Exhibit 10.1

EXECUTION COPY

 

 

 

RIO GRANDE RESOURCES TRUST II

(El Paso Electric Company, guarantor)

$110,000,000

Senior Notes

$15,000,000 3.67% Senior Notes, Series A, due August 15, 2015

$50,000,000 4.47% Senior Notes, Series B, due August 15, 2017

$45,000,000 5.04% Senior Notes, Series C, due August 15, 2020

 

 

NOTE PURCHASE AGREEMENT

 

 

Dated as of August 17, 2010

 

 

 

SERIES A PPN: 76711@ AA6

SERIES B PPN: 76711@ AB4

SERIES C PPN: 76711@ AC2

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TABLE OF CONTENTS

 

Section

        Page

1.      

   AUTHORIZATION OF NOTES    1

2.

   SALE AND PURCHASE OF NOTES    2

3.

   CLOSING    2

4.

   CONDITIONS TO CLOSING    2    4.1    Representations and Warranties    2   
4.2    Performance; No Default    2    4.3    Compliance Certificates    3   
4.4    Opinions of Counsel    3    4.5    Purchase Permitted By Applicable Law,
etc    4    4.6    Sale of Other Notes    4    4.7    Payment of Special Counsel
Fees    4    4.8    Private Placement Numbers    4    4.9    Changes in
Organization Structure    4    4.10    Funding Instructions    4    4.11   
Proceedings and Documents    5

5.

   REPRESENTATIONS AND WARRANTIES OF THE ISSUER AND THE COMPANY    5    5.1   
Organization; Power and Authority    5    5.2    Authorization, etc    5    5.3
   Disclosure    6    5.4    Organization and Ownership of Shares of
Subsidiaries    6    5.5    Financial Statements; Material Liabilities    7   
5.6    Compliance with Laws, Other Instruments, etc    7    5.7    Governmental
Authorizations, etc    8    5.8    Litigation; Observance of Statutes and Orders
   8    5.9    Taxes    8    5.10    Title to Property; Leases    8    5.11   
Licenses, Permits, etc    9    5.12    Compliance with ERISA    9    5.13   
Private Offering by the Company    10    5.14    Use of Proceeds; Margin
Regulations    10    5.15    Existing Debt; Future Liens    10    5.16   
Foreign Assets Control Regulations, etc    11    5.17    Status under Certain
Statutes    11    5.18    Environmental Matters    12

6.

   REPRESENTATIONS OF THE PURCHASERS    12    6.1    Purchase for Investment   
12    6.2    Additional Representations of the Purchasers    13

 

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   6.3      Resale Restrictions    13    6.4      Legend    13    6.5     
Source of Funds    13    6.6      Authority    15

7.      

   INFORMATION AS TO THE COMPANY    15    7.1      Financial and Business
Information    15    7.2      Officer’s Certificate    18    7.3      Visitation
   18

8.

   PREPAYMENT OF THE NOTES    19    8.1      No Scheduled Prepayments    19   
8.2      Optional Prepayments with Make-Whole Amount    19    8.3      Mandatory
Offer to Prepay Upon Change of Control    20    8.4      Allocation of Partial
Prepayments    20    8.5      Maturity; Surrender, etc    21    8.6     
Purchase of Notes    21    8.7      Make-Whole Amount    21

9.

   AFFIRMATIVE COVENANTS    23    9.1      Compliance with Law    23    9.2     
Insurance    23    9.3      Maintenance of Properties    23    9.4      Payment
of Taxes and Claims    23    9.5      Corporate Existence, etc    24    9.6     
Books and Records    24

10.

   NEGATIVE COVENANTS    24    10.1      Debt to Capitalization Ratio    24   
10.2      Liens    24    10.3      Merger, Consolidation, etc    26    10.4     
Sanctions or Terrorism Designation    27    10.5      Liens of Issuer    27

11.

   EVENTS OF DEFAULT    27

12.

   REMEDIES ON DEFAULT, ETC    29    12.1      Acceleration    29    12.2     
Other Remedies    30    12.3      Rescission    30    12.4      No Waivers or
Election of Remedies, Expenses, etc    30

13.

   GUARANTY OF NOTES    30    13.1      Guarantee    31    13.2      Obligations
Not Waived    31    13.3      Security    31    13.4      Guarantee of Payment
   31

 

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   13.5      No Discharge or Diminishment of Guarantee    32    13.6     
Defenses of the Issuer Waived    32    13.7      Agreement to Pay; Subrogation
   32    13.8      Information    33    13.9      Termination    33

14.    

   REGISTRATION; EXCHANGE; SUBSTITUTION; TRANSFER OF NOTES    33    14.1     
Registration of Notes    33    14.2      Transfer and Exchange of Notes    33   
14.3      Replacement of Notes    34

15.

   PAYMENTS ON NOTES    34    15.1      Place of Payment    34    15.2      Home
Office Payment    35

16.

   EXPENSES, ETC    35    16.1      Transaction Expenses    36    16.2     
Survival    36

17.

   SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT    36

18.

   AMENDMENT AND WAIVER    36    18.1      Requirements    37    18.2     
Solicitation of Holders of Notes    37    18.3      Binding Effect, etc    37   
18.4      Notes held by the Issuer, etc    37

19.

   NOTICES    37

20.

   REPRODUCTION OF DOCUMENTS    38

21.

   CONFIDENTIAL INFORMATION    38

22.

   SUBSTITUTION OF PURCHASER    39

23.

   MISCELLANEOUS    40    23.1      Successors and Assigns    40    23.2     
Payments Due on Non-Business Days    40    23.3      Accounting Terms    40   
23.4      Severability    41    23.5      Construction    41    23.6     
Counterparts    41    23.7      Governing Law    41    23.8      Jurisdiction
and Process; Waiver of Jury Trial    41

 

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SCHEDULE A

  —      Information Relating to Purchasers

SCHEDULE B

  —      Defined Terms

SCHEDULE 5.3

  —      Disclosure Materials

SCHEDULE 5.4

  —      Subsidiaries; Ownership of Subsidiary Stock

SCHEDULE 5.5

  —      Financial Statements

SCHEDULE 5.11

  —      Licenses, Permits, etc.

SCHEDULE 5.15

  —      Existing Debt

EXHIBIT 1(a)

  —      Form of Series A Note

EXHIBIT 1(b)

  —      Form of Series B Note

EXHIBIT 1(c)

  —      Form of Series C Note

EXHIBIT 4.4(a)

  —      Form of Opinion of Special Counsel for the Company

EXHIBIT 4.4(b)

  —      Form of Opinion of Internal Counsel for the Company

EXHIBIT 4.4(c)

  —      Form of Opinion of Special Arizona Regulatory Counsel for the Company

EXHIBIT 4.4(d)

  —      Form of Opinion of Special Regulatory Counsel for the Company

EXHIBIT 4.4(e)

  —      Form of Opinion of Special New Mexico Counsel for the Company

EXHIBIT 4.4(f)

  —      Form of Opinion of Special Counsel to the Purchasers

 

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RIO GRANDE RESOURCES TRUST II

(El Paso Electric Company, guarantor)

Stanton Tower

100 N. Stanton

El Paso, TX 79901

Phone: (915) 543-5711

Fax: (915) 521-4729

$15,000,000 3.67% Senior Notes, Series A, due August 15, 2015

$50,000,000 4.47% Senior Notes, Series B, due August 15, 2017

$45,000,000 5.04% Senior Notes, Series C, due August 15, 2020

Dated as of August 17, 2010

TO EACH OF THE PURCHASERS LISTED IN

            THE ATTACHED SCHEDULE A:

Ladies and Gentlemen:

EL PASO ELECTRIC COMPANY, a Texas corporation (the “Company”), agrees with you,
and will instruct The Bank of New York Mellon Trust Company, N.A., not in its
individual capacity, but solely in its capacity as trustee of the Rio Grande
Resources Trust II (as successor by merger to JPMorgan Chase Bank, N.A., in such
capacity, the “Trustee”) to cause the RIO GRANDE RESOURCES TRUST II (the
“Issuer”) to agree with you as follows:

Wherever this Agreement contemplates or requires action by the Issuer, the
Company agrees to instruct the Trustee, consistent with the Trust Agreement, to
cause the Issuer to perform such action.

1. AUTHORIZATION OF NOTES.

The Issuer and the Company have authorized the issue and sale of $110,000,000
aggregate principal amount of the Issuer’s Senior Notes consisting of
(i) $15,000,000 aggregate principal amount of 3.67% Senior Notes, Series A, due
August 15, 2015 (the “Series A Notes”); (ii) $50,000,000 aggregate principal
amount of 4.47% Senior Notes, Series B, due August 15, 2017 (the “Series B
Notes”); and (iii) $45,000,000 aggregate principal amount of 5.04% Senior Notes,
Series C, due August 15, 2020 (the “Series C Notes” and, together with the
Series A Notes and the Series B Notes, the “Notes”, such term to include any
such Notes issued in substitution therefor pursuant to Section 14 of this
Agreement). The Notes shall be substantially in the form set out in
Exhibits 1(a), 1(b) and 1(c), with such changes therefrom, if any, as may be
approved by you, the Other Purchasers of such Notes, or series thereof, the
Company, and the Issuer. Certain capitalized terms used in this Agreement are
defined in Schedule B; references to a “Schedule” or an “Exhibit” are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement.

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2. SALE AND PURCHASE OF NOTES.

Subject to the terms and conditions of this Agreement, the Issuer will issue and
sell to you and each of the other purchasers named in Schedule A (the “Other
Purchasers”), and you and the Other Purchasers will purchase from the Issuer, at
the Closing provided for in Section 3, Notes in the principal amount and series
specified opposite your names in Schedule A at the purchase price of 100% of the
principal amount thereof. Your obligation hereunder and the obligations of the
Other Purchasers are several and not joint obligations and you shall have no
obligation and no liability to any Person for the performance or non-performance
by any Other Purchaser hereunder. Notwithstanding the foregoing, if any
Purchaser defaults on its purchase obligations hereunder and the Other
Purchasers do not collectively purchase 100% of the Notes to be issued hereby,
the Issuer and the Company shall have the right to terminate this Agreement.

3. CLOSING.

The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of Foley & Lardner LLP, 321 North Clark
Street, Suite 2800, Chicago, Illinois 60610-4764, at 9:00 a.m., Chicago time, at
a closing (the “Closing”) on August 17, 2010 or on such other Business Day
thereafter on or prior to August 31, 2010 as may be agreed upon by the Issuer
and you and the Other Purchasers. At the Closing, the Issuer will deliver to you
the Notes to be purchased by you in the form of a single Note (or such greater
number of Notes in denominations of at least $100,000 as you may request) dated
the date of such Closing and registered in your name (or in the name of your
nominee), against delivery by you to the Issuer or its order of immediately
available funds in the amount of the purchase price therefor by wire transfer of
immediately available funds for the account of the Issuer to account number
211065 at Bank of New York Mellon, ABA number 021000018, for further credit to
Rio Grande Resources Trust II, account number 418395. If at the Closing the
Issuer shall fail to tender such Notes to you as provided above in this
Section 3, or any of the conditions specified in Section 4 shall not have been
fulfilled to your satisfaction, you shall, at your election, be relieved of all
further obligations under this Agreement, without thereby waiving any rights you
may have by reason of such failure or such nonfulfillment.

4. CONDITIONS TO CLOSING.

Your obligation to purchase and pay for the Notes to be sold to you at the
Closing is subject to the fulfillment to your satisfaction, prior to or at the
Closing, of the following conditions:

4.1 Representations and Warranties.

The representations and warranties of the Issuer and the Company in this
Agreement shall be correct when made and at the time of the Closing.

4.2 Performance; No Default.

The Issuer and the Company shall have performed and complied with all agreements
and conditions contained in this Agreement required to be performed or complied

 

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with by it prior to or at the Closing, and, after giving effect to the issue and
sale of the Notes (and the application of the proceeds thereof as contemplated
by Section 5.14), no Default or Event of Default shall have occurred and be
continuing. The Company shall not have entered into any transaction since the
date of the Memorandum that would have been prohibited by Section 10 had such
Section applied since such date.

4.3 Compliance Certificates.

(a) Officer’s Certificate. The Company shall have delivered to you an Officer’s
Certificate, dated the date of Closing, certifying that the conditions specified
in Sections 4.1, 4.2 and 4.9 have been fulfilled.

(b) Secretary’s Certificate. The Company shall have delivered to you a
certificate of its Secretary or Assistant Secretary, dated the date of Closing,
certifying as to the resolutions attached thereto and other proceedings relating
to the authorization, execution and delivery of the Notes and this Agreement.

(c) Trustee’s Certificate. The Trustee shall have delivered to you a certificate
of an Officer of the Trustee, dated the date of Closing, certifying as to the
proceedings relating to the authorization, execution and delivery of the Notes
and this Agreement.

4.4 Opinions of Counsel.

You shall have received opinions in form and substance satisfactory to you,
dated the date of the Closing (a) from Davis Polk & Wardwell LLP, counsel for
the Company, covering the matters set forth in Exhibit 4.4(a) and covering such
other matters incident to the transactions contemplated hereby as you or your
counsel may reasonably request (and the Company instructs its counsel to deliver
such opinion to you), (b) from Mary E. Kipp, Senior Vice President and General
Counsel for the Company], covering the matters set forth in Exhibit 4.4(b) and
covering such other matters incident to the transactions contemplated hereby as
you or your counsel may reasonably request (and the Company instructs its
counsel to deliver such opinion to you), (c) from Perkins Coie LLP, special
Arizona regulatory counsel for the Company, covering the matters set forth in
Exhibit 4.4(c) and covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request (and the
Company instructs its counsel to deliver such opinion to you), (d) from Perkins
Coie LLP, special regulatory counsel for the Company, covering the matters set
forth in Exhibit 4.4(d) and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably request
(and the Company instructs its counsel to deliver such opinion to you), (e) from
the Law Offices of Randall W. Childress, P.C., special New Mexico counsel for
the Company, covering the matters set forth in Exhibit 4.4(e) and covering such
other matters incident to the transactions contemplated hereby as you or your
counsel may reasonably request (and the Company instructs its counsel to deliver
such opinion to you) and (f) from Foley & Lardner LLP, your special counsel in
connection with such transactions, substantially in the form set forth in
Exhibit 4.4(f) and covering such other matters incident to such transactions as
you may reasonably request.

 

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4.5 Purchase Permitted By Applicable Law, etc.

On the date of the Closing, your purchase of Notes shall (i) be permitted by the
laws and regulations of each jurisdiction to which you are subject, without
recourse to provisions (such as Section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (ii) not violate any
applicable law or regulation (including, without limitation, Regulation U, T or
X of the Board of Governors of the Federal Reserve System) and (iii) not subject
you to any tax, penalty or liability under or pursuant to any applicable law or
regulation, which law or regulation was not in effect on the date hereof. If
requested by you, you shall have received an Officer’s Certificate certifying as
to such matters of fact as you may reasonably specify to enable you to determine
whether such purchase is so permitted.

4.6 Sale of Other Notes.

Contemporaneously with the Closing Issuer shall sell to the Other Purchasers and
the Other Purchasers shall purchase the Notes to be purchased by them as
specified in Schedule A.

4.7 Payment of Special Counsel Fees.

Without limiting the provisions of Section 16.1, the Issuer shall have paid on
or before the Closing the reasonable fees, charges and disbursements of your
special counsel referred to in Section 4.4 reflected in a statement of such
counsel rendered to the Issuer at least one Business Day prior to the Closing.

4.8 Private Placement Numbers.

Private Placement Numbers issued by Standard & Poor’s CUSIP Service Bureau (in
cooperation with the SVO) shall have been obtained by Foley & Lardner LLP for
each series of the Notes.

4.9 Changes in Organization Structure.

Neither the Issuer nor the Company shall have changed its jurisdiction of
incorporation or organization, as applicable, or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other Person, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.

4.10 Funding Instructions.

At least three Business Days prior to the date of the Closing, you shall have
received written instructions signed by the Issuer on letterhead of the Issuer
confirming the information specified in Section 3 including (i) the name and
address of the transferee bank, (ii) such transferee bank’s ABA number and
(iii) the account name and number into which the purchase price for the Notes is
to be deposited.

 

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4.11 Proceedings and Documents.

All corporate, trust and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be reasonably satisfactory to you and your special
counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.

5. REPRESENTATIONS AND WARRANTIES OF THE ISSUER AND THE COMPANY.

Each of the Company and the Issuer represents and warrants to you that:

5.1 Organization; Power and Authority.

The Company is a corporation duly organized, validly existing and in good
standing under the laws of Texas, and is duly qualified as a foreign corporation
and is in good standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the failure to be so
qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Company has the
corporate power and authority to own or hold under lease the properties it
purports to own or hold under lease, to transact the business it transacts and
proposes to transact, to execute and deliver this Agreement and to perform the
provisions hereof.

The Issuer is a trust duly formed, validly existing and in good standing under
the laws of Texas. The Issuer has all requisite power and authority to own or
hold under lease the properties it purports to own or hold under lease, to
transact the business it transacts and proposes to transact, to execute and
deliver this Agreement and the Notes and to perform the provisions hereof and
thereof.

5.2 Authorization, etc.

This Agreement, the Trust Agreement and the Purchase Contract have been duly
authorized by all necessary corporate action on the part of the Company, and
this Agreement, the Trust Agreement and the Purchase Contract constitute legal,
valid and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors’ rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

This Agreement, the Trust Agreement, the Purchase Contract and the Notes have
been duly authorized by all necessary trust action on the part of the Issuer and
the Trustee, and this Agreement, the Trust Agreement and the Purchase Contract
constitute, and upon execution and delivery thereof each Note will constitute, a
legal, valid and binding obligation of the Issuer enforceable against the Issuer
in accordance with its terms, except as such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar

 

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laws affecting the enforcement of creditors’ rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

5.3 Disclosure.

The Issuer and the Company, through their agents, U.S. Bancorp Investments, Inc.
and Banc of America Securities LLC, have delivered to you and each Other
Purchaser a copy of a Private Placement Memorandum, dated July 2010 (the
“Memorandum”), relating to the transactions contemplated hereby. The Memorandum
fairly describes, in all material respects, the general nature of the business
and principal properties of the Company. This Agreement, the Memorandum
(including the documents incorporated by reference therein), the documents,
certificates or other writings delivered or made available to the Purchasers and
identified in Schedule 5.3 and the financial statements listed in Schedule 5.5,
(this Agreement, the Memorandum (including the documents incorporated by
reference therein) and such documents, certificates or other writings and such
financial statements being referred to, collectively, as the “Disclosure
Documents”), taken as a whole, do not contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein
not misleading in light of the circumstances under which they were made. Since
March 31, 2010, there has been no change in the financial condition, operations,
business, properties or prospects of the Issuer, the Company or its Subsidiary
except changes that individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect. There is no fact known to the Issuer
or the Company that could reasonably be expected to have a Material Adverse
Effect that has not been set forth herein or in the Disclosure Documents.

5.4 Organization and Ownership of Shares of Subsidiaries.

(a) Schedule 5.4 contains (except as noted therein) complete and correct lists
of (i) the Company’s Subsidiary, showing the correct name thereof, the
jurisdiction of its organization, and the percentage of shares of each class of
its capital stock or similar equity interests outstanding owned by the Company,
and (ii) the Company’s directors and senior officers.

(b) All of the outstanding shares of capital stock or similar equity interests
of the Subsidiary shown in Schedule 5.4 as being owned by the Company have been
validly issued, are fully paid and nonassessable and are owned by the Company
free and clear of any Lien (except as otherwise disclosed in Schedule 5.4).

(c) The Subsidiary identified in Schedule 5.4 is a corporation or other legal
entity duly organized, validly existing and in good standing or equivalent
status under the laws of its jurisdiction of organization, and is duly qualified
as a foreign corporation or other legal entity and is in good standing in each
jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.

 

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(d) The Subsidiary is not a party to, or otherwise subject to any legal,
regulatory, contractual or other restriction (other than this Agreement, the
agreements listed on Schedule 5.4 and customary limitations imposed by corporate
law or similar statutes) restricting the ability of the Subsidiary to pay
dividends out of profits or make any other similar distributions of profits to
the Company.

5.5 Financial Statements; Material Liabilities.

The Company has delivered to you and each Other Purchaser copies of the
consolidated financial statements of the Company and its Subsidiary listed on
Schedule 5.5. All of said financial statements (including in each case the
related schedules and notes) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiary as of the
respective dates specified in such Schedule and the consolidated results of
their operations and cash flows for the respective periods so specified and have
been prepared in accordance with GAAP consistently applied throughout the
periods involved except as set forth in the notes thereto (subject, in the case
of any interim financial statements, to normal year-end adjustments). The
Company and its Subsidiary do not have any Material liabilities that are not
disclosed on such financial statements or otherwise disclosed in the Disclosure
Documents.

5.6 Compliance with Laws, Other Instruments, etc.

The execution, delivery and performance by the Company of this Agreement, the
Trust Agreement and the Purchase Contract will not (i) contravene, result in any
breach of, or constitute a default under, or result in the creation of any Lien
in respect of any property of the Company or its Subsidiary under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease,
corporate charter or by-laws, or any other agreement or instrument to which the
Company or its Subsidiary is bound or to which any of the properties of the
Company is subject, (ii) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to the Company or its
Subsidiary or (iii) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company or its
Subsidiary, except for any default or violation that would not have a Material
Adverse Effect.

The execution, delivery and performance by the Issuer of this Agreement, the
Trust Agreement, the Purchase Contract and the Notes will not (i) contravene,
result in any breach of, or constitute a default under, or result in the
creation of any Lien in respect of any property of the Issuer under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease,
corporate charter or by-laws, or any other agreement or instrument to which the
Issuer is bound or to which any of its property is subject, (ii) conflict with
or result in a breach of any of the terms, conditions or provisions of any
order, judgment, decree, or ruling of any court, arbitrator or Governmental
Authority applicable to the Issuer or (iii) violate any provision of any statute
or other rule or regulation of any Governmental Authority applicable to the
Issuer, except for any default or violation that would not have a Material
Adverse Effect.

 

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5.7 Governmental Authorizations, etc.

Other than the approvals of FERC and the New Mexico Public Regulation Commission
(the “NMPRC”), which approvals have been received and are in full force and
effect, no consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company of this Agreement, or in
connection with the execution, delivery or performance by the Issuer of this
Agreement or the Notes.

5.8 Litigation; Observance of Statutes and Orders.

(a) There are no actions, suits, proceedings or investigations pending or, to
the knowledge of the Company or the Issuer, threatened against or affecting the
Issuer, the Company or its Subsidiary or any property of the Issuer, the Company
or its Subsidiary in any court or before any arbitrator of any kind or before or
by any Governmental Authority that individually could reasonably be expected to
have a Material Adverse Effect.

(b) None of the Issuer, the Company or its Subsidiary is in default under any
term of any agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance, rule
or regulation (including Environmental Laws and the USA Patriot Act) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

5.9 Taxes.

The Company and its Subsidiary have filed all tax returns that are required to
have been filed in any jurisdiction (except in any case in which the failure to
so file would not have a Material Adverse Effect), and have paid all taxes shown
to be due and payable on such returns and all other taxes and assessments levied
upon them or their properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (i) the nonpayment of which
would not, individually or in the aggregate, have a Material Adverse Effect or
(ii) the amount, applicability or validity of which is currently being contested
in good faith by appropriate proceedings and with respect to which the Company
or its Subsidiary, as the case may be, has established adequate reserves in
accordance with GAAP. To the Company’s knowledge, there is no tax claim
currently asserted against the Company or its Subsidiary except for any such
claim that would not have a Material Adverse Effect.

5.10 Title to Property; Leases.

The Company and its Subsidiary have good and sufficient title to their
respective properties that individually or in the aggregate are Material,
including all such properties reflected in the most recent audited balance sheet
referred to in Section 5.5 or purported to have been acquired by the Company or
its Subsidiary after said date (except as sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of Liens prohibited by

 

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this Agreement. All leases that individually or in the aggregate are Material
are valid and subsisting and are in full force and effect in all material
respects.

5.11 Licenses, Permits, etc.

(a) Except as disclosed on Schedule 5.11, the Company and its Subsidiary own or
possess all licenses, permits, franchises, authorizations, patents, copyrights,
proprietary software, service marks, trademarks and trade names, or rights
thereto, that individually or in the aggregate are Material, without known
conflict with the rights of others.

(b) To the best knowledge of the Company, no product of the Company or its
Subsidiary infringes in any material respect any license, permit, franchise,
authorization, patent, copyright, proprietary software, service mark, trademark,
trade name or other right owned by any other Person.

(c) To the best knowledge of the Company, there is no Material violation by any
Person of any right of the Company or its Subsidiary with respect to any patent,
copyright, proprietary software, service mark, trademark, trade name or other
right owned or used by the Company or its Subsidiary.

5.12 Compliance with ERISA.

(a) The Company and each ERISA Affiliate have operated and administered each
Plan in compliance with all applicable laws except for such instances of
noncompliance as have not resulted in and could not reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate
has incurred any liability on account of a violation of Title I or IV of ERISA
or the penalty or excise tax provisions of the Code relating to employee benefit
plans (as defined in section 3 of ERISA), and no event, transaction or condition
has occurred or exists that could reasonably be expected to result in the
incurrence of any such liability by the Company or any ERISA Affiliate, or in
the imposition of any Lien on any of the rights, properties or assets of the
Company or any ERISA Affiliate, in either case pursuant to Title I or IV of
ERISA or to such penalty or excise tax provisions or to section 401(a)(29) or
412 of the Code or section 4068 of ERISA, other than such liabilities or Liens
as would not be individually or in the aggregate Material.

(b) The funding target (as defined in section 430(d) of the Code without regard
to section 430(i)(1))for each of the Plans (other than Multiemployer Plans),
determined as of the beginning of such Plan’s current plan year and in
accordance with section 430 of the Code, did not exceed the value of the assets
of each Plan allocable to its benefit liabilities, determined in accordance with
section 430 of the Code, by an amount that, individually, or in the aggregate
for all Plans, is Material.

(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.

 

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(d) The expected postretirement benefit obligation (determined as of the last
day of the Company’s most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiary is set forth on the most recent
audited balance sheet of the Company included in the financial statements listed
in Schedule 5.5.

(e) The execution and delivery of this Agreement and the issuance and sale of
the Notes hereunder will not involve any transaction that is subject to the
prohibitions of section 406 of ERISA or in connection with which a tax could be
imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation by
the Company to each Purchaser in the first sentence of this Section 5.12(e) is
made in reliance upon and subject to the accuracy of each Purchaser’s
representations in Section 6.5.

5.13 Private Offering by the Company.

None of the Issuer, the Company or anyone acting on their behalf has offered the
Notes or any similar securities that would be integrated with the Notes for sale
to, or solicited any offer to buy any of the same from, or otherwise approached
or negotiated in respect thereof with, any person other than you, the Other
Purchasers and not more than 65 other Institutional Accredited Investors, each
of which has been offered the Notes at a private sale for investment. None of
the Issuer, the Company or anyone acting on its behalf has taken, or will take,
any action that would subject the issuance or sale of the Notes to the
registration requirements of Section 5 of the Securities Act or to the
registration requirements of any securities or blue sky laws of any applicable
jurisdiction.

5.14 Use of Proceeds; Margin Regulations.

The Issuer will apply the proceeds of the sale of the Notes primarily to repay
amounts borrowed under its joint revolving credit facility with the Company and
reduce the amount outstanding thereunder that has been used to finance nuclear
fuel. No part of the proceeds from the sale of the Notes will be used, directly
or indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
(12 CFR 221), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Issuer or the Company in a
violation of Regulation X of said Board (12 CFR 224) or to involve any broker or
dealer in a violation of Regulation T of said Board (12 CFR 220). Margin stock
does not constitute more than 25% of the value of the consolidated assets of the
Issuer, the Company and its Subsidiary and neither the Issuer nor the Company
has any present intention that margin stock will constitute more than 25% of the
value of such assets. As used in this Section, the terms “margin stock” and
“purpose of buying or carrying” shall have the meanings assigned to them in said
Regulation U.

5.15 Existing Debt; Future Liens.

(a) Except as described therein, Schedule 5.15 sets forth a complete and correct
list of all outstanding Debt of the Issuer, the Company and its Subsidiary as of
June 30, 2010 (including a description of the obligors and obligees, principal
amount

 

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outstanding and collateral therefor, if any, and guaranty thereof, if any),
since which date there has been no Material change in the amounts, interest
rates, sinking funds, installment payments or maturities of the Debt of the
Issuer, the Company or its Subsidiaries. None of the Issuer, the Company or its
Subsidiary is in default and no waiver of default is currently in effect, in the
payment of any principal or interest on any Debt of the Issuer, the Company or
its Subsidiary and no event or condition exists with respect to any Debt of the
Issuer, the Company or its Subsidiary that would permit (or that with notice or
the lapse of time, or both, would permit) one or more Persons to cause such Debt
to become due and payable before its stated maturity or before its regularly
scheduled dates of payment.

(b) Except as disclosed in Schedule 5.15, none of the Issuer, the Company or its
Subsidiary has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien not permitted by Section 10.2.

(c) None of the Issuer, the Company or its Subsidiary is a party to, or
otherwise subject to any provision contained in, any instrument evidencing Debt
of the Company or such Subsidiary, any agreement relating thereto or any other
agreement (including its charter or other organizational document) that limits
the amount of, or otherwise imposes restrictions on the incurring of, Debt of
the Issuer or the Company, except as specifically indicated in Schedule 5.15.

5.16 Foreign Assets Control Regulations, etc.

(a) Neither the sale of the Notes by the Issuer hereunder nor its use of the
proceeds thereof will violate the Trading with the Enemy Act, as amended, or any
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.

(b) None of the Issuer, the Company or its Subsidiary (i) is a Person described
or designated in the Specially Designated Nationals and Blocked Persons List of
the Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order
or (ii) to the Issuer’s or the Company’s knowledge, engages in any dealings or
transactions with any such Person. The Issuer, the Company and its Subsidiary
are in compliance, in all material respects, with the USA Patriot Act.

(c) No part of the proceeds from the sale of the Notes hereunder will be used,
directly or indirectly, in violation of the United States Foreign Corrupt
Practices Act of 1977, as amended, assuming in all cases that such Act applies
to the Issuer and the Company.

5.17 Status under Certain Statutes.

Neither of the Issuer or the Company is subject to regulation under the
Investment Company Act of 1940, as amended, or the ICC Termination Act, as
amended. The Company is subject to regulation by the FERC under the Federal
Power Act, as amended. The Company is a

 

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public utility company in the States of Texas and New Mexico and is subject to
regulation as a public utility company in those states.

5.18 Environmental Matters.

Except as disclosed in the Disclosure Documents:

(a) Neither the Company nor its Subsidiary has knowledge of any claim or has
received any notice of any claim, and no proceeding has been instituted raising
any claim against the Company or any of its Subsidiaries or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect.

(b) Neither the Company nor its Subsidiary has knowledge of any facts that would
give rise to any claim, public or private, of violation of Environmental Laws or
damage to the environment emanating from, occurring on or in any way related to
real properties now or formerly owned, leased or operated by any of them or to
other assets or their use, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect.

(c) Neither the Company nor its Subsidiary has stored any Hazardous Materials on
real properties now or formerly owned, leased or operated by any of them and has
not disposed of any Hazardous Materials in a manner contrary to any
Environmental Laws in each case in any manner that could reasonably be expected
to result in a Material Adverse Effect.

(d) All buildings on all real properties now owned, leased or operated by the
Company or its Subsidiary are in compliance with applicable Environmental Laws,
except where failure to comply could not reasonably be expected to result in a
Material Adverse Effect.

6. REPRESENTATIONS OF THE PURCHASERS.

6.1 Purchase for Investment.

You represent that you are an institutional “accredited investor” (as such term
is defined under Rule 501(a)(1), (2), (3) or (7) promulgated under the
Securities Act) and are purchasing the Notes for your own account, for the
account of another Institutional Accredited Investor, or for one or more
separate accounts maintained by you and not with a view to the distribution
thereof, provided that the disposition of your or their property shall at all
times be within your or their control. You understand that the Notes have not
been registered under the Securities Act, that the sale of the Notes is being
made by the Issuer in reliance on a private placement exemption from
registration under the Securities Act, and that the Notes may be resold only if
registered pursuant to the provisions of the Securities Act or if an exemption
from registration is available, except under circumstances where neither such
registration nor such an

 

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exemption is required by law, and that neither the Issuer nor the Company is
required to register the Notes under the Securities Act or to list the Notes on
any national securities exchange.

6.2 Additional Representations of the Purchasers.

You further represent that you (a) have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its prospective investment in the Notes, (b) have conducted your own
investigation of the Issuer, the Company and the terms of the Notes, (c) have
access to the Company’s public filings with the SEC and to such financial and
other information as you deem necessary to make your decision to purchase the
Notes, (d) have been offered the opportunity to ask questions of the Issuer and
the Company and received answers thereto, all as you deem necessary in
connection with your decision to purchase the Notes and (e) have the ability to
bear the economic risks of your prospective investment and can afford the
complete loss of such investment.

6.3 Resale Restrictions.

You understand and agree on behalf of yourself and on behalf of any investor
account for which you are purchasing Notes, and each subsequent holder of a Note
by its acceptance thereof will be deemed to agree, that the Notes will be
transferable only in accordance with this Agreement and that if you or such
holder decides to offer, resell, pledge or otherwise transfer any of the Notes,
such Notes may be offered, resold, pledged or otherwise transferred only to an
Institutional Accredited Investor in reliance upon an exemption from
registration under the Securities Act, and only as permitted by Section 14.2.

6.4 Legend.

You understand that the Notes will, unless sold pursuant to a registration
statement that has been declared effective under the Securities Act, bear a
legend substantially to the following effect:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THIS SECURITY MAY ONLY BE
TRANSFERRED TO AN “INSTITUTIONAL ACCREDITED INVESTOR” IN ACCORDANCE WITH THE
TERMS OF THE NOTE PURCHASE AGREEMENT DATED AUGUST 17, 2010.

6.5 Source of Funds.

You represent that at least one of the following statements is an accurate
representation as to each source of funds (a “Source”) to be used by you to pay
the purchase price of the Notes to be purchased by you hereunder:

 

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(a) the Source is an “insurance company general account” (as the term is defined
in the United States Department of Labor’s Prohibited Transaction Exemption
(“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by
the annual statement for life insurance companies approved by the National
Association of Insurance Commissioners (the “NAIC Annual Statement”)) for the
general account contract(s) held by or on behalf of any employee benefit plan
together with the amount of the reserves and liabilities for the general account
contract(s) held by or on behalf of any other employee benefit plans maintained
by the same employer (or affiliate thereof as defined in PTE 95-60) or by the
same employee organization in the general account do not exceed 10% of the total
reserves and liabilities of the general account (exclusive of separate account
liabilities) plus surplus as set forth in the NAIC Annual Statement filed with
your state of domicile; or

(b) the Source is a separate account that is maintained solely in connection
with your fixed contractual obligations under which the amounts payable, or
credited, to any employee benefit plan (or its related trust) that has any
interest in such separate account (or to any participant or beneficiary of such
plan (including any annuitant)) are not affected in any manner by the investment
performance of the separate account; or

(c) the Source is either (i) an insurance company pooled separate account,
within the meaning of PTE 90-1 (issued January 29, 1990), or (ii) a bank
collective investment fund, within the meaning of PTE 91-38 (issued July 12,
1991) and, except as you have disclosed to the Trustee in writing pursuant to
this paragraph (c), no employee benefit plan or group of plans maintained by the
same employer or employee organization beneficially owns more than 10% of all
assets allocated to such pooled separate account or collective investment fund;
or

(d) the Source constitutes assets of an “investment fund” (within the meaning of
Part V of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified professional
asset manager” or “QPAM” (within the meaning of Part V of the QPAM Exemption),
no employee benefit plan’s assets that are included in such investment fund,
when combined with the assets of all other employee benefit plans established or
maintained by the same employer or by an affiliate (within the meaning of
Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client assets
managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption
are satisfied, neither the QPAM nor a person controlling or controlled by the
QPAM (applying the definition of “control” in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Trustee and (i) the identity of
such QPAM and (ii) the names of all employee benefit plans whose assets are
included in such investment fund have been disclosed to the Trustee in writing
pursuant to this clause (d); or

(e) the Source constitutes assets of a “plan(s)” (within the meaning of
Section IV of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset
manager” or “INHAM” (within the meaning of Part IV of the INHAM exemption), the
conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied,
neither the INHAM nor a person controlling or controlled by the INHAM (applying
the definition of

 

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“control” in Section IV(h) of the INHAM Exemption) owns a 5% or more interest in
the Company and (i) the identity of such INHAM and (ii) the name(s) of the
employee benefit plan(s) whose assets constitute the Source have been disclosed
to the Company in writing pursuant to this clause (e); or

(f) the Source is a governmental plan; or

(g) the Source is one or more employee benefit plans, or a separate account or
trust fund comprised of one or more employee benefit plans, each of which has
been identified to the Trustee in writing pursuant to this paragraph (g); or

(h) the Source does not include assets of any employee benefit plan, other than
a plan exempt from the coverage of ERISA.

As used in this Section 6.2, the terms “employee benefit plan”, “governmental
plan” and “separate account” shall have the respective meanings assigned to such
terms in Section 3 of ERISA.

6.6 Authority.

If you are acquiring Notes as a fiduciary or agent for one or more investor
accounts, you represent that you have sole investment discretion with respect to
each such account and you have full power to make the foregoing representations
and agreements on behalf of such account.

7. INFORMATION AS TO THE COMPANY.

7.1 Financial and Business Information.

The Company will deliver to each holder of Notes that is an Institutional
Accredited Investor:

(a) Quarterly Statements — within 60 days (or such shorter period as is 15 days
greater than the period applicable to the filing of the Company’s Quarterly
Report on Form 10-Q (the “Form 10-Q”) with the SEC regardless of whether the
Company is subject to the filing requirements thereof) after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year), duplicate copies of,

(i) a consolidated balance sheet of the Company and its Subsidiaries as at the
end of such quarter,

(ii) a consolidated statement of operations of the Company and its Subsidiaries
for such quarter and (in the case of the second and third quarters) for the
portion of the fiscal year ending with such quarter, and

(iii) a consolidated statement of cash flows of the Company and its Subsidiaries
for the portion of the fiscal year ending with such quarter,

 

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setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery of copies of the Company’s Form 10-Q
prepared in compliance with the requirements therefor and filed with the SEC
shall be deemed to satisfy the requirements of this Section 7.1(a) provided,
further, that the Company shall be deemed to have made such delivery of such
financial statements or such Form 10-Q if it shall have timely made Electronic
Delivery thereof;

(b) Annual Statements — within 120 days (or such shorter period as is 15 days
greater than the period applicable to the filing of the Company’s Annual Report
on Form 10-K (the “Form 10-K”) with the SEC regardless of whether the Company is
subject to the filing requirements thereof) after the end of each fiscal year of
the Company, duplicate copies of,

(i) a consolidated balance sheet of the Company and its Subsidiaries, as at the
end of such year, and

(ii) consolidated statements of operations, stockholders’ equity and cash flows
of the Company and its Subsidiaries for such year,

setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an opinion thereon of independent public accountants of
recognized national standing, which opinion shall state that such financial
statements present fairly, in all material respects, the financial position of
the companies being reported upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the circumstances, provided that
the delivery of the Company’s Annual Report on Form 10-K for such fiscal
year (together with the Company’s annual report to stockholders, if any,
prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance
with the requirements therefor and filed with the SEC shall be deemed to satisfy
the requirements of this Section 7.1(b) provided, further, that the Company
shall be deemed to have made such delivery of such financial statements or such
Form 10-K if it shall have timely made Electronic Delivery thereof;

(c) SEC and Other Reports — promptly upon their becoming available, one copy of
(i) each financial statement, report, notice or proxy statement sent by the
Company or its Subsidiaries to its public securities holders generally and
(ii) each regular or periodic report, each registration statement (without
exhibits except as expressly requested by such holder), and each prospectus and
all amendments thereto filed by the Company or its Subsidiaries with the SEC and
of all press releases and other statements made available generally by the
Company or its Subsidiaries to the public concerning

 

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developments that are Material; provided that Electronic Delivery of such
documents shall be deemed to satisfy the requirements of this Section 7.1(c);

(d) Notice of Default or Event of Default — promptly, and in any event within
five days after the Issuer or a Responsible Officer becoming aware of the
existence of any Default or Event of Default or that any Person has given any
notice or taken any action with respect to a claimed default hereunder or that
any Person has given any notice or taken any action with respect to a claimed
default of the type referred to in Section 11(f), a written notice specifying
the nature and period of existence thereof and what action the Issuer and the
Company is taking or proposes to take with respect thereto;

(e) ERISA Matters — promptly, and in any event within five days after a
Responsible Officer becoming aware of any of the following, a written notice
setting forth the nature thereof and the action, if any, that the Company or an
ERISA Affiliate proposes to take with respect thereto:

(i) with respect to any Plan, any reportable event, as defined in
section 4043(c) of ERISA and the regulations thereunder, for which notice
thereof has not been waived pursuant to such regulations as in effect on the
date hereof, other than a reportable event that, alone or together with other
reportable events, would not reasonably be expected to have a Material Adverse
Effect; or

(ii) the taking by the PBGC of steps to institute, or the threatening by the
PBGC of the institution of, proceedings under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by the PBGC with respect to such
Multiemployer Plan; or

(iii) any event, transaction or condition that could result in the incurrence of
any liability by the Company or any ERISA Affiliate for a violation of Title I
or IV of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate pursuant to Title I
or IV of ERISA or such penalty or excise tax provisions, if such liability or
Lien, taken together with any other such liabilities or Liens then existing,
could reasonably be expected to have a Material Adverse Effect;

(f) Notices from Governmental Authority — promptly, and in any event within 30
days of receipt thereof, copies of any notice to the Issuer, the Company or its
Subsidiaries from any Federal or state Governmental Authority relating to any
order, ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect;

(g) Trust Reports — promptly, and in any event within 5 days of receipt thereof,
copies of any periodic trust report of the Issuer delivered to the Company; and

 

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(h) Requested Information — with reasonable promptness, such other data and
information relating to the business, operations, affairs, financial condition,
assets or properties of the Issuer, the Company or its Subsidiaries (including
actual copies of any documents previously delivered by means of Electronic
Delivery) or relating to (i) the ability of the Issuer to perform its
obligations hereunder and under the Notes as from time to time may be reasonably
requested by any such holder of Notes or (ii) the ability of the Company to
perform its obligations hereunder as from time to time may be reasonably
requested by any such holder of Notes.

7.2 Officer’s Certificate.

Each set of financial statements delivered to a holder of Notes pursuant to
Section 7.1(a) or Section 7.1(b) will be accompanied by a certificate (which, in
the case of Electronic Delivery of any such financial statements, may be by
separate concurrent delivery of such certificate to each holder of Notes or by
Electronic Delivery thereof) of a Senior Financial Officer setting forth:

(a) Covenant Compliance — the information (including detailed calculations and a
reconciliation to GAAP if based other than on GAAP) required in order to
establish whether the Company was in compliance with the requirements of
Section 10.1 through Section 10.5, inclusive, during the quarterly or annual
period covered by the statements then being furnished (including with respect to
each such Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the terms of
such Sections, and the calculation of the amount, ratio or percentage then in
existence); and

(b) Event of Default — a statement that such Senior Financial Officer has
reviewed the relevant terms hereof and has made, or caused to be made, under his
or her supervision, a review of the transactions and conditions of the Company
and its Subsidiaries from the beginning of the quarterly or annual period
covered by the statements then being furnished to the date of the certificate
and that such review shall not have disclosed the existence during such period
of any condition or event that constitutes a Default or an Event of Default or,
if any such condition or event existed or exists (including any such event or
condition resulting from the failure of the Company or its Subsidiaries to
comply with any Environmental Law), specifying the nature and period of
existence thereof and what action the Company shall have taken or proposes to
take with respect thereto.

7.3 Visitation.

The Company shall permit the representatives of each holder of Notes that is an
Institutional Accredited Investor:

(a) No Default — if no Default or Event of Default then exists, at the expense
of such holder and upon reasonable prior notice to the Company, but no more than
two times during any 12 month period, to visit, during normal business hours,
the principal executive office of the Company, to discuss the affairs, finances
and accounts of the

 

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Company and its Subsidiaries with the Company’s officers, and (with the consent
of the Company, which consent will not be unreasonably withheld) its independent
public accountants, and (with the consent of the Company, which consent will not
be unreasonably withheld) to visit the other offices and properties of the
Company and each Subsidiaries; and

(b) Default — if a Default or Event of Default then exists, at the expense of
the Company, and upon reasonable prior notice to the Company, to visit and
inspect, during normal business hours, any of the offices or properties of the
Company or its Subsidiaries, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all as often as may be requested.

8. PREPAYMENT OF THE NOTES.

8.1 No Scheduled Prepayments.

No regularly scheduled prepayments are due on the Notes prior to their stated
maturity.

8.2 Optional Prepayments with Make-Whole Amount.

(a) Normal Optional Prepayments. The Issuer may, at its option, upon notice as
provided below, prepay at any time all, or from time to time any part of, the
Notes of any series in an amount not less than $2,000,000 in the aggregate in
the case of a partial prepayment, at 100% of the principal amount so prepaid,
plus the Make-Whole Amount determined for the prepayment date with respect to
such principal amount. The Issuer will give each holder of Notes of the series
to be prepaid written notice of each optional prepayment under this Section 8.2
not less than 30 days and not more than 60 days prior to the date fixed for such
prepayment. Each such notice shall specify such date (which shall be a Business
Day), the aggregate principal amount of the Notes to be prepaid on such date,
the principal amount of each Note held by such holder to be prepaid (determined
in accordance with Section 8.4), and the interest to be paid on the prepayment
date with respect to such principal amount being prepaid, and shall be
accompanied by a certificate of a Senior Financial Officer of the Company as to
the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes of the series to
be prepaid a certificate of a Senior Financial Officer of the Company specifying
the calculation of such Make-Whole Amount as of the specified prepayment date.

(b) Prepayments During Defaults or Events of Defaults. Anything in
Section 8.2(a) to the contrary notwithstanding, during the continuance of a
Default or

 

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Event of Default, the Issuer may prepay less than all of the outstanding Notes
pursuant to Section 8.2(a) only if such prepayment is allocated among all of the
series of Notes at the time outstanding in proportion, as nearly as practicable,
to the respective unpaid principal amounts of the Notes in each such series not
theretofore called for prepayment.

8.3 Mandatory Offer to Prepay Upon Change of Control.

(a) Change of Control. The Company will, within 5 days of a Rating Decline,
cause the Trustee to give each holder of Notes written notice containing and
constituting an offer to prepay Notes accompanied by the certificate described
in paragraph (e) of this Section 8.3.

(b) Offer to Prepay Notes. The offer to prepay Notes contemplated by
paragraph (a) of this Section 8.3 shall be an offer to prepay, in accordance
with and subject to this Section 8.3, all, but not less than all, of the Notes
held by each holder (in this case only, “holder” in respect of any Note
registered in the name of a nominee for a disclosed beneficial owner shall mean
such beneficial owner) on the Business Day specified in such offer (the
“Proposed Prepayment Date”). The Proposed Prepayment Date shall be not less than
30 days and not more than 60 days after the date of such offer.

(c) Acceptance; Rejection. A holder of Notes may accept the offer to prepay made
pursuant to this Section 8.3 by causing a notice of such acceptance to be
delivered to the Trustee on or before the date specified in the certificate
described in paragraph (e) of this Section 8.3. A failure by a holder of Notes
to respond to an offer to prepay made pursuant to this Section 8.3, or to accept
an offer as to all of the Notes held by the holder, within such time period
shall be deemed to constitute rejection of such offer by such holder.

(d) Prepayment. Prepayment of the Notes to be prepaid pursuant to this
Section 8.3 shall be at 100% of the principal amount of such Notes, together
with interest on such Notes accrued to the date of prepayment and shall not
require the payment of any Make-Whole Amount. The prepayment shall be made on
the Proposed Prepayment Date.

(e) Officer’s Certificate. Each offer to prepay the Notes pursuant to this
Section 8.3 shall be accompanied by a certificate, executed by the Trustee and
dated the date of such offer, specifying: (i) the Proposed Prepayment Date,
(ii) that such offer is made pursuant to this Section 8.3, (iii) the principal
amount of each Note offered to be prepaid, (iv) the interest that would be due
on each Note offered to be prepaid, accrued to the Proposed Prepayment Date,
(v) that the conditions of this Section 8.3 have been fulfilled, (vi) in
reasonable detail, the nature and date of the Change of Control and (vii) the
date by which any holder of a Note that wishes to accept such offer must deliver
notice thereof to the Trustee, which date shall not be earlier than three
Business Days prior to the Proposed Prepayment Date

8.4 Allocation of Partial Prepayments.

In the case of each partial prepayment of Notes pursuant to Section 8.2, the
principal amount of the Notes of a series to be prepaid shall be allocated among
all of the Notes

 

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of such series at the time outstanding in proportion, as nearly as practicable,
to the respective unpaid principal amounts thereof not theretofore called for
prepayment.

8.5 Maturity; Surrender, etc.

In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment (which shall be a Business Day),
together with interest on such principal amount accrued to such date and the
applicable Make-Whole Amount, if any. From and after such date, unless the
Issuer shall fail to pay such principal amount when so due and payable, together
with the interest and Make-Whole Amount, if any, as aforesaid, interest on such
principal amount shall cease to accrue. Any Note paid or prepaid in full shall
be surrendered to the Issuer and canceled and shall not be reissued, and no Note
shall be issued in lieu of any prepaid principal amount of any Note.

8.6 Purchase of Notes.

The Company will not and will not permit any Affiliate to purchase, redeem,
prepay or otherwise acquire, directly or indirectly, any of the outstanding
Notes except (a) upon the payment or prepayment of the Notes in accordance with
the terms of this Agreement and the Notes or (b) pursuant to an offer to
purchase made by the Company or an Affiliate pro rata to the holders of all
Notes of that series at the time outstanding upon the same terms and conditions
(which shall be established by the Company). Any such offer shall provide each
holder with sufficient information to enable it to make an informed decision
with respect to such offer, and shall remain open for at least 10 Business Days.
If the holders of more than 50% of the principal amount of the series of Notes
then outstanding accept such offer, the Company shall promptly notify the
remaining holders of such fact and the expiration date for the acceptance by
holders of the series Notes of such offer shall be extended by the number of
days necessary to give each such remaining holder at least 10 Business Days from
its receipt of such notice to accept such offer. The Trustee will promptly
cancel all Notes acquired by the Company or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.

8.7 Make-Whole Amount.

“Make-Whole Amount” means, with respect to any Note, an amount equal to the
excess, if any, of the Discounted Value of the Remaining Scheduled Payments with
respect to the Called Principal of such Note over the amount of such Called
Principal, provided that the Make-Whole Amount may in no event be less than
zero. For the purposes of determining the Make-Whole Amount, the following terms
have the following meanings:

“Called Principal” means, with respect to any Note, the principal of such Note
that is to be prepaid pursuant to Section 8.2 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context requires.

“Discounted Value” means, with respect to the Called Principal of any Note, the
amount obtained by discounting all Remaining Scheduled Payments with respect to
such Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such

 

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Called Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which interest on
the Notes is payable) equal to the Reinvestment Yield with respect to such
Called Principal.

“Reinvestment Yield” means, with respect to the Called Principal of any Note,
.50% over the yield to maturity implied by (i) the yields reported as of 10:00
a.m. (New York City time) on the second Business Day preceding the Settlement
Date with respect to such Called Principal, on the display designated as “Page
PX1” (or such other display as may replace Page PX1 on Bloomberg Financial
Markets (“Bloomberg”) or, if Page PX1 (or its successor screen on Bloomberg) is
unavailable, the Telerate Access Service screen which corresponds most closely
to Page PX1 for the most recently issued actively traded on-the-run U.S.
Treasury securities having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date, or (ii) if such yields are not
reported as of such time or the yields reported as of such time are not
ascertainable (including by way of interpolation), the Treasury Constant
Maturity Series Yields reported, for the latest day for which such yields have
been so reported as of the second Business Day preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical Release
H.15 (519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between (1) the actively traded U.S.
Treasury security with the maturity closest to and greater than such Remaining
Average Life and (2) the actively traded U.S. Treasury security with the
maturity closest to and less than such Remaining Average Life. The Reinvestment
Yield shall be rounded to the number of decimal places as appears in the
interest rate of the applicable Note.

“Remaining Average Life” means, with respect to any Called Principal, the number
of years (calculated to the nearest one-twelfth year) obtained by dividing
(i) such Called Principal into (ii) the sum of the products obtained by
multiplying (a) the principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (b) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.

“Remaining Scheduled Payments” means, with respect to the Called Principal of
any Note, all payments of such Called Principal and interest thereon that would
be due after the Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its scheduled due date,
provided that if such Settlement Date is not a date on which interest payments
are due to be made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such Settlement Date
pursuant to Section 8.2 or 12.1.

“Settlement Date” means, with respect to the Called Principal of any Note, the
date on which such Called Principal is to be prepaid pursuant to Section 8.2 or
has become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.

 

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9. AFFIRMATIVE COVENANTS.

Each of the Company and the Issuer covenants that so long as any of the Notes
are outstanding:

9.1 Compliance with Law.

Without limiting Section 10.4, the Company will, will cause its Subsidiaries to,
and the Issuer will, comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including ERISA, the USA Patriot
Act and Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

9.2 Insurance.

The Company will, will cause its Subsidiaries to, and the Issuer will, maintain,
with financially sound and reputable insurers, insurance with respect to their
respective properties and businesses and the insurable properties of the Issuer
against such casualties and contingencies, of such types, on such terms and in
such amounts (including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is customary in the
case of entities of established reputations engaged in the same or a similar
business and similarly situated.

9.3 Maintenance of Properties.

The Company will, will cause its Subsidiaries to, and the Issuer will, maintain
and keep, or cause to be maintained and kept, their respective properties in
good repair, working order and condition (other than ordinary wear and tear), so
that the business carried on in connection therewith may be properly conducted
at all times, provided that this Section shall not prevent the Issuer, the
Company or its Subsidiaries from discontinuing the operation and the maintenance
of any of its properties if such discontinuance is desirable in the conduct of
its business and the Issuer or the Company has concluded that such
discontinuance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

9.4 Payment of Taxes and Claims.

The Company will, will cause each Subsidiary to, and the Issuer will, file all
tax returns required to be filed in any jurisdiction (except in any case in
which the failure to file would not have a Material Adverse Effect) and to pay
and discharge all taxes shown to be due and payable on such returns and all
other taxes, assessments, governmental charges, or levies imposed on them or any
of their properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable, before they have become delinquent,
provided that none of the Company, any Subsidiary or the Issuer need pay any
such tax or assessment or

 

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claims if (i) the amount, applicability or validity thereof is contested on a
timely basis in good faith and in appropriate proceedings, and the Company, such
Subsidiary or the Issuer has established adequate reserves therefor in
accordance with GAAP on its books or (ii) the nonpayment of all such taxes,
assessments and claims in the aggregate would not have a Material Adverse
Effect.

9.5 Corporate Existence, etc.

Subject to Section 10.3, the Company and the Issuer will at all times preserve
and keep in full force and effect their respective legal existence and all
rights and franchises of the Company unless, in the good faith judgment of the
Company, the termination of or failure to preserve and keep in full force and
effect such corporate existence, right or franchise could not, individually or
in the aggregate, have a Material Adverse Effect.

9.6 Books and Records.

The Company and the Issuer will maintain proper books of record and account in
conformity with GAAP and all applicable requirements of any Governmental
Authority having legal or regulatory jurisdiction over the Issuer or the
Company, as the case may be.

10. NEGATIVE COVENANTS.

Each of the Company and the Issuer covenants that so long as any of the Notes
are outstanding:

10.1 Debt to Capitalization Ratio.

The Company will not permit the ratio of (i) Debt to (ii) Capitalization as of
the last day of any fiscal quarter to be in excess of 0.65 to 1.00.

10.2 Liens.

The Company will not permit to exist or incur, directly or indirectly, any Lien
on its Operating Property, whether now owned or hereafter acquired, unless the
Notes are equally and ratably secured by a Lien on the same property and assets,
except:

(a) The Lien of a Mortgage Indenture to secure First Mortgage Bonds in an
aggregate principal amount, at the date of issuance of such First Mortgage
Bonds, not to exceed 15% of Capitalization (in addition to First Mortgage Bonds
issued to secure Debt described in (b) and (h) below);

(b) Liens to secure Debt pursuant to the Credit Agreement in an aggregate
principal amount not to exceed $200 million;

(c) Liens to secure Debt existing on the date of this Agreement other than
pursuant to the Credit Agreement, provided that such Debt shall not be increased
in amount;

 

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(d) Liens on any Operating Property that existed on such property prior to the
acquisition thereof by the Company to secure Debt assumed by the Company in
connection with such acquisition;

(e) Liens to secure Debt incurred by the Company in connection with the
acquisition or lease by the Company in the ordinary course of business, after
the date of this Agreement, of furniture, fixtures, equipment and other assets
not owned by the Company as of the date of issuance of the Notes provided that
(i) such Debt shall not be secured by any Operating Property of the Company
other than the Operating Property with respect to which such Debt is incurred,
and (ii) the Lien securing such Debt shall be created within 90 days of the
incurrence of such Debt;

(f) Liens to secure Debt of any Person existing at the time such Person is
merged into or consolidated with, or such Person disposes of all or
substantially all its properties (or those of a division) to, the Company;

(g) Liens to secure Debt incurred by the Company to acquire, construct, develop
or substantially repair, alter or improve Operating Property or to provide funds
for any such purpose or for reimbursement of funds previously expended for any
such purpose; provided that such Debt is incurred contemporaneously with, or
within 730 days after, such acquisition or the completion of construction,
development or substantial repair, alteration or improvement;

(h) Liens to secure, directly or indirectly, the Company’s obligations with
respect to Debt issued by any Governmental Authority, including Debt represented
by securities issued by any such Governmental Authority (or providers of credit
enhancement with respect to such securities), including, without limitation, the
Company’s obligations with respect to industrial development, pollution control
or similar revenue bonds incurred for the purpose of financing all or any part
of the purchase price or the cost of substantially repairing or altering,
constructing, developing or substantially improving Operating Property;

(i) Liens to secure Debt which has been defeased, including the Notes;

(j) Liens to secure Debt incurred in connection with an accounts receivable
facility (including, without limitation, Liens on the property of Finsub
incurred pursuant to the Receivables Program Documents and Liens in favor of
Finsub granted by the Company with respect to Receivables purportedly sold to
Finsub by the Company pursuant to the Receivables Program) and/or contract
payments facility or the securitization of any Excepted Assets;

(k) any Lien to secure the Notes;

(l) Liens for taxes or assessments by any Governmental Authority not yet due or
being contested in good faith by appropriate proceedings;

 

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(m) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s,
landlords’, licensors’ or other like Liens arising in the ordinary course of
business and securing obligations that are not due and payable;

(n) pledges and deposits made in the ordinary course of the Company’s business
in compliance with workmen’s compensation, unemployment insurance and other
social security laws or regulations;

(o) deposits by the Company to secure the performance of bids, trade contracts
(other than for Debt), leases (other than Capital Leases), statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course of business;

(p) zoning restrictions, easements, rights-of-way, restrictions on use of real
property or permit or license requirements and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate, are not
substantial in amount and do not materially detract from the value of the
property subject thereto or interfere with the ordinary conduct of the
businesses of the Company;

(q) one or more attachments or other similar Liens on assets of the Company
arising in connection with court proceedings (i) in an aggregate principal
amount not in excess of $10,000,000 (so long as the Company has set aside
adequate reserves therefor) or (ii) the execution of which has been stayed or
which has been appealed and secured, if necessary, by an appeal bond; provided
that in each case no Event of Default shall result therefrom;

(r) any Lien arising by operation of law on the assets of the Company in favor
of any Governmental Authority with respect to any franchise, grant, license,
permit or contract; and

(s) Liens to secure any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of an instrument or
agreement creating any Debt referred to in the above clauses.

10.3 Merger, Consolidation, etc.

The Company will not consolidate with or merge with any other Person or convey,
transfer or lease all or substantially all of its assets in a single transaction
or series of transactions to any Person unless:

(a) the successor formed by such consolidation or the survivor of such merger or
the Person that acquires by conveyance, transfer or lease all or substantially
all of the assets of the Company as an entirety, as the case may be, shall be a
solvent corporation or limited liability company organized and existing under
the laws of the United States or any State thereof (including the District of
Columbia), and, if the Company is not such corporation or limited liability
company, (i) such corporation or limited liability company shall have executed
and delivered to each holder of any Notes its assumption of the due and punctual
performance and observance of each covenant and condition of this

 

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Agreement and the Notes and (ii) such corporation or limited liability company
shall have caused to be delivered to each holder of any Notes an opinion of
nationally recognized independent counsel, or other independent counsel
reasonably satisfactory to the Required Holders, to the effect that all
agreements or instruments effecting such assumption are enforceable in
accordance with their terms and comply with the terms hereof; and

(b) immediately before and immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing.

No such conveyance, transfer or lease of substantially all of the assets of the
Company shall have the effect of releasing the Company or any successor
corporation or limited liability company that shall theretofore have become such
in the manner prescribed in this Section 10.3 from its liability under this
Agreement or the Notes.

10.4 Sanctions or Terrorism Designation.

The Company will not, will not permit any of its Subsidiaries to, and the Issuer
will not (a) engage in activities that are likely to result in its or their
designation (i) on the Specially Designated Nationals and Blocked Persons List
of the Office of Foreign Assets Control, or (ii) under Section 1 of the
Anti-Terrorism Order or (b) knowingly engage in any unlawful dealings or
transactions with any Person so designated.

10.5 Liens of Issuer.

The Issuer will not, and will not permit any Subsidiary to, permit to exist,
create, assume or incur, directly or indirectly, any Lien on its properties or
assets, whether now owned or hereafter acquired, unless the Notes are equally
and ratably secured by a Lien on the same property and assets pursuant to an
agreement or agreements reasonably acceptable to the Required Holders.

11. EVENTS OF DEFAULT.

An “Event of Default” shall exist if any of the following conditions or events
shall occur and be continuing:

(a) the Issuer defaults in the payment of any principal or Make-Whole Amount, if
any, on any Note when the same becomes due and payable, whether at maturity or
at a date fixed for prepayment or by declaration or otherwise; or

(b) the Issuer defaults in the payment of any interest on any Note for more than
ten days after the same becomes due and payable; or

(c) the Company or the Issuer defaults in the performance of or compliance
with any term contained herein (other than those referred to in paragraphs (a)
and (b) of this Section 11) and such default is not remedied within 30 days
after the earlier of (i) the Issuer or a Responsible Officer obtaining actual
knowledge of such default and (ii) the Company or the Issuer receiving written
notice of such default from any holder of a Note

 

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(any such written notice to be identified as a “notice of default” and to refer
specifically to this paragraph (c) of Section 11); or

(d) any representation or warranty made in writing by or on behalf of the
Issuer, the Company or by any officer of the Company in this Agreement or in any
writing furnished in connection with the transactions contemplated hereby or
thereby proves to have been false or incorrect in any material respect on the
date as of which made; or

(e) the Issuer or the Company is in default (as principal or as guarantor or
other surety) in the payment of any principal of or premium or make-whole amount
or interest on any Debt when due (whether by acceleration or otherwise) that is
outstanding in an aggregate principal amount of at least $10,000,000, for a
period of 10 days; or

(f) the Issuer or the Company (i) is generally not paying, or admits in writing
its inability to pay, its debts as they become due, (ii) files, or consents by
answer or otherwise to the filing against it of, a petition for relief or
reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an assignment
for the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or

(g) a court or Governmental Authority of competent jurisdiction enters an order
appointing, without consent by the Issuer or the Company, a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of the Issuer or the Company, or any such petition shall be filed
against the Issuer or the Company and such petition shall not be dismissed
within 90 days; or

(h) a final judgment or judgments for the payment of money aggregating in excess
of $100,000,000 are rendered against one or more of the Issuer or the Company,
which judgments are not, within 60 days after entry thereof, bonded, discharged
or stayed pending appeal, or are not discharged within 60 days after the
expiration of such stay; or

(i) if any event or events described in clauses (i) through (vi) below, either
individually or together with any other such event or events, could reasonably
be expected to have a Material Adverse Effect: (i) the Company fails to make
contributions necessary to satisfy the minimum funding standards of ERISA or the
Code for any plan year or part thereof or a waiver of such standards or
extension of any amortization period is sought or granted under section 412 of
the Code, (ii) a notice of intent to terminate any Plan shall have been or is
reasonably expected to be filed with the PBGC or the PBGC

 

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shall have instituted proceedings under ERISA section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have notified the
Company or any ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the adjusted funding target attainment percentage, determined
in accordance with section 436 of the Code, is less than 80% for any Plan,
(iv) the Company or any ERISA Affiliate shall have incurred or is reasonably
expected to incur any liability on account of a violation of Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to employee
benefit plans, (v) the Company or any ERISA Affiliate withdraws from any
Multiemployer Plan, or (vi) the Company establishes or amends any employee
welfare benefit plan that provides post-employment welfare benefits in a manner
that would increase the liability of the Company thereunder in a Material way;
or

(j) the guaranty of the Company ceases to be in full force and effect, or is
declared to be null and void in whole or in material part by a court or other
governmental or regulatory authority having jurisdiction, or the validity or
enforceability thereof shall be contested by either the Issuer or the Company or
either of them renounces any of the same or denies that it has any or further
liability thereunder.

As used in Section 11(i), the terms “employee benefit plan” and “employee
welfare benefit plan” shall have the respective meanings assigned to such terms
in section 3 of ERISA.

12. REMEDIES ON DEFAULT, ETC.

12.1 Acceleration.

(a) If an Event of Default with respect to the Issuer or the Company described
in paragraph (f) or (g) of Section 11 (other than an Event of Default described
in clause (i) of paragraph (f) or described in clause (vi) of paragraph (f) by
virtue of the fact that such clause encompasses clause (i) of paragraph (f)) has
occurred, all the Notes then outstanding shall automatically become immediately
due and payable.

(b) If any other Event of Default has occurred and is continuing, any holder or
holders of at least 51% in principal amount of the Notes at the time outstanding
may at any time at its or their option, by notice or notices to the Issuer,
declare all the Notes then outstanding to be immediately due and payable.

(c) If any Event of Default described in paragraph (a) or (b) of Section 11 has
occurred and is continuing, any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time, at its or their
option, by notice or notices to the Issuer, declare all the Notes held by it or
them to be immediately due and payable.

Upon any Notes becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest
thereon (including, but not limited to, interest accrued thereon at the Default
Rate) and (y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or

 

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further notice, all of which are hereby waived. The parties hereto agree, that
each holder of a Note has the right to maintain its investment in the Notes free
from repayment by the Issuer (except as herein specifically provided for) and
that the provision for payment of a Make-Whole Amount by the Issuer in the event
that the Notes are prepaid or are accelerated as a result of an Event of
Default, is intended to provide compensation for the deprivation of such right
under such circumstances.

12.2 Other Remedies.

If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.

12.3 Rescission.

At any time after any Notes have been declared due and payable pursuant to
clause (b) or (c) of Section 12.1, the holder or holders of at least 51% in
principal amount of the Notes then outstanding, by written notice to the Issuer,
may rescind and annul any such declaration and its consequences if (a) the
Issuer has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid
other than by reason of such declaration, and all interest on such overdue
principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) neither the Issuer nor any other Person shall have paid any amounts
which have become due solely by reason of such declaration, (c) all Events of
Default and Defaults, other than non-payment of amounts that have become due
solely by reason of such declaration, have been cured or have been waived
pursuant to Section 18, and (d) no judgment or decree has been entered for the
payment of any monies due pursuant hereto or to the Notes. No rescission and
annulment under this Section 12.3 will extend to or affect any subsequent Event
of Default or Default or impair any right consequent thereon.

12.4 No Waivers or Election of Remedies, Expenses, etc.

No course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder’s rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.

13. GUARANTY OF NOTES.

As a result of the arrangements contemplated by the Trust Agreement and the
Purchase Contract for the financing by the Issuer of nuclear fuel, the Company
acknowledges that it will derive substantial benefit from the issuance of the
Notes. To induce the holders of

 

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Notes to enter into this Agreement, the Company agrees with you, each Other
Purchaser and any other holder of Notes (each such person, together with its
successors and assigns, a “Guaranteed Party”) as follows:

13.1 Guarantee.

The Company unconditionally guarantees, as a primary obligor and not merely as a
surety, (a) the due and punctual payment of (i) the principal of and premium, if
any, and interest (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Notes, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, and (ii) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), of the Issuer to the
Guaranteed Parties under this Agreement and (b) the due and punctual performance
of all covenants, agreements, obligations and liabilities of the Issuer under or
pursuant to this Agreement or the Notes (all the monetary and other obligations
referred to in the preceding clauses (a) and (b) being collectively called the
“Obligations”). The Company further agrees that the Obligations may be extended
or renewed, in whole or in part, without notice to or further assent from it,
and that it will remain bound upon its guarantee notwithstanding any extension
or renewal of any Obligation.

13.2 Obligations Not Waived.

To the fullest extent permitted by applicable law, the Company waives
presentment to, demand of payment from and protest to the Issuer of any of the
Obligations, and also waives notice of acceptance of its guarantee and notice of
protest for nonpayment. To the fullest extent permitted by applicable law, the
obligations of the Company hereunder shall not be affected by (a) the failure of
any Guaranteed Party to assert any claim or demand or to enforce or exercise any
right or remedy against the Issuer or (b) any rescission, waiver, amendment or
modification of, or any release from any of the terms or provisions of this
Agreement or any other agreement, including with respect to any other guarantor
of the Obligations.

13.3 Security.

The Company authorizes each of the Guaranteed Parties to (a) take and hold
security for the payment of this guarantee and the Obligations and exchange,
enforce, waive and release any such security, (b) apply such security and direct
the order or manner of sale thereof as they in their sole discretion may
determine and (c) release or substitute any one or more endorsees, other
guarantors or other obligors.

13.4 Guarantee of Payment.

The Company further agrees that its guarantee constitutes a guarantee of payment
when due and not of collection, and waives any right to require that any resort
be had by the any Guaranteed Party to any of the security held for payment of
the Obligations or to any balance of

 

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any deposit account or credit on the books of any Guaranteed Party in favor of
the Issuer or any other person.

13.5 No Discharge or Diminishment of Guarantee.

The obligations of the Company hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the payment in
full in cash of the Obligations), including any claim of waiver, release,
surrender, alteration or compromise of any of the Obligations, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of the Company hereunder shall not be discharged or impaired or
otherwise affected by the failure of any Guaranteed Party to assert any claim or
demand or to enforce any remedy under this Agreement, any Note or any other
agreement, by any waiver or modification of any provision of any thereof, by any
default, failure or delay, willful or otherwise, in the performance of the
Obligations, or by any other act or omission that may or might in any manner or
to any extent vary the risk of the Company or that would otherwise operate as a
discharge of the Company as a matter of law or equity (other than the payment in
full in cash of all the Obligations).

13.6 Defenses of the Issuer Waived.

To the fullest extent permitted by applicable law, the Company waives any
defense based on or arising out of any defense of the Issuer or the
unenforceability of the Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of the Issuer, other than the payment
in full in cash of the Obligations. The Guaranteed Parties may, at their
election, foreclose on any security held by one or more of them by one or more
judicial or nonjudicial sales, accept an assignment of any such security in lieu
of foreclosure, compromise or adjust any part of the Obligations, make any other
accommodation with the Issuer or any other guarantor or exercise any other right
or remedy available to them against the Issuer or any other guarantor, without
affecting or impairing in any way the liability of the Company hereunder except
to the extent the Obligations have been fully, finally paid in cash. To the
fullest extent permitted by applicable law, the Company waives any defense
arising out of any such election even though such election operates, pursuant to
applicable law, to impair or to extinguish any right of reimbursement or
subrogation or other right or remedy of the Company against the Issuer or any
other guarantor, as the case may be, or any security.

13.7 Agreement to Pay; Subrogation.

In furtherance of the foregoing and not in limitation of any other right that
any Guaranteed Party has at law or in equity against the Company by virtue
hereof, upon the failure of the Issuer to pay any Obligation when and as the
same shall become due, whether at maturity, by acceleration, after notice of
prepayment or otherwise, the Company hereby promises to and will forthwith pay,
or cause to be paid, to each Guaranteed Party in cash the amount of such unpaid
Obligations. Upon payment by the Company of any sums to each Guaranteed Party as
provided above, all rights of the Company against the Issuer arising as a result
thereof by way of right of subrogation, contribution, reimbursement, indemnity
or otherwise shall in all respects be subordinate and junior in right of payment
to the prior payment in full in cash of all the

 

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Obligations. In addition, any indebtedness of the Issuer now or hereafter held
by the Company is hereby subordinated in right of payment to the prior payment
in full of the Obligations. If any amount shall erroneously be paid to the
Company on account of (i) such subrogation, contribution, reimbursement,
indemnity or similar right or (ii) any such indebtedness of the Issuer, such
amount shall be held in trust for the benefit of the Guaranteed Parties and
shall forthwith be paid to the Guaranteed Parties to be credited against the
payment of the Obligations, whether matured or unmatured, in accordance with the
terms of this Agreement and the Notes.

13.8 Information.

The Company assumes all responsibility for being and keeping itself informed of
the Issuer’s financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Obligations and the nature, scope and
extent of the risks that the Company assumes and incurs hereunder, and agrees
that none of the Guaranteed Parties will have any duty to advise the Company of
information known to it or any of them regarding such circumstances or risks.

13.9 Termination.

The guarantee made hereunder (a) shall terminate when all the Obligations have
been indefeasibly paid in full and (b) shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any Obligation is rescinded or must otherwise be restored by any Guaranteed
Party or the Company upon the bankruptcy or reorganization of the Issuer, the
Company or otherwise.

14. REGISTRATION; EXCHANGE; SUBSTITUTION; TRANSFER OF NOTES.

14.1 Registration of Notes.

The Company, acting as agent for the Issuer, shall keep at its principal
executive office in the United States a register for the registration and
registration of transfers of Notes. The name and address of each holder of one
or more Notes and the principal amounts thereof, each transfer thereof and the
name and address of each transferee of one or more Notes shall be registered in
such register. Prior to due presentment for registration of transfer, the Person
in whose name any Note shall be registered shall be deemed and treated as the
owner and holder thereof for all purposes absent manifest error, and the Issuer
shall not be affected by any notice or knowledge to the contrary. The Company or
the Issuer shall give to any holder of a Note that is an Institutional
Accredited Investor, promptly upon request therefor, a complete and correct copy
of the names and addresses of all registered holders of Notes.

14.2 Transfer and Exchange of Notes.

Upon surrender of any Note to the Issuer at the address and to the attention of
the designated officer (all as specified in Section 19(iv)), for registration of
transfer or exchange (and in the case of a surrender for registration of
transfer accompanied by a written instrument of transfer duly executed by the
registered holder of such Note or such holder’s attorney duly authorized in
writing and accompanied by the relevant name, address and other information for
notices of each transferee of such Note or part thereof), the Issuer shall
execute and deliver

 

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within 10 Business Days, at the Issuer’s expense (except as provided below), one
or more new Notes (as requested by the holder thereof) of the same series in
exchange therefor, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new Note shall be payable to
such Person as such holder may request and shall be substantially in the form of
Exhibit 1(a), 1(b) or 1(c). Each such new Note shall be dated and bear interest
from the date to which interest shall have been paid on the surrendered Note or
dated the date of the surrendered Note if no interest shall have been paid
thereon. The Issuer may require payment of a sum sufficient to cover any stamp
tax or governmental charge imposed in respect of any such transfer of Notes.
Notes shall not be transferred in denominations of less than $100,000, provided
that if necessary to enable the registration of transfer by a holder of its
entire holding of Notes, one Note may be in a denomination of less than
$100,000. Any transferee, by its acceptance of a Note registered in its name (or
the name of its nominee), shall be deemed to have made the representations set
forth in Section 6.

14.3 Replacement of Notes.

Upon receipt by the Issuer at the address and to the attention of the designated
officer (all as specified in Section 19(iii)) of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of any Note (which evidence shall be, in the case of an Institutional
Accredited Investor, notice from such Institutional Accredited Investor of such
ownership and such loss, theft, destruction or mutilation), and

(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original Purchaser or another holder of a Note with a minimum net worth
of at least $50,000,000 or an Institutional Accredited Investor, such Person’s
own unsecured agreement of indemnity shall be deemed to be satisfactory), or

(b) in the case of mutilation, upon surrender and cancellation thereof,

the Issuer at its own expense shall execute and deliver within 10 Business Days,
in lieu thereof, a new Note, dated and bearing interest from the date to which
interest shall have been paid on such lost, stolen, destroyed or mutilated Note
or dated the date of such lost, stolen, destroyed or mutilated Note if no
interest shall have been paid thereon.

15. PAYMENTS ON NOTES.

15.1 Place of Payment.

Subject to Section 15.2, payments of principal, Make-Whole Amount, if any, and
interest becoming due and payable on the Notes shall be made in New York, New
York at the principal office of The Bank of New York Mellon in such
jurisdiction. The Issuer may at any time, by notice to each holder of a Note,
change the place of payment of the Notes so long as such place of payment shall
be either the principal office of the Issuer in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.

 

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15.2 Home Office Payment.

So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 15.1 or in such Note to the
contrary, the Issuer will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Issuer in writing for such purpose, without the presentation or surrender of
such Note or the making of any notation thereon, except that upon written
request of the Issuer made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Issuer at its
principal executive office or at the place of payment most recently designated
by the Issuer pursuant to Section 15.1. Prior to any sale or other disposition
of any Note held by you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Issuer in exchange
for a new Note or Notes pursuant to Section 14.2. The Issuer will afford the
benefits of this Section 15.2 to any Institutional Accredited Investor that is
the direct or indirect transferee of any Note purchased by you under this
Agreement and that has made the same agreement relating to such Note as you have
made in this Section 15.2.

16. EXPENSES, ETC.

16.1 Transaction Expenses.

Whether or not the transactions contemplated hereby are consummated, the Issuer
will pay all costs and expenses (including reasonable attorneys’ fees of one
special counsel and, if reasonably required by the Required Holders, local or
other counsel) incurred by you and each Other Purchaser or holder of a Note in
connection with such transactions and in connection with any amendments, waivers
or consents under or in respect of this Agreement or the Notes (whether or not
such amendment, waiver or consent becomes effective), including, without
limitation: (a) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this Agreement
or the Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, or
by reason of being a holder of any Note, (b) the costs and expenses, including
financial advisors’ fees, incurred in connection with the insolvency or
bankruptcy of the Issuer, the Company or any Subsidiary or in connection with
any work-out or restructuring of the transactions contemplated hereby and by the
Notes and (c) the costs and expenses incurred in connection with the initial
filing of this Agreement and all related documents and financial information
with the SVO; provided, that such costs and expenses shall not exceed $3,500.
The Issuer will pay, and will save you and each Other Purchaser or holder of a
Note harmless from, all claims in respect of any fees, costs or expenses, if
any, of brokers and finders (other than those, if any, retained by a Purchaser
or other holder in connection with its purchase of the Notes). You agree to pay,
and agree to hold the Issuer and the Company harmless from, all claims in
respect of any fees, costs or expenses, if any, of brokers or finders retained
by you; provided that, in connection with the initial sale of the Notes, U.S.
Bancorp Investments, Inc. and Banc of America Securities LLC shall be considered
a broker or finder retained by the Issuer.

 

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16.2 Survival.

The obligations of the Issuer under this Section 16 will survive the payment or
transfer of any Note, the enforcement, amendment or waiver of any provision of
this Agreement or the Notes, and the termination of this Agreement.

17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

All representations and warranties contained herein shall survive the execution
and delivery of this Agreement and the Notes, the purchase or transfer by you of
any Note or portion thereof or interest therein and the payment of any Note, and
may be relied upon by any subsequent holder of a Note, regardless of any
investigation made at any time by or on behalf of you or any other holder of a
Note. All statements contained in any certificate or other instrument delivered
by or on behalf of the Issuer or the Company pursuant to this Agreement shall be
deemed representations and warranties of the Issuer or Company under this
Agreement, as applicable. Subject to the preceding sentence, this Agreement and
the Notes embody the entire agreement and understanding between you, the Issuer
and the Company and supersede all prior agreements and understandings relating
to the subject matter hereof.

18. AMENDMENT AND WAIVER.

18.1 Requirements.

This Agreement and the Notes may be amended, and the observance of any term
hereof or of the Notes may be waived (either retroactively or prospectively),
with (and only with) the written consent of the Issuer, the Company and the
Required Holders, except that (a) no amendment or waiver of any of the
provisions of Section 1, 2, 3, 4, 5, 6 or 22 hereof, or any defined term (as it
is used in such sections), will be effective as to you unless consented to by
you in writing, and (b) no such amendment or waiver may, without the written
consent of the holder of each Note at the time outstanding affected thereby,
(i) subject to the provisions of Section 12 relating to acceleration or
rescission, change the amount or time of any prepayment or payment of principal
of, or reduce the rate or change the time of payment or method of computation of
interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage
of the principal amount of the Notes the holders of which are required to
consent to any such amendment or waiver, or (iii) amend any of Sections 8,
11(a), 11(b), 12, 18 or 21.

18.2 Solicitation of Holders of Notes.

(a) Solicitation. The Company and the Issuer will provide each holder of the
Notes (irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company or the Issuer will deliver executed or true
and correct copies of each amendment, waiver or consent effected pursuant to the
provisions of this Section 18 to each holder of outstanding Notes promptly
following the date on which it is executed and delivered by, or receives the
consent or approval of, the requisite holders of Notes.

 

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(b) Payment. Neither the Company nor the Issuer will directly or indirectly pay
or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security or provide other
credit support, to any holder of Notes as consideration for or as an inducement
to the entering into by any holder of Notes of any waiver or amendment of any of
the terms and provisions hereof unless such remuneration is concurrently paid,
or security is concurrently granted or other credit support concurrently
provided, on the same terms, ratably to each holder of Notes then outstanding
even if such holder did not consent to such waiver or amendment.

18.3 Binding Effect, etc.

Any amendment or waiver consented to as provided in this Section 18 applies
equally to all holders of Notes and is binding upon them and upon each future
holder of any Note and upon the Issuer and the Company without regard to whether
such Note has been marked to indicate such amendment or waiver. No such
amendment or waiver will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or waived or impair
any right consequent thereon. No course of dealing between the Issuer, the
Company and the holder of any Note nor any delay in exercising any rights
hereunder or under any Note shall operate as a waiver of any rights of any
holder of such Note. As used herein, the term “this Agreement” or “the
Agreement” and references thereto shall mean this Agreement as it may from time
to time be amended or supplemented.

18.4 Notes held by the Issuer, etc.

Solely for the purpose of determining whether the holders of the requisite
percentage of the aggregate principal amount of Notes then outstanding approved
or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Issuer or any of its
Affiliates shall be deemed not to be outstanding.

19. NOTICES.

All notices and communications provided for hereunder shall be in writing and
sent (a) by telecopy if the sender on the same day sends a confirming copy of
such notice by a recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by a recognized overnight delivery service (with charges
prepaid). Any such notice must be sent:

(i) if to you or your nominee, to you or it at the address specified for such
communications in Schedule A, or at such other address as you or it shall have
specified to the Company in writing,

(ii) if to any other holder of any Note, to such holder at such address as such
other holder shall have specified to the Company in writing,

 

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(iii) if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of Office of the General Counsel, or at such
other address as the Company shall have specified to the holder of each Note in
writing, or

(iv) if to the Issuer, to the Trustee at The Bank of New York Mellon Trust
Company, N.A., 601 Travis Street, 16th Floor, Houston, TX 77002 to the attention
of Corporate Finance, or at such other address as the Trustee shall have
specified to the holder of each Note in writing

Notices under this Section 19 will be deemed given only when actually received.

20. REPRODUCTION OF DOCUMENTS.

This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by any Purchaser at the Closing (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to any Purchaser, may be
reproduced by any Person who is a party to or recipient of any such document by
any photographic, photostatic, electronic, digital, or other similar process and
such Purchaser may destroy any original document so reproduced. Each of the
Company, the Issuer and you agrees and stipulates that, to the extent permitted
by applicable law, any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by such
Purchaser in the regular course of business) and any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence. This Section 20 shall not prohibit the Company, the Issuer or any
other holder of Notes from contesting any such reproduction to the same extent
that it could contest the original, or from introducing evidence to demonstrate
the inaccuracy of any such reproduction.

21. CONFIDENTIAL INFORMATION.

For the purposes of this Section 21, “Confidential Information” means
information delivered to any Purchaser by or on behalf of the Issuer, the
Company or its Subsidiaries in connection with the transactions contemplated by
or otherwise pursuant to this Agreement that is proprietary or confidential in
nature and that was clearly marked or labeled or otherwise adequately identified
when received by you as being confidential information of the Issuer, the
Company or its Subsidiaries, provided that such term does not include
information that (a) was publicly known or otherwise known to you prior to the
time of such disclosure, (b) subsequently becomes publicly known through no act
or omission by you or any Person acting on your behalf, (c) otherwise becomes
known to you other than through disclosure by the Issuer, the Company or its
Subsidiaries, or (d) constitutes financial statements delivered to you under
Section 7.1 that are otherwise publicly available. You will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by you in good faith to protect confidential information of third
parties delivered to you, provided that you may deliver or disclose Confidential
Information to (i) your directors, officers, employees, agents, attorneys and
affiliates (to the extent such disclosure reasonably relates to the
administration of the

 

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investment represented by your Notes), (ii) your financial advisors and other
professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 21,
(iii) any other holder of any Note, (iv) any Institutional Accredited Investor
to which you sell or offer to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this
Section 21), (v) any Person from which you offer to purchase any security of the
Issuer (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 21),
(vi) any federal or state regulatory authority having jurisdiction over you,
(vii) the NAIC or the SVO or, in each case, any similar organization, or any
nationally recognized rating agency that requires access to information about
your investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process (provided that, subject to clause (z) below, if
not prohibited by applicable law, you shall use commercially reasonable efforts
to give notice thereof to the Company and the Issuer prior to such disclosure),
(y) in connection with any litigation to which you are a party (provided that,
subject to clause (z) below, if not prohibited by applicable law, you shall use
commercially reasonable efforts to give notice thereof to the Company and the
Issuer prior to such disclosure) or (z) if an Event of Default has occurred and
is continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 21 as though it
were a party to this Agreement. On reasonable request by the Company or the
Issuer in connection with the delivery to any holder of a Note of information
required to be delivered to such holder under this Agreement or requested by
such holder (other than a holder that is a party to this Agreement or its
nominee), such holder will enter into an agreement with the Issuer and the
Company embodying the provisions of this Section 21.

22. SUBSTITUTION OF PURCHASER.

You shall have the right to substitute any one of your Affiliates as the
purchaser of the Notes that you have agreed to purchase hereunder, by written
notice to the Issuer, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate’s agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word “you” is used in this Agreement (other than in
this Section 22), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Issuer of notice of such transfer,
wherever the word “you” is used in this Agreement (other than in this
Section 22), such word shall no longer be deemed to refer to such Affiliate, but
shall refer to you, and you shall have all the rights of an original holder of
the Notes under this Agreement.

 

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23. MISCELLANEOUS.

23.1 Successors and Assigns.

All covenants and other agreements contained in this Agreement by or on behalf
of any of the parties hereto bind and inure to the benefit of their respective
successors and assigns (including any subsequent holder of a Note) whether so
expressed or not.

23.2 Payments Due on Non-Business Days.

Anything in this Agreement or the Notes to the contrary notwithstanding (but
without limiting the requirement in Section 8.5 that the notice of any optional
prepayment specify a Business Day as the date fixed for such prepayment), any
payment of principal of or Make-Whole Amount or interest on any Note that is due
on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation of
the interest payable on such next succeeding Business Day; provided that if the
maturity date of any Note is a date other than a Business Day, the payment
otherwise due on such maturity date shall be made on the next succeeding
Business Day and shall include the additional days elapsed in the computation of
interest payable on such next succeeding Business Day.

23.3 Accounting Terms.

All accounting terms used herein that are not expressly defined in this
Agreement have the meanings respectively given to them in accordance with GAAP.
Except as otherwise specifically provided herein, (i) all computations made
pursuant to this Agreement shall be made in accordance with GAAP and (ii) all
financial statements shall be prepared in accordance with GAAP; provided,
however, that in the event of a change in GAAP, the Company and the Required
Holders shall negotiate in good faith to revise (if appropriate) such ratios and
covenants to give effect to the intention of the parties under this Agreement as
at the date of this Agreement. In the event that such negotiation is
unsuccessful, all calculations thereafter made for the purpose of determining
compliance with the financial ratios and financial covenants contained herein
shall be made on a basis consistent with GAAP in existence as at the date of
this Agreement.

23.4 Severability.

Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.

23.5 Construction.

Each covenant contained herein shall be construed (absent express provision to
the contrary) as being independent of each other covenant contained herein, so
that compliance with any one covenant shall not (absent such an express contrary
provision) be deemed to excuse

 

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compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.

For the avoidance of doubt, all Schedules and Exhibits attached to this
Agreement shall be deemed to be a part hereof.

23.6 Counterparts.

This Agreement may be executed in any number of counterparts, each of which
shall be an original but all of which together shall constitute one instrument.
Each counterpart may consist of a number of copies hereof, each signed by less
than all, but together signed by all, of the parties hereto.

23.7 Governing Law.

This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would permit
the application of the laws of a jurisdiction other than such State.

23.8 Jurisdiction and Process; Waiver of Jury Trial.

(a) The Issuer and the Company irrevocably submit to the non-exclusive
jurisdiction of any New York State or federal court sitting in the Borough of
Manhattan, The City of New York, over any suit, action or proceeding arising out
of or relating to this Agreement or the Notes. To the fullest extent permitted
by applicable law, the Issuer and the Company irrevocably waive and agree not to
assert, by way of motion, as a defense or otherwise, any claim that it is not
subject to the jurisdiction of any such court, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.

(b) The Issuer and the Company consent to process being served by or on behalf
of any holder of Notes in any suit, action or proceeding of the nature referred
to in Section 23.8(a) by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, return receipt
requested, to it at its address specified in Section 19 or at such other address
of which such holder shall then have been notified pursuant to said Section. The
Issuer and the Company agree that such service upon receipt (i) shall be deemed
in every respect effective service of process upon it in any such suit, action
or proceeding and (ii) shall, to the fullest extent permitted by applicable law,
be taken and held to be valid personal service upon and personal delivery to it.
Notices hereunder shall be conclusively presumed received as evidenced by a
delivery receipt furnished by the United States Postal Service or any reputable
commercial delivery service.

 

41

--------------------------------------------------------------------------------

(c) Nothing in this Section 23.8 shall affect the right of any holder of a Note
to serve process in any manner permitted by law, or limit any right that the
holders of any of the Notes may have to bring proceedings against the Issuer or
the Company in the courts of any appropriate jurisdiction or to enforce in any
lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

(d) THE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH
RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION HEREWITH OR THEREWITH.

 

42

--------------------------------------------------------------------------------

If you are in agreement with the foregoing, please sign the form of agreement on
a counterpart of this Agreement and return it to the Company, whereupon this
Agreement shall become a binding agreement between you, the Company and the
Issuer.

 

Very truly yours, RIO GRANDE RESOURCES TRUST II By: THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Trustee By:  

/s/ Rafael Martinez

Name:   Rafael Martinez Title:   Senior Associate EL PASO ELECTRIC COMPANY By:  

/s/ Steven P. Busser

Name:   Steven P. Busser Title:   VP. Treas. & CRO

 

S-1

--------------------------------------------------------------------------------

This Agreement is hereby accepted and agreed to as of the date thereof.

HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY

HARTFORD LIFE AND ANNUITY INSURANCE COMPANY

HARTFORD FIRE INSURANCE COMPANY

HARTFORD LIFE INSURANCE COMPANY

By:   Hartford Investment Management Company

         Their Agent and Attorney-in-Fact

By:  

/s/ Ralph D. Witt

Name:   Ralph D. Witt Title:   Vice President

 

PHYSICIANS LIFE INSURANCE COMPANY

By:   Hartford Investment Management Company

         Its Investment Manager

By:  

/s/ Ralph D. Witt

Name:   Ralph D. Witt Title:   Vice President

 

S-2

--------------------------------------------------------------------------------

UNITED OF OMAHA LIFE INSURANCE COMPANY

By:  

/s/ Justin P. Kavan

Name:   Justin P. Kavan Title:   Vice President

 

S-3

--------------------------------------------------------------------------------

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

 

By:  

/s/ Eve Hampton

Name:   Eve Hampton Title:   Vice President, Investments By:  

/s/ James Lowery

Name:   James Lowery Title:   Assistant Vice President, Investments

 

S-4

--------------------------------------------------------------------------------

SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY

 

By:  

/s/ David Divine

Name:   David Divine Title:   Portfolio Manager

 

S-5

--------------------------------------------------------------------------------

American United Life Insurance Company

/s/ John C. Mason

By:   John C. Mason Its:   V.P. Fixed Income Securities The State Life Insurance
Company By:   American United Life Insurance Company Its:   Agent

/s/ John C. Mason

By:   John C. Mason Its:   V.P. Fixed Income Securities Pioneer Mutual Life
Insurance Company By:   American United Life Insurance Company Its:   Agent

/s/ John C. Mason

By:   John C. Mason Its:   V.P. Fixed Income Securities

 

S-6

--------------------------------------------------------------------------------

SCHEDULE A

INFORMATION RELATING TO PURCHASERS

 

Name and Address of Purchaser

  

Principal Amount of

Series B Notes to be Purchased

Hartford Life and Accident Insurance Company

   $5,000,000

$5,000,000

 

1.      All payments by wire transfer of immediately available funds to:

Bank Name:

   JPMorgan Chase

ABA Routing #:

   021000021

Account No.:

   900-9-000200 for F/C/T - G06956-EBD-B

Attn:

  

Bond Interest /Principal - RIO GRANDE RESOURCES TRUST II 4.47% Senior Notes due

August 15, 2017

Ref:

   PPN #: 76711@ AB4; Prin: $        ; Int $        

with sufficient information to identify the source and application of such
funds.

2.      All notices of payments and written confirmations of such wire
transfers:

Hartford Investment Management Company

c/o Portfolio Support

Regular Mailing Address:

P.O. Box 1744

Hartford, CT 06144-1744

Overnight Mailing Address:

55 Farmington Avenue

Hartford, Connecticut 06105

Telefacsimile: (860)297-8875/8876

3.      All other communications:

Hartford Investment Management Company

c/o Investment Department-Private Placements

E-mail Address:

kenneth.doiron@himco.com and PrivatePlacements.Himco@Himco.com,

subject to confirming copy of notice being sent same day by recognized
international commercial delivery service (charges prepaid) to the following
addresses:

Regular Mailing Address:

P.O. Box 1744

Hartford, CT 06144-1744

Overnight Mailing Address:

55 Farmington Avenue

Hartford, Connecticut 06105

Telefacsimile: (860)297-8884

 

Schedule A-1

--------------------------------------------------------------------------------

4.      Address for delivery of original Notes:

JPMorgan Chase

4 New York Plaza

New York, New York 10004

Attn: Brian Cavanaugh

Phy/Rec - 11th Floor

Phone: 212-623-2721

Custody Account Number: G06956-EBD-B must appear on outside of envelope

5.      Tax ID No.: 06-0838648

 

Schedule A-2

--------------------------------------------------------------------------------

Name and Address of Purchaser

   Principal Amount of
Series B Notes to be Purchased

Hartford Fire Insurance Company

   $5,000,000

$5,000,000

$2,000,000

 

1.      All payments by wire transfer of immediately available funds to:

Bank Name:

   JPMorgan Chase Bank

ABA Routing #:

   021000021

Account No.:

   900-9-000200 for F/C/T - G06245-FIR-B

Attn:

  

Bond Interest /Principal - RIO GRANDE RESOURCES TRUST II 4.47% Senior Notes due

August 15, 2017

Ref:

   PPN #: 76711@ AB4; Prin $        ; Int $         

with sufficient information to identify the source and application of such
funds.

2.      All notices of payments and written confirmations of such wire
transfers:

Hartford Investment Management Company

c/o Portfolio Support

Regular Mailing Address:

P.O. Box 1744

Hartford, CT 06144-1744

Overnight Mailing Address:

55 Farmington Avenue

Hartford, Connecticut 06105

Telefacsimile: (860)297-8875/8876

3.      All other communications:

Hartford Investment Management Company

c/o Investment Department-Private Placements

E-mail Address:

kenneth.doiron@himco.com and PrivatePlacements.Himco@Himco.com,

subject to confirming copy of notice being sent same day by recognized
international

commercial delivery service (charges prepaid) to the following addresses:

Regular Mailing Address:

P.O. Box 1744

Hartford, CT 06144-1744

Overnight Mailing Address:

55 Farmington Avenue

Hartford, Connecticut 06105

Telefacsimile: (860)297-8884

 

Schedule A-3

--------------------------------------------------------------------------------

4.      Address for delivery of original Notes:

JPMorgan Chase

4 New York Plaza

New York, New York 10004

Attn: Brian Cavanaugh

         Phy/Rec - 11th Floor

Phone: 212-623-2721

Custody Account Number: G06245-FIR-B must appear on outside of envelope

5.      Tax ID No.: 06-0383750

 

Schedule A-4

--------------------------------------------------------------------------------

Name and Address of Purchaser

   Principal Amount of
Series B  Notes to be Purchased

Hartford Life and Annuity Insurance Company

   $5,000,000

 

1.      All payments by wire transfer of immediately available funds to:

Bank Name:

   JPMorgan Chase Bank

ABA Routing #:

   021000021

Account No.:

   900-9-000200 for F/C/T - G06584-IHL-B

Attn:

  

Bond Interest /Principal - RIO GRANDE RESOURCES TRUST II 4.47% Senior Notes due

August 15, 2017

Ref:

   PPN #:76711@ AB4; Prin $         ; Int $         

with sufficient information to identify the source and application of such
funds.

2.      All notices of payments and written confirmations of such wire
transfers:

Hartford Investment Management Company

c/o Portfolio Support

Regular Mailing Address:

P.O. Box 1744

Hartford, CT 06144-1744

Overnight Mailing Address:

55 Farmington Avenue

Hartford, Connecticut 06105

Telefacsimile: (860)297-8875/8876

3.      All other communications:

Hartford Investment Management Company

c/o Investment Department-Private Placements

E-mail Address:

kenneth.doiron@himco.com and PrivatePlacements.Himco@Himco.com,

subject to confirming copy of notice being sent same day by recognized
international

commercial delivery service (charges prepaid) to the following addresses:

Regular Mailing Address:

P.O. Box 1744

Hartford, CT 06144-1744

Overnight Mailing Address:

55 Farmington Avenue

Hartford, Connecticut 06105

Telefacsimile: (860)297-8884

 

Schedule A-5

--------------------------------------------------------------------------------

4.      Address for delivery of original Notes:

JPMorgan Chase

4 New York Plaza

New York, New York 10004

Attn: Brian Cavanaugh

Phy/Rec - 11th Floor

Phone: 212-623-2721

Custody Account Number: G06584-IHL-B must appear on outside of envelope

5.      Tax ID No.: 39-1052598

 

Schedule A-6

--------------------------------------------------------------------------------

Name and Address of Purchaser

   Principal Amount of
Series B Notes to be Purchased

Hartford Life and Annuity Insurance Company

   $5,000,000

$5,000,000

 

1.      All payments by wire transfer of immediately available funds to:

Bank Name:

   JPMorgan Chase Bank

ABA Routing #:

   021000021

Account No.:

   900-9-000200 for F/C/T - G06583-ILA-B

Attn:

  

Bond Interest /Principal - RIO GRANDE RESOURCES TRUST II 4.47% Senior Notes due

August 15, 2017

Ref:

   PPN #: 76711@ AB4; Prin $        ; Int $         

with sufficient information to identify the source and application of such
funds.

2.      All notices of payments and written confirmations of such wire
transfers:

Hartford Investment Management Company

c/o Portfolio Support

Regular Mailing Address:

P.O. Box 1744

Hartford, CT 06144-1744

Overnight Mailing Address:

55 Farmington Avenue

Hartford, Connecticut 06105

Telefacsimile: (860)297-8875/8876

3.      All other communications:

Hartford Investment Management Company

c/o Investment Department-Private Placements

E-mail Address:

kenneth.doiron@himco.com and PrivatePlacements.Himco@Himco.com,

subject to confirming copy of notice being sent same day by recognized
international

commercial delivery service (charges prepaid) to the following addresses:

Regular Mailing Address:

P.O. Box 1744

Hartford, CT 06144-1744

Overnight Mailing Address:

55 Farmington Avenue

Hartford, Connecticut 06105

Telefacsimile: (860)297-8884

 

Schedule A-7

--------------------------------------------------------------------------------

4.      Address for delivery of original Notes:

JPMorgan Chase

4 New York Plaza

New York, New York 10004

Attn: Brian Cavanaugh

         Phy/Rec - 11th Floor

Phone: 212-623-2721

Custody Account Number: G06583-ILA-B must appear on outside of envelope

5.      Tax ID No.: 39-1052598

 

Schedule A-8

--------------------------------------------------------------------------------

Name and Address of Purchaser

  

Principal Amount of
Series B Notes to be Purchased

Hartford Life and Annuity Insurance Company

   $5,000,000

 

1.      All payments by wire transfer of immediately available funds to:

Bank Name:

   JPMorgan Chase Bank

ABA Routing #:

   021000021

Account No.:

   900-9-000200 for F/C/T - G06586-ITT-B

Attn:

  

Bond Interest /Principal - RIO GRANDE RESOURCES TRUST II 4.47% Senior Notes due

August 15, 2017

Ref:

   PPN #: 76711@ AB4; Prin $          ; Int $         

with sufficient information to identify the source and application of such
funds.

2.      All notices of payments and written confirmations of such wire
transfers:

Hartford Investment Management Company

c/o Portfolio Support

Regular Mailing Address:

P.O. Box 1744

Hartford, CT 06144-1744

Overnight Mailing Address:

55 Farmington Avenue

Hartford, Connecticut 06105

Telefacsimile: (860)297-8875/8876

3.      All other communications:

Hartford Investment Management Company

c/o Investment Department-Private Placements

E-mail Address:

kenneth.doiron@himco.com and PrivatePlacements.Himco@Himco.com,

subject to confirming copy of notice being sent same day by recognized
international

commercial delivery service (charges prepaid) to the following addresses:

Regular Mailing Address:

P.O. Box 1744

Hartford, CT 06144-1744

Overnight Mailing Address:

55 Farmington Avenue

Hartford, Connecticut 06105

Telefacsimile: (860)297-8884

 

Schedule A-9

--------------------------------------------------------------------------------

4.      Address for delivery of original Notes:

JPMorgan Chase

4 New York Plaza

New York, New York 10004

Attn: Brian Cavanaugh

Phy/Rec - 11th Floor

Phone: 212-623-2721

Custody Account Number: G06586-ITT-B must appear on outside of envelope

5.      Tax ID No.: 39-1052598

 

Schedule A-10

--------------------------------------------------------------------------------

Name and Address of Purchaser

  

Principal Amount of
Series B Notes to be Purchased

Hartford Life Insurance Company

   $3,000,000

 

1.      All payments by wire transfer of immediately available funds to:

Bank Name:

   JPMorgan Chase Bank

ABA Routing #:

   021000021

Account No.:

   900-9-000200 for F/C/T - G06607-LGA-B

Account Name:

  

Bond Interest /Principal - RIO GRANDE RESOURCES TRUST II 4.47% Senior Secured
Notes due

August 15, 2017

Ref:

   PPN #: 76711@ AB4; Prin $         ; Int $         

with sufficient information to identify the source and application of such
funds.

2.      All notices of payments and written confirmations of such wire
transfers:

Hartford Investment Management Company

c/o Portfolio Support

Regular Mailing Address:

P.O. Box 1744

Hartford, CT 06144-1744

Overnight Mailing Address:

55 Farmington Avenue

Hartford, Connecticut 06105

Telefacsimile: (860)297-8875/8876

3.      All other communications:

Hartford Investment Management Company

c/o Investment Department-Private Placements

E-mail Address:

kenneth.doiron@himco.com and PrivatePlacements.Himco@Himco.com,

subject to confirming copy of notice being sent same day by recognized
international

commercial delivery service (charges prepaid) to the following addresses:

Regular Mailing Address:

P.O. Box 1744

Hartford, CT 06144-1744

Overnight Mailing Address:

55 Farmington Avenue

Hartford, Connecticut 06105

Telefacsimile: (860)297-8884

 

Schedule A-11

--------------------------------------------------------------------------------

4.      Address for delivery of original Notes:

JPMorgan Chase

4 New York Plaza

New York, New York 10004

Attn: Brian Cavanaugh

Phy/Rec - 11th Floor

Phone: 212-623-2721

Custody Account Number: G06607-LGA-B must appear on outside of envelope

5.      Tax ID No.: 06-0974148

 

Schedule A-12

--------------------------------------------------------------------------------

Name and Address of Purchaser

  

Principal Amount of

Series B Notes to be Purchased

Physicians Life Insurance Company

   $600,000

 

1.      Registered in the name of ELL & CO.

2.      All payments by wire transfer of immediately available funds to:

Bank Name:

   The Northern Trust Company

ABA Routing #:

   071000152

Account No.:

   5186041000 for F/C/T - Physicians Life Insurance Company - (26-27104 - QPA)

Attn:

   INC/DIV

Ref:

   PPN #: 76711@ AB4; Prin $        ; Int $         Attn: Bond Interest
/Principal - RIO GRANDE RESOURCES TRUST II 4.47% Senior Notes due August 15,
2017

with sufficient information to identify the source and application of such
funds.

3.      All notices of payments and written confirmations of such wire
transfers:

Physicians Life Insurance Company

Attention: Steven Scanlon

Address: 2600 Dodge Street

Omaha, NE 68131

Facsimile: (402) 633-1096

4.      All other communications:

Hartford Investment Management Company

c/o Investment Department-Private Placements

E-mail Address:

kenneth.doiron@himco.com and PrivatePlacements.Himco@Himco.com,

subject to confirming copy of notice being sent same day by recognized
international

commercial delivery service (charges prepaid) to the following addresses:

Regular Mailing Address:

P.O. Box 1744

Hartford, CT 06144-1744

Overnight Mailing Address:

55 Farmington Avenue

Hartford, Connecticut 06105

Telefacsimile: (860)297-8884

 

Schedule A-13

--------------------------------------------------------------------------------

5.      Address for delivery of original Notes:

The Northern Trust Company of New York

Harborside Financial Center 10, Suite 1401

3 Second Street

Northern Acct # 26-27104 - Physicians Life Insurance Company

Jersey City, NJ 07311

6.      Tax ID No.: 47-0529583

 

Schedule A-14

--------------------------------------------------------------------------------

Name and Address of Purchaser

  

Principal Amount of

Series B Notes to be Purchased

Physicians Life Insurance Company

   $400,000

 

1.      Registered in the name of ELL & CO.

2.      All payments by wire transfer of immediately available funds to:

Bank Name:

   The Northern Trust Company

ABA Routing #:

   071000152

Account No.:

   5186041000 for F/C/T - Physicians Life Insurance Company - (26-27103-QPL)

Attn:

   INC/DIV

Ref:

   PPN #: 76711@ AB4; Prin $        ; Int $         Attn: Bond Interest
/Principal - RIO GRANDE RESOURCES TRUST II 4.47% Senior Notes due August 15,
2017

with sufficient information to identify the source and application of such
funds.

3.      All notices of payments and written confirmations of such wire
transfers:

Physicians Life Insurance Company

Attention: Steven Scanlon

Address: 2600 Dodge Street

Omaha, NE 68131

Facsimile: (402) 633-1096

4.      All other communications:

Hartford Investment Management Company

c/o Investment Department-Private Placements

E-mail Address:

kenneth.doiron@himco.com and PrivatePlacements.Himco@Himco.com,

subject to confirming copy of notice being sent same day by recognized
international

commercial delivery service (charges prepaid) to the following addresses:

Regular Mailing Address:

P.O. Box 1744

Hartford, CT 06144-1744

Overnight Mailing Address:

55 Farmington Avenue

Hartford, Connecticut 06105

Telefacsimile: (860)297-8884

 

Schedule A-15

--------------------------------------------------------------------------------

5.      Address for delivery of original Notes:

The Northern Trust Company of New York

Harborside Financial Center 10, Suite 1401

3 Second Street

Northern Acct # 26-27103 - Physicians Life Insurance Company

Jersey City, NJ 07311

6.      Tax ID No.: 47-0529583

 

Schedule A-16

--------------------------------------------------------------------------------

Name and Address of Purchaser

   Principal Amount of
Series B Notes to be Purchased

Hartford Life Insurance Company

   $4,000,000

 

1.      All payments by wire transfer of immediately available funds to:

Bank Name:

   JPMorgan Chase Bank

ABA Routing #:

   021000021

Account No.:

   900-9-000200 for F/C/T - G06617-SUR-B

Account Name:

  

Bond Interest /Principal - RIO GRANDE RESOURCES TRUST II 4.47% Senior Secured
Notes due

August 15, 2017

Ref:

   PPN #: 76711@ AB4 Prin $         Int $        

with sufficient information to identify the source and application of such
funds.

2.      All notices of payments and written confirmations of such wire
transfers:

Hartford Investment Management Company

c/o Portfolio Support

Regular Mailing Address:

P.O. Box 1744

Hartford, CT 06144-1744

Overnight Mailing Address:

55 Farmington Avenue

Hartford, Connecticut 06105

Telefacsimile: (860)297-8875/8876

3.      All other communications:

Hartford Investment Management Company

c/o Investment Department-Private Placements

E-mail Address:

kenneth.doiron@himco.com and PrivatePlacements.Himco@Himco.com,

subject to confirming copy of notice being sent same day by recognized
international

commercial delivery service (charges prepaid) to the following addresses:

Regular Mailing Address:

P.O. Box 1744

Hartford, CT 06144-1744

Overnight Mailing Address:

55 Farmington Avenue

Hartford, Connecticut 06105

Telefacsimile: (860)297-8884

 

Schedule A-17

--------------------------------------------------------------------------------

4.      Address for delivery of original Notes:

JPMorgan Chase

4 New York Plaza

New York, New York 10004

Attn: Brian Cavanaugh

Phy/Rec - 11th Floor

Phone: 212-623-2721

Custody Account Number: G06617-SUR-B must appear on outside of envelope

5.      Tax ID No.: 06-0974148

 

Schedule A-18

--------------------------------------------------------------------------------

Name and Address of Purchaser

   Principal Amount of Series
2010 Notes to be Purchased

United of Omaha Life Insurance Company

   Series A

$15,000,000

   Series C

$5,000,000

 

1.      All payments by wire transfer of immediately available funds to:

Bank Name:

  

JPMorgan Chase Bank

Private Income Processing

ABA Routing #:

   021000021

Account No.:

   900-9000200

Account Name:

   United of Omaha Life Insurance Company

A/C:

   G07097

CUSIP/PPN:

   Series A PPN: 76711@ AA6; Series C PPN: 76711@ AC2

Interest Amount:

  

Principal Amount:

  

with sufficient information to identify the source and application of such
funds.

2.      All notices of payments and written confirmations of such wire
transfers:

JPMorgan Chase Bank

14201 Dallas Parkway - 13th Floor

Dallas, TX 75254-2917

Attn: Income Processing – G. Ruiz

a/c: G07097

3.      All other communications:

4 - Investment Accounting

United of Omaha Life Insurance Company

Mutual of Omaha Plaza

Omaha, NE 68175-1011

4.      Address for delivery of original Notes:

JPMorgan Chase Bank

4 Chase Metrotech Center, 3rd Floor

Brooklyn, NY 11245-0001

Attention: Physical Receive Department

Account # G07097

 

**It is imperative that the custody account be included on the delivery letter.
Without

this information, the security will be returned to the sender.

5.      Tax ID No.: 47-0322111

 

Schedule A-19

--------------------------------------------------------------------------------

Name and Address of Purchaser

   Principal Amount of
Series C Notes to be Purchased

Great-West Life & Annuity Insurance Company

   $14,000,000

 

1.      All payments by wire transfer of immediately available funds to:

Bank Name:

   The Bank of New York Mellon

ABA Routing #:

   021000018

Account No.:

   IOC566

Account Name:

   Great-West Life/Acct No. 640935

Ref:

  

RIO GRANDE RESOURCES TRUST II 5.04% Senior Secured Notes due August 15, 2020

Prin $         Int $         

Principal Amount:

  

with sufficient information to identify the source and application of such
funds.

2.      All notices of payments and written confirmations of such wire
transfers:

Great-West Life & Annuity Insurance Company

8515 East Orchard Road, 3T2

Greenwood Village, CO 80111

Attn: Investments Division

Fax: (303) 737-6193

3.      All other communications:

Great-West Life & Annuity Insurance Company

8515 East Orchard Road, 3T2

Greenwood Village, CO 80111

Attn: Investments Division

Fax: (303) 737-6193

4.      Address for delivery of original Notes:

The Bank of New York Mellon

3rd Floor, Window A

One Wall Street

New York, NY 10286

Attn: Receive/Deliver Dept (Great-West Life/Acct No. 640935)

5.      Tax ID No.: 84-0467907

 

Schedule A-20

--------------------------------------------------------------------------------

Name and Address of Purchaser

  

Principal Amount of

Series C Notes to be Purchased

Southern Farm Bureau Life Insurance Company

   $14,000,000

 

1.      All payments by wire transfer of immediately available funds to:

Bank Name:

   State Street Bank and Trust Company

ABA Routing #:

   011000028

Account No.:

   EQ83

Account Name:

  

Southern Farm Bureau Life Insurance Company,

DDA #59848127

All payments of federal wire transfer of immediately available funds should
identify the security by its name or PPN and include the principal and interest
breakdown. (If the wire is not a principal and/or interest payment, indicate the
type of payment.)

2.      All notices of payments and written confirmations of such wire
transfers:

Southern Farm Bureau Life Insurance Company

1401 Livingston Lane

Jackson, MS 39213

Attn: Investment Department

3.      All other communications:

Investment Department

Southern Farm Bureau Life Insurance Company

P. O. Box 78

Jackson, MS 39205

Attn: Investment Department

or by overnight delivery to:

1401 Livingston Lane

Jackson, MS 39213

 

Contact Person:

David Divine

Telephone (601) 981-5332 extension 1010

Facsimile (601)-981-3605

ddivine@sfbli.com

4.      Address for delivery of original Notes:

Southern Farm Bureau Life Insurance Company

1401 Livingston Lane

Jackson, MS 39213

Attn: Investment Department

5.      Tax ID No.: 64-0283583

 

Schedule A-21

--------------------------------------------------------------------------------

Name and Address of Purchaser

  

Principal Amount of

Series C Notes to be Purchased

American United Life Insurance Company

   $7,500,000

 

1.      All payments by wire transfer of immediately available funds to:

Bank Name:

   The Bank of New York Mellon

ABA Routing #:

   021000018

Credit A/C:

   GLA111566

Account No.:

   186683

Account Name:

   American United Life Insurance Co.

Ref:

   PPN #: 76711@ AC2; Prin $        ; Int $        

Payments should contain sufficient information to identify the breakdown of
principal and interest and should identify the full description of the bond and
the payment date.

2.      All notices of payments and written confirmations of such wire
transfers:

American United Life Insurance Company

ATTN: Mike Bullock, Securities Department

One American Square

Post Office Box 368

Indianapolis, IN 46206

3.      All other communications:

American United Life Insurance Company

ATTN: Mike Bullock, Securities Department

One American Square

Post Office Box 368

Indianapolis, IN 46206

4.      Address for delivery of original Notes:

The Bank of New York Mellon

One Wall Street, 3rd Floor

New York, NY 10286

American United Life, #186683

Attn: Anthony Saviano/ Window A

5.      Tax ID No.: 35-0145825

 

Schedule A-22

--------------------------------------------------------------------------------

Name and Address of Purchaser

  

Principal Amount of

Series C Notes to be Purchased

The State Life Insurance Company

   $4,000,000

 

1.      All payments by wire transfer of immediately available funds to:

Bank Name:

   The Bank of New York Mellon

ABA Routing #:

   021000018

Credit A/C:

   GLA111566

Account No.:

   343761

Account Name:

   The State Life Insurance Co.

Ref:

   PPN #: 76711@ AC2; Prin $        ; Int $        

Payments should contain sufficient information to identify the breakdown of
principal and interest and should identify the full description of the bond and
the payment date.

2.      All notices of payments and written confirmations of such wire
transfers:

American United Life Insurance Company

ATTN: Mike Bullock, Securities Department

One American Square

Post Office Box 368

Indianapolis, IN 46206

3.      All other communications:

American United Life Insurance Company

ATTN: Mike Bullock, Securities Department

One American Square

Post Office Box 368

Indianapolis, IN 46206

4.      Address for delivery of original Notes:

The Bank of New York Mellon

One Wall Street, 3rd Floor

New York, NY 10286

The State Life Insurance Co.

c/o American United Life Insurance Company, #343761

Attn: Anthony Saviano/ Window A

5.      Tax ID No.: 35-0684263

 

Schedule A-23

--------------------------------------------------------------------------------

Name and Address of Purchaser

  

Principal Amount of

Series C Notes to be Purchased

Pioneer Mutual Life Insurance Company

   $500,000

 

1.      All payments by wire transfer of immediately available funds to:

Bank Name:

   The Bank of New York Mellon

ABA Routing #:

   021000018

Credit A/C:

   GLA111566

Account No.:

   186709

Account Name:

   Pioneer Mutual Life Insurance Co.

Ref:

   PPN #: 76711@ AC2; Prin $        ; Int $        

Payments should contain sufficient information to identify the breakdown of
principal and interest and should identify the full description of the bond and
the payment date.

2.      All notices of payments and written confirmations of such wire
transfers:

American United Life Insurance Company

ATTN: Mike Bullock, Securities Department

One American Square

Post Office Box 368

Indianapolis, IN 46206

3.      All other communications:

American United Life Insurance Company

ATTN: Mike Bullock, Securities Department

One American Square

Post Office Box 368

Indianapolis, IN 46206

4.      Address for delivery of original Notes:

The Bank of New York Mellon

One Wall Street, 3rd Floor

New York, NY 10286

Pioneer Mutual Life Insurance Co.

c/o American United Life Insurance Company, #186709

Attn: Anthony Saviano/ Window A

5.      Tax ID No.: 45-0220640

 

Schedule A-24

--------------------------------------------------------------------------------

SCHEDULE B

DEFINED TERMS

As used herein, the following terms have the respective meanings set forth below
or set forth in the Section hereof following such term:

“Affiliate” means, at any time, and with respect to any Person, any other Person
that at such time directly or indirectly through one or more intermediaries
Controls, or is Controlled by, or is under common Control with, such first
Person, and, with respect to the Company, shall include any Person beneficially
owning or holding, directly or indirectly, 10% or more of any class of voting or
equity interests of the Company or its Subsidiaries or any corporation of which
the Company and its Subsidiaries beneficially own or hold, in the aggregate,
directly or indirectly, 10% or more of any class of voting or equity interests.
As used in this definition, “Control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly requires, any
reference to an “Affiliate” is a reference to an Affiliate of the Company.

“Anti-Terrorism Order” means Executive Order 13224 of September 23, 2001,
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)).

“Business Day” means any day other than a Saturday, a Sunday or a day on which
commercial banks in New York City are required or authorized to be closed.

“Capital Lease” means, at any time, a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

“Capitalization” means, at any time, the total of all the following items
appearing on, or included in, the Company’s consolidated balance sheet:

(a) liabilities for any outstanding Debt; and

(b) common stock, preferred stock, hybrid preferred securities, premium on
capital stock, capital surplus, capital in excess of par value and retained
earnings (however the foregoing may be designated), less, to the extent not
otherwise deducted, the cost of shares of capital stock held in treasury.

Subject to the foregoing, Capitalization shall be determined in accordance with
GAAP applicable to the type of business in which the Company is engaged and that
are approved by independent accountants regularly retained by the Company, and
may be determined as of a date not more than 60 days prior to the happening of
the event for which such determination is being made.

“Capital Stock” means (a) in the case of a corporation, capital stock, (b) in
the case of a partnership, partnership interests (whether general or limited),
(c) in the case of a limited liability

 

Schedule B-1

--------------------------------------------------------------------------------

company, membership interests and (d) any other interest or participation in a
Person that confers on the holder the right to receive a share of the profits
and losses of, or distributions of assets of, such Person.

“Change of Control” means (a) an event or series of events by which any “person”
or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange
Act) (other than one or more Permitted Holders) becomes the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
more than 50% of the voting power of the then outstanding Voting Stock of the
Company or (b) a majority of the members of the Board of Directors of the
Company are not Continuing Directors; provided, however, that a “Change of
Control” shall not be deemed to have occurred as a result of the formation of a
holding company for the Company or its businesses as part of any transaction
(merger, consolidation, plan of exchange, etc.) in which such holding company is
owned, following the transaction, by the former holders of the Company’s Voting
Stock in substantially the same proportions as their ownership of the Company’s
Voting Stock immediately prior to such transaction.

“Closing” is defined in Section 3.

“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.

“Company” means El Paso Electric Company, a Texas corporation.

“Confidential Information” is defined in Section 21.

“Continuing Directors” means as of any date of determination, any member of the
board of directors of the Company who (i) was a member of such board of
directors on the date of this Agreement or (ii) was nominated for election or
elected to such board of directors with the approval of a majority of Continuing
Directors who were members of such board at the time of such nomination or
election.

“Credit Agreement” means the Credit Agreement dated as of April 11, 2006 as
amended as of July 12, 2007 among the Company, The Bank of New York Trust
Company, National Association, as trustee of the Rio Grande Resources Trust II,
the lenders party thereto and JPMorgan Chase Bank, National Association as
Administrative Agent and Issuing Bank, as such agreement may be amended,
restated, supplemented, modified or extended, and any successor, substitute, or
replacement thereto.

“Debt” with respect to any Person means any of its outstanding debt for money
borrowed, including debt evidenced by notes, debentures, bonds, or other
securities, or guarantees of any thereof. Debt of any Person shall include the
Debt of any partnership in which such person is a general partner. Debt shall be
calculated for all purposes of this Agreement at its stated principal amount,
without regard to the effect of utilizing FASB No. 159 (Fair Value Option for
Financial Assets and Financial Liabilities) or International Accounting
Standard 39; provided that the amount of Debt represented by the Credit
Agreement shall be limited to the amount drawn thereunder at the date of
calculation.

 

Schedule B-2

--------------------------------------------------------------------------------

“Default” means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.

“Default Rate” means that rate of interest that is the greater of (i) 2% per
annum above the rate of interest stated in clause (a) of the first paragraph of
the Notes or (ii) 2% over the rate of interest publicly announced by JPMorgan
Chase Bank, National Association as its “base” or “prime” rate.

“Disclosure Documents” is defined in Section 5.3.

“Electronic Delivery” means (i) for reports, registration statements and other
documents required to be filed with the SEC, the filing and availability thereof
on “EDGAR” and the availability thereof on the Company’s home page on the
worldwide web (at the date of this Agreement located at:
http//www.epelectric.com) and (ii) for any documents not required to be filed
with the SEC, the availability thereof on the Company’s home page on the
worldwide web, and in every case, the prior notice by the Company to each holder
of Notes of such availability, with such notice containing either (y) an
attachment of such reports, registration statements or other documents or (z) a
link to the site on the worldwide web containing such documents.

“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
Hazardous Materials.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time in effect.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that
is treated as a single employer together with the Company under section 414 of
the Code.

“Event of Default” is defined in Section 11.

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

“Excepted Assets” means all bills, notes and other instruments, accounts
receivable, claims, credits, judgments, demands, general intangibles, licenses
and privileges (except franchises and permits), emissions allowances, choses in
action, patents, patent applications, patent licenses and other patent rights,
trade names, trademarks and all contracts, leases and agreements of whatsoever
kind and nature, other than any of the foregoing which are by the express
provisions of the Mortgage Indenture subjected or required to be subjected to
the lien of the Mortgage Indenture.

“FERC” means the Federal Energy Regulatory Commission, or any Governmental
Authority succeeding to any or all of such commission’s authority.

 

Schedule B-3

--------------------------------------------------------------------------------

“Finsub” means a special purpose corporation organized under the laws of a state
of the United States of America formed solely for the purpose of engaging in the
Receivables Program.

“First Mortgage Bonds” means any series of First Mortgage Bonds of the Company
issued pursuant to the Mortgage Indenture after the date hereof.

“Form 10-K” is defined in Section 7.1(b).

“Form 10-Q” is defined in Section 7.1(a).

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States of America.

“Governmental Authority” means

(a) the government of

(i) the United States of America or any state or other political subdivision
thereof, or

(ii) any jurisdiction in which the Issuer, the Company or its Subsidiaries
conducts all or any part of its business, or which asserts jurisdiction over any
properties of the Company or its Subsidiaries, or

(b) any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.

“Guaranteed Party” is defined in Section 13.

“Hazardous Material” means any and all pollutants, toxic or hazardous wastes or
other substances that might pose a hazard to health and safety, the removal of
which may be required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage or filtration of which is or
shall be restricted, prohibited or penalized by any applicable law including,
but not limited to, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum, petroleum products, lead based paint, radon gas or similar
restricted, prohibited or penalized substances.

“holder” means, with respect to any Note, the Person in whose name such Note is
registered in the register maintained by the Company as agent for the Issuer
pursuant to Section 14.1.

“Institutional Accredited Investor” means any Person that is an “accredited
investor” as such term is defined under Rule 501(a)(1), (2), (3) or
(7) promulgated under the Securities Act.

“Issuer” means Rio Grande Resources Trust II, a grantor trust organized and
existing pursuant to the Trust Agreement.

 

Schedule B-4

--------------------------------------------------------------------------------

“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge,
security interest or other encumbrance, or any interest or title of any vendor,
lessor, lender or other secured party to or of such Person under any conditional
sale or other title retention agreement or Capital Lease, upon or with respect
to any property or asset of such Person (including in the case of stock,
stockholder agreements, voting trust agreements and all similar arrangements).

“Make-Whole Amount” is defined in Section 8.7.

“Material” means material in relation to the business, operations, affairs,
financial condition, assets, properties of the Company and its Subsidiaries
taken as a whole.

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, financial condition, assets or properties of the Company and its
Subsidiaries taken as a whole, (b) the ability of the Company or the Issuer to
perform its obligations under this Agreement or the Notes or (c) the validity or
enforceability of this Agreement or the Notes.

“Memorandum” is defined in Section 5.3.

“Moody’s” means Moody’s Investors Service, Inc., and its successors.

“Mortgage Indenture” means any indenture (including without limitation any
indenture entered into by the Company following the date hereof) secured by a
mortgage Lien upon the Company’s Operating Property.

“Mortgage Indenture Trustee” means the trustee under a Mortgage Indenture,
together with its successors and assigns in such capacity.

“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term
is defined in section 4001(a)(3) of ERISA).

“NAIC” means the National Association of Insurance Commissioners or any
successor thereto.

“NMPRC” is defined in Section 5.7.

“Notes” is defined in Section 1.

“Obligations” is defined in Section 13.1.

“Officer’s Certificate” means a certificate of a Senior Financial Officer or of
any other officer of the Company whose responsibilities extend to the subject
matter of such certificate.

“Operating Property” mean, as of any date, (a) all of the real, personal and
mixed property which is an integral part of or is used or to be used as an
integral part of the electric generating, transmission and/or distribution
operations of the Company, (b) any undivided legal interest of the Company in
any such property which is jointly owned by the Company and any other Person or
Persons and (c) franchises and permits owned by the Company in connection with
the electric generating, transmission and/or distribution operations of the
Company,

 

Schedule B-5

--------------------------------------------------------------------------------

including, without limitation, all of such property which is acquired by the
Company after the Closing; provided, however, that Operating Property shall not
be deemed to include any Operating Property excepted under a Mortgage Indenture.

“Other Purchasers” is defined in Section 2.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA or any successor thereto.

“Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, business entity or
Governmental Authority.

“Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA)
that is or, within the preceding five years, has been established or maintained,
or to which contributions are or, within the preceding five years, have been
made or required to be made, by the Company or any ERISA Affiliate or with
respect to which the Company or any ERISA Affiliate may have any liability.

“property” or “properties” means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate.

“Purchase Contract” means the Purchase Contract dated as of February 12, 1996,
as amended as of February 11, 1999, between the Trustee and the Company, as the
same may be further amended, supplemented or otherwise modified from time to
time in accordance with the provisions thereof and hereof.

“Purchaser” means each purchaser listed in Schedule A.

“Rating Decline” means (i) a decrease to less than “investment grade” (currently
BBB- and Baa3) in the rating of the Company’s unsecured debt (or its secured
debt that is the equivalent of the Notes if they are secured at such time) by
either Moody’s or S&P or (ii) a withdrawal of such rating by either Moody’s or
S&P; provided, however, that such decrease or withdrawal occurs on, or within
30 days following, the date of public notice of the occurrence of a Change of
Control.

“Receivables Program” means, collectively, (a) the sale of, or transfer of
interests in, account receivables and related contract rights (“Receivables”) of
the Company to Finsub and (b) the transfer of such Receivables by Finsub to a
special purpose trust or corporation which is not an Affiliate of the Company or
Finsub; provided, that all terms and conditions of, and all documentation
relating to, the Receivables Program shall be (i) in form and substance
customary to a comparable Receivables Program and (ii) non-recourse to the
Company other than pursuant to customary representations, warranties, covenants
and indemnities entered into in connection with a Receivables Program.

“Required Holders” means, at any time, the holders of at least 51% in principal
amount of the Notes at the time outstanding (exclusive of Notes then owned by
the Issuer or any of its Affiliates).

 

Schedule B-6

--------------------------------------------------------------------------------

“Responsible Officer” means any Senior Financial Officer and any other officer
of the Company with responsibility for the administration of the relevant
portion of this Agreement.

“SEC” shall mean the Securities and Exchange Commission of the United States, or
any successor thereto.

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.

“Senior Financial Officer” means the chief financial officer, principal
accounting officer, treasurer or controller of the Company.

“Series A Notes” is defined in Section 1.

“Series B Notes” is defined in Section 1.

“Series C Notes” is defined in Section 1.

“S&P” means Standard & Poor’s Ratings Group, and its successors.

“Subsidiary” means, as to any Person, any other Person in which such first
Person or one or more of its Subsidiaries or such first Person and one or more
of its Subsidiaries owns sufficient equity or voting interests to enable it or
them (as a group) ordinarily, in the absence of contingencies, to elect a
majority of the directors (or Persons performing similar functions) of such
second Person, and any partnership or joint venture if more than a 50% interest
in the profits or capital thereof is owned by such first Person or one or more
of its Subsidiaries or such first Person and one or more of its Subsidiaries
(unless such partnership can and does ordinarily take major business actions
without the prior approval of such Person or one or more of its Subsidiaries).
Unless the context otherwise clearly requires, any reference to a “Subsidiary”
is a reference to a Subsidiary of the Company.

“SVO” means the Securities Valuation Office of the NAIC or any successor to such
Office.

“this Agreement” or “the Agreement” is defined in Section 18.3.

“Trust Agreement” means the Trust Agreement dated as of February 12, 1996,
between the Trustee and the Company, providing for the creation of the Rio
Grande Resources Trust II, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the provisions thereof and hereof.

“Trustee” means The Bank of New York Mellon Trust Company, N.A., not in its
individual capacity, but solely in its capacity as trustee of the Rio Grande
Resources Trust II (as successor by merger to JPMorgan Chase Bank, N.A., in such
capacity).

“USA Patriot Act” means United States Public Law 107-56, Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA

 

Schedule B-7

--------------------------------------------------------------------------------

PATRIOT ACT) Act of 2001, as amended from time to time, and the rules and
regulations promulgated thereunder from time to time in effect.

“Voting Stock” means stock having the voting power for the election of
directors, trustees, general partners or managers, as the case may be, whether
at all times or only so long as no senior class of stock has such voting power
by reason of any contingency.

 

Schedule B-8

--------------------------------------------------------------------------------

SCHEDULE 5.3

DISCLOSURE MATERIALS

1. Quarterly Report on Form 10-Q for the Quarterly Period Ended June 30, 2010.

2. Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2009.

3. Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2008.

4. Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2007.

5. Quarterly Report on Form 10-Q for the Quarterly Period Ended March 31, 2010.

6. Annual Report to Shareholders for the Fiscal Year Ended December 31, 2009.

7. Current Report on Form 8-K dated as of May 4, 2010.

8. Current Report on Form 8-K dated as of May 7, 2010.

9. Current Report on Form 8-K dated as of May 10, 2010.

10. Current Report on Form 8-K dated as of May 26, 2010.

11. Current Report on Form 8-K dated as of June 8, 2010.

12. Current Report on Form 8-K dated as of June 14, 2010.

13. Current Report on Form 8-K dated as of July 7, 2010.

 

Schedule 5.3

--------------------------------------------------------------------------------

SCHEDULE 5.4

SUBSIDIARY; OWNERSHIP OF SUBSIDIARY STOCK

(a)(i)

Name of Subsidiary

Mirasol Energy Services, Inc.

Jurisdiction of Organization

Delaware

Percentage of Shares of Each Class Owned by El Paso Electric Company

Common Stock 100%

(a)(ii)

Directors and Officers of the Company

Directors:

Kenneth R. Heitz, Chairman of the Board

Michael K. Parks, Vice Chairman of the Board

Catherine A. Allen

J. Robert Brown

James W. Cicconi

James W. Harris

Patricia Z. Holland-Branch

Thomas V. Shockley

Eric B. Siegel

David W. Stevens

Stephen N. Wertheimer

Charles A. Yamarone

Senior Officers:

David W. Stevens, Chief Executive Officer

David G. Carpenter, Senior Vice President, Chief Financial Officer

George A. Williams, Senior Vice President, Chief Operating Officer

Richard Fleager, Senior Vice President, Customer Care and External Affairs

Mary E. Kipp, Senior Vice President, General Counsel and Chief Compliance
Officer

 

Schedule 5.4

--------------------------------------------------------------------------------

Rocky Miracle, Senior Vice President, Corporate Planning and Development

(b)

Liens on Subsidiary Shares

None

(d)

Restrictions on Payment of Dividends or Similar Distributions

None

 

Schedule 5.4-2

--------------------------------------------------------------------------------

SCHEDULE 5.5

FINANCIAL STATEMENTS

 

1. Consolidated Financial Statements of El Paso Electric Company and Subsidiary
for the Year Ended December 31, 2009.

 

2. Consolidated Financial Statements of El Paso Electric Company and Subsidiary
for the Year Ended December 31, 2008.

 

3. Consolidated Financial Statements of El Paso Electric Company and Subsidiary
for the Year Ended December 31, 2007.

 

4. Condensed Consolidated Financial Statements of El Paso Electric Company and
Subsidiary for the Quarter Ended June 30, 2010 (Unaudited).

 

Schedule 5. 5

--------------------------------------------------------------------------------

SCHEDULE 5.11

LICENSES, PERMITS, ETC.

 

(a)

Las Cruces Franchise

In February 2000, the Company and Las Cruces entered into a seven-year franchise
agreement with a franchise fee of 2% of revenues for the provision of electric
distribution service. Las Cruces exercised its right to extend the franchise for
an additional two-year term which ended April 30, 2009. The Company is currently
operating under an implied franchise by satisfying all obligations under the
expired franchise. It is not known when or if a new franchise agreement will be
entered into with the City of Las Cruces. The Company believes, however, that it
can operate under the currently existing implied franchise construct for the
foreseeable future.

 

Schedule 5.11

--------------------------------------------------------------------------------

SCHEDULE 5.15

EXISTING DEBT

 

Description

   Obligor    Obligee   Principal
Outstanding
at June 30,
2010
(In thousands)    Collateral/Guaranty    Restrictions
on the
Incurrence
of Debt

Pollution Control Bonds:

             

7.25% 2009 Series A due 2040

   EPE    (1)   $63,500    Unsecured    (1)

4.80% 2005 Series A due 2040

   EPE    (2)   $59,235    Unsecured    (2)

7.25% 2009 Series B due 2040

   EPE    (1)   $37,100    Unsecured    (1)

4.00% 2002 Series A due 2032

   EPE    (3)   $33,300    Unsecured    (3)

Senior Notes:

             

6.00% Senior Notes due 2035

   EPE    Public

offering

  $400,000    Unsecured    (6)

7.50% Senior Notes due 2038

   EPE    Public
offering   $150,000    Unsecured    (7)

Credit Facility:

             

$200 million credit facility

   EPE

and

RGRT

   (4)   $122,800    RGRT’s

obligations

guaranteed by EPE

   (5)

“EPE” means El Paso Electric Company

“RGRT” means the Rio Grande Resources Trust II

 

(1) These pollution control bonds were issued by Maricopa County, Arizona
Pollution Control Corporation in private placements, and the proceeds therefrom
were loaned to EPE pursuant to loan agreements dated March 1, 2009. There are no
restrictions on the incurrence of debt under the terms of these pollution
control bonds.

 

Schedule 5.15-1

--------------------------------------------------------------------------------

(2) These pollution control bonds were issued by Maricopa County, Arizona
Pollution Control Corporation in a private placement, and the proceeds therefrom
were loaned to EPE pursuant to a loan agreement dated July 1, 2005. The bonds
were insured by the Financial Guaranty Insurance Company (“FGIC”) pursuant to an
Insurance Agreement between FGIC and EPE dated August 1, 2005. Section 2.03 of
the Insurance Agreement contains limitations on liens, an excerpt of which is
attached hereto as Exhibit A to Schedule 5.15.

(3) These pollution control bonds were issued by The City of Farmington, New
Mexico in a private placement, and the proceeds therefrom were loaned to EPE
pursuant to the Amended and Restated Installment Sales Agreement dated August 1,
2002. The bonds were insured by FGIC pursuant to an Insurance Agreement between
FGIC and EPE dated August 1, 2005. Section 2.03 of the Insurance Agreement
contains limitations on liens, an excerpt of which is attached hereto as Exhibit
B to Schedule 5.15.

(4) Lenders under the $200 million credit facility include JP Morgan Chase Bank,
N.A., Union Bank of California, N.A., The Bank of New York, Citicorp North
America, Inc., Bank of Communications (New York Branch), U.S. Bank National
Association, and Bank Hapoalim, B.M.

(5) Limitations on liens, Prohibition on Sale and Lease-Back Transactions, and
Maintenance Covenant relating to the $200 million credit facility are set forth
in Sections 6.02, 6.03 and 6.09 of the Credit Agreement dated April 11, 2006, an
excerpt of which is attached hereto as Exhibit C to Schedule 5.15.

(6) Limitations on liens relating to the 6.00% Senior Notes due 2035 are set
forth in Annex A to Securities Resolution No. 1 dated May 11, 2005, an excerpt
of which is attached hereto as Exhibit D to Schedule 5.15.

(7) Limitations on liens relating to the 7.50% Senior Notes due 2038 are set
forth in Annex A to Securities Resolution dated May 29, 2008, an excerpt of
which is attached hereto as Exhibit E to Schedule 5.15.

 

Schedule 5.15-2

--------------------------------------------------------------------------------

EXHIBIT A TO SCHEDULE 5.15

LIMITATIONS ON LIENS

4.80% 2005 SERIES A DUE 2040

Section 2.03. Negative Pledge. The Company agrees that for so long as the Policy
remains in effect, the Company will not create or permit to be created, any
mortgage, security interest, pledge, lien or other encumbrance (“Lien”) of or
upon any of the Company’s Operating Property, whether owned at the date of the
issuance of the Policy or thereafter acquired, to secure any Debt, without
effectively securing FGIC (together with, if the Company shall so determine, any
of its other Debt ranking senior to, or equally with, FGIC) equally and ratably
with such Debt (but only so long as such Debt is so secured), subject to the
following exceptions ; provided that any Lien that is permitted by one of the
exceptions other than the exception set forth in Section 2 .03(a) below shall in
no event be counted towards the limitation contained in Section 2.03(a) below.

The foregoing restriction shall not apply to the following:

 

  (a) Liens to secure Debt incurred up to an aggregate principal amount which,
immediately following the incurrence of such Debt, does not exceed fifteen
percent (15%) of Capitalization under the Mortgage;

 

  (b) Liens to secure Debt existing on the date of the issuance of the Policy
provided that such Debt shall not be increased in amount, except for the Debt
under the Company’s Credit Agreement dated as of December 17, 2004 among the
Company, JPMorgan Chase Bank, National Association, as trustee of the Rio Grande
Resources Trust II, the lenders party thereto and JPMorgan Chase Bank, National
Association, as Administrative Agent, Collateral Agent and Issuing Bank, which
may be increased to $150,000,000 in principal amount;

 

  (c) Liens on any Operating Property which existed on such property prior to
the acquisition thereof by the Company, to secure Debt assumed by the Company in
connection with such acquisition;

 

  (d) Liens to secure Debt incurred by the Company in connection with the
acquisition or lease by the Company in the ordinary course of business, after
the date of the issuance of the Policy, of furniture, fixtures, equipment and
other assets not owned by the Company as of the date of issuance of the Policy ;
provided that (i) such Debt shall not be secured by any Operating Property of
the Company other than the Operating Property with respect to which such Debt is
incurred, and (ii) the Lien securing such Debt shall be created within 90 days
of the incurrence of such Debt;

 

  (e) Liens to secure Debt of any Person existing at the time such Person is
merged into or consolidated with, or such Person disposes of all or
substantially all its properties (or those of a division) to, the Company;

 

  (f)

Liens to secure Debt incurred to acquire, construct, develop or substantially
repair, alter or improve Operating Property or to provide funds for any such
purpose or for reimbursement of funds previously expended for any such purpose ;
provided that such Debt is incurred contemporaneously with, or within 24 months
after, such acquisition or

 

Schedule 5.15-3

--------------------------------------------------------------------------------

 

the completion of construction, development or substantial repair, alteration or
improvement;

 

  (g) Liens to secure, directly or indirectly, the Company’s obligations with
respect to debt issued by any Governmental Authority, including debt represented
by securities issued by any such Governmental Authority (or providers of credit
enhancement with respect to such securities), including, without limitation, the
Company’s obligations with respect to industrial development, pollution control
or similar revenue bonds incurred for the purpose of financing all or any part
of the purchase price or the cost of substantially repairing or altering,
constructing, developing or substantially improving the Company’s Operating
Property;

 

  (h) Liens to secure Debt which has been defeased, including the Bonds;

 

  (i) Liens to secure Debt incurred in connection with an accounts receivable
facility and/or contract payments facility or the securitization of any Excepted
Assets; and

 

  (j) Liens to secure any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of an instrument or
agreement creating any Debt referred to in the above clauses.

 

Schedule 5.15-4

--------------------------------------------------------------------------------

EXHIBIT B TO SCHEDULE 5.15

LIMITATIONS ON LIENS

4.00% 2002 SERIES A DUE 2032

Section 2.03. Negative Pledge. The Company agrees that for so long as the Policy
remains in effect, the Company will not create or permit to be created, any
mortgage, security interest, pledge, lien or other encumbrance (“Lien”) of or
upon any of the Company’s Operating Property, whether owned at the date of the
issuance of the Policy or thereafter acquired, to secure any Debt, without
effectively securing FGIC (together with, if the Company shall so determine, any
of its other Debt ranking senior to, or equally with, FGIC) equally and ratably
with such Debt (but only so long as such Debt is so secured), subject to the
following exceptions ; provided that any Lien that is permitted by one of the
exceptions other than the exception set forth in Section 2 .03(a) below shall in
no event be counted towards the limitation contained in Section 2.03(a) below.

The foregoing restriction shall not apply to the following:

 

  (a) Liens to secure Debt incurred up to an aggregate principal amount which,
immediately following the incurrence of such Debt, does not exceed fifteen
percent (15%) of Capitalization under the Mortgage;

 

  (b) Liens to secure Debt existing on the date of the issuance of the Policy;
provided that such Debt shall not be increased in amount, except for the Debt
under the Company’s Credit Agreement dated as of December 17, 2004 among the
Company, JPMorgan Chase Bank, National Association, as trustee of the Rio Grande
Resources Trust II, the lenders party thereto and JPMorgan Chase Bank, National
Association, as Administrative Agent, Collateral Agent and Issuing Bank, which
may be increased to $150,000,000 in principal amount;

 

  (c) Liens on any Operating Property which existed on such property prior to
the acquisition thereof by the Company, to secure Debt assumed by the Company in
connection with such acquisition;

 

  (d) Liens to secure Debt incurred by the Company in connection with the
acquisition or lease by the Company in the ordinary course of business, after
the date of the issuance of the Policy, of furniture, fixtures, equipment and
other assets not owned by the Company as of the date of issuance of the Policy;
provided that (i) such Debt shall not be secured by any Operating Property of
the Company other than the Operating Property with respect to which such Debt is
incurred, and (ii) the Lien securing such Debt shall be created within 90 days
of the incurrence of such Debt;

 

  (e) Liens to secure Debt of any Person existing at the time such Person is
merged into or consolidated with, or such Person disposes of all or
substantially all its properties (or those of a division) to, the Company;

 

  (f)

Liens to secure Debt incurred to acquire, construct, develop or substantially
repair, alter or improve Operating Property or to provide funds for any such
purpose or for reimbursement of funds previously expended for any such purpose;
provided that such Debt is incurred contemporaneously with, or within 24 months
after, such acquisition or

 

Schedule 5.15-5

--------------------------------------------------------------------------------

 

the completion of construction, development or substantial repair, alteration or
improvement;

 

  (g) Liens to secure, directly or indirectly, the Company’s obligations with
respect to debt issued by any Governmental Authority, including debt represented
by securities issued by any such Governmental Authority (or providers of credit
enhancement with respect to such securities), including, without limitation, the
Company’s obligations with respect to industrial development, pollution control
or similar revenue bonds incurred for the purpose of financing all or any part
of the purchase price or the cost of substantially repairing or altering,
constructing, developing or substantially improving the Company’s Operating
Property;

 

  (h) Liens to secure Debt which has been defeased, including the Bonds;

 

  (i) Liens to secure Debt incurred in connection with an accounts receivable
facility and/or contract payments facility or the securitization of any Excepted
Assets; and

 

  (j) Liens to secure any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of an instrument or
agreement creating any Debt referred to in the above clauses.

 

Schedule 5.15-6

--------------------------------------------------------------------------------

EXHIBIT C TO SCHEDULE 5.15

RESTRICTIONS ON DEBT INCURRENCE UNDER CREDIT FACILITY

Section 6.02. Liens. Neither Borrower will, nor will El Paso permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or assets (including stock or other securities of any person, including any
Subsidiary) now owned or hereafter acquired by it or on any income or revenues
or rights in respect of any thereof, except:

 

  (a) Liens on property or assets of El Paso existing on the date hereof and set
forth in Schedule 6.02; provided that such Liens shall secure only those
obligations which they secure on the date hereof;

 

  (b) Liens to secure the Obligations;

 

  (c) any Lien existing on any Operating Property prior to the acquisition
thereof by El Paso or any Subsidiary to secure Indebtedness assumed by El Paso
or any Subsidiary; provided that (i) such Lien is not created in contemplation
of or in connection with such acquisition and (ii) such Lien does not apply to
any other property or assets of either Borrower or any Subsidiary;

 

  (d) Liens for taxes or assessments by any Governmental Authority not yet due
or which are being contested in compliance with Section 5.03;

 

  (e) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s,
landlords’, licensors’ or other like Liens arising in the ordinary course of
business and securing obligations that are not due and payable or which are
being contested in compliance with Section 5.03;

 

  (f) pledges and deposits made in the ordinary course of El Paso’s business in
compliance with workmen’s compensation, unemployment insurance and other social
security laws or regulations;

 

  (g) deposits by El Paso to secure the performance of bids, trade contracts
(other than for Indebtedness), leases (other than Capital Lease Obligations),
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business;

 

  (h) zoning restrictions, easements, rights-of-way, restrictions on use of real
property or permit or license requirements and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate, are not
substantial in amount and do not materially detract from the value of the
property subject thereto or interfere with the ordinary conduct of the
businesses of the Borrowers or any Subsidiary;

 

  (i)

Liens to secure Indebtedness incurred by El Paso in connection with the
acquisition or lease by El Paso in the ordinary course of business, after the
date hereof, of furniture, fixtures, equipment and other assets not owned by El
Paso on the date hereof; provided

 

Schedule 5.15-7

--------------------------------------------------------------------------------

 

that (i) such Indebtedness shall not be secured by any Operating Property of El
Paso other than the Operating Property with respect to which such Indebtedness
is incurred and (ii) the Lien securing such Indebtedness shall be created within
90 days of the incurrence of such Indebtedness;

 

  (j) the Lien of the Mortgage Indenture to secure First Mortgage Bonds in an
aggregate principal amount not to exceed $400,000,000 issued to repurchase,
repay or otherwise refinance the Indebtedness of El Paso under the Senior
Unsecured Notes;

 

  (k) Liens to secure Indebtedness of any person existing at the time such
person is merged into or consolidated with, or such person disposes of all or
substantially all its properties (or those of a division) to, El Paso;

 

  (l) Liens to secure Indebtedness incurred by El Paso to acquire, construct,
develop or substantially repair, alter or improve Operating Property or to
provide funds for any such purpose or for reimbursement of funds previously
expended for any such purpose; provided that such Indebtedness is incurred
contemporaneously with, or within 24 months after, such acquisition or the
completion of construction, development or substantial repair, alteration or
improvement;

 

  (m) Liens to secure, directly or indirectly, El Paso’s obligations with
respect to debt issued by any Governmental Authority, including debt represented
by securities issued by any such Governmental Authority (or providers of credit
enhancement with respect to such securities), including, without limitation, El
Paso’s obligations with respect to industrial development, pollution control or
similar revenue bonds incurred for the purpose of financing all or any part of
the purchase price or the cost of substantially repairing or altering,
constructing, developing or substantially improving El Paso’s Operating
Property;

 

  (n) Liens on the property of Finsub incurred pursuant to the Receivables
Program Documents and Liens in favor of Finsub granted by El Paso with respect
to Receivables purportedly sold to Finsub by El Paso pursuant to the Receivables
Program;

 

  (o) the Lien in favor of the Mortgage Indenture Trustee created by the
Mortgage Indenture and securing the payment of its fees and expenses;

 

  (p) one or more attachments or other similar Liens on assets of El Paso
arising in connection with court proceedings (i) in an aggregate principal
amount not in excess of $10,000,000 (so long as El Paso has set aside adequate
reserves therefor) or (ii) the execution of which has been stayed or which has
been appealed and secured, if necessary, by an appeal bond; provided that in
each case no Event of Default shall result therefrom;

 

  (q) any Lien arising by operation of law on the assets of El Paso in favor of
any Governmental Authority with respect to any franchise, grant, license, permit
or contract; and

 

  (r)

Liens that are not otherwise permitted by any of the foregoing paragraphs of
this Section 6.02; provided that, at the time that any such Lien is granted (and
after giving effect

 

Schedule 5.15-8

--------------------------------------------------------------------------------

 

thereto), the aggregate outstanding principal amount of all Indebtedness
outstanding under Section 6.01(c) and Indebtedness secured by Liens permitted by
this Section 6.02(r) shall not exceed 15% of Total Consolidated Capital.

Section 6.03. Sale and Lease-Back Transactions. Neither Borrower will, nor will
El Paso permit any Subsidiary to, enter into any arrangement, directly or
indirectly, with any person whereby it shall sell or transfer any property, real
or personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property which it
intends to use for substantially the same purpose or purposes as the property
being sold or transferred (a “Sale Lease-Back Transaction”), except for Sale
Lease-Back Transactions of real property and tangible personal property with an
aggregate fair market value not to exceed $25,000,000 at any time.

Section 6.09. Debt to Capitalization Ratio. El Paso will not permit the ratio of
(i) Total Consolidated Debt to (ii) Total Consolidated Capital as of the last
day of any fiscal quarter to be in excess of 0.65 to 1.00.

 

Schedule 5.15-9

--------------------------------------------------------------------------------

EXHIBIT D TO SCHEDULE 5.15

LIMITATIONS ON LIENS UNDER 6.00% SENIOR NOTES

Limitation on Liens to Secure Debt

So long as any Senior Notes are outstanding, the Company may not create or
permit to be created, any mortgage, security interest, pledge, lien or other
encumbrance (“Lien”) of or upon any Operating Property (as defined herein),
whether owned at the date of the Indenture or thereafter acquired, to secure any
Debt (as defined herein), without effectively securing the Senior Notes
(together with, if the Company shall so determine, any of the Company’s other
Debt ranking senior to, or equally with, the Senior Notes) equally and ratably
with such Debt (but only so long as such Debt is so secured), subject to the
following exceptions, one or more of which may apply to any particular Lien.

The foregoing restriction will not apply to:

(1) Liens to secure Debt incurred without limitation as to amount under the
Mortgage (as defined herein);

(2) Liens to secure Debt existing on the date of the issuance of the Senior
Notes; provided that such Debt shall not be increased in amount, except for the
Debt under the Credit Agreement (as defined herein) which may be increased to
$150,000,000 in principal amount;

(3) Liens on any Operating Property which existed on such property prior to the
acquisition thereof by the Company, to secure Debt assumed by the Company in
connection with such acquisition;

(4) Liens to secure Debt incurred by the Company in connection with the
acquisition or lease by the Company in the ordinary course of business, after
the date of the issuance of the Senior Notes, of furniture, fixtures, equipment
and other assets not owned by the Company as of the date of issuance of the
Senior Notes provided that (a) such Debt shall not be secured by any Operating
Property of the Company other than the Operating Property with respect to which
such Debt is incurred, and (b) the Lien securing such Debt shall be created
within 90 days of the incurrence of such Debt;

(5) Liens to secure Debt of any entity existing at the time such entity is
merged into or consolidated with, or such entity disposes of all or
substantially all its properties (or those of a division) to, the Company;

(6) Liens to secure Debt incurred to acquire, construct, develop or
substantially repair, alter or improve Operating Property or to provide funds
for any such purpose or for reimbursement of funds previously expended for any
such purpose; provided that such Debt is incurred contemporaneously with, or
within 24 months after, such acquisition or the completion of construction,
development or substantial repair, alteration or improvement;

 

Schedule 5.15-10

--------------------------------------------------------------------------------

(7) Liens to secure, directly or indirectly, the Company’s obligations with
respect to debt issued by any Governmental Authority (as defined herein),
including debt represented by securities issued by any such Governmental
Authority (or providers of credit enhancement with respect to such securities),
including, without limitation, the Company’s obligations with respect to
industrial development, pollution control or similar revenue bonds incurred for
the purpose of financing all or any part of the purchase price or the cost of
substantially repairing or altering, constructing, developing or substantially
improving Operating Property;

(8) Liens to secure Debt which has been defeased, including the Senior Notes;

(9) Liens to secure Debt incurred in connection with an accounts receivable
facility and/or contract payments facility or the securitization of any Excepted
Assets (as defined herein); and

(10) Liens to secure any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of an instrument or
agreement creating any Debt referred to in clauses (1) through (9).

Also, the foregoing restriction will not apply to Liens, otherwise subject to
the foregoing restrictions, to secure Debt of up to an aggregate principal
amount (not including Debt secured by Liens permitted by any of the foregoing
exceptions) which, immediately following the creation of such Lien, together
with all other Debt so secured, does not exceed 15% of Capitalization (as
defined herein).

 

Schedule 5.15-11

--------------------------------------------------------------------------------

EXHIBIT E TO SCHEDULE 5.15

LIMITATIONS ON LIENS UNDER 7.50% SENIOR NOTES

Limitation on Liens to Secure Debt

So long as any Senior Notes are outstanding, the Company may not create or
permit to be created, any mortgage, security interest, pledge, lien or other
encumbrance (“Lien”) of or upon any Operating Property (as defined herein),
whether owned at the date of the Indenture or thereafter acquired, to secure any
Debt (as defined herein), without effectively securing the Senior Notes
(together with, if the Company shall so determine, any of the Company’s other
Debt ranking senior to, or equally with, the Senior Notes) equally and ratably
with such Debt (but only so long as such Debt is so secured), subject to the
following exceptions, one or more of which may apply to any particular Lien.

The foregoing restriction will not apply to:

(1) Liens to secure Debt incurred without limitation as to amount under the
Mortgage (as defined herein);

(2) Liens to secure Debt existing on the date of the issuance of the Senior
Notes; provided that such Debt shall not be increased in amount, except for the
Debt under the Credit Agreement (as defined herein) which may be increased to
$150,000,000 in principal amount;

(3) Liens on any Operating Property which existed on such property prior to the
acquisition thereof by the Company, to secure Debt assumed by the Company in
connection with such acquisition;

(4) Liens to secure Debt incurred by the Company in connection with the
acquisition or lease by the Company in the ordinary course of business, after
the date of the issuance of the Senior Notes, of furniture, fixtures, equipment
and other assets not owned by the Company as of the date of issuance of the
Senior Notes provided that (a) such Debt shall not be secured by any Operating
Property of the Company other than the Operating Property with respect to which
such Debt is incurred, and (b) the Lien securing such Debt shall be created
within 90 days of the incurrence of such Debt;

(5) Liens to secure Debt of any entity existing at the time such entity is
merged into or consolidated with, or such entity disposes of all or
substantially all its properties (or those of a division) to, the Company;

(6) Liens to secure Debt incurred to acquire, construct, develop or
substantially repair, alter or improve Operating Property or to provide funds
for any such purpose or for reimbursement of funds previously expended for any
such purpose; provided that such Debt is incurred contemporaneously with, or
within 24 months after, such acquisition or the completion of construction,
development or substantial repair, alteration or improvement;

 

Schedule 5.15-12

--------------------------------------------------------------------------------

(7) Liens to secure, directly or indirectly, the Company’s obligations with
respect to debt issued by any Governmental Authority (as defined herein),
including debt represented by securities issued by any such Governmental
Authority (or providers of credit enhancement with respect to such securities),
including, without limitation, the Company’s obligations with respect to
industrial development, pollution control or similar revenue bonds incurred for
the purpose of financing all or any part of the purchase price or the cost of
substantially repairing or altering, constructing, developing or substantially
improving Operating Property;

(8) Liens to secure Debt which has been defeased, including the Senior Notes;

(9) Liens to secure Debt incurred in connection with an accounts receivable
facility and/or contract payments facility or the securitization of any Excepted
Assets (as defined herein); and

(10) Liens to secure any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of an instrument or
agreement creating any Debt referred to in clauses (1) through (9).

Also, the foregoing restriction will not apply to Liens, otherwise subject to
the foregoing restrictions, to secure Debt of up to an aggregate principal
amount (not including Debt secured by Liens permitted by any of the foregoing
exceptions) which, immediately following the creation of such Lien, together
with all other Debt so secured, does not exceed 15% of Capitalization (as
defined herein).

 

Schedule 5.15-13

--------------------------------------------------------------------------------

EXHIBIT 1(a)

[FORM OF SERIES A NOTE]

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THIS SECURITY MAY ONLY BE
TRANSFERRED TO AN “INSTITUTIONAL ACCREDITED INVESTOR” IN ACCORDANCE WITH THE
TERMS OF THE NOTE PURCHASE AGREEMENT DATED AUGUST 17, 2010.

RIO GRANDE RESOURCES TRUST II

3.67% Senior Note, Series A, due August 15, 2015

 

No. AR-[    ]

   [Date]

$[        ]

   PPN: 76711@ AA6

FOR VALUE RECEIVED, the undersigned, the Rio Grande Resources Trust II (the
“Issuer”), promises to pay to [        ], or registered assigns, the principal
sum of $[        ] on August 15, 2015, with interest (computed on the basis of a
360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the
rate of 3.67% per annum from the date hereof, payable semiannually, on
February 15 and August 15 in each year, commencing with the February 15 or
August 15 next succeeding the date hereof, until the principal hereof shall have
become due and payable, and (b) to the extent permitted by law, at a rate per
annum from time to time equal to the greater of (i) 5.67% or (ii) 2% over the
rate of interest publicly announced by JPMorgan Chase Bank, National Association
from time to time in New York, New York as its “base” or “prime” rate, on any
overdue payment of interest and, during the continuance of an Event of Default,
on the unpaid balance hereof and on any overdue payment of any Make-Whole
Amount, payable semiannually as aforesaid (or, at the option of the registered
holder hereof, on demand), but in each case in no event in excess of the maximum
nonusurious rate of interest permitted under applicable law.

Payments of principal of, interest on and any Make-Whole Amount with respect to
this Note are to be made in lawful money of the United States of America at the
principal office of The Bank of New York Mellon in New York, New York or at such
other place as the Issuer shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreement referred to below.

 

Exhibit 1(a)-1

--------------------------------------------------------------------------------

This Note is one of a series of Senior Notes (herein called the “Notes”) issued
pursuant to the Note Purchase Agreement dated as of August 17, 2010 (as from
time to time amended, the “Note Purchase Agreement”), between the Issuer, El
Paso Electric Company and the respective Purchasers named therein and is
entitled to the benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality provisions set
forth in Section 21 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6 of the Note Purchase Agreement. Unless
otherwise indicated, capitalized terms used in this Note shall have the
respective meanings ascribed to such terms in the Note Purchase Agreement.

This Note is a registered Note and, as provided in the Note Purchase Agreement,
upon surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder’s attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Issuer may treat the Person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Issuer will not be affected by any notice to the contrary.

This Note is subject to optional prepayment, in whole or from time to time in
part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.

If an Event of Default occurs and is continuing, the principal of this Note may
be declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in the
Note Purchase Agreement.

This Note shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the law of the state of New York excluding
choice-of-law principles of the law of such state that would require the
application of the laws of a jurisdiction other than such state.

 

RIO GRANDE RESOURCES TRUST II

By: THE BANK OF NEW YORK MELLON

TRUST COMPANY, N.A., as Trustee (as

successor by merger to JPMorgan Chase Bank,

N.A.)

By:  

 

Name:   Title:  

 

Exhibit 1(a)-2

--------------------------------------------------------------------------------

EXHIBIT 1(b)

[FORM OF SERIES B NOTE]

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THIS SECURITY MAY ONLY BE
TRANSFERRED TO AN “INSTITUTIONAL ACCREDITED INVESTOR” IN ACCORDANCE WITH THE
TERMS OF THE NOTE PURCHASE AGREEMENT DATED AUGUST 17, 2010.

RIO GRANDE RESOURCES TRUST II

4.47% Senior Note, Series B, due August 15, 2017

 

No. BR-[    ]

   [Date]

$[        ]

   PPN: 76711@ AB4

FOR VALUE RECEIVED, the undersigned, the Rio Grande Resources Trust II (the
“Issuer”), promises to pay to [        ], or registered assigns, the principal
sum of $[        ] on August 15, 2017, with interest (computed on the basis of a
360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the
rate of 4.47% per annum from the date hereof, payable semiannually, on
February 15 and August 15 in each year, commencing with the February 15 or
August 15 next succeeding the date hereof, until the principal hereof shall have
become due and payable, and (b) to the extent permitted by law, at a rate per
annum from time to time equal to the greater of (i) 6.47% or (ii) 2% over the
rate of interest publicly announced by JPMorgan Chase Bank, National Association
from time to time in New York, New York as its “base” or “prime” rate, on any
overdue payment of interest and, during the continuance of an Event of Default,
on the unpaid balance hereof and on any overdue payment of any Make-Whole
Amount, payable semiannually as aforesaid (or, at the option of the registered
holder hereof, on demand), but in each case in no event in excess of the maximum
nonusurious rate of interest permitted under applicable law.

Payments of principal of, interest on and any Make-Whole Amount with respect to
this Note are to be made in lawful money of the United States of America at the
principal office of The Bank of New York Mellon in New York, New York or at such
other place as the Issuer shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreement referred to below.

 

Exhibit 1(b)-1

--------------------------------------------------------------------------------

This Note is one of a series of Senior Notes (herein called the “Notes”) issued
pursuant to the Note Purchase Agreement dated as of August 17, 2010 (as from
time to time amended, the “Note Purchase Agreement”), between the Issuer, El
Paso Electric Company and the respective Purchasers named therein and is
entitled to the benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality provisions set
forth in Section 21 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6 of the Note Purchase Agreement. Unless
otherwise indicated, capitalized terms used in this Note shall have the
respective meanings ascribed to such terms in the Note Purchase Agreement.

This Note is a registered Note and, as provided in the Note Purchase Agreement,
upon surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder’s attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Issuer may treat the Person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Issuer will not be affected by any notice to the contrary.

This Note is subject to optional prepayment, in whole or from time to time in
part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.

If an Event of Default occurs and is continuing, the principal of this Note may
be declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in the
Note Purchase Agreement.

This Note shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the law of the state of New York excluding
choice-of-law principles of the law of such state that would require the
application of the laws of a jurisdiction other than such state.

 

RIO GRANDE RESOURCES TRUST II

By: THE BANK OF NEW YORK MELLON

TRUST COMPANY, N.A., as Trustee (as

successor by merger to JPMorgan Chase Bank,

N.A.)

By:  

 

Name:   Title:  

 

Exhibit 1(b)-2

--------------------------------------------------------------------------------

EXHIBIT 1(c)

[FORM OF SERIES C NOTE]

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THIS SECURITY MAY ONLY BE
TRANSFERRED TO AN “INSTITUTIONAL ACCREDITED INVESTOR” IN ACCORDANCE WITH THE
TERMS OF THE NOTE PURCHASE AGREEMENT DATED AUGUST 17, 2010.

RIO GRANDE RESOURCES TRUST II

5.04% Senior Note, Series C, due August 15, 2020

 

No. CR-[    ]

   [Date]

$[        ]

   PPN: 76711@ AC2

FOR VALUE RECEIVED, the undersigned, the Rio Grande Resources Trust II (the
“Issuer”), promises to pay to [            ], or registered assigns, the
principal sum of $[        ] on August 15, 2020, with interest (computed on the
basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance
thereof at the rate of 5.04% per annum from the date hereof, payable
semiannually, on February 15 and August 15 in each year, commencing with the
February 15 or August 15 next succeeding the date hereof, until the principal
hereof shall have become due and payable, and (b) to the extent permitted by
law, at a rate per annum from time to time equal to the greater of (i) 7.04% or
(ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank,
National Association from time to time in New York, New York as its “base” or
“prime” rate, on any overdue payment of interest and, during the continuance of
an Event of Default, on the unpaid balance hereof and on any overdue payment of
any Make-Whole Amount, payable semiannually as aforesaid (or, at the option of
the registered holder hereof, on demand), but in each case in no event in excess
of the maximum nonusurious rate of interest permitted under applicable law.

Payments of principal of, interest on and any Make-Whole Amount with respect to
this Note are to be made in lawful money of the United States of America at the
principal office of The Bank of New York Mellon in New York, New York or at such
other place as the Issuer shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreement referred to below.

 

Exhibit 1(c)-1

--------------------------------------------------------------------------------

This Note is one of a series of Senior Notes (herein called the “Notes”) issued
pursuant to the Note Purchase Agreement dated as of August 17, 2010 (as from
time to time amended, the “Note Purchase Agreement”), between the Issuer, El
Paso Electric Company and the respective Purchasers named therein and is
entitled to the benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality provisions set
forth in Section 21 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6 of the Note Purchase Agreement. Unless
otherwise indicated, capitalized terms used in this Note shall have the
respective meanings ascribed to such terms in the Note Purchase Agreement.

This Note is a registered Note and, as provided in the Note Purchase Agreement,
upon surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder’s attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Issuer may treat the Person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Issuer will not be affected by any notice to the contrary.

This Note is subject to optional prepayment, in whole or from time to time in
part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.

If an Event of Default occurs and is continuing, the principal of this Note may
be declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in the
Note Purchase Agreement.

This Note shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the law of the state of New York excluding
choice-of-law principles of the law of such state that would require the
application of the laws of a jurisdiction other than such state.

 

RIO GRANDE RESOURCES TRUST II By: THE BANK OF NEW YORK MELLON TRUST COMPANY,
N.A., as Trustee (as successor by merger to JPMorgan Chase Bank, N.A.) By:  

 

Name:   Title:  

 

Exhibit 1(c)-2

--------------------------------------------------------------------------------

EXHIBIT 4.4(a)

FORM OF OPINION OF COUNSEL

FOR THE COMPANY

August 17, 2010

To the Purchasers listed on

Schedule A to the

Agreement referred to below

Ladies and Gentlemen:

We have acted as special counsel for El Paso Electric Company, a Texas
corporation (the “Company”), in connection with the execution and delivery of,
and the consummation of the transactions contemplated by, the Note Purchase
Agreement dated August 17, 2010 (the “Agreement”) among the Company, the Rio
Grande Resources Trust II (the “Issuer”) and you, under which you have severally
agreed to purchase from the Issuer (i) $15,000,000 aggregate principal amount of
3.67% Senior Notes, Series A, due August 15, 2015 (the “Series A Notes”);
(ii) $50,000,000 aggregate principal amount of 4.47% Senior Notes, Series B, due
August 15, 2017 (the “Series B Notes”); and (iii) $45,000,000 aggregate
principal amount of 5.04% Senior Notes, Series C, due August 15, 2020 (the
“Series C Notes” and, together with the Series A Notes and the Series B Notes,
the “Notes”). The Notes will be guaranteed by El Paso Electric Company as
Guarantor (the “Guarantee” and, together with the Notes, the “Securities”). We
are issuing this opinion pursuant to Section 4.4(a) of the Agreement.
Capitalized terms used herein but not otherwise defined herein are used as
defined in Agreement.

We have reviewed the Agreement, and have examined originals or copies, certified
or otherwise identified to our satisfaction, of such documents, corporate
records, certificates of public officials, certificates of officers of the
Company and other instruments as we have deemed necessary or advisable for the
purpose of rendering this opinion.

Based upon the foregoing, we are of the opinion that:

 

  1. The execution and delivery by each of the Issuer and the Company of, and
the performance by each of the Issuer and the Company of their respective
obligations under, the Notes, the Guarantee and the Agreement (collectively, the
“Documents”) will not contravene (i) any provision of the laws of the State of
New York or any federal law of the United States of America that in our
experience is normally applicable to general business corporations of the same
type as the Company or grantor trusts of the same type as the Issuer or to their
respective assets or properties in relation to transactions of the type
contemplated by the Documents, provided that we express no opinion as to federal
or state securities laws (except as set forth in paragraph (6) below).

 

Exhibit 4.4(a)-1

--------------------------------------------------------------------------------

  2. Assuming the due authorization of the Securities by the Issuer and the
Company, the Securities, when executed and authenticated in accordance with the
provisions of the Agreement and delivered to and paid for by the Purchasers
pursuant to the Agreement, will be valid and binding obligations of each of the
Company and the Issuer, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors’ rights
generally, concepts of reasonableness and equitable principles of general
applicability, and will be entitled to the benefits of the Agreement pursuant to
which such Securities are to be issued, provided that we express no opinion as
to the (a) enforceability of any waiver of rights under any usury or stay law
and (b) the effect of fraudulent conveyance, fraudulent transfer or similar
provision of applicable law on the conclusions expressed above.

 

  3. Assuming the due authorization, execution and delivery of the Agreement by
the Issuer and the Company, the Agreement constitutes the legal, valid and
binding agreement of each of the Company and the Issuer enforceable against each
of them in accordance with its terms except that the enforcement thereof may be
subject to bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to or
affecting creditors’ rights or remedies generally, concepts of reasonableness
and equitable principles of general applicability;

 

  4. No consent, approval, authorization, or order of, or qualification with,
any state or federal governmental body or agency under the laws of the State of
New York or any federal law of the United States of America that in our
experience is normally applicable to general business corporations of the same
type as the Company or grantor trusts of the same type as the Issuer in relation
to transactions of the type contemplated by the Documents is required for the
execution, delivery and performance by each of the Issuer and the Company of
their obligations under the Documents, except such as may be required under
federal or state securities or Blue Sky laws as to which we express no opinion
(except as set forth in paragraph (6) below).

 

  5. Neither the Issuer nor the Company is, and after giving effect to the
offering and sale of the Securities and the application of the proceeds thereof
as described in the Agreement, neither will be, required to register as an
“investment company” as such term is defined in the Investment Company Act of
1940, as amended.

 

  6.

Assuming the accuracy of, and compliance with the representations, warranties
and covenants of the Issuer, the Company and the Purchasers in the Agreement, it
is not necessary in connection with the offer, sale and delivery of the
Securities to the Purchasers under the Agreement to register the Securities
under the Securities Act of 1933, as amended, or to qualify an indenture in
respect thereof under the

 

Exhibit 4.4(a)-2

--------------------------------------------------------------------------------

 

U.S. Trust Indenture Act of 1939, as amended, it being understood that no
opinion is expressed as to any subsequent offer or resale of any Security.

 

  7. The borrowings under the Agreement and the use of proceeds thereof as
contemplated by the Agreement do not violate Regulation U or X of the Board of
Governors of the Federal Reserve System.

In rendering the opinions in paragraphs (2) and (3) above, we have assumed that
each party to the Documents has been duly organized or incorporated and is
validly existing and, to the extent applicable, in good standing under the laws
of the jurisdiction of its organization. In addition, we have assumed that
(i) the execution, delivery and performance by each party thereto of each
Document to which it is a party, (a) are within its corporate powers, (b) do not
contravene, or constitute a default under, the certificate of incorporation or
bylaws or other constitutive documents of such party, (c) require no action by
or in respect of, or filing with, any governmental body, agency or official and
(d) do not contravene, or constitute a default under, any provision of
applicable law or regulation or any judgment, injunction, order or decree or any
agreement or other instrument binding upon such party, and (ii) each Document
(other than the Agreement) is a valid, binding and enforceable agreement of each
party thereto (other than as expressly covered above in respect of the Issuer
and the Company).

We are members of the Bar of the State of New York and the foregoing opinion is
limited to the laws of the State of New York, and the federal laws of the United
States of America, except that (i) we express no opinion with respect to such
laws relating specifically to public utility companies or the utilities industry
including the Public Utility Holding Company Act of 2005 or any related laws,
rules or regulations or the Federal Power Act or any other laws, rules or
regulations promulgated by or within the enforcement authority of the Federal
Energy Regulatory Commission or the United States Nuclear Regulatory Commission,
(ii) we express no opinion as to any law, rule or regulation that is applicable
to the Issuer, the Company, the Documents or such transactions solely because
such law, rule or regulation is part of a regulatory regime applicable to any
party to any of the Documents or any of its affiliates due to the specific
assets or business of such party or such affiliate, and (iii) we express no
opinion with respect to provisions providing for forfeitures or for liquidated
damages, acceleration of future amounts due (other than principal) without
appropriate discount to present value, late charges, prepayment charges and
make-whole premiums, default interest, other monetary penalties and other
economic remedies to the extent such provisions are deemed to constitute
penalties. Insofar as the foregoing opinion involves matters governed by the
laws of the State of Texas or the State of New Mexico, we have relied, without
independent investigation, on the opinions of Mary E. Kipp, Senior Vice
President and General Counsel for the Company and of Randall Childress P.C., New
Mexico Counsel for the Company delivered to you today pursuant to the Agreement,
and our opinion is subject in all respects to the assumptions, qualifications
and exceptions contained in such opinion.

This opinion is rendered solely to you in connection with the above matter. This
opinion may not be relied upon by you for any other purpose or relied upon by
any other person or furnished to any other person without our prior written
consent, except that (i) your successors and each future holder of the any
Securities under (and permitted by) the Agreement may rely on

 

Exhibit 4.4(a)-3

--------------------------------------------------------------------------------

this opinion as of the original date of this opinion in connection with the
above matter and subject to the limitations, qualifications, exceptions and
assumptions set forth herein, and (ii) that copies may be furnished to your
independent auditors, legal counsel, the National Association of Insurance
Commissioners and all regulatory authorities.

 

Very truly yours,

 

Exhibit 4.4(a)-4

--------------------------------------------------------------------------------

EXHIBIT 4.4(b)

FORM OF OPINION OF INTERNAL COUNSEL

FOR THE COMPANY

August 17, 2010

To the Purchasers listed on

Schedule A to the

Agreement referred to below

Ladies and Gentlemen:

I have acted as General Counsel for El Paso Electric Company, a Texas
corporation (the “Company”), in connection with the Note Purchase Agreement
dated August 17, 2010 (the “Agreement”) among the Company, the Rio Grande
Resources Trust II (the “Issuer”) and you, under which you have severally agreed
to purchase from the Company (i) $15,000,000 aggregate principal amount of 3.67%
Senior Notes, Series A, due August 15, 2015 (the “Series A Notes”);
(ii) $50,000,000 aggregate principal amount of 4.47% Senior Notes, Series B, due
August 15, 2017 (the “Series B Notes”); and (iii) $45,000,000 aggregate
principal amount of 5.04% Senior Notes, Series C, due August 15, 2020 (the
“Series C Notes” and, together with the Series A Notes and the Series B Notes,
the “Notes”). The Notes will be guaranteed by El Paso Electric Company as
Guarantor (the “Guarantee” and, together with the Notes, the “Securities”). I am
issuing this opinion pursuant to Section 4.4(b) of the Agreement. Capitalized
terms used but not otherwise defined herein shall have the meanings assigned to
such terms in the Agreement.

In connection with rendering the opinions expressed herein, I (or attorneys
under my supervision) have reviewed (1) the Agreement; (2) the Notes; (3) the
May 19, 2010 application filed by the Company with the Federal Energy Regulatory
Commission (“FERC”) in Docket No. ES10-43-000, for authorization under
Section 204 of the Federal Power Act, as amended (“FPA”) to issue long-term debt
(the “204 Application”); and (4) FERC’s delegated letter order dated June 29,
2010 in El Paso Electric Co., 131 FERC ¶ 62,269 (2010) (the “204 Order”). In
addition, I (or attorneys under my supervision) have reviewed such other
records, agreements, instruments, certificates of public officials and other
documents, and have made such other investigations, as I have deemed necessary
for the purpose of this opinion letter.

 

Exhibit 4.4(b)-1

--------------------------------------------------------------------------------

I have (i) relied as to factual matters on the representations and warranties
contained in the Agreement, and (ii) assumed (A) the authenticity of all
documents submitted to me as originals, (B) the genuineness of signatures or
original documents, and the conformity to the originals of all copies submitted
to me as photocopies or conformed copies, (C) the due authorization, execution
and delivery of the Agreement by each of the parties executing such documents
(other than the Company and the Issuer), (D) that the Agreement constitutes a
valid and binding agreement of the parties thereto (other than the Company and
the Issuer), and (E) the accuracy and completeness of the public records of the
regulatory agencies, boards and commissions on which I have relied.

I have assumed that all applicable laws and regulations have been duly enacted
and validly promulgated, that all regulatory agencies, boards and commissions
have been duly constituted, that all public officials and all members of said
agencies, boards and commissions have been duly appointed and are lawfully
holding the positions to which they have been elected or appointed, and that any
actions taken by them under delegated authority are undertaken pursuant to
properly delegated authority.

Based upon the foregoing, and subject to the qualifications set forth below, it
is my opinion that:

 

  1. The Company is validly existing as a corporation subsisting under the laws
of the State of Texas and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification (except where the
failure to so qualify would not have a Material Adverse Effect, as that term is
defined in the Agreement).

 

  2. The Issuer is validly existing as a trust subsisting under the laws of the
State of Texas and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification (except where the
failure to so qualify would not have a Material Adverse Effect, as that term is
defined in the Agreement).

 

  3. The Company has corporate power and authority to issue the Guarantee, to
enter into the Agreement and to perform its obligations thereunder.

 

  4. The Issuer has trust power and authority to issue the Notes, to enter into
the Agreement and to perform its obligations thereunder.

 

  5. The Agreement has been duly authorized, executed and delivered by each of
the Company and the Issuer.

 

Exhibit 4.4(b)-2

--------------------------------------------------------------------------------

  6. The Securities have been duly authorized by each of the Issuer and the
Company, and when executed and authenticated in accordance with the provisions
of the Agreement and delivered to and paid for by you pursuant to the Agreement,
to the extent such are covered by the laws of the State of Texas, or the federal
laws of the United States of America, will be valid and binding obligations of
each of the Issuer and the Company, enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally, concepts of reasonableness and equitable principles
of general applicability.

 

  7. The execution and delivery by each of the Issuer and the Company of, and
the performance by each of the Issuer and the Company of their obligations under
the Agreement and the Securities will not contravene (i) any provision of the
laws of the State of Texas, or any federal law of the United States of America
(except with respect to federal, state, or foreign securities laws as to which I
express no opinion), or (ii) the certificate of incorporation or by laws of the
Company and organizational documents of the Issuer.

 

  8. (a) The execution, delivery and performance by the Issuer and the Company
of the Agreement and (b) the incurrence of indebtedness pursuant to the
Agreement do not (i) violate, conflict with, constitute or result in a breach of
any of the terms or provisions of, or a default under (or an event that with
notice or the lapse of time, or both, would constitute a default), (ii) result
in the imposition of a lien or encumbrance on any assets or properties of the
Issuer or the Company pursuant to, or (iii) give rise to any right to accelerate
or require the prepayment or repurchase or redemption of any obligation under
(A) any indenture, contract, instrument or agreement known to me, or (B) any
judgment, order or decree any court or governmental agency or authority that has
jurisdiction over the Issuer or the Company or their assets or properties.

 

  9. There is no pending or, to my knowledge, threatened action or proceeding
against or affecting the Issuer or the Company before any court, governmental
agency or arbitrator which purports to affect the legality, validity or
enforceability of the Agreement.

 

  10.

No consent, approval, authorization, or order of, or qualification with, any
governmental body or agency under the laws of the State of Texas, any federal
law of the United States of America, or to the best of my knowledge, any other
state or jurisdiction of the United States, that in my experience is normally
applicable to (i) general business corporations of the same type as the Company
or (ii) grantor trusts of the same type as the Issuer, in relation to
transactions of the type contemplated by the Agreement, is required for the
issuance of the Securities or the execution, delivery and performance by each of
the Issuer and the Company of their obligations under the Agreement, except such
as may be required (i) under federal, state or foreign

 

Exhibit 4.4(b)-3

--------------------------------------------------------------------------------

 

securities or Blue Sky laws as to which I express no opinion, (ii) by the FERC
as described in paragraph 11 below, or (iii) by the New Mexico Public Regulation
Commission as to which I express no opinion.

 

  11. No authorization, consent, approval, or filing or registration with any
governmental agency or body under the FERC and under the FPA and the Public
Utility Holding Company Act of 2005, and the rules and regulations under each,
each as in effect on the date hereof is necessary for (i) the Issuer to issue
the Notes and (ii) for the Company to assume its obligations in connection with
the Securities, except for (1) the authorization that has been duly obtained
from FERC in the 204 Order, and (2) the filing with FERC of a Report of
Securities Issued no later than 30 days after the sale or placement of the
Securities.

 

  12. The execution, delivery and performance by the Company and the Issuer of
the Agreement and the Securities, in accordance with their respective terms will
not result in a violation of the FPA or the related rules, regulations,
published interpretations and orders issued thereunder, in each case as
presently implemented or interpreted.

 

  13. As of the date hereof, the 204 Order is still in effect.

I am a member of the Bar of the State of Texas and the foregoing opinion is
limited to the laws of the State of Texas and the federal laws of the United
States of America, except that I express no opinion as to any law, rule or
regulation that is applicable to the Issuer, the Company, the Agreement or the
transactions contemplated thereby solely because such law, rule or regulation is
part of a regulatory regime applicable to any party to the Agreement or any of
its affiliates due to the specific assets or business of such party or such
affiliate, except as set forth with respect to the FERC, and the FPA in
paragraphs (11) and (12) above. The foregoing opinion is based in upon existing
laws and regulations as of the date hereof, and I undertake no obligation to
advise you of changes that may be brought to my attention after the date hereof.

This opinion letter is being delivered solely for the benefit of the persons to
whom it is addressed and to their permitted successors and assigns; accordingly,
it may not be quoted, filed with any governmental authority or other regulatory
agency or otherwise circulated or utilized for any purpose without my prior
written consent, except that copies may be furnished to your independent
auditors, legal counsel, the National Association of Insurance Commissioners and
all regulatory authorities.

 

Very truly yours,

 

Exhibit 4.4(b)-4

--------------------------------------------------------------------------------

EXHIBIT 4.4(c)

FORM OF OPINION OF SPECIAL ARIZONA REGULATORY COUNSEL

FOR THE COMPANY

To the Purchasers listed on

Schedule A to the

Agreement referred to below

 

Re: El Paso Electric Company (Rio Grande Resources Trust II): $110,000,000
Senior Notes; 2010 Series Notes (Arizona Regulatory Opinion)

Ladies and Gentlemen:

We have acted as special counsel in the State of Arizona (the “State”) to El
Paso Electric Company, a Texas corporation (the “Company”), in connection with
the Note Purchase Agreement dated as of August 17, 2010 (the “Agreement”) among
the Company, the Rio Grande Resources Trust II (the “Issuer”) and you, under
which (a) you have severally agreed to purchase from the Company (i) $15,000,000
aggregate principal amount of 3.67% Senior Notes, Series A, due August 15, 2015
(the “Series A Notes”); (ii) $50,000,000 aggregate principal amount of 4.47%
Senior Notes, Series B, due August 15, 2017 (the “Series B Notes”); and
(iii) $45,000,000 aggregate principal amount of 5.04% Senior Notes, Series C,
due August 15, 2020 (the “Series C Notes” and, together with the Series A Notes
and the Series B Notes, the “Notes”); and (b) the Notes will be guaranteed by
the Company as Guarantor. Capitalized terms used but not defined herein shall
have the meanings assigned to such terms in the Agreement.

 

A. DOCUMENTS AND MATTERS EXAMINED

In connection with this opinion, we have examined originals or copies of such
documents, records, certificates of public officials and certificates of
officers and representatives of the Company as we considered necessary to
provide a basis for the opinions expressed herein, including the following:

A-1. the Agreement;

A-2. the Notes; and

A-3. the Private Placement Memorandum, Rio Grande Resources Trust II, Up to
$110,000,000 Senior Notes, 2010 Series Notes, July 2010 (Draft As of 7/6/2010
11:49 AM).

The documents listed in A-1 through A-3 are collectively referred to herein as
the “Transaction Documents”.

As to matters of fact material to the opinions expressed herein, we have relied
on (a) information in public authority documents (and all opinions based on
public authority documents are as of the date of such public authority documents
and not as of the date of this opinion letter), (b) information provided in
certificates of officers/representatives of the

 

Exhibit 4.4(c)-1

--------------------------------------------------------------------------------

Company, including the Officer’s Certificate attached hereto as Exhibit A, and
(c) the representations and warranties of the Company in the Transaction
Documents. We have not independently verified the facts so relied on.

 

B. ASSUMPTIONS

We have relied, without investigation, on the following assumptions:

B-1. Original documents reviewed by us are authentic, copies of original
documents reviewed by us conform to the originals and all signatures on executed
documents are genuine.

B-2. All individuals have sufficient legal capacity to perform their functions
with respect to the Transaction Documents and the transaction contemplated by
the Transaction Documents (the “Transaction”).

B-3. The Transaction Documents and the other documents reviewed by us are valid
and binding obligations of each party thereto, other than the Company (each, an
“Other Party”), enforceable against it in accordance with their terms, and each
such Other Party has complied with all legal requirements pertaining to its
status relevant to its right to enforce the Transaction Documents against the
Company.

B-4. The schedules and exhibits to the Agreement that were not reviewed by us do
not affect, alter or amend the terms of the Agreement reviewed by us.

B-5. Each party executing the Transaction Documents is duly organized, validly
existing and in good standing under all applicable laws, and has all requisite
corporate or other requisite power and authority to execute and deliver the
Transaction Documents and perform the applicable provisions thereof.

B-6. The Transaction Documents have been duly authorized, executed and delivered
by each party executing the Transaction Documents.

B-7. There is no requirement of consent, approval, authorization or other action
by, or filing with, any Governmental Authority with respect to any Other Party’s
execution and delivery of the Transaction Documents and the consummation of the
Transaction and the borrowings under the Agreement, except those that have
already been made or obtained. However, we disclaim any knowledge of what has
been made or obtained.

 

C. OPINIONS

Based on the foregoing, and subject to the qualifications and exclusions stated
below, we express the following opinions:

C-1. The Company’s and the Issuer’s execution and delivery of the Agreement and
consummation of the Transaction do not (i) violate any provision of the Arizona
Public Utility Act (or the related rules, regulations and published
interpretations thereunder that we examined and that in our experience are
typically applicable to agreements similar to the Agreement and transactions
similar to the Transaction) (collectively, the “Act”), or (ii) breach or violate
any

 

Exhibit 4.4(c)-2

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Material Order. “Material Order” means the court order or order of any
Governmental Authority of the State issued under the Act listed on Exhibit A,
Schedule 1 hereto, which list was provided by the Company in response to our
request for a list of all material orders binding on the Company, the Issuer or
their respective properties.

C-2. No consent, approval, authorization or other action by, or filing with, any
Governmental Authority pursuant to the Act or pursuant to other statutes of the
State (that in our experience are typically required in connection with
agreements similar to the Agreement and transactions similar to the Transaction)
applicable to the Company as a result of the fact that the Company is an
electric public utility, is required of the Company in connection with the
execution and delivery by the Company of the Agreement and the consummation of
the Transaction, except those that have already been made or obtained.

 

D. CONFIRMATIONS

D-1. In addition, we confirm to you that we are not representing the Company in
any litigation that is pending or overtly threatened in writing by a potential
claimant, that seeks to enjoin the Transaction or challenge the performance by
the Company of its obligations under the Transaction Documents.

 

E. QUALIFICATIONS; EXCLUSIONS

E-1. Except to the extent expressly noted to the contrary in this opinion
letter, we express no opinion as to the effect, if any, that one or more of the
following matters may have on the opinions expressed herein:

(a) state “blue sky” laws and regulations, and laws and regulations relating to
commodity (and other) futures and indices and other similar instruments;

(b) state laws and regulations dealing with (i) antitrust and unfair
competition; (ii) filing and notice requirements, other than requirements
applicable to charter-related documents such as a certificate of merger;
(iii) environmental matters; (iv) land use and subdivisions; (v) tax;
(vi) patents, copyrights, trademarks and intellectual property;
(vii) racketeering; (viii) health and safety; (ix) labor and employment;
(x) national and local emergencies; (xi) possible judicial deference to acts of
sovereign states; (xii) criminal and civil forfeiture; (xiii) statutes of
general application to the extent they provide for criminal prosecution (e.g.,
mail fraud and wire fraud statutes); and (xiv) regulation of lenders or the
conduct of the business of lenders and that may relate to the Transaction
Documents or the Transaction;

(c) compliance with fiduciary duty requirements;

(d) the statutes and ordinances, the administrative decisions, and the rules and
regulations of counties, cities, towns, municipalities and special political
subdivisions (whether created or enabled through legislative action at the
federal, state or regional level), and judicial decisions to the extent that
they deal with any of the foregoing;

(e) fraudulent transfer and fraudulent conveyance laws;

 

Exhibit 4.4(c)-3

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(f) pension and employee benefit laws and regulations;

(g) the Company’s title to or the condition of title of any property; and

(h) the creation, attachment, perfection, priority or enforcement of liens or
encumbrances.

For purposes of expressing the opinions herein, (a) we have examined the laws of
the State, (b) we have assumed that those laws govern the construction,
interpretation and enforcement of the Transaction Documents, whether or not any
of the Transaction Documents includes a choice-of-law provision stipulating the
application of the laws of some other jurisdiction, and (c) our opinions are
limited to such laws. We have not reviewed, nor are our opinions in any way
predicated on an examination of, the laws of any other jurisdiction (including,
but not limited to, federal laws), and we expressly disclaim responsibility for
advising you as to the effect, if any, that the laws of any other jurisdiction
may have on the opinions set forth herein.

The opinions expressed herein (a) are limited to matters expressly stated
herein, and no other opinions may be implied or inferred, and (b) are as of the
date hereof (except as otherwise noted above). We disclaim any undertaking or
obligation to update these opinions for events and circumstances occurring after
the date hereof or as to facts relating to prior events that are subsequently
brought to our attention.

This opinion letter is rendered only to you and is solely for your benefit in
connection with the Transaction. Except as noted herein, this opinion letter may
not be used or relied on for any other purpose or by any other person without
our prior written consent. You may refer to and produce a copy of this opinion
letter in connection with the review of the Transaction by a regulatory agency
having supervisory authority over you, in connection with the assertion of a
defense as to which this opinion letter is relevant and necessary and in
response to a court order.

 

Very truly yours, PERKINS COIE BROWN & BAIN P.A.

 

Exhibit 4.4(c)-4

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EXHIBIT 4.4(d)

FORM OF OPINION OF SPECIAL REGULATORY COUNSEL

FOR THE COMPANY

August 17, 2010

To the Purchasers listed on

Schedule A to the

Agreement referred to below

 

Re: El Paso Electric Company (Rio Grande Resources Trust II): $110,000,000
Senior Notes; 2010 Series Notes (Nuclear Waste Act and Atomic Energy Act
Opinion)

Ladies and Gentlemen:

We have acted as special regulatory counsel to El Paso Electric Company, a Texas
corporation (the “Company”), on matters relating to (i) the Nuclear Waste Policy
Act of 1982, 42 U.S.C. §§ 10101 et seq. and the Nuclear Waste Policy Amendments
Act of 1987, 42 U.S.C. §§ 10172, 10172a et seq. (collectively, the “Nuclear
Waste Act”), and (ii) the Atomic Energy Act of 1954, 42 U.S.C. §§ 2201, et seq.
(the “Atomic Energy Act”), in connection with the Note Purchase Agreement dated
as of August 17, 2010 (the “Agreement”) among the Company, the Rio Grande
Resources Trust II (the “Issuer”) and you (the “Purchasers”), under which
(a) you have severally agreed to purchase from the Company (i) $15,000,000
aggregate principal amount of 3.67% Senior Notes, Series A, due August 15, 2015
(the “Series A Notes”); (ii) $50,000,000 aggregate principal amount of 4.47%
Senior Notes, Series B, due August 15, 2017 (the “Series B Notes”); and
(iii) $45,000,000 aggregate principal amount of 5.04% Senior Notes, Series C,
due August 15, 2020 (the “Series C Notes” and, together with the Series A Notes
and the Series B Notes, the “Notes”); and (b) the Notes will be guaranteed by
the Company as Guarantor. Capitalized terms used but not defined herein shall
have the meanings assigned to such terms in the Agreement. The scope of this
opinion is limited solely to matters arising under the Nuclear Waste Act and the
Atomic Energy Act.

 

A. DOCUMENTS AND MATTERS EXAMINED

In connection with this opinion, we have examined originals or copies of such
documents, records, certificates of public officials and certificates of
officers and representatives of the Company as we considered necessary to
provide a basis for the opinions expressed herein, including the following:

A-1. The Agreement;

A-2. The Notes; and

A-3. The amendments issued by the Nuclear Regulatory Commission (“NRC”) to
licenses NPF-51 and NPF-74 (Palo Verde Nuclear Generating Station (“Palo Verde”)
Units 2

 

Exhibit 4.4(d)-1

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and 3) in NRC Docket Nos. STN 50-529 and STN 50-530 at the request of the
Company and Arizona Public Service Company, the operator of Palo Verde Units 2
and 3, on December 8, 1995, as amended on January 2, 1996 (the “NRC Approvals”).

The documents listed in A-1 through A-3 are collectively referred to herein as
the “Documents.” Our opinions are based solely upon a review of the Documents,
and, with your consent, we have reviewed no other agreements, documents,
records, instruments, certificates or other statements as a basis for the
opinions herein expressed.

As to matters of fact material to the opinions expressed herein, we have relied
on (a) information in public authority documents (and all opinions based on
public authority documents are as of the date of such public authority documents
and not as of the date of this opinion letter), (b) information provided in
certificates of officers/representatives of the Company, and (c) the
representations and warranties of the Company in the Documents. We have not
independently verified the facts so relied on.

 

B. ASSUMPTIONS

We have relied, without investigation, on the following assumptions:

B-1. Original documents reviewed by us are authentic, copies of original
documents reviewed by us conform to the originals and all signatures on executed
documents are genuine.

B-2. All individuals have sufficient legal capacity to perform their functions
with respect to the Documents and the transaction contemplated by the Documents
(the “Transaction”).

B-3. The Documents and the other documents reviewed by us are valid and binding
obligations of each party thereto, other than the Company (each, an “Other
Party”), enforceable against it in accordance with their terms, and each such
Other Party has complied with all legal requirements pertaining to its status
relevant to its right to enforce the Documents against the Company.

B-4. The schedules and exhibits to the Agreement that were not reviewed by us do
not affect, alter or amend materially the terms of the Agreement reviewed by us.

B-5. Each party executing the Documents is duly organized, validly existing and
in good standing under all applicable laws, and has all requisite corporate or
other requisite power and authority to execute and deliver the Documents and
perform the applicable provisions thereof.

B-6. The Documents have been duly authorized, executed and delivered by each
party executing the Documents.

B-7. There is no requirement of consent, approval, authorization or other action
by, or filing with, any Governmental Authority with respect to any Other Party’s
execution and delivery of the Transaction Documents and the consummation of the
Transaction and the

 

Exhibit 4.4(d)-2

--------------------------------------------------------------------------------

borrowings under the Agreement, except those that have already been made or
obtained. However, we disclaim any knowledge of what has been made or obtained.

B-8. All statutes, judicial and administrative decisions, and rules and
regulations of governmental agencies, constituting the law examined by us, are
generally available (i.e., in terms of access and distribution following
publication or other release) to lawyers practicing in such jurisdiction, and
are in a format that makes legal research reasonably feasible.

B-9. The constitutionality or validity of the relevant statute, rule, regulation
or agency action is not in issue unless a reported decision in the opining
jurisdiction has specifically addressed but not resolved, or has established,
its unconstitutionality or invalidity.

B-10. Other agreements and court orders will be enforced as written.

B-11. The Company will not in the future take any discretionary action
(including a decision not to act) permitted under the Agreement that would
result in the violation of law or constitute a breach or default under any other
agreement or court order.

B-12. The Company will obtain all permits and governmental approvals required in
the future, and will take all actions similarly required, relevant to subsequent
consummation of the Transaction or performance of the Agreement.

B-13. All parties to the Transaction will act in accordance with, and will
refrain from taking any action that is forbidden by, the terms and conditions of
the Agreement.

B-14. No party to this Transaction is owned, controlled, or dominated by an
alien, a foreign corporation, or a foreign government.

B-15. The Company does not receive, possess, handle, store, use, or transfer any
source material, byproducts material or special nuclear materials, as those
terms are defined in the Atomic Energy Act, and does not receive, possess,
handle, store, use, or transfer any spent nuclear fuel or high-level radioactive
waste, as those terms are defined in the Nuclear Waste Act.

 

C. OPINIONS

Based on the foregoing, and subject to the qualifications and exclusions stated
below, we express the following opinions:

C-1. Except for the NRC Approvals and the general NRC consent contained in
10 C.F.R. § 50.81(a) (2009) and 10 C.F.R. § 72.52(b) (2009), no authorization
approval or other action by, prior notice to or prior filing or registration
with the NRC is required for (i) the due execution and delivery by the Company
and the Issuer of the Agreement and the Notes, as applicable, and the
consummation of the Transaction, except those that have already been made or
obtained, and (ii) the utilization by the Purchasers of the NRC “consent”
contained in 10 C.F.R. § 50.81(a) (2009), “to the creation of any mortgage,
pledge, or other lien upon any leasehold or other interest in such facility” and
the NRC “consent” contained in 10 C.F.R. § 72.52(b) (2009), “to the creation of
any mortgage, pledge, or other lien on special nuclear material contained in
spent fuel not owned by the United States that is the subject of a license or

 

Exhibit 4.4(d)-3

--------------------------------------------------------------------------------

on any interest in special nuclear material in spent fuel”; provided, however,
that the rights of any such Purchaser may be exercised only in compliance with,
and subject to, the Atomic Energy Act and applicable NRC regulations, including
but not limited to 10 C.F.R. § 50.81 (2009) and 10 C.F.R. § 72.52 (2009).

C-2. The Transaction and the participation by the Purchasers in the Transaction
pursuant to the Atomic Energy Act and applicable NRC regulations do not violate
the Atomic Energy Act or the related rules, regulations and orders issued
thereunder that in our experience are typically applicable to agreements similar
to the Agreement and transactions similar to the Transaction; provided, however,
that the rights of the Purchasers may be exercised only in compliance with, and
subject to, the Atomic Energy Act and applicable NRC regulations, including but
not limited to 10 C.F.R. § 50.81 (2009).

C-3. The Transaction and the participation by the Purchasers in the Transaction
pursuant to the Nuclear Waste Act and applicable NRC regulations do not violate
the Nuclear Waste Act or the related rules, regulations and orders issued
thereunder that in our experience are typically applicable to agreements similar
to the Agreement and transactions similar to the Transaction; provided, however,
that the rights of the Purchasers may be exercised only in compliance with, and
subject to, the Nuclear Waste Act and applicable NRC regulations, including but
not limited to 10 C.F.R. § 72.52 (2009).

 

D. QUALIFICATIONS AND EXCLUSIONS

D-1. The opinions expressed herein are limited solely to the Nuclear Waste Act
and the Atomic Energy Act. We have not reviewed, nor are our opinions in any way
predicated upon an examination of, any other laws, and we expressly disclaim
responsibility for advising you as to the effect, if any, that any other laws
may have upon the opinions set forth herein. Furthermore, we express no opinion
as to matters that may be affected by pending or proposed federal, state or
local legislation, even though such legislation, if subsequently enacted, might
affect the opinions expressed herein.

D-2. Except to the extent expressly noted to the contrary in this opinion
letter, we express no opinion as to the effect, if any, that one or more of the
following matters may have on the opinions expressed herein:

(a) the statutes and ordinances, the administrative decisions, and the rules and
regulations of counties, cities, towns, municipalities and special political
subdivisions (whether created or enabled through legislative action at the
federal, state or regional level), and judicial decisions to the extent that
they deal with any of the foregoing; and

(b) the Company’s title to or the condition of title of any property.

The opinions expressed herein (a) are limited to matters expressly stated
herein, and no other opinions may be implied or inferred, and (b) are as of the
date hereof (except as otherwise noted above). We disclaim any undertaking or
obligation to update these opinions for events and circumstances occurring after
the date hereof or as to facts relating to prior events that are subsequently
brought to our attention.

 

Exhibit 4.4(d)-4

--------------------------------------------------------------------------------

This opinion letter is rendered only to you and is solely for your benefit in
connection with the Transaction. Except as noted herein, this opinion letter may
not be used or relied on for any other purpose or by any other person without
our prior written consent. You may refer to and produce a copy of this opinion
letter in connection with the review of the Transaction by a regulatory agency
having supervisory authority over you, in connection with the assertion of a
defense as to which this opinion letter is relevant and necessary and in
response to a court order.

 

Very truly yours, PERKINS COIE BROWN & BAIN P.A.

 

Exhibit 4.4(d)-5

--------------------------------------------------------------------------------

EXHIBIT 4.4(e)

FORM OF OPINION OF SPECIAL NEW MEXICO COUNSEL

FOR THE COMPANY

August 17, 2010

To the Purchasers listed on

Schedule A to the

Agreement referred to below

Ladies and Gentlemen:

We have acted as special counsel in the State of New Mexico to El Paso Electric
Company, a Texas corporation (the “Company”), in connection with matters of New
Mexico law in connection with the Note Purchase Agreement dated August 17, 2010
(the “Agreement”) among the Company, the Rio Grande Resources Trust II (the
“Issuer”) and you, under which you have severally agreed to purchase from the
Company (i) $15,000,000 aggregate principal amount of 3.67% Senior Notes, Series
A, due August 15, 2015 (the “Series A Notes”); (ii) $50,000,000 aggregate
principal amount of 4.47% Senior Notes, Series B, due August 15, 2017 (the
“Series B Notes”); and (iii) $45,000,000 aggregate principal amount of 5.04%
Senior Notes, Series C, due August 15, 2020 (the “Series C Notes” and, together
with the Series A Notes and the Series B Notes, the “Notes”). The Notes will be
guaranteed by El Paso Electric Company as Guarantor (the “Guarantees” and,
together with the Notes, the “Securities”). The scope of this legal opinion is
limited solely to matters arising under New Mexico State Law, as applicable to
the above matter. Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Agreement.

In connection with this opinion, we have examined the Agreement, as well as
originals or copies certified or identified to our satisfaction of such other
records, agreements, instruments and documents as we deemed necessary in
connection with rendering this opinion (collectively, the “Documents”).

As to certain factual matters material to the opinions hereinafter expressed, we
have relied, when relevant facts were not independently established by us,
without objection by you, upon representations and statements of facts of the
Company or its officers and/or directors, and on representations made by the
Company in the Documents. In each instance in this opinion where we have relied
upon representations of the Company, we do not know of any inaccuracy but do not
express an opinion as to such matters.

 

Exhibit 4.4(e)-1

--------------------------------------------------------------------------------

OPINIONS

Based upon the foregoing, and subject to the qualifications and assumptions set
forth below, we are of the opinion that as of the date hereof:

1. The Company is duly qualified to transact business and is in good standing as
a foreign corporation in the State of New Mexico and possesses adequate
certificates, authorities, or permits issued by appropriate New Mexico
regulatory agencies or bodies necessary to conduct the business now operated by
it in the State of New Mexico.

2. Based on the representations made by the Company and our examination of the
Documents, the issuance and sale of the Securities pursuant to the Agreement,
and the execution, delivery and performance of the Agreement by the Company,
will not result in (i) a breach or violation by the Company of any statute, or
any rule, regulation, order, judgment or decree of any court or governmental or
regulatory authority of the State of New Mexico applicable to the Company or by
which any property or asset of the Company is or may be bound; or (ii) a
violation of any provision of the New Mexico Public Utility Act (the “NMPUA”) or
the related rules, regulations, published interpretations and orders issued
thereunder, in each case as presently implemented or interpreted.

3. The New Mexico Public Regulation Commission (“NMPRC”) has issued its final
order authorizing the issuance and sale of the Securities pursuant to the
Agreement, such order is in full force and effect, is not subject to rehearing
or appeal by any party other than the Company, and is sufficient to authorize
the issuance and sale of the Notes and the transactions contemplated by the
Agreement; and no other action, consent or approval of, registration or prior
filing with or any other action by any Governmental Authority pursuant to the
NMPUA or pursuant to other statutes of the State of New Mexico applicable to the
Company as a result of the fact that it is an electric public utility, is or
will be required of the Company in connection with the Securities, except those
that (i) have been made or obtained, (ii) are in full force and effect and
(iii) have not been withdrawn.

4. To our knowledge, no stop order, restraining order or denial of an
application for approval has been issued and no investigation, proceeding or
litigation has been commenced or threatened before any governmental or
regulatory authority or court of the State of New Mexico with respect to the
Securities.

ASSUMPTIONS

The opinions set forth above are based upon, and these opinions are subject to
the accuracy, completeness and correctness of the following assumptions:

 

Exhibit 4.4(e)-2

--------------------------------------------------------------------------------

A. That the Documents have been duly authorized, executed and delivered by each
party executing the Documents.

B. That (i) signatures on all documents reviewed by us are genuine, (ii) all
photostatic copies of documents that we have reviewed conform to the original
documents and that all documents reviewed by us are authentic, (iii) all public
records reviewed by us are accurate and complete, and (iv) all natural persons
have legal capacity.

C. Except as set forth in paragraph (1) above, that each party executing the
Documents is duly organized, validly existing and in good standing under all
applicable laws, and has all requisite corporate power and authority to execute
and deliver the Documents and perform the applicable provisions thereof.

D. That the Documents are legal, valid, binding and enforceable in accordance
with their respective terms as to each party other than the Company executing
them, and that the Documents therefore have mutuality of binding effect.

E. That no party other than the Company executing the Documents is involved in
any court or administrative proceeding relating to or otherwise affecting the
transactions contemplated by the Documents or subject to any order, writ,
injunction or decree of any court or governmental authority that would prohibit
the execution or delivery of the Documents or the performance of the Agreement.

F. That each party other than the Company has obtained all consents, approvals
and authorizations by any person or governmental authority necessary for
execution and delivery of the Documents and the performance of the Agreement;
however, we disclaim any knowledge of what has been obtained or is necessary to
be obtained by such parties.

 

Exhibit 4.4(e)-3

--------------------------------------------------------------------------------

QUALIFICATIONS

In addition to the assumptions set forth above, the opinions expressed herein
are also subject to the following qualifications:

We are admitted to practice in the State of New Mexico and are members of the
State Bar of New Mexico and the opinions expressed above are limited in all
respects to the laws of the State of New Mexico. Except as specifically set
forth herein, we render no opinion with regard to any tax, securities. Blue Sky,
usury, bankruptcy, insurance, consumer, or antitrust and unfair competition
laws, rules or regulations, of any nature, whether state, local, foreign, or
federal, nor do we render any opinion with regard to any municipal, local, or
county laws, statutes, rules, regulations, or ordinances. We have considered
such laws, rules and regulations as we believe should be applicable to the
transactions contemplated by the Documents, but without our having made any
special investigation concerning any law, rule or regulation other than those
specifically referenced in the opinion paragraph numbered 2 above.

As to certain factual matters material to this opinion, we have relied, when the
relevant facts were not independently established by us, without objection by
you, upon representations and statements of facts of the Company or its officers
and/or directors, and on representations made by the Company in the Documents.
While we have no reason to believe that any of the information presented in this
letter, or upon which we have relied in expressing any of the opinions set forth
herein, is inaccurate or incomplete, we have not independently verified the
accuracy or completeness of any such information. In each instance in which
reference is made to any factual matter known to or within the knowledge or
information of this Firm, we wish to advise that no special investigation of the
relevant facts or circumstances has been made. In each instance in this opinion
in which we state that we have made certain assumptions, we wish to advise that
we have no knowledge of any inaccuracy of any such assumption, but we do not
express an opinion with respect to the matters so assumed.

Any opinion or statement herein which is expressed to be “to our knowledge,” “of
which we have knowledge” or as otherwise qualified by words of like import means
that the lawyers currently practicing law with our firm, who have had an active
involvement in the representation of the Company, have no current conscious
awareness of any facts or information contrary to such opinion or statement, but
we have undertaken no independent investigation with respect to anyone’s
awareness of such facts or information.

We express no opinion as to the laws of any jurisdiction other than the laws of
the State of New Mexico. In every instance where the laws of another
jurisdiction might normally control the issue, we have nonetheless expressed our
opinion based upon the unqualified assumption that the laws (including the
principles of conflict of laws) of such other jurisdiction is identical in all
respects to the laws (excluding the principles of conflict of laws) of the State
of New Mexico. The opinions expressed above concern only the effect of laws as
currently in effect.

We have not acted as general counsel to the Company, and our opinions relating
to matters about the Company are solely based on information provided to us by
the Company,

 

Exhibit 4.4(e)-4

--------------------------------------------------------------------------------

which we have not independently investigated, and information we have obtained
from third-party sources, which we believe to be reliable but have not
independently investigated.

We express no opinion except as expressly provided herein and no opinions may be
inferred or implied beyond the matters expressly stated herein. Our opinions are
as of the date hereof and are based, in each case, upon existing laws and
regulations effective as of the date hereof and assume the application of such
laws and regulations to events that may occur after the date of this letter, and
we undertake no obligation (i) to advise you of changes that may come to our
attention or that become effective after the date hereof or (ii) to withdraw,
reissue, or supplement the opinions expressed herein as a result of any
subsequent change to relevant facts or applicable law or any discovery by us
that any assumption or factual conclusion set forth in this letter was incorrect
as of the date hereof Moreover, in connection with our opinions, we have not
reviewed or considered, and are not rendering any opinions on or with respect
to, any proposed or pending local, state, or federal rules, regulations, or
legislation as to their possible impact on the Agreement and any transactions
contemplated in the Agreement.

We are furnishing this opinion to you solely for your use in connection with the
opinion of counsel required to be delivered pursuant to the Agreement. This
opinion may be relied upon by you and the Company, and by any of your successors
and assigns. This opinion is considered to be a confidential communication,
which may not otherwise be used, reproduced, distributed, quoted, filed with any
governmental or regulatory authority or disclosed to anyone other than those
listed without our prior written consent, except that copies may be furnished to
your independent auditors, legal counsel, the National Association of Insurance
Commissioners and all regulatory authorities.

 

Very Truly Yours, LAW OFFICES OF RANDALL W. CHILDRESS, P.C.

 

Exhibit 4.4(e)-5

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EXHIBIT 4.4(f)

FORM OF OPINION OF SPECIAL COUNSEL

TO THE PURCHASERS

The opinion of Foley & Lardner LLP, special counsel to the Purchasers, shall be
to the effect that:

1. The Agreement and the Notes constitute the legal, valid and binding
agreements of the Company and the Issuer, enforceable in accordance with their
terms, except to the extent that enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
fraudulent transfer, moratorium or similar laws of general application relating
to or affecting the enforcement of the rights of creditors or by equitable
principles, regardless of whether enforcement is sought in a proceeding in
equity or at law.

2. Based upon the representations set forth in the Agreement, the offering, sale
and delivery of the Notes do not require the registration of the Notes under the
Securities Act of 1933, as amended, nor the qualification of an indenture under
the Trust Indenture Act of 1939, as amended.

3. No approval, consent or withholding of objection on the part of, or filing,
registration or qualification with, any governmental body, Federal or state, is
necessary in connection with the execution and delivery of the Note Agreement or
the Notes.

As to matters of Texas law and as to the due authorization, execution and
delivery of the Notes and the Agreement by the Issuer and the Company, Foley &
Lardner LLP may rely on the opinions of Davis Polk & Wardwell LLP and Mary E.
Kipp. The opinion of Foley & Lardner LLP shall state that the opinions of Davis
Polk & Wardwell LLP, Mary E. Kipp, Perkins Coie LLP, and the Law Offices of
Randall W. Childress, P.C. are satisfactory in form and scope to Foley & Lardner
LLP, and, in its opinion, the Purchasers are justified in relying thereon and
shall cover such other matters relating to the sale of the Notes as the
Purchasers may reasonably request.

CHIC-4820430.11

 

Exhibit 4.4(f)