention: [_________________] (or at any other office or number in the City and State of New York which may be designated by us by written notice delivered to you) on or before 12:00 Noon (New York City time), or by tested telex (or telecopier) on or before 10:00 A.M. (New York City time), on the day (which shall be a Banking Day) of our making funds available to you hereunder. If we receive any of your drafts and certificates at such office, all in strict conformity with the terms and conditions of this Letter of Credit, on or prior to the termination hereof and in any event not later than 12:00 Noon (New York City time), or if such drafts and certificates are presented by tested telex (or telecopier) not later than 10:00 A.M. (New York City time) on the Stated Termination Date, we will honor the same after presentation thereof on the same day in accordance with your payment instructions. If we receive any of your drafts and certificates at such office after 12:00 Noon (New York City time), or if such drafts and certificates are presented by tested telex (or telecopier) after 10:00 A.M. (New York City time), on a Banking Day, we will honor the same after presentation thereof on the next succeeding Banking Day 82 provided that such drafts and certificates conform with the terms and conditions of this Letter of Credit. If requested by you, payment under this Letter of Credit may be made by wire transfer of Federal Reserve Bank of New York funds to your account in a bank on the Federal Reserve wire system or by deposit of same day funds into a designated account that you maintain with us. This Letter of Credit shall automatically terminate upon the earliest of (i) our honoring your Final Draft presented hereunder, (ii) the date stated in any written notice we receive from you as the effective date of termination of this Letter of Credit, (iii) the date that you surrender the Letter of Credit to us, (iv) the provision of any substitution letter of credit or credit facility as provided in the Indenture, (v) the date on which we receive written notice from you that there is no longer any "Bond Outstanding" within the meaning of the Indenture, and (vi) the Stated Termination Date. This Letter of Credit is transferable in its entirety (but not in part) to any transferee who has succeeded you as Trustee under the Indenture and may be successively transferred. Transfer of the available balance under this Letter of Credit to such transferee shall be effected by the presentation to us of this Letter of Credit accompanied by a certificate in substantially the form of Annex I attached hereto, together with a fee equal to 1/4 of 1% of the "Available Amount". "Available Amount" means the maximum amount available to be drawn at such time under the Letter of Credit, the determination of such maximum amount to assume compliance with all conditions for drawing and no reduction for (i) any amount drawn by an Interest Draft (unless such amount is not reinstated under the Letter of Credit) or (ii) any amount drawn by a Tender Draft or (iii) any amount not available to be drawn because Bonds are held by or for the account of the Company (or any Affiliate thereof). Upon such presentation and payment we shall forthwith transfer the same to your transferee or, if so requested by your transferee, issue an irrevocable letter of credit to your transferee with provisions therein consistent with this Letter of Credit. This Letter of Credit sets forth in full our undertaking, and such undertaking shall not in any way be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein (including, without limitation, the Bonds), except only the certificates and the drafts referred to herein; and any such reference shall not be deemed to incorporate herein by reference any document, instrument or agreement except for such certificates and such drafts. 83 This Letter of Credit shall be governed by the laws of the State of New York, including the Uniform Commercial Code as in effect in the State of New York. Communications with respect to this Letter of Credit shall be in writing and shall be addressed to us at [___________________], Attention: [_________________], specifically referring to the number of this Letter of Credit. Very truly yours, CREDIT SUISSE By Vice President 84 Annex A CERTIFICATE FOR THE REDUCTION OF AMOUNTS AVAILABLE UNDER IRREVOCABLE LETTER OF CREDIT NO. DATED , 199 The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Credit Suisse (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The Trustee hereby notifies you that on or prior to the date hereof $ principal amount of the Bonds have been redeemed and paid or have been defeased pursuant to the Indenture. (3) Following the redemption and payment or the defeasance referred to in paragraph (2) above, the aggregate principal amount of all of the Bonds Outstanding (as defined in the Indenture) is $ . (4) The maximum amount of interest, computed in accordance with the terms and conditions of the Bonds and the Indenture, which would accrue on the Bonds referred to in paragraph (3) above in any period of [ days] is $ . None of the Bonds referred to in paragraph (2) above were in a Bond Interest Term as of the date such Bonds were redeemed, paid or defeased pursuant to the Indenture. (5) The maximum amount available to be drawn by the Trustee under the Letter of Credit by any Interest Draft is reduced to $ (such amount being equal to the amount specified in paragraph (4) above) upon receipt by the Bank of this Certificate. (6) The maximum amount available to be drawn by the Trustee under the Letter of Credit by any Tender Draft is reduced to $ (such amount being equal to the sum of the amounts specified in paragraphs (3) and (4) above) upon receipt by the Bank of this Certificate. (7) The maximum amount available to be drawn by the Trustee under the Letter of Credit by any Partial Redemption Draft is reduced to $ (such amount 85 being equal to the sum of the amounts specified in paragraphs (3) and (4) above) upon receipt by the Bank of this Certificate. (8) The amount available to be drawn by the Trustee under the Letter of Credit by its Final Draft is reduced to $ (such amount being equal to the sum of the amounts specified in paragraphs (3) and (4) above) upon receipt by the Bank of this Certificate. (9) The amount of the Letter of Credit is reduced to $ (such amount being equal to the sum of the amounts specified in paragraph 8 above) upon receipt by the Bank of this Certificate. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate this day of , 19 . , as Trustee By [Name and Title] 86 Annex B CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF UP TO [ DAYS'] INTEREST ON THE MARICOPA COUNTY, ARIZONA POLLUTION CONTROL CORPORATION'S POLLUTION CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY PALO VERDE PROJECT), 199 SERIES Y-6 (THE "BONDS") Irrevocable Letter of Credit No. The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Credit Suisse (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The Trustee is making a drawing under the Letter of Credit with respect to a payment of days' interest on the Bonds, which payment is due on the date on which this Certificate and the Interest Draft it accompanies are being presented to the Bank. None of the Bonds in respect of which the drawing is being made (i) were, on the Record Date (as defined in the Indenture) held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company or (ii) were on such date in a Bond Interest Term. (3) The amount of the Interest Draft accompanying this Certificate is equal to $ . It was computed in compliance with the terms and conditions of the Bonds and the Indenture and does not include any amount of interest on the Bonds which is included in any Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft presented on or prior to the date of this Certificate and does not exceed the amount available to be drawn by the Trustee under the Letter of Credit. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of the day of , 19 . , as Trustee By [Name and Title] 87 Annex C CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF PRINCIPAL OF AND UP TO [ DAYS'] INTEREST ON THE MARICOPA COUNTY, ARIZONA POLLUTION CONTROL CORPORATION'S POLLUTION CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY PALO VERDE PROJECT), 199 SERIES Y-6 (THE "BONDS"), IN SUPPORT OF A TENDER (OTHER THAN A MANDATORY TENDER UPON TERMINATION OR EXPIRATION OF THE LETTER OF CREDIT) Irrevocable Letter of Credit No. The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Credit Suisse (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The Trustee is making a drawing under the Letter of Credit with respect to the payment, upon a tender of all or less than all of the Bonds which are Outstanding (as defined in the Indenture), of (i) the unpaid principal amount of the Bonds to be purchased either (a) as a result of a tender pursuant to the terms of Section 2.02 of the Indenture (other than Section 2.02(6) of the Indenture) or (b) as a result of a purchase of Bonds by the Bank pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture or Section 13.03(d) of the Indenture (in each case, other than Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company in each case, and (ii) the amount of interest (not exceeding [ days'] interest) accrued and unpaid thereon from the Interest Accrual Date (as defined in the Indenture) immediately preceding the date of purchase through the day immediately preceding the date of purchase thereof, which payment is due on the date on which this Certificate and the Tender Draft it accompanies are being presented to the Bank. (3) The amount of the Tender Draft accompanying this Certificate is equal to the sum of (i) $ being drawn in respect of the payment of unpaid principal of Bonds (other than Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender 88 Agent for the account of the Company) to be purchased as a result of a tender of the type described above and (ii) $ being drawn in respect of the payment of accrued and unpaid interest on such Bonds and does not include any amount of interest which is included in any Interest Draft, Tender Draft other than the Tender Draft accompanying this certificate, Partial Redemption Draft or Final Draft presented on or prior to the date of this Certificate. (4) The amount of the Tender Draft accompanying this Certificate was computed in compliance with the terms and conditions of the Bonds and the Indenture and does not exceed the amount available to be drawn by the Trustee under the Letter of credit. (5) None of the Bonds in respect of which a drawing is being made are in a Bond Interest Term. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of the day of , 19 . , as Trustee By [Name and Title] 89 Annex D CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF PRINCIPAL OF AND UP TO [ DAYS'] INTEREST ON THE MARICOPA COUNTY, ARIZONA POLLUTION CONTROL CORPORATION'S POLLUTION CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY PALO VERDE PROJECT), 199 SERIES Y-6 (THE "BONDS"), UPON PARTIAL REDEMPTION Irrevocable Letter of Credit No. The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Credit Suisse (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The Trustee is making a drawing under the Letter of Credit with respect to the payment, upon redemption of less than all of the Bonds which are Outstanding (as defined in the Indenture), of the unpaid principal amount of and up to [ days'] accrued and unpaid interest to the redemption date on, Bonds to be redeemed pursuant to the terms of Section 3.01 of the Indenture (other than Bonds purchased by the Tender Agent or the Trustee on behalf of or for the account of the Bank, pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture or Section 13.03(d) of the Indenture and held by or on behalf of or for the account of the Bank or its nominee and Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or Tender Agent for the account of the Company). [The direction from the Company with respect to redemption was received by us no more than 60 days prior to the date of this certificate. We have evidence, as of the date of this certificate, from two of Moody's Investors Services, Inc., Standard & Poor's Corporation and Duff & Phelps, Inc. that the Company's First Mortgage Bonds, Series A/B, and Second Mortgage Bonds, Series A, each have a rating of BBB- or better (or equivalent) and such Bonds have not, as of the date of this certificate, been placed on any watch list.]* __________________ * To be used in case of an optional redemption. 90 (3) The amount of the Partial Redemption Draft accompanying this Certificate is equal to the sum of (i) $ being drawn in respect of the payment of unpaid principal of Bonds (other than Bonds purchased by the Trustee on behalf of or for the account of the Bank, pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture or Section 13.03(d) of the Indenture and then held by or on behalf of or for the account of the Bank or its nominee and Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or Tender Agent for the account of the Company to be redeemed, and (ii) $ being drawn in respect of the payment of accrued and unpaid interest on such Bonds and does not include any amount of interest which is included in any Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft presented on or prior to the date of this Certificate. (4) The amount of the Partial Redemption Draft accompanying this Certificate was computed in accordance with the terms and conditions of the Bonds and the Indenture and does not exceed the amount available to be drawn under the Letter of Credit. (5) This Certificate and the Partial Redemption Draft it accompanies are dated, and are being presented to the Bank on, the date on which the unpaid principal amount of and accrued and unpaid interest on, Bonds to be redeemed are due and payable under the Indenture upon redemption of less than all of the Bonds which are Outstanding (as defined in the Indenture). (6) None of the Bonds in respect of which a drawing is being made are in a Bond Interest Term. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of the day of , 19 . , as Trustee By [Name and Title] 91 Annex E CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF PRINCIPAL OF AND UP TO DAYS' INTEREST ON THE MARICOPA COUNTY, ARIZONA POLLUTION CONTROL CORPORATION'S POLLUTION CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY PALO VERDE PROJECT), 199 SERIES Y-6 (THE "BONDS"), UPON STATED OR ACCELERATED MATURITY OR OPTIONAL OR MANDATORY REDEMPTION AS A WHOLE OR MANDATORY TENDER UPON TERMINATION OR EXPIRATION OF THE LETTER OF CREDIT Irrevocable Letter of Credit No. The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Credit Suisse (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The Trustee is making a drawing under the Letter of Credit (a) with respect to the payment, either at stated maturity, upon acceleration, as a result of a redemption in full pursuant to Section 3.01 of the Indenture [(the direction from the Company and notice to the Bondholders with respect to redemption was received and given by us no more than 60 days prior to the date of this Certificate and we had evidence, as of the date such notice was given by us to the Bondholders, from two of Moody's Investors Services, Inc., Standard & Poor's Corporation and Duff & Phelps, Inc. that the Company's First Mortgage Bonds, Series A/B, and Second Mortgage Bonds, Series A, each had a rating of BBB- or better (or equivalent) and such Bonds had not, as of such date, been placed on any watch list)]* or (b) as a result of a mandatory tender upon termination or expiration of the Letter of Credit or substitution of another credit facility for the Letter of Credit as contemplated by Section 2.02(6) of the Indenture, of the unpaid principal amount of and up to days' accrued and unpaid interest on, all of the Bonds which are Outstanding (as defined in the Indenture) (other than Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee _______________ * To be used in the case of an optional redemption. 92 or the Tender Agent for the account of the Company), which payment is due on the date on which this Certificate and the Final Draft it accompanies are being presented to the Bank. (3) The amount of the Final Draft accompanying this Certificate is equal to the sum of (i) $ being drawn in respect of the payment of unpaid principal of Bonds (other than Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company) and (ii) $ being drawn in respect of the payment of accrued and unpaid interest on such Bonds and does not include any amount of interest on the Bonds which is included in any Interest Draft, Tender Draft or Partial Redemption Draft presented on or prior to the date of this Certificate. (4) The amount of the Final Draft accompanying this Certificate was computed in compliance with the terms and conditions of the Bonds and the Indenture and does not exceed the amount available to be drawn by the Trustee under the Letter of Credit. (5) None of the Bonds in respect of which the drawing is being made are in a Bond Interest Term. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of the day of , 19 . , as Trustee By [Name and Title] 93 Annex F CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE UNDER IRREVOCABLE LETTER OF CREDIT NO. , DATED , 199 The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Credit Suisse (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The amount of $ paid to you today by the Trustee on behalf of the Company is a payment made pursuant to Section 2.09(b) of the Letter of Credit and Reimbursement Agreement dated as of , 19 (the "Reimbursement Agreement") between the Company and the Bank for amounts drawn under the Letter of Credit and represents unreimbursed drawings under Tender Draft[s] dated [ ]. (3) The amount referred to in paragraph (2) represents the amount of Bonds which were purchased with proceeds of a draw on the Letter of Credit by a Tender Draft dated , 19 . $ represents amounts paid in respect of accrued interest on Bonds and $ represents amounts paid in respect of unpaid principal on Bonds. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate this day of , 19 . , as Trustee By [Name and Title] 94 Annex G CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE UNDER IRREVOCABLE LETTER OF CREDIT NO. , DATED , 199 The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Credit Suisse (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: (1) The Trustee is the Trustee under the Indenture for the holders of the Bonds. (2) The Tender Agent has delivered to the Bank all Bonds purchased pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture, or Section 13.03(d) of the Indenture, as the case may be, with proceeds of a draw on the Letter of Credit by Tender Draft dated , 19 . (3) The amount of such Tender Draft used to purchase such Bonds which were not remarketed is $ . IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate this day of , 19 . , as Trustee By [Name and Title] 95 Annex H NOTICE THAT TRUSTEE'S RIGHT TO DRAW UNDER THE LETTER OF CREDIT BY AN INTEREST DRAFT HAS NOT BEEN REINSTATED [Name and Address of Trustee] Attention: Corporate Trust Department Irrevocable Letter of Credit No. Dear Sirs: You are hereby advised that El Paso Electric Company has not reimbursed us in an amount equal to the amount drawn by you under the Interest Draft dated , 19 . Therefore, the amount of our Irrevocable Letter of Credit No. and the amounts available to be drawn by you by an Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft (which available amounts have been decreased by an amount equal to the amount of such Interest Draft) shall not be reinstated in the amount of such Interest Draft. CREDIT SUISSE 96 Annex I INSTRUCTION TO TRANSFER , 19 Credit Suisse _________________ _________________ Attention: ________________________ Re: Irrevocable Letter of Credit No. Gentlemen: For value received, the undersigned beneficiary hereby irrevocably transfers to: [Name of Transferee] [Address] all rights of the undersigned beneficiary to draw under the above-captioned Letter of Credit (the "Letter of Credit"). The transferee has succeeded the undersigned as Trustee under the Indenture (as defined in the Letter of Credit). By this transfer, all rights of the undersigned beneficiary in the Letter of Credit are transferred to the transferee and the transferee shall hereafter have the sole rights as beneficiary thereof; provided, however, that no rights shall be deemed to have been transferred to the transferee until such transfer complies with the requirements of the Letter of Credit pertaining to transfers. 97 The Letter of Credit is returned herewith and in accordance therewith we ask that this transfer be effective and that you transfer the Letter of Credit to our transferee or that, if so requested by the transferee, you issue a new irrevocable letter of credit in favor of the transferee with provisions consistent with the Letter of Credit. Very truly yours, , as predecessor Trustee By [Name and Title] 98 EXHIBIT B TO LETTER CREDIT AND REIMBURSEMENT AGREEMENT OPINION OF COUNSEL TO THE COMPANY [Date of issuance of Letter of Credit] [Name and address of the L/C Issuer] [Name of the Company] Gentlemen: We are counsel to , a[n] corporation (the "Company"). In that capacity we are familiar with the matters relating to the preparation, execution and delivery of a Letter of Credit and Reimbursement Agreement, dated as of , 19 (the "Reimbursement Agreement"), between the Company and (the "Bank"). Terms defined in the Reimbursement Agreement are used herein as therein defined. Among other things, we have examined: (1) a fully executed counterpart of the Reimbursement Agreement; (2) the Letter of Credit referred to in the Reimbursement Agreement; (3) the [Articles] [Certificate] of Incorporation of the Company and all amendments thereto (the "Charter"); (4) the by-laws of the Company as now in effect (the "By-laws"); and (5) the documents delivered by or on behalf of the Company pursuant to Section 3.01 of the Reimbursement Agreement. We have also examined the originals, or copies certified to our satisfaction, of (i) such other corporate records of the Company, certificates of public officials and of officers of the Company, (ii) the agreements, instruments and documents which affect or purport to affect the obligations of the Company under the Reimbursement Agreement, and (iii) such other agreements, instruments and documents as we have deemed necessary as a basis for the opinions hereinafter expressed. As to questions of fact material to such opinions, we have, when relevant facts were not independently established by us, 99 relied upon certificates of the Company or its officers or of public officials. We have assumed the due execution and delivery of the Reimbursement Agreement by the Bank. Based upon the foregoing and upon such investigation as we have deemed necessary we are of the opinion that: 1. The Company is a corporation duly incorporated validly existing and in good standing under the laws of the State of and is duly qualified to do business in, and is in good standing under the laws of, the State of . 2. The execution, delivery and performance by the Company of the Reimbursement Agreement and the Related Documents to which it is a party are within the Company's corporate powers, have been duly authorized by all necessary corporate action, do not contravene (i) the Charter or the By-laws, (ii) law or (iii) any contractual restriction binding on or affecting the Company, and do not result in or require the creation of any lien, security interest or other charge or encumbrance (except as provided in or contemplated by the Reimbursement Agreement or the Indenture) upon or with respect to any of its properties. 3. No authorization, approval or other action by, and no notice to or filing or registration with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Company of the Reimbursement Agreement or any Related Document to which it is a party [, except for , all of which have been duly obtained or made and are in full force and effect]. 4. The Reimbursement Agreement and the Related Documents to which the Company is a party have been duly executed and delivered by the company and are the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms. 5. To the best of our knowledge, there is no pending or threatened action or proceeding against or affecting the Company or any of its subsidiaries before any court, governmental agency or arbitrator which may materially adversely affect the financial condition or operations of the Company [, except ] or which purports to affect the legality, validity or enforceability of the Reimbursement Agreement or any Related Documents. The opinions set forth above are subject to the following qualifications: 100 (a) The enforceability of the Company's obligations under the Reimbursement Agreement and the Related Documents is subject to the effect of any applicable bankruptcy, insolvency, reorganization moratorium or similar laws affecting creditors' rights generally. (b) The enforceability of the Company's obligations under the Reimbursement Agreement and the Related Documents may be subject to general principles of equity, including (without limitation) concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether such enforceability is considered in a proceeding in equity or at law). Very truly yours, 101 EXHIBIT C-1 TO LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT MATTERS TO BE COVERED BY AN OPINION OF BOND COUNSEL 102 EXHIBIT C-2 TO LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT RELIANCE OPINION OF BOND COUNSEL [Date of issuance of Letter of Credit] [Name and address of L/C Issuer] [Name of the Company] Gentlemen: We have acted as bond counsel in connection with the issuance on the date hereof by [Name of Issuer] of its [Name of Bond Issue] (the "Bonds"). Delivered herewith is a signed copy of our opinion of even date herewith relating to the validity of the Bonds and to other matters as set forth therein.* You are hereby authorized to rely on such opinion as if it were addressed to you. Very truly yours, ________________ * This reliance opinion should cover the bond opinion delivered to the bond purchasers and the underwriters. If there is more than one opinion (e.g., a separate tax opinion), this reliance opinion should cover all such opinions. 103 EXHIBIT D TO LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT OPINION OF COUNSEL FOR THE BANK [Date of issuance of Letter of Credit] [Name and address of L/C Issuer] [Name of the Company] Gentlemen: We have acted as your counsel in connection with the preparation, execution and delivery of the Letter of Credit and Reimbursement Agreement, dated as of , 19 (the "Reimbursement Agreement"), between (the "Company") and you and the issuance today by you of the Letter of Credit referred to in the Reimbursement Agreement. Terms defined in the Reimbursement Agreement are used herein as therein defined. In this connection we have examined the following documents, each of which, unless otherwise indicated, is dated the date hereof: 1. A counterpart of the Reimbursement Agreement, executed by the parties thereto; 2. The Letter of Credit; and 3. The documents delivered pursuant to Section 3.01 and Section 3.02 of the Reimbursement Agreement and listed on Annex A hereto, including an opinion of counsel for the Company, delivered pursuant to Section 3.01(d) of the Reimbursement Agreement, and an opinion of , Bond Counsel, delivered pursuant to Section 3.01(e) of the Reimbursement Agreement. In our examination of the documents referred to above, we have assumed the authenticity of all such documents submitted to us as originals, the genuineness of all signatures, the due authority of the parties executing such documents, and the conformity to the originals of all such documents submitted to us as copies. We have also assumed that you have duly executed and delivered, with all necessary power and authority (corporate and otherwise), the Reimbursement Agreement and the Letter of Credit. To the extent that our opinions expressed below involve conclusions as to the matters set forth in paragraphs 104 1, 2, and 3* of the above-mentioned opinion of , we have assumed without independent investigation the correctness of the matters set forth in such paragraphs [, our opinions being subject to the assumptions, qualifications and limitations set forth in such opinion of with respect thereto].** Based upon the foregoing and upon such other investigation as we have deemed necessary, we are of the following opinion: 1. The Reimbursement Agreement is the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms. 2. The opinion of , counsel for the Company, and the other documents referred to in item (3) above, are substantially responsive to the requirements of the Reimbursement Agreement.*** Our opinions above are subject to the following qualifications: (a) Our opinion in paragraph 1 above is subject to the effect of general principles of equity, including (without limitation) concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law). (b) Our opinion in paragraph 1 above is also subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors' rights generally. ___________________ * Such opinion should cover the laws of the jurisdiction of the Company's organization and the laws of any other jurisdiction, other than New York, which could apply under New York conflict of laws rules. If such opinion does not cover all such laws, we should consider what further assumptions or qualifications we should state in our opinion. ** If we need to rely on representations as to facts, we should also consider the representations or certificates on which we will rely and, if we do so rely, include a statement as to that reliance. See Legal Opinions to Third Parties: An Easier Path, 34 Bus. Law. 1891, 1900 (1979). *** This opinion should state that it excludes (i) specified certificates, if those certificates require computations or other specified financial analysis, and (ii) other specified documents (like insurance policies) which cannot readily be reviewed by our examining their text against the requirements of the Reimbursement Agreement. 105 [( ) We express no opinion as to Section 2.16(v), 7.05 or 7.06 of the Reimbursement Agreement.]* ( ) Our opinions expressed above are limited to the law of the State of New York and the Federal law of the United States, and we do not express any opinion herein concerning any other law. Without limiting the generality of the foregoing, we express no opinion as to the effect of the law of any jurisdiction other than the State of New York wherein the Bank may be located or wherein enforcement of the Reimbursement Agreement may be sought which limits the rates of interest legally chargeable or collectible.** Very truly yours, "( ) We express no opinion, with regard to the choice of law provisions of Section of the Reimbursement Agreement, as to whether the provisions of the New York Penal Law relating to usury (imposing a maximum interest rate of 25% per annum) apply to the Bank." ___________________ * Consider the enforceability of (a) the absoluteness of the liability of the Company, or the protection from liability of the Bank, from or against payment by the Bank against non-conforming documents and (b) the indemnity of the Bank against Securities Act violations. ** N.Y. General Obligations Law, Subsection 5-501..6b, excludes loans of $2,500,000 or more from the N.Y. Penal Law usury limit. If, however, such exclusion is not applicable, consideration should be given to (i) adding to the Reimbursement Agreement a maximum interest clause and (ii) adding to the above opinion an additional qualification to this effect: 106 EXHIBIT A to the Opinion dated , 19 of Milbank, Tweed, Hadley & McCloy Documents 107 ADDENDUM TO REIMBURSEMENT AGREEMENT As set forth in Section 3.7 of the Modified Third Amended Plan of Reorganization of the Debtor Providing For the Acquisition of El Paso Electric Company by Central and South West Corporation, filed August 27, 1993 (as corrected September 15, 1993) (the "Plan of Reorganization", unless otherwise defined herein, terms defined therein are used herein as therein defined), it is contemplated that the Maricopa Series E 1984 PCBs (the "Maricopa PCBs") will be refunded on or soon after the Effective Date. The Plan of Reorganization provides that in connection with such refunding a new letter of credit is to be issued on the Maricopa LC Terms by the bank (the "Bank") that issued the LC relating to the Maricopa PCBs LC (the "Original Maricopa PCB LC") or, if the conditions set forth in the Plan of Reorganization are satisfied, by another financial institution. If such refunding does not take place on the Effective Date then, unless otherwise agreed by the Bank and the Debtor, on the Effective Date the Bank and Reorganized EPE will enter into an agreement in the form of the attached agreement and, in addition, amend and restate the existing letter of credit and reimbursement agreement (the "Amended and Restated Agreement") to provide terms substantially similar to the attached agreement (including, without limitation, terms with respect to the repayment of principal and payment of interest and letter of credit fees) with the following exceptions: 1. The Original Maricopa PCB LC will expire on the expiration date thereof in effect on the Effective Date. 2. Reorganized EPE will have no right to extend such expiration date of the Original Maricopa PCB LC. 3. The obligations of Reorganized EPE under the Amended and Restated Agreement will not be directly secured by EPE Second Mortgage Bonds. 4. The obligations under the Maricopa PCBs will be directly secured by EPE Second Mortgage Bonds. 5. All amounts payable under the Amended and Restated Agreement and the Maricopa PCBs will be repaid upon the refunding referred to below from the proceeds therefrom or otherwise. 6. The Amended and Restated Agreement will contain conforming changes to reflect the above terms. 108 Notwithstanding anything herein to the contrary, the Debtor has agreed to use all reasonable efforts (subject to market conditions at the time and the need to preserve the tax-exempt status of the Maricopa PCBs) to cause the Maricopa PCBs to be refunded on the Effective Date or immediately thereafter. If it shall be determined that the tax-exempt status of the Maricopa PCBs would be jeopardized as a result of a refunding or the refunding otherwise does not occur, then unless otherwise agreed between the Bank and the Debtor the existing letter of credit and reimbursement agreement will be amended and restated to provide terms substantially similar to the attached agreement (including, without limitation, terms with respect to the repayment of principal and interest and letter of credit fees). 109 ADDENDUM TO REIMBURSEMENT AGREEMENT As set forth in Section 3.7 of the Modified Third Amended Plan of Reorganization of the Debtor Providing For the Acquisition of El Paso Electric Company by Central and South West Corporation, filed August 27, 1993 (as corrected September 15, 1993) (the "Plan of Reorganization", unless otherwise defined herein, terms defined therein are used herein as therein defined), it is contemplated that the Maricopa Series A 1985 PCBs (the "Maricopa PCBs") will be refunded on or soon after the Effective Date. The Plan of Reorganization provides that in connection with such refunding a new letter of credit is to be issued on the Maricopa LC Terms by the bank (the "Bank") that issued the LC relating to the Maricopa PCBs LC (the "Original Maricopa PCB LC") or, if the conditions set forth in the Plan of Reorganization are satisfied, by another financial institution. If such refunding does not take place on the Effective Date then, unless otherwise agreed by the Bank and the Debtor, on the Effective Date the Bank and Reorganized EPE will enter into an agreement in the form of the attached agreement and, in addition, amend and restate the existing letter of credit and reimbursement agreement (the "Amended and Restated Agreement") to provide terms substantially similar to the attached agreement (including, without limitation, Sections 2.05(b) and (c) thereof in respect of the Maricopa PCBs) with the following exceptions: 1. The Original Maricopa PCB LC will expire on the expiration date thereof in effect on the Effective Date. 2. Reorganized EPE will have no right to extend such expiration date of the Original Maricopa PCB LC. 3. The obligations of Reorganized EPE under the Amended and Restated Agreement will not be directly secured by EPE Second Mortgage Bonds. 4. The obligations under the Maricopa PCBs will be directly secured by EPE Second Mortgage Bonds. 5. All amounts payable under the Amended and Restated Agreement and the Maricopa PCBs will be repaid upon the refunding referred to below from the proceeds therefrom or otherwise. 6. The Amended and Restated Agreement will contain conforming changes to reflect the above terms. 110 Notwithstanding anything herein to the contrary, the Debtor has agreed to use all reasonable efforts (subject to market conditions at the time and the need to preserve the tax-exempt status of the Maricopa PCBs) to cause the Maricopa PCBs to be refunded on the Effective Date or immediately thereafter. If it shall be determined that the tax-exempt status of the Maricopa PCBs would be jeopardized as a result of a refunding or the refunding otherwise does not occur, then unless otherwise agreed between the Bank and the Debtor the existing letter of credit and reimbursement agreement will be amended and restated to provide terms substantially similar to the attached agreement (including, without limitation, Sections 2.05(b) and (c) thereof in respect of the Maricopa PCBs). 1 LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT Dated as of , 199[ ] among EL PASO ELECTRIC COMPANY, WESTPAC BANKING CORPORATION, as Issuing Bank, THE CREDITORS Specified Herein and WESTPAC BANKING CORPORATION, as Agent for such Creditors 2 TABLE OF CONTENTS PRELIMINARY STATEMENTS . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . 3 1.1. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . 3 1.2. Computation of Time Periods . . . . . . . . . . . . . . . . .14 1.3. Accounting Terms. . . . . . . . . . . . . . . . . . . . . . .14 1.4. Interpretation. . . . . . . . . . . . . . . . . . . . . . . .14 ARTICLE II. AMOUNT AND TERMS OF THE LETTER OF CREDIT. . . . . .15 2.1. The Letter of Credit. . . . . . . . . . . . . . . . . . . . .15 2.2. Issuing the Letter of Credit. . . . . . . . . . . . . . . . .15 2.3. Drawing Fee . . . . . . . . . . . . . . . . . . . . . . . . .15 2.4. Commissions . . . . . . . . . . . . . . . . . . . . . . . . .15 2.5. Reimbursement on the Date of the Draw . . . . . . . . . . . .16 2.6. Tender Advances . . . . . . . . . . . . . . . . . . . . . . .17 2.7. Interest on Advances. . . . . . . . . . . . . . . . . . . . .17 2.8. Reimbursement of Issuing Bank, Etc. . . . . . . . . . . . . .20 2.9. Prepayments; Reinstatement of Letter of Credit Amounts. . . . . . . . . . . . . . . . . . . . . .22 2.10. Additional Interest. . . . . . . . . . . . . . . . . . . . .23 2.11. Increased Costs. . . . . . . . . . . . . . . . . . . . . . .24 2.12. Payments and Computations. . . . . . . . . . . . . . . . . .26 2.13. Payments on Non-Business Days. . . . . . . . . . . . . . . .27 2.14. Extension of the Stated Termination Date . . . . . . . . . .27 2.15. Evidence of Debt . . . . . . . . . . . . . . . . . . . . . .28 2.16. Obligations Absolute . . . . . . . . . . . . . . . . . . . .28 2.17. U.S. Taxes . . . . . . . . . . . . . . . . . . . . . . . . .30 2.18. Applicable Lending Office. . . . . . . . . . . . . . . . . .32 2.19. Net Payments . . . . . . . . . . . . . . . . . . . . . . . .32 2.20. Reinstatement of the Letter of Credit. . . . . . . . . . . .32 ARTICLE III. CONDITIONS OF ISSUANCE. . . . . . . . . . . . . . .32 3.1. Conditions Precedent to Issuance of the Letter of Credit. . .32 3.2. Additional Conditions Precedent to Issuance of the Letter of Credit. . . . . . . . . . . . . . . . . . . . . . . .36 3.3. Conditions Precedent to Each Tender Advance . . . . . . . . .37 ARTICLE IV. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . .37 4.1. Representations and Warranties of the Company . . . . . . . .37 ARTICLE V. COVENANTS OF THE COMPANY. . . . . . . . . . . . . .41 5.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . .41 5.2. Negative Covenants. . . . . . . . . . . . . . . . . . . . . .45 ARTICLE VI. EVENTS OF DEFAULT 49 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . .49 6.2. Upon an Event of Default. . . . . . . . . . . . . . . . . . .52 i 3 ARTICLE VII. SECURITY. . . . . . . . . . . . . . . . . . . . . .52 7.1. Issuance and Pledge of Bonds. . . . . . . . . . . . . . . . .52 7.2. Application of Moneys . . . . . . . . . . . . . . . . . . . .53 7.3. Rights of Bondholders . . . . . . . . . . . . . . . . . . . .53 7.4. The Agent's Duties. . . . . . . . . . . . . . . . . . . . . .53 ARTICLE VIII. THE AGENT, THE CREDITORS AND THE ISSUING BANK . . .54 8.1. Authorization and Action. . . . . . . . . . . . . . . . . . .54 8.2. Reliance, Etc . . . . . . . . . . . . . . . . . . . . . . . .54 8.3. The Agent, the Issuing Bank and Affiliates. . . . . . . . . .55 8.4. Bank Credit Decision. . . . . . . . . . . . . . . . . . . . .55 8.5. Indemnification . . . . . . . . . . . . . . . . . . . . . . .55 8.6. Successor Agent . . . . . . . . . . . . . . . . . . . . . . .56 8.7. Issuing Bank. . . . . . . . . . . . . . . . . . . . . . . . .56 ARTICLE IX. MISCELLANEOUS . . . . . . . . . . . . . . . . . . .57 9.1. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . .57 9.2. Notices, Etc . . . . . . . . . . . . . . . . . . . . . . . .58 9.3. No Waiver; Remedies. . . . . . . . . . . . . . . . . . . . .58 9.4. Rights of Setoff and Subrogation . . . . . . . . . . . . . .58 9.5. Indemnification. . . . . . . . . . . . . . . . . . . . . . .60 9.6. Issuing Bank and Creditors . . . . . . . . . . . . . . . . .61 9.7. Costs, Expenses and Taxes. . . . . . . . . . . . . . . . . .62 9.8. Purchase Option. . . . . . . . . . . . . . . . . . . . . . .63 9.9. Binding Effect; Assignments and Participations . . . . . . .63 9.10. Further Assurances . . . . . . . . . . . . . . . . . . . . .65 9.11. Severability . . . . . . . . . . . . . . . . . . . . . . . .65 9.12. Headings . . . . . . . . . . . . . . . . . . . . . . . . . .66 9.13. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . .66 9.14. Submission to Jurisdiction . . . . . . . . . . . . . . . . .66 9.15. Waiver of Trial by Jury. . . . . . . . . . . . . . . . . . .66 9.16. Counterparts . . . . . . . . . . . . . . . . . . . . . . . .66 9.17. Integration. . . . . . . . . . . . . . . . . . . . . . . . .67 9.18. Survival . . . . . . . . . . . . . . . . . . . . . . . . . .67 9.19. Change in Lending Office . . . . . . . . . . . . . . . . . .67 EXHIBIT A - Form of Letter of Credit with Annexes A through I thereto attached ii 4 LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT, dated as of [ ], 199[ ], among EL PASO ELECTRIC COMPANY, a Texas corporation (the "Company") WESTPAC BANKING CORPORATION ("Westpac") as issuing bank (the "Issuing Bank"), the Creditors (as hereinafter defined) and Westpac, as agent for the Creditors (the "Agent"). PRELIMINARY STATEMENTS: (1) The Company requested the Maricopa County, Arizona Pollution Control Corporation (the "Issuer") to issue, pursuant to the Trust Indenture dated as of August 1, 1985 between the Issuer and MBank El Paso, National Association, as trustee, which Trust Indenture has been supplemented and amended as provided in a Supplemental Trust Indenture No. 1 dated as of July 1, 1986 between the Issuer and MBank El Paso, National Association, as trustee, a Supplemental Trust Indenture No. 2 dated as of June 1, 1992 between the Issuer and Continental Bank, National Association, as successor trustee, and a Supplemental Trust Indenture No. 3 dated _____ between the Issuer and Continental Bank, National Association, as successor trustee (such Trust Indenture, as supplemented and amended from time to time, being hereinafter called the "Original Indenture", and such trustee and successor trustee being hereinafter collectively called the "Original Trustee"), $59,235,000 aggregate principal amount of the Issuer's Pollution Control Refunding Revenue Bonds, 1985 Series A (El Paso Electric Company Palo Verde Project) (the "Original Bonds"), to various purchasers. (2) The Issuer and the Company entered into a Loan Agreement, dated as of August 1, 1985 (the "Original Loan Agreement"), which the Issuer assigned to the Original Trustee to secure the payment of the Original Bonds, and pursuant to which, among other things, the Company was required to furnish a letter of credit in connection with its payment obligations under the Original Loan Agreement. (3) Pursuant to the Original Loan Agreement, the Company was required to furnish a letter of credit to support the payment of the Original Bonds and certain purchase obligations of the Company in respect thereof. (4) The Company and Westpac entered into a Letter of Credit and Reimbursement Agreement dated as of August 1, 1985, (such agreement as at any time amended, the "Original Reimbursement Agreement"), pursuant to which Westpac issued its Irrevocable Letter of Credit dated August 20, 1985 (the "Original Letter of Credit") in respect of certain of the Company's payment obligations relating to the Original Bonds. Canadian Imperial Bank of Commerce ("CIBC") and Westpac entered into a Participation Agreement dated as of May 11, 1986 pursuant to which CIBC purchased from Westpac a participation in the Original Reimbursement Agreement and the Original Letter of Credit. 5 (5) On January 8, 1992, the Company commenced a voluntary case (the "Bankruptcy Case") under chapter 11 of the Bankruptcy Code (as hereinafter defined) (Case No. 92-10148-FM) in the Bankruptcy Court (as hereinafter defined), and thereafter has continued to operate its business and manage its assets as a debtor-in-possession. (6) The Company desires to restructure its outstanding indebtedness and, in connection therewith, the Company has requested the Issuer to, and the Issuer has agreed to, refund (the "Refunding") the Original Bonds by issuing Pollution Control Revenue Refunding Bonds (El Paso Electric Company Palo Verde Project), 199 Series (the "Bonds") pursuant to the Indenture of Trust dated as of , 199 a form of which has been filed with the Bankruptcy Court in accordance with Section 7.6 of the Plan of Reorganization (as hereinafter defined) (as such Indenture may be amended, supplemented and modified from time to time, the "Indenture"), naming [ ] as trustee (the "Trustee"). (7) In connection with the Refunding, the Issuer and the Company have entered into a Loan Agreement, dated as of , 199 (as the same may be amended, supplemented and modified from time to time, the "Loan Agreement"), which the Issuer has assigned to the Trustee to secure payment of the Bonds, and pursuant to which, among other things, in connection with the initial delivery of the Bonds, the Company is required to furnish a letter of credit in connection with its payment obligations under the Loan Agreement. [(8) In connection with the Refunding, the Trustee and the Company have entered into a Tender Agreement, dated as of __________, 199___, pursuant to which, among other things, the Company is required to furnish a letter of credit in connection with its obligation to purchase Bonds pursuant to Section 2.2 of the Indenture and redeem Bonds pursuant to Section 3.1 of the Indenture.] (9) In connection with the Refunding and in consideration therefor and as set forth in the Plan of Reorganization, the Company, Westpac and CIBC have agreed to enter into this Letter of Credit and Reimbursement Agreement (as amended, modified and supplemented from time to time, this "Agreement") and the Related Documents (as defined herein) pursuant to which Westpac will issue, in substantially the form of Exhibit A, a letter of credit (such letter of credit and any successor letter of credit as provided for in such letter of credit being the "Letter of Credit"), in the amount of $[_________]* (the "Commitment") of which $59,235,000** shall support the payment of principal of the Bonds and $[ ] shall support the payment of interest on the Bonds for up to [__] ________________ * Not to exceed face amount of Original Letter of Credit. ** Not to exceed the portion of the Original Letter of Credit available to pay principal on the Original Bonds. 6 days computed at [14%]*** per annum on the principal thereof and CIBC will become a Creditor hereunder. (10) On [ , ], an order was entered by the court having jurisdiction over the Bankruptcy Case (the "Bankruptcy Court") confirming the Plan of Reorganization, which Plan of Reorganization provided, among other things, for the Company to enter into this Agreement. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained in the Plan of Reorganization and herein and in order to induce the Issuing Bank to issue the Letter of Credit, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.1 Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Affiliate" means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term "control" (including the terms "controlling," "controlled by" and "under common control with") of a Person means the possession, direct or indirect, of the power to vote 5% or more of the Voting Stock of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise. "Agent Payment Notice" has the meaning assigned to that term in Section 2.8(a)(ii). "Agreement" has the meaning assigned to that term in Preliminary Statement (9). "Alternate Base Rate" means for each day that interest rate per annum as shall be equal to the higher of: (i) the rate of interest established by Westpac in New York, New York, from time to time as Westpac's base rate in effect on such day, each change in such rate to be effective as of Westpac's opening of business on the date such change occurs (extensions of credit made by Westpac may bear interest at rates below, equal to or above such rate); or ________________ *** To be set a market rate as determined by the Remarketing Agent, but not to exceed 14% per annum. 7 (ii) the sum of (x) one percent and (y) the Fed Funds Rate on such day. "Alternate Base Rate Advance" means a Tender Advance bearing interest as provided in Section 2.7(a). "Available Amount" in effect at any time means the maximum amount available to be drawn at such time under the Letter of Credit, the determination of such maximum amount to assume compliance with all conditions for drawing and no reduction for (i) any amount drawn by an Interest Draft (unless such amount is not reinstated under the Letter of Credit) or (ii) any amount drawn by a Tender Draft or (iii) any amount not available to be drawn because Bonds are held by or for the account of the Company. "Banking Institution" means any financial institution subject to regulation under Regulation D of the Board of Governors of the Federal Reserve System and any other banking institution or trust company or similar organization incorporated or organized under the laws of a country other than the United States, or a political subdivision of a country other than the United States. "Bankruptcy Case" has the meaning assigned to that term in Preliminary Statement (5). "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as heretofore and hereafter amended, and codified as title 11 of the United States Code. "Bankruptcy Court" has the meaning assigned to that term in Preliminary Statement (10). "Bond Interest Amount" for any Payment Date with respect to each Bond, means an amount equal to the accrued interest on the principal amount of such Bond in accordance with its terms from and including the first day of the Quarterly Period for such Bond ending on such Payment Date to but excluding the earlier of (i) the Payment Date and (ii) the date such Bond ceases to be held by or for the account of the Issuing Bank or the Agent or any other nominee of the Issuing Bank. "Bonds" has the meaning assigned to that term in Preliminary Statement (6). "Business Day" means any day of the year on which banks are not required or authorized to close in New York City and, if the applicable Business Day relates to any Eurodollar Advances, on which dealings are carried on the London interbank market. 8 "Capitalized Lease Obligation" means, with respect to any lease of property which, in accordance with GAAP, appears on the lessee's balance sheet as a capital lease, the amount of the liability which should appear on such balance sheet. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Commencement Date" means the earlier of (i) the Effective Date and (ii) December 31, 1994. "Commitment" has the meaning assigned to that term in Preliminary Statement (9). "Confirmation Order" means the order of the Bankruptcy Court confirming the Plan of Reorganization. "Consolidated Subsidiary" means, for any Person, each Subsidiary of such Person (whether now existing or hereafter created or acquired) the financial statements of which shall be (or should have been) consolidated with the financial statements of such Person in accordance with GAAP. "Contract Interest Amount" for any Payment Date means an amount equal to the interest that would have accrued on an amount equal to the purchase price paid for each Bond purchased by the Trustee or the Tender Agent on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank, from and including the first day of the Quarterly Period for each such Bond ending on such Payment Date to but excluding the earlier of (i) the Payment Date and (ii) the date such Bond ceases to be held by or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank, at an interest rate per annum equal at all times to the sum of (x) the Alternate Base Rate in effect from time to time plus (y) .50% per annum. "Creditors" means the banks (including CIBC) listed on the signature pages hereof under the caption "Creditors" and any other Person which becomes a party hereto pursuant to Section 9.9(a). "Credit Termination Date" means the earlier of (i) the day on which the Letter of Credit is surrendered by the Trustee to the Issuing Bank for cancellation and (ii) the Stated Termination Date. "Debt" of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (including, without limitation, all obligations, contingent or otherwise, 9 of such Person in connection with acceptance facilities (other than acceptance facilities entered into in connection with normal course commercial trade transactions) and letter of credit facilities to the extent such letter of credit facilities support Debt), (b) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (c) all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person, (d) all Capitalized Lease Obligations of such Person, (e) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any capital stock of or other ownership or profit interest in such Person or any other Person or any warrants, rights or options to acquire such capital stock, valued, in the case of preferred stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (f) all Debt of others referred to in clauses (a) through (e) above guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (iv) otherwise to assure a creditor against loss, and (g) all Debt referred to in clauses (a) through (e) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt. In cases where recourse to any Person or any of its properties in respect of Debt is limited, the amount of such Debt of such Person for purposes hereof shall be so limited. "Default Rate" means a fluctuating interest rate equal to 2% per annum above the Alternate Base Rate in effect from time to time. "EBITA" means, for any period, the sum, for the Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) net operating income (calculated before taxes, Interest Expense, extraordinary items and unusual non-cash, non-recurring items and income or loss attributable to equity in Affiliates) for such period plus (b) amortization (to the extent deducted in determining net operating income) for such period. 10 "Effective Date" means the Effective Date (as defined therein) of the Plan of Reorganization. "Eligible Institution" means (i) a bank or trust company organized under the laws of the United States of America, of any state therein, of the District of Columbia, of any member country of the Organization for Economic Cooperation and Development or of any political subdivision of any such country, in each case having assets in excess of $500,000,000, (ii) an insurance company organized under the laws of any state in the United States of America or of the District of Columbia having assets in excess of $500,000,000 or (iii) any other Person consented to by the Company, which consent shall not be unreasonably withheld. "Eligible Participant" has the meaning assigned to that term in Section 9.9(b). "Environmental Action" means any administrative, regulatory or judicial action, suit, demand, demand letter, claim, notice of non-compliance or violation, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law or any Environmental Permit including, without limitation, (a) any claim by any governmental or regulatory authority for enforcement, investigation, cleanup, removal, response, remedial or other actions or damages pursuant to any Environmental Law and (b) any claim by any Person seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment. "Environmental Law" means any federal, state or local law, rule, regulation, order, writ, judgment, injunction, decree, determination or award relating to the environment, health, safety or Hazardous Materials. "Environmental Permit" means any permit, approval, identification number, license or other authorization required under any Environmental Law. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "ERISA Affiliate" means any Person who for purposes of Title IV of ERISA is a member of the Company's controlled group, or under common control with the Company, within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended. "Eurodollar Advance" means any Tender Advance bearing interest at the Eurodollar Rate. 11 "Eurodollar Rate" for any Interest Period for any Tender Advance means an interest rate per annum equal at all times during such Interest Period to the sum of (x) the LIBO Rate for such Interest Period plus (y) 1.50% per annum. "Event of Default" has the meaning assigned to that term in Section 6.1. "Fed Funds Rate" means for each day the rate per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (i) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if such rate is not so published for any day, the Federal Funds Rate for such day shall be the average rate charged to the Westpac on such day on such transactions as determined by Westpac. "Final Approval" means any authorizations, consents, approvals, waivers, exceptions, variances, orders, licenses, exemptions, publications, filings, notices to and declarations of or with any governmental authority (other than routine reporting requirements the failure to comply with which will not affect the validity or enforceability of any of the Related Documents or have a Material Adverse Effect) or any other action in respect of any governmental authority that is in full force and effect and is not the subject of a pending appeal or reconsideration or other review, and the time in which to make an appeal or request the review or reconsideration of which has expired without any appeal or request for review or reconsideration having been taken or made. "Final Draft" has the meaning assigned to that term in the Letter of Credit. "Final Order" means an order of the Bankruptcy Court which (a) shall not have been reversed, stayed, modified or amended and the time to appeal from, or to seek review or rehearing of, shall have expired and as to which no appeal or petition for review, rehearing or certiorari is pending, or (b) if appealed from, shall have been affirmed and the time to appeal from such affirmance or to seek review or rehearing thereof, shall have expired or no further hearing, appeal or petition for certiorari can be taken or granted. "First Mortgage Bond Indenture" means the Indenture dated as of between the Company and , as trustee, providing for the issuance by the Company of its first mortgage bonds. 12 "First Mortgage Bonds" means bonds issued by the Company under the First Mortgage Bond Indenture. "First Mortgage Bonds, Series A/B" means collectively, the First Mortgage Bonds, Series A, and the First Mortgage Bonds, Series B, in each case under the First Mortgage Bond Indenture. "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time. "Governmental Person" means any national, state or local government, any political subdivision or any government instrumentality, authority, body or entity, including the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, any central bank or any comparable authority. "Hazardous Materials" means (a) petroleum or petroleum products, asbestos in any form, radioactive or source material, (b) any substances defined as or included in the definition of "hazardous substances", "hazardous wastes", "hazardous materials", "extremely hazardous wastes", "restricted hazardous wastes", "toxic substances", "toxic pollutants", "contaminants" or "pollutants", or words of similar import, under any Environmental Law and (c) any other substance exposure to which is regulated under any Environmental Law. "Indemnified Party" has the meaning assigned to that term in Section 9.5. "Indenture" has the meaning assigned to that term in Preliminary Statement (6). "Interest Coverage Ratio" means, as at any date, the ratio of (a) EBITA for the period of four consecutive fiscal quarters ending on or most recently ended prior to such date to (b) Interest Expense for such period. "Interest Draft" has the meaning assigned to that term in the Letter of Credit. "Interest Expense" means, for any period, the sum, for the Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) all interest in respect of Debt including, without limitation, interest capitalized during such period (whether or not actually paid during such period), including, without limitation, all commissions and fees (other than up-front fees), plus (b) the net amounts payable (or minus the net amounts receivable) under Interest Rate Protection Agreements accrued during such period (whether or not actually paid or received during such period). "Interest Period" has the meaning assigned to that term in Section 2.7(b). 13 "Interest Rate Protection Agreement" means, for any Person, an interest rate swap, cap or collar agreement, interest rate future or option contracts or similar arrangement providing for the transfer or mitigation of interest risks either generally or under specific contingencies. "Investment Grade Rating" means a rating of BBB- or better (or equivalent rating) by any two of Moody's Investors Service, Inc., Standard & Poor's Corporation and Duff & Phelps, Inc. "Issuer" has the meaning assigned to that term in Preliminary Statement (1). "LC Payment Notice" has the meaning assigned to that term in Section 2.8(a)(ii). "Letter of Credit" has the meaning assigned to that term in Preliminary Statement (9). "Leverage Ratio" means, at any time, the ratio of Total Debt to Total Capital at such time. "LIBO Rate" for any Interest Period means an interest rate per annum equal to the rate of interest per annum at which deposits in United States dollars are offered by the principal office of Westpac in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period for a period equal to such Interest Period. "Lien" means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property. "Loan Agreement" has the meaning assigned to that term in Preliminary Statement (7). "Majority Creditors" means Creditors which have an aggregate Participation Percentage of more than 50%. "Material Adverse Effect" means a material adverse effect on (i) the property, business, operations, financial condition, liabilities or capitalization of the Company and its Subsidiaries taken as a whole, (ii) the ability of the Company to perform its obligations under any of the Related Documents, (iii) the validity or enforceability of any of the Related Documents, (iv) the rights and remedies of the Issuing Bank, the Creditors and the Agent or (v) the timely payment of the principal of or interest hereunder or other amounts payable in connection herewith. 14 "Material Subsidiary" means, at any time, a Subsidiary of the Company (a) whose assets at such time exceed 10% of the assets of the Company and its Subsidiaries (on a consolidated basis) or (b) whose earnings at such time exceed 10% of the earnings of the Company and its Subsidiaries (on a consolidated basis). "Multiemployer Plan" means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions, such plan being maintained pursuant to one or more collective bargaining agreements. "Multiple Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the Company or an ERISA Affiliate and at least one Person other than the Company and its ERISA Affiliates or (ii) was so maintained and in respect of which the Company or an ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated. "Official Statement" means the Official Statement dated [ , 199 ] of the Issuer relating to the Bonds, together with the documents incorporated therein by reference. "Original Bonds" has the meaning assigned to that term in Preliminary Statement (1). "Original Indenture" has the meaning assigned to that term in Preliminary Statement (1). "Original Letter of Credit" has the meaning assigned to that term in Preliminary Statement (4). "Original Loan Agreement" has the meaning assigned to that term in Preliminary Statement (2). "Original Reimbursement Agreement" has the meaning assigned to that term in Preliminary Statement (4). "Original Trustee" has the meaning assigned to that term in Preliminary Statement (1). "Partial Redemption Draft" has the meaning assigned to that term in the Letter of Credit. "Participant" has the meaning assigned to that term in Section 9.9(b). "Participation Percentage" means, as of any date of determination (i) with respect to a Creditor initially a party hereto, the percentage set forth opposite such Creditor's name 15 on the signature pages hereof, except as provided in clause (iii) below, (ii) with respect to a Creditor that became a party hereto by operation of Section 9.9(a), the percentage participation interest assumed by such assignee Creditor as set forth in the instrument of assignment referred to in Section 9.9(a), except as provided in clause (iii) below, and (iii) with respect to any Creditor described in clause (i) or (ii) above that assigns a percentage of its interests in accordance with Section 9.9(a), its participation percentage as reduced by the percentage so assigned. "Payment Amount" has the meaning set forth in Section 2.5(c). "Payment Date" means the last day of each Quarterly Period. "Payment Period" has the meaning assigned to that term in Section 2.6. "PBGC" means the Pension Benefit Guaranty Corporation or any successor thereto. "Person" means an individual, a corporation, a partnership, an association, a business trust or any other entity or organization, including a Governmental Person. "Plan" means a Single Employer Plan or a Multiple Employer Plan. "Plan of Reorganization" means the Modified Third Amended Plan of Reorganization of the Debtor Providing for the Acquisition of El Paso Electric Company by Central and South West Corporation filed on August 27, 1993 (as corrected as of September 15, 1993). "Preliminary Official Statement" means the Preliminary Official Statement dated [ , 199 ] of the Issuer relating to the Bonds, together with the documents incorporated therein by reference. "Quarterly Period" with respect to each Bond means the period commencing on the date such Bond is purchased by the Trustee or the Tender Agent on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank and ending on the first to occur of March 31, June 30, September 30 or December 31 thereafter, and, thereafter, each subsequent period commencing on the last day of the immediately preceding Quarterly Period and ending on the first to occur of March 31, June 30, September 30 or December 31 thereafter. "Refunding" has the meaning assigned to that term in Preliminary Statement (6). 16 "Related Documents" has the meaning assigned to that term in Section 2.16. "Remarketing Agent's Agreement" means the remarketing agreement dated as of , 199[ ] between the Company and [ ]. "Second Mortgage Bond Indenture" means the Indenture dated as of between the Company and _____________, as trustee, providing for the issuance by the Company of its second mortgage bonds. "Second Mortgage Bonds" means bonds issued by the Company under the Second Mortgage Bond Indenture. "Second Mortgage Bonds, Series A" means Second Mortgage Bonds, Series A, issued under the Second Mortgage Bond Indenture. "Second Mortgage Bonds, Series [ ]" means the mortgage bonds at any time issued by the Company and outstanding pursuant to the Second Mortgage Bond Indenture. [Bonds to be rated]. "Single Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the Company or an ERISA Affiliate and no Person other than the Company and its ERISA Affiliates or (ii) was so maintained and in respect of which the Company or an ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated. "Stated Termination Date" means the earlier of (i) December 31, 1998 and (ii) the fourth anniversary of the Effective Date, unless extended as provided in Section 2.14. "Submission Date" means the date the form of this Agreement was filed with the Bankruptcy Court prior to the date creditors must have voted on the Plan of Reorganization in accordance with Section 7.6 of the Plan of Reorganization. "Subsidiary" means, with respect to any Person, any corporation, partnership or other entity of which at least a majority of the Voting Stock is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person. "Tender Advance" has the meaning assigned to that term in Section 2.6. "Tender Agent" has the meaning assigned to that term in the Indenture. 17 "Tender Draft" has the meaning assigned to that term in the Letter of Credit. "Total Capital" means, as at any date, the sum for the Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) the amount of capital stock (excluding treasury stock and capital stock subscribed for and unissued and preferred stock mandatorily redeemable in cash or redeemable in cash at the option of the holder thereof), plus (b) the amount of surplus and retained earnings (or, in the case of a surplus or retained earnings deficit, minus the amount of such deficit). "Total Debt" means, as at any date, the aggregate amount of all Debt of the Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) (other than contingent obligations in connection with acceptance facilities and letters of credit). "Trustee" means [ ] and its successors and permitted assigns under the Indenture, as trustee and paying agent. "Voting Stock" means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or Persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency. "Withdrawal Liability" has the meaning given such term under Part I of Subtitle E of Title IV of ERISA. SECTION 1.2 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 means "to but excluding". SECTION 1.3 Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP consistently applied, except as otherwise stated herein. SECTION 1.4 Interpretation. In this Agreement the singular includes the plural and the plural the singular; words importing any gender include the other genders; references to statutes are to be construed as including all statutory provisions consolidating, amending or replacing the statute referred to; 18 references to "writing" include printing, typing, lithography and other means of reproducing words in a tangible visible form; references to sections (or any subdivision of a section), articles, schedules, annexes and exhibits are to those of this Agreement unless otherwise indicated; the words "including", "includes" and "include" shall be deemed to be followed by the words "without limitation"; references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications to such instruments but only to the extent such amendments and other modifications are not prohibited by the terms of this Agreement or any other Related Document; and references to Persons include their respective permitted successors and assigns and, in the case of Governmental Persons, Persons succeeding to their respective functions and capacities. ARTICLE II AMOUNT AND TERMS OF THE LETTER OF CREDIT SECTION 2.1 The Letter of Credit. The Issuing Bank agrees, on the terms and conditions hereinafter set forth, to issue the Letter of Credit to the Trustee on any Business Day during the period from the date hereof to and including [ , 199 ] in the amount of the Commitment to support the payment of principal of and interest on the Bonds as set forth in Preliminary Statement (9) and expiring on the Stated Termination Date, unless earlier terminated in accordance with the terms thereof. SECTION 2.2 Issuing the Letter of Credit. The Letter of Credit shall be issued on at least two Business Days' notice from the Company to the Issuing Bank (which notice may be furnished prior to the execution and delivery hereof) specifying the Business Day of issuance thereof. On such Business Day specified by the Company in such notice and upon fulfillment of the applicable conditions set forth in Article III, the Issuing Bank will issue the Letter of Credit to the Trustee. SECTION 2.3 Drawing Fee. The Company hereby agrees to pay to the Agent, for the account of the Issuing Bank a drawing fee of $100 per draw, payable at the time of each draw under the Letter of Credit. SECTION 2.4 Commissions. (a) The Company hereby agrees to pay to the Agent, for the account of the Issuing Bank and the Creditors, a letter of credit commission on the Available Amount in effect from time to time (i) from the date of issuance of the Letter of Credit to but excluding the first anniversary of the Commencement Date, at the rate of .75% per annum, (ii) from the first anniversary of the Commencement Date to but excluding the second anniversary of the Commencement Date, at the rate of .875% per annum, (iii) from the second anniversary of the Commencement Date to but excluding the third anniversary of the Commencement Date, at the rate of 1.00% per annum, (iv) from the third anniversary of the Commencement Date to but excluding the fourth anniversary of the Commencement Date, at the rate of 1.125% per annum and (v) if applicable pursuant to Section 2.14(a), from the 19 fourth anniversary of the Commencement Date to but excluding the fifth anniversary of the Commencement Date, at the rate of 1.25% per annum. The Letter of Credit commission shall be payable quarterly in arrears on the last Business Day of each _______, _______, _______, and _______, commencing on the last day of the quarter in which the Letter of Credit is issued, until the Credit Termination Date, and on the Credit Termination Date. Such letter of credit commission shall be paid by the Agent to the Issuing Bank and the Creditors as the Issuing Bank and the Creditors shall agree. (b) The Company hereby agrees to pay to the Agent, for the account of the Issuing Bank, upon each transfer by the Trustee of the Letter of Credit in accordance with its terms, a transfer commission equal to 1/4 of 1% of the Available Amount then in effect. SECTION 2.5 Reimbursement on the Date of the Draw. (a) Except as otherwise provided in subsections (b) and (c) of this Section 2.5 and subject to the provisions of Sections 2.6 and 2.7, the Company hereby agrees to pay to the Agent (i) on each date on which the Issuing Bank shall pay any amount under the Letter of Credit pursuant to any draft (including, without limitation, amounts in respect of any reinstatement of the interest component at the election of the Issuing Bank in its sole discretion notwithstanding any failure by the Company to reimburse the Issuing Bank or the Creditors for any previous drawing to pay interest on the Bonds), a sum equal to such amount so paid, plus (ii) on each day thereafter interest on any amount remaining unpaid by the Company to the Agent under clause (i) above, from the date of such draw until payment in full, at the Default Rate. (b) The Company shall have no obligation under Section 2.5(a) or Section 2.6 in the case of a Tender Draft to pay to the Agent, the Issuing Bank or any Creditor pursuant to this Agreement the amount paid by the Issuing Bank under the Letter of Credit if and to the extent the amount so paid under the Letter of Credit shall have been used to purchase Bonds to be held by or on behalf of and for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank pursuant to subsection (e) of Section 3.01 of the Indenture, subsection (e) of Section 9.01 of the Indenture or subsection (d) of Section 13.03 of the Indenture. Notwithstanding the foregoing, the obligations of the Company under this Agreement to pay to the Agent on behalf of the Issuing Bank and the Creditors any amounts in respect of the amounts paid by the Issuing Bank under the Letter of Credit referred to in the immediately preceding sentence shall continue to be effective or shall be reinstated, as the case may be, if at any time the purchase of the Bonds by or on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank with the proceeds of such amounts paid under the Letter of Credit is rescinded in whole or in part or some or all of the Bonds so purchased must otherwise be returned by the Issuing Bank, the Agent or any other nominee of the Issuing Bank. 20 (c) The Company shall pay to the Agent, on each Payment Date the amount (the "Payment Amount") by which (i) the aggregate Contract Interest Amount for the Quarterly Period ending on such Payment Date exceeds (ii) the aggregate Bond Interest Amount for such Quarterly Period with respect to all Bonds held by or on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank during such Quarterly Period. Any amounts due pursuant to this Section 2.5(c) that are not paid when due shall bear interest from the date the same become due until such amounts are paid, payable on demand, at an interest rate equal to the Default Rate. SECTION 2.6 Tender Advances. Except as provided in Section 2.5(b), if the Issuing Bank shall make any payment under the Letter of Credit pursuant to a Tender Draft and the conditions set forth in Section 3.3(a) shall have been fulfilled, such payment shall constitute an advance made by the Issuing Bank to the Company on the date and in the amount of such payment, each such advance being a "Tender Advance" and collectively the "Tender Advances". Except as otherwise provided in Section 2.9 or Section 6.2, each Tender Advance shall be payable in substantially equal quarterly installments on the last day of each calendar quarter, commencing on the last day of the calendar quarter in which the 90th day following the date of such Tender Advance occurs and continuing until the Stated Termination Date in effect on the date of such Tender Advance (each such approximately 90-day period being a "Payment Period"). SECTION 2.7 Interest on Advances. The Company shall pay interest on the unpaid principal amount of each Tender Advance from the date of such Tender Advance until such principal amount is paid in full at the applicable rate set forth below: (a) Alternate Base Rate. Except to the extent that the Company shall elect to pay interest on the unpaid principal of any Tender Advance for any Interest Period pursuant to subsection (c) of this Section 2.7, the Company shall pay interest on the unpaid principal of each Tender Advance from the date of such Tender Advance until the principal amount of such Tender Advance is paid in full, payable quarterly in arrears on the last day of each calendar quarter and on the date such Tender Advance is paid in full, at a fluctuating interest rate per annum in effect from time to time equal to .50% per annum above the Alternate Base Rate in effect from time to time. (b) Interest Periods. The Company may from time to time elect to have the interest on any Tender Advance determined and payable for a specified period (an "Interest Period" for such Tender Advance) in accordance with subsection (c) of this Section 2.7. The first day of an Interest Period for any Tender Advance shall be either the date such Tender Advance is made, the date the Company 21 specifies as the first day of the Eurodollar Advance, or the last day of the then current Interest Period for a Eurodollar Advance. No Interest Period shall end after the Stated Termination Date. (c) Eurodollar Rate. The Company may from time to time elect to pay interest on any Tender Advance at the Eurodollar Rate for an Interest Period for such Tender Advance by notice delivered to the Agent, specifying the Tender Advance (which shall not be less than $1,000,000 unpaid principal amount during such Interest Period) and the first day and duration of such Interest Period, received by the Agent before 11:00 A.M. (New York City time) three Business Days prior to the first day of such Interest Period; provided that no more than four separate Interest Periods in respect of Eurodollar Advances may be outstanding at any one time. Such Interest Period shall be of 1, 3 or 6 months' duration, at the Company's election; provided, however, that the Company may not select any Interest Period which ends after any principal repayment installment date unless, after giving effect to such selection, the aggregate unpaid principal amount of Eurodollar Advances having Interest Periods which end on or prior to such principal repayment installment date and Alternate Base Rate Advances shall be at least equal to the principal amount of the Tender Advances due and payable on and prior to such date. If the Company shall have made such election for any Tender Advance for any such Interest Period, the Company shall pay interest on such Tender Advance during such Interest Period, payable on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day which occurs during such Interest Period every three months from the first day of such Interest Period, at the Eurodollar Rate for such Interest Period for such Tender Advance. (d) Default Interest. The Company shall pay interest on the unpaid principal amount of any Tender Advance that is not paid when due and on the unpaid amount of all interest, and other amounts payable hereunder, that is not paid when due, payable on demand, at a rate per annum equal at all times to 2% per annum above the Alternate Base Rate in effect from time to time. Notwithstanding anything in this Agreement to the contrary, upon the occurrence and during the continuance of an Event of Default, the right of the Company to make an election in respect of the Eurodollar Rate pursuant to Section 2.7(c) shall, terminate (i) automatically in the case of an Event of Default under Section 6.1(a) or (ii) upon notice to the Company by the Bank, in all other cases; provided that no termination referred to in either of the preceding clauses (i) or (ii) shall affect any Eurodollar Advance during an Interest Period in effect for such Eurodollar Advance at the time such notice is received by the Company. 22 (e) Illegality, Etc. Notwithstanding any other provision of this Agreement, if the Issuing Bank or any Creditor (which shall at the time be a Banking Institution) notifies the Company that the introduction of or any change in or in the interpretation of any law or regulation that occurs after the Submission Date makes it unlawful, or any central bank or other governmental authority asserts after the Submission Date that it is unlawful, for the Issuing Bank or any Creditor to perform its obligations to make, fund or maintain Eurodollar Advances hereunder (or participation interests therein), (i) the right of the Company to select the Eurodollar Rate for Tender Advances held by the Issuing Bank or such Creditor, as the case may be, and the obligation of the Issuing Bank and such Creditor, as the case may be, to make or maintain Eurodollar Advances shall be suspended until the Issuing Bank or such Creditor, as the case may be, shall notify the Company that the circumstances causing such suspension no longer exist and (ii) the rate of interest on all such Tender Advances held by the Issuing Bank or such Creditor, as the case may be, shall thereupon be .50% per annum above the Alternate Base Rate in effect from time to time. (f) Interest Rate Protection. (i) If the Company shall fail to select the duration of any Interest Period for any Eurodollar Advance in accordance with the provisions contained in Section 2.7(c), the Agent will forthwith so notify the Company and the Creditors and such Eurodollar Advance will automatically, on the last day of the then existing Interest Period therefor, convert into an Alternate Base Rate Advance. (ii) On and after the date on which the unpaid principal amount of any Tender Advance shall be reduced, by payment or prepayment or otherwise, to less than $1,000,000, the rate of interest on the unpaid principal amount of such Tender Advance shall be .50% per annum above the Alternate Base Rate in effect from time to time and the right of the Company to select a different rate for such Tender Advance shall terminate; provided, however, that if and so long as the Company shall select for such Tender Advance the same Eurodollar Rate for and the same Interest Period as another Tender Advance or other Tender Advances and the aggregate unpaid principal amount of all such Tender Advances shall equal or exceed $1,000,000, the Company shall have the right to select such rate for such Interest Period for such Tender Advance. (g) Alternate Rate of Interest. In the event, and on each occasion, that, on the day two Business Days prior to the commencement of any Interest Period for a Eurodollar Advance, the Agent shall have determined (which determination shall be conclusive and binding upon the Company absent manifest error) that reasonable means do not 23 exist for ascertaining the applicable Eurodollar Rate, the Agent shall, as soon as practicable thereafter, give written, facsimile or telegraphic notice of such determination to the Company, and any request by the Company for a Eurodollar Advance pursuant to subsection (c) of this Section 2.7 shall be deemed a request for an Alternate Base Rate Advance. After such notice shall have been given and until the circumstances giving rise to such notice no longer exist, each request for an Eurodollar Advance shall be deemed to be a request for an Alternate Base Rate Advance. (h) Majority Creditors' Costs for Eurodollar Advances. If, with respect to any Eurodollar Advances, the Majority Creditors notify the Agent that the Eurodollar Rate for any Interest Period for such Eurodollar Advances will not adequately reflect the cost to such Majority Creditors of making, funding or maintaining their respective Eurodollar Advances for such Interest Period, the Agent shall forthwith so notify the Company and the Creditors, whereupon (x) each Eurodollar Advance will automatically, on the last day of the then existing Interest Period therefor, convert into an Alternate Base Rate Advance, and (y) the obligation of the Creditors to make, or to convert Alternate Base Rate Advances into, Eurodollar Advances shall be suspended until the Agent shall notify the Company and the Creditors that the circumstances causing such suspension no longer exist. (i) Notice. promptly after the determination of any interest rate provided for herein or any change therein, the Agent shall give notice thereof to the Company. SECTION 2.8 Reimbursement of Issuing Bank, Etc. (a)(i) The Issuing Bank hereby sells and transfers to each Creditor, and each Creditor hereby acquires from the Issuing Bank, an undivided interest and participation to the extent of such Creditor's Participation Percentage in and to (A) the Letter of Credit, including the obligations of the Issuing Bank under and in respect thereof and the Company's reimbursement and other obligations in respect thereof and (B) any Tender Advance made by the Issuing Bank hereunder, whether now existing or hereafter arising. (ii) If the Issuing Bank (A) shall not have been reimbursed in full for any payment made by the Issuing Bank under the Letter of Credit on the date of such payment or (B) shall make any Tender Advance to the Company, the Issuing Bank shall give the Agent prompt notice thereof (an "LC Payment Notice") no later than 12:00 noon (New York City time) on the next Business Day immediately succeeding the date of such payment by the 24 Issuing Bank and the Agent shall give each Creditor prompt notice thereof (an "Agent Payment Notice") no later than two hours following the Agent's receipt of the LC Payment Notice at such Creditor's address referred to in Section 9.2. (iii) Upon receipt of an Agent Payment Notice, each Creditor severally agrees to pay to the Issuing Bank in accordance with clause (iv) below an amount equal to such Creditor's ratable portion (according to such Creditor's Participation Percentage as of the date of such Agent Payment Notice) of such unreimbursed amount or Tender Advance paid or made by the Issuing Bank, plus interest (if payment is not made in accordance with clause (iv)) on such amount at a rate per annum equal to the Federal Funds Rate from the date of payment by the Issuing Bank to the date of payment to the Issuing Bank by such Creditor. The failure of the Issuing Bank or the Agent to give such LC Payment Notice or the Agent Payment Notice, as the case may be, shall not affect any Creditor's obligations pursuant to this subsection (a). (iv) Each such payment by a Creditor shall be made to the Agent for the account of the Issuing Bank at its address referred to in Section 9.2 in lawful money of the United States of America, in same day funds (1) not later than 2:30 p.m. (New York City time) on the day any such Agent Payment Notice is received by such Creditor, if such notice is received at or prior to 12:00 noon (New York City time) on a Business Day; (2) not later than 4:30 p.m. (New York City time) on the day any such Agent Payment Notice is received by such Creditor, if such notice is received after 12:00 noon (New York City time) but at or prior to 2:30 p.m. (New York City time) on a Business Day; or (3) not later than 12:00 noon (New York City time) on the Business Day next succeeding the day any such Agent Payment Notice is received by such Creditor, if such notice is received after 2:30 p.m. (New York City time) on a Business Day. Each Creditor's obligation to make each such payment to the Issuing Bank, and the Issuing Bank's right to receive the same, shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limiting the foregoing or Section 2.16, the occurrence or continuance of an Event of Default or the failure of any other Creditor to make any payment under this Section 2.8. Each Creditor further agrees that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. (b) The failure of any Creditor to make any payment to the Issuing Bank in accordance with subsection (a), above, shall not relieve any other Creditor of its obligation to make payment, but neither the Issuing Bank nor any Creditor shall be responsible for the failure of any other Creditor to make such payment. If any Creditor shall fail to make any payment to the Issuing Bank in accordance with subsection (a)(iv), above, then such Creditor agrees to pay to the Issuing Bank forthwith on demand such corresponding amount together with interest thereon 25 for the first two days following the day upon which any such payment shall have been due and payable at the Federal Funds Rate and thereafter until the date such amount is repaid to the Issuing Bank at the Alternate Base Rate plus 1% per annum. (c) If any Creditor shall fail to make any payment to the Issuing Bank in accordance with subsection (a), above, then, in addition to other rights and remedies which the Issuing Bank may have, the Agent is hereby authorized, at the request of the Issuing Bank, to withhold and to apply to the payment of such amounts owing by such Creditor to the Issuing Bank and any related interest, that portion of any payments received by the Agent that would otherwise be payable to such Creditor. SECTION 2.9 Prepayments; Reinstatement of Letter of Credit Amounts. (a) The Company may, upon at least two Business Days' notice to the Agent stating the proposed date and principal amount of the prepayment, and if such notice is given to the Agent the Company shall, prepay the amount outstanding under any Tender Advance in whole or in part (each such partial prepayment shall be in the minimum amount of $[ ]) with accrued interest to the date of such prepayment on the amount prepaid (any such prepayment shall be applied to outstanding Tender Advances in the inverse order of maturity); provided, however, that with respect to any prepayment of any Eurodollar Advance made on a day other than the last day of an Interest Period for such Eurodollar Advance, the Company shall pay to the Agent, in accordance with Section 2.11(b), an amount sufficient to compensate the Issuing Bank and any Creditor for any loss, cost, or expense incurred by it by reason of such prepayment on a day other than the last day of an Interest Period. (b) Prior to or simultaneously with the resale of Bonds acquired by the Trustee or the Tender Agent for the account of the Company with the proceeds of one or more draws under the Letter of Credit by one or more Tender Drafts, the Company shall or shall cause the Trustee on behalf of the Company to prepay the then outstanding Tender Advances (any such prepayment shall be applied to outstanding Tender Advances in the inverse order of maturity) by paying to the Agent an amount equal to the sum of (i) the aggregate principal amount of the Bonds being resold or to be resold plus (ii) the aggregate amount of accrued and unpaid interest on such Bonds which was paid by a drawing or drawings under such Tender Draft or Drafts. Such payments when accompanied by a certificate completed and signed by the Trustee in substantially the form of Annex F to the Letter of Credit shall be applied by the Agent in reimbursement of such drawings (and as prepayment of Tender Advances resulting from such drawings in the manner described above); provided, however, that if any prepayment of any Tender Advance that is a Eurodollar Advance is made on a day other than the last day of the Interest Period for such Eurodollar Advance, the Company shall pay to the 26 Issuing Bank and any Creditor, in accordance with Section 2.11(b), an amount sufficient to compensate the Issuing Bank and any Creditor for any loss, cost, or expense incurred by it by reason of such prepayment on a day other than the last day of an Interest Period; provided further that, in the case of a prepayment certified to the Issuing Bank by the Trustee as a prepayment of a Tender Advance pursuant to this Section 2.9(b) and made on a date other than a date on which interest on such Tender Advance is scheduled to be paid hereunder, the Company may pay interest accrued on such Tender Advance to the date of prepayment on the next scheduled date for the payment of interest on such Tender Advance, or if such Tender Advance shall have been prepaid in whole, on the date which would have been the next such scheduled date in the absence of such prepayment. The Company irrevocably authorizes the Issuing Bank to rely on such certificate and to reinstate the Letter of Credit in accordance therewith. (c) Upon the substitution of a letter of credit or other credit facility for the Letter of Credit as provided in Section 2.2(6) of the Indenture, all Tender Advances and accrued and unpaid interest thereon and all other outstanding amounts payable by the Company to the Issuing Bank, the Creditors and the Agent under this Agreement shall be paid in full on the date the Letter of Credit shall terminate as a result of such substitution. SECTION 2.10 Additional Interest. Subject to Section 2.11(e)(ii), the Company shall pay to the Issuing Bank and each Creditor additional interest on the unpaid principal amount of any Eurodollar Advance by the Issuing Bank or such Creditor, from the date of such Eurodollar Advance until such principal amount is paid in full, at an interest rate per annum equal at all times during each Interest Period for such Eurodollar Advance to the remainder obtained by subtracting (i) the LIBO Rate for the Interest Period for such Eurodollar Advance from (ii) the rate obtained by dividing such LIBO Rate by a percentage equal to 100% minus the reserve percentage applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for the Issuing Bank or such Creditor, as the case may be, with respect to liabilities or assets consisting of or including Eurocurrency liabilities having a term equal to such Interest Period, payable on each date on which interest is payable on such Eurodollar Advance. Such additional interest shall be determined by the Issuing Bank or such Creditor, as the case may be, and notified to the Company (with a copy to the Agent). 27 SECTION 2.11 Increased Costs. (a) If due either to (i) the introduction after the Submission Date of, or any change (other than any change by way of imposition or increase of reserve requirements in the case of Eurodollar Advances referred to in Section 2.10), after the Submission Date, in or in the interpretation of, any law or regulation or (ii) the compliance by the Issuing Bank or any Creditor with any guideline or request issued or made after the Submission Date by any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to the Issuing Bank or any Creditor as a result of agreeing to make or making, funding or maintaining Eurodollar Advances, or reduction in the amount of any sum received in respect thereof, then the Company shall from time to time, promptly after demand by the Issuing Bank or such Creditor, as the case may be, pay to the Agent for the account of the Issuing Bank or such Creditor, as the case may be, additional amounts sufficient to reimburse the Issuing Bank or such Creditor, as the case may be, for such increased cost or reduced amount. A certificate as to the amount of such increased cost or reduced amount, submitted to the Company (with a copy to the Agent) by the Issuing Bank or such Creditor, as the case may be, shall be conclusive and binding for all purposes, absent manifest error. (b) If, due to any change of interest rate on any Eurodollar Advance pursuant to Section 2.7(e) or 2.7(f), any prepayment pursuant to Section 2.9 of any Eurodollar Advance, any acceleration of maturity of the Tender Advances pursuant to Section 6.2, or for any other reason, a Eurodollar Advance is subject to a change of interest rate, or any payment of principal of any Eurodollar Advance is received, in each case other than on the last day of an Interest Period relating to such Eurodollar Advance, the Company shall, promptly upon demand by Issuing Bank or any Creditor (with a copy of such demand to the Agent), pay to the Agent for the account of the Issuing Bank or such Creditor, as the case may be, any amounts required to compensate the Issuing Bank or such Creditor, as the case may be, for any additional losses, costs or expenses which it may reasonably incur as a result of such change or payment, including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by the Issuing Bank or such Creditor, as the case may be, to fund or maintain such Eurodollar Advance but excluding loss of anticipated profit. A certificate setting forth the amount of such additional losses, costs or expenses, submitted by the Issuing Bank or such Creditor, as the case may be, to the Company (with a copy to the Agent), shall be conclusive and binding for all purposes, absent manifest error. (c) If after the Submission Date any change in any law or regulation or in the interpretation thereof by any court or administrative or governmental authority charged with the administration thereof shall either (i) impose, modify or deem 28 applicable any reserve, special deposit or similar requirement against letters of credit or guarantees issued by, or assets held by, or deposits in or for the account of, the Issuing Bank or any Creditor or (ii) impose on the Issuing Bank or any Creditor any other condition regarding this Agreement or the Letter of Credit, and the result of any event referred to in clause (i) or (ii) above shall be to increase the cost to the Issuing Bank or such Creditor of issuing or maintaining, or in the case of such Creditor, acquiring a participation in, the Letter of Credit, then, upon demand by the Issuing Bank or such Creditor, the Company shall pay to the Agent for the account of the Issuing Bank or such Creditor, from time to time as specified by the Issuing Bank or such Creditor, additional amounts sufficient to compensate the Issuing Bank or such Creditor for such increased cost. A certificate as to the amount of such increased cost, submitted to the Company (with a copy to the Agent) by the Issuing Bank or such Creditor, shall be conclusive and binding for all purposes, absent manifest error. (d) If the Issuing Bank or any Creditor determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law), issued or made after the Submission Date, affects the amount of capital required to be maintained by the Issuing Bank or any Creditor or any corporation controlling the Issuing Bank or such Creditor, as the case may be, and that the amount of such capital is increased by or based upon the existence of the Issuing Bank's or such Creditor's, as the case may be, commitment hereunder and other commitments of this type or the issuance of the Letter of Credit (or similar contingent obligations), then, upon demand by the Issuing Bank or such Creditor, as the case may be, the Company shall pay to the Agent for the account of the Issuing Bank or such Creditor, as the case may be, from time to time as specified by the Issuing Bank or such Creditor, as the case may be, additional amounts sufficient to compensate the Issuing Bank or such Creditor, as the case may be, or such corporation in the light of such circumstances, to the extent that the Issuing Bank or such Creditor, as the case may be, reasonably determines such increase in capital to be allocable to the existence of the Issuing Bank's or such Creditor's, as the case may be, commitment hereunder. A certificate as to such amounts submitted to the Company (with a copy to the Agent) by the Issuing Bank or such Creditor, as the case may be, shall be conclusive and binding for all purposes, absent manifest error. (e) Notwithstanding any other provision in this Section 2.11 to the contrary, (i) the Company is not responsible for, and is not required to reimburse the Issuing Bank or any Creditor for, any amounts that would otherwise be payable by the Company pursuant to subsection (a), (b), (c) or (d) of this Section 2.11 to the extent such amounts accrued 90 days or more prior to the date the Issuing Bank or any Creditor provides to the Company a certificate which sets forth such amounts owed to 29 the Issuing Bank or such Creditor, as the case may be, by the Company pursuant to such subsections and (ii) the Company is responsible for, and is required to reimburse the Issuing Bank and any Creditor for, any amounts payable by the Company pursuant to Section 2.10 and this Section 2.11, only so long as the Issuing Bank or such Creditor is a Banking Institution. (f) In calculating any amounts required to be paid by the Company pursuant to this Section 2.11, the Issuing Bank or such Creditor, as the case may be, shall make all determinations and allocations on a reasonable basis. SECTION 2.12 Payments and Computations. (a) The Company shall make each payment hereunder not later than 12:00 noon (New York City time) (or, in the case of any payment required by Section 2.5(a), as soon as practicable after the Issuing Bank has made a payment under the Letter of Credit) on the day when due in lawful money of the United States of America to the Agent at its address referred to in Section 9.2 in same day funds. The Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal, interest, fees or other amounts payable to the Issuing Bank and the Creditors to whom the same are payable at their respective addresses referred to in Section 9.2. (b) If, after the Agent has paid to the Issuing Bank or any Creditor any amount pursuant to subsection (a) above, such payment is rescinded or must otherwise be returned or must be paid over by the Agent or the Issuing Bank to any Person, whether pursuant to any bankruptcy or insolvency law, Section 9.4(c) or otherwise, the Issuing Bank or such Creditor, as the case may be, shall, at the request of the Agent or the Issuing Bank, promptly repay to the Agent or the Issuing Bank, as the case may be, an amount equal to such payment, together with any interest required to be paid by the Agent or the Issuing Bank with respect to such payment. (c) The Company hereby authorizes the Issuing Bank and each Creditor, if and to the extent payment is not made when due hereunder, to charge from time to time against any or all of the Company's accounts with the Issuing Bank and each Creditor any amount so due. (d) All computations of interest based on the Alternate Base Rate shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, and computations of the commissions hereunder and of interest based on the LIBO Rate shall be made by the Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or commitment fees are payable. Each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. 30 SECTION 2.13 Payments on Non-Business Days. (a) Whenever any payment hereunder shall be stated to be due, or whenever the last day of any Interest Period, Payment Period or Quarterly Period would otherwise occur, on a day which is not a Business Day, such payment shall be made, and the last day of such Interest Period, Payment Period or Quarterly Period shall occur, on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or commission, as the case may be; provided, however, if such extension would cause such payment of interest on or principal of a Eurodollar Advance to be made, or the last day of an Interest Period for a Eurodollar Advance to occur, in the next following calendar month, such payment shall be made, and the last day of such Interest Period shall occur, on the next preceding Business Day. (b) Whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month. Notwithstanding anything to the contrary contained herein, each Interest Period that commences on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month. SECTION 2.14 Extension of the Stated Termination Date. (a) At least 60 but not more than 120 days before the initial Stated Termination Date, the Company may request in a writing delivered to the Agent (such request shall be accompanied by a certificate from a duly authorized officer of the Company that the representations and warranties in Section 4.1 are true and correct as of the date of such request, before and after giving effect to such request, as though made on and as of the date of such request, and such request shall be irrevocable) that the Issuing Bank, each Creditor and the Agent extend for one year the then Stated Termination Date for purposes of this Agreement and the Letter of Credit. If the Company shall make such request, the Issuing Bank shall so extend the Stated Termination Date of the Letter of Credit and the Issuing Bank, each Creditor and the Agent shall extend the Stated Termination Date for purposes of this Agreement, provided that on the date of such request by the Company the representations and warranties in Section 4.1 are true and correct, before and after giving effect to such request. The Agent shall notify the Company in writing within 40 days of receipt of such request whether (i) it has determined that the Company has not satisfied the condition to extension set forth in the proviso of the immediately preceding sentence or (ii) the Stated Termination Date has been so extended. 31 (b) If the Stated Termination Date is extended as provided for in Section 2.14(a), the Company may thereafter request, at least 60 days but not more that 120 days before the then Stated Termination Date, in a writing delivered to the Agent (such request shall be accompanied by a certificate from a duly authorized officer of the Company that the representations and warranties in Section 4.1 are true and correct as of the date of such request, before and after giving effect to such request, as though made on and as of the date of such request, and such request shall be irrevocable) that the Issuing Bank, each Creditor and the Agent extend for one year the then Stated Termination Date for purposes of this Agreement and the Letter of Credit. If the Company shall make such a request, the Agent shall, on or before 40 days before the then Stated Termination Date, notify the Company in writing whether or not the Issuing Bank, each Creditor and the Agent consent to such request and, if the Issuing Bank, each Creditor and the Agent do so consent, the conditions for such extension. If the Agent shall not so notify the Company, the Issuing Bank, each Creditor and the Agent shall be deemed not to have consented to such request. The Company acknowledges that none of the Issuing Bank, any Creditor or the Agent has any obligation to, and none of such entities has given any assurance, undertaking or commitment that it will, extend (or consider extending) the Letter of Credit as set forth in this Section 2.14(b). SECTION 2.15 Evidence of Debt. The Agent shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Company resulting from each drawing under the Letter of Credit and from each Tender Advance made from time to time hereunder and the amounts of principal and interest payable and paid from time to time hereunder. In any legal action or proceeding in respect of this Agreement, the entries made in such account or accounts shall, in the absence of manifest error, be conclusive evidence of the existence and amounts of the obligations of the Company therein recorded. SECTION 2.16 Obligations Absolute. (a) The obligations of the Company under this Agreement and any other agreement or instrument relating to the Letter of Credit shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement and such other agreement or instrument under all circumstances, including, without limitation, the following circumstances, and regardless of the use of proceeds of any drawing under the Letter of Credit or any defense to payment related thereto: (i) any lack of validity or enforceability of this Agreement, the Letter of Credit, the Bonds, the Indenture, the Loan Agreement, the Second Mortgage Bonds, Series , the Second Mortgage Bond Indenture, the Remarketing Agent's Agreement, or any other agreement or instrument relating thereto (collectively, the "Related Documents"); 32 (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Company in respect of the Letter of Credit or any other amendment or waiver of or any consent to departure from all or any of the Related Documents; (iii) the existence of any claim, set-off, defense or other right that the Company may have at any time against the Trustee or any other beneficiary or any transferee of the Letter of Credit (or any Persons or entities for whom the Trustee, any such beneficiary or any such transferee may be acting), the Issuing Bank, any Creditor, the Agent or any other Person or entity, whether in connection with this Agreement, the transactions contemplated hereby or by the other Related Documents or any unrelated transaction; (iv) any draft, statement or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (v) payment by the Issuing Bank under the Letter of Credit against presentation of a draft or certificate which does not comply with the terms of the Letter of Credit; (vi) any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any guarantee, for all or any of the obligations of the Company in respect of the Letter of Credit or any other Related Document; or (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company or a guarantor. (b) The obligations of each Creditor under Section 2.8 shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement (as the same may be amended from time to time) under all circumstances, including, without limitation, the following circumstances: (i) any lack of validity or enforceability of the Related Documents; (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Company in respect of the Letter of Credit or any other amendment or waiver of or any consent to departure from all or any of the Related Documents entered into in accordance with this Agreement; 33 (iii) the existence of any claim, set-off, defense or other right that the Company may have at any time against the Trustee or any other beneficiary or any transferee of the Letter of Credit (or any Persons or entities for whom the Trustee, any such beneficiary or any such transferee may be acting), the Issuing Bank, or any other Person or entity, whether in connection with this Agreement, the transactions contemplated hereby or by the other Related Documents or any unrelated transaction; (iv) any draft, statement or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (v) payment by the Issuing Bank under the Letter of Credit against presentation of a draft or certificate which does not comply with the terms of the Letter of Credit; (vi) any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any guarantee, for all or any of the obligations of the Company in respect of the Letter of Credit or any other Related Document; or (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company or a guarantor. (c) Without limiting the effect of subsections (a) or (b) above, or any other provision hereof, the Company and each Creditor agree with the Issuing Bank that the Issuing Bank is authorized to make payments under the Letter of Credit upon the presentation of the documents provided for therein and without regard to whether the Company has failed to fulfill any of its obligations with respect to any Related Document or any Event of Default or event which with the giving of notice or lapse of time or both would constitute an Event of Default or other default has occurred thereunder or hereunder. SECTION 2.17 U.S. Taxes. (a) The Company agrees to pay to the Issuing Bank and each Creditor with respect to any period during which it is not a U.S. Person such additional amounts as are necessary in order that the net payment of any amount due to such non-U.S. Person hereunder after deduction for or withholding in respect of any U.S. Tax imposed with respect to such payment (or in lieu thereof, payment of such U.S. Tax by such non-U.S. Person), will not be less than the amount stated herein to be then due and payable, provided that the foregoing obligation to pay such additional amounts shall not apply: 34 (i) to any payment to the Issuing Bank or any such Creditor hereunder unless the Issuing Bank or any such Creditor is, on the Submission Date (or on the date such Person becomes the successor to, or the assignee of, the Issuing Bank or any such Creditor as provided in Section 9.9) and on the date of any change in the applicable lending office of the Issuing Bank or any such Creditor after the date hereof, either entitled to submit a Form 1001 (relating to the Issuing Bank or any such Creditor and entitling it to a complete exemption from withholding on all interest to be received by it hereunder in respect of any Tender Advance or any other amount hereunder payable) or Form 4224 (relating to all interest to be received by the Issuing Bank or any such Creditor hereunder in respect of any Tender Advance or any other amount hereunder payable), or (ii) to any U.S. Tax imposed solely by reason of the failure by such non-U.S. Person to comply with applicable certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connections with the United States of America of such non-U.S. Person if such compliance is required by statute or regulation of the United States of America as a precondition to relief or exemption from such U.S. Tax. For the purposes of this Section 2.17(a), (w) "Form 1001" shall mean Form 1001 (Ownership, Exemption, or Reduced Rate Certificate) of the Department of the Treasury of the United States of America, (x) "Form 4224" shall mean Form 4224 (Exemption from Withholding of Tax on Income Effectively Connected with the Conduct of a Trade or Business in the United States) of the Department of the Treasury of the United States of America (or in relation to either such Form such successor and related forms as may from time to time be adopted by the relevant taxing authorities of the United States of America to document a claim to which such Form relates), (y) "U.S. Person" shall mean a citizen, national or resident of the United States of America, a corporation, partnership or other entity created or organized in or under any laws of the United States of America, or any estate or trust that is subject to Federal income taxation regardless of the source of its income and (z) "U.S. Taxes" shall mean any present or future tax, assessment or other charge or levy imposed by or on behalf of the United States of America or any taxing authority thereof or therein. (b) Within 30 days after paying any amount to the Issuing Bank or any such Creditor from which it is required by law to make any deduction or withholding, and within 30 days after it is required by law to remit such deduction or withholding to any relevant taxing or other authority, the Company shall deliver to the Issuing Bank or such Creditor, as the case may be, evidence satisfactory to the Issuing Bank or such Creditor, as the case may be, of such deduction, withholding or payment (as the case may be). 35 SECTION 2.18 Applicable Lending Office. If the Issuing Bank or any Creditor requests compensation from the Company under any of Section 2.11(a), 2.11(c), 2.11(d) or 2.17, the Issuing Bank or such Creditor, as the case may be, will designate a different applicable lending office for the portions of any Tender Advance or other amount due hereunder affected by the events giving rise to such request for compensation if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable opinion of the Issuing Bank or such Creditor, as the case may be, be disadvantageous to the Issuing Bank or such Creditor, as the case may be, except that the Issuing Bank or such Creditor, as the case may be, shall have no obligation to designate an applicable lending office located in the United States of America. SECTION 2.19 Net Payments. All payments under this Agreement to the Agent, the Issuing Bank, or any Creditor shall be made without set-off or counterclaim. SECTION 2.20 Reinstatement of the Letter of Credit. Upon delivery to the Agent of any Bonds purchased by the Trustee on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank pursuant to subsection (e) of Section 3.01 of the Indenture, subsection (e) of Section 9.01 of the Indenture, or subsection (d) of Section 13.03 of the Indenture with moneys drawn under the Letter of Credit, the amounts available to be drawn under the Letter of Credit shall be reinstated, without any further action by the Company or any party other than the Issuing Bank, in an amount equal to the amount of the moneys drawn under the Letter of Credit to purchase such Bonds; provided, however, if at any time any such purchase shall be rescinded, in whole or in part, or some or all of the Bonds so purchased must otherwise be returned by the Issuing Bank, the Agent or any other nominee of the Issuing Bank, in each case, for any reason, the amounts so reinstated shall not be available to be drawn until and unless the Company reimburses the Issuing Bank or the Creditors, as the case may be, for such amounts. ARTICLE III CONDITIONS OF ISSUANCE SECTION 3.1 Conditions Precedent to Issuance of the Letter of Credit. The obligation of the Issuing Bank to issue the Letter of Credit is subject to the satisfaction or waiver in writing by the Agent, in its sole discretion, of the following: (i) the Agent shall have received on or before the date of the issuance of the Letter of Credit the following, each dated such day (unless otherwise indicated), in form and substance satisfactory to and in sufficient copies for each Creditor: (a) certified copies of the restated articles of incorporation and bylaws of the Company, a certified copy of the resolutions of the Board of Directors of the Company 36 approving this Agreement, the form and content of the Letter of Credit, the other Related Documents and the other matters contemplated hereby and thereby, and of all other documents evidencing any other necessary corporate action; (b) a copy of a certificate of the Secretary of State of Texas dated a date reasonably close to the date of issuance of the Letter of Credit listing the articles of incorporation of the Company and each amendment thereto on file in his office and certifying that (A) such amendments are the only amendments to the Company's articles of incorporation on file in his office and (B) the Company is duly incorporated, validly existing and in good standing under the laws of such State; (c) a telegram from such Secretary of State or such other evidence satisfactory to the Agent certifying that the Company is duly incorporated, validly existing and in good standing under the laws of such State on the date of issuance of the Letter of Credit; (d) originals (or copies certified to be true copies by an appropriate officer of the Company or, in the case of the Issuer, by the county clerk of the Issuer) of all governmental and regulatory approvals (including, without limitation, approvals or orders of the Issuer and the Federal Energy Regulatory Commission and the New Mexico Public Service Commission approvals) legally required to be obtained at the time of consummation of the Plan of Reorganization and on the date of issuance of the Letter of Credit for the Company to enter into this Agreement and the other Related Documents and to carry out the transactions contemplated hereby and thereby; (e) a certified transcript relating to the issuance of the Bonds; (f) a certificate of the Secretary of the Company certifying the incumbency and the names and true signatures of the officers of the Company authorized to sign this Agreement and the other documents to be delivered by it hereunder, together with a certificate of another officer of the Company as to the incumbency and specimen signature of the Secretary of the Company; (g) a certified copy of the Indenture and evidence satisfactory to the Agent that the Indenture has been duly adopted by the Issuer and accepted by the Trustee; (h) the Second Mortgage Bonds, Series [ ], such series having been duly completed, executed and pledged to the Agent for its benefit and the benefit of the Issuing Bank and the Creditors by the Company; 37 (i) evidence of the completion of all recordings and filings of or with respect to the Second Mortgage Bond Indenture that the Agent may deem necessary or desirable in order to perfect the security interest created thereby; (j) a certified copy of the Second Mortgage Bond Indenture; (k) a favorable opinion of Milbank, Tweed, Hadley & McCloy, New York counsel for the Company, or other New York counsel for the Company reasonably satisfactory to the Agent and the Creditors, in form and substance reasonably satisfactory to the Agent; (l) a favorable opinion of Vinson & Elkins, Texas counsel for the Company, or other Texas counsel for the Company reasonably satisfactory to the Agent and the Creditors, in form and substance reasonably satisfactory to the Agent and the Creditors; (m) a favorable opinion of Stoops & Burns, Arizona counsel for the Company, or other Arizona counsel for the Company reasonably satisfactory to the Agent and the Creditors, in form and substance reasonably satisfactory to the Agent; (n) a favorable opinion of Taichert, Wiggins, Virtue, Wilson & Majjar, New Mexico regulatory counsel for the Company, or other New Mexico counsel for the Company reasonably satisfactory to the Agent and the Creditors, in form and substance reasonably satisfactory to the Agent; (o) a favorable opinion of [Milbank, Tweed, Hadley & McCloy], federal regulatory counsel for the Company, or other counsel reasonably satisfactory to the Agent and the Creditors, in form and substance reasonably satisfactory to the Agent; (p) a favorable opinion of Mudge Rose Guthrie Alexander & Ferdon, bond counsel, in form and substance reasonably satisfactory to the Agent; (q) a favorable opinion of ____________, counsel to the Issuer, or other counsel reasonably satisfactory to the Agent and the Creditors, in form and substance reasonably satisfactory to the Agent; (r) a favorable opinion of Gardner, Carton & Douglas, special counsel for the Issuing Bank, [to the extent required by the agencies rating the Bonds]; (s) a certificate of the Clerk of the Board of Supervisors of Maricopa County, Arizona certifying that the resolutions approving the issuance of the Bonds are in full force and effect; 38 (t) a certificate of the Secretary of the Board of Directors of the Issuer certifying that the resolutions approving the issuance of the Bonds, the execution and delivery of the Indenture and all documents delivered by the Issuer in connection with the issuance of the Bonds are in full force and effect; (u) the articles of incorporation of the Issuer (certified as of a recent date by the Arizona Corporation Commission); (v) a certificate of compliance of the Arizona Corporation Commission, dated as of a recent date, to the effect that the Issuer is in good standing and that franchise taxes have been paid; (w) a certificate of the Assistant Secretary of the Issuer, dated the date of issuance of the Letter of Credit, as to the incumbency of each of the officers of the Issuer and members of its board of directors, and the bylaws of the Issuer and that such bylaws are true, correct and complete copies thereof and are in full force and effect; (x) the Official Statement certified by the Secretary of the Company to be a true and correct copy thereof; (y) a certificate of the Trustee certifying the incumbency and signature specimens of officials of the Trustee authorized to make drawings, to execute and present certificates and drafts under the Letter of Credit and otherwise to communicate with the Issuing Bank regarding the Letter of Credit, upon which the Issuing Bank may rely until it receives a new such certificate; (z) written acknowledgment from the Trustee that it has received the Letter of Credit; (aa) receipt from the Original Trustee under the Original Indenture of the Original Letter of Credit and written acknowledgment from the Original Trustee that the Original Letter of Credit is of no further force and effect; (bb) written evidence, satisfactory to the Agent, that the First Mortgage Bonds, Series [ ], and the Second Mortgage Bonds, Series [ ], have an Investment Grade Rating; and (cc) a certificate of the chairman, president or chief financial officer of the Company, certifying (A) that the Effective Date has occurred as of the time of delivery thereof or will occur concurrently with the delivery thereof and (B) that, after giving effect to the transactions contemplated under the Plan of Reorganization: (x) no event has occurred and is continuing which constitutes an Event of Default or would constitute an Event of Default but for the 39 requirement that notice be given or the elapse of time or both; and (y) the representations and warranties made by the Company in Article IV hereof, and in each of the other Related Documents, shall be true on and as of the Effective Date with the same force and effect as if made on and as of such date (or, if such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date); and and (ii) the following has occurred on or before the date of the issuance of the Letter of Credit: (a) the Confirmation Order shall have been entered at least 10 days prior to the date hereof, no stay of such order shall be in effect and the Agent shall have received a certified copy of such order; (b) the Plan of Reorganization shall have been substantially consummated without waiver of any condition or other modification (other than waivers or modifications made in accordance with Section 6.6 of the Plan of Reorganization); (c) the Effective Date shall have occurred or shall occur substantially simultaneously with the delivery of this Agreement and of the other Related Documents; and (d) the Refunding shall have occurred or shall occur substantially simultaneously with the issuance of the Letter of Credit [and the delivery of the other Related Documents]. SECTION 3.2 Additional Conditions Precedent to Issuance of the Letter of Credit. The obligation of the Issuing Bank to issue the Letter of Credit shall be subject to the further conditions precedent that on the date of the issuance of the Letter of Credit (a) the following statements shall be true in all material respects and the Agent shall have received a certificate signed by a duly authorized officer of the Company, dated the date of such issuance, stating that: (i) The representations and warranties contained in Section 4.1 of this Agreement are correct on and as of the date of issuance of the Letter of Credit, before and after giving effect to such issuance, as though made on and as of such date; and (ii) No event has occurred and is continuing, or would result from such issuance of the Letter of Credit, which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both; and (b) the Agent shall have received such other approvals, opinions or documents as the Issuing Bank or any Creditor (through the Agent) may reasonably request. 40 SECTION 3.3 Conditions Precedent to Each Tender Advance. (a) Each payment made by the Issuing Bank under the Letter of Credit pursuant to a Tender Draft shall constitute a Tender Advance hereunder only if on the date of such payment by the Issuing Bank the following statements shall be true in all material respects: (i) The representations and warranties contained in Section 4.1 of this Agreement are correct on and as of the date of such Tender Advance, before and after giving effect to such Tender Advance and to the application of the proceeds therefrom, as though made on and as of such date; and (ii) No event has occurred and is continuing, or would result from such Tender Advance or from the application of the proceeds therefrom, which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both. (b) Unless the Company shall have previously advised the Issuing Bank in writing that one or more of the above statements in subsection (a) above is no longer true, the Company shall be deemed to have represented and warranted, on the date of each payment by the Issuing Bank under the Letter of Credit pursuant to a Tender Draft, that on the date of such payment the above statements are true. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.1 Representations and Warranties of the Company. The Company represents and warrants as follows: (a) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Texas and is duly qualified to do business in, and is in good standing under the laws of the States of Texas, Arizona and New Mexico and has requisite corporate power and authority, and all governmental licenses, authorizations and approvals necessary, to conduct its business and to own its properties, except where the failure to have the same would not result in a Material Adverse Effect. (b) The execution, delivery and performance by the Company of this Agreement and the other Related Documents to which it is a party are within the Company's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Company's articles of incorporation or by-laws, which the Company has adopted pursuant to the Plan of Reorganization or (ii) any law, order, rule, regulation (including, without limitation, any order, rule or regulation of the Federal Energy Regulatory 41 Commission, the New Mexico Public Service Commission or the Public Utility Commission of Texas, or Regulation G, T, U or X of the Board of Governors of the Federal Reserve System), writ, judgment, injunction or decree applicable to the Company or any contractual restriction binding on or affecting the Company or any Subsidiary, and do not result in or require the creation of any Lien of the Company or any Subsidiary (except as provided in or contemplated by this Agreement or the other Related Documents or the Plan of Reorganization) upon or with respect to any properties of the Company or any Subsidiary. (c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Company of this Agreement or any other Related Document (including the issuance and pledge of the Second Mortgage Bonds, Series [ ] and the creation and perfection of the Liens on the property securing such Bonds) except for (i) those that have been duly obtained or made and are in full force and effect and are Final Approvals and (ii) the Confirmation Order. (d) This Agreement has been duly and validly executed by the Company and constitutes, and the other Related Documents when delivered hereunder will be, the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms. (e) There is no pending or overtly threatened action, investigation, proceeding or notification which has been instituted after the Effective Date affecting the Company or any of its Subsidiaries before any court, governmental agency or arbitrator which is reasonably likely to have a Material Adverse Effect. (f) Except for information contained in Annex B to the Official Statement describing the Issuing Bank, as to which no representation is made, the Official Statement was, the Preliminary Official Statement was, and any supplement or amendment to any thereof shall be, accurate in all material respects for the purposes for which its use is, was, or shall be, authorized; and the Official Statement did not as of its date of issue contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements made therein, in the light of the circumstances under which they are or were made, not misleading. (g) The Company and the ERISA Affiliates have fulfilled their respective obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and are in compliance with the presently applicable 42 provisions of ERISA and the Code except where non-compliance would not have a Material Adverse Effect, and have not incurred any liability to the PBGC (other than to pay premiums under Section 4007 of ERISA) or any Plan or any Multiemployer Plan (other than to make contributions in the ordinary course of business). No reportable event, within the meaning of Section 4043 of ERISA, has occurred with respect to any Plan, except for any such event as to which the 30-day notice requirement has been waived by the PBGC. Schedule B (Actuarial Information) to the most recently filed annual report (Form 5500 Series) for each Plan is complete and accurate and fairly presents the funding status of such Plan, and since the date of such Schedule B there has been no change in such funding status that can reasonably be expected to have a Material Adverse Effect. (h) The Second Mortgage Bonds, Series , (i) have been duly authorized, executed, authenticated, issued, pledged and delivered in the manner provided for in the Second Mortgage Bond Indenture and in compliance with all applicable law; (ii) constitute the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their terms and the terms of the Second Mortgage Bond Indenture except insofar as enforceability may be limited or otherwise affected by (a) bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application relating to or affecting the rights and remedies of creditors from time to time in effect and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law); (iii) are entitled to the security and benefits of the Second Mortgage Bond Indenture; (iv) are secured equally and ratably with and only with all other bonds issued and outstanding and which may hereafter and thereafter be issued and outstanding under the Second Mortgage Bond Indenture; (v) are secured by duly perfected Liens on and security interests in the collateral purported to secure such bonds in the Second Mortgage Bond Indenture which Liens are subordinated in priority only to the Liens and security interests granted under the First Mortgage Bond Indenture and securing outstanding First Mortgage Bonds; and (vi) constitute collateral security encumbered by valid, duly perfected Liens thereon and security interests therein securing the obligations of the Company under this Agreement as purported to be provided in such indenture and herein. The Company has executed, issued and delivered all Second Mortgage Bonds, Series to the Agent for its benefit and the ratable benefit of the Issuing Bank and the Creditors and has made all such duly perfected pledges thereof to the Agent for its benefit and the ratable benefit of the Issuing Bank and the Creditors as are required to be executed, issued, delivered and made under this Agreement and there are no other Liens on such Second Mortgage Bonds. 43 (i) The Second Mortgage Bond Indenture creates a valid and perfected second Lien on the Company's property as described in the Second Mortgage Bond Indenture as collateral security for the Company's obligations under the Second Mortgage Bond Indenture and the Second Mortgage Bonds, Series [ ]. (j) No Material Adverse Effect has occurred since the Effective Date. (k) The operations and properties of the Company and each of its Subsidiaries comply in all material respects with all Environmental Laws, the Company and each of its Subsidiaries possess and are in compliance with all required Environmental Permits and no circumstances exist that are or would be reasonably likely to (i) form the basis of an Environmental Action against the Company or any of its Subsidiaries or any of their properties or (ii) cause any such property to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law, except as would not be likely to have a Material Adverse Effect, and none of the properties of the Company or any of its Subsidiaries is listed or proposed for listing on the National Priorities or CERCLA List under CERCLA or any analogous state list. (l) The Indenture creates a valid, enforceable and perfected first priority security interest in the Trust Estate (as defined in the Indenture) for the benefit of the holders of the Bonds, as security for the Issuer's obligations of the holders of the Bonds under the Indenture and pursuant to the terms of the Bonds. (m) The Company is not a "holding company" as such term is defined in the Public Utility Holding Company Act of 1935, as amended, nor an "investment company", or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (n) The Company and its Subsidiaries have filed all United States Federal and state income tax returns and all other material tax returns which are required to be filed by them, and have paid all taxes due pursuant to such returns or, to the extent deemed necessary or appropriate by the Company and such Subsidiary, provided reserves for the payment thereof, other than such taxes that the Company or any Subsidiary is contesting in good faith by appropriate legal proceedings. (o) Prior to the issuance of the Letter of Credit, the Confirmation Order has been entered and has not been reversed, amended (except as consented to by the Issuing Bank in its sole discretion), stayed, vacated or rescinded. 44 The Agent, the Issuing Bank and each Creditor shall be entitled to enforce the remedies under this Agreement without further application to or order by the Bankruptcy Court. (p) The Company is in material compliance with all Environmental Laws and is not exposed to any costs or liabilities under any Environmental Laws except as would not be reasonably likely to result in a Material Adverse Effect on the Company. ARTICLE V COVENANTS OF THE COMPANY SECTION 5.1 Affirmative Covenants. So long as a drawing is available under the Letter of Credit or the Issuing Bank or any Creditor shall have any commitment hereunder or the Company shall have not paid in full all amounts payable by the Company hereunder to the Agent, the Issuing Bank, or any Creditor, the Company agrees that, unless the Majority Creditors shall otherwise consent in writing: (a) Reporting Requirements. The Company shall deliver to the Agent and each Creditor: (i) as soon as available and in any event within 45 days after the end of each of the first three quarterly fiscal periods of each fiscal year of the Company, consolidated and consolidating statements of income, retained earnings and cash flow of the Company 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, and the related consolidated and consolidating balance sheets of the Company and its Consolidated Subsidiaries at the end of such period, setting forth in each case in comparative form the corresponding consolidated and consolidating figures for the corresponding period in the preceding fiscal year, accompanied by a certificate of a senior financial officer of the Company, which certificate shall state that said consolidated financial statements fairly present the consolidated financial condition and results of operations of the Company and its Consolidated Subsidiaries, and said consolidating financial statements fairly present the respective individual unconsolidated financial condition and results of operations of the Company and of each of its Consolidated Subsidiaries, in each case in accordance with GAAP, consistently applied, as at the end of, and for, such period (subject to normal year-end audit adjustments); (ii) as soon as available and in any event within 90 days after the end of each fiscal year of the Company, consolidated and consolidating statements of income, 45 retained earnings and cash flow of the Company and its Consolidated Subsidiaries for such fiscal year and the related consolidated and consolidating balance sheets of the Company and its Consolidated Subsidiaries as at the end of such fiscal year, setting forth in each case in comparative form the corresponding consolidated and consolidating figures for the preceding fiscal year, and accompanied (i) in the case of said consolidated statements and balance sheet of the Company, by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that said consolidated financial statements fairly present the consolidated financial condition and results of operations of the Company and its Consolidated Subsidiaries as at the end of, and for, such fiscal year in accordance with GAAP, consistently applied, and a certificate of such accountants stating that, in making the examination necessary for their opinion, they obtained no knowledge, except as specifically stated, of any failure by the Company to comply with Section 5.2(a) or (b), and (ii) in the case of said consolidating statements and balance sheets, by a certificate of a senior financial officer of the Company, which certificate shall state that said consolidating financial statements fairly present the respective individual unconsolidated financial condition and results of operations of the Company and of each of its Consolidated Subsidiaries, in each case in accordance with GAAP, consistently applied, as at the end of, and for, such fiscal year; (iii) as soon as available copies of all proxy statements, material reports and registration statements which the Company or any of its Subsidiaries files with the Securities and Exchange Commission or any national securities exchange (other than filings made pursuant to the Public Utility Holding Company Act of 1935, as amended, public offerings of securities under employee benefit plans, customer stock purchase plans or dividend reinvestment plans); (iv) as soon as possible and in any event within two days after the Company has knowledge of the occurrence of each Event of Default continuing on the date of such statement, a statement from the chief financial officer of the Company setting forth details of such Event of Default and the action that the Company has taken and proposes to take with respect thereto; (v) at the time the Company furnishes each set of financial statements pursuant to paragraph (i) or (ii) above, a certificate of a senior financial officer of the Company (A) setting forth in reasonable detail the computations necessary to determine whether the Company is in compliance with subsections (a) and (b) of Section 5.02 as of the end of the respective quarterly fiscal period or 46 fiscal year and (B) stating that no event has occurred and is continuing which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or the lapse of time or both or, if such an event has occurred and is continuing, a statement as to the nature thereof and the action that the Company has taken or proposes to take with respect thereto; and (vi) such other financial data and information of the Company or any of its Subsidiaries as the Agent, the Issuing Bank or any Creditor may from time to time reasonably request. (b) Litigation. The Company will promptly give to the Agent notice of all actions, suits, investigations, litigation or legal or arbitral proceedings, and of all proceedings by or before any governmental or regulatory authority or agency (and any material development in respect of such legal or other proceedings), in each case, known to the Company, which is reasonably likely to have a Material Adverse Effect. (c) Preservation of Corporate Existence, Etc. The Company shall (i) preserve and maintain its corporate existence in the state of its incorporation and qualify and remain qualified as a foreign corporation in each jurisdiction in which such qualification is reasonably necessary in view of its business, and (ii) pay and discharge, and cause its Subsidiaries to pay and discharge, all taxes, assessments and governmental charges upon its income and its properties prior to the date on which penalties are attached thereto, unless (A) such taxes, assessments and governmental charges shall be contested in good faith and by appropriate proceedings by the Company or its Subsidiaries and (B) the Company or any such Subsidiary shall set aside on its books adequate reserves therefor to the extent required by GAAP. Nothing contained in this clause (c) of Section 5.1 shall be deemed to prohibit any transaction permitted by clause (c) of Section 5.2. (d) Maintenance of Insurance, Etc. The Company shall, and shall cause its Subsidiaries to, maintain insurance with responsible insurance companies or associations or through its own program of self-insurance in such amounts, with such deductibles, and covering such risks as is usually carried by companies engaged in similar business. (e) Compliance with Laws, Etc. The Company shall comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA, except where the failure to so comply would not have a Material Adverse Effect. 47 (f) Compliance with Environmental Laws. The Company shall comply, and cause each of its Subsidiaries and all ylessees and other Persons occupying or operating on its properties to comply, in all material respects, with all Environmental Laws and Environmental Permits applicable to its operations and properties; obtain and renew all Environmental Permits necessary for its operations and properties; and conduct, and cause each of its Subsidiaries to conduct, any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action required under any Environmental Law to remove and clean up all Hazardous Materials from any of its properties, in accordance with the requirements of all Environmental Laws; provided, however, that neither the Company nor any of its Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and reserves, where required by GAAP, are being maintained with respect to such circumstances. (g) Visitation Rights. The Company shall, at any reasonable time and from time to time, permit the Agent, the Issuing Bank, any Creditor or any agents or representatives of any thereof, to examine and make copies of and abstracts from the records and books of account of, and examine the properties of, the Company and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Company and any of its Subsidiaries with any of their officers or directors and with their independent certified public accountants. (h) Maintenance of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted; provided that this subsection (h) shall not prevent the sale of any properties permitted by subsection (c) of Section 5.2. (i) Lien. The Company shall maintain the Lien created or purported to be created by the Second Mortgage Bond Indenture for the benefit of the Agent and the ratable benefit of the Issuing Bank and the Creditors and defend, preserve and protect such Lien against all claims of all Persons. (j) Redemption or Defeasance of Bonds or Substitution of Credit Facility. The Company shall use its best efforts to cause the Trustee, upon redemption or defeasance of less than all of the Bonds pursuant to the Indenture, to furnish to the Issuing Bank notice in the form of Annex A to the Letter of Credit, and, upon a redemption or defeasance of 48 all the Bonds pursuant to the Indenture or upon substitution of a Credit Facility (as defined in the Indenture) for the Letter of Credit, to surrender the Letter of Credit to the Issuing Bank for cancellation. (k) Bond Rating. The Company shall exercise its best efforts to cause the Bonds to have a rating by Moody's Investors Service, Inc. or by Standard & Poor's Corporation. (l) Remarketing. The Company shall take all steps that are necessary or appropriate to cause any Bonds acquired by the Trustee on behalf of and for the account of the Company or the Issuing Bank, the Agent or any other nominee of the Issuing Bank to be remarketed (in the case of Bonds acquired on behalf of or for the account of the Issuing Bank, the Agent or any other nominee of the Issuing Bank, to the extent the Issuing Bank requests that such Bonds be remarketed), including (without limitation) preparing such disclosure and other documents as are required to remarket the Bonds. (m) Registration of Bonds. The Company shall cause all Bonds which it (or any of its Affiliates) acquires, or which are acquired for its (or any of its Affiliates) account, to be registered forthwith in accordance with the Indenture in the name of the Company (or such Affiliate). (n) Maintain Books and Records. The Company shall keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied. (o) Additional Documents. As promptly as practicable (but in any event not later than 30 days) after the Effective Date, the Company will furnish to the Agent, (i) certified copies of recorded counterparts of the First Mortgage Bond Indenture evidencing the filing thereof and (ii) certified copies of all notices filed with respect to the First Mortgage Bond Indenture. (p) Creation of Subsidiaries. The Company shall not, and shall not permit any of its Subsidiaries to, create any Subsidiaries of the Company or make any investment in any Person except in compliance with the Public Utility Holding Company Act of 1935, as amended, and the regulations and orders of the Securities and Exchange Commission thereunder. SECTION 5.2 Negative Covenants. So long as a drawing is available under the Letter of Credit or the Issuing Bank shall have any commitment hereunder or the Company shall have not paid in full all amounts payable by the Company hereunder to the Agent, the Issuing Bank, or any Creditor, the Company agrees that, without the written consent of the Majority Creditors: 49 (a) Total EBITA to Interest Coverage Ratio. The Company shall not permit the Interest Coverage Ratio to be less than 1.40 to 1 at any time on or after the last day of the first full fiscal quarter of the Company commencing after the Effective Date. (b) Total Debt to Total Capital. The Company shall not permit the Leverage Ratio to exceed 0.68 to 1 at any time on or after the last day of the first full fiscal quarter of the Company commencing after the Effective Date. (c) Prohibition of Fundamental Changes. The Company shall not, and will not perit any of its Subsidiaries to, enter into any transaction of merger, consolidation, amalgamation, liquidation or dissolution; provided that the Company or any of its Subsidiaries may merge or consolidate with any other Person if (i) in any such transaction in which the Company is a party, the Company is the surviving corporation, (ii) in any such transaction in which the Company is not a party, the surviving corproation shall be a Subsidiary of the Company and (iii) after giving effect thereto no Event of Default would exist hereunder. The Company will not, and will not permit any of its Subsidiaries to, convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or substantially all of its business or assets or assets (excluding (i) accounts receivable, (ii) obsolete or worn- out tools, equipment or other property no longer used or useful in its business and (iii) inventory or other property sold or disposed of in the ordinary course of business and on ordinary business terms) which in the aggregate have a net book value in excess of $50,000,000, whether now owned or hereafter acquired, to any other Person. Notwithstanding the foregoing provisions of this subsection (c): (1) any Subsidiary of the Company may be merged or consolidated with or into: (A) the Company if the Company shall be the continuing or surviving corporation or (B) any other Subsidiary of the Company; and (2) any Subsidiary of the Company may sell, lease, transfer or otherwise dispose of any or all of its property (upon voluntary liquidation or otherwise) to the Company or a Subsidiary of the Company. (d) Compliance with ERISA. The Company shall not (i) enter into any non-exempt prohibited transaction (as defined in Section 4975 of the Code and in Section 406 of ERISA) involving any Plan which may result in any liability of the Company to any Person which (in the reasonable opinion of the Agent) will have a Material Adverse Effect or (ii) allow or suffer to exist any other event or condition known to the Company which results in any liability of the Company or any of its Subsidiaries to the PBGC, or in any 50 Withdrawal Liability to any Multiemployer Plan, which (in the reasonable opinion of the Agent) will have a Material Adverse Effect. For purposes of this Section 5.2(d), "liability" shall not include termination insurance premiums payable under Section 4007 of ERISA. Upon request of the Agent, the Company shall promptly furnish to the Agent a copy of Schedule B (Actuarial Information) to the most recently filed annual report (Form 5500 Series) of any Plan. (e) Limitation on Liens. The Company shall not, nor will it permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with respect to any of its property, whether now owned or hereafter acquired, except: (i) Liens created pursuant to the Related Documents or pursuant to the First Mortgage Bond Indenture or the Second Mortgage Bond Indenture; (ii) Liens created or otherwise in existence on the Effective Date or contemplated by the Plan of Reorganization; (iii) Liens imposed by any governmental authority for taxes, assessments or charges not yet due or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Company or the affected Subsidiaries, as the case may be, in accordance with GAAP; (iv) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith and by appropriate proceedings; (v) pledges or deposits under worker's compensation, unemployment insurance and other social security legislation; (vi) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (vii) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business and encumbrances consisting of zoning restrictions, easements, licenses, restrictions on the use of property or minor imperfections in title thereto which, in the aggregate, are not material in amount, and which do not in any case materially detract from the value of the property subject thereto, render title to the property encumbered 51 thereby unmarketable, materially adversely affect the use of such property for its present purposes or interfere with the ordinary conduct of the business of the Company or any of its Subsidiaries; (viii) Liens on property of any corporation which becomes a Subsidiary of the Company after the date of this Agreement, provided that such Liens are in existence at the time such corporation becomes a Subsidiary of the Company and were not created in anticipation thereof, provided further that such Liens shall not extend to cover any property of the Company or any of its other Subsidiaries and such Liens shall not cover property of such Subsidiary other than property of the types covered by the terms of such Liens at the time such Subsidiary is acquired; (ix) Liens upon real and/or tangible personal property acquired after the Effective Date (by purchase, construction or otherwise) by the Company or any of its Subsidiaries, each of which Liens either (A) existed on such property before the time of its acquisition and was not created in anticipation thereof, or (B) was created solely for the purpose of securing Debt representing, or incurred to finance, refinance or refund, the cost (including the cost of construction) of such property; provided that no such Lien shall extend to or cover any property of the Company or such Subsidiary other than the property so acquired and improvements thereon; (x) banker's liens, rights of set-off and Liens on documents presented under commercial letters of credit, in each case granted to banks in accordance with customary banking practices or arising by operation of law; (xi) additional Liens upon real and/or personal property created after the date hereof, provided that, on the date each such Lien is incurred, the lower of (1) the fair market value of all property subject to Liens permitted by this paragraph (xi) and not otherwise permitted by this subsection (i) or (2) the aggregate amount of all obligations secured by Liens permitted by this paragraph (xi) and not otherwise permitted by this subsection (i) shall not exceed 5% of Total Capital on such date; and (xii) any extension, renewal or replacement of the foregoing, provided, however, that the Liens permitted hereunder shall not be spread to cover any additional Debt or property (other than a substitution of like property). (f) Change in Nature of Business. The Company shall not make, or permit any of its Subsidiaries to make, any material change in the nature of its business as carried on at the date hereof. 52 (g) Optional Redemptions. The Company shall not optionally redeem any Bonds unless the First Mortgage Bonds, Series [ ], and the Second Mortgage Bonds, Series [ ], shall each have an Investment Grade Rating and such bonds have not been placed, with possible negative consequences, on any watch list. (h) Related Documents. The Company shall not, subject to specific rights contained in such agreements, amend, or consent to the amendment of, any of the Related Documents, which amendment would adversely affect the Agent, the Issuing Bank or any Creditor; provided that the Second Mortgage Bond Indenture may be amended in accordance with its terms; and provided further that the consent of the Agent, the Issuing Bank or such Creditor, as the case may be, may not be unreasonably withheld. (i) Appointment. The Company shall not appoint any successor to the Trustee or any Remarketing Agent (as defined in the Indenture) or other agent appointed pursuant to the Indenture or any additional Remarketing Agents or other such agents with respect to the Bonds without the consent of the Majority Creditors; provided that the consent of the Majority Creditors may not be unreasonably withheld. (j) Bond Interest Term. The Company shall not cause the Trustee to select a Bond Interest Term Rate (as defined in the Indenture) for any Bond. ARTICLE VI EVENTS OF DEFAULT SECTION 6.1 Events of Default. The occurrence of any of the following events shall be an "Event of Default" hereunder: (a) The Company shall fail to pay any amount payable under any provision of Article II or any other provision of this Agreement within two days after the same becomes due and payable; or (b) Any representation, warranty or certification made, or deemed made, by the Company in any Related Document by the Company (or any of its officers), or any certificate furnished to the Agent, the Issuing Bank or any Creditor pursuant to the provisions thereof, shall prove to have been false or misleading as of the time made or furnished in any material respect; or (c) The Company shall default in the performance of any of its obligations under clause (a)(iv) of Section 5.1 or clauses (a), (b), (c) or (f) of Section 5.2; or a consensual Lien shall be created by the Company or any of its Subsidiaries in violation of Section 5.2(e); or the Company 53 shall default in its performance of any of its other obligations under this Agreement or in any other Related Document and such default in the performance of any such other obligation shall continue unremedied for a period of 15 days after notice thereof to the Company by the Agent; or (d) The Company or any of its Subsidiaries shall default in the payment when due of any principal of or any interest on any Debt aggregating $10,000,000 or more, or fail to observe or perform any material term, covenant or agreement contained in any agreement by which it is bound, evidencing or securing Debt, in an aggregate amount of $10,000,000 or more, or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt, after the giving of any required notice and for such period of time as would permit the holder or holders thereof or of any obligations issued thereunder to accelerate the maturity thereof, unless such failure or event or condition shall have been cured by the Company or such Subsidiary, as the case may be, or effectively waived by such holder or holders; or (e) There shall remain in force, undischarged, unsatisfied and unstayed, for more than 30 days, whether or not consecutive, any final judgment against the Company or any of its Material Subsidiaries that, together with other outstanding final judgments, undischarged, against the Company and all of its Material Subsidiaries exceeds in the aggregate $10,000,000 (for the purposes hereof, the term "final judgment" shall mean a judgment which is not subject to appeal); or (g) The Company or any of its Material Subsidiaries shall make a general assignment for the benefit of creditors, or admit in writing its inability to pay or generally fail to pay its debts as they mature or become due, or shall petition or apply for the appointment of a trustee or other custodian, liquidator or receiver of the Company or any of its Material Subsidiaries, as the case may be, or any substantial part of its respective assets; or the Company or any of its Material Subsidiaries shall commence any case or other proceeding relating to the Company or any of its Material Subsidiaries under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, or the Company or any of its Material Subsidiaries shall take any action to authorize or in furtherance of any of the foregoing; or if any such petition or application shall be filed or any such case or other proceeding shall be commenced against the Company or any of its Material Subsidiaries and the Company or any of its Material Subsidiaries shall indicate its approval thereof, consent thereto or acquiescence therein or such petition or application shall not be dismissed on or before the 60th day after the filing thereof; or 54 (h) A decree or order is entered appointing any trustee, custodian, liquidator or receiver or adjudicating the Company or any of its Material Subsidiaries bankrupt or insolvent, or approving a petition in any such case or other proceeding, or a decree or order for relief is entered in respect of the Company or any of its Material Subsidiaries in an involuntary case under federal bankruptcy laws as now or hereafter reconstituted; or (i) There shall have been asserted against the Company by a Governmental Person or other Person, a written complaint, claim or demand asserting any claims or liabilities, whether accrued, absolute or contingent, based on or arising from the presence, release or disposal of Hazardous Materials by the Company or any of its Subsidiaries that is reasonably likely to be determined adversely to the Company or any of its Subsidiaries, and the amount thereof (either individually or in the aggregate) would, in such event, have a Material Adverse Effect (after deducting any portion thereof that is reasonably expected to be paid by other creditworthy Persons); or (j) The Confirmation Order shall be (i) reversed, revoked or vacated in whole or in part by any Final Order of a court of competent jurisdiction, or (ii) modified in a manner or subjected to a stay that adversely affects the Company's ability to perform any of its obligations hereunder, as determined by the Agent in its sole discretion; or (k) Central and South West Corporation shall cease directly or indirectly, to own (or otherwise shall cease, directly or indirectly, to control the voting rights of) at least 51% of the Voting Stock of the Company; or (l) Any "Event of Default" under and as defined in the Related Documents shall have occurred and be continuing; or (m) Any regulatory approval as set forth in Section 3.1(d) or required to consummate the Plan of Reorganization shall be rescinded if such rescission can not be appealed by the Company and has a Material Adverse Effect on the Company; or (n) Any material provision of this Agreement or any other Related Document shall at any time cease to be a valid, binding obligation of the Company enforceable against the Company, or any such agreement shall be declared to be null and void, or the validity or enforceability thereof shall be contested by the Company, or a proceeding shall be commenced by any Governmental Person having jurisdiction over the Company seeking to establish the invalidity or unenforceability thereof, or the Company shall deny that it has any further liability or obligation under this Agreement 55 or any other Related Document after delivery thereof or the Second Mortgage Bond Indenture shall for any reason (other than pursuant to the terms thereof) cease to create a valid and perfected second priority Lien on the Company's property purported to be secured thereby. SECTION 6.2 Upon an Event of Default. If any Event of Default shall have occurred and be continuing, (A) the Issuing Bank shall at the request, or may with the consent, of the Majority Creditors (i) if the Letter of Credit shall not have been issued, by notice to the Company, declare the obligation of the Issuing Bank to issue the Letter of Credit to be terminated, whereupon the same shall forthwith terminate, or, (ii) if the Letter of Credit shall have been issued, give notice to the Trustee pursuant to Section 9.01 of the Indenture that an Event of Default hereunder has occurred and is continuing and, if a drawing to pay interest on the Bonds shall have been made under the Letter of Credit (other than such a drawing in respect of the payment of interest upon scheduled or accelerated maturity, or redemption, of the Bonds), and not reimbursed, notify the Trustee prior to the fifteenth day following such drawing that the Issuing Bank has not been reimbursed for such drawing and that interest in the amount of such drawing will not be reinstated, and (B) the Agent shall at the request, or may with the consent, of the Majority Creditors (i) declare the Tender Advances, all interest thereon and all other amounts payable hereunder or in respect thereof, to be forthwith due and payable, whereupon the Tender Advances, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest, or further notice of any kind, all of which are hereby expressly waived by the Company and (ii) exercise all rights and remedies in respect of the Second Mortgage Bonds, Series [ ] pledged as security hereunder; provided, however, that in the event of the occurrence of an Event of Default pursuant to subsections (f) or (g) of Section 6.1, (A) the obligation of the Issuing Bank to issue the Letter of Credit shall automatically be terminated and (B) the Tender Advances, all interest thereon and all other amounts payable hereunder or in respect thereof shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Company. ARTICLE VII SECURITY SECTION 7.1 Issuance and Pledge of Bonds. Concurrently with the execution of this Agreement, the Company shall execute, issue and deliver to the Agent for its benefit and the ratable benefit of the Issuing Bank and each Creditor the Second Mortgage Bonds, Series [ ] as security for the payment of all obligations of the Company now or hereafter existing under this Agreement in respect of principal and interest pursuant to and on the terms of 56 this Agreement and of the Second Mortgage Bond Indenture. The Company hereby pledges to the Agent and grants to the Agent, in each case, for its benefit and the ratable benefit of the Issuing Bank and each Creditor a security interest in the Second Mortgage Bonds Series [ ] and all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Bonds and proceeds of any and all of the foregoing. The Second Mortgage Bond, Series [ ] shall be registered in the name of the Agent or such nominee or nominees as the Agent shall direct. SECTION 7.2 Application of Moneys. Any moneys received by the Agent, the Issuing Bank or any Creditor on account of the Second Mortgage Bonds, Series [ ] shall be applied as follows: (a) moneys received on account of principal of the Second Mortgage Bonds, Series [ ] shall be applied to the payment of any unpaid principal of the Tender Advances or drawings under the Letter of Credit then due and owing and (b) moneys received on account of interest on the Second Mortgage Bonds, Series [ ] shall be applied to the payment of any accrued and unpaid interest then due and owing. SECTION 7.3 Rights of Bondholders. The Agent, as holder of the Second Mortgage Bonds, Series [ ] for its benefit and the ratable benefit of the Issuing Bank and the Creditors, shall have all the rights (including, without limitation, voting rights) provided to holders of bonds in the Second Mortgage Bond Indenture and shall have only such rights. Without limiting the generality of the foregoing, (a) the Second Mortgage Bonds, Series [ ] may not be sold, assigned, pledged or otherwise transferred by the Agent (except to a successor Agent appointed in accordance with Section 8.6 to be held as security as provided under this Article VII), whether pursuant to the Uniform Commercial Code after an Event of Default or otherwise except in connection with any assignment of the Agent's rights and obligations under this Agreement as provided for herein and (b) no payment of principal of or interest on the Second Mortgage Bonds, Series [ ], or any other amount payable thereunder, shall be demanded or received except if, and to the extent that, the corresponding payment remains unpaid hereunder. To the extent that moneys recovered from the Second Mortgage Bonds, Series [ ] are insufficient to pay in full the amount of principal and interest and other amounts due hereunder, the Company shall remain liable for any such deficiency under the terms of this Agreement. SECTION 7.4 The Agent's Duties. The powers conferred on the Agent hereunder are solely to protect its interest in the collateral, including, without limitation, the Second Mortgage Bonds, Series [ ], and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any collateral in its possession and the accounting for moneys actually received by it hereunder, the Agent shall have no duty as to any collateral, as to ascertaining or taking action with 57 respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any collateral, whether or not the Agent, the Issuing Bank or any Creditor has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any collateral. The Agent shall be deemed to have exercised reasonable care in the custody and preservation of any collateral in its possession if such collateral is accorded treatment substantially equal to that which the Agent accords its own property. ARTICLE VIII THE AGENT, THE CREDITORS AND THE ISSUING BANK SECTION 8.1 Authorization and Action. The Issuing Bank and each Creditor hereby appoint and authorize the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of amounts due under this Agreement), neither the Issuing Bank nor the Agent shall be required to exercise any discretion or take any action, but the Agent shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Creditors, and such instructions shall be binding upon all Creditors; provided, however, that neither the Issuing Bank nor the Agent shall be required to take any action which exposes the Issuing Bank or the Agent to personal liability or which is contrary to this Agreement or applicable law. The Agent agrees to give to the Issuing Bank and each Creditor prompt notice of each notice given to it by the Company and to give to each Creditor notice of each notice delivered to it by the Issuing Bank, in each case pursuant to the terms of this Agreement. SECTION 8.2 Reliance, Etc. Neither the Agent, the Issuing Bank nor any of their directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or any other Related Document, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent and the Issuing Bank: (i) may treat each Creditor as a Creditor hereunder until the Agent receives written notice of the assignment or transfer of the rights and obligations of any Creditor hereunder signed by such Creditor and including the agreement of the assignee or transferee to be bound hereby as it would have been if it had been an original Creditor party hereto, in form satisfactory to the Agent; (ii) may consult with legal counsel (including counsel for the Company), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance 58 with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Creditor and shall not be responsible to any Creditor for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement or any other Related Document; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or any other Related Document on the part of the Company or any other party or to inspect the property (including the books and records) of the Company; (v) shall not be responsible to any Creditor for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Related Document or any other instrument or document furnished pursuant hereto or thereto; and (vi) shall incur no liability under or in respect of this Agreement or any other Related Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 8.3 The Agent, the Issuing Bank and Affiliates. The Agent and the Issuing Bank shall have the same rights and powers under this Agreement as any other Creditor and may exercise the same as though they were not the Issuing Bank and the Agent, respectively; and the term "Creditor" or "Creditors" shall, unless otherwise expressly indicated, include Westpac in its individual capacity. The Agent, the Issuing Bank and their respective Affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Company, any of its Subsidiaries and any Person who may do business with or own securities of the Company or any such Subsidiary, all as if Westpac was not the Agent or the Issuing Bank and without any duty to account therefor to the Creditors. SECTION 8.4 Bank Credit Decision. Each Creditor acknowledges that it has, independently and without reliance upon the Agent, the Issuing Bank or any other Creditor and based on the financial statements referred to in Section 4.1 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Creditor also acknowledges that it will, independently and without reliance upon the Agent, the Issuing Bank or any other Creditor and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. SECTION 8.5 Indemnification. The Creditors agree to indemnify the Agent and the Issuing Bank (to the extent not reimbursed by the Company), ratably according to the respective Participation Percentages, from and against any and all liabilities, obligations, losses, damages, penalties, actions, 59 judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent or the Issuing Bank in any way relating to or arising out of this Agreement or any action taken or omitted by the Agent or the Issuing Bank under this Agreement, provided that no Creditor shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's or the Issuing Bank's gross negligence or willful misconduct. Without limitation of the foregoing, each Creditor agrees to reimburse the Agent and the Issuing Bank promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by the Agent or the Issuing Bank, as the case may be, in connection with the preparation, execution, delivery, administration (except normal administrative costs and fees and expenses of counsel related thereto prior to an Event of Default), modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any other Related Document, to the extent that the Agent or the Issuing Bank is not reimbursed for such expenses by the Company. SECTION 8.6 Successor Agent. Subject to the appointment and acceptance of a successor Agent as provided below, the Agent may resign at any time by giving written notice thereof to the Issuing Bank, the Creditors and the Company and may be removed at any time with or without cause by the Issuing Bank. Upon any such resignation or removal, the Issuing Bank shall have the right to appoint a successor Agent which shall be reasonably acceptable to the Majority Creditors. If no successor Agent shall have been so appointed by the Issuing Bank, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or the Majority Creditors' removal of the retiring Agent, then the retiring Agent may, on behalf of the Issuing Bank and the Creditors, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $250,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. SECTION 8.7 Issuing Bank. (a) All notices received by the Issuing Bank pursuant to this Agreement or any other Related Document (other than the Letter of Credit) shall be promptly delivered to the Agent for 60 distribution to the Creditors. (b) The Issuing Bank shall not amend or waive any provision or consent to the amendment or waiver of any Related Document without the consent of the Majority Creditors, provided, however, that any waiver or amendment of any provision of the Letter of Credit or consent to the amendment or waiver of the Letter of Credit shall require the written consent of all of the Creditors. (c) Upon receipt by the Issuing Bank from time to time of any amount pursuant to the terms of any Related Document (other than pursuant to the terms of this Agreement), the Issuing Bank shall promptly deliver to the Agent such amount. ARTICLE IX MISCELLANEOUS SECTION 9.1 Amendments, Etc. No amendment or waiver of any provision of this Agreement nor consent to any departure by the Company therefrom shall in any event be effective unless the same shall be in writing and signed by the Majority Creditors, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by the Issuing Bank and all the Creditors, do any of the following: (a) waive any of the conditions specified in Article III, (b) increase the amount of the Letter of Credit or the Participation Percentage of any Creditor or subject the Creditors to any additional obligations, (c) reduce the principal of, or interest on, any Tender Advance or any fees (other than fees payable solely to the Issuing Bank) or other amounts payable hereunder, (d) extend the expiration date of the Letter of Credit (except as provided in Section 2.14(a) hereof) postpone any date fixed for any payment of principal of, or interest on, any Tender Advance or any fees (other than fees payable solely to the Issuing Bank) or other amounts payable hereunder, (e) change the aggregate unpaid principal amount of any Tender Advance or any other amount payable hereunder as a result of a draw on the Letter of Credit, or the number of Creditors, which shall be required for the Creditors or any of them to take any action hereunder, (f) amend this Section 9.1, (g) amend this Agreement in a manner intended to prefer one or more Creditors over any other Creditors, (h) amend the definition of "Majority Creditors", or (i) release any collateral, including, without limitation, the Second Mortgage Bonds, Series [ ]; provided further that no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Creditors required above to take such action, affect the rights or duties of the Agent under this Agreement; provided further that no amendment, waiver or consent shall, unless in writing and signed by the Issuing Bank in addition to the Creditors required above to take such action, affect the rights and duties of the Issuing Bank under this Agreement. 61 SECTION 9.2 Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telecopier, telegraphic, telex or cable communication) and mailed, telecopied, telegraphed, telexed, cabled or delivered, if to the Company, at its address at, in the case of deliveries, at its street address at [303 North Oregon Street, El Paso, Texas 79901], in the case of mailings, to its mailing address at [P.O. Box 982, El Paso, Texas 79960], in the case of telex, to telex no. [5435710 (callback 915-543-5707)] and in the case of telecopier to [915-521-4754], in each case to the attention of the Secretary; if to the Issuing Bank, at its address at [335 Madison Avenue, New York, New York 10017-4681], Attention: [_______ Department], telex no. [_________] and in the case of telecopier to [212-________]; if to the Agent, at its address at [335 Madison Avenue, New York, New York 10017-4681], Attention: [_______ Department], telex no. [_________] and in the case of telecopier to [212-________]; if to any Creditor, at its address specified on the signature pages hereof; and if to the Trustee, in the case of deliveries, at its street address at [ , ], in the case of mailings, to its mailing address at P.O. Box _________, and in the case of telex, to telex no. , in each case to the attention of [Corporate Trust Department] or, as to each such entity, at such other place and/or address or number as shall be designated by such entity in a written notice to the other such entities. All such notices and communications shall, when mailed, telecopied, telegraphed, telexed or cabled, be effective when deposited in the mails, telecopied, delivered to the telegraph company, confirmed by telex answerback or delivered to the cable company, respectively, addressed as aforesaid, except that notices to the Agent or Issuing Bank pursuant to the provisions of Article II shall not be effective until received by the Agent or Issuing Bank, as the case may be. SECTION 9.3 No Waiver; Remedies. No failure on the part of the Issuing Bank, the Agent or any Creditor to exercise, and no delay in exercising, any right hereunder or under any Related Document shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 9.4 Rights of Setoff and Subrogation. (a) Upon the occurrence and during the continuance of any Event of Default, the Issuing Bank and each Creditor are hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and otherwise apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Issuing Bank or such Creditor, as the case may be, to or for the credit or the account of the Company against any and all of the obligations of the Company now or 62 hereafter existing under this Agreement, the Second Mortgage Bond Indenture or the Second Mortgage Bonds, Series [ ], whether or not the Issuing Bank or such Creditor, as the case may be, shall have made any demand hereunder or under such other documents and although such obligations may be contingent or unmatured. The Issuing Bank and each Creditor, as the case may be, agree promptly to notify the Company after any such set-off and application made by it, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Issuing Bank and each Creditor under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Issuing Bank and each Creditor may have. (b) If any Creditor shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise, but excluding all proceeds received by assignments or sales of participations in accordance with Section 9.4) on account of its participatory interests in any Tender Advances or other amounts payable by the Company due to a draw under the Letter of Credit (other than pursuant to Section 2.11 or 2.17) in excess of its ratable share of payments on account of such Tender Advances or such other amounts obtained by all the Creditors and the Issuing Bank, such Creditor shall forthwith purchase from the other Creditors and the Issuing Bank a participation in the portions of such Tender Advances or such other amounts, as the case may be, owing to them as shall be necessary to cause such purchasing Creditor to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Creditor, such purchase from the Issuing Bank or such Creditor shall be rescinded and the Issuing Bank or such Creditor shall repay to the purchasing Creditor the purchase price to the extent of such recovery together with an amount equal to the Issuing Bank's or such Creditor's ratable share (according to the proportion of (i) the amount of the Issuing Bank's or such Creditor's required repayment to (ii) the total amount so recovered from the purchasing Creditor) of any interest or other amount paid or payable by the purchasing Creditor in respect of the total amount so recovered. (c) Notwithstanding the foregoing, if any Creditor shall obtain any such excess payment involuntarily, such Creditor may, in lieu of purchasing participations from the Issuing Bank and other Creditors in accordance with subsection (b) above, on the date of receipt of such excess payment, return such excess payment to the Agent for distribution in accordance with Section 2.12. (d) The Company agrees that the Issuing Bank and the Creditors, as the case may be, shall be subrogated to all rights of the Trustee and the holders of the Bonds, to the extent of any payment made by the Issuing Bank pursuant to a drawing under the 63 Letter of Credit, provided that so long as the Bonds remain unpaid and held by Persons other than the Company or any Affiliate thereof, such right of subrogation shall in all respects be subordinate to the rights of the Trustee and the holders of the Bonds. SECTION 9.5 Indemnification. The Company hereby indemnifies and holds the Agent, the ssuing Bank, each Creditor and each Participant and each of their Affiliates and their officers, directors, employers, agents and advisors (each, an "Indemnified Party") harmless from and against any and all claims, damages, losses, liabilities, costs or expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party (except to the extent any claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct), in each case relating to or arising out of or in connection with or by reason of: (a) any inaccuracy or alleged inaccuracy in any material respect, or any untrue statement or alleged untrue statement of any material fact, contained in the Preliminary Official Statement, the Official Statement or any amendment or supplement to the Official Statement, or by reason of the omission or alleged omission to state therein a material fact necessary to make such statements, in the light of the circumstances under which they were made, not misleading; provided, however, that, in the case of any action or proceeding alleging an inaccuracy in a material respect, or an untrue statement, with respect to information supplied by and describing the Issuing Bank in the Preliminary Official Statement or the Official Statement (the "Bank Information"), (i) indemnification by the Company pursuant to this Section 9.5(a) shall be limited to the costs and expenses of the Issuing Bank (including reasonable fees and expenses of the Issuing Bank's counsel) of defending itself against such allegation, (ii) if in any such action or proceeding it is finally determined that the Issuing Bank Information contained an inaccuracy in a material respect or an untrue statement, then the Company shall not be required to indemnify the Issuing Bank pursuant to this Section 9.5(a) for any claims, damages, losses, liabilities, costs or expenses to the extent caused by such inaccuracy or untrue statement, and (iii) if any such action or proceeding shall be settled by the Issuing Bank without there being a final determination to the effect described in the preceding clause (ii), unless the Letter of Credit is wrongfully dishonored and such action or proceeding relates to such wrongful dishonor, then the Company shall be required to indemnify the Issuing Bank pursuant to this Section 9.5(a) for the reasonable costs or expenses incurred in connection 64 with such action or proceeding prior to such settlement and, if such action or proceeding is settled with the Company's consent, for the costs and expenses of such settlement; or (b) any representation, warranty or certification made or deemed made in this Agreement by the Company (or any of its officers), or any certificate furnished to the Agent, the Issuing Bank or any Creditor pursuant to the provisions hereof, proving to hve been false or misleading as of the time made or furnished in any material respect; or (c) any case or proceeding pursuant to any bankruptcy, insolvency, reorganization, moratorium or similar law or any restructuring of the Company; or (d) any cost or liability under any Environmental Law arising out of the operation or assets of the Company; or (e) any event or occurrence set forth in Section 5.4 of the Loan Agreement; or (f) the execution and delivery or transfer of, or wrongful payment or wrongful failure to make payment under, the Letter of Credit; provided, however, that the Company shall not be required to indemnify any Indemnified Party pursuant to this Section 9.5 for any claims, damages, losses, liabilities, costs or expenses to the extent caused by (i) any Indemnified Party's willful misconduct or gross negligence in determining whether a draft or certificate presented under the Letter of Credit complied with the terms of the Letter of Credit or (ii) any Indemnified Party's wrongful failure to make lawful payment under the Letter of Credit after the presentation to it by the Trustee or a successor trustee under the Indenture of a draft and certificate strictly complying with the terms and conditions of the Letter of Credit. Nothing in this Section 9.5 is intended to limit the Company's obligations contained in Article II. Without prejudice to the survival of any other obligation of the Company hereunder, the indemnities and obligations of the Company contained in this Section 9.5 shall survive the payment in full of amounts payable by the Company pursuant to Article II and the termination of the Letter of Credit. SECTION 9.6 Issuing Bank and Creditors. As between the Issuing Bank, the Agent, and the Creditors on the one hand, and the Company on the other hand, the Company assumes all risks of the acts or omissions of the Trustee and any other beneficiary or transferee of the Letter of Credit with respect to its use of the Letter of Credit. Neither the Issuing Bank, the Agent, any Creditor, nor any Participant nor any of their Affiliates and their officers, directors, employers, agents and advisors shall be liable or responsible for: (a) the use which may be made of 65 the Letter of Credit or any acts or omissions of the Trustee and any other beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing Bank against presentation of documents that do not comply with the terms of the Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under the Letter of Credit, except that the Company shall have a claim against the Issuing Bank, and the Issuing Bank shall be liable to the Company, to the extent of any direct, but not consequential, damages suffered by the Company which the Company proves were caused by (i) the Issuing Bank's willful misconduct or gross negligence in determining whether a draft or certificate presented under the Letter of Credit complies with the terms of the Letter of Credit or (ii) the Issuing Bank's willful failure to make lawful payment under the Letter of Credit after the presentation to it by the Trustee or a successor trustee under the Indenture of a draft and certificate strictly complying with the terms and conditions of the Letter of Credit. In furtherance and not in limitation of the foregoing, the Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary. SECTION 9.7 Costs, Expenses and Taxes. The Company agrees to pay on demand all costs and expenses of the Agent, the Issuing Bank and each Creditor in connection with the preparation, execution, delivery, filing, recording, administration (except normal administrative costs and fees and expenses of counsel related thereto prior to an Event of Default), modification and amendment of this Agreement and any other documents which may be delivered in connection with this Agreement including transfer of the Letter of Credit in accordance with its terms and any other documents which may be delivered in connection with this Agreement, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Agent, the Issuing Bank and each Creditor, and local counsel who may be retained by said counsel, with respect thereto, with respect to advising the Agent, the Issuing Bank or any such Creditor as to its rights and responsibilities, or the perfection or preservation of rights or interests, under this Agreement, any other Related Document and such other documents which may be delivered in connection with this Agreement, with respect to negotiations with the Company or with other creditors of the Company, any Person controlling the Company or any of the Company's Subsidiaries arising out of any Event of Default or any events or circumstances that may give rise to an Event of Default and with respect to presenting claims in or otherwise participating in or monitoring any bankruptcy, insolvency or other similar proceeding involving creditor's rights generally and any proceeding ancillary thereto or in connection with the 66 negotiation of any restructuring or "work-out" (whether or not consummated). The Company further agrees to pay on demand all costs and expenses (including reasonable counsel fees and expenses) of the Agent, the Issuing Bank and each Creditor in connection with (i) the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, any other Related Document and any other documents which may be delivered in connection with this Agreement, including, without limitation, reasonable counsel fees and expenses in connection with the enforcement of rights under this Section 9.7, or (ii) any action or proceeding relating to a court order, injunction, or other process or decree restraining or seeking to restrain the Issuing Bank from paying any amount under the Letter of Credit. In addition, the Company shall pay any and all stamp and other administrative taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement, the Letter of Credit, any other Related Document or any such other documents, and agrees to save the Agent, the Issuing Bank and each Creditor harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees. SECTION 9.8 Purchase Option. (a) The Company acknowledges and consents to the effectiveness of the Indenture and the Letter of Credit, and agrees to take any and all actions as are necessary to ensure that the Issuing Bank shall have the benefit of the option to purchase Bonds contemplated therein. (b) The Issuing Bank may with the consent, or shall at the request, of the Majority Creditors exercise its right as set forth in Sections 3.1(e), 9.1(e) or 13.3(d) of the Indenture to purchase the Bonds. Upon any such purchase, the Agent shall notify all Creditors of their pro rata share (based on their Participation Percentage) of the purchase price of the Bonds so purchased and upon receipt of such notice each Creditor will pay to the Agent, for the benefit of the Issuing Bank, such Creditor's pro rata share of the purchase price. Any Bonds so purchased shall be held by the Issuing Bank or the Agent or any other nominee of the Issuing Bank, on behalf of all Creditors (the "Holder"). The Holder may with the consent, or shall at the request, of the Majority Creditors exercise its rights in respect of the Bonds. Upon the sale, remarketing or refunding of any Bonds so purchased, the Holder shall pay to the Agent for the ratable benefit of the Creditors the proceeds of such sale, remarketing or refunding. Upon receipt of such proceeds by the Agent, the Agent shall ratably reimburse the Creditors their share of such proceeds. SECTION 9.9 Binding Effect; Assignments and Participations. (a) This Agreement shall become effective when it shall have been executed by the Company, the Agent, the Issuing Bank and each Creditor and thereafter shall be binding upon and inure to the benefit of the Company, the Agent, the Issuing Bank and each Creditor and their respective successors 67 and assigns, except that the Company shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Agent, the Issuing Bank and each Creditor. The Issuing Bank and each Creditor, with the consent of the Issuing Bank, which consent shall not be unreasonably withheld, may assign to any Eligible Institution all or any part of, or any interest (undivided or divided) in, its rights, benefits and obligations (other than the Issuing Bank's obligation to issue the Letter of Credit) under this Agreement, and to the extent of that assignment such assignee shall have the same rights, benefits and obligations (other than the Issuing Bank's obligation to issue the Letter of Credit) against and to the Company hereunder as it would have had if such assignee were the Issuing Bank or such Creditor hereunder; provided that any such assignment shall not be in an amount less than $1,000,000. (b) The Issuing Bank and each Creditor may sell or agree to sell, to (i) any Eligible Institution (each such Eligible Institution being an "Eligible Participant") or (ii) one or more other Persons (each a "Restricted Participant"; and together with any Eligible Participants being referred to herein as a "Participant"), a participation in all or any part of the Letter of Credit, any Tender Advance or other amounts payable under this Agreement. Each Participant shall be entitled to the rights and benefits of the provisions of Section 5.1(a)(vi) with respect to its participation in the Letter of Credit or such Tender Advance or such other amounts as if (and the Company shall be directly obligated to such Participant under such provisions as if) such Participant were the "Creditor" for purposes of said Section, but, except as set forth below, shall not have any other rights or benefits under this Agreement or any other Related Document (the Participant's rights against the Creditor in respect of such participation to be those set forth in the agreements executed by the Creditor in favor of the Participant). All amounts payable by the Company to the Issuing Bank or any Creditor under Section 2.11 and 2.17 in respect of the Letter of Credit or any Tender Advance or other amounts payable under this Agreement shall be determined as if the Issuing Bank or any Creditor had not sold or agreed to sell any participations in the Letter of Credit or any Tender Advance or such other amounts, and as if the Issuing Bank or any Creditor were maintaining the Letter of Credit or any Tender Advance or such other amounts in the same way that it is maintaining the portion of the Letter of Credit or any Tender Advance or such other amounts in which no participations have been sold. In the case of an Eligible Participant, the Issuing Bank or Creditor may agree with such Participant to take or refrain from taking such action hereunder or under any Related Document as the Issuing Bank or any Creditor, may agree with such Participant as set forth in the agreement executed with such Participant. In no event shall the Issuing Bank or any Creditor agree with any Restricted Participant to take or refrain from taking any action hereunder or under any other Related Document except that the Issuing Bank or any Creditor may agree with a Restricted Participant that it 68 will not, without the consent of such Restricted Participant, agree to (i) extend the date fixed for the payment of principal of or interest on any Tender Advance or other amounts payable to such Restricted Participant, (ii) reduce the amount of any such payment of principal, (iii) reduce the rate at which interest is payable thereon to a level below the rate at which such Restricted Participant is entitled to receive such interest, (iv) alter the rights or obligations of the Company to prepay any Tender Advance or other amounts payable to such Restricted Participant or (v) release any collateral, including, without limitation, the Second Mortgage Bonds, Series [ ]. (c) Notwithstanding any other provision set forth in this Agreement, the Issuing Bank or any Creditor may at any time create a security interest in all or any portion of its rights under this Agreement (including, without limitation, the Advances owing to it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System. (d) The Agent and each Creditor agree that, with the consent of the Company, the Issuing Bank may cause a financial institution satisfactory to the Company to assume the obligations of the Issuing Bank under this Agreement and the Letter of Credit pursuant to such documentation as the Company, the Issuing Bank and such financial institution may agree, which may provide for the issuance of a new letter of credit in substitution of the Letter of Credit on substantially the same terms, whereupon the Issuing Bank shall be discharged from its obligations hereunder and under the Letter of Credit. SECTION 9.10 Further Assurances. The Company agrees promptly to do such further acts and things, and to execute and deliver such additional instruments (including, without limitation, notices), at its own expense, as the Agent, the Issuing Bank or any Creditor may at any time reasonably request in order better to insure and confirm the Agent's, the Issuing Bank's or any Creditor's, as the case may be, rights, powers and remedies hereunder and under the other Related Documents (including in order to perfect or protect any pledge or security interest granted or purported to be granted hereby or to enable the Agent, the Issuing Bank or any Creditor, as the case may be, to exercise or enforce its rights and remedies in respect hereof). SECTION 9.11 Severability. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. 69 SECTION 9.12 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 9.13 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICT OF LAW PRINCIPLES. SECTION 9.14 Submission to Jurisdiction. THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OR OMISSIONS OF THE AGENT, THE ISSUING BANK OR ANY CREDITOR IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY RELATED DOCUMENT. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE COMPANY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE COMPANY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER RELATED DOCUMENTS. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF TEXAS. SECTION 9.15 Waiver of Trial by Jury. EACH OF THE COMPANY AND THE AGENT, THE ISSUING BANK AND EACH CREDITOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER RELATED DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE COMPANY ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER RELATED DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER RELATED DOCUMENT. SECTION 9.16 Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 70 SECTION 9.17 Integration. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AS TO THE SUBJECT MATTER OF THIS AGREEMENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO. SECTION 9.18 Survival. The obligations of the Company under Sections 2.11, 2.17, 9.5, 9.14 and 9.15 shall survive the repayment of the Advances and all amounts payable by the Company under Section 9.7. SECTION 9.19 Change in Lending Office. Each Creditor may from time to time change its lending office at which its Advances are booked; provided, that the provisions of this Agreement, including without limitation Section 2.18 hereof, shall apply to the Advances maintained at each such lending office. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written. EL PASO ELECTRIC COMPANY By_______________________________ [Title] Issuing Bank WESTPAC BANKING CORPORATION By________________________________ Vice President Agent WESTPAC BANKING CORPORATION, as Agent By________________________________ Vice President 71 Participation Percentage Creditors __% WESTPAC BANKING CORPORATION By_________________________________ Vice President [335 Madison Avenue New York, New York 10017-4681 Attention: _____________ Department Telex No. ______________ Telecopier (212) _____________] __% CANADIAN IMPERIAL BANK OF COMMERCE By________________________________ Vice President ___________________________________ ___________________________________ ___________________________________ Telex No. ______________ Telecopier No. _____________] 72 EXHIBIT A FORM OF LETTER OF CREDIT IRREVOCABLE LETTER OF CREDIT No. [ ] ________________, 199[ ]* [Name and Address of Trustee] Attention: Corporate Trust Department Dear Sirs: We hereby establish, at the request and for the account of El Paso Electric Company, a Texas corporation (the "Company"), in your favor, as Trustee under the Indenture of Trust, dated as of , 199 (the "Indenture") between Maricopa County, Arizona Pollution Control Corporation (the "Issuer") and you, pursuant to which [$59,235,000]** in aggregate principal amount of the Issuer's Pollution Control Refunding Revenue Bonds (El Paso Electric Company Palo Verde Project), 19 Series (the "Bonds"), were issued, our Irrevocable Letter of Credit No. [________], in the amount of $[ ]*** (as more fully described below), effective immediately and expiring at the close of banking business at our 335 Madison Avenue, New York, New York 10017-4681 office on or such later date as we shall have agreed in writing (the "Stated Termination Date"), unless earlier terminated in accordance with the terms hereof. We hereby irrevocably authorize you to draw on us, in an aggregate amount not to exceed the amount of this Letter of Credit set forth above and in accordance with the terms and conditions and subject to the reductions in amount as hereinafter set forth, (1) in one or more drawings by one or more of your drafts, drawn on our 335 Madison Avenue, New York, New York 10017-4681 office, payable at sight on a banking day (which shall be any day other than a Saturday, Sunday or public or bank holiday or the equivalent for banks generally under the laws of the State of New York (a "Banking Day")), accompanied by a completed certificate in substantially the form of Annex B attached hereto, which drafts and certificates shall be in writing and signed by you (any such draft accompanied by such _______________ * To be dated the date of issuance of the Letter of Credit. ** In no event shall the principal amount of the Bonds exceed $59,235,000. *** In no event shall the face amount of this Letter of Credit exceed $64,279,712. 73 certificate being your "Interest Draft"), an amount not exceeding $[ ]; (2) in one or more drawings by one or more of your drafts, drawn on our 335 Madison Avenue, New York, New York 10017-4681 office, payable at sight on a Banking Day, accompanied by a completed certificate in substantially the form of Annex C attached hereto, which drafts and certificates shall be in writing and signed by you (any such draft accompanied by such certificate being your "Tender Draft"), an aggregate amount not exceeding $[ ]; (3) in one or more drawings by one or more of your drafts, drawn on our 335 Madison Avenue, New York, New York 10017-4681 office, payable at sight on a Banking Day, accompanied by a completed certificate in substantially the form of Annex D attached hereto, which drafts and certificates shall be in writing and signed by you (any such draft accompanied by such certificate being your "Partial Redemption Draft"), an aggregate amount not exceeding $[ ]; and (4) in a single drawing by your draft, drawn on our 335 Madison Avenue, New York, New York 10017-4681 office, payable at sight on a Banking Day, accompanied by a completed certificate in substantially the form of Annex E attached hereto, which draft and certificate shall be in writing and signed by you (such draft accompanied by such certificate being your "Final Draft"), an amount not exceeding $[___________]; provided that in no event will you have a right to make drawings under this Letter of Credit for the payment of the principal of, or interest on, Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company; provided further with respect to any such Bonds that were not so held by or for the account of the Company (or any Affiliate therof) on the immediately preceding Record Date (as defined in the Indenture), you may, in accordance with the Indenture, draw on us by your Interest Draft under clause (1). Notwithstanding any other provision in this Letter of Credit, in no event will you have a right to make a drawing under this Letter of Credit for the payment of principal of or interest on Bonds in a "Bond Interest Term" (as defined in the Indenture). This Letter of Credit may not be drawn upon for the payment of any premium which may be payable in respect of the Bonds. Upon our honoring any Interest Draft presented by you hereunder, the amount of this Letter of Credit and the amounts available to be drawn by you by any subsequent Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft shall be automatically decreased by an amount equal to the amount of such Interest Draft. If you shall not have received from us within 15 calendar days from the date of such drawing a notice from us to the effect that we have not been reimbursed for such drawing in the form of Annex H attached hereto appropriately completed, the amount of this Letter of Credit and the amounts from time to time available to be drawn by you by any Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft shall be automatically and irrevocably reinstated in the amount of such drawing, effective the 16th calendar day from the date of such drawing. 74 The amount of this Letter of Credit shall be decreased upon our receipt of notice from you, in the form of Annex A hereto, of a redemption or defeasance of less than all the Bonds outstanding, by an amount equal to the amount stated in said notice and the amounts available to be drawn by you by any subsequent Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft shall be automatically decreased to the amounts stated in such notice. Upon our honoring any Tender Draft or Partial Redemption Draft, (i) the amount of this Letter of Credit and the amount available to be drawn by you by any subsequent Tender Draft, Partial Redemption Draft or Final Draft shall be automatically decreased by an amount equal to the amount of such Tender Draft or such Partial Redemption Draft and (ii) the amount available to be drawn by you by any Interest Draft shall be automatically decreased by an amount equal to the amount drawn under such draft in respect of accrued and unpaid interest. In the case of any Tender Draft, the amount from time to time available to be drawn by you by any Interest Draft, Tender Draft or Partial Redemption Draft and Final Draft shall be reinstated to the extent, but only to the extent, we received reimbursement from the Company for amounts drawn hereunder by such Tender Draft and we so notify you in writing. In addition, the amount available from time to time to be drawn by you by any Interest Draft, Tender Draft, Partial Redemption Draft and Final Draft shall be automatically reinstated, upon our receipt from you of the proceeds of the resale of any Bonds purchased and held on behalf of the Company with amounts drawn hereunder accompanied by a completed and signed certificate substantially in the form of Annex F, by an amount equal to the amount of the drawings made to purchase the Bonds so resold. Amounts received from you on behalf of the Company shall, if accompanied by a completed and signed certificate substantially in the form of Annex F from you, shall be applied to the extent of the amounts indicated therein in reimbursement of unreimbursed drawings under your Tender Drafts. Amounts otherwise received from you on behalf of the Company shall first be applied in reimbursement of unreimbursed drawings made by your Interest Draft. Upon delivery to us (i) of all Bonds purchased by you on behalf of or for the account of the Bank pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture, or Section 13.03(d) of the Indenture with moneys drawn by a Tender Draft and (ii) a completed and signed certificate substantially in the form of Annex G, the Letter of Credit shall be reinstated in an amount equal to the amount of such Tender Draft used to purchase such Bonds so delivered; provided, however, if at any time any such purchase shall be rescinded, in whole or in part, or some or all of the Bonds so purchased must otherwise be returned by the Bank, in each case, for any reason, the amounts so reinstated shall not be available to be drawn until and unless the Company reimburses us for such amounts. 75 Funds under this Letter of Credit are available to you against (1) your Interest Draft referring thereon to the number of this Letter of Credit accompanied by your written and completed certificate signed by you in substantially the form of Annex B thereto, (2) your Tender Draft referring thereon to the number of this Letter of Credit accompanied by your written and completed certificate signed by you in substantially the form of Annex C thereto, (3) your Partial Redemption Draft referring thereon to the number of this Letter of Credit accompanied by your written and completed certificate signed by you in substantially the form of Annex D thereto and (4) your Final Draft referring thereon to the number of this Letter of Credit accompanied by your written and completed certificate signed by you in substantially the form of Annex E thereto. Each such draft and certificate shall be dated the date of its presentation, and shall be presented at our office located at 335 Madison Avenue, New York, New York 10017-4681, telex no.: __________ , Attention: Letter of Credit Operations (or at any other office or number in the City and State of New York which may be designated by us by written notice delivered to you) on or before 12:00 Noon (New York City time), or by tested telex (or telecopier) on or before 10:00 A.M. (New York City time), on the day (which shall be a Banking Day) of our making funds available to you hereunder. If we receive any of your drafts and certificates at such office, all in strict conformity with the terms and conditions of this Letter of Credit, on or prior to the termination hereof and in any event not later than 12:00 Noon (New York City time), or if such drafts and certificates are presented by tested telex (or telecopier) not later than 10:00 A.M. (New York City time) on the Stated Termination Date, we will honor the same after presentation thereof on the same day in accordance with your payment instructions. If we receive any of your drafts and certificates at such office after 12:00 Noon (New York City time), or if such drafts and certificates are presented by tested telex (or telecopier) after 10:00 A.M. (New York City time), on a Banking Day, we will honor the same after presentation thereof on the next succeeding Banking Day provided that such drafts and certificates conform with the terms and conditions of this Letter of Credit. If requested by you, payment under this Letter of Credit may be made by wire transfer of Federal Reserve Bank of New York funds to your account in a bank on the Federal Reserve wire system or by deposit of same day funds into a designated account that you maintain with us. This Letter of Credit shall automatically terminate upon the earliest of (i) our honoring your Final Draft presented hereunder, (ii) the date stated in any written notice we receive from you as the effective date of termination of this Letter of Credit, (iii) the date that you surrender the Letter of Credit to us, (iv) the provision of any substitution letter of credit or credit facility as provided in the Indenture, (v) the date on which we receive written notice from you that there is no longer any "Bond Outstanding" within the meaning of the Indenture, and (vi) the Stated Termination Date. 76 This Letter of Credit is transferable in its entirety (but not in part) to any transferee who has succeeded you as Trustee under the Indenture and may be successively transferred. Transfer of the available balance under this Letter of Credit to such transferee shall be effected by the presentation to us of this Letter of Credit accompanied by a certificate in substantially the form of Annex I attached hereto, together with a fee equal to 1/4 of 1% of the "Available Amount". "Available Amount" means the maximum amount available to be drawn at such time under the Letter of Credit, the determination of such maximum amount to assume compliance with all conditions for drawing and no reduction for (i) any amount drawn by an Interest Draft (unless such amount is not reinstated under the Letter of Credit) or (ii) any amount drawn by a Tender Draft or (iii) any amount not available to be drawn because Bonds are held by or for the account of the Company (or any Affiliate thereof). Upon such presentation and payment we shall forthwith transfer the same to your transferee or, if so requested by your transferee, issue an irrevocable letter of credit to your transferee with provisions therein consistent with this Letter of Credit. This Letter of Credit sets forth in full our undertaking, and such undertaking shall not in any way be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein (including, without limitation, the Bonds), except only the certificates and the drafts referred to herein; and any such reference shall not be deemed to incorporate herein by reference any document, instrument or agreement except for such certificates and such drafts. This Letter of Credit shall be governed by the laws of the State of New York, including the Uniform Commercial Code as in effect in the State of New York. Communications with respect to this Letter of Credit shall be in writing and shall be addressed to us at 335 Madison Avenue, New York, New York 10017- 4681, Attention: Letter of Credit Operations, specifically referring to the number of this Letter of Credit. Very truly yours, WESTPAC BANKING CORPORATION By__________________________ Vice President 77 Annex A CERTIFICATE FOR THE REDUCTION OF AMOUNTS AVAILABLE UNDER IRREVOCABLE LETTER OF CREDIT NO. DATED , 199 The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Westpac Banking Corporation (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: 1. The Trustee is the Trustee under the Indenture for the holders of the Bonds. 2. The Trustee hereby notifies you that on or prior to the date hereof $ principal amount of the Bonds have been redeemed and paid or have been defeased pursuant to the Indenture. 3. Following the redemption and payment or the defeasance referred to in paragraph 2. above, the aggregate principal amount of all of the Bonds Outstanding (as defined in the Indenture) is $ . 4. The maximum amount of interest, computed in accordance with the terms and conditions of the Bonds and the Indenture, which would accrue on the Bonds referred to in paragraph 3. above in any period of [ days] is $ . None of the Bonds referred to in paragraph 2. above were in a Bond Interest Term as of the date such Bonds were redeemed, paid or defeased pursuant to the Indenture. 5. The maximum amount available to be drawn by the Trustee under the Letter of Credit by any Interest Draft is reduced to $ (such amount being equal to the amount specified in paragraph 4. above) upon receipt by the Bank of this Certificate. 6. The maximum amount available to be drawn by the Trustee under the Letter of Credit by any Tender Draft is reduced to $ (such amount being equal to the sum of the amounts specified in paragraphs 3. and 4. above) upon receipt by the Bank of this Certificate. 7. The maximum amount available to be drawn by the Trustee under the Letter of Credit by any Partial Redemption Draft is reduced to $ (such amount being equal to the sum of the amounts specified in paragraphs 3. and 4. above) upon receipt by the Bank of this Certificate. 78 8. The amount available to be drawn by the Trustee under the Letter of Credit by its Final Draft is reduced to $ (such amount being equal to the sum of the amounts specified in paragraphs 3. and 4. above) upon receipt by the Bank of this Certificate. 9. The amount of the Letter of Credit is reduced to $ (such amount being equal to the sum of the amounts specified in paragraph 8. above) upon receipt by the Bank of this Certificate. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate this day of , 19 . ________________________, as Trustee By_______________________ [Name and Title] 79 Annex B CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF UP TO [ DAYS'] INTEREST ON THE MARICOPA COUNTY, ARIZONA POLLUTION CONTROL CORPORATION'S POLLUTION CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY PALO VERDE PROJECT), 199 SERIES (THE "BONDS") Irrevocable Letter of Credit No. The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Westpac Banking Corporation (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: 1. The Trustee is the Trustee under the Indenture for the holders of the Bonds. 2. The Trustee is making a drawing under the Letter of Credit with respect to a payment of days' interest on the Bonds, which payment is due on the date on which this Certificate and the Interest Draft it accompanies are being presented to the Bank. None of the Bonds in respect of which the drawing is being made (i) were, on the Record Date (as defined in the Indenture) held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company or (ii) were on such day in a Bond Interest Term. 3. The amount of the Interest Draft accompanying this Certificate is equal to $ . It was computed in compliance with the terms and conditions of the Bonds and the Indenture and does not include any amount of interest on the Bonds which is included in any Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft presented on or prior to the date of this Certificate and does not exceed the amount available to be drawn by the Trustee under the Letter of Credit. 80 IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of the day of , 19 . ________________________, as Trustee By______________________ [Name and Title] 81 Annex C CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF PRINCIPAL OF AND UP TO [___ DAYS'] INTEREST ON THE MARICOPA COUNTY, ARIZONA POLLUTION CONTROL CORPORATION'S POLLUTION CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY PALO VERDE PROJECT), 199 SERIES (THE "BONDS"), IN SUPPORT OF A TENDER (OTHER THAN A MANDATORY TENDER UPON TERMINATION OR EXPIRATION OF THE LETTER OF CREDIT) Irrevocable Letter of Credit No. The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Westpac Banking Corporation (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: 1. The Trustee is the Trustee under the Indenture for the holders of the Bonds. 2. The Trustee is making a drawing under the Letter of Credit with respect to the payment, upon a tender of all or less than all of the Bonds which are Outstanding (as defined in the Indenture), of (i) the unpaid principal amount of the Bonds to be purchased either (a) as a result of a tender pursuant to the terms of Section 2.02 of the Indenture (other than Section 2.02(6) of the Indenture) or (b) as a result of a purchase of Bonds by the Bank pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture or Section 13.03(d) of the Indenture (in each case, other than Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company in each case, and (ii) the amount of interest (not exceeding [____ days'] interest) accrued and unpaid thereon from the Interest Accrual Date (as defined in the Indenture) immediately preceding the date of purchase through the day immediately preceding the date of purchase thereof, which payment is due on the date on which this Certificate and the Tender Draft it accompanies are being presented to the Bank. 3. The amount of the Tender Draft accompanying this Certificate is equal to the sum of (i) $ being drawn in respect of the payment of unpaid principal of Bonds (other than Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company) to be purchased as a 82 result of a tender of the type described above and (ii) $ being drawn in respect of the payment of accrued and unpaid interest on such Bonds and does not include any amount of interest which is included in any Interest Draft, Tender Draft other than the Tender Draft accompanying this certificate, Partial Redemption Draft or Final Draft presented on or prior to the date of this Certificate. 4. The amount of the Tender Draft accompanying this Certificate was computed in compliance with the terms and conditions of the Bonds and the Indenture and does not exceed the amount available to be drawn by the Trustee under the Letter of credit. 5. None of the Bonds in respect of which a drawing is being made are in a Bond Interest Term. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of the day of , 19 . ________________________, as Trustee By_______________________ [Name and Title] 83 Annex D CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF PRINCIPAL OF AND UP TO [ DAYS'] INTEREST ON THE MARICOPA COUNTY, ARIZONA POLLUTION CONTROL CORPORATION'S POLLUTION CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY PALO VERDE PROJECT), 199 SERIES (THE "BONDS"), UPON PARTIAL REDEMPTION Irrevocable Letter of Credit No. The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Westpac Banking Corporation (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: 1. The Trustee is the Trustee under the Indenture for the holders of the Bonds. 2. The Trustee is making a drawing under the Letter of Credit with respect to the payment, upon redemption of less than all of the Bonds which are Outstanding (as defined in the Indenture), of the unpaid principal amount of and up to [ days'] accrued and unpaid interest to the redemption date on, Bonds to be redeemed pursuant to the terms of Section 3.01 of the Indenture (other than Bonds purchased by the Tender Agent or the Trustee on behalf of or for the account of the Bank, pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture or Section 13.03(d) of the Indenture and held by or on behalf of or for the account of the Bank or its nominee and Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or Tender Agent for the account of the Company). [The direction from the Company with respect to redemption was received by us no more than 60 days prior to the date of this certificate. We have evidence, as of the date of this certificate, from two of Moody's Investors Services, Inc., Standard & Poor's Corporation and Duff & Phelps, Inc. that the Company's First Mortgage Bonds, Series [ ], and Second Mortgage Bonds, Series [ ], each have a rating of BBB- or better (or equivalent) and such Bonds have not, as of the date of this certificate, been placed on any watch list.]* __________________ * To be used in case of an optional redemption. 84 3. The amount of the Partial Redemption Draft accompanying this Certificate is equal to the sum of (i) $ being drawn in respect of the payment of unpaid principal of Bonds (other than Bonds purchased by the Trustee on behalf of or for the account of the Bank, pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture or Section 13.03(d) of the Indenture and then held by or on behalf of or for the account of the Bank or its nominee and Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or Tender Agent for the account of the Company to be redeemed, and (ii) $ being drawn in respect of the payment of accrued and unpaid interest on such Bonds and does not include any amount of interest which is included in any Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft presented on or prior to the date of this Certificate. 4. The amount of the Partial Redemption Draft accompanying this Certificate was computed in accordance with the terms and conditions of the Bonds and the Indenture and does not exceed the amount available to be drawn under the Letter of Credit. 5. This Certificate and the Partial Redemption Draft it accompanies are dated, and are being presented to the Bank on, the date on which the unpaid principal amount of and accrued and unpaid interest on, Bonds to be redeemed are due and payable under the Indenture upon redemption of less than all of the Bonds which are Outstanding (as defined in the Indenture). 6. None of the Bonds in respect of which a drawing is being made are in a Bond Interest Term. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of the day of , 19 . ____________________, as Trustee By_______________________ [Name and Title] 85 Annex E CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF PRINCIPAL OF AND UP TO DAYS' INTEREST ON THE MARICOPA COUNTY, ARIZONA POLLUTION CONTROL CORPORATION'S POLLUTION CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY PALO VERDE PROJECT), 199 SERIES (THE "BONDS"), UPON STATED OR ACCELERATED MATURITY OR OPTIONAL OR MANDATORY REDEMPTION AS A WHOLE OR MANDATORY TENDER UPON TERMINATION OR EXPIRATION OF THE LETTER OF CREDIT Irrevocable Letter of Credit No. The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Westpac Banking Corporation (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: 1. The Trustee is the Trustee under the Indenture for the holders of the Bonds. 2. The Trustee is making a drawing under the Letter of Credit (a) with respect to the payment, either at stated maturity, upon acceleration, as a result of a redemption in full pursuant to Section 3.01 of the Indenture [(the direction from the Company and notice to the Bondholders with respect to redemption was received and given by us no more than 60 days prior to the date of this Certificate and we had evidence, as of the date such notice was given by us to the Bondholders, from two of Moody's Investors Services, Inc., Standard & Poor's Corporation and Duff & Phelps, Inc. that the Company's First Mortgage Bonds, Series [ ], and Second Mortgage Bonds, Series [ ], each had a rating of BBB- or better (or equivalent) and such Bonds had not, as of such date, been placed on any watch list)]* or (b) as a result of a mandatory tender upon termination or expiration of the Letter of Credit or substitution of another credit facility for the Letter of Credit as contemplated by Section 2.02(6) of the Indenture, of the unpaid principal amount of and up to days' accrued and unpaid interest on, all of the Bonds which are Outstanding (as defined in the Indenture) (other than Bonds held of record by the Company (or any Affiliate thereof) or held by the _________________ * To be used in the case of an optional redemption. 86 Trustee or the Tender Agent for the account of the Company), which payment is due on the date on which this Certificate and the Final Draft it accompanies are being presented to the Bank. 3. The amount of the Final Draft accompanying this Certificate is equal to the sum of (i) $ being drawn in respect of the payment of unpaid principal of Bonds (other than Bonds held of record by the Company (or any Affiliate thereof) or held by the Trustee or the Tender Agent for the account of the Company) and (ii) $ being drawn in respect of the payment of accrued and unpaid interest on such Bonds and does not include any amount of interest on the Bonds which is included in any Interest Draft, Tender Draft or Partial Redemption Draft presented on or prior to the date of this Certificate. 4. The amount of the Final Draft accompanying this Certificate was computed in compliance with the terms and conditions of the Bonds and the Indenture and does not exceed the amount available to be drawn by the Trustee under the Letter of Credit. 5. None of the Bonds in respect of which the drawing is being made are in a Bond Interest Term. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of the day of , 19 . _________________________, as Trustee By________________________ [Name and Title] 87 Annex F CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE UNDER IRREVOCABLE LETTER OF CREDIT NO. , DATED , 199__ The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Westpac Banking Corporation (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: 1. The Trustee is the Trustee under the Indenture for the holders of the Bonds. 2. The amount of $ paid to you today by the Trustee on behalf of the Company is a payment made pursuant to Section 2.9(b) of the Letter of Credit and Reimbursement Agreement dated as of , 19 (the "Reimbursement Agreement") between the Company and the Bank for amounts drawn under the Letter of Credit and represents unreimbursed drawings under Tender Draft[s] dated [ ]. 3. The amount referred to in paragraph 2. represents the amount of Bonds which were purchased with proceeds of a draw on the Letter of Credit by a Tender Draft dated , 19 . $ represents amounts paid in respect of accrued interest on Bonds and $ represents amounts paid in respect of unpaid principal on Bonds. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate this day of , 19 . _______________________, as Trustee By______________________ [Name and Title] 88 Annex G CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE UNDER IRREVOCABLE LETTER OF CREDIT NO. , DATED , 199___ The undersigned, a duly authorized officer of the undersigned Trustee (the "Trustee"), hereby certifies to Westpac Banking Corporation (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit", the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Trustee, that: 1. The Trustee is the Trustee under the Indenture for the holders of the Bonds. 2. The Tender Agent has delivered to the Bank all Bonds purchased pursuant to Section 3.01(e) of the Indenture, Section 9.01(e) of the Indenture, or Section 13.03(d) of the Indenture, as the case may be, with proceeds of a draw on the Letter of Credit by Tender Draft dated , 19 . 3. The amount of such Tender Draft used to purchase such Bonds which were not remarketed is $ . IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate this day of , 19 . ___________________________, as Trustee By__________________________ [Name and Title] 89 Annex H NOTICE THAT TRUSTEE'S RIGHT TO DRAW UNDER THE LETTER OF CREDIT BY AN INTEREST DRAFT HAS NOT BEEN REINSTATED [Name and Address of Trustee] Attention: Corporate Trust Department Irrevocable Letter of Credit No. Dear Sirs: You are hereby advised that El Paso Electric Company has not reimbursed us in an amount equal to the amount drawn by you under the Interest Draft dated , 19 . Therefore, the amount of our Irrevocable Letter of Credit No. and the amounts available to be drawn by you by an Interest Draft, Tender Draft, Partial Redemption Draft or Final Draft (which available amounts have been decreased by an amount equal to the amount of such Interest Draft) shall not be reinstated in the amount of such Interest Draft. WESTPAC BANKING CORPORATION _________________________ __ 90 Annex I INSTRUCTION TO TRANSFER __________________, 19__ Westpac Banking Corporation 335 Madison Avenue New York, New York 10017-4681 Attention: Letter of Credit Operations Re: Irrevocable Letter of Credit No. Gentlemen: For value received, the undersigned beneficiary hereby irrevocably transfers to: _______________________________ [Name of Transferee] _______________________________ [Address] all rights of the undersigned beneficiary to draw under the above-captioned Letter of Credit (the "Letter of Credit"). The transferee has succeeded the undersigned as Trustee under the Indenture (as defined in the Letter of Credit). By this transfer, all rights of the undersigned beneficiary in the Letter of Credit are transferred to the transferee and the transferee shall hereafter have the sole rights as beneficiary thereof; provided, however, that no rights shall be deemed to have been transferred to the transferee until such transfer complies with the requirements of the Letter of Credit pertaining to transfers. The Letter of Credit is returned herewith and in accordance therewith we ask that this transfer be effective and that you transfer the Letter of Credit to our transferee 91 or that, if so requested by the transferee, you issue a new irrevocable letter of credit in favor of the transferee with provisions consistent with the Letter of Credit. Very truly yours, __________________________, as predecessor Trustee By_________________________ [Name and Title] EX-99 7 APS SETTLEMENT AGT - ANNEX A 1 EXHIBIT B-9.1 ------------- ANNEX A The following agreements as the same shall have been amended to date: 1. ANPP Kyrene 500/230 KV Switchyard Interconnection Agreement, effective on or about July 24, 1980. 2. Palo Verde-North Gila Line ANPP High Voltage Switchyard Interconnection Agreement, effective on or about June 7, 1984. 3. ANPP Transmission Project-Westwing Switchyard Amended Interconnection Agreement, effective on or about August 14, 1986. 4. All other agreements of any type or nature entered into by SRP as operating agent relating to the ANPP High Voltage Switchyard and/or the Valley Transmission System. 2 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS 3091 3091 General Electric Company MA/Purch & Sale Renewed Parts & Factory Repair Work 08/06/82 12/31/99 60 3092 3092 Combustion Engineering MSSS Parts & Repair- Mstr Purch Agmt w/POs (Like Old) 08/14/81 01/01/99 60 PV81 3881 Decision Data Computer Corp. Equipment Maintenance 07/01/80 12/31/86 60 4443 Salt River Project Switchyard Intercon- nection Agreement 08/20/81 01/01/99 60 PV81 4692 Harris Corp. Purchase/Installation and Maintenance 04/20/92 01/01/99 60 PV81 4857 Genicom Corp. Printer Maintenance 01/01/81 01/01/99 60 PV82 C082 6077 Arthur Anderson and Company Disclosure of SIMS Documentation 02/16/82 12/31/99 60 C082 6341 EPRI Software License for VIPRE 07/09/82 01/01/99 60 6357 Bechtel Power Corporation Nuclear Incident Assistance Agreement 11/18/81 12/31/99 60 6584 Applications Software Maintenance on ASI/ Inquiry Software 09/01/85 08/31/84 60 PV83 7542 XES, Inc. Equiment Maintenance 09/01/83 12/31/84 60
3 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS C083 7735 University Computing Co. UCC Operating Software 05/24/83 12/31/99 60 PV83 7926 CGA Computer Associates,Inc. Multiple Systems Integrity License Agreement 07/15/83 12/31/99 60 PV84 8980 Kaibab Industries Lubricants & Related Services (Purch. Dept. Admin.) 12/10/84 12/31/93 60 PV84 9028 Doble Engineering Equipment Lines & Services 05/01/84 04/30/87 60 PV84 10021 10021 General Electric Company Master Purchase & Sale Agreement for Renewal Parts 05/10/84 12/31/99 60 PV84 10022 Hewlett Packard Maintenance for Laboratory Gas Chromatograph 01/01/84 10/31/88 60 PV72 10108 S.M. Stoller Corporation Fuel & Other Consulting Services 08/18/72 01/01/01 60 PV85 10233 Impell Corporation FRATS Software License 08/19/86 01/01/99 60 PV85 10236 General Electric Info.Service Computer Services 06/01/85 06/01/88 60 PV85 10326 Expert-Ease Systems, Inc. Software License Agreement 10/01/85 12/31/99 60
4 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV87 10370 10370 Combustion Engineering Perform Field Services 08/24/87 08/23/90 60 PV89 10421 The Bristol Group Ltd. Software License Agreement 12/12/89 01/01/99 60 PV85 10433 General Data Systems Add Funding 11/01/85 10/30/86 60 PV85 10433 General Data Systems Software Maintenance Agreement 11/01/85 10/31/86 60 PV86 10506 10506 TVA Sales Agreement for Future Purchase from TVA 01/09/86 01/01/01 60 PV86 10582 Marriott Corp. Cafeteria and Vending Services 08/21/86 07/25/88 60 PV86 10603 Nursefinders of Phoenix Health Services 11/01/86 10/31/87 60 PV86 10615 10615 NUS Corporation Consulting Services - Master Agreement (New) 01/01/87 12/31/89 60 PV86 10620 Vance & Associates License Agreement 10/01/86 90/30/87 60 PV86 10624 Gould CSD Software License Agreement 10/01/86 12/21/99 60 PV86 10649 Gould CSD Software License Agreement 04/16/87 12/31/99 60 PV86 10661 10661 Chemical Waste Management,Inc Hazardous Waste Disposal -Master Agreement 02/26/87 02/25/90 60
5 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV86 10662 10662 Combustion Engineering Professional Support Services - Master Agreement (New) 01/01/87 12/31/88 60 PV86 10676 Waste Management Group Procurement of RADMAN Package 03/30/87 01/01/99 60 PV87 10678 Data General Software Support 01/14/87 01/01/99 60 PV86 10712 10712 Combustion Engineering Engineering Services - Master Contract 07/01/87 06/30/90 60 PV86 10750 Oracle Corporation Software License Agrmt - Part of CE RRACS (PV85-10497 CO2) 07/21/87 01/01/01 60 PV86 10755 10755 Impell Corporation Unfunded Engineering Master Agreement - w/funded JO 02/01/87 01/31/90 60 PV86 10765 10765 Westinghouse Electric Corp. Off-Site Equipment Repair - Adminstration by Purchasing 11/03/86 11/02/89 60 PV86 10768 Moore Busienss Forms Maintenance 03/30/87 03/29/88 60 PV87 10850 10850 Westinghouse Electric Corp. NSSS Repair Services - Master Agreement (Old) 02/01/87 01/31/90 60 PV87 10877 BRS Leasing Office Equipment Maintenance 01/01/87 12/1/87 60
6 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV87 10896 Utility Data Institute Database Access & Use of UDI Database for 1987 04/13/87 04/12/88 60 PV87 10913 Studsvik Nuclear Analysis Computer Code Pkg 10/15/87 01/01/99 60 PV87 10956 Western Hydrovac Vactor Services/Cleaning Clarifiers, Tanks, Sumps, Pits, Vau 06/25/87 05/31/88 60 PV87 10978 10978 General Electric Company MA Technical Assistance Services 09/15/88 09/14/91 60 0187 10990 Research Instruments Associa Liquid Scintillator Maintenance/Emergency Services 07/15/87 07/14/88 60 PV87 10994 Interfacts, Inc. Software License Agreement for PC Software 06/30/87 12/31/99 60 PV87 15476 ITT Courier Terminal Systems On-Site Maintenance of PC Cards & Terminals 04/01/87 03/31/88 60 15698 Data General Maintenance 01/06/88 01/01/99 60 PV88 17480 Intergraph Corporation Equipment Services 12/01/88 01//01/99 60 PV88 17857 Expert-Ease Systems, Inc. Software Service Agreement 10/21/88 01/01/99 60 PV88 17909 NPA Systems of California RMCS Maintenance 10/01/88 01/01/99 60
7 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV89 18870 Canberra Industries, Inc. Series 90-Equip. Maintenance 10/27/88 01/01/99 60 PV89 18892 Wologong Group, Inc. End User License 04/07/89 01/01/99 60 PV89 19200 Relational Technology(INGRES) Sun Network License Agreement 10/24/89 01/01/99 60 C089 19210 Engineering Design Automation Software License Agreement 01/01/89 01/01/99 60 PV88 19245 Nuclear Data, Inc. Essential Software Services for ND9900 System 06/19/89 01/01/99 60 PV89 19421 The Bristol Group Ltd. Software License Agreement 12/12/89 01/01/99 60 PV89 19422 The Bristol Group Ltd. Software Support 09/01/89 01/01/99 60 PV89 19459 Encore Computer Corp. Simulator Maintenance 10/15/89 01/01/99 60 C089 19468 Parametric Technology License Agreement/ Pro Engineer 11/30/89 01/01/99 60 PV89 19775 The Technology Group, Inc. EZHANG License Agreement 11/30/89 01/01/99 60 C089 19777 Modular Computer Systems Compute Hardware Maintenance 11/01/89 05/31/91 60 PV89 19784 Swanson Service License Agreement/ANSYS 01/01/90 12/31/90 60
8 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 19785 Georgia Tech Research GTRC GT STRUDL End-User License Agreement 12/12/89 01/01/99 60 PV89 19786 R.T. Bradshaw Software License Agreement/Ductnet/Flow 12/05/89 01/01/99 60 PV90 19787 CHAM Of North America Software License Agreement and Training/ Phoenics 12/01/89 12/31/90 60 PV89 19789 Sampson Technical Consultants License Agreement/STC Thermal 01/01/89 12/31/99 60 PV89 19790 Mitchell & Gauthier Associates Licensing Agreement/ ACSL/OPTDES 01/01/90 01/01/99 60 PV89 MSD14 19791 Impell Corporation Shake Computer Program 04/01/90 / / 60 PV89 19864 Computer Engineering Services PV Simulator RMS Hardware Maintenance Services 11/15/89 10/30/90 60 PV89 19918 Design Synthesis, Inc. Program Licensing Agreement 01/01/90 01/01/99 60 OV89 19952 IMSL, Inc. Software License Agreement 12/31/89 01/01/99 60
9 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV87 20033 Rollins Environmental Services Transportation and/or Disposal of Hazardous Waste 07/01/87 06/30/90 60 PV87 20152 Southern California Edison SCE Personnel Assistance Agreement 09/01/88 01/01/01 60 PV87 20160 20160 Black & Veatch Engrs. & Architects Provide Professional Support Servs (MA, Loaned Servant & Svs. 10/15/87 10/14/90 60 PV87 20185 Dionex Corporation Repair/Maint. of Lab Testing Equipment 03/01/88 03/01/89 60 PV87 20237 Scientific Ecology Group Inc. Off-Site Disposal Services 01/01/88 12/31/93 60 PV88 20290 Environmental Systems Company Transportation and/or Disposal of Hazardous Waste 07/08/87 07/08/90 60 PV88 20292 Ground Improvement Techniques Non-Disclosure Agmt Reiunderwater Hypalon & Slope Repair 01/22/88 12/31/99 60 PV89 20314 Excel Mobile Wash Clean Unit 2 Transformer Bus 02/18/89 12/31/89 60 PV88 20317 Comgraphix, Inc. Micrographics Equipment Maintenance 01/01/88 12/31/88 60
10 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV88 20318 Hughes-Calihan Corporation Microfilm Equipment Maintenance 01/01/88 12/31/88 60 PV88 20324 Freeze Technology Intl. Inc. Provide Freeze Plugging Service 05/16/88 06/01/89 60 PV88 20326 Chambers, Inc. Fire Detection Sys Test (I&C Personnel) & Spare Parts 03/01/88 05/31/88 60 PV88 20335 Tennelec, Inc. Add Funding and Extend Term 01/01/88 12/31/88 60 PV88 20336 20336 General Electric Company Master Agreement to Provide Field Eng. Services 04/10/89 04/09/92 60 PV88 10770 20416 Wackenhut Advanced Tech Corp. Issue new Contract for Unit 1 Batch E Fab Surveillance 06/01/88 03/21/89 60 PV88 20439 U.S. Pollution Control, Inc. Initiate a Contract Based on APS Master Agreement HWID02 07/25/88 07/24/90 60 PV88 10662 20466 Combustion Engineering Professional Support Personnel (W.Kuntz) 07/15/88 09/01/88 60 PV88 10755 20484 Impell Corporation Establish a Contract Between Licensing & Impell Corp. 07/01/88 12/14/89 60
11 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV88 20516 20516 Williams Power Corporation Penetration Seals/ Thermolagging & Fire- proofing Services 03/15/89 03/14/92 60 PV88 20519 20519 TRI International, Inc. Establish a Contract Services Between Licensing & TRI 08/15/88 08/15/89 60 PV88 20520 CEP Provide Offsite Bioassay Services for PVNGS Unit 1,2,3 03/01/89 02/29/92 60 PV88 20521 20521 Lamber, MacGill,Thomas, Inc. Inservice Inspection Request for Proposal 12/15/88 12/14/91 60 PV88 20552 Impell Corporation Loaned Contract Labor to Support the CWD Project 10/14/88 10/31/91 60 PV88 20556 Interstate Nuclear Services Protective Clothing Service 04/01/89 03/31/92 60 PV88 20559 20559 Earth Technology Corporation Soil Testing 01/01/89 03/14/92 60 PV88 20588 ABR Express Systems Freight Pick-up & Delivery (1989 PO #10801393) 07/01/89 06/30/90 60 PV88 20601 Sargent & Lundy Engineers Professional Support Services 11/14/88 03/01/89 60
12 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV88 20640 S.L. Power Consultants Tech Services Contract for J.M. Moreland 01/01/89 12/31/89 60 PV89 10978 20652 General Electric Company Provide Technical Assistance for GE Turbine Inspection 03/31/89 06/20/89 60 PV89 20669 NUS Corporation/EI Division Labor Contract 01/01/89 12/31/89 60 PV89 20686 Infotech Corporation Licensing Department Review/Licensing Excellence 03/01/89 06/30/89 60 PV89 20559 20704 Earth Technology Corporation Soil Testing 04/01/89 12/31/90 60 PV89 20751 Chemical Waste Management,Inc Handle, Trans, Dispose Waste Material 04/24/89 04/24/91 60 PV89 20770 20770 Stone & Webster Engineering Master Agreement w/ Contracts Consulting Services 01/01/90 12/31/92 60 PV89 20773 Varian Associates Unit 3 Chemistry's Atomic Absorporation Instrument 05/15/89 05/14/90 60 PV89 20801 Combustion Engineering Provide Contract Labor 06/05/89 07/31/89 60 PV89 20814 Analytical & Precision Balance Service Balances in ALL Chemistry Labs 06/16/89 06/16/90 60
13 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV89 20843 Bechtel Construction Inc. Contract Labor-Craft, Professional & Non- Manual 03/01/90 02/28/93 60 PV89 20852 TAD Energy Services Provide Staff Augmentation for 8 License Training Inst 08/21/89 02/22/91 60 PV89 20917 20917 Conam Nuclear, Inc. Eddy Current Examination Services 12/15/89 12/14/92 60 PV89 20922 20922 Chem-Nuclear Systems, Inc. Provide Transportation and Interim On-Site Storage (Primary) 11/01/89 12/31/93 60 PV89 20923 20923 Pacific Nuclear Sys (PacNuc) Provide Radioactive Waste Solidification/ Demineralization 04/01/90 12/31/93 60 PV89 20924 20924 Pacific Nuclear Sys (PacNuc) Provide Transportaion and Interim On-Site Storage (Back-up) 11/01/89 06/30/93 60 PV89 20933 Cornoyer Hedric Architects Architectural Design Services for Admin- istration Complex 02/12/90 10/01/92 60 PV89 20950 General Services, Inc. Engineering Support 09/18/89 06/30/90 60
14 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV89 20955 United Engineers & Constructors Audits/Surveys and/or Inspection/ Surveillances 11/01/89 10/31/92 60 PV89 20957 Management Analysis Company Audits/Surveys and/or Inspection/ Surveillances 11/01/89 10/31/92 60 PV89 20968 20968 Tenera Establish Master for Consulting Services Support Personnel 11/01/89 10/31/92 60 PV89 20974 Sunstate Equipment Corporation Tire repair service for heavy equipment 04/16/90 04/15/91 60 PV89 21411 20983 PCI Energy Services Machining/Grinding Service (Kuma 21411) 06/01/91 12/31/92 60 PV89 20990 Arizona Elevator, Inc. Elevator Services 05/01/90 12/31/92 60 PV89 21004 21004 Chem-Nuclear Systems, Inc. Provide Rad Waste Solidification/ Demineralization Svc. 01/01/90 12/31/93 60 PV89 21007 Waste Management of Phoenix Provide Waste Removal Service 01/01/90 12/31/93 60 PV89 20922 21020 Chem-Nuclear Systems, Inc. Provide Transportation and Interim on-site Storage 11/01/89 12/31/93 60
15 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV89 20132 Architectural Interiors, Inc. Architectural Designer, Hold Pending Review of Other Co. 12/04/89 12/31/89 60 PV89 21051 Ronn Lavitt, Ph.D. Personnel Psychological Screening 06/01/90 05/31/92 60 PV90 20860 21072 United Energy Services Corp. Dean Valdez, and Gene Hinsley 01/04/90 02/28/90 60 PV90 21073 Airnetics Engineering Co. Perform Preventive Maintenance 01/20/90 12/31/90 60 PV90 21075 First Approach Provide Staff Augmentation for Sims Data Management & Control 01/02/90 06/30/90 60 PV90 21077 United Energy Services Corp. Contract Labor request for 2 Contract Sr. Tech. Specialists 12/15/89 12/31/90 60 PV90 21411 21081 ITI Movats, Inc. Testing/Surveillance of Motor Operated Valves 01/01/90 12/31/91 60 PV90 21085 Furmanite America, Inc. Perform safety and safety relief valve set point testing 03/01/90 12/31/91 60 PV90 21089 Bechtel Power Corporation Engineering Partnering Agreement 02/12/90 02/12/95 60
16 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 21090 Sargent & Lundy Engineers Engineering Partnering Agreement 02/12/90 02/12/95 60 PV90 21093 Panasonic Industrial Co. Maintain Service Contract 01/01/90 12/31/93 60 PV90 21097 Ace Mobile Wash New Ownership R. Olson, (Ref. PV88-20610) 01/13/90 04/30/91 60 PV90 21112 SMC ESMI (R. Morrison) PANDA Code Completion 01/29/90 06/02/90 60 PV90 21120 21120 Alimak Elevator Company Tendon Stressing Platform Services Agreement 04/01/90 03/31/92 60 PV90 21130 Sola Electric Maintain Service Contract 03/15/90 03/31/92 60 PV90 21147 Western Hydrovac Remove Sand & Anthracite for Gravity Filter cell #9 03/02/90 12/31/90 60 PV90 21151 Atlan-Tech, Inc. Perform Irradiations of PVNGS TLDS's 05/01/90 04/30/91 60 PV90 20924 21162 Pacific Nuclear Sys (PacNuc) To Provide Transportation and Interim on-site Storage 04/02/90 12/31/94 60
17 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 21164 Devtech Associates, Inc. Hardware Installation Engineer 03/19/90 06/19/90 60 PV90 21165 PRC Engineering Systems,Inc. Develop & Implement Vendor Tech Manuel 11/19/90 12/31/93 60 PV90 21169 21169 Paul Monroe-Enertech Perform Snubber Testing 12/01/90 11/30/93 60 PV90 21170 21170 ABB Power & T&D Company,Inc. Consulting Services/ Master Agreement 04/09/90 04/09/93 60 PV90 21182 Bartlett Nuclear Contract Labor for RP & Chemistry 10/01/90 09/30/93 60 PV90 21186 Thunderbird Fire & Safety Halon Systems Functional Test 05/07/90 05/06/93 60 PV90 21187 Fire Master Corporation Fire Extinguisher Refill & Service 07/01/90 06/30/93 60 PV91 21192 The Atlantic Group Professional & Technical (Awarded see CSR 9031 for RFP) 08/01/91 07/31/94 60 PV90 21192 The Atlantic Group Letter of Intent/ Initial Funding 08/01/91 08/31/94 60 PV90 21202 Nichols Institute Analyze and Confirm Urine Specimens 05/23/90 05/31/92 60
18 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 21205 Protection Technology, Inc. Nuclear/Support Security Services 06/01/90 05/31/92 60 PV90 21218 21218 Bunney's Inc. Cooling Tower Maintenance 01/01/91 12/31/93 60 PV90 21218 21218 Bunney's Inc. Perform Cooling Tower Fan Rework 08/26/91 12/31/91 PV90 21225 Consolidated Building Services Janitorial Services for PVNGS 10/01/90 09/20/93 60 PV91 21238 21238 Babcock Wilcox Nuclear Srvs. Purchase of Equipment and Parts 10/07/91 10/06/94 60 PV90 21252 MPR Associates, Inc. Consulting Services W/Contracts & J.O.'s 05/01/90 12/31/90 60 PV90 21252 21262 MPR Associates, Inc. Cooper-Bessermer Owner's Group Project Manager 05/01/90 12/31/90 60 PV90 21266 Southern Technical Services Office Facilities and Support Staff 04/01/90 12/31/90 60 PV90 21281 McKenzie Laboratories Water Quality Analysis 10/26/90 11/30/92 60 PV90 21285 Desert Security Modification & Repair 09/09/90 12/31/91 60
19 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 21288 Nuclear Data Systems No Cost P.O. to Execute Software License Agreement 08/23/90 12/1/99 60 PV90 21291 Nuclear Data Services, Inc. Participation in Nuclear Data Services Database 08/01/90 12/31/90 60 PV90 21292 Johson Yokogawa Corporation WRF C&MS Replacement Project (Awarded see RFP CSR9689) 06/01/91 01/01/99 60 PV89 10662 21294 Combustion Engineering MOV Program Engineering Support 06/04/90 12/31/90 60 PV90 20923 21299 Pacific Nuclear Sys (PacNuc) Provide Radioactive Waste Solidification/ Deminearlization Svc 04/01/90 06/14/93 60 PV90 21303 21303 BCP Technical Services Provide Engineering Services 01/15/91 01/14/94 60 PV90 21306 J.G. Keppler Off-Site Safety Review Committe Consultant 03/22/90 12/31/90 60 PV90 21307 S. Levy, Inc. Off-Site Safety Review Committe Consultant 03/22/90 12/31/90 60 PV90 21308 21308 Babcock Wilcox Nuclear Srvs. Outage Support Services - PP CSR 9746 01/01/91 12/31/93 60
20 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 21313 J.D. Shiffer Off-Site Safety Review Committee Consultant (Tract T&C) 03/22/90 12/31/90 60 PV90 21316 21316 Failure Prevention, Inc. Miscellaneous Consulting Services w/Contract 07/24/90 07/23/93 60 PV90 10622 21318 Combustion Engineering Material Management of Info. Support, Provide Lee Troistel 09/01/90 12/31/91 60 PV90 21321 Friedman Recycling Sale of Recyclable Paper 09/01/90 09/01/93 60 PV90 21323 Hartford Steam Boiler Vibration Diag. Computer Program -See Contract No. 21086 08/29/90 01/01/01 60 PV90 21328 S3 Technologies Second Simulator Procurement 12/01/90 03/30/93 60 PV90 21340 S&L Contracting Company Railroad Track Maintenance 09/15/90 09/15/93 60 PV90 21341 Sundt Products Fiberglass Repair 10/01/90 10/01/93 60 PV90 21344 PMH Primary Care, Inc. Physician and MRO Services for PVNGS 09/24/90 12/31/91 60
21 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 21350 NUS Corporation Review Licensing Correspondence Against the UFSAR 02/01/91 06/30/91 60 PV90 21353 21353 MQS Inspection, Inc. Miscellaneous Non- Destructive Examinations 01/01/91 12/31/94 60 PV90 21354 Nuclear Regulatory Commission Dummy Contract for Contracts database 01/01/90 12/31/99 60 PV90 21355 E&O Committee Dummy Contract for Database 01/01/90 12/31/99 60 PV90 21356 INPO Dummy Contract for Database 01/01/90 12/31/99 60 PV90 21357 Outside Review Board Dummy Contract for Database 01/01/90 12/31/99 60 PV90 21360 L.A. Dept. of Water & Power Dummy Contract for Database 01/01/90 12/31/99 60 PV90 21361 AZ Radiation Regulatory Agency Dummy Contract for Database 01/01/90 12/31/99 60 PV90 21363 Combustion Engineering Incore Detectors 09/01/90 09/01/91 60 PV90 21365 Johnson & Higgins Insurance Dummy Contract for Database 01/01/90 12/31/99 60
22 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 21367 Boise Cascade Office Products Inventory & Restock Supply Cabinet Service 10/15/90 12/31/91 60 PV90 21372 21372 Remote Systems, Inc. Technical Support for Refueling Equipment 02/01/91 02/01/94 60 PV90 21373 Data Enterprises Code Software 10/18/90 12/31/99 60 PV90 21383 Naumann Hobb Material Handling Lease/Buy Three Clark Order Pickers 11/01/90 11/01/93 60 PV90 21384 Sun Microsystems Sun UNIX Hardware/ Software Maintenance (Bid Award) 01/01/91 12/31/93 60 PV90 21386 21386 The Atlantic Group Pump, Valve, Actuator and Control Rework 11/01/90 07/31/90 60 PV90 21391 Tenera Development of Instr. Setpoint Software (see PP csr10303) 05/15/91 12/31/92 60 PV91 21392 CEP Radiological Services (Awarded see CSR 10318 for RFP) 08/01/91 08/01/94 60 PV90 21393 Infotech Corporation Develop 89 Series Procedures 10/01/90 03/15/91 60 PV90 21394 Combustion Engineering Regional Expediting Services 01/01/92 12/31/92 60
23 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 21397 21397 Pro-Tech Services Provide Procedure Upgrade Service 11/01/90 12/30/94 60 PV90 21406 Advance Technologies Software License Agreement 11/01/90 01/01/99 60 PV90 21407 S3 Technologies Provide Services, Materials draft escrow terms 09/04/91 03/21/96 60 PV90 21411 21411 Westinghouse Electric Corp. Engineering Services 03/20/91 03/19/94 60 PV90 21308 21414 Babcock Wilcox Nuclear Srvs. Provide Outage Management Team 11/01/90 12/03/93 60 PV90 21420 DCA, Inc. Upgrade and Support for DCA Communication Interface Equip. 12/15/90 12/15/91 60 PV90 21421 Emtac Electrical, Inc. Security and Safeguards Related Electrical Work 05/01/91 04/30/94 60 PV90 21425 EPRI MOV Performance Prediction Prg. - Admin Tracking PO Only 07/01/90 12/31/95 60 PV90 21433 Sundt Corp. Evap. Pond #1 Re-Line (Award see csr 10484 for RFP) 10/01/91 01/31/92 60 PV90 21435 BBN Software Products Software License Agreement 12/05/90 12/05/91 60
24 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 21437 Software Partner/32 Tape Management System for VAX 11/28/90 12/31/99 60 PV90 21438 Infincom, Inc. Provide Turnkey Copy Center & Mail Room Services 03/01/91 12/31/93 60 PV90 10662 21440 Combustion Engineering Provide Staff Augmentation to QA 12/10/90 12/31/91 60 PV90 21448 E.D. Smith Paving Place Asphalt Road and Sidewalk at U-3 12/17/90 12/31/90 60 PV90 21450 Combustion Engineering Controlled Program License Agreement-NPS-2 11/20/90 01/01/99 60 PV90 21453 BW/IP International Provide Technical Assistance 01/01/91 12/31/91 60 PV91 20860 21455 United Energy Services Corp. Evaluation of RX Eng. (Awarded see csr 10702 for RFP) 07/15/91 08/06/91 60 PV91 21461 Combustion Engineering Engineering Partnership Agreement 01/11/91 01/11/96 60 PV91 21473 Access Company Tracking for Contractors on PO's 01/01/91 01/01/99 60 PV91 21480 Southern California Edison Parts Transfer Agreement 01/01/01 01/01/92 60 PV91 20751 21486 Chemical Waste Management,Inc Hazardous Waste Handling, transport, and disposal 01/01/91 12/31/91 60
25 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 21490 Ace Mobile Wash On-Site Vehicle & Trolley Stop Washing Service (see CSR 11094) 05/01/91 04/30/93 60 PV91 21499 Perkin-Elmer Corporation Preventive Maint. Service for U-1 01/01/91 01/31/92 60 PV91 21500 Perkin-Elmer Corporation Preventive Maintenance for U-2 Chemistry's AA 01/01/91 01/31/92 60 PV91 21507 AZ Corp. Commission Dummy Contract Number for Badging 01/01/91 01/01/99 60 PV91 21513 Sunland Computer Services Computer Equipment Maintenance (see CSR 11413 for RFP) 08/19/91 07/31/94 60 PV91 20860 21516 United Energy Services Corp. Develop and Teach NPRDS 02/18/91 03/31/91 60 PV91 21519 Arizona State University Participation in ASU Interactive Instruc- tional TV Program 01/02/91 08/30/91 60 PV91 21524 Performance Plus Provide One Week Training Seminar 02/25/91 03/02/91 60 PV91 21525 B&W Legal Review of Confidentiality Agreement for Concurrance 04/01/91 10/01/91 60
26 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 21539 Intergraph Corporation Volume Purchase Agreement 05/30/91 04/30/94 60 PV91 21540 Vector Engineering, Inc. Cosulant Service for Evap-Pond #1 (Awarded see csr11635) 05/02/91 07/01/92 60 PV91 21545 Digital Equipment Corporation Loan of Products Agreement 03/20/91 05/20/91 60 PV91 21555 Mettler Repair U-1 Chem Auto- titrator & Maintenance in U-2&3 Chem. 03/28/91 04/05/91 60 PV91 21556 Performance/Safety/ Reliability Consultants to asst PVNGS w/INPO Evaluation 03/25/91 05/15/91 60 PV91 21557 BFA/Aquila Banyan Software Support (RFP csr12661) 05/15/91 05/1494 60 PV91 21569 Sanderson Ford, Inc. Personnel Transportation awarded see csr 11823 for RFP 09/01/91 12/31/95 60 PV91 21571 21571 Graver Water Division Field Services 04/08/91 04/07/94 60 PV91 21577 21577 BW/IP International Field Services 04/19/91 04/18/94 60 PV91 21579 Precision Visuals Purchase of PV WAVE Software 07/19/91 01/01/99 60
27 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 21582 Signal Technology Purchase of N Power Software 06/01/91 01/01/99 60 PV91 21585 Nutech Engineering Six Month Evaluation Period for Outside Hire Contract 04/29/91 07/01/92 60 PV91 21410 21590 Allied Technology Provide DAW/Volume Reduction Service 04/05/91 12/31/93 60 PV91 21603 AZ Time Recorder Maintenance of "Time Recorder" 03/14/91 03/13/92 60 PV91 21607 Information International On-Site Leonardo Training 06/17/91 06/21/92 60 PV91 21608 Integrated Management Services Develop NPE CATS program, manage SBO Project 04/01/91 09/30/91 60 PV91 10615 21609 NUS Corporation Provability Risk Assessment PRA Workstation 03/01/91 12/31/91 60 PV91 21612 Orbisphere Labs 05/16/91 05/15/94 60 PV91 21615 Ramendra P. Roy Provide Consulting Services 05/31/91 05/31/92 60 PV91 21620 21620 TRI International Consulting Services 05/22/91 05/22/94 60 PV91 21621 NPS Engr. & Tech. Services Qc Contract Labor Personnel 10/01/91 09/30/93 50
28 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 20968 21627 Tenera EQ Consulting Services 06/03/91 07/31/91 60 PV91 21634 S3 Technologies Secrecy Agreement 06/01/91 12/31/93 60 PV91 21636 AVTV Renew Annual Exchange Maintenance for 8mm Tape 07/01/91 06/30/92 60 PV91 21637 SYBASE Software License Agreement 06/06/91 01/01/99 60 PV91 21644 Digital Tools Purchase of Autoplan Software 08/01/91 01/01/99 60 PV91 21647 Bell Atlantic Tricon Leasing Lease/Purchase Agreement for Warehouse Carousels 01/01/91 01/01/92 60 PV91 21650 Arizona State Univesity Monitoring and Testing of Porcelain Contamination 07/01/91 06/30/93 60 PV91 21652 MDM Engineering Corporation Engineering Support (see RFP CSR 12456) 08/05/91 12/31/92 60 PV91 21660 S3 Technologies Secrecy Agreement Between APS, SE and GP (Butch Colby) 06/01/91 12/31/93 60 PV91 21665 Fuel Quality Service Supply portable Equipment and Filter Diesel Fuel in 06/27/91 03/01/92 60
29 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 21672 Bentley Systems Beta Test Site Agreement/Microstation SPARC Version 4.0 07/15/91 01/15/92 60 PV91 21679 PRC Engineering Systems,Inc. Engineering Study for Proposed IEEE Study 07/08/91 08/08/91 60 PV91 21687 United Energy Services Corp. Site Labor Contract 08/01/91 07/31/94 60 PV91 21688 IDS/SAIC Site Labor Contract 08/01/91 07/31/94 60 PV91 21695 Corporate Research Systems Background Screening 09/01/91 08/31/93 60 PV91 21696 Crystal Bottled Water Forklift Trianing and Site Access for Water Delivery 08/01/91 12/31/91 60 PV91 21699 Gundle Lining Systems Liner portion of Evaporation Pond Reline 08/01/91 05/01/92 60 PV91 21704 Integrated Management Services Development of a Model Design Change 08/05/91 12/30/91 60 PV91 21706 Western Technologies, Inc. Soil, Asphalt, & Concrete Testing Service 07/31/91 09/30/91 60 PV91 21708 Barrington Consulting Non Disclosure Agreement 08/05/91 09/05/91 60 PV91 21711 Western Technologies, Inc. Concrete Cylinder and Grout Cube Testing 08/01/91 12/31/91 60
30 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 21716 Accurate Corrosion Control Palo Verde Cathodic Protection Survey 10/21/91 04/30/92 60 PV91 21723 OI Analytical Extend Warranty of Units &,2,&3 TOC Analyzers Model 700 08/22/91 12/31/91 60 PV91 21728 21728 Arco Enterprises, Inc. Field Services 10/01/91 12/31/91 60 PV91 21730 Arizona State University Participation in ASU Instructional TV Program 08/31/91 08/30/92 60 PV91 21731 Liebert New Maintenance Requirement of UPS Equipment 09/18/91 09/17/92 60 PV91 21735 Halliburton (NUS) EPRI Agreement 07/26/91 08/01/92 60 PV91 21739 Western Hydrovac Vacuum Drilling 09/09/91 10/01/91 60 PV91 21745 Impell Corporation Provide Licensing Service on Various Regulatory issues 09/30/91 12/31/91 60 PV91 21749 Office Designs Design Services 01/01/91 12/31/92 60 PV91 21755 Field Lining Systems HPDE Welding Services 09/18/91 09/20/91 60
31 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 21759 Halliburton (NUS) Upgrades to the ERFDADS (See CSR 12938 for RFP) 02/02/92 04/03/94 60 PV91 21760 Progressive Roofing Roof Removal and Repair (Awarded see csr 12949 for RFP) 12/03/91 12/03/95 60 PV91 21770 Focus Learning Corporation RP Tech. Job & Task Analysis (See CSR 13005 for RFP) 03/02/92 07/31/92 60 PV91 21775 Training Concepts Qa Program Implemen- tation Training 10/01/91 03/31/92 60 PV91 21169 21777 Paul Monroe-Enertech Perform Hydraulic Snubber Functional Testing 10/06/91 12/31/91 60 PV91 21780 Request for Proposal Clerical Contract Labor Personnel / / / / 60 PV91 21792 Southern California Edison Ongoing Personnel Assistance from APS to SCE 10/01/91 01/01/99 60 PV91 21794 Nuclear Oversight Committee Dummy Contract for Tracking 10/01/91 12/31/99 60 PV91 21801 Cleveland Technical Perform Diesel Fuel Oil Analysis 12/01/91 12/01/92 60
32 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 21804 EPRI Tailored Collaboration Agreement 11/01/91 12/31/93 60 PV91 21807 Sargent & Lundy Engineers License Agreement-R- Base Software 11/01/91 01/01/99 60 PV92 21810 Poison Lab Analyze and confirm Specimens per 10CFR Part 26 11/01/91 11/01/92 60 PV91 21308 21813 Babcock Wilcox Nuclear Srvs. Design and install Access Hole in U2 (See CSR 13261 RFP) 11/29/91 12/31/91 60 PV91 21818 Westinghouse Electric Corp. Rapid EIDMS Access Agreement 11/18/91 01/01/99 60 PV91 21819 American Telephone &Telegraph Batteries at Units 1,2, and 3 11/30/91 12/31/93 60 PV91 21819 American Telephone &Telegraph Funding for Letter of Intent 12/04/91 12/01/93 60 PV91 21835 21821 Western Technologies, Inc. Provide Testing Per APS Spec/ASTM Standard 01/01/92 12/31/92 55 PV91 21825 PRC Engineering Services Corp Vendor Engineering Services 12/01/91 12/31/92 60 PV91 21826 United Energy Services Corp. Consulting Services/ Letter of Intent 01/20/92 12/31/92 60
33 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 21826 United Energy Services Corp. Balance of funding for SLD's/SFD's Project 01/20/92 12/31/92 60 PV91 10750 21828 Oracle Corporation Provide License of Pro-Fortran & Transaction Processing 11/20/91 01/01/99 60 PV91 10750 21829 Oracle Corporation Oracle S/W + Annual Maintenance 11/22/91 01/01/99 60 PV91 21831 Beckman & Associates Consulting Services 01/06/92 01/06/95 60 PV91 21833 Tenera EQ Program Enhancement Plan (See CSR 13325 for RFP) 02/01/92 02/01/94 60 PV91 21834 Digital Equipment Corporation Annual Maintenance 12/01/91 12/01/92 60 PV91 21835 21835 Western Technologies, Inc. Miscellaneous Testing Services 01/01/92 12/31/95 55 PV91 21838 Arizona Surplus Material Surplus and Disposal Service 01/13/92 12/31/92 60 PV91 21841 Halliburton (NUS) RAPID 01/01/92 12/31/92 50 PV91 21842 Request for Proposal Perform Underwater Inspection 04/01/92 03/31/95 30
34 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 10370 21843 Combustion Engineering Modify OPS Modules (See CSR 12816) 03/28/91 09/30/92 60 PV91 21847 Infotech Corporation Training Development and Training 01/02/92 06/30/92 60 PV91 21308 21849 Babcock Wilcox Nuclear Srvs. SG Emergency Access Hole Design & Install (see CSR13417 RFP) 01/16/92 05/01/92 60 PV91 21852 University of Arizona Technical Training & Consulting Support Services 01/01/92 12/31/92 50 PV91 41118 21863 NUS Corporation Comprehensive Laboratory Analysis Services 01/01/92 01/30/93 60 PV92 21871 Computational Systems, Inc. Software Maintenance 11/30/91 05/31/93 60 PV92 21872 Walsh Brothers Systems Furniture Assembly and Installation 01/02/92 12/31/92 55 PV92 21873 Boise Cascade Corporation Furniture Repair 01/02/92 12/31/92 60 PV92 21875 Bentley Systems Beta Test Site Agreement 02/01/92 06/01/92 60 PV92 MSD09 21876 First Approach Software Quality Assurance/Development & Maintenance 01/02/92 07/31/92 60 PV92 21879 Service America Corporation Vending Machine Services-Admin Complex 01/08/92 01/07/95 55
35 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 21308 21880 Babcock Wilcox Nuclear Srvs. U1 Inconel-600 project. (see CSR 13528 for RFP) 01/20/92 05/31/92 60 PV92 21884 Analytical & Precision Balance Maintain and Repair Laboratory Balances 01/01/92 01/01/93 60 PV92 21886 Lift-It Mfg. Co., Inc. Train Personnel on the usage of Synthetic Slings 01/16/92 01/18/92 60 PV92 44074 21887 Digital Equipment Corporation OPS Computer Equip Maintenance 10/10/91 09/30/92 60 PV92 21728 21888 Arco Enterprises, Inc. Sandlasting U-1 Turbine Parts 02/10/92 05/31/92 60 PV92 21889 21889 Heflin Industries Liner Repair & Inspection Services 03/01/92 02/28/95 60 PV92 21890 General Physics Corporation Evaluate and Revise Training Courses 01/15/92 03/31/92 60 PV92 21892 Beckman & Associates Commitment Action Tracking System Program 01/13/92 12/31/92 60 PV92 21896 Mahr Business Products Service Brother Typewriters & Equip. 01/01/92 12/31/92 04 PV92 21897 Typewriter Service of Arizona Maintenance & Repair of IBM & Xerox Type- writers 01/01/92 12/31/92 04
36 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 21900 Dionex Corporation Provide Service for Unit Chemistry's Ion Chromatographs 03/01/92 03/01/93 03 PV92 21902 Beckman & Associates Project Mgmt. Services 01/20/92 02/14/92 60 PV92 21904 PRC Engineering Systems, Inc. Recruiting Contract w/6 months Evaluation Period 01/01/92 12/31/92 60 PV92 21905 Operations Technology, Inc. Procurement and Maintenance for TCCURVE 01/27/92 01/31/93 60 PV92 21907 Request for Proposal Provide Portable Demineralizer Service 02/01/92 02/01/95 41 PV92 21910 Teledyne Engineering Services Install and Calibrate Strain Gauges 02/05/92 04/30/92 55 PV92 21911 MOS Inc. Additional Equipment Qualification Training 11/01/91 12/31/92 60 PV92 21914 Request for Proposal Maintenance of a Medical Assistance Program 01/31/92 01/31/93 20 PV92 21169 21918 Paul Monroe-Enertech Perform Hydraulic Snubber Testing 02/01/92 12/31/92 60 PV92 21921 Solar Turbines Letter of Intent for Caterpillar 07/30/91 08/31/91 60
37 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 21921 Solar Turbines Revision to Allow Solar to Procure the Generator 07/30/92 08/01/92 60 PV92 21921 Solar Turbines Furnish and Install Gas Turbine Generators 08/31/92 11/30/93 60 PV92 21923 Request for Proposal Containment Tendons Inservice Testing 07/27/92 01/20/93 29 PV92 21926 NUS Corporation Secrecy Agreement 07/02/92 07/01/93 60 PV92 21929 Request for Proposal Develop a System Performance Monitoring and Trending Prg. 04/15/92 12/31/92 41 PV90 21169 21930 Paul Monroe-Enertech Provide Status 4120 Snubber Test Machine Training 02/14/92 04/30/92 55 PV92 21411 21931 ITI Movats Inc. Provide Manpower for Diagnostic Testing 02/18/92 05/18/92 50 PV92 21933 Request for Proposal Present PVNGS Plant Systems Coourse To STA s 05/18/92 08/07/92 20 PV92 21935 Outdoor Systems Billboards at intersection of Wintersburg Road 04/17/92 04/16/92 60
38 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 21937 United Energy Service Corp. Perform Evaluation of PVNGS Emergency Operation Procedures 03/16/92 03/20/92 50 PV92 21939 Eaton Corp/Cutler-Hammer Provide Technical Assistance 02/19/92 02/29/92 55 PV92 21941 Carousel Intergrated Systems Maintence for Warehouse parts Carousel (first year) 03/01/92 02/28/93 50 PV92 21942 INPO INPO Loaned Position Kent Hamlin 10/15/91 10/30/93 60 PV92 21944 Infotech Corporation Software Error & Activity Tracking systems(SEATS) 02/24/92 07/31/92 60 PV92 21947 ARA/CORY Refreshment, Inc. Provide Refreshment Services at New Admin Complex 02/15/92 02/14/95 50 PV92 21959 Request for Proposal Root Cause of Failure 04/15/92 09/15/92 26 PV92 21960 Request for Proposal RFP To Construct Training Center 03/02/92 04/30/92 29 PV92 21963 Request for Proposal Fire Protection JCO Assessment 04/20/92 05/22/92 40 PV92 21964 Halliburton (NUS) 10CFR20 Upgrades (Awarded see crs13873 for RFP) 09/30/92 07/30/94 60
39 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 21972 Comgraphix, Inc. Nun-Disclosure Agreement- Tracking Only 03/17/92 12/31/93 60 PV92 21975 Cove s Edge, Inc. Consulting Service 05/01/92 12/31/92 60 PV92 21977 Concurrent Computer Corp. Maint Agreement for 5500 RTU System is U3 05/01/92 04/30/93 60 PV92 21979 Request for Proposal Background Screening 04/20/92 01/01/99 20 PV92 21981 Lambert, MacGill, Thomas, Inc. Erosion/Corrosion 01/01/92 12/31/92 03 PV92 21983 RIX Company, Inc. Seal Around Conduit installation Bldg. A 03/30/92 04/06/92 55 PV92 21984 Paul Monroe-Enertech Technical Asssistance 03/20/92 03/25/92 20 PV92 21985 Westinghouse Electric Corp. Proprietary Information Agreement 02/24/92 01/01/99 60 PV92 10370 22011 Combustion Engineering Handholes in Steam Generator 05/30/92 12/31/93 60 PV92 22014 Lucas Mgmt. System Inc. Corporate License Evaluation of Artemis Prestige for Windows 06/15/92 12/31/92 60 PV92 22019 I-Corp, International Consulting Services for Evaluation of Leak Detection 04/22/92 04/29/92 60
40 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 22028 Optilan Maintence and Upgrades 09/01/91 12/31/92 60 PV92 22039 American Telephone & Telegraph Funding for Letter of Intent 06/01/92 12/01/93 60 PV92 22043 American Fence Rework Isolation Zone Inner and Outer Fence and Gates 07/16/92 08/15/92 60 PV92 22058 Bunney s Inc. Unit 3 Structural Repairs 09/15/92 12/15/92 60 PV92 22060 Babcock Wilcox Nuclear Srvs. Steam Generator Tube Removal U2R4 02/01/93 07/31/93 60 PV92 22064 Genral Electric Company Refurbishment of Switchgear 123 E-NAN-SO3 Cubicle AA 10/01/92 11/30/94 60 PV92 22064 Gneral Electric Company Extend Letter of Intent to Initiate Design Drawings 12/15/92 01/01/93 60 PV92 20336 22064 General Electric Company Design Fabricate & Install Switchgear Cubicle 01/04/93 12/15/94 60 PV92 22068 Maricopa Comm College Instruct GOC Classes on District Site 08/24/92 06/15/93 60
41 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 22090 Conam Nuclear, Inc. ECT of the Unit 3 Upper Pressurizer I-600 Nozzles 09/15/92 10/15/92 60 PV92 21308 22091 Babcock Wilcox Nuclear Srvs. Units 2 & 3 Pressurizer Nozzle Replacement 01/04/93 12/31/94 60 PV92 22100 S3 Technologies Escrow Account for second Similar Project 04/01/92 12/31/99 60 PV92 22101 Structural Integrity Provide Fracture Mechhanic Computer Software 07/01/92 12/31/99 60 PV92 44074 22102 Digital Equipment Corporation Software License Agreement 05/01/92 01/01/99 60 PV92 22104 OGDEN/ERCE Service Water System Self Assessment (see CSR 14224 for RFP) 03/11/93 05/15/93 60 PV92 22105 IBM Hardware/Software Lease/ Purchase 06/29/92 06/28/94 60 PV92 40513 22107 CARA Corporation CMIS Phase IIa Project 05/26/92 09/30/92 60 PV92 22108 Perkin-Elmer Corporation Chemistry Data Management Software (awarded see CSR 14233) 10/02/93 12/31/93 60
42 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 22113 Halliburton(NUS) Provide Hardware / Software for Implementing ERDS 07/01/92 04/25/94 60 PV92 22116 American Netronic Graneda Software License 07/27/92 01/01/99 60 PV92 22118 Utility Resource Associates Provide Software Maint. Support(awarded see 14298 for RFP) 11/20/92 12/31/93 60 PV92 44179 22122 Cisco Systems, Inc. Maintenance on upgraded CISCO Router Model AGS 08/01/92 12/31/92 60 PV92 22125 Tenera Support Evaluation of Individual Plant for External Events 04/08/93 12/31/94 60 PV92 40513 22126 CARA Corporation Intergrated Budgets and Cost Project 06/29/92 12/31/92 60 PV92 22133 Hewlett Packard Service Maint. Agreement for RCPOMS 08/20/92 12/31/93 60 PV92 22134 Infotech Corproation Re-Engineer PRAM 08/25/92 01/31/92 60 PV92 44195 22135 Bell Alantic Maintence Agreement 09/01/92 08/31/94 60 PV92 22136 Sargent & Lamdy Engineers Develop License for PC Based IMS Software // // 45
43 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 44074 22140 Digital Equipment Corporation DEC Equipment Maintenance 08/01/92 07/31/92 60 PV92 22143 Tor Engineering Drawwing Revisions 09/15/92 12/31/92 60 PV92 22144 Stagg Systems PM Basis Project 09/23/92 12/20/92 60 PV92 22146 Stagg Systems TRMS Enhancement and Support Project 06/04/92 12/31/92 60 PV92 22152 Infotech Corporation Suppor Snubber Reduction Program 01/01/93 07/31/93 60 PV92 22161 Randy Siddell Softwarre Distribution Agreement 11/15/92 12/31/99 60 PV92 22162 Behavioral Consultant Services Evaluation Assessment of Palo Verde Personnel 11/16/92 03/01/93 60 PV92 22163 Qualtec Professional Services Limited Release 11/20/92 12/31/99 60 PV92 22164 HTH Associates Distribution Agreement 11/20/92 12/31/99 60 PV92 22165 PRC Engineering Systems, Inc. Provide Faciliation of Modification Process 11/12/92 03/28/93 60 PV92 22166 EG&G Idaho, Inc. Access to Studsvik Casmo 3 code on the NFM LAN 12/01/92 12/31/93 60 PV92 22171 Index Index Participation Agreement Membership 01/01/93 12/31/99 60
44 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 22172 Dr. Dennis Duffy Reommed Fix Options Unit 1 TB Pipe Leak 11/10/92 12/31/93 60 PV92 22173 Oracle Corporation Purchase of RDEMS and supporting products 12/31/92 12/31/93 60 PV92 22174 Camberra Provide Maintenance Support 01/01/92 12/31/93 60 PV92 20903 22176 S3 Technologies Existing Simular Relocation Project 12/18/92 12/31/93 60 PV92 22177 Jesse R. Wyatt P.E. Ltd Structural Evaluation for Unit 2 Ccooling Tower 01/01/93 12/31/92 60 PV92 22033 22178 Bechtel Power Coporation Provide Energy Support Services 12/01/92 12//31/93 60 PV93 22179 CHAM, Ltd. License Agreement for Phoenics Software 12/14/92 12/31/93 60 PV93 22181 Computer Power Group Provide Software Support (see csr15156 for RFP) 01/01/93 07/0193 60 PV93 22182 A-Z Micrographic Micrographic Equioment Maintenance 01/01/93 12/31/93 60 PV93 10712 22184 Combustion Engineering Provide Engineering Services 01/01/93 12/31/93 60
45 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV93 22185 Bechtel Software, Inc. Software, Licenses and Support 01/01/93 12/31/96 60 PV93 22186 Tor Engineering Cooling Tower Drawing Additions/Revisions 02/04/93 12/31/93 60 PV93 22187 Tetra Eng. Gp., Inc. Drift and Setpoint Statistics training Course 02/15/93 03/31/93 60 85 44195 22189 Bell Alantic Equipment Maintenance 02/01/93 12/31/93 60 PV93 22190 Lee & Northrup Maintenance Agreement Service 03/01/93 02/28/94 60 PV93 22192 Training-Ala-Carte Provide Windows Training 04/01/93 12/31/93 60 PV93 22193 Structural Integrity Assoc. Evaluation of U2 Essential Cooling Water Heat Exchanger 04/12/92 04/30/93 60 PV93 22194 Aptech, Inc. Allowable Flaw Sizes for Steam generator Tubing 04/09/93 07/30/93 60 PV93 22196 Computer Engineering Services IMUX 04/13/93 12/31/93 60
46 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV93 22197 Computer Engineering Services Check Adequacy of Escrow Account for PV90-21292 09/01/93 12/31/93 60 PV93 22198 Cygna Energy Services (carts)Software Program (see csr15845 for RFP) 08/01/93 01/31/94 55 PV90 22199 AEA O Donnell, Inc. Support U2 SG Tube Failure Root Cause Team 04/20/93 06/30/93 60 PV92 22213 Pacific Nuclear Sys (NUTECH) Provide Fire Protection Egineering Services 10/05/92 01/15/94 60 PV92 22242 22242 Welding Services, Inc. Issue Master Agreement for Future Services 02/01/93 01/01/95 26 PV92 21421 22250 EMTAC Electrical, Inc. Upgrade Camera /Detection Equipment Per Dcp A-PJ-SK-092 12/21/92 01/01/94 60 PV93 10370 22256 Combustion Engineering Redundent COLSS 01/08/93 12/31/93 60 PV93 22256 Combustion Engineering Add Funding 01/08/93 12/31/93 60 PV93 22267 MQS, Inc. Equipment Qualification Training 01/30/93 12/31/93 60 PV93 22290 Bunney s Inc. Implement Structural Mods at Unit 1 & 2 cooling Towers 01/0493 12/15/93 60
47 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV93 22294 Motorola PVNGS Two Way Radio Equipment/Sevvices 03/31/93 12/31/96 28 PV93 22294 Motorola Letter of Intent 06/30/93 07/30/93 60 PV93 21308 22299 Babcock Wilcox Nuclear Srvs. Permanent Refueling Pool Seal (see CSR 16181 for RFP) 08/01/93 06/30/95 10 PV93 22300 DCS Systems, Inc. Modification to ABB-CE Nuclear Fuel Fabrication Facilities 04/26/93 12/31/93 60 PV93 22301 Arizona Potroleum Clean Diesel Fuel Storage Tanks (see CSR 15881 for Rfp) 06/14/93 07/15/93 60 PV93 22302 PRC Engineering Systems, Inc. Project Team Training & Provide Senior Faciliator 05/10/93 08/31/93 60 PV93 22303 Nuclear Safety Review Committee Off-Site Safety Review Committee Consultant 07/01/93 12/31/93 60 PV93 22303 Nuclear Safety Review Concepts Off-Site Safety Review Committee Consultant 07/01/93 12/31/93 60 PV93 22304 IBM Add AS/400 to Maintenance at end of Waranty Period 06/17/93 06/16/94 60 PV93 22305 Visual Numerics Provide support to Develop Steam Generator Presentation 05/24/93 05/27/93 60
48 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV93 22306 Quarles/Brady/Fannin Establish Administrative P.O. for Payment of Invoices 05/01/93 12/31/3 60 PV93 22307 Kimball & Curry Legal Services 05/31/93 12/31/93 60 PV93 22308 Halliburton(NUS) Software License for PRA Workstation 06/01/93 01/01/99 60 PV93 22310 Alden Lorents Cost Control System Project Consulting 06/07/93 08/20/93 60 PV93 22311 Request for Proposal U2 SG Chem. Cleanup and Sludge Lancing 06/01/93 06/30/93 41 PV93 22313 Interleaf, Inc. Purchase Interleaf 5.3 06/15/93 01/01/99 60 PV93 22314 Hewlett Packard Hardware and operating Software Maintenance 05/01/93 04/30/94 60 PV92 22315 Polymetrics, Inc. Inspect Ultra Filtration 07/30/93 08/15/93 60 PV93 22316 Focas Learning Corp. Obtain PVNGS Vision Database Site License 07/06/93 07/06/94 60 PV93 22317 Combustion Engineering Obtain ABB-CE Reload Engineering Software 06/01/93 01/01/99 60 PV93 22318 Viasoft Non-Disclosure Agreement 06/18/93 01/01/99 60
49 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV93 22319 Niagara Technical Consultant Technical Consulting Services U2 Chemical Cleanup 06/30/93 12/31/93 60 PV93 22320 Dan Wilson(ASU) Instruct Class on IEE- 476/546 ASU will pay 06/07/93 08/31/93 60 PV93 22321 Institute of Conf. Mgmt. Training Configuration Management 07/01/93 12/31/93 60 PV93 22322 Infotech Coporation Phase II Changes for I/O EDEMS 07/15/93 10/30/93 60 PV93 22323 Computer Products Onsite Training for Course #3000 RTT/G2 07/20/93 12/31/93 55 PV93 22324 CSC Index Re-Engineering Services 05/01/93 008/31/93 60 PV93 22325 Fabricon 3 EA Boric Acid Treatment Skids (see CSR 16181 for RFP) 07/21/92 06/30/94 60 PV93 22326 Yankee Atomic Electric Co. Generation of Fabrication Bid Specification 07/20/93 10/29/93 60 PV93 22330 Request for Propoal Provide Programmer & Analysis Support 09/06/93 12/31/93 80 PV93 22331 PLG, Inc. Provide Consulting Services 08/19/93 12/31/93 60
50 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV93 22332 Structural Integrity Assoc. Evaluation U2 CW Heat Exchanger Tube Degradation 08/04/93 09/06/93 60 PV93 22334 Lucas Management Transfer of Technical Knowledge 09/07/93 10/02/93 60 PV93 22410 22410 Nuclear Energy Services, Inc. Establish Master Agreement 05/01/93 12/31/95 26 PV93 21835 22433 Western Technologies, Inc. Concrete cylinder Compression Test 05/01/93 12/29/93 60 PV93 22435 EEMC Provide Air Quality Testing Services for for Sta Blackout Proj 05/15/93 10/15/93 60 PV93 10370 22436 Combustion Engineering Steam Generator Sludge Removal 05/03/93 06/03/93 60 PV93 22511 22511 Halliburton NUS Corporation Master Agreement for Computer Services Support 09/01/93 12/31/96 10 PV89 40104 Bechtel Power Corporation BECAP & ME101 Software/ Services 07/01/89 12/31/90 60 PV90 40308 C-TS & Associates SQA Procedure Develop- ment 03/01/90 08/31/90 60
51 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 40416 CAD Southwest Corporation Hardware/Software Maintenance 06/01/90 01/01/99 60 PV90 40417 Sargent & Landy Engineers Software Access License 06/06/90 01/01/99 60 PV89 40493 K&ll Prof Mgmt Svcs Equipment Maintenance (Administrative P.O.) 08/01/89 07/31/90 60 PV90 40513 40513 CARA Corporation Software Dev & Consult 05/01/90 04/30/93 60 PV90 40533 40533 Devtech Associates, Inc. Software Dev/Computer Consuulting 05/01/90 04/30/93 60 PV93 42875 Halliburton NUS Corporation Enviromental Consulting 05/31/93 09/30/93 60 PV90 MSD12 44015 Computer Power Group Computer Consuulting Services (was Cornell Computer)see 11964 07/03/90 03/31/91 60 PV90 44065 Boeing Computer Services Software Licence Agreement/EZ5 11/14/90 11/13/91 60 PV90 44066 Universal Technical Systems Software Licence /Tk Solver 11/12/90 01/01/99 60 PV90 44071 HRS Systems, Inc. Program License Agreement /HAAS 11/01/90 10/31/95 60 MCP MCP09 MCP09 Sun Microsystems Supply Installation & Maintenance 11/30/88 12/31/99 60 PV87 MSD07 MSD07 AGR Information Services Software Dev 02/01/87 01/31/90 60
52 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS MSD08 MSD08 MICON, Inc. Incoporate Whistleblower Language 03/17/93 12/31/93 60 MSD09 MSD09 First Approach Computer Consulting Svcs 06/15/87 06/14/90 60 MSD12 MSD12 Computer Power Group Computer Consultant Services 03/01/88 02/28/91 60 MSD15 MSD15 Stagg Systems Computer Consulting Software Licensing 11/14/89 11/13/92 60 MSD18 MSD18 Impell Pacific Software Dev/Computer Consulting 12/01/89 / / 60 PV87 PVTA1 PVTA1 Combustion Engineering NSSS Tech Assist-Master Agreement (Replace w/ PV86-10725) 01/01/84 12/31/88 60
53 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS 2654 Energy, Inc. ARMP Disclosure Statement 05/08/79 01/01/99 60 3091 3091 General Electric Company MA/Purch & Sale Renewed Parts & Factory Repair Work 08/06/82 12/31/99 60 3092 3092 Combustion Engineering MSSS Parts & Repair- Mstr Purch Agmt w/POs (Like Old) 08/14/81 01/01/99 60 PV80 3182 Wixdorf Computers Maintenance Agreement 04/14/80 01/01/99 60 PV81 3881 Decision Data Computer Corp. Equipment Maintenance 07/01/80 12/31/86 60 4443 Salt River Project Switchyard Intercon- nection Agreement 08/20/81 01/01/99 60 PV81 4655 IBM Typewriter Maintenance 11/05/81 01/01/99 60 PV81 4692 Harris Corp. Purchase/Installation and Maintenance 04/20/92 01/01/99 60 PV81 4857 Genicom Corp. Printer Maintenance 01/01/81 01/01/99 60 PV82 C082 6077 Arthur Anderson and Company Disclosure of SIMS Documentation 02/16/82 12/31/99 60 C082 6341 EPRI Software License for VIPRE 07/09/82 01/01/99 60 6357 Bechtel Power Corporation Nuclear Incident Assistance Agreement 11/18/81 12/31/99 60
54 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS 6584 Applications Software Maintenance on ASI/ Inquiry Software 09/01/85 08/31/84 60 PV83 7542 XES, Inc. Equiment Maintenance 09/01/83 12/31/84 60 C083 7735 University Computing Co. UCC Operating Software 05/24/83 12/31/99 60 PV83 CO83 7926 CGA Computer Associates,Inc. Multiple Systems Integrity License Agreement 07/15/83 12/31/99 60 PV84 8980 Kaibab Industries Lubricants & Related Services (Purch. Dept. Admin.) 12/10/84 12/31/93 60 PV84 9028 Doble Engineering Equipment Lines & Services 05/01/84 04/30/87 60 MCP MCP09 00009 Sun Microsystems Supply Installation & Maintenance 11/30/88 12/31/99 60 PV84 10021 10021 General Electric Company Master Purchase & Sale Agreement for Renewal Parts 05/10/84 12/31/99 60 PV72 10108 S.M. Stoller Corporation Fuel & Other Consulting Services 08/18/72 01/01/01 60 PV85 10233 Impell Corporation FRATS Software License 08/19/86 01/01/99 60 PV85 10236 General Electric Info.Service Computer Services 06/01/85 06/01/88 60 PV85 10326 Expert-Ease Systems, Inc. Software License Agreement 10/01/85 12/31/99 60
55 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV85 10352 10352 Technical Info. Systems, Inc. Provide Software Support for Security System 12/31/85 12/30/88 60 PV87 10370 10370 Combustion Engineering Perform Field Services 08/24/87 08/23/90 60 PV89 10421 The Bristol Group Ltd. Software License Agreement 12/12/89 01/01/99 60 PV85 10433 General Data Systems Add Funding 11/01/85 10/30/86 60 PV85 10433 General Data Systems Software Maintenance Agreement 11/01/85 10/31/86 60 PV86 10506 10506 TVA Sales Agreement for Future Purchase from TVA 01/09/86 01/01/01 60 PV86 10582 Marriott Corp. Cafeteria and Vending Services 08/21/86 07/25/88 60 10582 Marriott Corp. Change Charge and Home Units and Account 01/01/01 01/01/01 60 PV86 10603 Nursefinders of Phoenix Health Services 11/01/86 10/31/87 60 PV86 10603 Nursefinders of Phoenix Change Terms Code from "00" to "10" 11/01/86 09/28/92 60 PV86 10615 10615 NUS Corporation Consulting Services - Master Agreement (New) 01/01/87 12/31/89 60 PV86 10620 Vance & Associates License Agreement 10/01/86 90/30/87 60 PV86 10624 Gould CSD Software License Agreement 10/01/86 12/21/99 60
56 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV86 10639 10639 Sargent & Lundy Engineers Engineering Services Master Agreement 06/20/86 06/19/89 60 PV86 10640 10640 Black & Veatch Engrs. & Architects Unfunded Engineering Mater Agreement w/ Funded JD 06/20/86 06/19/89 60 PV86 10649 Gould CSD Software License Agreement 04/16/87 12/31/99 60 PV86 10662 10662 Combustion Engineering Professional Support Services - Master Agreement (New) 01/01/87 12/31/88 60 PV86 10676 Waste Management Group Procurement of RADMAN Package 03/30/87 01/01/99 60 PV87 10678 Data General Software Support 01/14/87 01/01/99 60 PV86 10712 10712 Combustion Engineering Engineering Services - Master Contract 07/01/87 06/30/90 60 PV86 10750 Oracle Corporation Software License Agrmt - Part of CE RRACS (PV85-10497 CO2) 07/21/87 01/01/01 60 PV86 10755 10755 Impell Corporation Unfunded Engineering Master Agreement - w/funded JO 02/01/87 01/31/90 60 PV86 10765 10765 Westinghouse Electric Corp. Off-Site Equipment Repair - Adminstration by Purchasing 11/03/86 11/02/89 60
57 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV86 10768 Moore Business Forms Maintenance 03/30/87 03/29/88 60 PV86 10770 10770 Wackenhut Advanced Tech. Corp. Reload Pellet Sampling During NUC Fuel Fabrication-U123-MA 03/02/87 03/02/90 60 PV87 10850 10850 Westinghouse Electric Corp. NSSS Repair Services - Master Agreement (Old) 02/01/87 01/31/90 60 PV87 10877 BRS Leasing Office Equipment Maintenance 01/01/87 12/1/87 60 PV87 10896 Utility Data Institute Database Access & Use of UDI Database for 1987 04/13/87 04/12/88 60 PV87 10905 Canberra Industries, Inc. Whole Body Counter Maintenance Services 04/25/87 04/24/88 60 PV87 10913 Studsvik Nuclear Analysis Computer Code Pkg 10/15/87 01/01/99 60 PV87 10930 Diversified Inspections,Inc. Aerial Lift & Crane Equipment Inspection 05/15/87 05/14/88 60 PV87 10956 Western Hydrovac Vactor Services/Cleaning Clarifiers, Tanks, Sumps, Pits, Vau 06/25/87 05/31/88 60 PV87 10978 10978 General Electric Company MA Technical Assistance Services 09/15/88 09/14/91 60 0187 10990 Research Instruments Associa Liquid Scintillator Maintenance/Emergency Services 07/15/87 07/14/88 60
58 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV87 10994 Interfacts, Inc. Software License Agreement for PC Software 06/30/87 12/31/99 60 PV87 15476 ITT Courier Terminal Systems On-Site Maintenance of PC Cards & Terminals 04/01/87 03/31/88 60 15698 Data General Maintenance 01/06/88 01/01/99 60 PV87 16811 Digital Equipment Corporation Field Service Agreement 10/01/87 09/30/88 60 PV88 17480 Intergraph Corporation Equipment Services 12/01/88 01//01/99 60 PV88 17857 Expert-Ease Systems, Inc. Software Service Agreement 10/21/88 01/01/99 60 PV88 17909 NPA Systems of California RMCS Maintenance 10/01/88 01/01/99 60 PV89 18870 Canberra Industries, Inc. Series 90-Equip. Maintenance 10/27/88 01/01/99 60 PV89 18892 Wologong Group, Inc. End User License 04/07/89 01/01/99 60 PV89 19200 Relational Technology(INGRES) Sun Network License Agreement 10/24/89 01/01/99 60 C089 19210 Engineering Design Automation Software License Agreement 01/01/89 01/01/99 60 PV88 19245 Nuclear Data, Inc. Essential Software Services for ND9900 System 06/19/89 01/01/99 60 PV89 19421 The Bristol Group Ltd. Software License Agreement 12/12/89 01/01/99 60
59 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV89 19422 The Bristol Group Ltd. Software Support 09/01/89 01/01/99 60 PV89 19459 Encore Computer Corp. Simulator Maintenance 10/15/89 01/01/99 60 C089 19468 Parametric Technology License Agreement/ Pro Engineer 11/30/89 01/01/99 60 PV89 19775 The Technology Group, Inc. EZHANG License Agreement 11/30/89 01/01/99 60 C089 19777 Modular Computer Systems Compute Hardware Maintenance 11/01/89 05/31/91 60 PV90 19785 Georgia Tech Research GTRC GT STRUDL End-User License Agreement 12/12/89 01/01/99 60 PV89 19786 R.T. Bradshaw Software License Agreement/Ductnet/Flow 12/05/89 01/01/99 60 PV90 19787 CHAM Of North America Software License Agreement and Training/ Phoenics 12/01/89 12/31/90 60 PV89 19789 Sampson Technical Consultants License Agreement/STC Thermal 01/01/89 12/31/99 60 PV89 19790 Mitchell & Gauthier Associates Licensing Agreement/ ACSL/OPTDES 01/01/90 01/01/99 60 PV89 MSD14 19791 Impell Corporation Shake Computer Program 04/01/90 / / 60
60 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV89 19864 Computer Engineering Services PV Simulator RMS Hardware Maintenance Services 11/15/89 10/30/90 60 PV89 19918 Design Synthesis, Inc. Program Licensing Agreement 01/01/90 01/01/99 60 OV89 19952 IMSL, Inc. Software License Agreement 12/31/89 01/01/99 60 PV87 20046 Erin Engineering & Research Reliability Engineering Support 01/02/88 01/01/91 60 PV87 20050 Sargent & Lundy Engineers Eng-Svs to Provide Control Wiring Diagrams & Other Design 07/29/88 08/21/90 60 PV87 20152 Southern California Edison SCE Personnel Assistance Agreement 09/01/88 01/01/01 60 PV87 20160 20160 Black & Veatch Engrs. & Architects Provide Professional Support Servs (MA, Loaned Servant & Svs. 10/15/87 10/14/90 60 PV87 20237 Scientific Ecology Group Inc. Off-Site Disposal Services 01/01/88 12/31/93 60 PV88 20292 Ground Improvement Techniques Non-Disclosure Agmt Reiunderwater Hypalon & Slope Repair 01/22/88 12/31/99 60 PV93 20310 Foxboro Co. Vendor Support to Identify Source of U3 FWCS-2 Disturbance 03/08/93 03/09/93 60
61 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV89 20314 Excel Mobile Wash Clean Unit 2 Transformer Bus 02/18/89 12/31/89 60 PV88 20317 Comgraphix, Inc. Micrographics Equipment Maintenance 01/01/88 12/31/88 60 PV88 20318 Hughes-Calihan Corporation Microfilm Equipment Maintenance 01/01/88 12/31/88 60 PV88 20324 Freeze Technology Intl. Inc. Provide Freeze Plugging Service 05/16/88 06/01/89 60 PV88 20326 Chambers, Inc. Fire Detection Sys Test (I&C Personnel) & Spare Parts 03/01/88 05/31/88 60 PV88 20335 Tennelec, Inc. Add Funding and Extend Term 01/01/88 12/31/88 60 PV88 20336 20336 General Electric Company Master Agreement to Provide Field Eng. Services 04/10/89 04/09/92 60 PV88 10770 20416 Wackenhut Advanced Tech Corp. Issue new Contract for Unit 1 Batch E Fab Surveillance 06/01/88 03/21/89 60 PV88 20439 U.S. Pollution Control, Inc. Initiate a Contract Based on APS Master Agreement HWID02 07/25/88 07/24/90 60 PV88 10662 20466 Combustion Engineering Professional Support Personnel (W.Kuntz) 07/15/88 09/01/88 60
62 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV88 20520 CEP Provide Offsite Bioassay Services for PVNGS Unit 1,2,3 03/01/89 02/29/92 60 PV88 20552 Impell Corporation Loaned Contract Labor to Support the CWD Project 10/14/88 10/31/91 60 PV88 20556 Interstate Nuclear Services Protective Clothing Service 04/01/89 03/31/92 60 PV88 20559 20559 Earth Technology Corporation Soil Testing 01/01/89 03/14/92 60 PV88 20588 ABR Express Systems Freight Pick-up & Delivery (1989 PO #10801393) 07/01/89 06/30/90 60 PV88 20601 Sargent & Lundy Engineers Professional Support Services 11/14/88 03/01/89 60 PV88 20640 S.L. Power Consultants Tech Services Contract for J.M. Moreland 01/01/89 12/31/89 60 PV89 20687 Eastman Kodak Company Micrographics Equipment Maintenance 01/01/89 12/31/89 60 PV89 20559 20704 Earth Technology Corporation Soil Testing 04/01/89 12/31/90 60 PV89 20751 Chemical Waste Management,Inc Handle, Trans, Dispose Waste Material 04/24/89 04/24/91 60 PV89 20770 20770 Stone & Webster Engineering Master Agreement w/ Contracts Consulting Services 01/01/90 12/31/92 60
63 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV89 20773 Varian Associates Unit 3 Chemistry's Atomic Absorporation Instrument 05/15/89 05/14/90 60 PV89 20814 Analytical & Precision Balance Service Balances in ALL Chemistry Labs 06/16/89 06/16/90 60 PV89 20843 Bechtel Construction Inc. Contract Labor-Craft, Professional & Non- Manual 03/01/90 02/28/93 60 PV89 20917 20917 Conam Nuclear, Inc. Eddy Current Examination Services 12/15/89 12/14/92 60 PV89 20922 20922 Chem-Nuclear Systems, Inc. Provide Transportation and Interim On-Site Storage (Primary) 11/01/89 12/31/93 60 PV89 20923 20923 Pacific Nuclear Sys (PacNuc) Provide Radioactive Waste Solidification/ Demineralization 04/01/90 12/31/93 60 PV89 20924 20924 Pacific Nuclear Sys (PacNuc) Provide Transportaion and Interim On-Site Storage (Back-up) 11/01/89 06/30/93 60 PV89 20933 Cornoyer Hedric Architects Architectural Design Services for Admin- istration Complex 02/12/90 10/01/92 60 PV89 20950 General Services, Inc. Engineering Support 09/18/89 06/30/90 60
64 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV89 20952 BETA Products, Inc. Revise & Redraw the SESS System Technical Manual Drawings 10/03/89 12/31/90 60 PV89 20955 United Engineers & Constructors Audits/Surveys and/or Inspection/ Surveillances 11/01/89 10/31/92 60 PV89 20957 Management Analysis Company Audits/Surveys and/or Inspection/ Surveillances 11/01/89 10/31/92 60 PV89 20968 20968 Tenera Establish Master for Consulting Services Support Personnel 11/01/89 10/31/92 60 PV89 20974 Sunstate Equipment Corporation Tire repair service for heavy equipment 04/16/90 04/15/91 60 PV89 21411 20983 PCI Energy Services Machining/Grinding Service (Kuma 21411) 06/01/91 12/31/92 60 PV89 20990 Arizona Elevator, Inc. Elevator Services 05/01/90 12/31/92 60 PV89 21004 21004 Chem-Nuclear Systems, Inc. Provide Rad Waste Solidification/ Demineralization Svc. 01/01/90 12/31/93 60 PV89 21007 Waste Management of Phoenix Provide Waste Removal Service 01/01/90 12/31/93 60
65 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV89 20632 21019 Computer Engineering Services Suppor of IIR into PNUX Failures 11/15/88 12/30/89 60 PV89 20922 21020 Chem-Nuclear Systems, Inc. Provide Transportation and Interim on-site Storage 11/01/89 12/31/93 60 PV89 20132 Architectural Interiors, Inc. Architectural Designer, Hold Pending Review of Other Co. 12/04/89 12/31/89 60 PV89 21034 APTECH Provide Metallurgical Project Engineering 01/01/90 06/30/90 60 PV89 21051 Ronn Lavit, Ph.D. Personnel Psychological Screening 06/01/90 05/31/92 60 PV90 21070 Environmental & Energy Service Engineering Assistance in Technical Reviews 12/11/89 02/28/90 60 PV90 20860 21072 United Energy Services Corp. Dean Valdez, and Gene Hinsley 01/04/90 02/28/90 60 PV90 21073 Airnetics Engineering Co. Perform Preventive Maintenance 01/20/90 12/31/90 60 PV90 21075 First Approach Provide Staff Augmentation for Sims Data Management & Control 01/02/90 06/30/90 60 PV90 21077 United Energy Services Corp. Contract Labor request for 2 Contract Sr. Tech. Specialists 12/15/89 12/31/90 60
66 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 21411 21081 ITI Movats, Inc. Testing/Surveillance of Motor Operated Valves 01/01/90 12/31/91 60 PV90 21085 Furmanite America, Inc. Perform safety and safety relief valve set point testing 03/01/90 12/31/91 60 PV90 21086 Hartford Steam Boiler Company Nuclear Inservice Inspections 02/01/90 02/01/93 60 PV90 21089 Bechtel Power Corporation Engineering Partnering Agreement 02/12/90 02/12/95 60 PV90 21090 Sargent & Lundy Engineers Engineering Partnering Agreement 02/12/90 02/12/95 60 PV90 21093 Panasonic Industrial Co. Maintain Service Contract 01/01/90 12/31/93 60 PV90 21097 Ace Mobile Wash New Ownership R. Olson, (Ref. PV88-20610) 01/13/90 04/30/91 60 PV90 21112 SMC ESMI (R. Morrison) PANDA Code Completion 01/29/90 06/02/90 60 PV90 21120 21120 Alimak Elevator Company Tendon Stressing Platform Services Agreement 04/01/90 03/31/92 60 PV90 21130 Sola Electric Maintain Service Contract 03/15/90 03/31/92 60 PV90 21147 Western Hydrovac Remove Sand & Anthracite for Gravity Filter cell #9 03/02/90 12/31/90 60
67 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 21147 Western Hydrovac Change Unit # from 8512 to 8617 03/02/90 12/31/93 60 PV90 21151 Atlan-Tech, Inc. Perform Irradiations of PVNGS TLDS's 05/01/90 04/30/91 60 PV90 21157 General Physics Corporation MED Job/Task Analysis 05/15/90 12/15/90 60 PV90 20924 21162 Pacific Nuclear Sys (PacNuc) To Provide Transportation and Interim on-site Storage 04/02/90 12/31/94 60 PV90 21164 Devtech Associates, Inc. Hardware Installation Engineer 03/19/90 06/19/90 60 PV90 21165 PRC Engineering Systems,Inc. Develop & Implement Vendor Tech Manuel 11/19/90 12/31/93 60 PV90 21169 21169 Paul Monroe-Enertech Perform Snubber Testing 12/01/90 11/30/93 60 PV90 21170 21170 ABB Power & T&D Company,Inc. Consulting Services/ Master Agreement 04/09/90 04/09/93 60 PV90 21177 Dionex Corporation Service Units 1,2,& 3's Ion Chromato- graphs 03/01/90 02/28/91 60 PV90 21182 Bartlett Nuclear Contract Labor for RP & Chemistry 10/01/90 09/30/93 60 PV90 21186 Thunderbird Fire & Safety Halon Systems Functional Test 05/07/90 05/06/93 60
68 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 21187 Fire Master Corporation Fire Extinguisher Refill & Service 07/01/90 06/30/93 60 PV91 21192 The Atlantic Group Professional & Technical (Awarded see CSR 9031 for RFP) 08/01/91 07/31/94 60 PV90 21192 The Atlantic Group Letter of Intent/ Initial Funding 08/01/91 08/31/94 60 PV90 21202 Nichols Institute Analyze and Confirm Urine Specimens 05/23/90 05/31/92 60 PV90 21205 Protection Technology, Inc. Nuclear/Support Security Services 06/01/90 05/31/92 60 PV90 21218 21218 Bunney's Inc. Cooling Tower Maintenance 01/01/91 12/31/93 60 PV90 21218 21218 Bunney's Inc. Perform Cooling Tower Fan Rework 08/26/91 12/31/91 PV90 21225 Consolidated Building Services Janitorial Services for PVNGS 10/01/90 09/20/93 60 PV91 21238 21238 Babcock Wilcox Nuclear Srvs. Purchase of Equipment and Parts 10/07/91 10/06/94 60 PV90 21252 MPR Associates, Inc. Consulting Services W/Contracts & J.O.'s 05/01/90 12/31/90 60 PV90 21256 Ron French & Associates Cost Control Consulting 06/18/90 10/31/90 60
69 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 21252 21262 MPR Associates, Inc. Cooper-Bessermer Owner's Group Project Manager 05/01/90 12/31/90 60 PV90 21266 Southern Technical Services Office Facilities and Support Staff 04/01/90 12/31/90 60 PV90 21281 McKenzie Laboratories Water Quality Analysis 10/26/90 11/30/92 60 PV90 21285 Desert Security Modification & Repair 09/09/90 12/31/91 60 PV90 21288 Nuclear Data Systems No Cost P.O. to Execute Software License Agreement 08/23/90 12/1/99 60 PV90 21291 Nuclear Data Services, Inc. Participation in Nuclear Data Services Database 08/01/90 12/31/90 60 PV90 21292 Johson Yokogawa Corporation WRF C&MS Replacement Project (Awarded see RFP CSR9689) 06/01/91 01/01/99 60 PV89 10662 21294 Combustion Engineering MOV Program Engineering Support 06/04/90 12/31/90 60 PV90 20923 21299 Pacific Nuclear Sys (PacNuc) Provide Radioactive Waste Solidification/ Deminearlization Svc 04/01/90 06/14/93 60 PV90 21303 21303 BCP Technical Services Provide Engineering Services 01/15/91 01/14/94 60 PV90 21306 J.G. Keppler Off-Site Safety Review Committe Consultant 03/22/90 12/31/90 60
70 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 21307 S. Levy, Inc. Off-Site Safety Review Committe Consultant 03/22/90 12/31/90 60 PV90 21308 21308 Babcock Wilcox Nuclear Srvs. Outage Support Services - PP CSR 9746 01/01/91 12/31/93 60 PV90 21313 J.D. Shiffer Off-Site Safety Review Committee Consultant (Tract T&C) 03/22/90 12/31/90 60 PV90 21316 21316 Failure Prevention, Inc. Miscellaneous Consulting Services w/Contract 07/24/90 07/23/93 60 PV90 10622 21318 Combustion Engineering Material Management of Info. Support, Provide Lee Troistel 09/01/90 12/31/91 60 PV90 21321 Friedman Recycling Sale of Recyclable Paper 09/01/90 09/01/93 60 PV90 21323 Hartford Steam Boiler Vibration Diag. Computer Program -See Contract No. 21086 08/29/90 01/01/01 60 PV90 21324 Andrew Carter Associates,Inc. Support Services for Assessment Activities 08/10/90 10/12/90 60 PV90 21328 S3 Technologies Second Simulator Procurement 12/01/90 03/30/93 60 PV92 22033 21332 Bechtel Construction Inc. Site Services for PVNGS 06/01/92 05/31/95 60
71 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 21333 Hewlett Packard Maintain the Hewlett Packard Computer for RCPOMS 10/01/90 10/01/91 60 PV90 21340 S&L Contracting Company Railroad Track Maintenance 09/15/90 09/15/93 60 PV90 21340 S&L Contracting Company Change Unit # from 8512 to 8617 09/15/90 09/15/93 60 PV90 21341 Sundt Products Fiberglass Repair 10/01/90 10/01/93 60 PV90 21341 Sundt Products Change Unit # from 8512 to 8517 10/01/90 09/30/93 60 PV90 21344 PMH Primary Care, Inc. Physician and MRO Services for PVNGS 09/24/90 12/31/91 60 PV90 21347 General Physics Corporation Simulator Procurement and Consulting Services 09/04/90 03/30/93 60 PV90 21354 Nuclear Regulatory Commission Dummy Contract for Contracts database 01/01/90 12/31/99 60 PV90 21355 E&O Committee Dummy Contract for Database 01/01/90 12/31/99 60 PV90 21356 INPO Dummy Contract for Database 01/01/90 12/31/99 60 PV90 21357 Outside Review Board Dummy Contract for Database 01/01/90 12/31/99 60 PV90 21360 L.A. Dept. of Water & Power Dummy Contract for Database 01/01/90 12/31/99 60
72 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 21361 AZ Radiation Regulatory Agency Dummy Contract for Database 01/01/90 12/31/99 60 PV90 21363 Combustion Engineering Incore Detectors 09/01/90 09/01/91 60 PV90 21365 Johnson & Higgins Insurance Dummy Contract for Database 01/01/90 12/31/99 60 PV90 21367 Boise Cascade Office Products Inventory & Restock Supply Cabinet Service 10/15/90 12/31/91 60 PV90 21372 21372 Remote Systems, Inc. Technical Support for Refueling Equipment 02/01/91 02/01/94 60 PV90 21373 Data Enterprises Code Software 10/18/90 12/31/99 60 PV90 21375 Buckeye Autowrecking Towing Services 11/01/90 10/31/91 60 PV90 21383 Naumann Hobb Material Handling Lease/Buy Three Clark Order Pickers 11/01/90 11/01/93 60 PV90 21384 Sun Microsystems Sun UNIX Hardware/ Software Maintenance (Bid Award) 01/01/91 12/31/93 60 PV90 21386 21386 The Atlantic Group Pump, Valve, Actuator and Control Rework 11/01/90 07/31/90 60 PV90 21391 Tenera Development of Instr. Setpoint Software (see PP csr10303) 05/15/91 12/31/92 60
73 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 21392 CEP Radiological Services (Awarded see CSR 10318 for RFP) 08/01/91 08/01/94 60 PV90 21394 Combustion Engineering Regional Expediting Services 01/01/92 12/31/92 60 PV90 21406 Advance Technologies Software License Agreement 11/01/90 01/01/99 60 PV90 21407 S3 Technologies Provide Services, Materials draft escrow terms 09/04/91 03/21/96 60 PV90 21411 21411 Westinghouse Electric Corp. Engineering Services 03/20/91 03/19/94 60 PV90 21308 21414 Babcock Wilcox Nuclear Srvs. Provide Outage Management Team 11/01/90 12/03/93 60 PV90 21416 PCMS, Inc. Provide PREMIS Software 01/15/91 12/31/93 60 PV90 21420 DCA, Inc. Upgrade and Support for DCA Communication Interface Equip. 12/15/90 12/15/91 60 PV90 21421 Emtac Electrical, Inc. Security and Safeguards Related Electrical Work 05/01/91 04/30/94 60 PV90 21425 EPRI MOV Performance Prediction Prg. - Admin Tracking PO Only 07/01/90 12/31/95 60
74 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 21433 Sundt Corp. Evap. Pond #1 Re-Line (Award see csr 10484 for RFP) 10/01/91 01/31/92 60 PV90 21435 BBN Software Products Software License Agreement 12/05/90 12/05/91 60 PV90 21437 Software Partner/32 Tape Management System for VAX 11/28/90 12/31/99 60 PV90 21438 Infincom, Inc. Provide Turnkey Copy Center & Mail Room Services 03/01/91 12/31/93 60 PV 21438 Infincom, Inc. Change Charge and Home Units and Account 03/01/91 02/28/94 60 PV90 10662 21440 Combustion Engineering Provide Staff Augmentation to QA 12/10/90 12/31/91 60 PV90 21448 E.D. Smith Paving Place Asphalt Road and Sidewalk at U-3 12/17/90 12/31/90 60 PV90 21449 IBM Business Systems Planning 01/07/91 03/14/91 60 PV90 21450 Combustion Engineering Controlled Program License Agreement-NPS-2 11/20/90 01/01/99 60 PV90 21453 BW/IP International Provide Technical Assistance 01/01/91 12/31/91 60 PV91 21461 Combustion Engineering Engineering Partnership Agreement 01/11/91 01/11/96 60
75 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued) PRE
MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 21473 Access Company Tracking for Contractors on PO's 01/01/91 01/01/99 60 PV91 20751 21486 Chemical Waste Management,Inc Hazardous Waste Handling, transport, and disposal 01/01/91 12/31/91 60 PV91 21490 Ace Mobile Wash On-Site Vehicle & Trolley Stop Washing Service (see CSR 11094) 05/01/91 04/30/93 60 PV91 21499 Perkin-Elmer Corporation Preventive Maint. Service for U-1 01/01/91 01/31/92 60 PV91 21500 Perkin-Elmer Corporation Preventive Maintenance for U-2 Chemistry's AA 01/01/91 01/31/92 60 PV91 21507 AZ Corp. Commission Dummy Contract Number for Badging 01/01/91 01/01/99 60 PV91 21513 Sunland Computer Services Computer Equipment Maintenance (see CSR 11413 for RFP) 08/19/91 07/31/94 60 PV91 20860 21516 United Energy Services Corp. Develop and Teach NPRDS 02/18/91 03/31/91 60 PV91 21519 Arizona State University Participation in ASU Interactive Instruc- tional TV Program 01/02/91 08/30/91 60 PV91 21524 Performance Plus Provide One Week Training Seminar 02/25/91 03/02/91 60
76 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 21525 B&W Legal Review of Confidentiality Agreement for Concurrance 04/01/91 10/01/91 60 PV91 21539 Intergraph Corporation Volume Purchase Agreement 05/30/91 04/30/94 60 PV91 21540 Vector Engineering, Inc. Cosulant Service for Evap-Pond #1 (Awarded see csr11635) 05/02/91 07/01/92 60 PV91 21545 Digital Equipment Corporation Loan of Products Agreement 03/20/91 05/20/91 60 PV91 21555 Mettler Repair U-1 Chem Auto- titrator & Maintenance in U-2&3 Chem. 03/28/91 04/05/91 60 PV91 21557 BFA/Aquila Banyan Software Support (RFP csr12661) 05/15/91 05/1494 60 PV91 21569 Sanderson Ford, Inc. Personnel Transportation awarded see csr 11823 for RFP 09/01/91 12/31/95 60 PV 21569 Sanderson Ford, Inc. Change Charge and Home Units and Account 01/01/01 12/31/95 60 PV91 21571 21571 Graver Water Division Field Services 04/08/91 04/07/94 60 PV91 21577 21577 BW/IP International Field Services 04/19/91 04/18/94 60
77 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 21579 Precision Visuals Purchase of PV WAVE Software 07/19/91 01/01/99 60 PV91 21582 Signal Technology Purchase of N Power Software 06/01/91 01/01/99 60 PV91 21585 Nutech Engineering Six Month Evaluation Period for Outside Hire Contract 04/29/91 07/01/92 60 PV91 21410 21590 Allied Technology Provide DAW/Volume Reduction Service 04/05/91 12/31/93 60 PV91 21595 Corporated Education Resources Executive Track/Grown/ Charter 04/29/91 01/01/99 60 PV91 21603 AZ Time Recorder Maintenance of "Time Recorder" 03/14/91 03/13/92 60 PV91 21606 First Approach Sims PM Program Modifications 05/06/91 06/28/91 60 PV91 21607 Information International On-Site Leonardo Training 06/17/91 06/21/92 60 PV91 21608 Integrated Management Services Develop NPE CATS program, manage SBO Project 04/01/91 09/30/91 60 PV91 10615 21609 NUS Corporation Provability Risk Assessment PRA Workstation 03/01/91 12/31/91 60
78 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 21612 Orbisphere Labs 05/16/91 05/15/94 60 PV91 21615 Ramendra P. Roy Provide Consulting Services 05/31/91 05/31/92 60 PV91 21620 21620 TRI International Consulting Services 05/22/91 05/22/94 60 PV91 21621 NPS Engr. & Tech. Services Qc Contract Labor Personnel 10/01/91 09/30/93 50 PV91 20968 21627 Tenera EQ Consulting Services 06/03/91 07/31/91 60 PV91 21634 S3 Technologies Secrecy Agreement 06/01/91 12/31/93 60 PV91 21636 AVTV Renew Annual Exchange Maintenance for 8mm Tape 07/01/91 06/30/92 60 PV91 21637 SYBASE Software License Agreement 06/06/91 01/01/99 60 PV91 21642 Amalgamated Services, Inc. Support for Resolution of PRS 1771 06/24/91 08/23/91 60 PV91 21644 Digital Tools Purchase of Autoplan Software 08/01/91 01/01/99 60 PV91 21646 Amalgamated Services, Inc. Qualification of Hastings Flow Transducer 06/24/91 11/20/91 60 PV91 21647 Bell Atlantic Tricon Leasing Lease/Purchase Agreement for Warehouse Carousels 01/01/91 01/01/92 60
79 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 21650 Arizona State Univesity Monitoring and Testing of Porcelain Contamination 07/01/91 06/30/93 60 PV91 21652 MDM Engineering Corporation Engineering Support (see RFP CSR 12456) 08/05/91 12/31/92 60 PV91 21660 S3 Technologies Secrecy Agreement Between APS, SE and GP (Butch Colby) 06/01/91 12/31/93 60 PV91 21665 Fuel Quality Service Supply portable Equipment and Filter Diesel Fuel in 06/27/91 03/01/92 60 PV91 21669 Digital Equipment Corporation Purchase Compilers and Tape Drive 06/04/91 01/01/99 60 PV91 21679 PRC Engineering Systems,Inc. Engineering Study for Proposed IEEE Study 07/08/91 08/08/91 60 PV91 21687 United Energy Services Corp. Site Labor Contract 08/01/91 07/31/94 60 PV91 21688 IDS/SAIC Site Labor Contract 08/01/91 07/31/94 60 PV91 21695 Corporate Research Systems Background Screening 09/01/91 08/31/93 60 PV91 21696 Crystal Bottled Water Forklift Trianing and Site Access for Water Delivery 08/01/91 12/31/91 60 PV91 21697 Kaisi Engineering Perform Analysis on Butterfly Valves 07/17/91 08/19/91 60
80 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 21699 Gundle Lining Systems Liner portion of Evaporation Pond Reline 08/01/91 05/01/92 60 PV91 21703 Amalgamated Services, Inc. Support for Resolution of PRS 1771 07/26/91 08/15/91 60 PV91 21704 Integrated Management Services Development of a Model Design Change 08/05/91 12/30/91 60 PV91 21706 Western Technologies, Inc. Soil, Asphalt, & Concrete Testing Service 07/31/91 09/30/91 60 PV91 21708 Barrington Consulting Non Disclosure Agreement 08/05/91 09/05/91 60 PV91 21711 Western Technologies, Inc. Concrete Cylinder and Grout Cube Testing 08/01/91 12/31/91 60 PV91 21716 Accurate Corrosion Control Palo Verde Cathodic Protection Survey 10/21/91 04/30/92 60 PV91 21723 OI Analytical Extend Warranty of Units &,2,&3 TOC Analyzers Model 700 08/22/91 12/31/91 60 PV91 21728 21728 Arco Enterprises, Inc. Field Services 10/01/91 12/31/91 60 PV91 21730 Arizona State University Participation in ASU Instructional TV Program 08/31/91 08/30/92 60 PV91 21731 Liebert New Maintenance Requirement of UPS Equipment 09/18/91 09/17/92 60
81 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 21735 Halliburton (NUS) EPRI Agreement 07/26/91 08/01/92 60 PV91 21736 Kaisi Engineering Hydraulic Calculation for Valeves NV 401/402/403 08/09/91 10/09/91 60 PV91 21739 Western Hydrovac Vacuum Drilling 09/09/91 10/01/91 60 PV91 21749 Office Designs Design Services 01/01/91 12/31/92 60 PV91 21755 Field Lining Systems HPDE Welding Services 09/18/91 09/20/91 60 PV92 21759 Halliburton (NUS) Upgrades to the ERFDADS (See CSR 12938 for RFP) 02/02/92 04/03/94 60 PV91 21760 Progressive Roofing Roof Removal and Repair (Awarded see csr 12949 for RFP) 12/03/91 12/03/95 60 PV91 21775 Training Concepts Qa Program Implemen- tation Training 10/01/91 03/31/92 60 PV91 21780 Request for Proposal Clerical Contract Labor Personnel / / / / 60 PV91 21794 Nuclear Oversight Committee Dummy Contract for Tracking 10/01/91 12/31/99 60 PV91 21801 Cleveland Technical Perform Diesel Fuel Oil Analysis 12/01/91 12/01/92 60 PV91 20632 21803 Computer Engineering Services Review Requirements Maxtrix 10/15/91 12/30/91 60
82 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 21804 EPRI Tailored Collaboration Agreement 11/01/91 12/31/93 60 PV91 21807 Sargent & Lundy Engineers License Agreement-R- Base Software 11/01/91 01/01/99 60 PV92 21810 Poison Lab Analyze and confirm Specimens per 10CFR Part 26 11/01/91 11/01/92 60 PV91 21308 21813 Babcock Wilcox Nuclear Srvs. Design and install Access Hole in U2 (See CSR 13261 RFP) 11/29/91 12/31/91 60 PV91 21818 Westinghouse Electric Corp. Rapid EIDMS Access Agreement 11/18/91 01/01/99 60 PV91 21819 American Telephone &Telegraph Batteries at Units 1,2, and 3 11/30/91 12/31/93 60 PV91 21819 American Telephone &Telegraph Funding for Letter of Intent 12/04/91 12/01/93 60 PV91 21835 21821 Western Technologies, Inc. Provide Testing Per APS Spec/ASTM Standard 01/01/92 12/31/92 55 PV91 21825 PRC Engineering Services Corp Vendor Engineering Services 12/01/91 12/31/92 60 PV91 21826 United Energy Services Corp. Consulting Services/ Letter of Intent 01/20/92 12/31/92 60 PV91 10750 21828 Oracle Corporation Provide License of Pro-Fortran & Transaction Processing 11/20/91 01/01/99 60
83 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 10750 21829 Oracle Corporation Oracle S/W + Annual Maintenance 11/22/91 01/01/99 60 PV91 21831 Beckman & Associates Consulting Services 01/06/92 01/06/95 60 PV91 21833 Tenera EQ Program Enhancement Plan (See CSR 13325 for RFP) 02/01/92 02/01/94 60 PV91 21834 Digital Equipment Corporation Annual Maintenance 12/01/91 12/01/92 60 PV91 21835 21835 Western Technologies, Inc. Miscellaneous Testing Services 01/01/92 12/31/95 55 PV91 21838 Arizona Surplus Material Surplus and Disposal Service 01/13/92 12/31/92 60 PV92 21839 21839 Williams Power Corporation Perform Penetration Seal, Thermolagging and Fireproofing 07/27/9207/27/95 60 PV91 21841 Halliburton (NUS) RAPID 01/01/92 12/31/92 50 PV91 21842 Request for Proposal Perform Underwater Inspection 04/01/92 03/31/95 30 PV91 10370 21843 Combustion Engineering Modify OPS Modules (See CSR 12816) 03/28/91 09/30/92 60 PV91 21308 21849 Babcock Wilcox Nuclear Srvs. SG Emergency Access Hole Design & Install (see CSR13417 RFP) 01/16/92 05/01/92 60
84 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV91 21852 University of Arizona Technical Training & Consulting Support Services 01/01/92 12/31/92 50 PV91 41118 21863 NUS Corporation Comprehensive Laboratory Analysis Services 01/01/92 01/30/93 60 PV91 21866 John Hughes Contract w/John Hughes for Training and Programming 01/06/92 01/17/92 60 PV92 21871 Computational Systems, Inc. Software Maintenance 11/30/91 05/31/93 60 PV92 21872 Walsh Brothers Systems Furniture Assembly and Installation 01/02/92 12/31/92 55 PV92 21873 Boise Cascade Corporation Furniture Repair 01/02/92 12/31/92 60 PV92 MSD09 21876 First Approach Software Quality Assurance/Development & Maintenance 01/02/92 07/31/92 60 PV92 21879 Service America Corporation Vending Machine Services-Admin Complex 01/08/92 01/07/95 55 PV 21879 Service America Corporation Change Charge and Home Units and Account 01/01/01 01/01/01 60 PV92 21308 21880 Babcock Wilcox Nuclear Srvs. U1 Inconel-600 project. (see CSR 13528 for RFP) 01/20/92 05/31/92 60
85 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 21884 Analytical & Precision Balance Maintain and Repair Laboratory Balances 01/01/92 01/01/93 60 PV92 21886 Lift-It Mfg. Co., Inc. Train Personnel on the usage of Synthetic Slings 01/16/92 01/18/92 60 PV92 44074 21887 Digital Equipment Corporation OPS Computer Equip Maintenance 10/10/91 09/30/92 60 PV92 21889 21889 Heflin Industries Liner Repair & Inspection Services 03/01/92 02/28/95 60 PV92 21900 Dionex Corporation Provide Service for Unit Chemistry's Ion Chromatographs 03/01/92 03/01/93 03 PV92 21904 PRC Engineering Systems, Inc. Recruiting Contract w/6 months Evaluation Period 01/01/92 12/31/92 60 PV92 21905 Operations Technology, Inc. Procurement and Maintenance for TCCURVE 01/27/92 01/31/93 60 PV92 21907 Request for Proposal Provide Portable Demineralizer Service 02/01/92 02/01/95 41 PV92 21907 Echolochem, Inc. Change Unit # from 8512 to 8617 05/01/92 02/01/95 60
86 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 21910 Teledyne Engineering Services Install and Calibrate Strain Gauges 02/05/92 04/30/92 55 PV92 21911 MOS Inc. Additional Equipment Qualification Training 11/01/91 12/31/92 60 PV92 21914 Request for Proposal Maintenance of a Medical Assistance Program 01/31/92 01/31/93 20 PV92 21169 21918 Paul Monroe-Enertech Perform Hydraulic Snubber Testing 02/01/92 12/31/92 60 PV92 21921 Solar Turbines Letter of Intent for Caterpillar 07/30/91 08/31/91 60 PV92 21921 Solar Turbines Revision to Allow Solar to Procure the Generator 07/30/92 08/01/92 60 PV92 21921 Solar Turbines Furnish and Install Gas Turbine Generators 08/31/92 11/30/93 60 PV92 21926 NUS Corporation Secrecy Agreement 07/02/92 07/01/93 60 PV92 21935 Outdoor Systems Billboards at intersection of Wintersburg Road 04/17/92 04/16/92 60 PV92 21939 Eaton Corp/Cutler-Hammer Provide Technical Assistance 02/19/92 02/29/92 55 PV92 21941 Carousel Intergrated Systems Maintence for Warehouse parts Carousel (first year) 03/01/92 02/28/93 50
87 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 21942 INPO INPO Loaned Position Kent Hamlin 10/15/91 10/30/93 60 PV92 21942 Institute of Nuclear Power Change Terms Code from "00" to "10" 10/15/91 10/30/95 60 PV92 21944 Infotech Corporation Software Error & Activity Tracking systems(SEATS) 02/24/92 07/31/92 60 PV92 21947 ARA/CORY Refreshment, Inc. Provide Refreshment Services at New Admin Complex 02/15/92 02/14/95 50 PV92 21951 Stagg Systems SIMS System Support & Modification 02/10/92 06/30/92 60 PV92 21972 Comgraphix, Inc. Nun-Disclosure Agreement- Tracking Only 03/17/92 12/31/93 60 PV92 21977 Concurrent Computer Corp. Maint Agreement for 5500 RTU System is U3 05/01/92 04/30/93 60 PV92 21979 Request for Proposal Background Screening 04/20/92 01/01/99 20 PV92 21169 21984 Paul Monroe-Enertech Technical Asssistance 03/20/92 03/25/92 20 PV92 21985 Westinghouse Electric Corp. Proprietary Information Agreement 02/24/92 01/01/99 60 PV92 21998 21998 Progressive Roofing Roof Removal and Replacement 03/20/92 02/30/95 60 PV92 21999 21999 Classic Roofing Roof Repair, Removal and Replacement 03/20/92 03/20/95 60
88 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 22000 Reliable Roofing Roof Repair, Removal and Replacement 03/20/92 02/20/95 60 PV92 22001 22001 Universal Roofing Roof Repair, Removal and Replacement 03/20/92 02/20/95 60 PV92 22007 Relco Sales & Leasing Salvage and Storage of Equipment for Unit Delis 04/01/92 12/31/92 60 PV92 22009 Focus Learning Corporation Develop Dosimetry Self- Study Guids - See CSR 14073 for RFP 09/08/92 12/24/92 60 PV92 10370 22011 Combustion Engineering Handholes in Steam Generator 05/30/92 12/31/93 60 PV92 22019 I-Corp, International Consulting Services for Evaluation of Leak Detection 04/22/92 04/29/92 60 PV92 22028 Optilan Maintence and Upgrades 09/01/91 12/31/92 60 PV92 22031 Florida Power Corp. CBT Consortium 05/14/92 12/31/92 60 PV90 21831 22032 Beckman & Associates Audit Support 06/15/92 10/16/92 60 PV92 22038 Arizona Public Service Provide PV with Off- Site Power for Admin. Purposes Only 04/02/92 04/01/93 60 PV92 22039 American Telephone & Telegraph Funding for Letter of Intent 06/01/92 12/01/93 60
89 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 22043 American Fence Rework Isolation Zone Inner and Outer Fence and Gates 07/16/92 08/15/92 60 PV92 22047 Modulaire Purchase of APS Trailers 08/21/92 12/31/92 60 PV92 22050 Danny Willis Sale of Single Wide Trailers to Danny Willis 06/19/92 12/31/92 60 PV92 22054 PLS International Perform Remote TV Insp Inside 10" Buried Underground Piping 10/04/92 11/30/92 60 PV92 22058 Bunney s Inc. Unit 3 Structural Repairs 09/15/92 12/15/92 60 PV92 22059 Varian Associates Refurbish Leak Detectors 08/03/92 09/03/92 60 PV92 22060 Babcock Wilcox Nuclear Srvs. Steam Generator Tube Removal U2R4 02/01/93 07/31/93 60 PV92 22063 Protection Technology, Inc. Nuclear Security/ Support Services (see CSR #14494 for RFP) 07/01/93 06/30/96 60 PV92 22064 Genral Electric Company Refurbishment of Switchgear 123 E-NAN-SO3 Cubicle AA 10/01/92 11/30/94 60 PV92 22064 Gneral Electric Company Extend Letter of Intent to Initiate Design Drawings 12/15/92 01/01/93 60
90 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 20336 22064 General Electric Company Design Fabricate & Install Switchgear Cubicle 01/04/93 12/15/94 60 PV92 22068 Maricopa Comm College Instruct GOC Classes on District Site 08/24/92 06/15/93 60 PV92 21839 22072 Williams Power Corporation Perform Penetration Seal and Fireproofing Applications 07/27/92 12/31/93 60 PV92 21728 22077 Arco Enterprises, Inc. Sandblasting U-3 Turbine Parts 09/01/92 12/15/92 60 PV92 22079 Equifax Services, Inc. Automated Motor Vehicle Records Check 08/15/92 08/14/93 60 PV92 22081 AZ Oil Recyclers, Inc. Used Oil Collection, Transportation and Recycling 05/01/92 04/30/94 60 PV92 22082 City of Phoenix Mutual Training Agreement between PVNGS and City of Phoenix 09/01/92 07/07/98 60 PV92 21839 22083 Williams Power Corporation Perform Penetration Seal and Fireproofing Applications 07/27/92 12/31/93 60 PV92 21839 22085 Williams Power Corporation Perform Penetration Seal and Fireproofing Applications 07/27/92 12/31/93 60
91 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 22086 State of California Information Services Program, Dept. of Motor Vehicles 09/01/92 09/01/93 60 PV92 22087 Volt Temporary Services Contract Award 09/28/92 08/31/95 60 PV92 22087 Volt Temporary Services Add Additional Funding 11/16/92 10/31/95 60 PV92 22090 Conam Nuclear, Inc. ECT of the Unit 3 Upper Pressurizer I-600 Nozzles 09/15/92 10/15/92 60 PV92 21308 22091 Babcock Wilcox Nuclear Srvs. Units 2 & 3 Pressurizer Nozzle Replacement 01/04/93 12/31/94 60 PV92 22093 J.Allen Ginn, M.D. Physician Services 10/01/92 09/30/94 60 PV92 22096 Act One Contract Award 09/28/92 08/31/95 60 PV92 22097 Quadrex Corporation Resin Survey Services 09/01/92 12/31/93 60 PV92 22097 Quadrex Corporation Change Unit Number to 8842 02/25/93 12/31/93 60 PV92 21308 22099 Babcock Wilcox Nuclear Srvs. Review Inventory for Parts Reduction 09/14/92 12/31/92 60 PV92 10978 22203 General Electric Company Vendor Manual Subscrip- tion Service 09/30/92 12/31/93 60 PV92 22205 Rayne Water Systems, Inc. Repair Rayne Water Conditioner 09/18/92 12/31/92
92 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 22206 Johnson Carlier Award Contract for Chemical Storage Building (x'd CSR #14922) 02/02/93 08/31/93 60 PV92 22209 Flooring Consultants Miscellaneous Floor Covering Services 10/12/92 12/31/92 60 PV92 22213 Pacific Nuclear Sys (NUTECH) Provide Fire Protection Egineering Services 10/05/92 01/15/94 60 PV92 22215 Milam Glass Add Funding 06/01/93 05/31/94 60 PV92 22216 Southern Electric Non-Disclosure Agreement 10/15/92 01/01/01 60 PV92 22218 Western Hydrovac Clarifier Interior Cleaning 01/04/93 11/30/93 60 PV92 22219 Vincent J. Blauvelt Sale of Two-Wide Trailer 10/23/92 12/31/92 60 PV92 22220 22220 MOS Inspection, Inc. Perform Misc. Non- destructive Examination Services 01/01/93 12/30/95 60 PV92 22221 22221 Lambert, MacGill, Thomas Inc. Inservice Inspection (Nondestructive Examination) 03/01/93 12/31/93 60 PV92 22223 Ray Stevens Paving Company Asphalt Replacement Services 12/28/92 01/29/93 60
93 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 22224 Horizon Engineering Perform Line, Leak, and Tank Testing 11/01/92 12/31/93 60 PV92 22225 Pioneer Equipment Company Rework & Maintenance of Air Compressors 12/15/92 12/14/95 60 PV92 22228 Thomas Heating & A/C A/C Equip Repair/HVAC Control Installation & Repair 10/15/92 10/14/93 60 PV92 22229 DP Air Corporation Technical Support/Mech Reqork of Computer Room A/C Equip 10/15/92 10/14/95 60 PV92 22232 Westscape Environmental Landscape Maintenance (RFP CSR #15009 Cancelled) 03/01/93 03/01/95 60 PV93 22233 CEP Radiochemical & Characterization Analysis (CSR #15029 x'ld) 04/01/93 03/31/95 60 PV92 22235 Dusty McWilliams Surface Supplied Air Diving Training 02/16/93 06/30/93 60 PV92 22236 Furmanite America, Inc. Leak Sealing Contract (Cancelled CSR #15066 RFP) 01/19/93 01/18/96 60 PV92 22237 Southwest Transfer & Storage General Moving Services 01/01/93 12/31/93 60 PV92 10615 22238 Halliburton (NUS) Provide Consulting Services 12/07/93 12/31/93 60
94 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV92 22240 D. Conley Assoc. Ltd. Development & Prepara- tion of the Nuc Lic & Compl Div Manual 12/01/92 05/30/93 60 PV92 22241 Carousel Interated Systems Relocate Carousels in Warehouse "F" 12/18/92 12/21/92 60 PV92 21411 22243 Westinghouse Electric Corp. Testing of Reactor Vessel Material Capsule 03/30/93 11/30/93 60 PV92 22245 Chem-Nuclear Services, Inc. Provide Radioactive Waste Disposal 01/01/93 12/31/94 60 PV92 22246 PRC Engineering Systems,Inc. Vendor Engineering Services 01/01/93 12/31/93 60 PV92 21421 22250 EMTAC Electrical, Inc. Upgrade Camera /Detection Equipment Per Dcp A-PJ-SK-092 12/21/92 01/01/94 60 PV93 22254 Bel-Aire Mechnical Oils Lab Addition to the Training Center Chemistry Lab 04/30/93 06/30/93 60 PV93 22255 Phoenix Pest & Termite Control Pest Control (Cancelled CSR #15291) 05/01/93 04/30/95 60 PV93 10370 22256 Combustion Engineering Redundent COLSS 01/08/93 12/31/93 60 PV93 22256 Combustion Engineering Add Funding 01/08/93 12/31/93 60 PV93 22259 Eastman Kodak Company Maintenance Contract for Edicon System 10/01/92 10/01/93 60
95 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV93 21308 22261 Babcock Wilcox Nuclear Srvs. Contract for U24RF Outage 01/04/93 07/31/93 60 PV93 22262 Canteen Funding for OT Meals and Catering (see CSR 15353 for RFP) 06/18/93 06/17/96 60 PV93 10978 22263 General Electric Company Turbine Rotor Ultrasonic Examination 03/01/93 07/01/93 60 PV93 22267 MQS, Inc. Equipment Qualification Training 01/30/93 12/31/93 60 PV93 22270 22270 ENSR Corporation Mixed Waste Consulting 02/04/93 02/04/96 60 PV93 22270 22271 ENSR Corporation Mixed Waste Consulting 02/04/93 04/04/96 60 PV93 20336 22272 General Electric Company Provide Technical Advisor During U1-U2's Refueling Outage 03/10/93 12/31/93 60 PV93 22273 Dick & Fritsche Design Design and Construction Administration of MODS Building 03/02/93 11/30/93 60 PV93 22220 22274 MQS Inspection, Inc. NDE of Welder Qualification Tests 01/01/93 12/31/93 60 PV93 22220 22276 MQS Inspection, Inc. Contract Funding for Turbine and Balance of Plant MDE 03/01/93 07/01/93 60 PV93 22278 Flex Con, Inc. Vulcanize Condenser Expansion Joint 04/12/93 05/31/93 60
96 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV93 22279 Env. Science & Engineering Conduct Inventory & Complete MCHD Form A & SARA III 02/11/93 03/31/93 60 PV93 22280 Bruce H. Little Provide Assessment of ISE Procedures 02/08/93 03/19/93 60 PV93 21004 22281 Chem-Nuclear Systems, Inc. Field Services for Radioactive Waste Solidification 01/01/93 12/31/93 60 PV93 22285 Chapdelaine & Associates Contracts Department Consulting Services 02/08/93 12/31/93 60 PV83 22286 Computional Systems, Inc. Provide Maintenance Seminar 03/15/93 04/15/93 PV93 22286 Computional Systems, Inc. Provide Maintenance Seminar 03/15/93 04/15/93 PV93 22287 Southwest Business Machines Typewriter Repair 03/01/93 03/01/94 60 PV93 22288 Mahr Business Products Typewriter Repair 03/01/93 03/01/94 60 PV93 22289 Typewriter Service of America Typewriter Repair 03/01/93 03/01/94 60 PV93 22290 Bunney s Inc. Implement Structural Mods at Unit 1 & 2 cooling Towers 01/0493 12/15/93 60 PV93 22291 Nuclear Energy Services Provide Steam Generator Nozzle Dam Service 03/10/93 05/31/93 60
97 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV93 22291 Nuclear Energy Services Provide Steam Generator Nozzle Dam Service 03/10/93 05/31/93 60 PV93 20917 22292 Conan Nuclear, Inc. Eddy Current Examination of the U2 EW Heat Exchangers 03/19/93 06/01/93 60 PV93 22293 Crane Institute of America Provide Safety Evaluation of PVNGS Crane Program 03/29/93 04/10/93 60 PV93 10978 22295 General Electric Company GE Vendor Contracts for NQR Equipment 04/15/93 12/31/93 60 PV93 22296 Southwest Supply & Service Typewriter Repair 04/01/93 04/01/94 60 PV93 22221 22297 Lambert, MacGill,Thomas Inc. Inservice Inspection (Nondestructive Examination) 03/01/93 12/31/93 60 PV93 10370 22298 Combustion Engineering Perform U-2 Steam Generator Clamp Ring UT Examination 03/10/93 05/31/93 60 PV93 10370 22298 Combustion Engineering Add Funding for Delay Charges 03/10/93 05/31/93 60 PV92 22327 Johnson Carlier CC Tranfer Line Replacement and Retaining Wall Addition 09/20/93 01/31/94 60
98 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV93 22328 American Fence Provide Lbr-Natl. Equip to Install Fence -See CSR 16514 for RFP 09/07/93 09/30/93 60 PV93 22329 E.O.Smith Paving Inc. Provide Labor, Material and Equipment for Asphalt, Chip Seal 10/04/93 10/08/93 60 PV93 22409 Weber Group Well 27 DDC Inspection and Repair - see CSR 15748 for RFP 07/12/93 08/31/93 60 PV93 22412 Focus Learning Corporation Perform Design Phase and 10 lessons 05/10/93 08/13/93 60 PV93 10370 22413 Combustion Engineering UT Inspection of Steam Generator Cladding to Base Metal Bond 03/20/93 04/07/93 60 PV93 22415 Cogswell Mfg. Company Unit 1 CEA Handling Tools 04/01/93 09/01/93 60 PV93 22416 CEK Corp Repair HV Transformer Unit 1 04/21/93 04/21/93 60 PV93 22418 General Physics Corporation Solid State Protective Relay Course 06/01/93 06/30/93 60 PV93 22419 Apparatus Services, Inc. Engineer and Technical Assistant's Services 03/15/93 12/31/93 60
99 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV93 21839 22422 Williams Power Corporation Consultant to Assist in Setting Up Penetra- tion Seal 04/01/93 06/30/93 60 PV93 22423 Westfalia Associated Tech Assist in the Rework of the U-2 MST 04/19/93 05/15/93 60 PV93 22424 Baltes/Valentino Assoc. Misc. MP&E Engineering for various buildings at PVNGS 05/01/93 12/31/93 60 PV93 22426 Inca Contracting Company Install Speed Bumps 04/26/93 05/26/93 60 PV93 21316 22427 Failure Prevention, Inc. Technical Expertise on Steam Generator Tube Ruptures 04/22/93 06/30/93 60 PV93 22428 Hurricane Fence Company Install 6'x9' Gate into Existing Fence 04/26/93 04/30/93 60 PV93 22429 22429 Evergreen Environmental Transport, Store, Treat Recycle or Dispose of Waste 04/28/93 04/28/96 60 PV93 22430 Evergreen Environmental Generate Letter of Intent for Pickup, Transport and Recycle 04/30/93 05/07/93 60 PV 22429 22430 Evergreen Environmental Transport, Store, Treat Recycle or Dispose of Waste 05/04/93 12/31/93 60 PV93 20336 22432 General Electric Company Replace Main Turbine Busting 03/30/93 07/31/93 60
100 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV93 21835 22433 Western Technologies, Inc. Concrete cylinder Compression Test 05/01/93 12/29/93 60 PV93 22435 EEMC Provide Air Quality Testing Services for for Sta Blackout Proj 05/15/93 10/15/93 60 PV93 10370 22436 Combustion Engineering Steam Generator Sludge Removal 05/03/93 06/03/93 60 PV93 22439 Fire Master Corporation Ancillary Bldg. Fire Pro. Svcs. (See CSR 16016 for RFP) 08/01/93 07/31/97 60 PV93 22442 Beckman & Associates Audit Support 08/09/93 10/01/93 60 PV93 22444 SSI Shredder Repair 06/01/93 08/31/93 60 PV93 22445 Star Engineering Audit Support 06/05/93 07/28/93 60 PV93 22447 Envirodrill, Inc. Recover/Restore Well PV195A 06/21/93 06/30/93 60 PV93 22448 Ionics Pure Solutions Lease with Option to Buy an Ultraviolet Sterilization Unit 05/24/93 10/01/93 60 PV93 22449 22449 Lee Hernandez Co., Inc. Construction Services 06/01/93 06/01/96 60 PV93 22450 22450 Simpson General Contracting Construction Services 06/01/93 06/01/96 60 PV93 22451 22451 Arizona Bilt Rite Const. Construction Services 06/01/93 06/01/96 60
101 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV93 22545 Request for Proposal Statistical Process Control Training 07/15/93 09/01/93 60 PV93 22454 Learning Resources Statistical Process Control Training 09/01/93 10/31/93 60 PV93 22455 Occupational Medical Center Collection of FFD Specimens 06/21/93 12/31/93 60 PV93 22457 General Modular Sales/ Leasing Remove Trailer from PVNGS and Return to Vendor Property 07/02/93 07/31/93 60 PV93 22458 Field Lining Systems Lining Repair on Condensate Demin. Vessels 06/21/93 07/15/93 60 PV93 22459 Dominion Engineering Consulting Sr. Review Group/Steam Gen Degradation Modeling 06/11/93 08/31/93 60 PV93 21303 22460 BCP Technical Services U1, 10CFR50 App. J, Integrated Leak Rate Testing 09/01/93 11/30/93 60 PV93 22461 Steeling Weens Non-Disclosure Agreement - Document Review 01/01/01 01/01/01 60 PV93 22462 Dr. Chuck Welty Non-Disclosure Agreement - Document Review 01/01/01 01/01/01 60
102 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV93 22463 Ramirez Mechanical Systems Procurement-Installa- tion of New HVAC Units for DOC Vaults 07/01/93 09/15/93 60 PV93 22464 Bunney's Inc. Concrete Repair on Condensate Demin. Vessel 07/01/93 07/10/93 60 PV93 22465 Walters & Wolf Construction Removal-Replacement of Front Window System-Admin Bldg. B 08/15/93 10/15/93 60 PV93 22468 Color Cor Painting Paint Interior of North Annex Building 07/29/93 09/15/93 60 PV93 22469 Aero Automatic Sprinkler Remove and Replace Sprinkler Heads in New Simulator Areas 08/15/93 10/15/93 60 PV93 22470 Arizona Coating Applicators Lining of Domestic Water Tanks - see CSR 16411 for RFP 10/12/93 12/31/93 60 PV93 22451 22471 Arizona Bilt Rite Const. Construction Services (See CSR #16415 for RFP) 08/23/93 09/30/93 60 PV93 22472 Haliburton (NUS) Meteorological System Calibration 10/01/93 06/15/96 60 PV93 21308 22473 Babcock Wilcox Nuclear Srvs. Perform Non-Instrusive Check Valve Monitoring 09/21/93 09/30/93 60 PV93 22474 Power Gener. Tech. Provide Technical Consultation and Assistance 08/09/93 08/20/93 60
103 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV93 22475 Field Lining Systems Replace U1 Condensate Demin. Vessels (see CSR 16458 for RFP) 08/24/93 12/31/93 60 PV93 22475 Field Lining Systems Change Terms Code to #23 09/01/93 10/31/93 60 PV93 22477 Bootz & Duke Sign Co. Design New Signs for Site 07/23/93 09/15/93 60 PV93 22478 KLA Enterprises Backflow Prev. Trng. for 6 people (see CSR 16462 for RFP) 08/30/93 09/03/93 60 PV93 22449 22479 Hernandez Co. Coat 14 Shuttle Stops and 10 Trash Receptacles 08/09/93 09/30/93 60 PV93 22480 Ed Knowles Technical Writer 01/01/01 01/01/01 60 PV93 21308 22483 Babcock Wilcox Nuclear Srvs. 08/13/93 12/31/93 60 PV93 22484 Duke Engineering & Svcs.,Inc. Conduct Eval. of Effectiveness of Employee Concerns Program 08/16/93 11/30/93 60 PV93 22486 Vantage Training Services On-Site Training- ASNE Nuclear Coades and Standards 08/30/93 09/10/93 60 PV93 22220 22487 MQS Inspection, Inc. K Funding for Turbine and balance of Plant MDE for Refuel #4 08/01/93 12/31/93 60
104 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV93 22491 Field Lining Systems Reline Vessels, U1 (K# Cancelled per SD# See K#22475) 08/23/93 10/15/93 60 PV93 22497 Besinger, Dupont & Assoc. Audit Support 11/15/93 11/20/93 60 PV93 22498 QSI Vendor Quality Services (Audits & Surveillances) 09/27/93 09/01/96 60 PV93 21441 22501 ITI Movats, Inc. HDV Diagnostic Software "Software Maintenance Agreement" 01/01/93 12/31/94 60 PV93 22502 Pacific Institute Developmental Training 09/20/93 09/20/94 60 PV93 22221 22505 Lamber, MacGill, Thomas, Inc. Inservice Inspection (Non-Destructive Examination) 09/01/93 12/31/93 60 PV93 22506 Target Rock Corp. Modification of Shut-Off Valves 09/08/93 10/29/93 60 PV93 22509 General Welding Provide Crane Welding Repair Services 09/01/93 08/31/94 60 PV93 10370 22510 Combustion Engineering Unit 1 and Unit 3 Clamp Ring UT Examination 08/30/93 12/31/94 60 PV93 22518 Division Nine Contracting Prepare Sales Agreement 09/01/93 10/31/93 60 PV93 22519 Praise Chapel Prepare Sales Agreement 09/01/93 12/31/93 60 PV93 22524 Safety Floor International Install Safety Flooring 09/17/93 10/31/93 60
105 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV89 40104 Bechtel Power Corporation BECAP & ME101 Software/ Services 07/01/89 12/31/90 60 C)90 40235 Bits, Inc. Workstation Specific LAN Planning 01/01/90 12/31/90 60 PV90 40308 C-TS & Associates SQA Procedure Develop- ment 03/01/90 08/31/90 60 PV90 40416 CAD Southwest Corporation Hardware/Software Maintenance 06/01/90 01/01/99 60 PV90 40417 Sargent & Landy Engineers Software Access License 06/06/90 01/01/99 60 PV88 20305 40489 Control Data Maintenance Agreement 04/11/90 04/10/91 60 PV89 40493 K&ll Prof Mgmt Svcs Equipment Maintenance (Administrative P.O.) 08/01/89 07/31/90 60 PV90 40513 40513 CARA Corporation Software Dev & Consult 05/01/90 04/30/93 60 PV90 40533 40533 Devtech Associates, Inc. Software Dev/Computer Consuulting 05/01/90 04/30/93 60 PV90 MSD12 44015 Computer Power Group Computer Consuulting Services (was Cornell Computer)see 11964 07/03/90 03/31/91 60 PV90 44065 Boeing Computer Services Software Licence Agreement/EZ5 11/14/90 11/13/91 60 PV90 44066 Universal Technical Systems Software Licence /Tk Solver 11/12/90 01/01/99 60
106 ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS PV90 44071 HRS Systems, Inc. Program License Agreement /HAAS 11/01/90 10/31/95 60 PV87 MSD07 MSD07 AGR Information Services Software Dev 02/01/87 01/31/90 60 MSD09 MSD09 First Approach Computer Consulting Svcs 06/15/87 06/14/90 60 MSD12 MSD12 Computer Power Group Computer Consultant Services 03/01/88 02/28/91 60 MSD15 MSD15 Stagg Systems Computer Consulting Software Licensing 11/14/89 11/13/92 60 MSD18 MSD18 Impell Pacific Software Dev/Computer Consulting 12/01/89 / / 60 PV87 PVTA1 PVTA1 Combustion Engineering NSSS Tech Assist-Master Agreement (Replace w/ PV86-10725) 01/01/84 12/31/88 60 107 ANNEX B The following agreements as the same shall have been amended to date: 1. Agreement for Construction of Arizona Nuclear Power Project, dated as of January 15, 1973, between APS, as Agent for all Participants in Arizona Nuclear Power Project, and Bechtel Power Corporation. 2. Agreement for Engineering and Procurement Services, dated as of January 15, 1973, between APS, as Project Manager of Arizona Nuclear Power Project, and Bechtel Power Corporation. 3. Agreement No. 13904 - Option and Purchase of Effluent, dated as of April 23, 1973, among APS and the Cities of Phoenix, Glendale, Mesa, Scottsdale, and Tempe, the Town of Youngtown, and Salt River Project Agricultural Improvement and Power District. 4. Nuclear Steam Supply System Contract, dated as of August 20, 1973, between APS as Project Manager of Arizona Nuclear Power Project and Combustion Engineering, Inc. 5. Turbine Generator Contract, dated as of March 21, 1974, between APS, as Project Manager and Operating Agent for Palo Verde Nuclear Generating Station, and General Electric Company. 6. Supplemental Agreement of Settlement, dated June 2, 1980, between APS, Salt River Project Agricultural Improvement and Power District, Southern California Edison Company, Public Service Company of New Mexico, El Paso Electric Company, Arizona Electric Power Corporation Inc., and The Department of Energy, ANPP. 7. Agreement for Delivery of Natural UF6, dated June 2, 1980, between APS, Salt River Agricultural Improvement and Power District, Southern California Edison Company, Public Service Company of New Mexico, El Paso Electric Company, Arizona Electric Power Cooperative, Inc., and the Department of Energy, ANPP. 8. Agreement for the Sale and Purchase of Wastewater Effluent, dated as of June 12, 1981, between APS, Salt River Project Agricultural Improvement and Power District and the City of Tolleson, as amended by Amendment No. 1 thereto dated as of November 12, 1981, and Amendment No. 2 thereto dated as of June 4, 1986. 108 9. Master Purchase and Sale Agreement for Renewal Parts and Factory Repair Work for Palo Verde Nuclear Steam Supply Systems and Related Equipment, dated as of August 14, 1981, between APS and Combustion Engineering, Inc. 10. Master Purchase and Sale Agreement for Renewal Parts and Factory Repair Work for Palo Verde Turbine Generators and Auxiliary Drive Turbines, dated as of August 6, 1982, between APS as agent for all Participants in Palo Verde Nuclear Generating Station and General Electric Company. 11. Master Agreement between APS and Singer Link-Miles Simulation Corporation - Agreement No. PV 89-20903, dated as of July 27, 1989. 12. Contract, dated July 17, 1991 Under Master Agreement Between APS and Simulation, Systems & Services Technologies for the Procurement of a Second Simulator for the Palo Verde Nuclear Generating Station. 13. All purchase orders entered into by the Project Manager or the Operating Agent relating to ANPP. 14. All software and other licensing agreements relating to ANPP. 15. All agreements for legal services or support entered into by the Operating Agent relating to ANPP. 16. All settlement agreements entered into by the Project Manager or the Operating Agent relating to ANPP. 17. All agreements for confidentiality, indemnification or waivers entered into by the Project Manager or the Operating Agent relating to ANPP. 18. All other agreements of any type or nature entered into by the Project Manager or the Operating Agent relating to ANPP.
EX-99 8 AMENDED FINDINGS OF FACT AND CONCLUSIONS OF LAW 1 EXHIBIT D-14.1 -------------- IN THE UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF TEXAS AUSTIN DIVISION In re S S EL PASO ELECTRIC COMPANY, S CASE NO. 92-10148-FM S (Chapter 11) S Debtor S AGREED ORDER GRANTING MOTION TO AMEND FINDINGS OF FACT AND CONCLUSIONS OF LAW On this day in Austin, Texas came on for hearing the Motion to Amend Findings of Fact and Conclusions of Law filed by the Public Utility Commission of Texas, Texas Office of Public Util- ity Counsel and City of El Paso on December 17, 1993 (the "Motion to Amend"). Having determined notice of the Motion satisfies the requirement of the Bankruptcy Code, the Federal Rules of Bank- ruptcy Procedure, and the Local Rules of the United States Bank- ruptcy Court for the Western District of Texas, and upon consid- eration of the Motion to Amend and the pleadings filed in support of and in opposition thereto, the arguments of counsel, and the Court otherwise being fully aware of the matters in this case, the Court is of the opinion that the Motion to Amend should be granted; accordingly, it is therefore ORDERED that the Motion to Amend is GRANTED and the follow- ing findings of fact contained in the Findings of Fact and Con- clusions of Law entered and filed in this case on December 8, 1993 (the "Findings and Conclusions") are hereby amended as follows: 2 Finding of Fact 5 beginning on page 3 of the Findings and Conclusions is hereby deleted in its entirety and the following Finding of Fact is substituted therefor: 5. "EPE's retail rates in Texas have been set under a series of rate orders by the Public Utility Commission of Texas ("PUCT"), which speak for themselves, as to, among other things, the reasonable and prudent levels of EPE's investments in its assets, including Units 1, 2 and 3 of the Palo Verde Nuclear Generating Station ("Palo Verde") and the extent to which those investments and assets would be deemed used and useful, under applicable regulatory standards, in rendering service to the public." Finding of Fact 10 on page 6 of the Findings and Conclusions is hereby deleted in its entirety and the following Finding of Fact is substituted therefor: 10. "Without determining whether EPE has satisfied state law regulatory requirements applicable to a public utility, the Court finds that during the course of this case, EPE has conducted its business and affairs in a reasonable, prudent, and proper manner and properly discharged its obligations under the Bankruptcy Code and applicable non-bankruptcy law." Finding of Fact 18.1 beginning on page 21 of the Findings and Conclusions is hereby deleted in its entirety and the follow- ing Finding of Fact, derived from the transcript of this Court's oral findings made on December 6, 1993, is substituted therefor: 18.1. "The rate path of the proposed merger plan is less than the rate path that the Debtor would seek in a stand-alone plan. It has been demonstrated to be less than that that was contained by Mr. Gioia in his report for the estate as a stand-alone entity. And so even though a higher value to creditors and equity holders has resulted or will be realized as a result of the proposed merger plan, it would also appear that lower rates than would otherwise be feasible will also result. It appears, therefore, that there has been some type of division of whatever merger premium there was among the estate and the public customer base of the Debtor. That leads to the conclusion that it is reasonable to expect that this 3 rate path will ultimately be approved, or something not too divergent from it. Therefore, to the extent a finding of feasibility rests upon a finding that the rate path is either reasonable or falls in a reasonable range of expectation, as Judge Yacos explained in detail in Public Service of New Hampshire, the proposed rate path is reasonable and it is at the lower range of the reasonable range of expectation." Finding of Fact 21 beginning on page 25 of the Findings and Conclusions is hereby deleted in its entirety and the following Finding of Fact is substituted therefor: 21. "The CSW Merger will allow Reorganized EPE to emerge from bankruptcy as a financially viable entity which should enable Reorganized EPE to comply with applicable regulatory laws requiring it to provide efficient and reliable utility service, and, as a result of the cost reductions and efficiencies projected to result from the improved financial condition of Reorganized EPE and its status as an operating subsidiary of CSW, Reorganized EPE will probably be able to provide service at a lower cost than if the merger did not occur. Accordingly, the CSW Merger is an appropriate means of the implementation of the Plan under [section sign] 1123(a)(5)(J) of the Bankruptcy Code." Except as amended hereby, the Findings of Fact and Conclu- sions of law entered in this case on December 8, 1993 remain effective and in full force and effect. SIGNED this the 3rd day of February, 1994. /s/ FRANK R. MONROE Frank R. Monroe UNITED STATES BANKRUPTCY JUDGE 4 APPROVED: (with copies to:) J. Ronald Trost Shalom L. Kohn SIDLEY & AUSTIN 875 Third Avenue New York, New York 10022 212/906-2000 Daniel C. Stewart Berry D. Spears WINSTEAD SECHREST & MINICK P.C. 100 Congress Avenue Suite 800 Austin, Texas 78701 (512) 474-4330 By: /s/ J. RONALD TROST One of Counsel ATTORNEYS FOR EL PASO ELECTRIC COMPANY Robert D. Albergotti Kathryn C. Mallory HAYNES AND BOONE, L.L.P. 3100 NationsBank Plaza 901 Main Street Dallas, Texas 75202 214/651-5000 By: /s/ KATHRYN C. MALLORY One of Counsel ATTORNEYS FOR THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS Mark Browning Assistant Attorney General P.O. Box 12548 Austin, Texas 78711 512/463-2173 By: /s/ MARK BROWNING ATTORNEYS FOR THE PUBLIC UTILITY COMMISSION OF TEXAS 5 Myron M. Sheinfeld Henry J. Kaim SHEINFELD, MALEY & KAY 1001 Fannin, Suite 3700 Houston, Texas 77002 713/658-8881 By: /s/ HENRY J. KAIM One of Counsel ATTORNEYS FOR CENTRAL AND SOUTH WEST CORPORATION Benjamin Waisbren Michael Yetnikoff LORD, BISSELL & BROOK 115 S. LaSalle Street Suite 3000 Chicago, Illinois 60603 312/443-0700 By: One of Counsel COUNSEL TO OFFICIAL COMMITTEE OF EQUITY HOLDERS kv165.wp 020294AMY1 LITI E4302 45300 -----END PRIVACY-ENHANCED MESSAGE-----