Document:

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                                                                    EXHIBIT 4.22

                         CITY OF FARMINGTON, NEW MEXICO

                               __________________

                             ORDINANCE NO. 2002-1134

                              Adopted July 9, 2002

                               __________________

                                   AUTHORIZING

                            Pollution Control Revenue
                         Refunding Bonds, 2002 Series A
                            (El Paso Electric Company
                              Four Corners Project)

                               __________________

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       TABLE OF CONTENTS

                                Table of Contents

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<S>                                                                             <C>
ARTICLE I DEFINITIONS .........................................................    4

   Section 1.01  Definitions ..................................................    4
   Section 1.02  Number and Gender ............................................   13
   Section 1.03  Articles, Sections, Etc ......................................   13
   Section 1.04  Content of Certificates and Opinions .........................   13
   Section 1.05  Findings .....................................................   14

ARTICLE II THE BONDS ..........................................................   15

   Section 2.01  Authorization and Terms ......................................   15
   Section 2.02  Execution of Bonds; Limited Obligation .......................   28
   Section 2.03  Transfer and Exchange of Bonds ...............................   30
   Section 2.04  Bond Register ................................................   30
   Section 2.05  Bonds Mutilated, Lost, Destroyed or Stolen ...................   30
   Section 2.06  Disposition of Bonds .........................................   31
   Section 2.07  CUSIP Numbers ................................................   31
   Section 2.08  Other Obligations ............................................   31
   Section 2.09  Temporary Bonds ..............................................   31

ARTICLE III ISSUANCE OF BONDS .................................................   32

   Section 3.01  Authentication and Delivery of Bonds .........................   32
   Section 3.02  Payment of Principal and Interest ............................   32

ARTICLE IV REDEMPTION AND PURCHASE OF BONDS ...................................   33

   Section 4.01  Redemption of Bonds ..........................................   33
   Section 4.02  Selection of Bonds to be Redeemed ............................   37
   Section 4.03  Notice for Redemption ........................................   37
   Section 4.04  Partial Redemption of Bonds ..................................   38
   Section 4.05  Effect of Redemption .........................................   39
   Section 4.06  Payment of Redemption Price ..................................   39
   Section 4.07  Bank Purchase Option .........................................   39
   Section 4.08  Purchase of Bonds ............................................   42
   Section 4.09  Delivery of Tendered Bonds ...................................   44
   Section 4.10  Bonds Deemed Purchased .......................................   44

ARTICLE V THE BOND FUND .......................................................   45

   Section 5.01  Creation of Bond Fund ........................................   45
   Section 5.02  Deposits into Bond Fund ......................................   45
   Section 5.03  Use of Moneys in Bond Fund ...................................   45
   Section 5.04  Credit Facility ..............................................   46
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<S>                                                                                      <C>
   Section 5.05   Custody of Bond Fund; Withdrawal of Moneys .........................   48
   Section 5.06   Bonds Not Presented for Payment ....................................   48
   Section 5.07   Moneys Held in Trust ...............................................   48
   Section 5.08   Payment to the Bank and to the Company .............................   49

ARTICLE VI CONSTRUCTION FUND; APPLICATION OF BOND PROCEEDS ...........................   49

   Section 6.01   Construction Fund ..................................................   49
   Section 6.02   Application of Proceeds ............................................   51

ARTICLE VII INVESTMENTS ..............................................................   51

   Section 7.01   Investments ........................................................   51

ARTICLE VIII GENERAL COVENANTS .......................................................   52

   Section 8.01   Limited Obligation; Payment of Principal and Interest ..............   52
   Section 8.02   Performance of Agreements; Authority ...............................   52
   Section 8.03   Maintenance of Corporate Existence; Compliance with Laws ...........   53
   Section 8.04   Enforcement of Company's Obligations under the Agreement ...........   53
   Section 8.05   Further Assurances .................................................   53
   Section 8.06   No Disposition or Encumbrance of City's Interests ..................   53
   Section 8.07   Trustee's Access to Books Relating to Facilities ...................   53
   Section 8.08   Filing of Financing Statements .....................................   53
   Section 8.09   Tax Covenant .......................................................   54
   Section 8.10   Notices by Trustee .................................................   54
   Section 8.11   Ratification of Prior Action .......................................   54
   Section 8.12   No Transfer of Credit Facility .....................................   54

ARTICLE IX DEFEASANCE ................................................................   55

   Section 9.01   Defeasance .........................................................   55
   Section 9.02   Survival of Certain Provisions .....................................   56

ARTICLE X DEFAULTS AND REMEDIES ......................................................   56

   Section 10.01  Events of Default ..................................................   56
   Section 10.02  Remedies ...........................................................   59
   Section 10.03  Restoration to Former Position .....................................   59
   Section 10.04  Owner's Right to Direct Proceedings ................................   59
   Section 10.05  Limitation on Owners' Right to Institute Proceedings ...............   60
   Section 10.06  No Impairment of Right to Enforce Payment ..........................   60
   Section 10.07  Proceeding by Trustee Without Possession of Bonds ..................   60
   Section 10.08  No Remedy Exclusive ................................................   60
   Section 10.09  No Waiver of Remedies ..............................................   60
   Section 10.10  Application of Moneys ..............................................   61
   Section 10.11  Severability of Remedies ...........................................   62
   Section 10.12  Waivers of Events of Default .......................................   62
   Section 10.13  No Obligation of City to Act .......................................   63
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<TABLE>
<S>                                                                                             <C>
ARTICLE XI TRUSTEE; PAYING AGENT; REGISTRAR ..................................................  63

   Section 11.01  Acceptance of Trusts .......................................................  63
   Section 11.02  Trustee Not Responsible for Recitals, Maintenance, Insurance, etc ..........  63
   Section 11.03  Limitations on Liability ...................................................  64
   Section 11.04  Compensation, Expenses and Advances ........................................  64
   Section 11.05  Notice of Events of Default ................................................  65
   Section 11.06  Action by Trustee ..........................................................  65
   Section 11.07  Good Faith Reliance ........................................................  65
   Section 11.08  Dealings in Bonds and with the City and the Company ........................  66
   Section 11.09  Several Capacities .........................................................  66
   Section 11.10  Construction of Ordinance ..................................................  66
   Section 11.11  Resignation of Trustee .....................................................  66
   Section 11.12  Removal of Trustee .........................................................  66
   Section 11.13  Appointment of Successor Trustee ...........................................  67
   Section 11.14  Qualifications of Successor Trustee ........................................  67
   Section 11.15  Judicial Appointment of Successor Trustee ..................................  67
   Section 11.16  Acceptance of Trusts by Successor Trustee ..................................  68
   Section 11.17  Successor by Merger or Consolidation .......................................  68
   Section 11.18  Standard of Care ...........................................................  68
   Section 11.19  Notice of Event of Default .................................................  68
   Section 11.20  Intervention in Litigation .................................................  68
   Section 11.21  Paying Agent ...............................................................  68
   Section 11.22  Qualifications of Paying Agent; Resignation; Removal .......................  69
   Section 11.23  Registrar ..................................................................  69
   Section 11.24  Qualifications of Registrar; Resignation; Removal ..........................  70
   Section 11.25  Appointment of Co-Trustee ..................................................  70
   Section 11.26  Notices to Rating Agencies .................................................  71

ARTICLE XII EXECUTION OF INSTRUMENTS BY OWNERS AND PROOF OF OWNERSHIP OF BONDS ...............  71

   Section 12.01  Execution of Instruments; Proof of Ownership ...............................  71

ARTICLE XIII MODIFICATION OF THIS ORDINANCE AND THE AGREEMENT ................................  72

   Section 13.01  Limitations ................................................................  72
   Section 13.02  Supplemental Ordinances without Consent of Owners ..........................  72
   Section 13.03  Supplemental Ordinances with Consent of Owners .............................  73
   Section 13.04  Effect of Supplemental Ordinance ...........................................  74
   Section 13.05  Consent of the Company and the Bank ........................................  74
   Section 13.06  Amendment of Agreement without Consent of Owners ...........................  75
   Section 13.07  Amendment of Agreement with Consent of Owners ..............................  75
   Section 13.08  Issuance of Bonds Under Other Ordinances; Recognition of Prior Pledges .....  75
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<TABLE>
<S>                                                                                                   <C>
ARTICLE XIV REMARKETING AGENT; TENDER AGENT; PURCHASE AND REMARKETING OF BONDS ....................   76

   Section 14.01  Remarketing Agent and Tender Agent. .............................................   76
   Section 14.02  Qualifications of Remarketing Agent and Tender Agent; Resignation; Removal ......   77
   Section 14.03  Notice of Bonds Delivered for Purchase; Purchase of Bonds .......................   78
   Section 14.04  Remarketing of Bonds; Notice of Interest Rates ..................................   80
   Section 14.05  Delivery of Bonds ...............................................................   80
   Section 14.06  Drawings on Credit Facility .....................................................   81
   Section 14.07  Delivery of Proceeds of Sale ....................................................   82

ARTICLE XV MISCELLANEOUS ..........................................................................   82

   Section 15.01  Ordinance to Bind and Inure to Benefit of Successors to City ....................   82
   Section 15.02  Parties in Interest .............................................................   82
   Section 15.03  Severability ....................................................................   82
   Section 15.04  No Personal Liability of City Officials Under Ordinance .........................   83
   Section 15.05  Bonds Owned by the City or the Company ..........................................   83
   Section 15.06  Governing Law ...................................................................   83
   Section 15.07  Notices .........................................................................   83
   Section 15.08  Non-Business Days ...............................................................   84
   Section 15.09  Opinions ........................................................................   84
   Section 15.10  Headlines; Table of Contents ....................................................   84
   Section 15.11  Acceptance by Trustee ...........................................................   84
   Section 15.12  Declaration of Emergency ........................................................   85

EXHIBIT A.     Bond Form ..........................................................................  A-1
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                                   CERTIFICATE

STATE OF NEW MEXICO   )
                      )
COUNTY OF SAN JUAN    )   SS.
                      )
CITY OF FARMINGTON    )

     I hereby certify that the attached document numbered as pages 1 through __,
both inclusive, is a true and correct copy of Ordinance No. ________ adopted by
the Governing Body of the City of Farmington, New Mexico at its meeting held in
the Council Chamber of City Hall, at ______ on ________, the original of said
document being under my care, custody and control and recorded in my office.

     IN WITNESS WHEREOF I have hereunto set my hand and seal of said City of
Farmington, New Mexico this ___ day of July, 2002.

SEAL

                                                      __________________________
                                                      __________, City Clerk

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                             ORDINANCE NO. 2002-1134

     AN ORDINANCE AUTHORIZING AND PROVIDING FOR THE ISSUANCE BY THE CITY OF
     FARMINGTON, NEW MEXICO OF AN ISSUE OF ITS REVENUE BONDS DESIGNATED
     "POLLUTION CONTROL REFUNDING REVENUE BONDS, 2002 SERIES A (EL PASO ELECTRIC
     COMPANY, FOUR CORNERS PROJECT)" TO BE ISSUED PURSUANT TO THE PROVISIONS OF
     THE POLLUTION CONTROL REVENUE BOND ACT, CHAPTER 397, LAWS OF 1973 OF THE
     STATE OF NEW MEXICO, 31ST LEGISLATURE, 1ST SESSION, AS AMENDED, FOR THE
     PURPOSE OF REFUNDING OUTSTANDING REVENUE BONDS ISSUED UNDER SUCH ACT TO
     REFUND PREVIOUSLY OUTSTANDING REVENUE BONDS ISSUED UNDER SUCH ACT TO
     FINANCE PROJECTS CONSISTING OF INTERESTS IN CERTAIN AIR AND WATER POLLUTION
     CONTROL FACILITIES AT THE FOUR CORNERS GENERATING STATION, ELECTRIC POWER
     GENERATING PLANT LOCATED IN SAN JUAN COUNTY, NEW MEXICO, INTERESTS IN WHICH
     ARE OWNED BY EL PASO ELECTRIC COMPANY, A CORPORATION ORGANIZED AND EXISTING
     UNDER THE LAWS OF THE STATE OF TEXAS, SAID REVENUE BONDS TO BE PAYABLE BY
     THE CITY SOLELY FROM THE REVENUES PAYABLE TO THE CITY BY EL PASO ELECTRIC
     COMPANY PURSUANT TO A CERTAIN AMENDED AND RESTATED INSTALLMENT SALE
     AGREEMENT BETWEEN THE CITY, AS VENDOR, AND EL PASO ELECTRIC COMPANY, AS
     VENDEE. AND CERTAIN OTHER MONEYS PLEDGED THEREFOR HEREUNDER, SAID REVENUE
     BONDS NEVER TO CONSTITUTE AN INDEBTEDNESS OF THE CITY WITHIN THE MEANING OF
     ANY STATE CONSTITUTIONAL PROVISION OR STATUTORY LIMITATION, AND NEVER TO
     CONSTITUTE OR GIVE RISE TO ANY PECUNIARY LIABILITY OF THE CITY OR A CHARGE
     AGAINST ITS GENERAL CREDIT OR TAXING POWERS AND DECLARING THAT EMERGENCY
     CIRCUMSTANCES EXIST WITH RESPECT THERETO.

          WHEREAS, the City of Farmington, an incorporated municipality, a body
politic and corporate, existing under the Constitution and laws of the State of
New Mexico (the "City"), is authorized and empowered under the Pollution Control
Revenue Bond Act, Chapter 397, Laws of 1973 of the State of New Mexico, 31st
Legislature, 1st Session, as amended (the "Act"), to issue revenue bonds for and
to acquire, whether by construction, purchase, gift or lease, one or more
projects consisting of any land, interest in land, building, structure,
facility, system, fixture, improvement, appurtenance, machinery, equipment or
any combination thereof, or any interest in any one or more of the foregoing,
whether or not presently in existence or under construction, used by an
individual, partnership, firm, company, corporation (including a public
utility), association, trust, estate, political subdivision, state agency or any
legal entity, or its legal representative, agent or assigns, substantially for
the reduction, abatement or prevention of pollution, including, but not limited
to, the removal of pollutants, contaminants or foreign substances from land, air
or water, or for the removal or treatment of any substance in a processed
material which would otherwise cause pollution when such material is used,
provided that any such project shall be located within the State of New Mexico
and within or without or partially within or without the City, but not more than
fifteen miles outside of the corporate limits of the City (or that, if there is
no municipality within fifteen miles of the project, the City

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is in the county in which the project is or may be located) and to sell or lease
or otherwise dispose of any or all of such projects upon such terms and
conditions as the governing body of the City (hereinafter called the "City
Council") may deem advisable and as shall not conflict with the provisions of
the Act; and

          WHEREAS, the City is authorized and empowered under the Act to issue
refunding bonds to refund bonds issued and outstanding under the Act; and

          WHEREAS, the City Council has heretofore on October 23, 1973, adopted
a Resolution (the "1973 Resolution") determining to issue, and, subject to
certain conditions, agreeing to issue under the Act revenue bonds to finance the
cost to El Paso Electric Company, a corporation organized and existing under the
laws of the State of Texas (the "Company"), of certain Facilities (the
"Facilities") for the abatement, control, reduction or prevention of air and
water pollution caused by the operation of Units 4 and 5 at the Four Corners
Generating Station, an electric power generating plant (the "Plant") located in
San Juan County, New Mexico, and authorizing the Mayor to execute and deliver a
preliminary agreement relating thereto and, subject to certain conditions, to
take such steps and actions required or necessary in order to issue such revenue
bonds, and a Preliminary Agreement dated as of December 28, 1973 (the "1973
Agreement"), in the form contemplated by the 1973 Resolution was executed and
delivered by the City and the Company; and

          WHEREAS, the City Council on April 8, 1980, adopted a resolution
authorizing the Mayor to execute and deliver an amendment to the 1973 Agreement,
and an Amendment to the 1973 Agreement dated as of April 8, 1980, in the form
contemplated by said resolution, was executed and delivered by the City and the
Company; and

          WHEREAS, the City has heretofore issued and sold $35,440,000 aggregate
principal amount of its Pollution Control Revenue Bonds, 1981 Series A (El Paso
Electric Company, Four Corners Project) (the "1981 Bonds") the proceeds of which
were used to defray a portion of the cost to the Company of acquiring,
constructing, reconstructing, improving, maintaining, equipping or furnishing
the Facilities; and

          WHEREAS, the City Council has heretofore on November 22, 1983, adopted
Resolutions approving and authorizing the execution and delivery by the Mayor
and the City Clerk of the City, on behalf of the City, of that certain
Installment Sale Agreement, dated as of November 1, 1983, between the City and
the Company, and setting forth the undertaking by the City to issue and sell the
1983 Bonds (as hereinafter defined); and

          WHEREAS, the City has heretofore issued and sold $35,805,000 aggregate
principal amount of its Annual Tender Pollution Control Revenue Refunding Bonds,
1983 Series A (El Paso Electric Company, Four Corners Project) (the "1983
Bonds") the proceeds of which were used to refund the outstanding 1981 Bonds;
and

          WHEREAS, the City Council has heretofore on October 18, 1994, adopted
a Resolution approving and authorizing the execution and delivery by the Mayor
and the City Clerk of the City, on behalf of the City, of that certain
Installment Sale Agreement (the "1994

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Agreement"), dated as of November 1, 1994, between the City and the Company, and
setting forth the undertaking by the City to issue and sell the 1994 Bonds (as
hereinafter defined); and

          WHEREAS, the City has heretofore issued and sold $33,300,000 aggregate
principal amount of its Annual Tender Pollution Control Revenue Refunding Bonds,
1994 Series A (El Paso Electric Company, Four Corners Project) (the "1994
Bonds") the proceeds of which were used to refund the outstanding 1983 Bonds;
and

          WHEREAS, the Company has advised the City and the Trustee of its
election to exercise its option to prepay the unpaid balance of the purchase
price of the Project (as hereinafter defined) by taking the actions required by
the 1994 Ordinance (as hereinafter defined) to cause to be redeemed the entire
principal amount of the 1994 Bonds then outstanding, subject to the Company's
right to revoke such election; and

          WHEREAS, the City intends to adopt a resolution approving and
authorizing the execution and delivery by the Mayor and the City Clerk of the
City, on behalf of the City, of that certain Amended and Restated Installment
Sale Agreement (the "Agreement"), to be dated as of a date at or prior to the
first issuance of the Bonds (as hereinafter defined), between the City, as
Vendor, and the Company, as Vendee (amending and restating the 1994 Agreement),
and setting forth the undertaking by the City to issue and sell the Bonds; and

          WHEREAS, JPMorgan Chase, as successor trustee under the 1994 Ordinance
and pursuant to instructions from the Company, has called the 1994 Bonds for
mandatory tender for purchase pursuant to the 1994 Ordinance; and

          WHEREAS, the Company has requested that the City adopt an ordinance in
the following form and containing the following terms and provisions and
designating the named parties as Trustee, Registrar, Remarketing Agent and
Tender Agent; and

          WHEREAS, in the Agreement the Company will release the City and agree
that the City shall not be liable for, and will agree to indemnify and hold the
City harmless from, certain matters; and

          WHEREAS, this Ordinance shall serve as an indenture of trust.

          NOW, THEREFORE,

          BE IT ORDAINED BY THE GOVERNING BODY OF THE CITY OF FARMINGTON, NEW
MEXICO that the City, in consideration of the covenants herein contained and of
the purchase and acceptance of the Bonds by the holders thereof, in order to
secure the payment of all Bonds at any time outstanding under this Ordinance,
according to their tenor and effect, and the performance and observance of all
the covenants and conditions in the Bonds and herein contained, and to declare
the terms and conditions upon and subject to which the Bonds are issued and
secured, does grant a security interest in and pledge to the Trustee (as
hereinafter defined), and to its successors and assigns forever, upon written
acceptance of this ordinance by the Trustee, the Trust Estate (as hereinafter
defined) for the equal and proportionate benefit, security and protection of all
holders and owners of the Bonds issued under and secured

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by this Ordinance without privilege, priority or distinction as to the lien or
otherwise of any of the Bonds over any other of the Bonds, all upon the terms
stated in this Ordinance.

                                    ARTICLE I

                                   DEFINITIONS

     Section 1.01 Definitions. The terms defined in this Article I shall, for
all purposes of this Ordinance, have the meanings herein specified, unless the
context clearly requires otherwise. Capitalized terms used herein, defined in
the Agreement and not otherwise defined herein, shall have the meaning specified
in the Agreement.

          "Act" shall mean the Pollution Control Revenue Bond Act, Chapter 397,
Laws of 1973 of the State of New Mexico, 31st Legislature, 1st Session, as
amended by Chapter 312, Laws of 1977 of the State of New Mexico, 33rd
Legislature, 1st Session, and Chapter 181, Laws of 1978 of the State of New
Mexico, 33rd Legislature, 2nd Session, and Chapter 114, Laws of 1983 of the
State of New Mexico, 36th Legislature, 1st Session, and all acts supplemental
thereto or amendatory thereof.

          "Agreement" shall mean the Amended and Restated Installment Sale
Agreement dated as of August 1, 2002 (amending and restating the Amended and
Restated Installment Sale Agreement dated as of November 1, 1994), executed and
delivered at or prior to the initial issuance of the Bonds, between the City and
the Company, relating to the Bonds, and any and all modifications, alterations,
amendments and supplements thereto, in accordance with the terms of this
Ordinance.

          "Alternate Credit Support" shall mean any letter of credit, credit
facility, insurance policy, guarantee or other credit support agreement or
security mechanism provided by the Company in accordance with Section 6.08 of
the Agreement and any extension thereof.

          "Authorized Company Representative" shall mean each person at the time
designated to act on behalf of the Company by written certificate furnished to
the City and the Trustee containing the specimen signature of such person and
signed on behalf of the Company.

          "Authorized Denominations" shall mean: (i) with respect to any
Long-Term Interest Rate Period, $5,000 and any integral multiple thereof; (ii)
with respect to any Daily Interest Rate Period, Weekly Interest Rate Period or
Short-Term Interest Rate Period, $100,000 and any integral multiple of $5,000 in
excess of $100,000.

          "Available Moneys" shall mean (i) with respect to any date occurring
during the term of a Credit Facility, (a) proceeds of a drawing under a Credit
Facility which have been directly deposited in the Bond Fund or the Purchase
Fund, as applicable, (b) moneys deposited in the Bond Fund or the Purchase Fund
by or on behalf of the Company and which have been on deposit with the Trustee
or the Tender Agent, as applicable, for at least one hundred and twenty-four
(124) days prior to and during which no petition by or against the City or the
Company or any affiliate of the Company, under any Bankruptcy Act shall have
been filed or any bankruptcy or similar proceeding shall have been commenced,
unless such petition or proceeding shall have been dismissed and such dismissal
shall be final and not subject to appeal, (c) any other money

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(including the proceeds of the sale of refunding obligations of the City) the
application of which would not, in the written opinion of Bond Counsel or other
nationally recognized counsel experienced in bankruptcy matters and acceptable
to the City, the Rating Agencies, if any, and the Trustee and delivered to the
Trustee and the Tender Agent, constitute a voidable preference in the case of a
filing for protection under the Bankruptcy Act of the City or the Company and
(d) the proceeds from the investment of moneys described above, and (ii) with
respect to any date not occurring during the term of a Credit Facility, any
moneys furnished to the Trustee or the Tender Agent, as applicable, and the
proceeds from the investment thereof.

          "Bank" shall mean the issuer of a Letter of Credit, if any, with
respect to the Bonds, and, any subsequently issued Credit Facility, the issuer
of such other Credit Facility so long as such other Credit Facility shall be in
effect, in its capacity as such issuer, its successors in such capacity and
their assigns.

          "Bankruptcy Act" shall mean the United States Bankruptcy Code, any
successor act thereto or amendment thereof or any other applicable federal or
state bankruptcy, insolvency, reorganization, liquidation, dissolution or
similar law, now or hereafter in effect.

          "Bond" or "Bonds" shall mean the bonds issued in accordance with this
Ordinance as referenced in Article II hereof.

          "Bond Counsel" shall mean any firm of nationally recognized bond
counsel which is experienced in the financing of pollution control facilities
and acceptable to the City, the Remarketing Agent, the Trustee and the Company
hereof.

          "Book Entry Bond" shall mean any Bonds which are then held in
book-entry form as provided in Section 2.01(e) hereof.

          "Bond Fund" shall mean the fund created by Section 5.01

          "Bond Interest Term" or "BIT" shall mean, with respect to each Bond
bearing interest at a BIT Rate, the period established in accordance with the
terms Section 2.01(c) hereof.

          "Bond Interest Term Rate" or "BIT Rate" shall mean, the interest rate
on any Bond established in accordance with Section 2.01(c) hereof.

          "Business Day" shall mean a day on which banks located in the cities
in which the Principal Offices of the Trustee and the Tender Agent are located,
and in the city or cities in which drawings under a Credit Facility are required
to be made, are not required or authorized by law or executive order to remain
closed and on which the New York Stock Exchange, Inc. is not closed.

          "City" shall mean the City of Farmington, in the County of San Juan,
an incorporated municipality, a body politic and corporate, existing under the
Constitution and the Laws of the State of New Mexico, and its successors and
assigns.

          "City Clerk" shall mean the City Clerk of the City or the officer
succeeding to the principal functions of such office.

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          "City Council" shall mean the City Council of the City or the board or
body in which general legislative powers of the City may subsequently be vested.

          "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time. Each reference herein to a section of the Code shall be deemed to
include the United States Treasury Regulations adopted under the Code, as the
same may be in effect from time to time, unless the context clearly requires
otherwise.

          "Company" shall mean El Paso Electric Company, a corporation organized
and existing under the laws of the State of Texas, and its successors or assigns
and any transferee entity to the extent permitted by Section 6.02 of the
Agreement.

          "Construction Fund" shall mean the fund created by Section 6.01
hereof.

          "Cost of Construction" shall have the meaning specified in Article I
of the Agreement.

          "Credit Facility" shall mean, collectively, the Letter of Credit and
any extensions thereof, and, upon the issuance and delivery of any Alternate
Credit Support in accordance with Section 6.08 of the Agreement, "Credit
Facility" shall mean such Alternate Credit Support.

          "Daily Interest Rate" shall mean the variable interest rate on any
Bond established in accordance with Section 2.01(c)(ii) hereof.

          "Daily Interest Rate Period" shall mean each period during which a
Daily Interest Rate is in effect.

          "Determination of Taxability" means a determination that, due to the
untruth or inaccuracy of any representation or warranty made by the Company in
the Agreement or the breach of any covenant or warranty of the Company contained
in the Agreement, interest on the Bonds, or any of them, is determined not to be
Tax-Exempt by a final administrative determination of the Internal Revenue
Service or a final judicial decision of a court of competent jurisdiction in a
proceeding of which the Company received notice and in which the Company was
afforded an opportunity to participate to the full extent permitted by law. A
determination or decision will not be considered final for purposes of the
preceding sentence unless (A) the City or the holder or holders of the Bonds
involved in the proceeding in which the issue is raised (i) shall have given the
Company and the Trustee prompt written notice of the commencement thereof, and
(ii) shall have offered the Company the opportunity to control the proceeding;
provided the Company agrees to pay all expenses in connection therewith and to
indemnify such holder or holders against all liability for such expenses (except
that any such holder may engage separate counsel, and the Company shall not be
liable for the fees or expenses of such counsel); and (B) such proceeding shall
not be subject to a further right of appeal or shall not have been timely
appealed.

          "Electronic" notice shall mean notice by any form of electronic
transmission capable of producing a written record and shall constitute written
notice as required herein.

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          "Facilities" shall mean the pollution control systems and facilities
at the Plant, which are described in Exhibit A to the Agreement, as from time to
time revised, changed, amended or modified, and related improvements and any
substitutions therefor.

          "Favorable Opinion of Bond Counsel" shall mean an opinion of Bond
Counsel addressed to the City, the Bank and the Trustee to the effect that the
action proposed to be taken (i) is authorized or permitted by the laws of the
State of New Mexico and this Ordinance, and all conditions precedent, if any,
have been satisfied and (ii) will not adversely affect any exclusion from gross
income for federal income tax purposes of interest on the Bonds.

          "Government Obligations" shall mean direct obligations of, or
obligations the principal of and interest on which are unconditionally
guaranteed as to full and timely payment by, the United States of America and
which are not subject to prepayment or redemption prior to maturity.

          "Initial Interest Rate Period" shall mean the Interest Rate Period for
the Bonds on the date of issuance and delivery of the bonds as specified in
Section 2.01(b) hereof.

          "Initial Long-Term Interest Rate Period" shall mean the period
commencing August 1, 2002 and ending July 31, 2005.

          "Interest Accrual Date" shall mean (i) with respect to any Daily
Interest Rate Period, the first day thereof and, thereafter, the first day of
each calendar month during that Daily Interest Rate Period, (ii) with respect to
any Weekly Interest Rate Period, the first day thereof and, thereafter, the
first day of each calendar month during that Weekly Interest Rate Period, (iii)
with respect to any Long-Term Interest Rate Period, the first day thereof and,
thereafter, each Interest Payment Date in respect thereof, other than the last
such Interest Payment Date, and (iv) with respect to each Bond Interest Term
within a Short Term Interest Rate Period, the first day thereof.

          "Interest Payment Date" shall mean (i) with respect to any Daily
Interest Rate Period or Weekly Interest Rate Period, the first Business Day of
each calendar month, (ii) with respect to any Long-Term Interest Rate Period,
each June 1 and December 1 occurring during such Long-Term Interest Rate Period,
and the Business Day next succeeding the last day thereof, (iii) with respect to
any Short-Term Interest Rate Period, the Business Day next succeeding the last
day thereof, and (iv) in all events, the final maturity date of the Bonds.

          "Interest Rate Period" shall mean any Daily Interest Rate Period,
Weekly Interest Rate Period, Short-Term Interest Rate Period or Long-Term
Interest Rate Period.

          "Investment Securities" shall mean any of the following obligations or
securities (only to the extent investment therein would not violate the laws of
the State of New Mexico) on which the Company (or any affiliate) is not the
obligor, maturing at such time or times as to enable disbursements to be made
from the Bond Fund or Construction Fund in accordance with the terms hereof, or
which shall be marketable prior to the maturities thereof:

               (i)  direct obligations of, or obligations the principal and
     interest of which are guaranteed as to the full and timely payment by, the
     United States of America, which

                                        7

<PAGE>

     obligations, in either case, are not subject to redemption or prepayment at
     less than par by anyone other than the holder;

               (ii)   obligations issued or guaranteed by an instrumentality of
     the United States of America pursuant to authority granted by the Congress
     of the United States of America, including obligations of the Federal
     National Mortgage Association, Federal Intermediate Credit Banks, Banks for
     Cooperatives, Federal Land Banks or Federal Home Loan Banks;

               (iii)  commercial paper rated at the time of investment in the
     highest short-term grade by the Rating Agencies;

               (iv)   bankers' acceptances drawn on and accepted by commercial
     banks (including the Trustee, the Paying Agent, and the Bank) having at
     least $10,000,000 in capital stock, surplus and undivided profits the
     unsecured, uninsured obligations of which are rated not less than "Prime -
     1" or "Aa2" by Moody's and "A-1" or "A+" by S&P;

               (v)    certificates of deposit, deposit accounts and savings
     accounts fully insured by the Federal Deposit Insurance Corporation;

               (vi)   repurchase agreements with solvent banking or other
     financial institutions (including the Trustee, the Paying Agent, and the
     Bank) rated at the time of investment not less than the then current rating
     of the Bonds by each of the Rating Agencies;

               (vii)  obligations of a state, a Territory, Puerto Rico, or a
     possession of the United States of America, or any political subdivision of
     the foregoing, or of the District of Columbia and which are rated at the
     time of investment not less than the then current rating of the Bonds by
     each of the Rating Agencies;

               (viii) money market funds registered under the federal Investment
     Company Act of 1940, whose shares are registered under the federal
     Securities Act of 1933, and having a rating by S&P of "AAAm-G", "AAAm" or
     "Aam", and by Moody's of "Ass" or "As";

               (ix)   custodial agreements providing for the investment of
     moneys through a custodian, reverse purchase agreements, option agreements
     and agreements to lend securities; and

               (x)    any other obligations and securities not prohibited by law
     and which are rated at least "Aaa" or "A8" by Moody's and "AAA" or `AA' by
     S&P.

          "Issue Date" shall mean August 1, 2002, the date of issuance and
delivery of the Bonds.

          "Letter of Credit" shall mean the irrevocable direct-pay letter of
credit issued by the Bank and delivered to the Trustee in accordance with
Section 6.08 of the Agreement and any extension thereof.

                                       8

<PAGE>

          "Long-Term Interest Rate" shall mean, with respect to each Bond, a
fixed, non-variable interest rate on such bond established in accordance with
Section 2.01(c)(iv) hereof.

          "Long-Term Interest Rate Period" shall mean each period during which a
Long-Term Interest Rate is in effect.

          "Maturity Date" shall mean the date as set forth in the resolution
adopted prior to the bond issuance which in no event shall exceed 30 years from
the Issue Date.

          "Maximum Interest Rate" shall mean fifteen percent (15%) per annum.

          "Mayor" shall mean the Mayor of the City or the officer succeeding to
the principal functions of such office.

          "Moody's" shall mean Moody's Investors Service, Inc., a corporation
organized and existing under the laws of the State of Delaware, its successors
and their assigns, and, if such corporation shall be dissolved or liquidated or
shall no longer perform the functions of a securities rating agency, "Moody's"
shall be deemed to refer to any other nationally recognized securities rating
agency designated by the Company, with the approval of the Remarketing Agent and
the Bank, by notice to the Trustee, the Tender Agent and the City.

          "1983 Bonds" shall mean the City's $35,805,000 aggregate principal
amount of Annual Tender Pollution Control Revenue Refunding Bonds, 1983 Series A
(El Paso Electric Company Four Corners Project).

          "1994 Bonds" shall mean the City's $33,300,000 aggregate principal
amount of Adjustable Tender Pollution Control Revenue Refunding Bonds, 1994
Series A (El Paso Electric Company Four Corners Project).

          "1994 Ordinance" shall mean Ordinance No. 94-1018, as supplemented and
amended by Resolution No. 94-798, and Ordinance Nos. 96-1035 and 99-965 creating
and securing the 1994 Bonds.

          "Nominee" shall have the meaning specified in Section 2.01(e) hereof.

          "Non-Qualifying Costs" in respect of the Facilities shall mean any
Cost of Construction that does not constitute a Qualifying Cost.

          "Ordinance" shall mean this ordinance adopted July 9, 2002, as
modified, altered, amended, supplemented or confirmed by any and all ordinances
or resolutions supplemental thereto or amendatory thereof adopted pursuant
thereto.

          "Outstanding", when used in reference to the Bonds, shall mean, as at
any particular date, the aggregate of all Bonds authenticated and delivered in
accordance with this Ordinance except:

               1.  those cancelled at or prior to such date or delivered to or
     held by the Trustee at or prior to such date for cancellation;

                                       9

<PAGE>

               2.   those deemed to be paid in accordance with Article VIII
     hereof;

               3.   those in lieu of or in exchange, replacement or substitution
     for which other Bonds shall have been authenticated and delivered in
     accordance with this Ordinance, unless proof satisfactory to the Trustee
     and the Company is presented that such Bond is held by a bona fide holder
     in due course; and

               4.   Bonds deemed purchased pursuant to Section 4.10 hereof.

          "Owner" shall mean the person or entity in whose name any Bond is
registered upon the registration books maintained pursuant to Section 2.04
hereof.

          "Paying Agent" shall mean the initial and any successor paying agent
or agents appointed in or in accordance with Section 11.21 hereof. "Corporate
Trust Office" of the Paying Agent shall mean the Corporate Trust Office of the
Trustee (if the Trustee is the Paying Agent) or such other office of the Paying
Agent designated in writing to the City, the Trustee, the Bank, the Tender Agent
and the Remarketing Agent.

          "Plant" shall mean the Four Corners Generating Station, an electric
power generating plant, located within fifteen miles of the corporate limits of
the City in San Juan County, New Mexico but not within the corporate limits of
any municipality, and portions of such Plant, if any, located in San Juan
County, New Mexico, but not located within fifteen miles of the corporate limits
of the City, provided there is no incorporated municipality within fifteen miles
of such portions of such Plant.

          "Project" shall mean the interest in the Facilities sold by the City
to the Company pursuant to Agreement.

          "Purchase Fund" shall mean the fund created by Section 14.01 hereof.

          "Purchase Price of the Project" shall mean the purchase price of the
Project determined pursuant to Section 5.02(a) of the Agreement.

          "Qualifying Costs" shall mean any Cost of Construction to the extent
payment therefor from the Construction Fund would constitute within the meaning
of the Code, the use of proceeds of Bonds to provide Facilities that are air or
water pollution control, solid waste disposal and sewage disposal facilities, or
other exempt facilities within the meaning of the Code, or facilities
functionally related and subordinate thereto.

          "Rating Agencies" shall mean S&P and Moody's.

          "Receipts and Revenues" shall mean (a) the installments of the
Purchase Price of the Project, including all moneys drawn by the Trustee under a
Credit Facility in satisfaction of the Company's obligations to make
installments of the Purchase Price of the Project, (b) all other moneys received
or to be received by the Trustee (for the account of the City) pursuant to the
Agreement, (c) all moneys and investments in the Bond Fund and (d) all income
and profit from the investment of the foregoing moneys. The term "Receipts and
Revenues" does not include

                                       10

<PAGE>

any moneys or investments in the Purchase Fund or amounts required to be paid to
the City pursuant to sections 5.04, 5.08 or 8.05 of the Agreement.

          "Record Date" shall mean (a) with respect to any Interest Payment Date
in respect of any Daily Interest Rate Period, the last Business Day of each
calendar month or, in the case of the last Interest Payment Date in respect of a
Daily Interest Rate Period, the Business Day immediately preceding such Interest
Payment Date, (b) with respect to any Interest Payment Date in respect of any
Weekly Interest Rate Period or any Bond Interest Term within a Short-Term
Interest Rate Period, the Business Day immediately preceding such Interest
Payment Date, and (c) with respect to any Interest Payment Date in respect of
any Long-Term Interest Rate Period, the fifteenth day of the month immediately
preceding such Interest Payment Date or, in the event that an Interest Payment
Date shall occur within 16 days after the first day of a Long-Term Interest Rate
Period, such first day.

          "Registrar" shall mean the registrar or registrars appointed in or in
accordance with Section 11.23 hereof. "Corporate Trust Office" of the Registrar
shall mean the Corporate Trust Office of the Trustee (if the Trustee is the
Registrar) or such other office of the Registrar designated in writing to the
City, the Trustee, the Tender Agent and the Remarketing Agent.

          "Reimbursement Agreement" shall mean the Reimbursement Agreement,
between the Company and the Bank issued in connection with the Letter of Credit
and delivered to the Trustee in connection with Section 6.08 of the Agreement
and any extension thereof.

          "Remarketing Agent" shall mean Salomon Smith Barney and any successor
remarketing agent appointed in accordance with Section 14.01(i) hereof.
"Corporate Trust Office" of the Remarketing Agent shall mean Salomon Smith
Barney, 388 Greenwich Street, 34th Floor, New York, New York 10013, Attention:
Public Finance Department, or such other office thereof designated in writing to
the City, the Trustee, the Bank and the Tender Agent.

          "Remarketing Agreement" shall mean the Remarketing Agreement, executed
and delivered at or prior to the initial issuance of the Bonds, between the
Company and the Remarketing Agent, relating to the Bonds, as supplemented or
amended in accordance with the provisions thereof.

          "Representation Letter" shall have the meaning set forth in Section
2.01(e) hereof.

          "S&P" shall mean Standard & Poor's Ratings Group (a Division of
McGraw-Hill Inc.), a corporation organized and existing under the laws of the
State of New York, its successors and their assigns, and, if such corporation
shall be dissolved or liquidated or shall no longer perform the functions of a
securities rating agency, "S&P" shall be deemed to refer to any other nationally
recognized securities rating agency designated by the Company, with the approval
of the Remarketing Agent and the Bank, by notice to the Trustee, the Tender
Agent and the City.

          "Short-Term Interest Rate Period" shall mean, with respect to each
Bond bearing interest at a BIT Rate, the period established in accordance with
Section 2.01(c)(v) hereof.

                                       11

<PAGE>

          "Special Record Date" shall mean, with respect to any bond, the date
established by the Trustee in connection with the payment of overdue interest on
that Bond pursuant to Section 2.01(b) hereof.

          "Supplemental Ordinance" shall mean any Ordinance of the City
modifying, altering, amending, supplementing or confirming this Ordinance, in
accordance with the terms of this Ordinance, as such Supplemental Ordinance may
be amended or supplemented by any and all ordinances and related resolutions of
the City Council adopted pursuant thereto.

          "Tax Certificate" shall mean "The Tax Certificate as to Arbitrage and
the Provisions of Sections 141-150 of the Internal Revenue Code of 1986",
executed by the City in connection with the issuance of the Bonds.

          "Tax Exempt" shall mean, with respect to interest on any obligations
of a state or local government, including the Bonds, that such interest is
excluded from the gross income of the holders thereof (other than any holder who
is a "substantial user" of facilities financed with such obligations or a
"related person" within the meaning of Section 147(a) of the Code) for federal
income tax purposes, whether or not such interest is includable as an item of
tax preference or otherwise includable directly or indirectly for purposes of
calculating other tax liabilities, including any alternative minimum tax or
environmental tax under the Code.

          "TBMA Municipal Index" means The Bond Market Association Municipal
Index as of the most recent date for which such index was published or such
other weekly, high-grade index comprised of seven-day, Tax-Exempt variable rate
demand notes produced by Municipal Market Data, Inc., or its successor, or as
otherwise designated by The Bond Market Association; provided, however, that, if
such index is no longer produced by Municipal Market Data, Inc. or its
successor, then "TBMA Municipal Index" shall mean such other reasonably
comparable index selected by the Company with the advice of the Remarketing
Agent, if any.

          "Tender Agent" shall mean Salomon Smith Barney and any successor
tender agent appointed in accordance with Section 14.02(ii) hereof. "Corporate
Trust Office" of the Tender Agent shall mean the Corporate Trust Office of the
Trustee (if the Trustee is the Tender Agent), or such other office thereof
designated in writing to the City, the Trustee and the Remarketing Agent.

          "Tender Agreement" shall mean the Tender Agreement, if any, executed
and delivered at or prior to the initial issuance of the Bonds, between the
Company and the Tender Agent, relating to the Bonds, as supplemented or amended
in accordance with the provisions thereof.

          "Treasurer" shall mean the Treasurer of the City or the officer
succeeding to the principal functions of such office.

          "Trust Estate" shall mean at any particular time all right, title and
interest of the City in and to the Agreement (except its rights under Sections
5.04, 5.08 and 8.05 thereof and any rights of the City to receive notices,
certificates, requests, requisitions, directions and other communications
thereunder), including without limitation the Receipts and Revenues, all moneys
and obligations which at such time are deposited or are required to be deposited
with, or

                                       12

<PAGE>

are held or are required to be held by or on behalf of, the Trustee or any
Paying Agent in trust under any of the provisions of this Ordinance and all
other rights, titles and interests which at such time are subject to the lien of
this Ordinance, except for moneys or obligations deposited with or paid to the
Trustee or any Paying Agent for the redemption or payment of Bonds which are
deemed to have been paid in accordance with Article IX hereof and funds held
pursuant to Section 5.06 hereof.

          "Trustee" shall mean JPMorgan Chase Bank, as trustee under this
Ordinance, and its successor or successors hereunder. "Corporate Trust Office"
of the Trustee shall mean the principal office of the Trustee at which at any
particular time its corporate trust business shall be administered, which office
at the date of the adoption of this Ordinance, as to the Trustee, is 600 Travis,
Suite 1150 Houston, TX 77002, Attention: Corporate Trust Department, Vice
President and Trust Officer; except that with respect to the presentation of
Bonds for payment or for registration of transfer, exchange or tender, such term
shall mean the office or agency of the Trustee at which at any particular time
its corporate agency business shall be conducted.

          "Weekly Interest Rate" shall mean a variable interest rate on the
Bonds established in accordance with Section 2.01(c)(iii) hereof.

          "Weekly Interest Rate Period" means each period during which a Weekly
Interest Rate is in effect.

     Section 1.02 Number and Gender. The singular form of any word used herein,
including the terms defined in Section 1.01, shall include the plural, and vice
versa. The use herein of a word of any gender shall include all genders.

     Section 1.03 Articles, Sections, Etc. All references herein to "Articles,"
"Sections" and other subdivisions are to the corresponding Articles, Sections or
subdivisions of this Ordinance as originally executed; and the words "herein,"
"hereof," "hereunder" and other words of similar import refer to this Ordinance
as a whole and not to any particular Article, Section or subdivision hereof. The
headings or titles of the several Articles and Sections hereof, and any table of
contents appended to copies hereof, shall be solely for convenience of reference
and shall not affect the meaning, construction or effect of this Ordinance.

     Section 1.04 Content of Certificates and Opinions. Every certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Ordinance or the Agreement (except for the certificate of cancelled Bonds
provided for in Sections 2.05, 2.06 and 4.05 hereof) shall include (a) a
statement that the person or persons making or giving such certificate or
opinion have read such covenant or condition and the definitions herein relating
thereto; (b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; (c) a statement that, in the opinion of the
signers, they have made or caused to be made such examination or investigation
as is necessary to enable them to express an informed opinion as to whether or
not such covenant or condition has been complied with; and (d) a statement as to
whether, in the opinion of the signers, such condition or covenant has been
complied with.

                                       13

<PAGE>

          Any such certificate or opinion made or given by an officer of the
City or the Company may be based, insofar as it relates to legal matters, upon a
certificate or opinion of or representations by counsel, unless such officer
knows that the certificate or opinion or representations with respect to the
matters upon which his or her certificate or opinion may be based as aforesaid
are erroneous, or in the exercise of reasonable care should have known that the
same were erroneous. Any such certificate or opinion made or given by counsel
may be based, insofar as it relates to factual matters (with respect to which
information is in the possession of the City or the Company), upon the
certificate or opinion of or representations by an officer of the City or the
Company, as applicable, unless such counsel knows that the certificate or
opinion or representations with respect to the matters upon which his or her
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should have known that the same were erroneous.

     Section 1.05 Findings. It is hereby found and determined that:

          (a)  The City is authorized and empowered under the Act to issue and
sell the Bonds and to enter into the Amended and Restated Installment Sale
Agreement, and the same will further the intent of the Act. The Four Corners
Plant is located within 15 miles of the corporate limits of the City and not
within the corporate limits of any municipality or, if portions of the Four
Corners Plant are not located within 15 miles of the corporate limits of the
City, there is no incorporated municipality within 15 miles of such portions of
the Four Corners Plant and the City is located in the county in which such
portions of the Four Corners Plant are located.

          (b)  The amount necessary in each year to pay the principal of,
premium, if any, and interest (excluding accrued interest and purchase premium,
if any, to be paid by the initial purchasers) on the Bonds is equal to the
portion of the purchase price of the applicable Project in each such year
required to be paid by the Company to the Trustee by Section 5.02(a) of the
Amended and Restated Installment Sale Agreement. The City Council shall
determine and set forth in a resolution adopted prior to the first issuance of
the Bonds the amount necessary to pay in each year the principal of and interest
on the Bonds.

          (c)  It is not advisable or necessary to establish any reserve fund in
connection with the retirement of the Bonds or the maintenance of the applicable
Facilities because the terms of the Amended and Restated Installment Sale
Agreement provide that the Company shall maintain the applicable Project and
carry all proper insurance with respect thereto, and no reserve fund has been
required by the initial purchasers of the Bonds to be established for the Bonds.

          (d)  The Bonds shall not be the general obligations of the City within
the meaning of Article 9, Sections 12 and 13 of the Constitution of New Mexico,
shall be payable by the City solely from the Receipts and Revenues of the City
from the Amended and Restated Installment Sale Agreement and other amounts
pledged therefor hereunder, and the Bonds shall never constitute an indebtedness
of the City within the meaning of any State constitutional provision or
statutory limitation, and shall never constitute or give rise to any pecuniary
liability of the City or a charge against its general credit or taxing powers,
and such fact shall be plainly stated on the face of each of the Bonds.

                                       14

<PAGE>

          (e)  In connection with the authorization, issuance and sale of the
Bonds pursuant to this Ordinance, it is advantageous that the sale thereof be
private rather than public and that the City pay, from the proceeds of the sale
of the Bonds, no expenses, attorneys', engineering, and architects' fees,
premiums and commissions but that such expenses, attorneys', engineering, and
architects' fees, premiums and commissions be paid by the Company.

          (f)  The Mayor and the City Clerk are, and each of them is, authorized
and directed to cause this Ordinance to be published one time by title and a
general summary of the subject matter contained herein in the manner provided by
Section 3-17-5 N.M.S.A. 1978.

          (g)  The actions heretofore taken by the Mayor or City Clerk to cause
this Ordinance in proposed form to be published by title and subject matter in
the manner provided by Section 3-17-3 N.M.S.A. 1978 are hereby confirmed and
such publication is hereby adopted, ratified and confirmed.

          (h)  The Mayor, the City Clerk and the Treasurer are authorized to
take all action necessary or appropriate to effectuate the provisions of this
Ordinance, including without limiting the generality of the foregoing, printing
of the Bonds, the execution, delivery, and, if required or desirable, the filing
and recording of such documents, instruments, financing statements and
certificates as are required by this Ordinance and as may reasonably be required
by the purchasers of the Bonds, including, without limiting the generality of
the foregoing, certificates relating to the signing of the Bonds, the tenure and
identity of the municipal officials, the delivery of the Bonds and payment
therefor, and, if in accordance with the facts, the absence of litigation,
pending or threatened, affecting the validity of the Bonds, and the absence and
existence of factors affecting the exclusion from gross income of interest on
the Bonds for Federal income tax purposes and, upon or after the effective date
of this Ordinance, to execute and deliver the Bonds in accordance with this
Ordinance and to do and cause to be done any and all acts and things necessary
or proper for carrying out the transaction contemplated by this Ordinance, and
all actions taken pursuant to such authorization are hereby ratified, approved
and confirmed.

          (j)  The issuance of the Bonds and the refunding of the 1994 Bonds is
hereby approved, and such approval shall constitute such approval as is required
by the Code.

                               (End of Article I)

                                   ARTICLE II
                                    THE BONDS

     Section 2.01 Authorization and Terms.

          (a)  Authorization. Bonds designated "Pollution Control Refunding
Revenue Bonds, 2002 Series A (El Paso Electric Company, Four Corners Project)"
may be issued hereunder. The aggregate principal amount of Bonds which may be
issued and Outstanding under this Ordinance shall not exceed $33,300,000 as
shall be determined in a resolution of the City Council adopted prior to the
initial issuance of the Bonds. The proceeds of such Bonds (other than any
accrued interest on the Bonds) will be used by the City to redeem the 1994 Bonds

                                       15

<PAGE>

previously issued by the City for the purpose of refunding other bonds
previously issued by the City which refunded other bonds issued for the purpose
of providing a portion of the moneys necessary to finance the cost of
acquisition, construction and installation of the interest of the Company in
certain pollution control, solid waste disposal and sewerage disposal facilities
by the Company, within the County of San Juan, New Mexico. No other series of
Bonds shall be issued under this Ordinance. Prior to the initial issuance of the
Bonds the City Council shall determine in a resolution the amount necessary in
each year to pay the principal and interest on the Bonds.

          (b)  General Terms. The Bonds shall be issued as fully registered
Bonds without coupons, in Authorized Denominations and shall be dated as of the
Issue Date. The Bonds shall mature, subject to prior redemption upon the terms
and conditions hereinafter set forth, on the Maturity Date. The Bond shall bear
interest at a Long-Term Interest Rate for a Long-Term Interest Rate Period
commencing August 1, 2002 and ending July 31, 2005 (the "Initial Interest Rate
Period"). The Initial Long-Term Interest Rate shall be set forth in the
resolution adopted prior to issuance of the Bonds.

          The Bonds shall be numbered from R-1 consecutively upwards in order of
authentication. Each Bond shall bear interest from the last date to which
interest has been paid in full or, if no interest has been paid in full or duly
provided on such Bond from the Issue Date. All Bonds shall mature on the date
set forth above and shall bear interest at the rates determined from time to
time in accordance with the provisions of this Ordinance. Payment of the
interest on any Bond shall be made to the person appearing on the bond
registration books of the Registrar as the registered holder thereof as of the
close of business on the Record Date, such interest to be paid by the Paying
Agent to such registered holder (i) in the event such Bond is a Book-Entry Bond,
in immediately available funds on the Interest Payment Date in accordance with
the Representation Letter, and (ii) in the event such Bond is not a Book-Entry
Bond (A) in immediately available funds (by wire transfer or by deposit to the
account of the holder of any such Bond if such account is maintained with the
Paying Agent), according to the written instructions given by such holder to the
Registrar prior to the Record Date or (B) in all other cases, by check mailed by
first class mail to the holder at such holder's address as it appears as of the
Record Date on the registration books of the Registrar; except, in each case,
that, if and to the extent that there shall be a default in the payment of the
interest due on such Interest Payment Date, such defaulted interest shall be
paid to the holders in whose name any such Bonds are registered as of a special
record date to be fixed by the Trustee, notice of which shall be given to such
holders not less than ten (10) days prior thereto. Both the principal of and
premium, if any, on the Bonds shall be payable upon surrender thereof in lawful
money of the United States of America at the Corporate Trust Office of the
Paying Agent. Notwithstanding the foregoing, interest on any Bond bearing a
Short-Term Interest Rate (except any such Bond which is a Book-Entry Bond) shall
be paid only upon presentation to the Tender Agent of the Bond on which such
payment is due. The Bonds shall be dated as of the date of the Issue Date. The
Bonds shall be substantially in the form attached hereto as Exhibit A.

          If and to the extent, however, that the City fails to make payment or
provision for payment of interest on any Bond on any Interest Payment Date, that
interest shall cease to be payable to the Owner of that Bond on the applicable
Record Date. When moneys become available for payment of the interest, (a) the
Trustee shall, pursuant to Section 10.10 hereof, establish a Special Record Date
for the payment of that interest which shall be not more than 15

                                       16

<PAGE>

nor fewer than 10 days prior to the date of the proposed payment, and (b) the
Trustee shall give notice by first-class mail of the proposed payment and of the
Special Record Date to each owner not fewer than 10 days prior to the Special
Record Date and, thereafter, the interest shall be payable to the owners of the
Bonds as of the Special Record Date at the close of business on the Special
Record Date.

          (c)  Interest Rates and Rate Periods. The Bonds shall bear interest
until final payment of the principal or redemption price thereof shall have been
made in accordance with the provisions hereof, whether at maturity, upon
redemption or otherwise. During Daily Interest Rate Periods, interest on the
Bonds shall be computed on the basis of a 365- or 366-day year for the number of
days actually elapsed during Daily Interest Rate Periods. During Short-Term
Interest Rate Periods or Weekly Interest Rate Periods, interest on the Bonds
shall be computed on the basis of a 365- or 366-day year for the number of days
actually elapsed based on the calendar year in which the Short-Term Interest
Rate Period or Weekly Interest Rate Period commences. During any Long-Term
Interest Rate Period, interest on the Bonds shall be computed upon the basis of
a 360-day year, consisting of twelve 30-day months.

               (i)    Rate Periods.

          The Bonds shall initially bear interest as set forth in Section
2.01(b), and shall remain in such Interest Rate Period until adjusted to a
different Interest Rate Period as provided herein. After any such adjustment,
the term of the Bonds shall be divided into consecutive Interest Rate Periods
during which the Bonds may bear interest at the Daily Interest Rate, Weekly
Interest Rate, Short-Term Interest Rate or Long-Term Interest Rate. Any Daily
Interest Rate Period, Weekly Interest Rate Period or Short-Term Interest Rate
Period established with respect to the Bonds shall continue in effect unless and
until adjusted to a different Interest Rate Period as provided herein.

               (ii)   Daily Interest Rate.

                         (A)  Determination of Daily Interest Rate. During each
          Daily Interest Rate Period, the Bonds shall bear interest at the Daily
          Interest Rate determined by the Remarketing Agent on or before each
          Business Day for such Business Day. The Daily Interest Rate shall be
          the rate of interest per annum determined by the Remarketing Agent to
          be the lowest interest rate which would enable the Remarketing Agent
          to sell the Bonds for delivery on the effective date of such interest
          rate at a price (without regard to accrued interest) equal to 100% of
          the principal amount thereof. The Remarketing Agent shall provide the
          Trustee and the Company with telephonic or Electronic notice of the
          Daily Interest Rate determined by 10:30 a.m. (New York City time) on
          the date of determination. If the Remarketing Agent shall not have
          determined a Daily Interest Rate for any day by 10:30 a.m. (New York
          City time) on such day, the Daily Interest Rate shall be the same as
          the Daily Interest Rate for the immediately preceding day. In no event
          shall the Daily Interest Rate be greater than the Maximum Interest
          Rate.

                                       17

<PAGE>

                         (B)  Adjustment to Daily Interest Rate Period. At any
          time, the Company, by written notice to the City, the Trustee, the
          Bank, the Tender Agent and the Remarketing Agent, may elect that the
          Bonds shall bear interest at a Daily Interest Rate. Such notice (1)
          shall specify the effective date of such adjustment to a Daily
          Interest Rate, which shall be (A) a Business Day not earlier than
          twenty-five (25) days after delivery of such notice (or such shorter
          period as shall be acceptable to the Trustee); (B) in the case of an
          adjustment from a Long-Term Interest Rate Period, a day on which the
          Bonds would be permitted to be redeemed at the option of the Company
          pursuant to Section 4.01(a)(ii)(C) hereof; and (C) in the case of an
          adjustment from a Weekly Interest Rate Period or a Short-Term Interest
          Rate Period, an Interest Payment Date on which interest is payable for
          the Weekly Interest Rate Period or Bond Interest Term from which the
          adjustment is to be made; provided, however, that if prior to the
          Company's making such election, any Bonds shall have been called for
          redemption and such redemption shall not have theretofore been
          effected, the effective date of such Daily Interest Rate Period shall
          not precede such redemption date; and (2) if the adjustment is from a
          Long-Term Interest Rate Period, shall be accompanied by a Favorable
          Opinion of Bond Counsel to the effect that such adjustment (a) is
          authorized or permitted by the Ordinance and the Act, and (b) will not
          adversely affect the Tax-Exempt status of the interest on the Bonds.

                         (C)  Notice of Adjustment to Daily Interest  Rate.  The
          Trustee shall give notice by first-class mail of an adjustment to a
          Daily Interest Rate Period to the Owners of the Bonds not less than 15
          days (30 days if the then current Interest Rate Period is a Long-Term
          Interest Rate Period) prior to the effective date of such Daily
          Interest Rate Period. Such notice shall state (1) that the interest
          rate on the Bonds will be adjusted to a Daily Interest Rate (subject
          to the Company's ability to rescind its election as described in
          Section 2.01(c)(viii) hereof), (2) the effective date of the Daily
          Interest Rate Period, (3) that the Bonds are subject to mandatory
          tender for purchase on such effective date (except in the case of
          adjustment between Daily Interest Rate Periods and Weekly Interest
          Rate Periods), (4) the procedures for such mandatory tender, and (5)
          the purchase price of the Bonds on such effective date (expressed as a
          percentage of the principal amount thereof).

               (iii)  Weekly Interest Rate.

                         (A)  Determination of Weekly Interest Rate. During each
          Weekly Interest Rate Period, the Bonds shall bear interest at the
          Weekly Interest Rate, which shall be determined by the Remarketing
          Agent no later than the first day of such Weekly Interest Rate Period
          and thereafter no later than 10:00 a.m. (New York City time) on
          Wednesday of each week during such Weekly Interest Rate Period, unless
          any such Wednesday shall not be a Business Day, in which event the
          Weekly Interest Rate shall be determined by the Remarketing Agent no
          later than the Business Day immediately preceding such Wednesday. The
          Weekly Interest Rate shall be the rate of interest per annum
          determined by the Remarketing Agent to be the lowest interest rate
          which would enable the

                                       18

<PAGE>

          Remarketing Agent to sell the Bonds for delivery on the effective date
          of such interest rate at a price (without regard to accrued interest)
          equal to 100% of the principal amount thereof. If for any reason, a
          Weekly Interest Rate is not so established for any period by the time
          specified above by the Remarketing Agent, the Weekly Interest Rate
          shall be the same as the Weekly Interest Rate in effect for the
          immediately preceding week. In no event shall any Weekly Interest Rate
          exceed the Maximum Interest Rate. The first Weekly Interest Rate
          determined for each Weekly Interest Rate Period shall apply to the
          period commencing on the first day of such Weekly Interest Rate Period
          and ending on the next succeeding Tuesday, unless such Weekly Interest
          Rate Period shall end on a day other than Tuesday, in which event the
          last Weekly Interest Rate for such Weekly Interest Rate Period shall
          apply to the period commencing on the Wednesday preceding the last day
          of such Weekly Interest Rate Period and ending on such last day. The
          Remarketing Agent shall provide the Trustee and the Company with
          written, telephonic or Electronic notice of each Weekly Rate, as
          determined, by 12:00 noon (New York City time) on the effective date
          of such Weekly Rate.

                    (B)  Adjustment to Weekly Interest Rate. At any time, the
          Company, by written direction to the City, the Trustee, the Bank, the
          Tender Agent and the Remarketing Agent, may elect that the Bonds shall
          bear interest at a Weekly Interest Rate. Such direction (1) shall
          specify the effective date of such adjustment to a Weekly Interest
          Rate, which shall be (A) a Business Day not earlier than twenty-five
          (25) days after delivery of such notice (or such shorter period as
          shall be acceptable to the Trustee), (B) in the case of an adjustment
          from a Long-Term Interest Rate Period, a day on which the Bonds would
          otherwise be permitted to be redeemed at the option of the Company
          pursuant to Section 4.01(a)(ii)(C) hereof; and (C) in the case of an
          adjustment from a Daily Interest Rate Period or Short-Term Interest
          Rate Period, an Interest Payment Date on which interest is payable for
          the Daily Interest Rate Period or Bond Interest Term from which the
          adjustment is to be made; provided, however, that if prior to the
          Company's making such election, any Bonds shall have been called for
          redemption and such redemption shall not have theretofore been
          effected, the effective date of such Weekly Interest Rate Period shall
          not precede such redemption date; and (2) if the adjustment is from a
          Long-Term Interest Rate Period, shall be accompanied by a Favorable
          Opinion of Bond Counsel addressed to the Trustee to the effect that
          such adjustment (a) is authorized or permitted by the Ordinance and
          the Act, and (b) will not adversely affect the Tax-Exempt status of
          interest on the Bonds.

                    (C)  Notice of Adjustment to Weekly Interest Rate. The
          Trustee shall give notice by first-class mail of an adjustment to a
          Weekly Interest Rate Period to the Owners of the Bonds not less than
          fifteen (15) days (thirty (30) days if the then current Interest Rate
          Period is a Long-Term Interest Rate Period) prior to the effective
          date of such Weekly Interest Rate Period. Such notice shall state (1)
          that the Interest Rate on the Bonds will be adjusted to a Weekly
          Interest Rate (subject to the Company's ability to rescind its
          election as provided in Section 2.01(c)(viii) hereof), (2) the
          effective date of the Weekly Interest Rate Period, (3)

                                       19

<PAGE>

               that the Bonds are subject to mandatory tender for purchase on
               such effective date (except in the case of adjustments between
               Daily Interest Rate Periods and Weekly Interest Rate Periods),
               (4) the procedures for such mandatory tender, and (5) the
               purchase price of such Bonds on such effective date (expressed as
               a percentage of the principal amount thereof).

                    (iv) Long-Term Interest Rate.

                           (A) Determination of Long-Term Interest Rate. During
               each Long-Term Interest Rate Period, the Bonds shall bear
               interest at the Long-Term Interest Rate, which shall be
               determined by the Remarketing Agent on a Business Day selected by
               the Remarketing Agent but not more than forty (40) days prior to
               and not later than the effective date of such Long-Term Interest
               Rate Period. The Long Term Interest Rate shall be the rate of
               interest per annum determined by the Remarketing Agent on such
               date, and communicated by the close of business on such date to
               the Trustee, the Paying Agent and the Company, by written,
               telephonic or Electronic notice as being the lowest interest rate
               which would enable the Remarketing Agent to sell the Bonds for
               delivery on the effective date of such Long-Term Interest Rate
               Period at a price (without regard to accrued interest) equal to
               100% of the principal amount thereof; provided, however, that if,
               for any reason, a Long-Term Interest Rate for any Long-Term
               Interest Rate Period shall not be determined or effective or if
               an adjustment from a Long-Term Interest Rate Period to another
               Interest Rate Period shall not be effective, the Interest Rate
               Period for the Bonds shall automatically convert to a Daily
               Interest Rate Period; provided, further, however, that if the
               Favorable Opinion of Bond Counsel required by Section
               2.01(c)(ii)(B) in connection with an adjustment to a Daily
               Interest Rate Period from a Long-Term Interest Rate Period cannot
               be obtained, then the Interest Rate Period for the Bonds shall
               automatically convert to a Long-Term Interest Rate Period of one
               year and one day. If a Daily Interest Rate for the first day of
               such Daily Interest Rate Period is not determined as provided in
               Section 2.01(c)(ii)(A) hereof, the Daily Interest Rate for the
               first day of such Daily Interest Rate Period shall be equal to
               the TBMA Municipal Index. In no event shall any Long-Term
               Interest Rate be greater than the Maximum Interest Rate.

                           (B) Adjustment to or Continuation of Long-Term
               Interest Rate.

                       At any time, the Company, by written notice to the City,
               the Bank, the Trustee, the Tender Agent and the Remarketing
               Agent, may elect that the Bonds shall bear or continue to bear
               interest at a Long-Term Interest Rate and if it shall so elect,
               shall determine the duration of the Long-Term Interest Rate
               Period during which the Bonds shall bear interest at such
               Long-Term Interest Rate. Each Long-Term Interest Rate Period
               shall have a duration such that the last day of such Long-Term
               Interest Rate Period is (1) a day which both immediately precedes
               a Business Day and is at least one year after the effective date
               of such Long-Term Interest Rate Period or (2) if earlier, the day
               immediately preceding the final maturity date of the Bonds. At
               the time the Company so elects an

                                       20

<PAGE>

               adjustment to or continuation of a Long-Term Interest Rate
               Period, the Company may specify two or more consecutive Long-Term
               Interest Rate Periods and, if the Company so specifies, shall
               specify the duration of each such Long-Term Interest Rate Period
               as provided in this paragraph. Such notice shall specify the
               effective date of each such Long-Term Interest Rate Period, which
               shall be (a) a Business Day not earlier than twenty-five (25)
               days after delivery of such notice (or such shorter period as
               shall be acceptable to the Trustee); (b) in the case of an
               adjustment from or continuation of a Long-Term Interest Rate
               Period, a day on which the Bonds would be permitted to be
               redeemed by the Company pursuant to Section 4.01(a)(ii)(C)
               hereof; and (c) in the case of an adjustment from a Daily or
               Weekly or Short-Term Interest Rate Period, an Interest Payment
               Date on which interest is payable for the Daily or Weekly
               Interest Rate Period or Bond Interest Term from which the
               adjustment is to be made; provided, however, that if prior to the
               Company's making such election, any Bonds shall have been called
               for redemption and such redemption shall not have theretofore
               been effected, the effective date of such Long-Term Interest Rate
               Period shall not precede such redemption date. In addition, such
               notice (i) shall specify the last day of such Long-Term Interest
               Rate Period, and (ii) if the adjustment is from a Daily, Weekly
               or Short-Term Interest Rate Period, shall be accompanied by a
               Favorable Opinion of Bond Counsel to the effect that such
               adjustment (a) is authorized or permitted by the Ordinance and
               the Act, and (b) will not adversely affect the Tax-Exempt status
               of interest on the Bonds.

                       If, by the thirty-fifth day prior to the last day of any
               Long-Term Interest Rate Period, the Trustee shall not have
               received notice of the Company's election that, during the next
               succeeding Interest Rate Period, the Bonds shall bear interest at
               a Daily Interest Rate, a Weekly Interest Rate, a Long-Term
               Interest Rate, or a Bond Interest Term Rate accompanied by
               appropriate opinions of Bond Counsel, if required by Section
               2.01(c)(ii)(B), (iii)(B), (iv)(B) or (v)(B) hereof, the next
               succeeding Interest Rate Period for the Bonds shall be a Daily
               Interest Rate Period; provided, however, that if the opinion of
               Bond Counsel required by Section 2.01(c)(ii)(B) in connection
               with an adjustment to a Daily Interest Rate Period from a
               Long-Term Interest Rate Period cannot be obtained, then the
               Interest Rate Period for the Bonds shall automatically convert to
               a Long-Term Interest Rate Period of one year and one day. If a
               Daily Interest Rate for the first day of such Daily Interest Rate
               Period is not determined as provided in Section 2.01(c)(ii)
               hereof, the Daily Interest Rate for the first day of such Daily
               Interest Rate Period shall be equal to the TBMA Municipal Index.

                       At the same time that the Company elects to have the
               Bonds bear interest at a Long-Term Interest Rate or continue to
               bear interest at a Long-Term Interest Rate, the Company may also
               specify to the Trustee optional redemption prices and periods
               different from (including that there be no such optional
               redemption) those set out in Section 4.01(a)(ii)(C) during the
               Long-Term Interest Rate Period(s) with respect to which such
               election is made; provided, however, that such notice shall be
               accompanied by a Favorable Opinion of Bond Counsel addressed to
               the Trustee to the effect that such changes (i) are authorized or

                                       21

<PAGE>

               permitted by the Act and this Ordinance, and (ii) will not
               adversely affect the Tax-Exempt status of interest on the Bonds.

                           (C) Notice of Adjustment to or Continuation of a
               Long-Term Interest Rate. The Trustee shall give notice by
               first-class mail of an adjustment to or continuation of a
               Long-Term Interest Rate Period to the Owners of the Bonds not
               less than fifteen (15) days (thirty (30) days if the then current
               Interest Rate Period is a Long-Term Interest Rate Period) prior
               to the effective date of such Long-Term Interest Rate Period.
               Such notice shall state (1) that the interest rate on the Bonds
               will be adjusted to, or continue to be, a Long-Term Interest Rate
               (subject to the Company's ability to rescind its election as
               provided in Section 2.01(c)(viii) hereof), (2) the effective date
               of such Long-Term Interest Rate Period, (3) that the Bonds shall
               be subject to mandatory tender for purchase on such effective
               date (except in the case of the effective date of a Long-Term
               Interest Rate Period which is preceded by a Long-Term Interest
               Rate Period of the same duration), (4) the procedures for such
               mandatory tender, and (5) the purchase price of the Bonds on such
               effective date (expressed as a percentage of the principal amount
               thereof).

                     (v) Bond Interest Term Rate.

                           (A) Determination of Bond Interest Terms and Bond
               Interest Term Rates.

                       During each Short-Term Interest Rate Period, each Bond
               shall bear interest during each Bond Interest Term for such Bond
               at the Bond Interest Term Rate for such Bond. Each Bond Interest
               Term and Bond Interest Term Rate for any Bond shall be a period
               of at least one day but not more than the lesser of (x) 270 days
               or (y) the number of days of interest coverage on the Bonds
               provided for in any Credit Facility then in effect plus five (5)
               days. When a Credit Facility, if any, other than a Letter of
               Credit is in effect with respect to the Bonds or no Credit
               Facility is in effect with respect to the Bonds, each Bond
               Interest Term for any Bond shall be a period of at least one day
               but not more than 270 days. Each Bond Interest Term for any Bond
               shall be a period determined by the Remarketing Agent to be, in
               its judgment, the period which, taking into account prevailing
               market conditions and all other Bond Interest Terms and Bond
               Interest Term Rates for all Bonds then Outstanding, is likely to
               result in the lowest overall net interest expense on all such
               Bonds; provided, however, that any such Bond purchased on behalf
               of the Company and remaining unsold in the hands of the
               Remarketing Agent as of 1:00 p.m. (New York City time) on the
               effective date of the Bond Interest Term for such Bond shall have
               a Bond Interest Term of one day or, if such Bond Interest Term
               would not end on a day immediately preceding a Business Day, a
               Bond Interest Term of more than one day ending on the day
               immediately preceding the next Business Day; provided, further,
               however, that (1) each Bond Interest Term shall end on a day
               which immediately precedes a Business Day and no Bond Interest
               Term shall extend beyond the day immediately preceding the final
               maturity date of the Bonds or, if a Credit Facility,

                                       22

<PAGE>

               if any, is then in effect with respect to the Bonds, the
               scheduled expiration date of such Credit Facility, and (2) if for
               any reason the Remarketing Agent fails or is unable to determine
               a Bond Interest Term on any Bond, the Bond Interest Term for such
               Bond shall be one day, unless such Bond Interest Term would end
               on a day which does not precede a Business Day, in which case
               such Bond Interest Term shall end on the day immediately
               preceding the next succeeding Business Day.

                       The Bond Interest Term Rate for each Bond Interest Term
               for each Bond shall be the rate of interest per annum determined
               by the Remarketing Agent no later than 1:00 p.m. (New York City
               time) on the first day of such Bond Interest Term to be the
               lowest interest rate which would enable the Remarketing Agent to
               sell such Bonds on the effective date of such interest rate at a
               price (without regard to accrued interest) equal to 100% of the
               principal amount thereof. The Remarketing Agent shall provide the
               Trustee and the Company with telephonic or Electronic notice of
               each Bond Interest Term Rate and Bond Interest Term by 1:00 p.m.
               (New York City time) on the date of determination. If a Bond
               Interest Term Rate for a Bond Interest Term of one day is not
               determined or effective by 1:00 p.m. (New York City time) on such
               day, the Bond Interest Term Rate for such Bond Interest Term of
               one day shall be equal to the TBMA Municipal Index. In no event
               shall any Bond Interest Term Rate exceed the Maximum Interest
               Rate.

                       Notwithstanding the foregoing, in the event that notice
               of redemption with respect to any Bond in a Short-Term Interest
               Rate Period shall have been given to the holder of such Bond by
               the Trustee pursuant to Section 4.03 hereof, no subsequent Bond
               Interest Terms or Bond Interest Term Rates shall be determined
               with respect to such Bond.

                         (B) Adjustment to or Continuation of Bond Interest Term
               Rates. At any time, the Company, by written direction to the
               City, the Trustee, the Bank, if any, the Tender Agent and the
               Remarketing Agent, may elect that the Bonds shall bear interest
               at Bond Interest Term Rates. Such direction shall specify the
               effective date of the Short-Term Interest Rate Period during
               which the Bonds shall bear interest at Bond Interest Term Rates,
               which shall be (A) a Business Day not earlier than twenty-five
               (25) days after delivery of such notice (or such shorter period
               as shall be acceptable to the Trustee), (B) in the case of an
               adjustment from a Long-Term Interest Rate Period, a day on which
               the Bonds would be permitted to be redeemed at the option of the
               Company pursuant to Section 4.01(a)(ii)(C) hereof; and (C) in the
               case of an adjustment from a Daily or Weekly Interest Rate
               Period, an Interest Payment Date on which interest is payable for
               the Daily or Weekly Interest Rate Period from which the
               adjustment is to be made; provided, however, that if prior to the
               Company's making such election any Bonds shall have been called
               for redemption and such redemption shall not have theretofore
               been effected, the effective date of such Short-Term Interest
               Rate Period shall not precede such redemption date; and (2) shall
               be accompanied by a Favorable Opinion of Bond Counsel addressed
               to the Trustee to the effect that such

                                       23

<PAGE>

               adjustment (a) is authorized or permitted by the Ordinance and
               the Act and (b) will not adversely affect the Tax-Exempt status
               of interest on the Bonds.

                           (C) Notice of Adjustment to Bond Interest Term Rates.
               The Trustee shall give notice by first-class mail of an
               adjustment to a Short-Term Interest Rate Period to the Owners of
               the Bonds not less than fifteen (15) days (thirty (30) days if
               the then current Interest Rate Period is a Long-Term Interest
               Rate Period) prior to the effective date of such Short-Term
               Interest Rate Period. Such notice shall state (1) that the
               interest rate on the Bonds will be adjusted to Bond Interest Term
               Rates (subject to the Company's ability to rescind its election
               as provided in Section 2.01(c)(viii) hereof), (2) the effective
               date of the Short-Term Interest Rate Period, (3) that the Bonds
               are subject to mandatory tender for purchase on the effective
               date of such Short-Term Interest Rate Period, (4) the procedures
               for such mandatory tender, and (5) the purchase price of the
               Bonds on such effective date (expressed as a percentage of the
               principal amount thereof).

                           (D) Adjustment from Short-Term Interest Rate Period.
               At any time during a Short-Term Interest Rate Period, the Company
               may elect that the Bonds shall no longer bear interest at Bond
               Interest Term Rates and shall instead bear interest as otherwise
               permitted under this Ordinance. The Company shall give written
               notice to the City, the Trustee, the Paying Agent and the
               Remarketing Agent, if any, of such election and shall specify the
               Interest Rate Period to follow with respect to such Bonds upon
               cessation of the Short-Term Interest Rate Period and instruct the
               Remarketing Agent to (1) determine Bond Interest Terms of such
               duration that, as soon as possible, all Bond Interest Terms shall
               end on the same date, not earlier than twenty-four (24) days (or
               such shorter period acceptable to the Trustee) following the
               delivery by the Company of such written notice, and upon the
               establishment of such Bond Interest Term the day next succeeding
               the last day of all such Bond Interest Terms shall be the
               effective date of the Interest Rate Period elected by the
               Company; or (2) determine Bond Interest Terms that will best
               promote an orderly transition to the next succeeding Interest
               Rate Period to apply to the Bonds, beginning not earlier than
               twenty-four (24) days (or such shorter period acceptable to the
               Trustee) following the delivery by the Company of such written
               notice. If the alternative in clause (2) above is selected, the
               day next succeeding the last day of the Bond Interest Term for
               each Bond shall be with respect to such Bond the effective date
               of the Interest Rate Period elected by the Company. The
               Remarketing Agent, promptly upon the determination thereof, shall
               give written notice of such last day and such effective dates to
               the City, the Company, the Trustee and the Tender Agent. During
               any transitional period from a Short-Term Interest Rate Period to
               the next succeeding Interest Rate Period in accordance with
               clause (2) above, the provisions of this Ordinance shall be
               deemed to apply to the Bonds as follows: the Bonds continuing to
               bear interest at Bond Interest Term Rates shall have applicable
               to them the provisions hereunder theretofore applicable to such
               Bonds as if all Bonds were continuing to bear interest at Bond
               Interest Term Rates and the Bonds bearing interest in the
               Interest Rate Period to which the transition is being made will
               have applicable to them the

                                       24

<PAGE>

                 provisions hereunder as if all Bonds were bearing interest
                 in such Interest Rate Period.

                   (vi)   Terms of Credit Facility, If Any. If a Credit Facility
               in the form of a letter of credit, municipal bond insurance
               policy or surety bond is to be held by the Trustee after the
               effective date of any adjustment from one Interest Rate Period to
               another Interest Rate Period, such Credit Facility, if any, shall
               be in an amount sufficient to provide payment of (x) the
               principal amount of the Outstanding Bonds plus (y) the amount of
               interest (computed on the basis of a 365-day year in the case of
               an adjustment to a Daily Interest Rate Period, Weekly Interest
               Rate Period or Short-Term Interest Rate Period, and on the basis
               of a 360-day year consisting of twelve 30-day months in the case
               of an adjustment to a Long-Term Interest Rate Period) which will
               accrue on the Outstanding Bonds for a period equal to the maximum
               number of days between Interest Payment Dates during the new
               Interest Rate Period plus five (5) days. In the case of an
               adjustment to a Long-Term Interest Rate Period, a Credit
               Facility, if any, to be in effect after the effective date of
               such adjustment shall (i) extend for a period ending on a date no
               earlier than five (5) days after the first date on which the
               Bonds may be called for redemption pursuant to Section
               4.01(a)(ii) and (ii) cover the premium, if any, which would be
               included in the purchase price upon mandatory purchase of the
               Bonds pursuant to Section 4.01(b) hereof if the term of such
               Credit Facility was not extended beyond the expiration date set
               forth therein.

                   (vii)  Determination Conclusive. The determination of any
               Bond Interest Term Rate, Daily Interest Rate, Weekly Interest
               Rate and Long-Term Interest Rate and each Bond Interest Term and
               the calculation of interest payable on the Bonds by the
               Remarketing Agent shall be conclusive and binding upon such
               Remarketing Agent, the Trustee, the Tender Agent, the City, the
               Company, the Bank and the Owners of the Bonds.

                   (viii) Rescission of Election. Notwithstanding anything
               herein to the contrary, the Company may rescind any election by
               it to adjust to or continue an Interest Rate Period pursuant to
               Section 2.01(c)(ii)(B), (iii)(B), (iv)(B) or (v)(B) hereof prior
               to the effective date of such adjustment or continuation by
               giving written notice thereof to the City, the Trustee, the
               Tender Agent and the Remarketing Agent, if any, prior to such
               effective date. If the Trustee receives notice of such rescission
               prior to the time the Trustee has given notice to the Owners of
               the Bonds pursuant to Section 2.01(c)(ii)(C), (iii)(C), (iv)(C)
               or (v)(C), as applicable, then the notice of adjustment or
               continuation previously delivered by the Company shall be of no
               force and effect. If the Trustee receives notice from the Company
               of rescission of an adjustment to or continuation of an Interest
               Rate Period after the Trustee has given notice to the Owners of
               the Bonds pursuant to Section 2.01(c)(ii)(C), (iii)(C), (iv)(C)
               or (v)(C), as applicable, then the Interest Rate Period for the
               Bonds shall automatically adjust to a Daily Interest Rate Period
               on the date originally scheduled for such adjustment or
               continuation; provided, however, that if the Bonds are then in a
               Long-Term Interest Rate Period and the Favorable Opinion of Bond
               Counsel required by Section 2.01(c)(ii)(B) in connection with an
               adjustment to a Daily Interest Rate Period from a Long-Term
               Interest Rate Period cannot be obtained, then the Interest Rate
               Period for the Bonds shall automatically

                                       25

<PAGE>

               convert to a Long-Term Interest Rate Period of one year and one
               day. If a Daily Interest Rate for the first day of such Daily
               Interest Rate Period is not determined as provided in Section
               2.01(c)(ii)(A) hereof, the Daily Interest Rate for the first day
               of such Daily Interest Rate Period shall be equal to the TBMA
               Municipal Index.

                   (d) Form of Bonds. The Bonds may be engraved, printed,
lithographed or typewritten, shall be in Authorized Denominations and may
contain such references to any of the provisions of this Ordinance as may be
appropriate. The form of the Bonds, the certificate of authentication to be
executed on all the Bonds by the Trustee and the forms for registration of
transfer shall be in substantially the forms thereof set forth in Exhibit A
hereto, with necessary or appropriate variations, omissions and insertions as
permitted or required by this Ordinance. The Bonds and the certificate of
authentication to be executed thereon shall be in substantially the form
attached hereto as Exhibit A, with such appropriate variations, omissions and
insertions as are permitted or required by this Ordinance. Pursuant to
recommendations promulgated by the Committee on Uniform Security Identification
Procedures, "CUSIP" numbers may be printed on the Bonds. The Bonds may bear such
endorsement or legend relating thereto as may be required to conform to usage or
law with respect thereto. If appropriate, the Bonds may be printed with a
portion of the text printed on the reverse side thereof and with a legend
printed on the front referring to such text to the following effect: "Reference
is hereby made to the further provisions of this Bond set forth on the back
hereof and such further provisions are hereby incorporated by reference as if
set forth here in full." Upon adjustment to a Long-Term Interest Rate Period,
the form of Bond may include a summary of the mandatory and optional redemption
provisions to apply to the Bonds during such Long-Term Interest Rate Period, or
a statement to the effect that the Bonds will not be optionally redeemed during
such Long-Term Interest Rate Period, provided that the Registrar shall not
authenticate such a revised Bond form prior to receiving a Favorable Opinion of
Bond Counsel that such Bond form conforms to the terms of the Act and of this
Ordinance and that authentication thereof will not adversely affect the
Tax-Exempt status of the Bonds.

                   (e) Book-Entry System. Bonds shall be issued in the form of a
single certificated fully registered Bond, registered in the name of Cede & Co.,
as nominee of the Depository Trust Company (such entity and its successors and
assigns are referred to herein as "DTC"), or such other name as may be requested
by an authorized representative of DTC, or any successor nominee (the
"Nominee"). Except as provided in paragraph (C) below, all of the Outstanding
Bonds shall be so registered in the registration books kept by the Registrar,
and the provisions of this Section 2.01(e) shall apply thereto.

                          (A) The City, the Company, the Remarketing Agent, the
                   Tender Agent, the Trustee, the Registrar, the Paying Agent
                   and any Co-Registrar and Co-Paying Agent shall have no
                   responsibility or obligation to any DTC participant or to any
                   person on behalf of which a DTC participant holds an interest
                   in the Bonds, except as otherwise expressly provided herein.
                   Without limiting the immediately preceding sentence, the
                   City, the Company, the Trustee, the Registrar, the Paying
                   Agent, the Tender Agent, the Remarketing Agent and any
                   Co-Registrar and Co-Paying Agent shall have no responsibility
                   or obligation with respect to (i) the accuracy of the records
                   of DTC, the Nominee, any DTC participant or any indirect
                   participant with respect to any ownership interest in the
                   Bonds, (ii) the

                                       26

<PAGE>

               delivery to any DTC participant or any other person, other than
               an Owner as shown in the registration books kept by the
               Registrar, of any notice with respect to the Bonds, including any
               notice of redemption (except that the Trustee and Tender Agent,
               if any, shall have the obligation to deliver notices of optional
               and mandatory tender to the Remarketing Agent, if any, as
               provided herein) or (iii) the payment to any DTC participant or
               any other person, other than an Owner, as shown in the
               registration books kept by the Registrar, of any amount with
               respect to principal or purchase price of, premium, if any, or
               interest on the Bonds. The Tender Agent shall pay all principal
               and purchase price of, premium, if any, and interest on the Bonds
               only to or upon the order of the respective Owners, as shown in
               the registration books kept by the Registrar, or their respective
               attorneys duly authorized in writing, and all such payments shall
               be valid and effective to fully satisfy and discharge the City's
               obligations with respect to payment of principal of, premium, if
               any, and interest on the Bonds to the extent of the sum or sums
               so paid. The City, the Company, the Trustee, the Registrar, the
               Paying Agent, the Tender Agent, the Remarketing Agent and any
               Co-Registrar and Co-Paying Agent may treat and consider the
               person in whose name each Bond is registered in the registration
               books kept by the Registrar as the holder and absolute owner of
               such Bond for the purpose of payment of principal, purchase
               price, premium and interest with respect to such Bond, for the
               purpose of giving notices of redemption and other matters with
               respect to such Bond, for the purpose of registering transfers
               with respect to such Bond, and for all other purposes whatsoever;
               provided, however, notwithstanding the foregoing provisions, the
               Tender Agent, if any, shall accept any notice of optional tender
               pursuant to Section 4.08(a) from any Owner of any Book-Entry
               Bond, but shall make payment of the purchase price thereof only
               to the registered owner of such Bond in the manner provided in
               the Representation Letter (as defined below); and provided
               further, that no person other than an Owner, as shown in the
               registration books kept by the Registrar shall receive a
               certificated Bond evidencing the obligation of the City to make
               payments of principal, purchase price, premium, if any, and
               interest pursuant to this Ordinance.

                           (B) The City, the Paying Agent, the Registrar, the
               Tender Agent and/or the Trustee shall, if not previously on file,
               execute and deliver to DTC a letter of representation in
               customary form with respect to the Bonds (the "Representation
               Letter"), but such Representation Letter shall not in any way
               limit the provisions of the foregoing paragraph or in any other
               way impose upon the City any obligation whatsoever with respect
               to persons having interests in the Bonds other than the Owners,
               as shown on the registration books kept by the Registrar. The
               Trustee, the Tender Agent, and the Paying Agent shall take all
               actions necessary for representations of the City in the
               Representation Letter with respect to the Trustee, the Tender
               Agent and the Paying Agent to be complied with at all times.

                           (C) The City, with the consent of the Company, may,
               and upon request of the Company shall, terminate the services of
               DTC with respect to the Bonds. DTC may determine to discontinue
               providing its services with respect to

                                       27

<PAGE>

               the Bonds at any time by giving written notice and all relevant
               information on the beneficial owners of the Bonds to the City,
               the Company, the Tender Agent, if any, and the Trustee and
               discharging its responsibilities with respect thereto under
               applicable law. Upon the discontinuance or termination of the
               services of DTC with respect to the Bonds, unless a substitute
               securities depository is appointed by the City (with the consent,
               or at the request, of the Company) to undertake the functions of
               DTC hereunder, the City, at the expense of the Company, is
               obligated to deliver Bond certificates to the Owners of such
               Bonds, as described in this Ordinance, and such Bonds shall no
               longer be restricted to being registered in the registration
               books kept by the Registrar in the name of the Nominee, but may
               be registered in whatever name or names Owners transferring or
               exchanging such Bonds shall designate, in accordance with the
               provisions of this Ordinance.

                           (D) In connection with any notice or other
               communication to be provided to Owners pursuant to this Ordinance
               by the City, the Company, the Remarketing Agent, the Tender
               Agent, the Trustee, the Registrar, the Paying Agent, and any
               Co-Registrar and Co-Paying Agent with respect to any consent or
               other action to be taken by the Owners of the Bonds, the City,
               the Company, the Remarketing Agent, the Tender Agent, the
               Trustee, the Registrar, the Paying Agent, any Co-Registrar and
               Co-Paying Agent, as the case may be, the Trustee shall establish
               a record date for such consent or other action and give DTC
               notice of such record date not less than 15 calendar days in
               advance of such record date to the extent possible.

                           (E) So long as any Bond is registered in the name of
               the Nominee, all payments with respect to principal, purchase
               price, premium, if any, and interest on such Bond and all notices
               with respect to such Bond shall be made and given, respectively,
               in the manner provided in the Representation Letter. Owners shall
               have no lien or security interest in any rebate or refund paid by
               DTC to the Tender Agent, if any, or the Paying Agent which arises
               from the payment by the Tender Agent, if any, or Paying Agent of
               principal of, premium, if any, or interest on the Bonds in
               immediately available funds to DTC.

     Section 2.02 Execution of Bonds; Limited Obligation. The Bonds shall be
executed on behalf of the City by the Mayor and Treasurer and shall have
affixed, impressed or reproduced thereon the corporate seal of the City,
attested by the City Clerk. Each of the foregoing officers of the City, after
filing with the Secretary of State of New Mexico his or her manual signature
certified by him or her under oath, may execute or cause to be executed or
attest or cause to be attested the Bonds with a facsimile signature in lieu of
his or her manual signature; provided that the signature of at least one of the
foregoing officers of the City or of a duly authorized representative of the
Trustee must be manually subscribed. Except as provided in the preceding
sentence, the signatures of the Mayor, the Treasurer and the City Clerk on the
Bonds shall be manual signatures.

               In case any officer of the City whose signature or a facsimile of
whose signature shall appear on the Bonds shall cease to be such officer before
the authentication by the Trustee and delivery of such Bonds, such signature or
such facsimile shall nevertheless be valid and

                                       28

<PAGE>

sufficient for all purposes, the same as if he had remained in office until
delivery; and any Bond may be signed on behalf of the City by such persons as at
the time of execution of such Bond shall be the proper officers of the City,
even though at the date of such Bond or of the adoption of this Ordinance any
such person was not such officer.

                  The Bonds and the interest thereon shall not be general
obligations or an indebtedness of the City within the meaning of Article 9,
Sections 12 and 13 of the Constitution of New Mexico, but shall be limited
obligations of the City the principal of, premium, if any, and interest on which
shall be payable solely from and secured by a pledge of the Receipts and
Revenues from the Agreement and other moneys pledged therefor under this
Ordinance. As additional security for the payment of the principal of, premium,
if any, and interest on the Bonds, the City hereby pledges and assigns to the
Trustee all its rights and interest under the Agreement except for the City's
rights under Sections 5.04, 5.08 and 8.05 thereof. The Bonds shall never
constitute an indebtedness of the City within the meaning of any State
constitutional provision or statutory limitation, and shall never constitute or
give rise to a pecuniary liability of the City or a charge against its general
credit or taxing powers, and such fact shall be plainly stated on each Bond.

         The Bonds shall then be delivered to the Trustee for authentication by
the Trustee; provided, however, that upon initial issuance the Bonds shall be
authenticated by the Registrar. In case any officer who shall have signed any of
the Bonds shall cease to be such officer before the Bonds so signed or attested
shall have been authenticated or delivered by the Registrar or the Trustee or
issued by the City, such Bonds may nevertheless be authenticated, delivered and
issued and, upon such authentication, delivery and issuance, shall be as binding
upon the City as though those who signed and attested the same had continued to
be such officers of the City. Also, any Bond may be signed on behalf of the City
by such persons as on the actual date of the execution of such Bond shall be the
proper officers although on the nominal date of such Bond any such person shall
not have been such officer.

                  Only such of the Bonds as shall bear thereon a certificate of
authentication in the form recited in Exhibit A hereto, manually executed by the
Trustee, shall be valid or obligatory for any purpose or entitled to the
benefits of this Ordinance, and such certificate of the Trustee, if any, as the
case may be, shall be conclusive evidence that the Bonds so authenticated have
been duly authenticated and delivered hereunder and are entitled to the benefits
of this Ordinance. The Trustee's certificate of authentication on any Bond shall
be deemed to have been executed by it if manually signed by an authorized
signatory on behalf of the Trustee but it shall not be necessary that the same
person sign the certificate of authentication on all of the Bonds issued
hereunder.

                  Upon authentication of any Bond, the Registrar or the Tender
Agent, if any, as the case may be, shall set forth on such Bond (1) the date of
such authentication and (2) in the case of a Bond bearing interest at a Flexible
Rate which is not a Book-Entry Bond, such Flexible Rate, the day next succeeding
the last day of the applicable Flexible Segment, the number of days comprising
such Flexible Segment and the amount of interest to accrue during such Flexible
Segment.

                                       29

<PAGE>

         So long as JPMorgan Chase Bank is serving as Trustee hereunder, it
shall also serve as Registrar hereunder.

         Section 2.03 Transfer and Exchange of Bonds. Registration of any Bond
may, in accordance with the terms of this Ordinance, be transferred, upon the
books of the Registrar required to be kept pursuant to the provisions of Section
2.04, by the person in whose name it is registered, in person or by his duly
authorized attorney, upon surrender of such Bond for cancellation, accompanied
by a written instrument of transfer in a form approved by the Registrar, duly
executed. Whenever any Bond shall be surrendered for registration of transfer,
the City shall execute and the Trustee shall authenticate and deliver a new Bond
or Bonds of the same tenor in Authorized Denominations. No registration of
transfer of Bonds upon the books of the Registrar required to be kept pursuant
to the provisions of Section 2.04 hereof shall be required to be made during the
period after any Record Date and prior to the related Interest Payment Date or
during the period of fifteen (15) days immediately preceding the date on which
the Trustee mails any notice of redemption, nor shall any registration of
transfer of Bonds called for redemption be required.

                  Bonds may be exchanged at the Corporate Trust Office of the
Trustee for a like aggregate principal amount of Bonds of the same tenor of
Authorized Denominations. The Trustee shall require the payment by the Owner
requesting such exchange of any tax or other governmental charge required to be
paid with respect to such exchange, and there shall be no other charge to any
Owner for any such exchange. Except with respect to Bonds remarketed after being
purchased pursuant to Section 4.08 hereof, no exchange of Bonds shall be
required to be made during the period after any Record Date and prior to the
related Interest Payment Date or during the period of fifteen (15) days
immediately preceding the date on which the Trustee gives notice of redemption,
nor shall any exchange of Bonds called for redemption be required. If a Bond is
presented for transfer or exchange after notice of redemption of such Bond has
been given as provided in Section 4.03 hereof, the Registrar shall deliver a
copy of such notice of redemption to the new owner of such Bond.

         Section 2.04 Bond Register. The Registrar will keep or cause to be kept
at its Principal Office sufficient books for the registration and the
registration of transfer of the Bonds, which shall at all times, during regular
business hours, be open to inspection by the City, the Trustee and the Company;
and, upon presentation for such purpose, the Registrar shall, under such
reasonable regulations as it may prescribe, register the transfer or cause to be
registered the transfer, on said books, of Bonds as hereinbefore provided.

         Section 2.05 Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond
shall become mutilated, the City, upon the request and at the expense of the
holder of said Bond, shall execute, and the Trustee shall thereupon authenticate
and deliver a new Bond of like tenor and number in exchange and substitution for
the Bond so mutilated, but only upon surrender to the Registrar of the Bond so
mutilated. Every mutilated Bond so surrendered to the Registrar shall be treated
by the Trustee in accordance with its document retention policies (provided that
the Trustee shall not be required to destroy such Bonds) and, upon the written
request of the City, a certificate evidencing such disposition shall be
delivered to the City, with a copy to the Company. If any Bond issued hereunder
shall be lost, destroyed or stolen, evidence of such loss, destruction or theft
may be submitted to the City, the Company and the Registrar, and if such
evidence be

                                       30

<PAGE>

satisfactory to them and indemnity satisfactory to them shall be given by or on
behalf of the holder of such lost, destroyed or stolen Bond, the City, at the
expense of the holder, shall execute, and the Trustee shall thereupon
authenticate and deliver, a new Bond of like tenor in lieu of and in
substitution for the Bond so lost, destroyed or stolen (or if any such Bond
shall have matured or shall be about to mature, instead of issuing a substitute
Bond the Trustee shall, at the direction of the City, pay the same without
surrender thereof). The City may require payment of a reasonable fee for each
new Bond issued under this Section and payment of the expenses which may be
incurred by the City and the Trustee. Any Bond issued under the provisions of
this Section in lieu of any Bond mutilated or alleged to be lost, destroyed or
stolen shall constitute an original additional contractual obligation on the
part of the City whether or not the Bond mutilated or so alleged to be lost,
destroyed or stolen shall be at any time enforceable by anyone, and shall be
equally and proportionately entitled to the benefits of this Ordinance with all
other Bonds secured by this Ordinance.

                  Every replacement Bond issued pursuant to the provisions of
this Section 2.05 by virtue of the fact that any Bond is lost, destroyed or
improperly cancelled shall constitute an additional contractual obligation of
the City, whether or not the lost, destroyed or improperly cancelled Bond shall
be at any time enforceable, and shall be entitled to all the benefits of this
Ordinance equally and proportionately with any and all other Bonds duly issued
hereunder. All Bonds shall be held and owned upon the express condition that, to
the extent permitted by law, the foregoing provisions are exclusive with respect
to the replacement or payment of lost, destroyed or improperly cancelled Bonds,
notwithstanding any law or statute now existing or hereafter enacted.

         Section 2.06 Disposition of Bonds. When paid in full, all Bonds shall
be delivered to the Trustee, who shall forthwith cancel such Bonds and deliver a
certificate evidencing such cancellation to the City, the Paying Agent, the
Bank, the Registrar and the Company. The Trustee shall treat such cancelled
Bonds in accordance with its document retention policies and shall not be
required to destroy such Bonds.

         Section 2.07 CUSIP Numbers. As provided in Section 2.01(d) of this
Ordinance, the City in issuing the Bonds may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to holders of Bonds; provided that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Bonds or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Bonds, and any such redemption shall not be affected by
any defect in or omission of such CUSIP numbers. The City shall promptly notify
the Trustee of any changes in the CUSIP number.

         Section 2.08 Other Obligations. The City expressly reserves the right
to issue, to the extent permitted by law, obligations under another ordinance or
ordinances to provide additional funds or, at the request of the Company, to
refund all or any principal amount of the Bonds.

         Section 2.09 Temporary Bonds. Pending the preparation of definitive
Bonds, the City may execute and the Trustee shall authenticate and deliver
temporary Bonds. Temporary Bonds shall be issuable as fully registered Bonds, of
any Authorized Denomination, and substantially in

                                       31

<PAGE>

the form of the definitive Bonds but with such omissions, insertions and
variations as may be appropriate for temporary Bonds, all as may be determined
by the City. Temporary Bonds may contain such reference to any provisions of
this Ordinance as may be appropriate. Every temporary Bond shall be executed by
the City and be authenticated by the Trustee upon the same conditions and in
substantially the same manner, and with like effect, as the definitive Bonds. As
promptly as practicable, the City shall execute and shall furnish definitive
Bonds and thereupon temporary Bonds may be surrendered in exchange therefor
without charge at the Corporate Trust Office of the Trustee, and the Trustee
shall authenticate and deliver in exchange for such temporary Bonds a like
aggregate principal amount of the definitive Bonds of Authorized Denominations.
Until so exchanged the temporary Bonds shall be entitled to the same benefits
under this Ordinance as definitive Bonds.

                               (End of Article II)

                                  ARTICLE III

                                ISSUANCE OF BONDS

         Section 3.01 Authentication and Delivery of Bonds. The City shall
execute and deliver to the Trustee and the Trustee shall authenticate the Bonds
and deliver the Bonds to the initial purchasers thereof as directed hereinafter
in this Section 3.01.

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

                     (i)   a duly certified copy of a resolution of the City
         authorizing the issuance of the Bonds;

                     (ii)  an original duly executed counterpart or a duly
         certified copy of the Agreement and this Ordinance;

                     (iii) a request and authorization to the Trustee on behalf
         of the City to authenticate and deliver the Bonds to the purchaser or
         purchasers therein identified upon payment of the amounts specified in
         Section 6.02 hereof;

                     (iv)  a written statement on behalf of the Company (i)
         approving the issuance and delivery of the Bonds and (ii) consenting to
         each and every provision of this Ordinance; provided, however, that the
         execution of the Agreement on behalf of the Company by an authorized
         officer shall be deemed to be such written statement of approval and
         consent; and

                     (v)   evidence that the 1994 Bonds have been repurchased,
         in accordance with the 1994 Ordinance, immediately prior to (or on the
         same date as) the delivery of the Bonds to the initial purchasers and
         that the principal and interest on the 1994 Bonds has been paid.

         Section 3.02 Payment of Principal and Interest. For the payment of
interest on the Bonds, the City shall cause to be deposited in the Bond Fund, on
or prior to each Interest

                                       32

<PAGE>

Payment Date, solely out of the Receipts and Revenues, an amount sufficient to
pay the interest to become due on such Interest Payment Date. The obligation of
the City to cause any such deposit to be made hereunder shall be reduced by the
amount of moneys in the Bond Fund available on such Interest Payment Date for
the payment of interest on the Bonds.

                  For the payment of the principal of the Bonds upon maturity or
earlier redemption, the City shall cause to be deposited in the Bond Fund, on or
prior to the maturity or redemption date of the Bonds, solely out of the
Receipts and Revenues, an amount sufficient to pay the principal of the Bonds
then due. The obligation of the City to cause any such deposit to be made
hereunder shall be reduced by the amount of moneys in the Bond Fund available on
the maturity or redemption date for the payment of the principal of the Bonds.

                              (End of Article III)

                                   ARTICLE IV

                        REDEMPTION AND PURCHASE OF BONDS

         Section 4.01 Redemption of Bonds. The Bonds are subject to redemption
if and to the extent the Company is entitled or required to make and makes a
prepayment pursuant to Article IX of the Agreement. The Trustee shall not give
notice of any optional redemption under Section 4.01(a) hereof unless the
Company has so directed in accordance with Section 9.02(b) of the Agreement. In
the event of a failure by the Company to give a notice of mandatory prepayment
under such Section 9.02(a), such notice may be given by the City, the Trustee or
any holder or holders of ten percent (10%) or more in aggregate principal amount
of the Outstanding Bonds. No Bond shall be subject to optional redemption
pursuant to Section 4.01(a)(ii) during the Initial Long-Term Interest Rate
Period.

                  The Bonds shall be redeemed upon the following terms:

                  (a) Redemption Upon Optional Prepayment.

                      (i) Extraordinary Events. During any Long-Term Interest
         Rate Period, the Bonds shall be redeemed prior to maturity in whole or
         in part, and if in part by lot, at any time at a redemption price equal
         to the principal amount thereof plus accrued interest to the redemption
         date, upon receipt by the Trustee of a written notice of the Company
         and signed by an Authorized Company Representative stating that any of
         the following events has occurred (which determination shall be in the
         sole discretion of the Company) and that the Company therefore intends
         to exercise its option to prepay all payments due under the Agreement
         in whole or in part pursuant to Section 9.01 of the Agreement and
         thereby effect the redemption of Bonds in whole or in part to the
         extent of such prepayments:

                          (A) All or part of the Project or the Plant shall have
         been damaged or destroyed to such an extent that, in the opinion of the
         Company, (i) the Project or the Plant or such affected portion could
         not reasonably be restored within a period of four (4) months to the
         condition thereof immediately preceding such damage or destruction, and
         the Company or the operator of the Project or the

                                       33

<PAGE>

               Plant will be prevented, or is likely to be prevented for a
               period of four (4) consecutive months or more, from carrying on
               all or substantially all of its normal operation of the Project
               or the Plant, or (ii) the cost of restoration of the Project or
               the Plant or such affected portion will be substantially in
               excess of the net proceeds of insurance thereon.

                           (B) Title to, or the temporary use of, all or a part
               of the Project or the Plant shall have been taken under the
               exercise of the power of eminent domain.

                           (C) Changes in economic availability of raw
               materials, operating supplies or facilities necessary to operate
               all or a part of the Project or the Plant, or technological or
               other changes which make the continued operation of the Project
               or the Plant or such affected portion uneconomical, in the
               opinion of the Company, shall have occurred and shall have
               resulted in a cessation of all or substantially all of the
               Company's normal operations of either the Project or the Plant.

                           (D) Unreasonable burdens or excessive liabilities
               shall have been imposed upon the City or the Company in respect
               of all or a part of the Project or the Plant including, without
               limitation, federal, state or other ad valorem, property, income
               or other taxes not being imposed on the date of the Agreement, as
               well as any statute or regulation enacted or promulgated after
               the date of the Agreement that prevents the Company from
               deducting interest in respect of the Agreement for federal income
               tax purposes.

                           (E) All or substantially all of the property of the
               Company shall be transferred or sold to any entity other than an
               affiliate of the Company or the Company shall be consolidated
               with or merged into an entity other than an affiliate of the
               Company in such manner that the Company is not the surviving
               entity and the surviving, resulting or transferee entity does not
               agree to perform the obligations of the Company.

                  (ii) Company Option. The Bonds shall be subject to redemption
          prior to maturity by the exercise by the Company of any of its options
          to prepay all or a part of the unpaid balance of the Purchase Price of
          the Project and cause the Bonds to be redeemed, in whole, or in part
          by lot, prior to their maturity dates, as follows:

                           (A) During any Short-Term Interest Rate Period, each
               Bond shall be subject to such redemption on the day next
               succeeding the last day of each Bond Interest Term for such Bond
               at a redemption price equal to 100% of the principal amount
               thereof.

                           (B) During any Daily Interest Rate Period or Weekly
               Interest Rate Period, the Bonds shall be subject to such
               redemption on any Interest Payment Date at a redemption price
               equal to 100% of the principal amount thereof.

                                       34

<PAGE>

                           (C) On the day next succeeding the last scheduled day
               of any Long-Term Interest Rate Period, the Bonds shall be subject
               to such redemption at a redemption price of 100% of the principal
               amount thereof. During any Long-Term Interest Rate Period, the
               Bonds shall be subject to redemption during the periods specified
               below, in whole or in part, at the redemption prices (expressed
               as percentages of principal amount) hereinafter indicated subject
               to a resolution of the City Council adopted prior to the Issue
               Date of the Bonds (unless different redemption terms shall be
               specified by the Company pursuant to Section 2.01(c)(iv)(B)):

<TABLE>
<CAPTION>
                       Length of
              Long-Term Interest Rate Period
                  (expressed in years)                        Redemption Prices
               -----------------------------                  -----------------
              <S>                                   <C>
              Greater than 17                       After 10 years at 102% declining by
                                                    1% every 12 months to 100%

              Less than or equal to 17 and          After 8 years at 102%, declining by
                 greater than 10                    1% every 12 months to 100%

              Less than or equal to 10 and          After 6 years at 101%, declining by
                 greater than 7                     1/2 of 1% every 6 months to 100%

              Less than or equal to 7 and           After 3 years at 101%, declining by
                 greater than 4                     1/2 of 1% every 6 months to 100%

              Less than or equal to 4 and           After 2 years at 100 1/2%, declining
                 greater than 3                     by 1/2 of 1% after 6 months to 100%

              Less than or equal to 3 and           After 1 year at 100  1/2%, declining
                 greater than 2                     by 1/2 of 1% after 6 months to 100%

              Less than or equal to 2 and           After 1 year at 100%
                 greater than 1

              1 year or less                        Not redeemable
</TABLE>

         provided that, notwithstanding the foregoing, other terms and
         conditions for optional prior redemption of the Bonds during any
         Long-Term Interest Rate Period may be

                                       35

<PAGE>

         established in a resolution of the City Council adopted prior to the
         Issue Date of the Bonds.

                  (iii) Change of Use. Subject to a resolution of the City
         Council adopted prior to the Issue Date of the Bonds, during any
         Long-Term Interest Rate Period, the Bonds shall be subject to
         redemption prior to maturity at the option of the Company in whole or
         in part by lot on any Interest Payment Date, at a redemption price
         equal to 100% of the principal amount thereof, if the Company delivers
         to the Trustee a written or Electronic notice to the effect that
         either:

                        (A) the Company has determined that some or all of the
             interest payable under the Agreement for any sixty (60) days (which
             need not be consecutive) within any consecutive twenty-four (24)
             month period is not or will not be deductible, in whole or in part,
             for federal income tax purposes by reason of Section 150(b) of the
             Code (or would not be deductible unless some or all of the Bonds
             are redeemed) due to a change in use of the Project or any portion
             thereof, and the Company will not claim deductions for such
             interest on its federal income tax returns; or

                        (B) the Company after reasonable effort has been unable
             to obtain an opinion of Bond Counsel that it is more likely than
             not that Section 150 of the Code will not prevent interest payable
             under the Agreement for any sixty (60) days (which need not be
             consecutive) within any consecutive twenty-four (24) month period
             from being deductible, in whole or in part, for federal income tax
             purposes.

         In either such case, (i) the Company shall only cause the Trustee to
         redeem Bonds pursuant to this Section 4.01(a)(ii) on or after the
         Interest Payment Date immediately preceding the date on which, due to a
         change in use in the Project or any portion thereof, the period of
         potential interest expense disallowance described above commences, and
         the Company may only cause the Trustee to redeem such principal amount
         of Bonds as the Company determines is necessary to assure that the
         Company retains its right to all such deductions otherwise allowable
         or, if a partial redemption will not enable the Company to retain the
         right to deduct such interest, the Company may cause the Trustee to
         redeem all the Outstanding Bonds.

         Notwithstanding any term or provision of Section 4.01(a)(i) of this
         Ordinance to the contrary, the Bonds shall not be subject to optional
         redemption unless (i) the Bank, if any, shall consent thereto in
         writing and deliver such consent to the Company and the Trustee, (ii)
         in connection with such redemption, the proceeds of such refunding
         shall be sufficient to pay, and shall be used to. pay, the redemption
         price of the Bonds so redeemed or (iii) sufficient Available Moneys
         (other than proceeds of any drawing under the Letter of Credit) shall
         have been deposited by the Company with the Trustee for the payment of
         all amounts due in respect of all Bonds called for redemption pursuant
         to Section 4.01(a)(i) of this Ordinance. This paragraph shall be
         inapplicable if at the time of such optional redemption there is no
         Letter of Credit or other Credit Facility with respect to the Bonds.

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<PAGE>

         (b) Redemption Upon Mandatory Prepayment. The Bonds shall be subject to
redemption prior to maturity from amounts which are required to be prepaid by
the Company under Section 9.03 of the Agreement, as set forth below.

             (i)   The Bonds shall be redeemed in whole on any date at a
     redemption price equal to the principal amount thereof plus interest
     accrued to the redemption date upon the occurrence of a Determination of
     Taxability; provided, however, that if, in the opinion of Bond Counsel
     delivered to the Trustee, the redemption of a specified portion of such
     Bonds Outstanding would have the result that interest payable on such Bonds
     remaining Outstanding after such redemption would remain Tax-Exempt, then
     such Bonds shall be redeemed in part by lot (in Authorized Denominations),
     in such amount as Bond Counsel in such opinion shall have determined is
     necessary to accomplish that result.

             (ii)  The Bonds shall be redeemed in whole at a redemption price
     equal to the principal amount thereof plus accrued interest to the
     redemption date in the event that as a result of any changes in the
     Constitution of the United States of America or the Constitution of the
     State or as a result of any legislative, judicial or administrative action,
     the Agreement shall have become void or unenforceable or impossible to
     perform in accordance with the intention and purposes of the parties
     thereto, or shall have been declared unlawful.

             (iii) The Bonds shall be redeemed in whole at a redemption price
     equal to the principal amount thereof plus accrued interest to the
     redemption date in the event that at least thirty-five (35) days prior to
     the expiration of any Credit Facility, if any, then in effect with respect
     to the Bonds the Trustee shall not have received (a) a renewal or extension
     of the existing Credit Facility for a period of at least one (1) year (or,
     if shorter, the period to maturity of the Bonds) or (b) a substitute Credit
     Facility meeting the requirements of Section 6.08 of the Agreement. Such
     redemption shall occur on the last Business Day which is not less than five
     (5) calendar days preceding the expiration date of a Credit Facility, if
     any, then in effect.

     Section 4.02 Selection of Bonds to be Redeemed. If less than all the Bonds
shall be called for redemption the Trustee shall select the Bonds or any given
portion thereof to be redeemed, from Outstanding Bonds or any given portion
thereof not previously called for redemption, by lot. For the purpose of any
such selection the Trustee shall assign a separate number for each minimum
Authorized Denomination of each Bond of a denomination of more than such
minimum; provided that following any such selection, both the portion of such
Bond to be redeemed and the portion remaining shall be in Authorized
Denominations. The Trustee shall promptly notify the City and the Company in
writing of the numbers of the Bonds or portions thereof so selected for
redemption.

     Section 4.03 Notice for Redemption. The Trustee shall give notice,
Electronically or by first class mail, in the name of the City, of the
redemption of Bonds, not less than thirty (30) nor more than sixty (60) days
prior to the redemption date for Bonds bearing interest fixed to maturity or at
Daily, Weekly or Long-Term Interest Rates, and at any time not more than sixty
(60) days prior to the redemption date for Bonds bearing interest at Bond
Interest Term Rates,

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<PAGE>

provided, however, that any such notice of redemption of Bonds bearing interest
at Bond Interest Term Rates may be given at any time not more than sixty (60)
days prior to the applicable redemption date. Each notice of redemption shall
(i) specify the Bonds to be redeemed, the redemption date, the redemption price,
the place where amounts due upon such redemption will be payable (which shall be
the Corporate Trust Office of the Paying Agent) and the source of the funds to
be used for such redemption, the principal amount, the CUSIP numbers (if any) of
the Bonds to be redeemed and, if less than all, the distinctive certificate
numbers of the Bonds to be redeemed and, in the case of Bonds to be redeemed in
part only, the respective portions of the principal amount thereof to be
redeemed. Each such notice shall also state that the interest on the Bonds
designated for redemption shall cease to accrue from and after such redemption
date and that on said date there will become due and payable on each of said
Bonds the principal amount thereof to be redeemed, interest accrued thereon, if
any, to the redemption date and the premium, if any, thereon (such premium to be
specified) and shall require that such Bonds be then surrendered at the address
or addresses of the Paying Agent specified in the redemption notice; provided,
however, the failure to duly give such notice, or any defect therein, shall not
affect the validity of any proceedings for the redemption of Bonds with respect
to which no such failure or defect occurred. In the event that any Bond selected
for redemption shall be tendered for purchase pursuant to Section 4.08 hereof,
the Tender Agent shall note on each Bond delivered to an Owner pursuant to
Section 14.05 hereof upon the purchase of such tendered Bond that such Bond has
been called for redemption and the date of such redemption. Upon presentation
and surrender of Bonds so called for redemption at the place or places of
payment, such Bonds shall be redeemed and cancelled. Notice of any redemption
hereunder shall also be given to the Tender Agent and the Bank.

         With respect to any notice of optional redemption of Bonds pursuant to
Section 4.01(a), unless upon the giving of such notice such Bonds shall be
deemed to have been paid within the meaning of Article IX hereof, such notice
shall state that such redemption shall be conditional upon the receipt by the
Trustee on or prior to the date fixed for such redemption of Available Amounts
sufficient to pay the principal of, premium, if any, and interest on, such Bonds
to be redeemed, and that if such Available Amounts shall not have been so
received said notice shall be of no force and effect and the City shall not be
required to redeem such Bonds. In the event that such notice of redemption
contains such a condition and such Available Amounts are not so received, the
redemption shall not be made and the Trustee shall within a reasonable time
thereafter give notice, to the persons and in the manner in which the notice of
redemption was given, that such Available Amounts were not so received.

         Any notice for the redemption of any Bond mailed as provided herein
shall be conclusively deemed to have been duly given whether or not such notice
is received. Failure to mail the notices required by this paragraph to any
holder of a Bond, or any defect in any notice so mailed, shall not affect the
validity of the proceedings for redemption of any Bonds nor impose any liability
on the Trustee.

     Section 4.04 Partial Redemption of Bonds. Upon surrender of any Bond
redeemed in part only, the Registrar shall exchange the Bond redeemed for a new
Bond of like tenor and in an Authorized Denomination without charge to the
holder in the principal amount of the portion of the Bond not redeemed. In the
event of any partial redemption of a Bond which is registered in the name of the
Nominee, DTC may elect to make a notation on the Bond certificate which

                                       38

<PAGE>

reflects the date and amount of the reduction in principal amount of said Bond
in lieu of surrendering the Bond certificate to the Registrar for exchange. The
City, the Trustee and the Registrar shall be fully released and discharged from
all liability upon, and to the extent of, payment of the redemption price for
any partial redemption and upon the taking of all other actions required
hereunder in connection with such redemption.

     Section 4.05 Effect of Redemption. Notice of redemption having been duly
given as aforesaid, and moneys for payment of the redemption price being held by
the Trustee, the Bonds so called for redemption shall, on the redemption date
designated in such notice, become due and payable at the redemption price
specified in such notice, interest on the Bonds so called for redemption shall
cease to accrue, said Bonds shall cease to be entitled to any lien, benefit or
security under this Ordinance, and the holders of said Bonds shall have no
rights in respect thereof except to receive payment of the redemption price
thereof (including interest, if any, accrued to the redemption date), without
interest accrued on any funds held after the redemption date to pay such
redemption price.

         All Bonds fully redeemed pursuant to the provisions of this Article IV
shall upon surrender thereof be cancelled by the Trustee, who shall deliver a
certificate evidencing such cancellation to the City and the Company. The
Trustee shall treat such cancelled Bonds in accordance with its document
retention policies and shall not be required to destroy such Bonds.

     Section 4.06 Payment of Redemption Price.

            (i)  For the redemption of any of the Bonds, the City shall cause to
     be deposited in the Bond Fund, on or prior to the date fixed for
     redemption, solely out of the Receipts and Revenues, an amount sufficient
     to pay the principal of and interest and any premium to become due on the
     date fixed for such redemption on the Bonds; provided that so long as a
     Credit Facility is in effect with respect to the Bonds and such credit
     Facility does not cover some or all of the optional or mandatory redemption
     price, any amount payable as the optional or mandatory redemption price
     upon redemption of Bonds and not covered by such Credit Facility shall be
     on deposit in the Bond Fund and constitute Available Moneys prior to the
     Trustee giving any notice of redemption hereunder.

            (ii) Moneys for payment of the principal of and interest and any
     premium to the date fixed for redemption on Bonds called for redemption and
     not presented for payment on the date fixed for redemption shall be set
     aside by the Trustee in trust for the Owners of such Bonds and shall be
     held uninvested. Interest on such Bonds shall cease to accrue on the date
     fixed for redemption.

     Section 4.07 Bank Purchase Option.

            (i)  Notwithstanding any term or provision of this Ordinance to the
     contrary, if a Credit Facility is in effect, (i) if an event of Default
     shall occur and the Bonds are accelerated or (ii) if any Bonds shall be
     subject to redemption pursuant to Section 4.01 of this Ordinance, or (iii)
     if the Remarketing Agent shall be unable to remarket Bonds as provided in
     Article XIV of this Ordinance, then in any of such cases

                                       39

<PAGE>

         the Bank may from time to time in its discretion (in the manner
         provided in this Section 4.07) purchase all of the Bonds or the portion
         thereof that is subject to redemption, acceleration or which the
         Remarketing Agent has been unable to remarket, on the terms provided
         herein.

                  (ii)  The Bank shall notify the Trustee in writing of its
         exercise of its purchase option pursuant hereto at or before the time
         by which payment of any drawing of a Credit Facility is required in
         respect of the relevant acceleration, redemption or failure to remarket
         Bonds which gives rise to such purchase option. Such notice may be
         given after presentation by the Trustee of any document or draft under
         such Credit Facility with respect to such acceleration, redemption or
         failure to remarket, in which case purchase of the relevant Bonds by
         the Bank shall take precedence over such drawing; provided, that if the
         Bank has not exercised its purchase option and paid the purchase price
         of the Bonds being purchased by the time by which payment is due under
         such Credit Facility in respect of such drawing, the Bank shall pay
         such drawing pursuant to such Credit Facility. If the Trustee shall
         have presented drafts or documents under such Credit Facility, the
         Bank's notice of exercise of its purchase option may accompany payment
         of the purchase price of Bonds being acquired. The purchase price of
         Bonds purchased by the Bank pursuant hereto shall be paid to the
         Trustee at such account as it shall specify and shall be distributed by
         the Trustee to the former owners from which such Bonds shall have been
         purchased; provided, that in the case of any Bonds purchased upon a
         failed remarketing pursuant to paragraph (f) of this Section 4.07, the
         purchase price shall be paid to the Remarketing Agent for distribution
         to the former Owners of such Bonds which tendered them to the Tender
         Agent.

                  (iii) No purchase of any Bonds by the Bank in accordance
         herewith shall cause such Bonds to be extinguished or deemed paid, and
         upon payment of the purchase price of Bonds by the Bank, the Trustee
         shall authenticate and deliver to the Bank (or its nominee) as Owner a
         Bond or Bonds in an aggregate principal amount equal to the aggregate
         principal amount of Bonds so purchased (which shall be deemed to be in
         an "Authorized Denomination" for all purposes of this Ordinance), and
         such Bonds so delivered shall be Outstanding Bonds that are entitled to
         the benefits of this Ordinance equally and proportionately with all
         other Bonds; provided that the Trustee shall not make any drawing on a
         Credit Facility in respect of Bonds known by the Trustee to be held by
         the Bank (or its nominee) except as provided in paragraph (viii) of
         this Section 4.07. Bonds purchased by the Bank which are not delivered
         to the Trustee by the date upon which such Bonds were to have been
         purchased nonetheless will be deemed to have been purchased by the
         Bank, and the former Owner or Owners of such Bonds shall have no claim
         thereon, under this Ordinance or otherwise, for any amount other than
         the purchase price thereof. Interest accruing after the purchase date
         of such Bonds shall no longer be payable to the former Owners thereof.

                  (iv)  Bonds called for and subject to redemption pursuant to
         Section 4.01 of this Ordinance may, at the option of the Bank, be
         purchased by the Bank pursuant to this Section 4.07 in lieu of such
         redemption on the date upon which such Bonds were to have been redeemed
         at a purchase price equal to the amount that would have been payable on
         such Bonds if such Bonds had been so redeemed, except as provided in

                                       40

<PAGE>

         paragraph (vii) of this Section 4.07; provided, that no Bond called for
         redemption shall be subject to purchase by the Bank pursuant to this
         Section 4.07 if (i) in connection with such redemption, the proceeds of
         such refunding shall be sufficient to pay, and shall be used to pay,
         the redemption price of the Bonds so redeemed or (ii) sufficient
         Available Moneys (other than proceeds of any drawing under a Credit
         Facility) shall have been deposited by the Company with the Trustee for
         the payment of all amounts due in respect of all Bonds called for
         redemption pursuant to Section 4.01(a) or 4.01(b) of this Ordinance.
         The Bank shall pay the purchase price for Bonds purchased by the Bank
         on such redemption date.

                  (v)    If an Event of Default occurs and the Bonds are
         accelerated, the Bank may purchase all Bonds, pursuant to this Section
         4.07, for a purchase price equal to the principal amount of such Bonds
         plus interest accrued thereon to the date of purchase, except as
         otherwise provided in paragraph (vii) of this Section 4.07.

                  (vi)   In the event that the Remarketing Agent shall be unable
         to remarket any Bonds as provided in Article XIII hereof, the Bank may,
         at its option, purchase all such unremarketed Bonds pursuant to this
         Section 4.07, at a purchase price equal to 100% of the principal amount
         thereof plus accrued interest, if any, on the date on which such Bonds
         would otherwise be purchased by the Remarketing Agent pursuant to
         Section 14.03(b), except as otherwise provided in paragraph (vii) of
         this Section 4.07.

                  (vii)  Upon a purchase of Bonds by the Bank pursuant to this
         Section 4.07, the Bank may, in its discretion, purchase all Bonds, if
         any, then held by the Trustee which have been purchased by or on behalf
         of the Company with moneys drawn under a Credit Facility as to which
         drawing the Company has not reimbursed the Bank in accordance with the
         Reimbursement Agreement without the payment of any cash purchase price
         therefor, but the Company's reimbursement obligations under the
         Reimbursement Agreement shall be reduced by an amount equal to the
         principal amount of such Bonds so deemed purchased. The Bank may
         exercise its option pursuant to the preceding sentence by a notice to
         the Trustee given with or included in the relevant notice to the
         Trustee under paragraph (ii) of this Section 4.07, together with a
         notice which shall confirm that a Credit Facility has been reinstated
         in an equal amount.

                  (viii) Notwithstanding any term or provision of this Ordinance
         to the contrary, the Trustee shall not without the prior written
         consent of the Bank make any drawing under a Credit Facility with
         respect to the principal amount of any Bonds known by the Trustee to be
         held by the Bank or its nominee; provided, that the Trustee shall make
         drawings of interest under a Credit Facility with respect to the Bonds
         held by the Bank or its nominee, as provided in this Ordinance.

                  (ix)   The purchase price of any Bonds to be purchased by the
         Bank in accordance with this Section 4.07 shall be paid by the Bank
         with its general funds and not directly or indirectly from funds or
         collateral on deposit with or pledged to the Bank for the account of
         the City or the Company or any affiliate thereof, and such payment by
         the Bank shall not be deemed to be a draw under a Credit Facility.

                                       41

<PAGE>

                  (x)    Notwithstanding any term or provision of this Ordinance
         or the Bonds to the contrary, if at any time all of the Outstanding
         Bonds are in aggregate held by the Bank or its nominee (whether
         pursuant to the provisions hereof or otherwise), the Bank shall not be
         entitled to exercise its rights under Section 4.08 of this Ordinance or
         under the Bonds to require that the Bonds be purchased unless either
         (i) the Bank shall have given the Company, the Trustee and the
         Remarketing Agent at least 30 days prior written notice of its
         intention to exercise such rights or (ii) the Remarketing Agent shall
         have received from the Company offering materials relating to the Bonds
         which are, in the opinion of the counsel to the Company and the counsel
         to the City, correct and complete in all material respects.

         Section 4.08 Purchase of Bonds.

              (a) Holder's Option to Tender for Purchase.

                  (i)    During any Daily Interest Rate Period, any Bond or
         portion thereof in an Authorized Denomination shall be purchased any
         Business Day at a purchase price equal to 100% of the principal amount
         thereof plus accrued interest from the Interest Accrual Date
         immediately prior to the date of purchase to the date of purchase
         (unless the date of purchase shall be an Interest Accrual Date, in
         which case at a purchase price equal to the principal amount thereof),
         payable in immediately available funds, upon (A) delivery to the Tender
         Agent at its Corporate Trust Office, by no later than 11:00 a.m. (New
         York City time), on such Business Day, of an irrevocable written,
         telephonic or Electronic notice which states the principal amount of
         such Bond to be tendered for purchase and the date of purchase, and (B)
         delivery of such Bond tendered for purchase to the Tender Agent at its
         Corporate Trust Office on the date of purchase in accordance with
         Section 4.09 hereof. The Tender Agent shall keep a written record of
         the notice described in Clause (A).

                  (ii)   During any Weekly Interest Rate Period, any Bond or
         portion thereof in an Authorized Denomination shall be purchased on any
         Business Day at a purchase price equal to 100% of the principal amount
         thereof plus accrued interest, if any, from the Interest Accrual Date
         immediately prior to the date of purchase to the date of purchase
         (unless the date of purchase shall be an Interest Accrual Date, in
         which case at a purchase price equal to the principal amount thereof),
         payable in immediately available funds, upon (A) delivery to the Tender
         Agent at its Corporate Trust Office, by no later than 5:00 p.m. (New
         York City time), on such Business Day at least seven (7) days prior to
         the date of purchase of an irrevocable written, telephonic or
         Electronic notice which states the principal amount of such Bond to be
         tendered for purchase and the date of purchase, and (B) delivery of
         such Bond tendered for purchase to the Tender Agent at its Corporate
         Trust Office on the date of purchase in accordance with Section 4.09
         hereof. The Tender Agent shall keep a written record of the notice
         described in Clause (A).

                  (iii)  If any Bond is to be purchased in part pursuant to (i)
         or (ii) above, the amount so purchased and the amount not so purchased
         must each be an Authorized Denomination.

                                       42

<PAGE>

                  (iv)   Any instrument delivered to the Tender Agent in
         accordance with this Section 4.08 shall be irrevocable with respect to
         the purchase for which such instrument was delivered and shall be
         binding upon any subsequent Owner of the Bond to which it relates,
         including any Bond issued in exchange therefor or upon the registration
         of transfer thereof, and as of the date of such instrument, the Owner
         of the Bonds specified therein shall not have any right to optionally
         tender for purchase such Bonds prior to the date of purchase specified
         in such notice. The Tender Agent and the Trustee may conclusively
         assume that any person (other than a holder) providing notice of
         optional tender pursuant to (i) or (ii) above is the Owner of the Bond
         to which such notice relates, and neither the Tender Agent nor the
         Trustee shall assume any liability in accepting such notice from any
         person whom it reasonably believes to be an Owner of Bonds.

             (b)  Mandatory Tender for Purchase.

                  (i)    The Bonds shall be subject to mandatory tender for
         purchase at a purchase price, except as provided in paragraph (ii)
         below, equal to 100% of the principal amount thereof, plus accrued
         interest to the date of purchase described below, upon the occurrence
         of any of the events stated below:

                           (A) as to any Bond, on the effective date of any
             change in an Interest Rate Period for such Bond, other than the
             effective date of any change from a Daily Interest Rate Period to a
             Weekly Interest Rate Period or from a Weekly Interest Rate Period
             to a Daily Interest Rate Period; or

                           (B) as to each Bond in a Short-Term Interest Rate
             Period, on the day next succeeding the last day of each Bond
             Interest Term with respect to such Bond; or

                           (C) as to all Bonds, on the effective date of any
             Credit Facility which may be provided with respect to the Bonds
             pursuant to Section 6.08 of the Agreement or of any substitute
             Credit Facility provided with respect to the Bonds pursuant to
             Section 6.08 of the Agreement.

                  (ii)   In the event that on a date the Bonds are subject to
         optional redemption pursuant to Section 4.01(a)(ii), the Company elects
         to change the Interest Rate Period with respect to the Bonds during a
         Long-Term Interest Rate Period to a different Interest Rate Period or
         to provide, substitute or terminate a Credit Facility, if any, during a
         Long-Term Interest Rate Period and thereby causes a mandatory tender of
         such Bonds as provided in Section 4.08(b)(i)(A) or (C), as the case may
         be, the Bonds shall be purchased on the applicable mandatory tender
         date at a purchase price equal to the principal amount thereof plus an
         amount equal to any premium which would have been payable on such day
         had the Company directed redemption of the Bonds pursuant to Section
         4.01(a)(ii) hereof.

                  (iii)  The Trustee shall give notice Electronically or by
         first class mail of the provision of any Credit Facility with respect
         to the Bonds or the provision of any substitute Credit Facility with
         respect to the Bonds to the holders of the Bonds at their

                                       43

<PAGE>

     addresses shown on the registration books kept by the Registrar, not later
     than the fifteenth day (thirtieth day if the then current Interest Rate
     Period is a Long-Term Interest Rate Period) prior to the date on which the
     Bonds are subject to mandatory tender pursuant to Section 4.08(b)(i)(C),
     which notice shall (i) state the date of such provision or substitution;
     and (ii) state that such Bonds shall be subject to mandatory tender for
     purchase on the effective date of such provision or substitution in
     accordance with Section 4.08(b)(i)(C) hereof.

          (c) Mandatory Tender for Purchase on Termination or Expiration of
Credit Facility. In the event that any Credit Facility either is to terminate or
is to expire in accordance with its terms (other than because a final drawing
thereunder shall have been made in accordance with its terms), unless the term
of the Credit Facility shall be extended or unless the Company shall provide the
Trustee, no later than the 35/th/ day preceding the mandatory purchase date set
forth herein with a substitute Credit Facility and with written evidence from
Moody's, if the Bonds shall be rated and the time by Moody's, and from S&P, if
the Bonds shall be rated at the time by S&P, to the effect that such substitute
Credit Facility will not, by itself, result in a reduction or withdrawal of the
rating on the Bonds by Moody's or S&P, as the case may be (and the Trustee shall
have received written notice of such extension or such substitution and evidence
thereof prior to giving the notice required in paragraph (b) above), the Bonds
shall be subject to mandatory tender for purchase at a purchase price, payable
in immediately available funds, of 100% of their principal amount, plus accrued
interest, if any, to the mandatory purchase date, on the second Business Day
prior to the date of such termination or expiration.

     Section 4.09 Delivery of Tendered Bonds. With respect to any Book-Entry
Bond, delivery of such Bond to the Tender Agent in connection with any optional
or mandatory tender pursuant to Section 4.08 (a) or (b) hereof shall be effected
by the making of, or the irrevocable authorization to make, appropriate entries
on the books of DTC or any DTC Participant to reflect the transfer of the
beneficial ownership interest in such Bond to the account of the Tender Agent,
or to the account of a DTC Participant acting on behalf of the Tender Agent.
With respect to any Bond which is not a Book-Entry Bond, delivery of such Bond
to the Tender Agent in connection with any optional or mandatory tender pursuant
to Section 4.08(a) or (b) hereof shall be effected by physical delivery of such
Bond to the Tender Agent at its Principal Office, by 1:00 p.m. (New York City
time) on the purchase date, accompanied by a proper instrument of transfer
thereof, in a form satisfactory to the Tender Agent, executed in blank by the
holder thereof with the signature of such holder guaranteed in accordance with
the guidelines set forth by one of the nationally recognized medallion signature
programs.

     Section 4.10 Bonds Deemed Purchased.

                 (i)   If moneys sufficient to pay the purchase price of Bonds
     to be purchased pursuant to Section 4.08(a) or (b) shall be held by the
     Tender Agent on the date such Bonds are to be purchased, such Bonds shall
     be deemed to have been purchased for all purposes of this Ordinance,
     irrespective of whether or not such Bonds shall have been delivered to the
     Tender Agent, and neither the former holder of such Bonds nor any other
     person shall have any claim thereon, under this Ordinance or otherwise, for
     any amount other than the purchase price thereof.

                                       44

<PAGE>

                 (ii)  In the event of non-delivery of any Bond to be purchased
     pursuant to Section 4.08(a) or (b) hereof, the Tender Agent shall segregate
     and hold uninvested the moneys for the purchase price of such Bonds in
     trust, without liability for interest thereon, for the benefit of the
     former holders of such Bonds, who shall, except as provided in the
     following sentence, thereafter be restricted exclusively to such moneys for
     the satisfaction of any claim for the purchase price of such Bonds. Any
     moneys which the Tender Agent shall segregate and hold in trust for the
     payment of the purchase price of any Bond and remaining unclaimed for two
     (2) years after the date of purchase shall be paid, upon the Company's
     written request, to the Company. After the payment of such unclaimed moneys
     to the Company, the former holder of such Bond shall look only to the
     Company for the payment thereof.

                               (End of Article IV)

                                    ARTICLE V

                                  THE BOND FUND

     Section 5.01 Creation of Bond Fund. There is hereby created by the City and
ordered established with the Trustee a trust fund in the name of the City to be
designated "Pollution Control Refunding Revenue Bonds, 2002 Series A (El Paso
Electric Company, Four Corners Project) Bond Fund" (the "Bond Fund"). The
Trustee shall establish one or more accounts within the Bond Fund for the
purpose of segregating moneys drawn under a Credit Facility, if any, and
Available Moneys from other moneys therein, and may establish one or more
accounts within the Bond Fund for other purposes.

     Section 5.02 Deposits into Bond Fund. There shall be deposited in the Bond
Fund:

                 (i)   The accrued interest and purchase premium, if any, paid
     by the initial purchasers of the Bonds;

                 (ii)  All installments of the Purchase Price of the Project and
     all moneys drawn by the Trustee under a Credit Facility for the payment of
     principal of and interest and any premium on the Bonds, other than moneys
     paid by the Bank pursuant to Section 4.07 hereof or drawn under a Credit
     Facility pursuant to subsection (ii) of Section 14.03 hereof or Section
     4.07 hereof;

                 (iii) All other moneys received by the Trustee under and
     pursuant to any provision of the Agreement, other than Sections 5.04, 5.08
     and 8.05 thereof, or from any other source when accompanied by directions
     by the Company that such moneys are to be paid into the Bond Fund; and

                 (iv)  All moneys required to be deposited therein under any
     other provision of this Ordinance.

     Section 5.03 Use of Moneys in Bond Fund. Except as otherwise provided in
Sections 5.05, 5.06, 5.08, 9.01, 10.10 and 11.04 hereof, moneys in the Bond Fund
shall be used solely for the payment of the principal of and interest and any
premium on the Bonds as the same shall

                                       45

<PAGE>

become due and payable on an Interest Payment Date or at maturity, upon
redemption or acceleration or otherwise. Funds for such payments of the
principal of and interest and any premium on the Bonds shall be derived from the
following sources in the order of priority indicated:

                 (i)   moneys paid into the Bond Fund pursuant to Section
     5.02(i) hereof, which shall be applied to the payment of interest on the
     Bonds;

                 (ii)  proceeds of the sale of refunding obligations and
     proceeds from the investment thereof, deposited into the Bond Fund which
     constitute Available Moneys;

                 (iii) moneys furnished by the Company to the Trustee pursuant
     to the Agreement which have been deposited into the Bond Fund and
     constitute Available Moneys (other than funds under a Credit Facility) and
     proceeds from the investment thereof;

                 (iv)  moneys paid into the Bond Fund pursuant to Section
     6.01(iii) or 6.01(iv) hereof;

                 (v)   moneys drawn by the Trustee under a Credit Facility for
     the payment of the principal of or interest or any premium on the Bonds and
     deposited into the Bond Fund;

                 (vi) moneys furnished by the Company to the Trustee pursuant to
     the Agreement and any other moneys available therefor and proceeds from the
     investment thereof;

                 (vii) In addition to amounts required to be paid into the Bond
     Fund, the Trustee shall (i) in the case of Bonds to be purchased by the
     Tender Agent on behalf of the Company pursuant to Article IV hereof, draw
     moneys under a Credit Facility in accordance with the terms thereof to the
     extent necessary to make timely payments of the purchase price of the Bonds
     pursuant to such Article IV, but only to the extent moneys are not
     available from the sources set forth in clauses (i) and (ii) of Section
     14.03(ii) hereof, and furnish said moneys to the Tender Agent and (ii) in
     connection with the purchase of Bonds by the Trustee on behalf of or for
     the account of the Bank pursuant to Section 4.07, draw moneys under such
     Credit Facility in accordance with the terms hereof and of such Credit
     Facility in amounts sufficient to pay the purchase price of the Bonds so
     purchased to the extent sufficient funds are not otherwise timely furnished
     by the Bank to the Trustee; provided, however, that the principal of,
     premium, if any, and interest on Bonds held by the Company, the Tender
     Agent or the Trustee on behalf of the Company (or any affiliate thereof),
     shall not be paid from moneys drawn under such Credit Facility.

     Section 5.04 Credit Facility.

                 (i)   A Credit Facility shall be the obligation of a Bank to
     pay to the Trustee, in accordance with the terms thereof, such amounts as
     shall be specified therein and available to be drawn thereunder for the
     timely payment of the principal of and

                                       46

<PAGE>

     interest and, if permitted by a Credit Facility, any premium on the Bonds
     (whether at their stated maturity, or upon acceleration or redemption or
     otherwise), and portions of the purchase price of Bonds corresponding to
     principal and interest thereon, and, if permitted by a Credit Facility,
     portions of the purchase price corresponding to premium on the Bonds,
     required to be made pursuant to, and in accordance with the provisions of
     this Ordinance. Such Credit Facility shall be reduced to the extent of any
     drawings thereunder and reinstated in accordance with the terms thereof.

                 (ii)  The Trustee shall draw moneys under a Credit Facility in
     accordance with the terms thereof and the terms of the Tender Agreement to
     the extent necessary to make timely payments of principal of and interest
     and any premium, if drawings thereunder shall be available to pay premium,
     on the Bonds required to be made from the Bond Fund or to enable the Tender
     Agent to pay the purchase price of Bonds purchased pursuant to Section
     14.03(ii) hereof; provided, however, that, anything herein to the contrary
     notwithstanding, in no event shall the Trustee draw moneys under such
     Credit Facility in order to make payments of principal of or interest or
     any premium on, or to enable the Tender Agent to pay the purchase price of,
     Bonds held of record by the Company (or any affiliate thereof) or held by
     the Tender Agent or the Trustee for the account of the Company or delivered
     to and held of record by, or held for the account of, the Bank pursuant to
     Section 14.05(iii) hereof if such Credit Facility prohibits by its terms a
     drawing thereunder for such purpose; provided, further, however, that the
     Trustee may draw moneys under such Credit Facility in order to make payment
     of interest on Bonds held of record by the Company (or any affiliate
     thereof), the Bank or by the Tender Agent or the Trustee for the account of
     the Company or the Bank pursuant to Section 14.05(iii) hereof if such Bond
     was not so held by or for the account of the Company or the Bank on the
     immediately preceding Record Date. Upon any reduction in the aggregate
     principal amount of Bonds Outstanding, the Trustee shall request the Bank
     to permanently reduce the amounts that may be drawn under the applicable
     Credit Facility to those amounts which are then required pursuant to
     Section 6.08 of the Agreement. For extensions of the term of a Credit
     Facility, the Trustee shall surrender the applicable Credit Facility to the
     Bank (if so directed by the Bank) in exchange for a Credit Facility of the
     Bank conforming in all material respects to the applicable Credit Facility
     except that the expiration date shall be extended. If at any time there
     shall cease to be any Bonds Outstanding hereunder, the Trustee shall
     promptly surrender the applicable Credit Facility to the Bank, in
     accordance with the terms of the applicable Credit Facility, for
     cancellation.

                 (iii) If at any time there shall have been delivered to the
     Trustee, all as described in and in accordance with Section 6.08 of the
     Agreement, (i) a notice of the Company, (ii) the required opinion of Bond
     Counsel and (iii) a Credit Facility, if any, described in such notice, then
     the Trustee shall accept such Credit Facility, if any, and comply with the
     direction of the Company, if any, contained in such notice. If the delivery
     of such Credit Facility does not result in a mandatory tender for purchase
     of all Bonds pursuant to Section 4.01(b)(iii) hereof, the Trustee shall
     give notice by first-class mail of the delivery of such Credit Facility to
     the Owners of the Bonds not less than 20 days prior to the date of the
     expiration or termination of a Credit Facility then in effect. Such notice
     shall state that the Company has caused to be provided the new Credit

                                       47

<PAGE>

     Facility, shall describe the new Credit Facility (including. its effective
     date and scheduled expiration date) and shall state that the Company has
     delivered written evidence from Moody's, if the Bonds are then rated by
     Moody's and from S&P, if the Bonds are then rated by S&P, that neither
     Moody's nor S&P will reduce or withdraw its rating then in effect with
     respect to the Bonds as a result of the proposed delivery of the new Credit
     Facility.

     Section 5.05 Custody of Bond Fund; Withdrawal of Moneys. The Bond Fund
shall be in the custody of the Trustee but in the name of the City and the City
hereby irrevocably authorizes and directs the Trustee to withdraw from the Bond
Fund and furnish to the Paying Agent funds sufficient to pay the principal of
and interest and any premium on the Bonds as the same shall become due and
payable, and to withdraw from the Bond Fund funds sufficient to pay any other
amounts payable therefrom as the same shall become due and payable. If and to
the extent that moneys remain in the Bond Fund after payment of such principal,
interest and premium, if any, and are not required to be held therein pursuant
to Section 5.06, such moneys shall be paid to the Bank, to the extent that there
shall then be amounts due and payable to the Bank pursuant to the Reimbursement
Agreement and the Bank has notified the Trustee thereof.

     Section 5.06 Bonds Not Presented for Payment. In the event any Bond shall
not be presented for payment when the principal thereof (or any portion of such
principal) becomes due, either at maturity or at the date fixed for redemption
thereof or otherwise or in the event that any interest payment remains
unclaimed, if moneys sufficient to pay such Bonds or portions thereof or such
interest are held by the Paying Agent for the benefit of the Owners thereof, the
Paying Agent shall segregate and hold such moneys in trust uninvested without
liability for interest thereon, for the benefit of Owners of such Bonds, who
shall, except as provided in the following paragraph, thereafter be restricted
exclusively to such fund or funds for the satisfaction of any claim of whatever
nature on their part under this Ordinance or relating to said Bonds.

         Any moneys which the Paying Agent shall segregate and hold in trust for
the payment of the principal of or interest or any premium on any Bond and
remaining unclaimed for three years after such principal, interest or any
premium shall have become due and payable shall be paid to the extent legally
permissible (i) if, at the time, there shall be amounts due and payable to the
Bank pursuant to the Reimbursement Agreement, to the Bank, or (ii) if no such
amounts shall be due and payable, to the Company, with notice to the Trustee of
such action. For purposes of this Ordinance, the Paying Agent may conclusively
assume that no such indebtedness, liability or obligation is owing to the Bank
unless the Bank shall otherwise give written notice to the Paying Agent. After
the payment of such unclaimed moneys to the Bank or the Company, the Owner of
such Bond shall look only to the Company for the payment thereof.

     Section 5.07 Moneys Held in Trust. All moneys required to be deposited with
or paid to the Trustee for deposit into the Bond Fund under any provision hereof
and all moneys withdrawn from the Bond Fund and held by the Trustee or the
Paying Agent shall be held by the Trustee or the Paying Agent, as the case may
be, in trust, and such moneys (other than moneys held pursuant to Section 5.06
hereof) shall, while so held, constitute part of the Trust Estate and be subject
to the lien hereof for the benefit of the Owners.

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<PAGE>

     Section 5.08 Payment to the Bank and to the Company. Any moneys remaining
in the Bond Fund after the right, title and interest of the Trustee in and to
the Trust Estate and all covenants, agreements and other obligations of the City
under this Ordinance shall have ceased, terminated and become void and shall
have been satisfied and discharged in accordance with Article VIII hereof, shall
be paid (a) if, at that time, there shall be amounts due and payable to the Bank
pursuant to the Reimbursement Agreement, if any, and the Bank has notified the
Trustee thereof, to the Bank, or (b) if no such amounts shall be so due and
payable, to the Company.

                               (End of Article V)

                                   ARTICLE VI

                               CONSTRUCTION FUND;
                          APPLICATION OF BOND PROCEEDS

     Section 6.01 Construction Fund.

                 (i)   There is hereby created by the City and ordered
     established with the Trustee a trust fund in the name of the City to be
     designated "Pollution Control Refunding Revenue Bonds, 2002 Series A (El
     Paso Electric Company, Four Corners Project) Construction Fund".

                 (ii)  The Trustee, in its capacity as Prior Trustee, shall
     transfer to the Construction Fund all amounts, together with any investment
     income thereon, on deposit in the 1994 Construction Fund.

                 (iii) Moneys in the Construction Fund shall be expended, and
     the Trustee is hereby authorized and directed to make such expenditures in
     accordance with the provisions of the Agreement and particularly Sections
     4.03 and 4.04 thereof.

                 (iv)  When the Facilities are completed in their entirety and
     those portions of the Facilities which reduce, abate or prevent pollution
     are ready to be placed in service and operated as pollution control
     facilities at substantially the level for which they were designed, within
     the meaning of United States Treasury Regulations Section
     1.103-8(a)(5)(ii), the Company shall so notify the Trustee by a duplicate
     original of the certificate executed by an Authorized Company
     Representative and delivered to the City in accordance with the Agreement.
     Such certificate shall establish the Completion Date and shall state that,
     except for any amount retained by the Trustee at the direction of the
     Company for any Cost of Construction not then due and payable or the
     liability for payment of which is being contested or disputed by the
     Company, (i) acquiring, constructing, reconstructing, improving,
     maintaining, equipping or furnishing the Facilities has been completed and
     all the Cost of Construction thereof has been paid, (ii) acquiring,
     constructing, reconstructing, improving, maintaining, equipping or
     furnishing all other facilities necessary in connection with the Facilities
     has been completed and all labor, services, materials and supplies used
     therefor have been paid for, and (iii) the Facilities are suitable for
     operation for pollution control purposes. Notwithstanding the

                                       49

<PAGE>

         foregoing, such certificate may state that it is given without
         prejudice to any rights against third parties which exist at the date
         thereof or which may subsequently come into being.

                           As soon as practicable and in any event within sixty
         (60) days from the date of said certificate, any balance remaining in
         the Construction Fund (other than amounts retained by the Trustee
         referred to in the second sentence of subsection (iv) of this section)
         shall without further authorization be deposited in the Bond Fund by
         the Trustee with advice to the City and to the Company of such action.
         From and after the Completion Date such balance shall be held either
         uninvested or invested according to the terms of Section 7.01 hereof
         and applied to pay principal of the Bonds at the earlier of the
         maturity of such Bonds or redemption on the first date on which Bonds
         may be redeemed by their terms at the principal amount thereof, without
         premium, and for which timely notice of redemption may be given under
         this Ordinance upon receipt from the Company of moneys for the payment
         of any interest to become due on such Bonds to be redeemed on the date
         fixed for redemption thereof, unless the Trustee and the City shall
         receive prior to such redemption date the opinion of Bond Counsel to
         the effect that failure so to apply such moneys will not adversely
         affect the exemption of interest on the Bonds from Federal income
         taxes, in which case such moneys shall be applied to the payment of
         interest on the Bonds or the payment of principal or premium, if any,
         or any combination thereof, on Bonds upon redemption or purchase, as
         the Company shall direct and as such opinion shall indicate will not
         adversely affect the exemption of interest on the Bonds from Federal
         income taxes. From time to time as the proper disposition of the
         amounts retained by the Trustee referred to in the second sentence of
         subsection (iv) of this Section shall be determined, to the extent that
         such amounts are not paid out by the Trustee pursuant to Section
         6.01(iii) hereof, the Company shall so notify the Trustee and the City
         by one or more certificates as aforesaid and amounts from time to time
         no longer to be so retained by the Trustee shall be so deposited in the
         Bond Fund and applied by the Trustee as aforesaid.

                (v) If the principal of the Bonds shall have become due and
         payable pursuant to Section 10.01 of this Ordinance, upon the obtaining
         or entering of a judgment or decree for the payment of the moneys due
         as hereinafter in Article X provided, any balance remaining in the
         Construction Fund shall without further authorization be deposited in
         the Bond Fund by the Trustee with advice to the City and to the Company
         of such action.

                (vi) In the event the Company shall be required under Section
         9.03 of the Agreement, or in the event the Company elects under Section
         9.01(a) of the Agreement, to prepay the unpaid balance of the purchase
         price of the Project, the Trustee shall deposit in the Bond Fund, on
         the date on which such prepayment is made, all amounts remaining in the
         Construction Fund.

                (vii) In paying any requisition in accordance with this Section
         6.01 -the Trustee may rely as to the completeness and accuracy of all
         statements in such requisition signed by an Authorized Company
         Representative, and the Company shall indemnify and save harmless the
         Trustee from any liability incurred in connection with any requisition

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<PAGE>

         so signed by an Authorized Company Representative. If requested by the
         City, a copy of each requisition submitted to the Trustee for payment
         in accordance with this Section shall be promptly provided by the
         Trustee to the City.

                (viii) Amounts in the Construction Fund may be invested at the
         direction of the Company in Investment Securities subject to the
         limitations in Section 7.01 hereof.

                (ix)   All moneys required to be deposited with or paid to the
         Trustee for deposit into the Construction Fund under any provision
         hereof and all moneys withdrawn from the Construction Fund and held by
         the Trustee or the Paying Agent shall be held by the Trustee or the
         Paying Agent, as the case may be, in trust, and such moneys shall,
         while so held, constitute part of the Trust Estate and be subject to
         the lien hereof for the benefit of the Owners.

         Section 6.02 Application of Proceeds. The proceeds from the issuance
and initial sale of the Bonds shall be deposited or paid as follows:

                (i)    There shall be deposited in the Bond Fund any accrued
         interest and purchase premium, if any, paid by the initial purchasers
         of the Bonds;

                (ii)   The balance of such proceeds shall be immediately paid to
         the Trustee to prepay indebtedness owed by the Company to the City
         under the Agreement and in turn on the date of the initial issuance of
         the Bonds to be used by the City to pay principal of 1994 Bonds, on
         redemption thereof on such date under the 1994 Ordinance.

                               (End of Article VI)

                                   ARTICLE VII

                                   INVESTMENTS

         Section 7.01 Investments. The moneys in the Bond Fund (other than the
moneys described in Sections 4.06(ii), 5.04(ii) and 5.06 hereof, which may not
be invested) and the Construction Fund shall, but only at the direction of the
Company, be invested and reinvested in Investment Securities to the extent not
prohibited by applicable law provided, however, that amounts on deposit in the
Construction Fund may only be invested and reinvested in Investment Securities
of which either (a) the income is exempt from federal taxation pursuant to
Section 103(a) of the Code and which securities do not include "specified
private equity bonds" within the meaning of Section 57(a)(5)(C) of the Code or
(b) the yield of each such Investment Security in which moneys in the
Construction Fund are invested or reinvested at all times is no greater than
that borne by each of the Bonds from time to time. The income from, and any gain
or loss from, any investment shall be credited or charged to the Fund from which
such investment was made. Investment Securities will be registered in the name
of the Trustee or its nominee and held by or under the control of the Trustee.
Subject to the further provisions of this Section 7.01, such investment shall be
made, and such agreements entered into, by the Trustee as directed and
designated by the Company in a certificate of, or telephonic advice promptly
confirmed by a certificate of, an Authorized Company Representative. As and when
any amounts thus invested (including investments of Available Moneys) may be
needed for disbursements from the Bond

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<PAGE>

Fund or the Construction Fund, the Trustee shall cause a sufficient amount of
such investments to be sold or otherwise converted into cash to the credit of
such Fund. As long as no Event of Default (as defined in Section 10.01 hereof)
shall have occurred and be continuing, the Company shall have the right to
designate the investments to be sold and to otherwise direct the Trustee in the
sale or conversion to cash of the investments made with the moneys in the Bond
Fund or the Construction Fund; provided that, the Trustee shall be entitled to
conclusively assume the absence of any such Event of Default unless it has
notice thereof within the meaning of Section 11.05 hereof. The Trustee shall
have no responsibility under this Ordinance with respect to the compliance by
the Company or the City with any covenant herein or in the Agreement regarding
the yield on, or tax-exempt nature of investments made in accordance with this
Section 7.01, other than to use its best efforts to comply with instructions
from the Company or the City regarding such investments and the Trustee shall
bear no responsibility for losses incurred from such investments or the sale
thereof. Moneys held by the Tender Agent in the Purchase Fund shall not be
invested.

                              (End of Article VII)

                                  ARTICLE VIII

                                GENERAL COVENANTS

         Section 8.01 Limited Obligation; Payment of Principal and Interest.

                (i)  Each and every covenant herein made, including all
         covenants made in the various Sections of this Article VIII, is
         predicated upon the condition that any obligation for the payment of
         money incurred by the City shall not be the general obligation of the
         City within the meaning of Article 9, Sections 12 and 13 of the
         Constitution of New Mexico, and shall never constitute an indebtedness
         of the City within the meaning of any State constitutional provision or
         statutory limitation, and shall never constitute or give rise to any
         pecuniary liability of the City or a charge against its general credit
         or taxing powers, but shall be payable by the City solely from the
         Receipts and Revenues from the Agreement, which are required to be set
         apart and transferred to the Bond Fund, and which, along with the
         balance of the Trust Estate, are hereby specifically pledged to the
         payment thereof in the manner and to the extent specified in this
         Ordinance, and nothing in the Bonds or in this Ordinance shall be
         considered as pledging or obligating any other funds or assets of the
         City.

                (ii) The City will in the manner provided herein and in the
Bonds, according to the true intent and meaning thereof, promptly cause to be
paid, solely from the sources stated herein, at the place and on the dates
provided herein, the principal of and premium, if any, and interest on every
Bond issued under this Ordinance.

         Section 8.02 Performance of Agreements; Authority. The City will
faithfully perform at all times any and all covenants, undertakings,
stipulations and provisions contained in this Ordinance, in any and every Bond
executed, authenticated and delivered hereunder, and in all proceedings
pertaining thereto. The City represents that it has the authority under the
Constitution and laws of the State of New Mexico to issue the Bonds authorized
hereby, to enter

                                       52

<PAGE>

into the Agreement, and to pledge to the Trustee the Receipts and Revenues from
the Agreement and to pledge and assign to the Trustee all or any part of the
City's right, title and interest under the Agreement pledged and assigned
hereunder, and that the Bonds in the hands of the Owners thereof are and will be
valid and enforceable obligations of the City according to the import thereof.

     Section 8.03 Maintenance of Corporate Existence; Compliance with Laws. The
City will at all times maintain its corporate existence or assure the assumption
of its obligations under this Ordinance by any public body succeeding to its
powers under the Act, and it will use its best efforts to maintain, preserve and
renew all the rights and powers provided to it by the Act; and it will comply
with all valid acts, rules, regulations, orders and directions of any
legislative, executive, administrative or judicial body applicable to the
Agreement.

     Section 8.04 Enforcement of Company's Obligations under the Agreement. So
long as any of the Bonds are outstanding, upon receipt of written notification
from the Trustee, the City will, in the manner provided herein and giving due
recognition to the role of the Trustee hereunder, enforce the obligation of the
Company to pay, or cause to be paid, all the payments and other costs and
charges payable by the Company under the Agreement, provided, however, that the
City shall not be required to spend any of its own funds in any such
enforcement. The City will not enter into any agreement with the Company
amending the Agreement without the prior written consent of the Trustee and
compliance with Sections 13.06 and 13.07 hereof.

     Section 8.05 Further Assurances. The City will, upon the reasonable request
of the Trustee, from time to time execute and deliver such further instruments
and take such further action as may be reasonable and as may be required to
carry out the purpose of this Ordinance; provided, however, that no such
instruments or actions shall give rise to any pecuniary liability of the City or
pledge the credit or taxing power of the State of New Mexico, the City or any
other political subdivision of said State.

     Section 8.06 No Disposition or Encumbrance of City's Interests. Except as
permitted by this Ordinance, the City will not sell, lease, pledge, assign or
otherwise dispose of or encumber its interest in the Receipts and Revenues from
the Agreement or its rights and interest under the Agreement pledged and
assigned hereunder and will promptly pay or cause to be discharged or make
adequate provision to satisfy and discharge any lien or charge on any part
thereof not permitted by this Ordinance.

     Section 8.07 Trustee's Access to Books Relating to Facilities. All books
and documents in the possession of the City relating to the Facilities and the
moneys, revenues and receipts derived from the Facilities shall at all
reasonable times be open to inspection by such accountants or other agencies as
the Trustee may from time to time designate. The Trustee shall permit the
Company or its designee reasonable access to records relating to the investment
of the proceeds of the Bonds or any other records relating to the Bonds
necessary to assure compliance with Section 148 of the Code.

     Section 8.08 Filing of Financing Statements. Appropriate financing
statements, naming the-Trustee as secured party with respect to the Receipts and
Revenues from the Agreement and the other moneys pledged by the City under this
Ordinance for the payment of the principal of

                                       53

<PAGE>

and premium, if any, and interest on the Bonds, and as pledgee and assignee of
certain of the City's rights and interest under the Agreement, shall be duly
filed and recorded in the appropriate state and county offices as required by
the provisions of the Uniform Commercial Code or other similar law as adopted in
the State of New Mexico, the state in which lies the Corporate Trust Office of
the Trustee and any other applicable jurisdiction, as from time to time amended.
The Trustee will file and record, with such assistance as necessary from the
City and the Company, such necessary continuation statements from time to time
as may be required pursuant to the provisions of said Uniform Commercial Code or
other similar law to protect the interest of the Trustee.

     Section 8.09 Tax Covenant. The City covenants for the benefit of the
purchasers of the Bonds that it will not take any action or fail to take any
action reasonably within its control which would, under the Code, Regulations of
the Department of the Treasury of the United States of America (including
Temporary Regulations and Proposed Regulations) under the Code applicable to the
Bonds, rulings and court decisions, cause the interest payable on the Bonds to
be includable in the gross income of the holders thereof for Federal income tax
purposes (other than a "substantial user" of the Facilities or a "related
person" as those terms are used in Section 147(a) of the Code). Pursuant to such
covenant, the City obligates itself to comply throughout the term of the issue
of the Bonds with the requirements of Section 148 of the Code and any
regulations promulgated thereunder.

             The Company by its execution of the Agreement has covenanted to
restrict the investment of money in the funds created under this Ordinance in
such manner and to such extent, if any, as may be necessary, so that the Bonds
will not constitute "arbitrage bonds" under Section 148 of the Code.

     Section 8.10 Notices by Trustee. The Trustee shall give the same notices to
the City that it is required to give to the Company, and to the Company that it
is required to give to the City, pursuant to the terms of this Ordinance and,
additionally, shall give written or Electronic notice to the City, the Company
and the Remarketing Agent of any prior redemption pursuant to Section 4.01
hereof.

     Section 8.11 Ratification of Prior Action. All action (not inconsistent
with the provisions of this Ordinance) heretofore taken by the City Council and
the officers of the City directed toward the refunding of the 1994 Bonds and
sale and issuance of the Bonds is ratified, approved and confirmed.

     Section 8.12 No Transfer of Credit Facility. Except as provided in Section
5.04 hereof, the Trustee shall not sell, assign or transfer a Credit Facility
except to a successor trustee under this Ordinance and as contemplated by
Section 11.16 hereof.

                              (End of Article VIII)

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<PAGE>

                                   ARTICLE IX

                                   DEFEASANCE

         Section 9.01 Defeasance. If the City shall pay or cause to be paid with
Available Moneys to the Owner of any Outstanding Bond secured hereby the
principal of and interest and any premium due and payable, and thereafter to
become due and payable, on such Bond, or any portion of such Bond in an
Authorized Denomination, such Bond or portion thereof shall cease to be entitled
to any lien, benefit or security under this Ordinance (except as set forth in
Section 9.02 hereof). If the City shall pay or cause to be paid with Available
Moneys to the owners of all the Bonds the principal thereof and interest and any
premium due and payable and thereafter to become due and payable thereon, and
shall pay or cause to be paid all other sums payable hereunder by the City, or
payable under the Agreement by the Company, then the right, title and interest
of the Trustee in and to the Trust Estate shall thereupon cease, terminate and
become void. In such event, the Trustee shall assign, transfer and turn over the
Trust Estate, including, without limitation, any surplus in the Bond Fund and
any balance remaining in any other fund created under this Ordinance, (i) if, at
that time, there shall be amounts due and payable to the Bank pursuant to the
Reimbursement Agreement and the Bank has notified the Trustee thereof, to the
Bank, or (ii) if no such amounts shall be so due and payable, to the Company.

                All Outstanding Bonds shall, prior to the maturity or redemption
date thereof, be deemed to have been paid within the meaning and with the effect
expressed in this Article IX (except as set forth in Section 9.02 hereof) when

                  (i)  in the event the Bonds are to be redeemed, the Trustee
         shall have given, or the Company shall have given to the Trustee in
         form satisfactory to the Trustee irrevocable instruction to give, on a
         date in accordance with the provisions of Article IV hereof, notice of
         redemption of the Bonds,

                  (ii) all Outstanding Bonds then bear interest at a Long-Term
         Interest Rate during a Long-Term Interest Rate Period ending on or
         after the redemption date or on the day immediately preceding the
         Maturity Date, as the case may be, or at Bond Interest Term Rates for
         Bond Interest Terms which end on the redemption date or the day
         immediately preceding the Maturity Date, as the case may be, and there
         shall have been deposited with the Trustee either moneys in an amount
         which shall be sufficient, or fixed rate Government Obligations (i)
         which shall not contain provisions permitting the redemption or
         prepayment thereof at the option of the issuer thereof, (ii) which
         mature no later than the earlier of (A) the date fixed for the
         redemption of the Bonds and (B) the Maturity Date, and (iii) the
         principal of and the interest on which, when due, and without any
         regard to reinvestment thereof, will provide moneys which, together
         with the moneys, if any, deposited with or held by the Trustee, shall
         be sufficient, based on the written opinion of a firm of certified
         public accountants acceptable to the Trustee, delivered to the Trustee,
         to pay when due the principal of and interest and any premium due and
         to become due on the Bonds on and prior to the redemption date or
         Maturity Date, as the case may be; provided, however, that such moneys
         shall constitute Available Moneys and that such Government Obligations
         shall have been purchased with Available Moneys, and

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                  (iii) in the event the Bonds do not mature and are not to be
     redeemed within the next succeeding 60 days, the Company shall have given
     the Trustee, in form satisfactory to it, irrevocable instructions to give,
     as soon as practicable in the same manner as a notice of redemption is
     given pursuant to Section 4.03 hereof, a notice to the Owners that the
     deposit required by clause (ii) above has been made with the Trustee and
     that the Bonds are deemed to have been paid in accordance with this Article
     IX and stating the maturity or redemption date upon which moneys are to be
     available for the payment of the principal of and interest and any premium
     on the Bonds.

               Neither the Government obligations nor moneys deposited with the
Trustee pursuant to this Article IX nor principal or interest payments on any
such Government Obligations shall be withdrawn or used for any purpose other
than, and shall be held in trust for, the payment of the principal of and
interest and any premium on the Bonds; provided that any cash received from such
principal or interest payments on such Government Obligations deposited with the
Trustee, if not then needed for such purpose, shall be invested, to the extent
practicable, at the direction of the Company, in Government Obligations of the
type and tenor described in clause (b) of the immediately preceding paragraph,
and interest earned from such reinvestment shall be paid as received by the
Trustee (i) if, at that time, there shall be amounts due and payable to the Bank
pursuant to the Reimbursement Agreement and the Bank has notified the Trustee
thereof, to the Bank, or (ii) if no such amounts shall be so due and payable, to
the Company.

     Section 9.02 Survival of Certain Provisions. Notwithstanding the foregoing,
any provisions of this Ordinance which relate to the payment of the principal of
or any premium on Bonds at maturity or pursuant to redemption, as the case may
be, interest payments and dates thereof, exchange, transfer and registration of
Bonds, replacement of mutilated, destroyed, lost or stolen Bonds, the
safekeeping and cancellation of Bonds, non-presentment of Bonds, the holding of
moneys in trust and repayments to the Bank or the Company from the Bond Fund,
the Construction Fund or the Purchase Fund and the duties of the Trustee, the
Registrar, the Remarketing Agent and the Paying Agent in connection with all of
the foregoing, shall remain in effect and be binding upon the City, the Trustee,
the Remarketing Agent, the Tender Agent, the Registrar, the Paying Agent and
Owners notwithstanding the release and discharge of this Ordinance. The
provisions of this Section shall survive the release, discharge and satisfaction
of this Ordinance provided, however, that the provisions of Section 2.01 hereof,
permitting adjustments in the Interest Rate Period with respect to the Bonds,
shall not be in effect after the release and discharge of this Ordinance.

                               (End of Article IX)

                                    ARTICLE X

                              DEFAULTS AND REMEDIES

     Section 10.01 Events of Default.

             (a) Each of the following events shall constitute and is referred
to in this Ordinance as an "Event of Default":

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<PAGE>

                (i)   a failure to pay the principal of or any premium on any of
         the Bonds when the same shall become due and payable at maturity or
         upon redemption;

                (ii)  a failure to pay an installment of interest on any of the
         Bonds after such interest has become due and payable;

                (iii) a failure to pay an amount due pursuant to Section 4.08
         hereof after such payment has become due and payable;

                (iv)  an "Event of Default" as such term is defined in Section
         8.01 of the Agreement;

                (v)   prior to termination or expiration of a Credit Facility,
         receipt by the Trustee, prior to the date set forth in a Credit
         Facility for automatic reinstatement of interest following a drawing
         under a Credit Facility to pay accrued interest on the Bonds, of notice
         from the Bank in accordance with a Credit Facility that a Credit
         Facility will not be reinstated in respect of such interest;

                (vi)  prior to termination or expiration of a Credit Facility
         and payment in full of all amounts due under the Reimbursement
         Agreement, receipt by the Trustee of written notice from the Bank that
         an "Event of Default" under the Reimbursement Agreement has occurred
         and is continuing; or

                (vii) a failure by the City to observe and perform any covenant,
         condition, agreement or provision (other than as specified in clauses
         (i), (ii) and (iii) of paragraph (a) of this Section 10.01) contained
         in the Bonds or in this Ordinance on the part of the City to be
         observed or performed, which failure shall continue for a period of 60
         days after written notice, specifying such failure and requesting that
         it be remedied, shall have been given to the City and the Company by
         the Trustee, which may give such notice in its discretion and shall
         give such notice at the written request of the Owners of a majority in
         principal amount of the Bonds then Outstanding, unless the Trustee or
         the Owners of Bonds then Outstanding in principal amount not less than
         the principal amount of Bonds the Owners of which requested such
         notice, as the case may be, shall agree in writing to an extension of
         such period prior to its expiration; provided, however, that the
         Trustee, or the Trustee and the Owners of such principal amount of
         Bonds, as the case may be, shall be deemed to have agreed to an
         extension of such period if corrective action is initiated by the City,
         or the Company on behalf of the City, within such period and is being
         diligently pursued.

            (b) If:

                (i) (A) a Credit Facility is then in effect and (B) an Event of
         Default described in clauses (i), (ii) or (iii) of paragraph (a) of
         this Section 10.01 shall occur and be continuing, the Trustee may, and
         at the written request of the owners of a majority in principal amount
         of Bonds then Outstanding, the Trustee shall, or

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<PAGE>

                (ii) (A) a Credit Facility is then in effect and (B) an Event of
         Default described in clause (iv) of paragraph (a) of this Section 10.01
         shall occur and be continuing, at the written request of the Bank, the
         Trustee shall, or

                (iii) (A) a Credit Facility is then in effect and (B) an Event
         of Default described in clauses (v) or (vi) of paragraph (a) of this
         Section 10.01 shall occur and be continuing, the Trustee shall, or

                (iv) (A) a Credit Facility is not then in effect or if the Bank
         shall have wrongfully failed to honor a drawing under such Credit
         Facility then in effect and (B) an Event of Default described in
         clauses (i), (ii), (iii), (iv), (v), or (vi) of paragraph (a) of this
         Section 10.01 shall occur and be continuing, the Trustee may, and at
         the written request of the Owners of a majority in principal amount of
         Bonds then Outstanding, the Trustee shall, subject to the Bank's right
         to purchase the Bonds pursuant to Section 4.07 in the circumstances set
         forth therein, by written notice to the City, the Bank, and the
         Company, declare the Bonds to be immediately due and payable, whereupon
         they shall, without further action, become and be immediately due and
         payable, anything in this Ordinance or in the Bonds to the contrary
         notwithstanding, and the Trustee shall give notice thereof to the
         Tender Agent, the Remarketing Agent and the Owners and shall
         immediately (and in no event later than five (5) days thereafter) draw
         under a Credit Facility to the extent provided in Section 5.04 hereof.
         If the principal of all of the Bonds shall have been declared due and
         payable while a Credit Facility shall be in effect, interest on such
         Bonds shall cease to accrue on the date of the drawing on a Credit
         Facility with respect to such declaration unless such drawing is
         pursuant to the Bank's purchase of the Bonds in accordance with Section
         4.07 hereof. The Trustee shall not be entitled to accelerate the
         principal of the Bonds upon the occurrence of an Event of Default
         described in clause (vii) of paragraph (a) of this Section 10.01.

            (c) The provisions of paragraph (b), however, are subject, when no
Credit Facility shall be in effect, to the condition that if, after the
principal of the Bonds shall have been so declared to be due and payable, and
before any judgment or decree-for the payment of the moneys due shall have been
obtained or entered as hereinafter provided, the City shall cause to be
deposited with the Trustee a sum sufficient to pay all matured installments of
interest upon all Bonds, premium, if any, and the principal of any and all Bonds
which shall have become due otherwise than by reason of such declaration (with
interest upon such principal and, to the extent permissible by law, on overdue
installments of interest, at the rate per annum borne by the Bonds on the date
of such declaration) and such amounts as shall be sufficient to cover reasonable
compensation and reimbursement of expenses payable to the Trustee, and all
Events of Default hereunder other than nonpayment of the principal of Bonds
which shall have become due by said declaration shall have been remedied or
waived, then, in every such case, such Event of Default shall be deemed waived
and such declaration and its consequences rescinded and annulled, and the
Trustee shall promptly give written or Electronic notice of such waiver,
rescission and annulment to the City, the Company, the Remarketing Agent, and,
if notice of the acceleration of the Bonds shall have been given to the Owners,
shall give notice thereof to the Owners; but no such waiver, rescission and
annulment shall extend to or affect any subsequent Event of Default or impair
any right or remedy consequent thereon.

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<PAGE>

             (d) The provisions of paragraph (b) are, further, subject to the
condition that (i) if an Event of Default described in clauses (v) or (vi) of
paragraph (a) shall have occurred and the Trustee shall thereafter have received
written notice from the Bank that the notice of the Bank which caused the
occurrence of such Event of Default shall have been withdrawn and (ii) if any
drawing under a Credit Facility shall have been made and a Credit Facility shall
have been reinstated as to principal to an amount equal to the outstanding
principal amount of the Bonds and as to interest to an amount which at least
equals, depending on the type of Interest Rate Period then in effect, the
coverage required by Section 2.01(c)(iv) hereof to permit such Interest Rate
Period to go into effect, and the Trustee shall have received written notice
from the Bank of such reinstatement, then such Event of Default shall be waived,
and the consequences of such Event of Default rescinded and annulled and the
Trustee shall promptly give written notice of such waiver, rescission and
annulment to the City, the Company, the Bank, the Tender Agent, the Remarketing
Agent, and, if notice of the acceleration of the Bonds shall have been given to
the Owners, shall give notice thereof to the owners; but no such waiver,
rescission and annulment shall extend to or affect any subsequent Event of
Default or impair any right or remedy consequent thereon.

         Section 10.02 Remedies. In addition to the rights conferred, or
obligation imposed, upon the Trustee under Section 10.01 hereof to accelerate
the principal of the Bonds upon the occurrence and continuance of any Event of
Default, then and in every such case the Trustee in its discretion may, and upon
the written request of the Bank or the Owners of a majority in principal amount
of the Bonds then Outstanding and receipt of indemnity to its satisfaction
shall, in its own name and as the Trustee of an express trust:

                (i)   by mandamus, or other suit, action or proceeding at law or
         in equity, enforce all rights of the Owners of the Bonds, and require
         the City, the Bank, and the Company to carry out any agreements with or
         for the benefit of the Owners and to perform their duties under the
         Act, the Agreement, a Credit Facility and this Ordinance;

                (ii)  bring suit upon the Bonds or a Credit Facility; or

                (iii) by action or suit in equity enjoin any acts or things
         which may be unlawful or in violation of the rights of the Owners of
         the Bonds.

         Section 10.03 Restoration to Former Position. In the event that any
proceeding taken by the Trustee to enforce any right under this Ordinance shall
have been discontinued or abandoned for any reason, or shall have been
determined adversely to the Trustee, then and in every case the City, the
Trustee and the Owners of the Bonds shall be restored to their former positions
and rights hereunder, respectively, and all rights, remedies and powers of the
Trustee shall continue as though no such proceeding had been taken.

         Section 10.04 Owner's Right to Direct Proceedings. Subject to the
provisions of Section 4.07 hereof relating to the rights of the Bank in the
circumstances set forth as described therein, anything in this Ordinance to the
contrary notwithstanding, the owners of a majority in principal amount of the
Bonds then Outstanding hereunder shall have the right, by an instrument in
writing executed and delivered to the Trustee, to direct the time, method and
place of conducting all

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<PAGE>

remedial proceedings available to the Trustee under this Ordinance or exercising
any trust or power conferred on the Trustee by this Ordinance.

     Section 10.05 Limitation on Owners' Right to Institute Proceedings. No
owner shall have any right to institute any suit, action or proceedings in
equity or at law for the execution of any trust or power hereunder, or any other
remedy hereunder or on said Bonds, unless (i) such Owner previously shall have
given to the Trustee. written notice of an Event of Default as hereinabove
provided, (ii) the owners of a majority in principal amount of the Bonds then
Outstanding shall have made written request of the Trustee so to do, after the
right to institute said suit, action or proceeding shall have accrued, and shall
have afforded the Trustee a reasonable opportunity to proceed to institute the
same in either its or their name, (iii) there also shall have been offered to
the Trustee security and indemnity satisfactory to it against the costs,
expenses and liabilities to be incurred therein or thereby, and (iv) the Trustee
shall not have complied with such request within a reasonable time after such
notice, request and offer of indemnity; and such notification, request and offer
of indemnity are hereby declared in every such case, at the option of the
Trustee, to be conditions precedent to the institution of said suit, action or
proceeding; it being understood and intended that no one or more of the Owners
shall have any right in any manner whatever by his or their action to affect,
disturb or prejudice the security of this Ordinance, or to enforce any right
hereunder or under the Bonds, except in the manner herein provided, and that all
suits, actions and proceedings at law or in equity shall be instituted, had and
maintained in the manner herein provided and for the equal benefit of all
Owners.

     Section 10.06 No Impairment of Right to Enforce Payment. Notwithstanding
any other provision in this Ordinance, the right of any Owner to receive payment
of the principal of and interest and any premium on such Bond, on or after the
respective due dates expressed therein or applicable redemption dates, or to
institute suit for the enforcement of any such payment on or after such
respective date, shall not be impaired or affected without the consent of such
Owner.

     Section 10.07 Proceeding by Trustee Without Possession of Bonds. All rights
of action under this Ordinance or under any of the Bonds secured hereby which
are enforceable by the Trustee may be enforced by it without the possession of
any of the Bonds or the production thereof at the trial or other proceedings
relative thereto. Any such suit, action or proceeding instituted by the Trustee
shall be brought in its name for the equal and ratable benefit of the Owners
subject to the provisions of this Ordinance.

     Section 10.08 No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Trustee, the Bank or to the Owners of the Bonds is intended to
be exclusive of any other remedy or remedies, and each and every such remedy
shall be cumulative, and shall be in addition to every other remedy given
hereunder or under the Agreement, or now or hereafter existing at lay or in
equity or by statute.

     Section 10.09 No Waiver of Remedies. No delay or omission of the Trustee,
the Bank or of any Owner of a Bond to exercise any right or power accruing upon
any default shall impair any such right or power accruing upon any default or
shall be construed to be a waiver of any such default, or an acquiescence
therein. Every power and remedy given by this Article X to the

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Trustee, the Bank and to the Owners of the Bonds, respectively, may be exercised
from time to time as often as may be deemed expedient.

     Section 10.10 Application of Moneys. Any moneys received by the Trustee, by
any receiver or by any Owner of a Bond pursuant to any right given or action
taken under the provisions of this Article X (other than moneys received by the
Trustee in consequence of the exercise by the Bank of its right to purchase the
Bonds pursuant to Section 4.07) or under the provisions of the Agreement after
payment of the costs and expenses of the proceedings resulting in the collection
of such moneys, including any amounts due to the Trustee pursuant to Section
11.04 hereof and under the Agreement (except that proceeds of a drawing under a
Credit Facility and any moneys held pursuant to Section 5.06 hereof may not be
so used), shall be deposited in the Bond Fund and all moneys so deposited in the
Bond Fund during the continuance of an Event of Default (other than moneys for
the payment of Bonds which had matured or otherwise become payable prior to such
Event of Default or for the payment of interest due prior to such Event of
Default) shall be applied as follows:

                (i)  Unless the principal of all the Bonds shall have been
         declared due and payable, all such moneys shall be applied (i) first,
         to the payment to the persons entitled thereto of all installments of
         interest then due on the Bonds, with interest on overdue installments,
         if lawful, at the rate per annum borne by the Bonds on the date of
         occurrence of such Event of Default, in the order of maturity of the
         installments of such interest and, if the amount available shall not be
         sufficient to pay in full any particular installment of interest, then
         to the payment ratably, according to the amounts due on such
         installment, and (ii) second, to the payment to the persons entitled
         thereto of the unpaid principal of and any premium on any of the Bonds
         which shall have become due (other than Bonds called for redemption for
         the payment of which money is held pursuant to the provisions of this
         Ordinance) with interest on such Bonds at their rate on the date of
         occurrence of such Event of Default from the respective dates upon
         which they became due and, if the amount available shall not be
         sufficient to pay in full Bonds due on any particular date, together
         with such interest, then to the payment ratably, according to the
         amount of principal and interest and any premium due on such date, in
         each case to the persons entitled thereto, without any discrimination
         or privilege; provided, however, that moneys derived from the exercise
         of rights by the Trustee under a Credit Facility shall not be applied
         to the payment of the principal of or premium or interest on Bonds held
         of record by the Company or any affiliate thereof or by the Tender
         Agent for the account of the Company.

                (ii) If the principal of all the Bonds shall have been declared
         due and payable and the Bank has not exercised its option to direct the
         Trustee to purchase all Bonds on behalf of the Bank pursuant to Section
         4.07 hereof, all such moneys shall be applied to the payment of the
         principal and interest then due and unpaid upon the Bonds, with
         interest on overdue interest and principal, as aforesaid, without
         preference or priority of principal over interest or of interest over
         principal, or of any installment of interest over any other installment
         of interest, or of any Bond over any other Bond, ratably, according to
         the amounts due respectively for principal and interest, to the persons
         entitled thereto without any discrimination or privilege; provided,
         however, that moneys derived from the exercise of rights by the Trustee
         under a Credit Facility shall not be

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<PAGE>

         applied to the payment of the principal of or premium or interest on
         Bonds held of record by the Company or any affiliate thereof or by the
         Tender Agent for the account of the Company.

                (iii) If the principal of all the Bonds shall have been declared
         due and payable, and if such declaration shall thereafter have been
         rescinded and annulled under the provisions of this Article X, subject
         to the provisions of clause (ii) of this Section 10.10 which shall be
         applicable in the event that the principal of all the Bonds shall later
         become due and payable, the moneys shall be applied in accordance with
         the provisions of clause (i) of this Section 10.10.

              Whenever moneys are to be applied pursuant to the provisions of
this Section 10.10, such moneys shall be applied at such times, and from time to
time, as the Trustee shall determine, having due regard to the amount of such
moneys available for application and the likelihood of additional moneys
becoming available for such application in the future. Whenever the Trustee
shall apply such funds, it shall fix the date (which, while a Credit Facility
shall be in effect, shall be within five days of any declaration of acceleration
and, if possible, an Interest Accrual Date unless it shall deem another date
more suitable) upon which such application is to be made and, upon such
application, interest on the amounts of principal, premium and interest to be
paid on such dates shall cease to accrue, except that if the principal of all of
the Bonds shall have been declared due and payable when a Credit Facility shall
be in effect, interest on such amounts shall cease to accrue on the date of the
drawing on a Credit Facility with respect to such declaration unless such
drawing is pursuant to the Bank's purchase of the Bonds in accordance with
Section 4.07 hereof. The Trustee shall give notice of the deposit with it of any
such moneys and of the fixing of any such date to all Owners of Outstanding
Bonds, consistent with the requirements of Section 2.01 hereof for the
establishment of, and giving of notice with respect to, a Special Record Date
for the payment of overdue interest. The Trustee shall not be required to make
payment to any Owner of a Bond until such Bond shall be presented to the Trustee
for appropriate endorsement or for cancellation if fully paid.

              Notwithstanding anything in this Section 10.10 to the contrary,
moneys received by the Trustee pursuant to draws on a Credit Facility, and
moneys held by the Trustee pursuant to Section 4.08 for the payment of Bonds not
presented for payment, shall be applied only to the payment of principal,
redemption premium (if any) and interest due on the Bonds.

         Section 10.11 Severability of Remedies. It is the purpose and intention
of this Article X to provide rights and remedies to the Trustee, the Bank, and
the Owners which may be lawfully granted under the provisions of the Act, but
should any right or remedy granted herein be held to be unlawful, the Trustee,
the Bank, and the Owners shall be entitled, as above set forth, to every other
right and remedy provided in this Ordinance and by law.

         Section 10.12 Waivers of Events of Default. The Trustee in its
discretion may waive any Event of Default hereunder (other than an Event of
Default described in clauses (v) and (vi) of paragraph (a) of Section 10.01 and
not waived in accordance with paragraph (d) of Section 10.01) and its
consequences and shall in any event do so upon the written request of the Owners
of a majority in principal amount of all Bonds then outstanding; provided,
however, that there shall not be waived

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                (i)  any Event of Default pertaining to the payment of the
         principal of any Bond at the Maturity Date or redemption date prior to
         maturity, or

                (ii) any Event of Default pertaining to the payment when due of
         the interest on any Bond,

unless, prior to such waiver (A) all arrears of principal (due otherwise than by
declaration) and interest, with interest (to the extent permitted by law) at the
rate per annum borne by the Bonds in respect of which such Event of Default
shall have occurred on overdue installments of principal (due otherwise than by
declaration) and interest, shall have been paid or provided for, (B) all
expenses of the Trustee in connection with such Event of Default shall have been
paid or provided for to the satisfaction of the Trustee, and (C) if a Credit
Facility is in effect with respect to the Bonds. the coverage under a Credit
Facility shall have been reinstated as to principal to an amount equal to the
outstanding principal amount of the Bonds and as to interest to an amount which
at least equals, depending on the type of Interest Rate Period then in effect,
the coverage required by Section 2.01(c)(iv) hereof to permit such Interest Rate
Period to go into effect, and provided further that, in case of any such waiver,
or in case any proceeding taken by the Trustee on account of any such Event of
Default shall be discontinued or abandoned or determined adversely, then and in
every such case the City, the Company, the Trustee, the Bank and the Owners of
the Bonds shall be restored to their former positions and rights hereunder,
respectively, but no such waiver shall extend to any subsequent or other Event
of Default, or impair any right consequent thereon. The Trustee shall not have
any discretion to waive any Event of Default hereunder and its consequences
except in the manner and subject to the terms expressed above.

         Section 10.13 No Obligation of City to Act. Subject to Sections 8.04
and 8.05, the City shall have no obligation to take any action or pursue any
right or remedy of the Trustee or any Owner under this Ordinance or otherwise,
including, but not limited to, taking any action in a bankruptcy proceeding.

                               (End of Article X)

                                   ARTICLE XI

                        TRUSTEE; PAYING AGENT; REGISTRAR

         Section 11.01 Acceptance of Trusts. By executing the certificate of
authentication endorsed upon the Bonds, the Trustee shall signify its acceptance
and agree to execute the trusts hereby created but only upon the additional
terms set forth in this Article XI, to all of which the City agrees and the
respective owners agree by their acceptance of delivery of any of the Bonds.

         Section 11.02 Trustee Not Responsible for Recitals, Maintenance,
Insurance, etc. The recitals, findings and representations in this Ordinance or
in the Bonds contained, save only the Trustee's authentication upon the Bonds,
shall be taken and construed as made by and on the part of the City, and not by
the Trustee, and the Trustee does not assume, and shall not have, any
responsibility or obligation for the correctness of any thereof. In addition,
the Trustee shall not have any responsibility for monitoring the Company's
obligations under Sections 5.06 and 5.07

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of the Agreement to maintain the Facilities or to maintain or cause to be
maintained the insurance required thereunder.

         Section 11.03 Limitations on Liability.

                (i)   The Trustee may execute any of the trusts or powers hereof
         and perform the duties required of it hereunder by or through
         attorneys, agents, receivers or employees, and shall be entitled to
         advice of counsel concerning all matters of trust and its duty
         hereunder and shall not be liable for any action taken or omitted to be
         taken in good faith on the basis of such advice, and the Trustee shall
         not be answerable for the default or misconduct of any such attorney,
         agent or employee selected by it with reasonable care. The Trustee
         shall not be answerable for the exercise of any discretion or power
         under this Ordinance or for anything whatsoever in connection with the
         trust created hereby, except only for its own gross negligence or
         willful misconduct.

                (ii)  The permissive rights of the Trustee to do things
         enumerated in this Ordinance shall not be construed as a duty, and the
         Trustee shall not be liable for any action reasonably taken or omitted
         to be taken by it in good faith and reasonably believed by it to be
         within its discretion or power conferred upon it hereby.

                (iii) Whenever in the administration of this Ordinance the
         Trustee shall deem it desirable that a matter be proved or established
         prior to taking, suffering or omitting any action hereunder or under
         the Agreement, the Trustee may, in the absence of bad faith on its
         part, rely upon a certificate of an Authorized Company Representative.

                (iv)  Prior to taking any action under the Agreement or this
         Ordinance, the Trustee shall be entitled to a certificate of the
         Authorized Company Representative and/or an opinion of counsel with
         respect to the proposed action, which certificate and/or opinion shall
         confirm that all conditions precedent, if any, have been satisfied.

                (v)   The Trustee shall not be required to give any bond or
         surety with respect to the performance of its duties or the exercise of
         its powers under this Ordinance.

                (vi)  The Trustee shall not be bound to ascertain or inquire as
         to performance or observance of any covenants, conditions or other
         agreements on the part of the Company or the City under the Agreement
         or this Ordinance, as the case may be, except as specifically provided
         for herein. The Trustee shall have no obligation to perform any of the
         duties of the City or the Company under the Agreement or this
         Ordinance.

         Section 11.04 Compensation, Expenses and Advances. The Trustee, the
Paying Agent, the Registrar and the Tender Agent under this Ordinance shall be
entitled to reasonable compensation for their services rendered hereunder (not
limited by any provision of law in regard to the compensation of the trustee of
an express trust) and to reimbursement for their actual out-of-pocket expenses
(including counsel fees and expenses) reasonably incurred in connection
therewith except as a result of their gross negligence or willful misconduct. If
the City shall fail to perform any of the covenants or agreements contained in
this Ordinance, other than the covenants or agreements in respect of the payment
of the principal of and interest on the

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<PAGE>

Bonds, the Trustee may, in its uncontrolled discretion and without notice to the
Owners of the Bonds, at any time and from time to time, make advances to effect
performance of the same on behalf of the City, but the Trustee shall be under no
obligation to do so; but no such advance shall operate to relieve the City from
any default hereunder. In Section 5.04 of the Agreement, the Company has agreed
that it will pay to the Trustee, the Paying Agent, the Registrar, the
Remarketing Agent and the Tender Agent such compensation and reimbursement of
expenses and advances, but the Company may, without creating a default
hereunder, contest in good faith the reasonableness of any such services,
expenses and advances. In Section 5.08 of the Agreement, the Company has agreed
to indemnify the Trustee and the Registrar to the extent stated therein. If the
Company shall have failed to make any payment to the Trustee under Sections 5.04
or 5.08 of the Agreement and such failure shall have resulted in an Event of
Default under the Agreement, the Trustee shall have, in addition to any other
rights hereunder, a claim, prior to the claim of the Owners of the Bonds, for
the payment of its compensation and the reimbursement of its expenses and any
advances made by it, as provided in this Section 11.04, upon the moneys and
obligations in the Bond Fund, except for proceeds of drawings under a Credit
Facility and except for moneys or obligations deposited with or paid to the
Trustee for the purchase of Bonds by the Bank in accordance with Section 4.07
hereof or which are deemed to have been paid in accordance with Article IX
hereof and funds held pursuant to Section 5.06 hereof.

     Section 11.05 Notice of Events of Default. The Trustee shall not be
required to take notice, or be deemed to have notice, of any default or Event of
Default under this Ordinance or the Agreement other than an Event of Default
under clauses (i), (ii), (iii) (but only if the Trustee and the Tender Agent are
the same entity), (v) or (vi) of paragraph (a) of Section 10.01 hereof, unless
specifically notified in writing of such default or Event of Default by Owners
of at least a majority in principal amount of the Bonds then Outstanding or by
the Bank. The Trustee may, however, at any time, in its discretion, require of
the City full information and advice as to the performance of any of the
covenants, conditions and agreements contained herein.

     Section 11.06 Action by Trustee. The Trustee shall be under no obligation
to take any action in respect of any default or Event of Default hereunder other
than pursuant to Section 10.01(b) hereof, or toward the execution or enforcement
of any of the trusts hereby created, or to institute, appear in or defend any
suit or other proceeding in connection therewith, unless requested in writing to
do so by Owners of at least a majority in principal amount of the Bonds then
Outstanding or the Bank, and, if in its opinion such action may tend to involve
it in expense or liability, unless furnished, from time to time as often as it
may require, with security and indemnity satisfactory to it. The foregoing
provisions are intended only for the protection of the Trustee, and shall not
affect any discretion or power given by any provisions of this Ordinance to the
Trustee to take action in respect of any default or Event of Default without
such notice or request from Owners or the Bank, or without such security or
indemnity. Notwithstanding the foregoing, the Trustee shall submit draw requests
under a Credit Facility as provided therein, make payments on the Bonds in
accordance with this Ordinance and give notice of acceleration in accordance
with Section 10.01(b) hereof, without as a precondition to such action,
demanding security and indemnity as hereinbefore provided.

     Section 11.07 Good Faith Reliance. The Trustee shall be protected and shall
incur no liability in acting or proceeding in good faith upon any resolution,
notice, telegram, request,

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consent, waiver, certificate, statement, affidavit, voucher, bond, requisition
or other paper or document, or upon telephonic instructions to the extent the
giving of telephonic instructions is specifically authorized by this Ordinance
or the Agreement, in any case which the Trustee shall in good faith believe to
be genuine and to have been passed, signed or given by the proper board, body or
person or to have been prepared and furnished pursuant to any of the provisions
of this Ordinance or the Agreement, or upon the written opinion of any attorney,
engineer, accountant or other expert believed by the Trustee to be qualified in
relation to the subject matter, and the Trustee shall be under no duty to make
any investigation or inquiry as to any statements contained or matters referred
to in any such instrument, but may accept and rely upon the same as conclusive
evidence of the truth and accuracy of such statements. Neither the Trustee, the
Paying Agent, the Registrar nor the Tender Agent shall be bound to recognize any
person as an Owner or to take any action at his request unless his Bond shall be
deposited with such entity or satisfactory evidence of the ownership of such
Bond shall be furnished to such entity.

     Section 11.08 Dealings in Bonds and with the City and the Company. The
Trustee, the Paying Agent, the Registrar, the Bank, the Tender Agent or the
Remarketing Agent, in its individual capacity, may in good faith buy, sell, own,
hold and deal in any of the Bonds, and may join in any action which any Owner
may be entitled to take with like effect as if it did not act in any capacity
hereunder. The Trustee, the Paying Agent, the Registrar, the Bank, the Tender
Agent or the Remarketing Agent, in its individual capacity, either as principal
or agent, may also engage in or be interested in any financial or other
transaction with the City or the Company, and may act as depositary, trustee or
agent for any committee or body of Owners or other obligations of the City as
freely as if it did not act in any capacity hereunder.

     Section 11.09 Several Capacities. Anything in this Ordinance to the
contrary notwithstanding, the same entity may serve hereunder as the Trustee,
the Paying Agent, the Registrar, the Tender Agent and the Remarketing Agent and
in any other combination of such capacities, to the extent permitted by law.

     Section 11.10 Construction of Ordinance. The Trustee may construe any of
the provisions of this Ordinance insofar as the same may appear to be ambiguous
or inconsistent with any other provision hereof, and any construction of any
such provisions hereof by the Trustee in good faith shall be binding upon the
Owners, the City, the Company and the Bank.

     Section 11.11 Resignation of Trustee. The Trustee may resign and be
discharged of the trusts created by this Ordinance by executing an instrument in
writing resigning such trust and specifying the date when such resignation shall
take effect, and filing the same with the City Clerk, the Company, the Tender
Agent, the Remarketing Agent, and the Bank, and by giving notice of such
resignation to all Owners. Such resignation shall only take effect on the day a
successor Trustee shall have been appointed as hereinafter provided and shall
have accepted such appointment and agreed to assume all of the obligations as
Trustee hereunder.

     Section 11.12 Removal of Trustee. The Trustee may be removed by the City at
any time, at the written request of the Company or the Owners of not less than a
majority in principal amount of the Bonds then outstanding, by filing with the
Trustee so removed, the City, the Company, the Tender Agent, the Remarketing
Agent, and the Bank an instrument or instruments in writing appointing a
successor in accordance with Section 11.13 hereof. Promptly upon

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delivery of such instrument or instruments to the Trustee, the successor Trustee
upon its acceptance of the trusts created hereby shall give notice thereof to
all Owners.

     Section 11.13 Appointment of Successor Trustee. If at any time the Trustee
shall be removed, be dissolved or its property or affairs shall be taken under
the control of any state or federal court or administrative body because of
insolvency, bankruptcy or any other reason, a vacancy shall ipso facto be deemed
to exist in the office of Trustee and a successor may be appointed, and in case
at any time the Trustee shall resign, then a successor may be appointed, by
filing with the City Clerk, the Company, the Tender Agent, the Remarketing
Agent, and the Bank an instrument of appointment in writing, executed by Owners
of not less than a majority in principal amount of Bonds then Outstanding with
the consent of the Bank unless the Bank has wrongfully dishonored a draw on a
Credit Facility. Copies of such instrument shall be promptly delivered by the
City to the predecessor Trustee and to the Trustee so appointed.

              Until a successor Trustee shall be appointed by the Owners of the
Bonds as herein authorized with the consent of the Bank unless the Bank has
wrongfully dishonored a draw on a Credit Facility, the City, by an instrument
authorized by resolution of the City Council, may, but shall have no obligation
to, appoint a successor Trustee acceptable to the Company and the Bank. After
any appointment by the City, it shall cause notice of such appointment to be
given to the Remarketing Agent and to all Owners of the Bonds. Any new Trustee
so appointed by the City shall immediately and without further act be superseded
by a Trustee appointed by the Owners of the Bonds in the manner above provided.
Notwithstanding anything herein to the contrary, no resignation or removal of
the Trustee shall be effective until (i) a successor Trustee shall be appointed
in accordance with the terms hereof and has accepted such appointment and (ii)
each then existing Letter of Credit or other Credit Facility shall have been
transferred to such successor in accordance with the terms thereof.

     Section 11.14 Qualifications of Successor Trustee. Every successor Trustee
(a) shall be a bank or trust company (other than the Bank) duly organized under
the laws of the United States or any state or territory thereof and authorized
by law to perform all the duties imposed upon it by this Ordinance, (b) shall
have a combined capital stock, surplus and undivided profits of at least
$50,000,000 if there can be located, with reasonable effort, such an institution
willing and able to accept the trust on reasonable and customary terms and (c)
shall have its obligations rated or be a wholly-owned subsidiary of an entity
whose obligations are rated, so long as the Bonds shall be rated by Moody's, at
least Baa3/P-3 by Moody's or otherwise qualified by Moody's.

     Section 11.15 Judicial Appointment of Successor Trustee. If at any time the
Trustee shall resign and no appointment of a successor Trustee shall be made
pursuant to the foregoing provisions of this Article XI prior to the date
specified in the notice of resignation as the date when such resignation is to
take effect, the retiring Trustee may forthwith apply to a court of competent
jurisdiction for the appointment of a successor Trustee. If no appointment of a
successor Trustee shall be made pursuant to the foregoing provisions of this
Article XI within six months after a vacancy shall have occurred in the office
of Trustee, any Owner of a Bond or the Bank may apply to any court of competent
jurisdiction to appoint a successor Trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, appoint a successor
Trustee.

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     Section 11.16 Acceptance of Trusts by Successor Trustee. Any successor
Trustee appointed hereunder shall execute, acknowledge and deliver to the City
an instrument accepting such appointment hereunder, and thereupon such successor
Trustee, without any further act, deed or conveyance, shall become duly vested
with all the estates, property, rights, powers, trusts, duties and obligations
of its predecessor in the trust hereunder, with like effect as if originally
named Trustee herein. Upon request of such Trustee, such predecessor Trustee and
the City shall execute and deliver an instrument transferring to such successor
Trustee all the estates, property, rights, powers and trusts hereunder of such
predecessor Trustee and, subject to the provisions of Section 11.04 hereof and
upon payment of its charges, such predecessor Trustee shall (i) pay over to the
successor Trustee all moneys and other assets at the time held by it hereunder
and (ii) transfer over to the successor Trustee its interest in any Credit
Facility.

     Section 11.17 Successor by Merger or Consolidation. Any corporation into
which any Trustee hereunder may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which any Trustee hereunder shall be a party or any corporation to which the
corporate trust business of the Trustee shall be sold or transferred, shall be
the successor Trustee under this Ordinance, without the execution or filing of
any paper or any further act on the part of the parties hereto, anything in this
Ordinance to the contrary notwithstanding.

     Section 11.18 Standard of Care. Notwithstanding any other provisions of
this Article XI, the Trustee shall, during the existence of an Event of Default
of which the Trustee is required to take notice or is deemed to have notice
under Section 11.05 hereof, exercise such of the rights and powers vested in it
by this Ordinance and use the same degree of skill and care in their exercise as
a prudent person would use and exercise under the circumstances in the conduct
of his own affairs. Prior to the existence and after the curing or waiving of
any such Event of Default, the duties of the Trustee hereunder shall be only
such duties as are specifically set forth herein and no implied covenants shall
be read into this Ordinance against the Trustee.

     Section 11.19 Notice of Event of Default. If an Event of Default occurs of
which the Trustee is required by Section 11.05 hereof to take notice or has
notice, or any other Event of Default occurs of which the Trustee has been
specifically notified in accordance-with Section 11.05 hereof, and any such
Event of Default shall continue for at least five Business Days after the
Trustee is required to take, or has received, notice thereof, the Trustee shall
give notice thereof to the City, the Remarketing Agent, the Tender Agent, the
Bank and the Owners of the Bonds.

     Section 11.20 Intervention in Litigation. In any judicial proceeding to
which the City is a party and which in the opinion of the Trustee and its
counsel has a substantial bearing on the interests of the Owners of the Bonds,
the Trustee may intervene on behalf of the Owners of the Bonds and shall, upon
receipt of indemnity satisfactory to it, do so if requested in writing by Owners
of at least a majority in principal amount of the Bonds then Outstanding if
permitted by the court having jurisdiction in the premises.

     Section 11.21 Paying Agent. The City may at any time or from time to time
by resolution, with the approval of the Company, appoint the Paying Agent for
the Bonds, subject to the conditions set forth in Section 11.22 hereof. The
Trustee is hereby appointed as the initial

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Paying Agent. Each Paying Agent (if not also the Trustee) shall designate to the
Trustee and the Bank its Corporate Trust Office and signify its acceptance of
the duties and obligations imposed upon it hereunder by a written instrument of
acceptance delivered to the City, the Company and the Trustee under which such
Paying Agent will agree, particularly:

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

                (ii) to keep such books and records as shall be consistent with
         prudent industry practice and to make such books and records available
         for inspection by the City, the Trustee and the Company at all
         reasonable times.

              The City shall cooperate with the Trustee and the Company to cause
the necessary arrangements to be made and to be thereafter continued whereby
funds will be made available for the payment when due of the Bonds as presented
at the Corporate Trust Office of the Paying Agent.

         Section 11.22 Qualifications of Paying Agent; Resignation; Removal. The
Paying Agent shall (i) be a bank, a trust company, national banking association
or another corporation duly organized under the laws of the United States of
America or any state or territory thereof, (ii) have its obligations rated or be
a wholly-owned subsidiary of an entity whose obligations are rated, so long as
the Bonds are rated by Moody's, at least Baa3/P-3 by Moody's or otherwise
qualified by Moody's, and (iii) be authorized by law to perform all the duties
imposed upon it by this ordinance. The Paying Agent may at any time resign and
be discharged of the duties and obligations created by this Ordinance by giving
at least 60 days' notice to the City, the Company and the Trustee (if no longer
the Paying Agent). The Paying Agent shall be removed at any time, other than
during the continuance of an Event of Default, at the direction of the Company,
by an instrument, signed by the City, filed with the Paying Agent and with the
Trustee.

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

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

         Section 11.23 Registrar. The Trustee hereby is appointed as the initial
Registrar. In the event of the resignation or removal of the Registrar, the City
shall, at the direction of the Company, appoint the Registrar for the Bonds,
subject to the conditions set forth in Section 11.24 hereof. Each Registrar (if
not also the Trustee) shall designate to the Trustee its Corporate Trust Office
and signify its acceptance of the duties imposed upon it hereunder by a written
instrument of acceptance delivered to the City, the Company and the Trustee
under which such

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Registrar will agree, particularly, to keep such books and records as shall be
consistent with prudent industry practice and to make such books and records
available for inspection by the City, the Trustee and the Company at all
reasonable times.

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

         Section 11.24 Qualifications of Registrar; Resignation; Removal. The
Registrar shall be a corporation duly organized under the laws of the United
States of America or any state or territory thereof, authorized by law to
perform all the duties imposed upon it by this Ordinance. The Registrar may at
any time resign and be discharged of the duties and obligations created by this
Ordinance by giving at least 60 days' notice to the City, the Trustee and the
Company. The Registrar may be removed at any time, at the direction of the
Company (other than during the continuance of an Event of Default), by an
instrument, signed by the City, filed with the Registrar and the Trustee.

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

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

         Section 11.25 Appointment of Co-Trustee. It is the purpose of this
Ordinance that there shall be no violation of any law of any jurisdiction
(including particularly the law of the State of New Mexico) denying or
restricting the right of banking corporations or associations to transact
business as trustee in such jurisdiction. It is recognized that in case of
litigation under this Ordinance or the Agreement, and in particular in the case
of the enforcement thereof on default, or in the case the Trustee deems that by
reason of airy present or future law of any jurisdiction it may not exercise any
of the powers, rights or remedies herein granted to the Trustee or hold title to
the properties, in trust, as herein granted, or take any action which may be
desirable or necessary in connection therewith, it may be necessary that the
Trustee appoint an additional individual or institution as a separate or
co-trustee.

              In the event that the Trustee shall appoint an additional
individual or institution as a separate or co-trustee, each and every remedy,
power, right, claim, demand, cause of action,

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immunity, estate, title, interest and lien expressed or intended by this
Ordinance to be exercised by or vested in or conveyed to the Trustee with
respect thereto shall be exercisable by and vest in such separate or co-trustee,
but only to the extent necessary to enable such separate or co-trustee to
exercise such powers, rights and remedies, and every covenant and obligation
necessary to the exercise thereof by such separate or co-trustee shall run to
and be enforceable by either of them.

          Should any reasonable instrument in writing from the City be required
by the separate or co-trustee so appointed by the Trustee for more fully and
certainly vesting in and confirming to him or it such estates, property, rights,
powers, trusts, duties and obligations, any and all such instruments in writing
shall, on request, be executed, acknowledged and delivered by the City. In case
any separate or co-trustee or a successor to either shall die, become incapable
of acting, resign or be removed, all the estates, properties, rights, powers,
trusts, duties and obligations of such separate or co-trustee, so far as
permitted by law, shall vest in and be exercised by the Trustee until the
appointment of a successor to such separate or co-trustee or a new separate or
co-trustee.

     Section 11.26 Notices to Rating Agencies. The Trustee shall provide
Moody's, if the Bonds are then rated by Moody's, or S&P, if the Bonds are then
rated by S&P, as appropriate, with prompt written notice of (i) the appointment
of any successor Trustee, Paying Agent, Remarketing Agent or Tender Agent (ii)
any amendments to this Ordinance or the Agreement, (iii) the payment (or
provision for payment) in whole of the Bonds, (iv) the adjustment of any Bonds
to a Short-Term or Long-Term Interest Rate Period, (v) the extension, expiration
or termination of a Credit Facility or (vi) any amendment to the Reimbursement
Agreement or a Credit Facility of which the Trustee has actual knowledge.

                               (End of Article XI)

                                  ARTICLE XII

                           EXECUTION OF INSTRUMENTS BY
                     OWNERS AND PROOF OF OWNERSHIP OF BONDS

     Section 12.01 Execution of Instruments; Proof of Ownership. Any request,
direction, consent or other instrument in writing, whether or not required or
permitted by this Ordinance to be signed or executed by Owners of the Bonds, may
be in any number of concurrent instruments of similar tenor and may be signed or
executed by Owners of the Bonds in person or by agent appointed by an instrument
in writing. Proof of the execution of any such instrument and of the ownership
or former ownership of Bonds shall be sufficient for any purpose of this
Ordinance and shall be conclusive in favor of the Trustee with regard to any
action taken by it under such instrument if made in the following manner:

               (i)    The fact and date of the execution by any person of any
     such instrument may be proved by the certificate of any officer in any
     jurisdiction who, by the laws thereof, has power to take acknowledgments
     within such jurisdiction, to-the effect that the person signing such
     instrument acknowledged before him the execution thereof, or by an
     affidavit of a witness to such execution, or in any other manner reasonably
     acceptable to the Trustee.

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               (ii)   The ownership or former ownership of Bonds shall be proved
     by the registration books kept under the provisions of Section 2.04 hereof
     and the records kept by the Trustee pursuant to Section 14.03(iii) hereof.

               (iii)  While the Bonds are in book-entry only form, the
     beneficial ownership or former ownership of Bonds shall be proved by an
     instrument in writing signed by such beneficial owner and acceptable to the
     Trustee.

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

                              (End of Article XII)

                                  ARTICLE XIII

                MODIFICATION OF THIS ORDINANCE AND THE AGREEMENT

     Section 13.01 Limitations. This Ordinance and the Agreement shall not be
modified or amended in any respect subsequent to the initial issuance of the
Bonds, except as provided in and in accordance with and subject to the
provisions of this Article XIII.

     Section 13.02 Supplemental Ordinances without Consent of Owners. The City
may, from time to time and at any time, without the consent of or notice to the
Owners of the Bonds, adopt, and the Trustee shall accept, subject to Section
13.05 hereof, Supplemental Ordinances as follows:

               (i)    to cure any formal defect, omission, inconsistency or
     ambiguity in this Ordinance;

               (ii)   to grant to or confer upon the Trustee for the benefit of
     the Owners of the Bonds any additional rights, remedies, powers, authority
     or security which may lawfully be granted or conferred and which are not
     contrary to or inconsistent with this Ordinance as theretofore in effect;

               (iii)  to add to the covenants and agreements of, and limitations
     and restrictions upon, the City in this Ordinance other covenants,
     agreements, limitations and restrictions to be observed by the City which
     are not contrary to or inconsistent with this Ordinance as theretofore in
     effect;

               (iv)   to confirm, as further assurance, any pledge or assignment
     under, and the subjection to any claim, lien, pledge or assignment created
     or to be created by this Ordinance, of the Receipts and Revenues or of any
     other moneys, securities or funds;

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               (v)    to authorize different Authorized Denominations of the
     Bonds and to make correlative amendments and modifications to this
     Ordinance regarding exchangeability of Bonds of different Authorized
     Denominations, redemptions of portions of Bonds of particular Authorized
     Denominations and similar amendments and modifications of a technical
     nature;

               (vi)   to modify, alter, supplement or amend this Ordinance in
     such manner as shall permit the qualification hereof under the Trust
     Indenture Act of 1939, as from time to time amended;

               (vii)  to increase or decrease the number of days specified in
     Section 2.01(c) hereof and to make corresponding changes to Section 4.03
     hereof; provided that no decreases in any such number of days shall become
     effective except during a Daily Interest Rate Period or a Weekly Interest
     Rate Period and until 30 days after the Trustee shall have given notice to
     the Owners;

               (viii) to provide for the procedures required to permit or
     implement an uncertificated system of registration of the Bonds;

               (ix)   to modify, alter, amend or supplement this Ordinance in
     any other respect which is not materially adverse to the Owners and which
     does not involve a change described in the provisions of Section 13.03(i)
     hereof; and

               (x)    to modify, alter, supplement or amend this Ordinance to
     comply with changes in the Code affecting the status of interest on the
     Bonds as excluded from gross income for federal income tax purposes or the
     obligations of the City or the Company in respect of Section 148 of the
     Code.

          Before the City shall adopt any Supplemental Ordinance pursuant to
this Section 13.02, there shall have been filed with the City and the Trustee a
Favorable Opinion of Bond Counsel.

     Section 13.03 Supplemental Ordinances with Consent of Owners.

               (i)    Except for any Supplemental Ordinance entered into
     pursuant to Section 13.02 hereof, subject to the terms and provisions
     contained in this Section 13.03, the Owners of not less than a majority in
     aggregate principal amount of the Bonds shall have the right from time to
     time to consent to and approve the adoption by the City of any Supplemental
     Ordinance deemed necessary or desirable by the City for the purposes of
     modifying, altering, amending, supplementing or rescinding, in any
     particular, any of the terms or provisions contained in this Ordinance;
     provided, however, that, unless approved in writing by the Owners of all
     the Bonds, nothing herein contained shall permit, or be construed as
     permitting, (i) a change in the times, amounts or currency of payment of
     the principal of or interest or any premium on any Bond, a change in the
     terms of the purchase of Bonds pursuant to Section 4.06 hereof (other than
     as permitted by Section 13.02(viii) hereof), or a reduction in the
     principal amount or redemption price of any Bond or a change in the method
     of determining the rate of interest thereon, or (ii) the creation of a
     claim or lien upon, or a pledge or assignment of, the Receipts and Revenues

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     ranking prior to or on a parity with the claim, lien, pledge or assignment
     created by this Ordinance, or (iii) a preference or priority of any Bond or
     Bonds over any other Bond or Bonds, or (iv) a reduction in the aggregate
     principal amount of Bonds the consent of the Owners of which is required
     for any such Supplemental Ordinance under Section 13.07 hereof, for any
     modification, alteration, amendment or supplement to the Agreement.

               (ii)   If at any time the City shall determine to adopt any
     Supplemental Ordinance for any of the purposes of this Section 13.03, the
     Trustee shall cause notice of the proposed Supplemental Ordinance to be
     given to all Owners of the Bonds. Such notice shall briefly set forth the
     nature of the proposed Supplemental Ordinance and shall state that a copy
     thereof is on file at the Corporate Trust Office of the Trustee for
     inspection by all Owners of the Bonds.

               (iii)  Within two years after the date of the giving of such
     notice, the City may adopt (the date of adoption shall be the date of
     passage and not the effective date) such Supplemental Ordinance in
     substantially the form described in such notice, but only if there shall
     have first been filed with the Trustee (i) the required consents, in
     writing, of the Owners of the Bonds and (ii) a Favorable Opinion of Bond
     Counsel stating that such Supplemental Ordinance is authorized or permitted
     by this Ordinance and the Act, complies with their respective terms, and,
     upon the adoption thereof, will be valid and binding upon the City in
     accordance with its terms and will not adversely affect the exclusion from
     gross income for federal income tax purposes of interest on the Bonds.

               (iv)   If Owners of not less than the percentage of Bonds
     required by this Section 13.03 shall have consented to and approved the
     adoption thereof as herein provided, no Owner shall have any right to
     object to the adoption of such Supplemental Ordinance, or to object to any
     of the terms and provisions contained therein or the operation thereof, or
     in any manner to question the propriety of the execution and delivery
     thereof, or to enjoin or restrain the City from enacting the same or from
     taking any action pursuant to the provisions thereof.

     Section 13.04 Effect of Supplemental Ordinance. Upon the adoption of any
Supplemental Ordinance pursuant to the provisions of this Article XIII, this
Ordinance shall be, and be deemed to be, modified and amended in accordance
therewith, and the respective rights, duties and obligations under this
Ordinance of the City, the Trustee and all Owners of Bonds then outstanding
shall thereafter be determined, exercised and enforced under this Ordinance
subject in all respects to such modifications and amendments.

     Section 13.05 Consent of the Company and the Bank. Anything herein to the
contrary notwithstanding, if a Credit Facility is in effect, the Trustee (i)
shall not accept any Supplemental Ordinance under this Article XIII which
affects any rights, powers and authority of the Company under the Agreement, the
Tender Agreement or the applicable Credit Facility or requires a revision of the
Agreement, the Tender Agreement or the applicable Credit Facility unless and
until the Company and the Bank shall have consented to such Supplemental
Ordinance and (ii) need not accept any Supplemental Ordinance which affects its
rights, duties and responsibilities hereunder.

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     Section 13.06 Amendment of Agreement without Consent of Owners. Without the
consent of or notice to the Owners of the Bonds but with the consent of the
Company and the Bank, the City may modify, alter, amend or supplement the
Agreement, and the Trustee may consent thereto, (a) as may be required by the
provisions of the Agreement and this Ordinance, (b) for the purpose of curing
any formal defect, omission, inconsistency or ambiguity therein, or (c) in
connection with any other change therein which is not materially adverse to the
Owners. No extension, termination or provision of any substitute Credit Facility
in accordance with the provisions of the Agreement shall be deemed a
modification, alteration, amendment or supplement to the Agreement, or to this
Ordinance, for any purpose of this Ordinance.

          Before the City shall enter into, and the Trustee shall consent to,
any modification, alteration, amendment or supplement to the Agreement, pursuant
to this Section 13.06, there shall have been delivered to the City and the
Trustee, a Favorable Opinion of Bond Counsel.

     Section 13.07 Amendment of Agreement with Consent of Owners. Except in the
cases of modifications, alterations, amendments or supplements referred to in
Sections 13.02 and 13.06 hereof, the City shall not enter into, and the Trustee
shall not consent to, any modification, alteration, amendment or supplement of
the Agreement, without the written approval or consent of the Owners of not less
than a majority in aggregate principal amount of the Bonds then Outstanding but
with the consent of the Company and the Bank, given and procured as provided in
Sections 13.03 and 13.05 hereof; provided, however, that, unless approved in
writing by the Owners of all Bonds then Outstanding, nothing in this Section
13.07 shall permit, or be construed as permitting, a change in the obligations
of the Company under Section 5.02 or 10.01 of the Agreement. If at any time the
City or the Company shall request the consent of the Trustee to any such
proposed modification, alteration, amendment or supplement, the Trustee shall
cause notice thereof to be given in the same manner as provided by Section 13.03
hereof with respect to Supplemental Ordinances. Such notice shall briefly set
forth the nature of such proposed modification, alteration, amendment or
supplement and shall state that copies of the instrument embodying the same are
on file at the Corporate Trust office of the Trustee for inspection by all
Owners of Bonds Outstanding. The City may enter into, and the Trustee may
consent to, any such proposed modification, alteration, amendment or supplement
of the Agreement, subject to the same conditions and with the same effect as
provided in Section 13.03 hereof with respect to Supplemental Ordinances.

     Section 13.08 Issuance of Bonds Under Other Ordinances; Recognition of
Prior Pledges. The City hereby expressly reserves the right to issue, to the
extent permitted by law, bonds in accordance with other ordinances for one or
more purposes permitted by the Act. The City hereby recognizes and protects any
prior pledge or mortgage made to secure any prior issue of bonds.

                              (End of Article XIII)

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                                  ARTICLE XIV

                        REMARKETING AGENT; TENDER AGENT;
                        PURCHASE AND REMARKETING OF BONDS

     Section 14.01 Remarketing Agent and Tender Agent.

                 (i)  The Company shall appoint a Remarketing Agent for the
     Bonds, subject to the conditions set forth in Section 14.02(i) hereof. The
     Remarketing Agent shall designate its Corporate Trust Office and signify
     its acceptance of the duties and obligations imposed upon it hereunder by a
     written instrument of acceptance delivered to the City, the Trustee, the
     Tender Agent and the Company under which the Remarketing Agent will agree,
     particularly, to keep such books and records with respect to the Bonds as
     shall be consistent with prudent industry practice and to make such books
     and records available for inspection by the City, the Trustee, the Tender
     Agent and the Company at all reasonable times.

                 (ii) The Company shall appoint a Tender Agent for the Bonds;
     subject to the conditions set forth in Section 14.02(ii) hereof. The Tender
     Agent shall designate its Corporate Trust Office and signify its acceptance
     of the duties and obligations imposed upon it hereunder by a written
     instrument of acceptance delivered to the City, the Trustee, the Company,
     the Bank, and the Remarketing Agent. By acceptance of its appointment
     hereunder, the Tender Agent agrees:

                         (A)  to hold all Bonds delivered to it pursuant to
               Section 4.06 hereof, as agent and bailee of, and in escrow for
               the benefit of, the respective Owners which shall have so
               delivered such Bonds until moneys representing the purchase price
               of such Bonds shall have been delivered to or for the account of
               or to the order of such Owners;

                         (B)  to establish and maintain, and there is hereby
               established with the Tender Agent, a separate segregated trust
               fund designated as the "Pollution Control Revenue Refunding
               Bonds, 2002 Series A (El Paso Electric Company, Four Corners
               Project) Purchase Fund" (the "Purchase Fund") until such time as
               it has been discharged from its duties as Tender Agent hereunder;

                         (C)  to hold all moneys (without investment thereof)
               delivered to it hereunder in the Purchase Fund for the purchase
               of Bonds pursuant to Section 4.06 hereof, other than moneys
               delivered to it by the Company during the term of a Credit
               Facility, as agent and bailee of, and in escrow for the benefit
               of, the person or entity which shall have so delivered such
               moneys until the Bonds purchased with such moneys shall have been
               delivered to or for the account of such person or entity;

                         (D)  to hold all moneys delivered to it by the Company
               for the purchase of Bonds pursuant to Section 4.04 hereof, as
               agent and bailee of, and in escrow for the benefit of, the Owners
               or former Owners who shall deliver Bonds

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<PAGE>

               to it for purchase until the Bonds purchased with such moneys
               shall have been delivered to or for the account of the Company;
               provided, however, that if the bonds shall at any time become due
               and payable, the Tender Agent shall cause such moneys (other than
               moneys held pursuant to Section 14.03(iii) hereof) to be
               deposited into the Bond Fund;

                         (E)   to hold all Bonds registered in the name of the
               new Owners thereof which have been delivered to it by the Trustee
               for delivery to the Remarketing Agent in accordance with the
               Tender Agreement;

                         (F)   to hold Bonds for the account of the Company as
               contemplated by Section 14.05(iii) hereof, such Bonds to be
               released to or upon the order of the Company upon receipt by the
               Tender Agent from the Bank of a notice to the effect that the
               Trustee is entitled to draw under a Credit Facility to pay
               principal of the Bonds and to pay the purchase price of Bonds
               tendered under Section 4.08 hereof and not remarketed in an
               amount equal to the amount that could be drawn under a Credit
               Facility if the drawing made to purchase such Bonds were
               disregarded;

                         (G)   to hold Bonds for the account of the Bank (or its
               nominee), or to deliver Bonds to the Bank, as contemplated by
               Section 14.05(iii) hereof; and

                         (H)   to keep such books and records with respect to
               the Bonds as shall be consistent with prudent industry practice
               and to make such books and records available for inspection by
               the City, the Trustee, the Company and the Remarketing Agent at
               all reasonable times.

               The City shall cooperate with the Company and the Trustee to
cause the necessary arrangements to be made and to be thereafter continued to
enable the Tender Agent to perform its duties and obligations described above.

     Section 14.02 Qualifications of Remarketing Agent and Tender Agent;
Resignation; Removal.

               (i)    The Remarketing Agent shall be a member of the National
     Association of Securities Dealers, Inc., having a combined capital stock,
     surplus and undivided profits of at least $15,000,000 and authorized by law
     to perform all the duties imposed upon it by this Ordinance and the
     Remarketing Agreement. Any successor Remarketing Agent shall have its
     obligations rated or be a wholly-owned subsidiary of an entity whose
     obligations are rated, so long as the Bonds shall be rated by Moody's, at
     least Baa3/P-3 by Moody's or otherwise qualified by Moody's. The
     Remarketing Agent may at any time resign and be discharged of the duties
     and obligations created by this Ordinance by giving notice to the City, the
     Trustee, the Tender Agent, the Bank and the Company. Such resignation shall
     take effect on the earlier of: (i) the day a successor Remarketing Agent
     shall have been appointed by the Company and shall have accepted such
     appointment or (ii) the 45th day after the receipt by the City and the
     Company of the notice of resignation. The Remarketing Agent may be removed
     at any time, by an

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<PAGE>

     instrument signed by the Company and filed with the Remarketing Agent, the
     City, the Trustee, the Tender Agent and the Bank.

               (ii)   The Tender Agent shall be a corporation duly organized
     under the laws of the United States of America or any state or territory
     thereof, and, if not a bank or trust company, for so long as the Bonds
     shall be rated by Moody's, shall have its obligations rated at least
     Baa3/P-3 by Moody's or otherwise qualified by Moody's, and in any case
     having a combined capital stock, surplus and undivided profits of at least
     $25,000,000 and authorized by law to perform all the duties imposed upon it
     by this Ordinance and the Tender Agreement. The Tender Agent may at any
     time resign and be discharged of the duties and obligations created by this
     Ordinance by giving at least 30 days' notice to the City, the Trustee, the
     Company, the Remarketing Agent and the Bank. Such resignation shall take
     effect on the day a successor Tender Agent shall have been appointed by the
     Company and shall have accepted such appointment. The Tender Agent may be
     removed at any time by an instrument signed by the Company, filed with the
     Tender Agent, the City, the Trustee, the Remarketing Agent and the Bank.

          In the event of the resignation or removal of the Tender Agent, the
Tender Agent shall deliver any Bonds and moneys held by it in such capacity to
its successor, or if there is no successor, to the Trustee.

     Section 14.03 Notice of Bonds Delivered for Purchase; Purchase of Bonds.

               (i)    The Tender Agent shall determine timely and proper
     delivery of Bonds pursuant to this Ordinance and the proper endorsement of
     such Bonds. Such determination shall be binding on the Owners of such
     Bonds, the City, the Company, the Remarketing Agent, the Trustee and the
     Bank absent manifest error. As promptly as practicable, the Tender Agent
     shall give telephonic or Electronic notice, promptly confirmed by a written
     notice, to the Bank, the Trustee, the Remarketing Agent and the Company
     specifying the principal amount of Bonds, if any, as to which it shall have
     received notice of tender for purchase in accordance with Section
     4.08(a)(i) or 4.08(a)(ii) hereof.

               (ii)   Bonds required to be purchased in accordance with Section
     4.08 hereof shall be purchased from the Owners thereof by the Tender Agent,
     on the date and at the purchase price at which such Bonds are required to
     be purchased if the Bank shall not have exercised its option to purchase
     such Bonds pursuant to Section 5.05 hereof. Funds for the payment of such
     purchase price by the Tender Agent from the Owners of Bonds shall first be
     derived from any moneys furnished by the Trustee to the Remarketing Agent
     pursuant to Section 6.01(iii) or 6.01(iv) of this Ordinance, and thereafter
     shall be derived from the following sources in the order of priority
     indicated:

                         (A)   moneys furnished to the Tender Agent for deposit
          into the Purchase Fund representing moneys provided by the Company
          pursuant to Section 10.02 of the Agreement, which constitute Available
          Moneys;

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<PAGE>

                      (B)   proceeds of the sale of such Bonds remarketed to any
          person, other than the City, the Company or an affiliate thereof,
          pursuant to Section 14.04 hereof and furnished to the Tender Agent by
          the Remarketing Agent for deposit into the Purchase Fund;

                      (C)   moneys furnished to the Tender Agent by the Trustee
          for deposit into the Purchase Fund representing the proceeds of a
          drawing under a Credit Facility; and

                      (D)   moneys furnished to the Tender Agent representing
          moneys provided by the Company (or any affiliate thereof) pursuant to
          Section 10.01 or 10.02 of the Agreement or otherwise available for
          such purpose.

          Moneys described in clause (C) may not be used to purchase Bonds held
of record by the Company (or any affiliate thereof) or by the Tender Agent for
the account of the Company.

          The Tender Agent shall establish separate accounts or subaccounts
within the Purchase Fund for each deposit made into the Purchase Fund so that
(1) the Tender Agent may at all times ascertain the date of deposit of the funds
in each account or subaccount, and (2) the amounts derived from the source
described in clause (C) may be segregated from other sources and such amounts
shall not be commingled with any funds from the sources described in clause (D).

               (iii)  The Trustee shall authenticate a new Bond or Bonds in an
     aggregate principal amount equal to the principal amount of Bonds purchased
     in accordance with Section 14.03(ii), whether or not the Bonds so purchased
     are presented by the owners thereof, bearing a number or numbers not
     contemporaneously outstanding. Every Bond authenticated and delivered as
     provided in this Section 14.03(iii) shall be entitled to all the benefits
     of this Ordinance equally and proportionately with any and all other Bonds
     duly issued hereunder, except as provided in Section 5.04(ii) hereof. The
     Trustee shall maintain a record of the Bonds purchased as provided in this
     Section 14.03, together with the names and addresses of the former Owners
     thereof.

          In the event any Bonds purchased as provided in this Section 14.03
     shall not be presented to the Tender Agent, the Tender Agent shall
     segregate and hold the moneys for the purchase price of such Bonds in trust
     for the benefit of the former Owners of such Bonds, who shall, except as
     provided in the following sentence, thereafter be restricted exclusively to
     such moneys for the satisfaction of any claim for the purchase price of
     such Bonds. Any moneys which the Tender Agent shall segregate and hold in
     trust for the payment of the purchase price of any Bond and remaining
     unclaimed for two years after the date of purchase shall, to the extent
     legally permissible, upon the Company's written request to the Tender
     Agent, be paid to the Bank, if the Company then owes funds under the
     Reimbursement Agreement or otherwise to the Company. After the payment of
     such unclaimed moneys to the Company, the former Owner of such Bond shall
     look only to the Company for the payment thereof.

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     Section 14.04 Remarketing of Bonds; Notice of Interest Rates.

               (i)    Upon notice of the tender for purchase of Bonds in
     accordance with Section 4.08 hereof, the Remarketing Agent shall offer for
     sale and use its best efforts to sell such Bonds (other than Bonds
     purchased with moneys derived from the source described in clause (i) of
     Section 14.03(ii) hereof, if so directed by the Company), any such sale to
     be made on the date of such purchase in accordance with Section 4.06 at the
     best price available in the marketplace; provided, however, that, if a
     Credit Facility shall be in effect, the Remarketing Agent shall not sell
     any of such Bonds at a price below the principal amount thereof plus
     accrued interest thereon, if any. Any Bond which is tendered for purchase,
     pursuant to Section 4.01 hereof, and any Bond that has become subject to
     mandatory tender for purchase pursuant to Section 4.08 hereof, shall be
     sold only to a purchaser who agrees to refrain from selling that Bond other
     than under the terms of this Ordinance and hold that Bond only to the date
     of mandatory purchase.

               (ii)   The Remarketing Agent shall determine the rate of interest
     to be borne by the Bonds during each Interest Rate Period and by each Bond
     during each Bond Interest Term for such Bond and the Bond Interest Terms
     for each Bond during each Short-Term Interest Rate Period as provided in
     Section 2.01 hereof and shall furnish to the Trustee, the Tender Agent, the
     Company and the Bank on the Business Day of determination each rate of
     interest and Bond Interest Term so determined.

               (iii)  The Remarketing Agent shall give telephonic or telegraphic
     notice, promptly confirmed by a written notice, to the Trustee and the
     Tender Agent on each date on which Bonds shall have been purchased pursuant
     to Section 14.03(ii) hereof, specifying the principal amount of Bonds, if
     any, sold by it pursuant to Section 14.04(i) hereof.

     Section 14.05 Delivery of Bonds.

               (i)    Bonds purchased with moneys described in clause (A) of
     Section 14.03(ii) hereof shall be delivered to the Company and shall be
     registered in accordance with instructions from the Company.

               (ii)   Bonds purchased with moneys described in clause (B) of
     Section 14.03(ii) hereof shall be delivered by the Trustee to the Tender
     Agent or the Remarketing Agent for delivery to the purchasers thereof
     against payment therefor in accordance with the Tender Agreement.

               (iii)  Bonds purchased with moneys described in clause (C) of
     Section 14.03(ii) hereof shall be:

                         (A)  except as otherwise provided in Section
          14.05(iii)(B) or (C) hereof, held by the Tender Agent for the account
          of the Company, if a Credit Facility provides for reinstatement in
          respect of the drawings for the purchase of Bonds tendered pursuant to
          Section 4.08 hereof and not remarketed by reimbursement to the Bank of
          the amount of such drawing together with interest thereon;

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<PAGE>

                      (B) delivered to the Bank, as applicable, if a Credit
            Facility provides for immediate reinstatement in respect of drawings
            for the purchase of Bonds tendered pursuant to Section 4.08 hereof
            and not remarketed by the delivery to the Bank of such Bonds or
            otherwise requires that Bonds be delivered to the Bank;

                      (C) held by the Tender Agent. for the account of the Bank,
            if a Credit Facility provides for immediate reinstatement in respect
            of drawings for the purchase of Bonds tendered pursuant to Section
            4.08 hereof and not remarketed by the holding for the account of the
            Bank of such Bonds or otherwise requires that Bonds be held for the
            account of the Bank; or

                      (D) delivered to the Trustee for cancellation, if a Credit
            Facility does not provide for reinstatement in respect of drawings
            for the purchase of Bonds tendered pursuant to Section 4.08 hereof
            and not remarketed.

Upon delivery to the Bank, or to the Tender Agent for the account of the Bank,
of the Bonds in accordance with clause (B) or (C) above, the Trustee shall
deliver any certificate evidencing such reimbursement or delivery of Bonds to or
for the account of the Bank, as applicable, required for reinstatement, in whole
or in part, of any Credit Facility. Bonds held pursuant to clauses (A), (B) and
(C) above shall be released for the purpose of remarketing or released to or
upon the order of the Company only upon receipt by the Tender Agent from the
Bank of a written notice to the effect that the Trustee is entitled to draw
under a Credit Facility to pay principal of and interest on the Bonds and to pay
the purchase price of Bonds purchased pursuant to Section 4.08 hereof and not
remarketed in an amount equal to the amount that could be drawn under a Credit
Facility if the drawing made to purchase such Bonds were disregarded.

               (iv) Bonds purchased with moneys described in clause (D) of
         Section 14.03(ii) hereof shall, at the direction of the Company, be (i)
         held by the Tender Agent for the account of the Company, (ii) delivered
         to the Trustee for cancellation or (iii) delivered to the Company;
         provided, however, that any Bonds so purchased after the selection
         thereof by the Trustee for redemption shall be delivered to the Trustee
         for cancellation.

               (v)  Bonds delivered as provided in this Section 14.05 shall be
         registered in the manner directed by the recipient thereof.

               (vi) Bonds purchased by the Trustee on behalf of or for the
         account of the Bank (or its nominee) pursuant to Section 4.08 shall be
         delivered promptly to the Bank (or its nominee, as the case may be), or
         as the Bank shall otherwise direct and thereafter, if requested by the
         Bank, remarketed in accordance with the provisions of Section 14.04
         hereof and the Remarketing Agreement.

         Section 14.06 Drawings on Credit Facility. In accordance with the
provisions of the Tender Agreement, on each day on which Bonds are to be
purchased pursuant to Section 4.01 hereof, except to the extent that (i) moneys
described in Section 14.03(ii)(A) hereof shall be available for the purchase of
such Bonds, or (ii) the Trustee shall have received telephonic or

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<PAGE>

Electronic notification from the Remarketing Agent or the Tender Agent that such
Bonds shall have been remarketed pursuant to Section 14.04 hereof and that the
moneys described in Section 14.03(ii)(B) or 6.01(iii) hereof will be sufficient
to pay the purchase price of such Bonds or (iii) the Bank shall have purchased
the Bonds pursuant to Section 4.08 hereof, the Trustee promptly shall draw under
a Credit Facility, in accordance with its terms, an amount sufficient to make
timely payment of the purchase price of such Bonds and furnish the proceeds of
such drawing to the Tender Agent. Following payment of all amounts payable in
respect of the purchase of Bonds pursuant to Section 4.08 hereof, the Trustee
shall remit to the Bank any amount drawn under a Credit Facility in excess of
the amount sufficient to make timely payment of the purchase price of such
Bonds.

         Section 14.07 Delivery of Proceeds of Sale. The proceeds of the sale by
the Remarketing Agent of any Bonds delivered to it by, or held by it for the
account of, the Company or the Bank, or delivered to it by the Bank or any other
Owner, shall be turned over to the Company, the Bank or such other Owner, as the
case may be. If the applicable Credit Facility provides for reinstatement in
respect of the drawings for the purchase of Bonds tendered pursuant to Section
4.08 hereof by reimbursement to the Bank of the amount of such drawing, the
Trustee shall deliver the proceeds of such remarketing to the Bank to the extent
the Bank has not been reimbursed, and in connection therewith, the Trustee shall
deliver any certificate required for reinstatement, in whole or in part, of any
Credit Facility.

                              (End of Article XIV).

                                   ARTICLE XV

                                  MISCELLANEOUS

         Section 15.01 Ordinance to Bind and Inure to Benefit of Successors to
City. In the event of the dissolution of the City, all the covenants,
stipulations, promises and agreements in this Ordinance contained, by or on
behalf of, or for the benefit of, the City, shall bind or inure to the benefit
of the successors of the City from time to time and any entity, officer, board,
commission, agency or instrumentality to whom or to which any power or duty of
the City shall be transferred.

         Section 15.02 Parties in Interest. Except as herein otherwise
specifically provided, nothing in this Ordinance expressed or implied is
intended or shall be construed to confer upon any person, firm or corporation,
other than the City, the Company, the Trustee, the Bank and the Owners, any
right, remedy or claim under or by reason of this Ordinance, this Ordinance
being intended to be for the sole and exclusive benefit of the City, the
Company, the Trustee, the Bank and the Owners of the Bonds. Nothing in this
Ordinance is intended to create in the Company any interest in the Bond Fund or
the moneys or Investment Securities therein.

         Section 15.03 Severability. In case any one or more of the provisions
of this Ordinance or of the Bonds issued hereunder shall, for any reason, be
held to be illegal or invalid, such illegality or invalidity shall not affect
any other provisions of this Ordinance, the Agreement, the Tender Agreement or
said Bonds, and this Ordinance, the Agreement, the Tender Agreement and

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the Bonds shall be construed and enforced as if such illegal or invalid
provisions had not been contained herein or therein.

         Section 15.04 No Personal Liability of City Officials Under Ordinance.
No covenant or agreement contained in the Bonds or in this Ordinance shall be
deemed to be the covenant or agreement of any official, officer, agent, or
employee of the City in his individual capacity, and neither the members of the
City Council nor any official executing the Bonds shall be liable personally on
the Bonds or be subject to any personal liability or accountability by reason of
the issuance thereof.

         Section 15.05 Bonds Owned by the City or the Company. In determining
whether Owners of the requisite aggregate principal amount of the Bonds have
concurred in any direction, consent or waiver under this Ordinance, Bonds which
are owned by the City or the Company or by any affiliate of the Company (unless
the City, the Company and such persons own all Bonds which are then Outstanding,
determined without regard to this Section 15.05) shall be disregarded and deemed
not to be Outstanding for purpose of any such determination, except that, for
the purpose of determining whether the Trustee shall be protected in relying on
any such direction, consent or waiver, only Bonds which the Trustee knows are so
owned shall be so disregarded. Bonds so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Bonds and that the pledgee is not the City or the Company or any affiliate of
the Company. Bonds delivered to the Bank or held by the Tender Agent for the
account of the Bank pursuant to Section 14.05(iii) hereof shall be regarded as
Outstanding for purposes of this Section 15.05 and shall be owned by the Bank
for purposes of this Section 15.05.

         Section 15.06 Governing Law. The laws of the State of New Mexico shall
govern the construction of this Ordinance and of all Bonds issued hereunder.

         Section 15.07 Notices. Except as otherwise provided in this Ordinance,
all notices, certificates, requests, requisitions or other communications by the
City, the Company, the Trustee, the Tender Agent, the Paying Agent, the
Registrar, the Remarketing Agent, Moody's, S&P and the Bank pursuant to this
Ordinance shall be in writing and shall be sufficiently given and shall be
deemed given when mailed by first-class mail, postage prepaid, addressed as
follows: If to the City, at City of Farmington, City Hall, 800 Municipal Drive,
Farmington, New Mexico 87401, Attention: Treasurer; if to the Company, at 303
North Oregon, El Paso, Texas 79901, Attention: Treasurer; if to the Trustee, at
600 Travis, Suite 1150, Houston, Texas 77002, Attention: Corporate Trust
Department; if to Moody's, at Moody's Investors Service, Structured Transactions
Croup, 99 Church St., New York, New York 10007; if to S & P, at Standard &
Poor's Corporation, 25 Broadway, New York, New York 10004; and if to the
Company, the Paying Agent, the Registrar, the Tender Agent, the Remarketing
Agent, or the Bank, at the address designated herein or designated to the City,
the Company and the Trustee. Any of the foregoing may, by notice given hereunder
to each of the others, designate any further or different addresses to which
subsequent notices, certificates, requests or other communications shall be sent
hereunder.

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         Section 15.08 Non-Business Days. If the last day of any period of
grace, or the date for making any payment or the last date for performance of
any act or the exercising of any right, as provided in this Ordinance, is not a
Business Day, the last day of such period of grace shall be deemed to be, any
such payment may be made or act performed or right exercised, with the same
force and effect as if done on the nominal date provided in this Ordinance, on
the next succeeding Business Day, and no interest shall accrue for the period
after such nominal date.

         Section 15.09 Opinions. Each opinion with respect to the validity of
documents or Bonds may be qualified to the extent of the application of
bankruptcy, insolvency, moratorium or reorganization laws or laws affecting the
remedies for the enforcement of the rights and security provided therein and
need not pass on the availability of the remedy of specific enforcement,
injunctive relief or any other equitable remedy.

         Section 15.10 Headlines; Table of Contents. The division of this
Ordinance into sections, the provision of a table of contents and the insertion
of headings are for convenience of reference only and shall not affect the
construction or interpretation hereof.

         Section 15.11 Acceptance by Trustee. The execution by the party
designated and appointed Trustee of the acceptance set forth at the end of this
Ordinance certified by the City Clerk shall be sufficient to constitute said
party as Trustee hereunder in accordance with the provisions hereof without the
execution of any other instrument.

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<PAGE>

         Section 15.12 Declaration of Emergency. The City Council declares that
emergency circumstances exist which are of an immediate danger to the public
health, safety and welfare of the City and that this Ordinance shall therefore
take effect immediately.

                               (End of Article XV)

        Passed, Adopted, Signed and Approved this 9/th/ day of July, 2002

                                       /s/ William E. Standley
                                       ----------------------------------
                                       William E. Standley, Mayor

SEAL

ATTEST:

/s/ Dianne Fuhrman
---------------------------------
Dianne Fuhrman, Deputy City Clerk

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<PAGE>

         I, William E. Standley, Mayor of the City of Farmington. New Mexico, do
hereby declare that, pursuant to Section 3-17-3 N.M.S.A. 1978, this Ordinance
deals with an emergency of an immediate danger to the public health, safety and
welfare of the City, and any publication of such Ordinance prior to its adoption
is hereby declared to be unnecessary.

                                       /s/ William E. Standley
                                       -----------------------------------
                                       William E. Standley, Mayor

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<PAGE>

                                                                       EXHIBIT A

                                 (Form of Bond)

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
         THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC") TO THE
         CITY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
         AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
         IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
         DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
         IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
         PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE, BY OR TO ANY PERSON
         IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
         INTEREST HEREIN.

         AS PROVIDED IN THE ORDINANCE REFERRED TO HEREIN, UNTIL THE TERMINATION
         OF THE SYSTEM OF BOOK-ENTRY ONLY TRANSFERS THROUGH DTC, AND
         NOTWITHSTANDING ANY OTHER PROVISION OF THE ORDINANCE TO THE CONTRARY, A
         PORTION OF THE PRINCIPAL AMOUNT OF THIS BOND MAY BE PAID OR REDEEMED
         WITHOUT SURRENDER HEREOF TO THE PAYING AGENT. DTC OR A NOMINEE,
         TRANSFEREE OR ASSIGNEE OF DTC AS OWNER OF THIS BOND MAY NOT RELY UPON
         THE PRINCIPAL AMOUNT INDICATED HEREON AS THE PRINCIPAL AMOUNT HEREOF
         OUTSTANDING AND UNPAID. THE PRINCIPAL AMOUNT HEREOF OUTSTANDING AND
         UNPAID SHALL FOR ALL PURPOSES BE THE AMOUNT DETERMINED IN THE MANNER
         PROVIDED IN THE ORDINANCE AND INDICATED ON THE BOOKS OF THE TRUSTEE.

No.                                                                      $

                         CITY OF FARMINGTON, NEW MEXICO

                            Pollution Control Revenue
                          Refunding Bond, 2002 Series A
                (El Paso Electric Company, Four Corners Project)

Maturity Date                 Original Issue Date                          CUSIP

Registered Owner.

Principal Sum:

               The City of Farmington, an incorporated municipality, a body
politic, and corporate, existing under the Constitution and laws of the State of
New Mexico, United States of America (the "City"), for value received, hereby
promises to pay (but only from the source and

                                      A-1

<PAGE>

in the manner provided herein) to the registered owner named above, or
registered assigns, on the Maturity Date specified above upon the presentation
and surrender hereof, the Principal Sum specified above and to pay (but only out
of the Receipts and Revenues from the Agreement and other moneys pledged
therefor) interest on said Principal Sum, from and including the date of
authentication hereof until payment of said Principal Sum has been made or duly
provided for, at the rates and on the dates determined as described herein and
in the Ordinance (as hereinafter defined). The principal of and any premium on
this Bond are payable at the principal corporate trust office of JPMorgan Chase
Bank, as Trustee and Paying Agent. Interest on this Bond is payable (i) by check
mailed on the Interest Payment Date to the owner hereof at the registered
address of the registered owner of this Bond as of the close of business on the
Record Date (as defined in the Ordinance) in respect of such interest, or (ii)
except for interest in respect of a Long-Term Interest Rate Period (described
herein), upon the written request of the owner hereof, by deposit on the
Interest Payment Date of immediately available funds to the account of the owner
maintained with the Paying Agent or transmitted by wire transfer to such
registered owner at an account maintained at a commercial bank located within
the United States of America; provided that the owner hereof shall have provided
deposit or transfer instructions to the Paying Agent at least two Business Days
(hereinafter defined) prior to the applicable Record Date; provided further,
that interest payable in respect of a Bond Interest Term (described herein) is
payable only upon presentation of this Bond to the Tender Agent (hereinafter
identified). Payment of the principal of and interest and any premium on this
Bond shall be in such coin or currency of the United States of America as, at
the respective times of payment, shall be legal tender for the payment of public
and private debts.

               Unless otherwise defined herein, all terms herein shall have the
same meanings, respectively, as such terms are given in the Ordinance.

               THE BONDS AND INTEREST THEREON ARE LIMITED OBLIGATIONS OF THE
CITY, ISSUED UNDER AND SECURED AND ENTITLED EQUALLY AND RATABLY TO THE
PROTECTION GIVEN BY THE ORDINANCE. NEITHER THE GENERAL CREDIT NOR THE TAXIING
POWER OF THE CITY OF FARMINGTON OR OF THE STATE OF NEW MEXICO OR OF ANY
POLITICAL SUBDIVISION THEREOF IS PLEDGED FOR THE PAYMENT OF THE BONDS, THE BONDS
SHALL NEVER CONSTITUTE AN INDEBTEDNESS OF THE CITY OF FARMINGTON WITHIN THE
MEANING OF ANY STATE CONSTITUTIONAL PROVISION OR STATUTORY LIMITATION AND SHALL
NEVER GIVE RISE TO A PECUNIARY LIABILITY OF THE CITY OF FARMINGTON OR A CHARGE
AGAINST ITS GENERAL CREDIT OR TAXING POWER; NOR SHALL THE BONDS AND INTEREST
THEREON BE DEEMED A GENERAL OBLIGATION OF THE CITY OF FARMINGTON OR OF THE STATE
OF NEW MEXICO OR OF ANY POLITICAL SUBDIVISION THEREOF.

               This Bond is one of the duly authorized Pollution Control
Refunding Revenue Bonds, 2002 Series A (El Paso Electric Company, Four Comers
Project), of the City, aggregating __________ Dollars ($-__________) in
principal amount (the "Bonds"), issued or to be issued under and pursuant to the
Constitution and the laws of the State of New Mexico, particularly the Pollution
Control Revenue Bond Act, Chapter 397, Laws of 1973 of the State of New Mexico,
31st Legislature, 1st Session, as amended (the "Act"), and Ordinance No.
________ of the City adopted ________ ___, 2002 by the City Council of the City
(collectively, the "Ordinance"), to

                                      A-2

<PAGE>

prepay indebtedness owed by the El Paso Electric Company (the "Company") to the
City under that certain Installment Sale Agreement dated as of November 1, 1994
and in turn used by the City to redeem prior bonds previously issued by the City
for the purpose of providing a portion of the moneys necessary to finance the
cost of acquisition, construction and installation of the interest of the
Company in certain pollution control, solid waste disposal and sewerage disposal
facilities by the Company, within the County of San Juan, New Mexico. Pursuant
to the Amended and Restated Installment Sale Agreement, executed and delivered
at or prior to the initial issuance of the Bonds (the "Agreement"), between the
City and the Company, and the Company will agree to operate and maintain the
Facilities and to make installments of the Purchase Price of the Project in the
amount of the principal of and interest and any premium on the Bonds.

               Concurrently with the initial delivery of the Bonds, the Company
has caused to be delivered to the Trustee an irrevocable, direct-pay letter of
credit (the "Letter of Credit") of Citibank, N.A., (the "Bank"), which will
expire on the earlier of November 15, 1995 or the occurrence of certain events
specified therein, pursuant to that certain Letter of Credit and Reimbursement
Agreement (the "Reimbursement Agreement"), between the Company and the Bank. The
Letter of Credit is an obligation of the Bank to pay to the Trustee, in
accordance with the terms thereof, such amounts as are specified therein and
available to be drawn thereunder, for the timely payment of the principal of and
interest on the Bonds, and the purchase price of the Bonds, required to be made
pursuant to and in accordance with the provisions of the Ordinance.

               The Letter of Credit is referred to herein, along with any
Alternate Credit Support delivered in accordance with the Ordinance, as the
"Credit Facility".

               The Bonds are equally and ratably secured, to the extent provided
in the Ordinance, by the assignment thereunder of the "Receipts and Revenues,"
and which as therein defined means the installments of the Purchase Price of the
Project, including all moneys drawn by the Trustee under a Credit Facility in
satisfaction of the Company's obligation to make installments of the Purchase
Price of the Project, all other moneys received or to be received by the Trustee
(for the account of the City) pursuant to the Agreement, all moneys in the Bond
Fund and the Construction Fund created under and held by the Trustee pursuant to
the Ordinance and all income and profit from the investment of the foregoing
moneys. The City has also assigned to the Trustee as security for the Bonds all
other rights and interests of the City under the Agreement (other than its
rights to indemnification and to reimbursement of certain administrative
expenses and certain other rights), including (with certain exceptions) the
moneys and obligations held by or on behalf of the Trustee or any Paying Agent
under the Ordinance.

               In the manner hereinafter provided, the term of this Bond will be
divided into consecutive Interest Rate Periods during each of which this Bond
shall bear interest at a Daily Interest Rate (a "Daily Interest Rate Period"), a
Weekly Interest Rate (a "Weekly Interest Rate Period"), a Long-Term Interest
Rate or Rates (a "Long-Term Interest Rate Period"), or each Bond may bear
interest at a Bond Interest Term Rate during one or more consecutive Bond
Interest Terms (a "Short-Term Interest Rate Period"). The first Interest Rate
Period shall be the Interest Rate Period as specified in the Ordinance.

                                      A-3

<PAGE>

               This Bond shall bear interest from and including the Interest
Accrual Date (as hereinafter defined) to which interest has been paid in full or
duly provided for immediately preceding the date of authentication hereof, or,
if such date of authentication shall be an Interest Accrual Date to which
interest on this Bond has been paid in full or duly provided for, or the date of
initial authentication hereof, from its date of authentication; provided,
however, that if, as shown by the records of the Trustee, interest on this Bond
shall be in default, any Bond issued in exchange for this Bond if it is
surrendered for registration of transfer or exchange shall bear interest from
the date to which interest has been paid in full on this Bond or duly provided
for or, if no interest has been paid on this Bond or duly provided for, the date
of the first authentication of this Bond under the provisions of the Ordinance.
For any Daily Interest Rate Period and any Weekly Interest Rate Period, interest
on this Bond shall be payable on each Interest Payment Date for the period
commencing on the preceding Interest Accrual Date (unless such Interest Payment
Date does not fall on an Interest Accrual Date, in which case on the second
preceding Interest Accrual Date) and ending on the day immediately preceding the
Interest Accrual Date on which such Interest Payment Date falls (unless such
Interest Payment Date does not fall on an Interest Accrual Date, in which case
on the day immediately preceding the immediately preceding Interest Accrual
Date). For any Short-Term Interest Rate Period or Long-Term Interest Rate
Period, interest on this Bond shall be payable on each Interest Payment Date for
the period commencing on the immediately preceding Interest Accrual Date and
ending on the day immediately preceding such Interest Payment Date. In any
event, interest on this Bond shall be payable for the final Interest Rate Period
to the date on which this Bond shall have been paid in full. Interest shall be
computed, in the case of a Long-Term Interest Rate Period, on the basis of a
360-day year consisting of twelve 30-day months, and in the case of any other
Interest Rate Period, on the basis of a 365- or 366-day year, as appropriate,
and the actual number of days elapsed. The Bonds shall be issuable in the form
of registered Bonds without coupons in the denomination of (i) $5,000 and any
integral multiple thereof, during any Long-Term Interest Rate Period, (ii)
5100,000 and any integral multiple of $100,000 (and provided that one Bond in
excess of $100,000 may be in an integral multiple of S5,000), during any Daily
Interest Rate Period or Weekly Interest Rate Period, and (iii) $100,000 and any
integral multiple of $5,000 in excess of $100,000 during any Short-Term Interest
Rate Period (such denominations referred to herein as "Authorized
Denominations").

               The term "Interest Accrual Date" shall mean (i) with respect to
any Daily Interest Rate Period, the first day thereof and, thereafter, the first
day of each calendar month during that Daily Interest Rate Period, (ii) with
respect to any Weekly Interest Rate Period, the first day thereof and,
thereafter, the first day of each calendar month during that Weekly Interest
Rate Period, (iii) with respect to any Long-Term Interest Rate Period, the first
day thereof and, thereafter, each Interest Payment Date in respect thereof,
other than the last such Interest Payment Date, and (iv) with respect to each
Bond Interest Term within a Short Term Interest Rate Period, the first day
thereof. The Term "Interest Payment Date" shall mean (i) with respect to any
Daily or Weekly Interest Rate Period, the first Business Day of each calendar
month, (ii) with respect to any Long-Term Interest Rate Period, each June 1 and
December 1 occurring during such Long-Term Interest Rate Period, and the
Business Day next succeeding the last day thereof, (iii) with respect to any
Short-Term Interest Rate Period, the Business Day next succeeding the last day
thereof, and (iv) in all events, the final maturity date of the Bonds. The term
"Business Day" shall mean a day on which banks located in the cities in which
the Principal Offices of the Trustee and the Tender Agent are located, and in
the city or cities in which

                                      A-4

<PAGE>

drawings under a Credit Facility are required to be made, are not required or
authorized by law or executive order to remain closed and on which the New York
Stock Exchange, Inc. is not closed.

              (1)  Daily Interest Rate

         (i)  Determination of Daily Interest Rate. During each Daily Interest
         Rate Period, the Bonds shall bear interest at the Daily Interest Rate
         determined by the Remarketing Agent on or before each Business Day for
         such Business Day. The Daily Interest Rate shall be the rate of
         interest per annum determined by the Remarketing Agent to be the lowest
         interest rate which would enable the Remarketing Agent to sell the
         Bonds for delivery on the effective date of such interest rate at a
         price (without regard to accrued interest) equal to 100% of the
         principal amount thereof. The Remarketing Agent shall provide the
         Trustee and the Company with telephonic or Electronic notice of the
         Daily Interest Rate determined by 10:30 a.m. (New York City time) on
         the date of determination. If the Remarketing Agent shall not have
         determined a Daily Interest Rate for any day by 10:30 a.m. (New York
         City time) on such day, the Daily Interest Rate shall be the same as
         the Daily Interest Rate for the immediately preceding day. In no event
         shall the Daily Interest Rate be greater than the Maximum Interest
         Rate.

         (ii) Adjustment to Daily Interest Rate Period. At any time, the
         Company, by written notice to the City, the Trustee, the Bank, the
         Tender Agent and the Remarketing Agent, may elect that the Bonds shall
         bear interest at a Daily Interest Rate. Such notice (1) shall specify
         the effective date of such adjustment to a Daily Interest Rate, which
         shall be (A) a Business Day not earlier than twenty-five (25) days
         after delivery of such notice (or such shorter period as shall be
         acceptable to the Trustee); (B) in the case of an adjustment from a
         Long-Term Interest Rate Period, a day on which the Bonds would be
         permitted to be redeemed at the option of the Company pursuant to
         Section 3.01(b) hereof; and (C) in the case of an adjustment from a
         Weekly Interest Rate Period or a Short-Term Interest Rate Period, an
         Interest Payment Date on which interest is payable for the Weekly
         Interest Rate Period or Bond Interest Term from which the adjustment is
         to be made; provided, however, that if prior to the Company's making
         such election, any Bonds shall have been called for redemption and such
         redemption shall not have theretofore been effected, the effective date
         of such Daily Interest Rate Period shall not precede such redemption
         date; and (2) if the adjustment is from a Long-Term Interest Rate
         Period, shall be accompanied by a Favorable Opinion of Bond Counsel to
         the effect that such adjustment (a) is authorized or permitted by the
         Ordinance and the Act, and (b) will not adversely affect the Tax-Exempt
         status of the interest on the Bonds.

         (2)  Weekly Interest Rate.

         (i)  Determination of Weekly Interest Rate. During each Weekly Interest
         Rate Period, the Bonds shall bear interest at the Weekly Interest Rate,
         which shall be determined by the Remarketing Agent no later than the
         first day of such Weekly Interest Rate Period and thereafter no later
         than 10:00 a.m. (New York City time) on Wednesday of each week during
         such Weekly Interest Rate Period, unless any such Wednesday shall not
         be a Business Day, in which event the Weekly Interest Rate shall be
         determined by

                                      A-5

<PAGE>

         the Remarketing Agent no later than the Business Day immediately
         preceding such Wednesday. The Weekly Interest Rate shall be the rate of
         interest per annum determined by the Remarketing Agent to be the lowest
         interest rate which would enable the Remarketing Agent to sell the
         Bonds for delivery on the effective date of such interest rate at a
         price (without regard to accrued interest) equal to 100% of the
         principal amount thereof. If for any reason, a Weekly Interest Rate is
         not so established for any period by the time specified above by the
         Remarketing Agent, the Weekly Interest Rate shall be the same as the
         Weekly Interest Rate in effect for the immediately preceding week. In
         no event shall any Weekly Interest Rate exceed the Maximum Interest
         Rate. The first Weekly Interest Rate determined for each Weekly
         Interest Rate Period shall apply to the period commencing on the first
         day of such Weekly Interest Rate Period and ending on the next
         succeeding Tuesday, unless such Weekly Interest Rate Period shall end
         on a day other than Tuesday, in which event the last Weekly Interest
         Rate for such Weekly Interest Rate Period shall apply to the period
         commencing on the Wednesday preceding the last day of such Weekly
         Interest Rate Period and ending on such last day. The Remarketing Agent
         shall provide the Trustee and the Company with written, telephonic or
         Electronic notice of each Weekly Rate, as determined, by 12:00 noon
         (New York City time) on the effective date of such Weekly Rate.

         (ii) Adjustment to Weekly Interest Rate. At any time, the Company, by
         written direction to the City, the Trustee, the Bank, the Tender Agent
         and the Remarketing Agent, may elect that the Bonds shall bear interest
         at a Weekly Interest Rate. Such direction (1) shall specify the
         effective date of such adjustment to a Weekly Interest Rate, which
         shall be (A) a Business Day not earlier than twenty-five (25) days
         after delivery of such notice (or such shorter period as shall be
         acceptable to the Trustee), (B) in the case of an adjustment from a
         Long-Term Interest Rate Period, a day on which the Bonds would
         otherwise be permitted to be redeemed at the option of the Company
         pursuant to Section 3.01(b) hereof; and (C) in the case of an
         adjustment from a Daily Interest Rate Period or Short-Term Interest
         Rate Period, an Interest Payment Date on which interest is payable for
         the Daily Interest Rate Period or Bond Interest Term from which the
         adjustment is to be made; provided, however, that if prior to the
         Company's making such election, any Bonds shall have been called for
         redemption and such redemption shall not have theretofore been
         effected, the effective date of such Weekly Interest Rate Period shall
         not precede such redemption date; and (2) if the adjustment is from a
         Long-Term Interest Rate Period, shall be accompanied by a Favorable
         Opinion of Bond Counsel addressed to the Trustee to the effect that
         such adjustment (a) is authorized or permitted by the Ordinance and the
         Act, and (b) will not adversely affect the Tax-Exempt status of
         interest on the Bonds.

         (3)  Long-Term Interest Rate.

         (i)  Determination of Long-Term Interest Rate. During each Long-Term
         Interest Rate Period, the Bonds shall bear interest at the Long-Term
         Interest Rate, which shall be determined by the Remarketing Agent on a
         Business Day selected by the Remarketing Agent but not more than forty
         (40) days prior to and not later than the effective date of such
         Long-Term Interest Rate Period. The Long Term Interest Rate shall be
         the rate of interest per annum determined by the Remarketing Agent on
         such date, and

                                      A-6

<PAGE>

         communicated by the close of business on such date to the Trustee, the
         Paying Agent and the Company, by written, telephonic or Electronic
         notice as being the lowest interest rate which would enable the
         Remarketing Agent to sell the Bonds for delivery on the effective date
         of such Long-Term Interest Rate Period at a price (without regard to
         accrued interest) equal to 100% of the principal amount thereof;
         provided, however, that if, for any reason, a Long-Term Interest Rate
         for any Long-Term Interest Rate Period shall not be determined or
         effective or if an adjustment from a Long-Term Interest Rate Period to
         another Interest Rate Period shall not be effective, the Interest Rate
         Period for the Bonds shall automatically convert to a Daily Interest
         Rate Period; provided, further, however, that if the opinion of Bond
         Counsel required by Section [2.01(4)(b)] in connection with an
         adjustment to a Daily Interest Rate Period from a Long-Term Interest
         Rate Period cannot be obtained, then the Interest Rate Period for the
         Bonds shall automatically convert to a Long-Term Interest Rate Period
         of one year and one day. If a Daily Interest Rate for the first day of
         such Daily Interest Rate Period is not determined as provided in
         Section 2.01(4) hereof, the Daily Interest Rate for the first day of
         such Daily Interest Rate Period shall be equal to the TBMA Municipal
         Index. In no event shall any Long-Term Interest Rate be greater than
         the Maximum Interest Rate.

         (ii) Adjustment to or Continuation of Long-Term Interest Rate. At any
         time, the Company, by written notice to the City, the Bank, the
         Trustee, the Tender Agent and the Remarketing Agent, may elect that the
         Bonds shall bear or continue to bear interest at a Long-Term Interest
         Rate and if it shall so elect, shall determine the duration of the
         Long-Term Interest Rate Period during which the Bonds shall bear
         interest at such Long-Term Interest Rate. Each Long-Term Interest Rate
         Period shall have a duration such that the last day of such Long-Term
         Interest Rate Period is (1) a day which both immediately precedes a
         Business Day and is at least one (1) year after the effective date of
         such Long-Term Interest Rate Period or (2) if earlier, the day
         immediately preceding the final maturity date of the Bonds. At the time
         the Company so elects an adjustment to or continuation of a Long-Term
         Interest Rate Period, the Company may specify two or more consecutive
         Long-Term Interest Rate Periods and, if the Company so specifies, shall
         specify the duration of each such Long-Term Interest Rate Period as
         provided in this paragraph (1). Such notice shall specify the effective
         date of each such Long-Term Interest Rate Period, which shall be (a) a
         Business Day not earlier than twenty-five (25) days after delivery of
         such notice (or such shorter period as shall be acceptable to the
         Trustee); (b) in the case of an adjustment from or continuation of a
         Long-Term Interest Rate Period, a day on which the Bonds would be
         permitted to be redeemed by the Company pursuant to Section 3.01(b)
         hereof; and (c) in the case of an adjustment from a Daily or Weekly or
         Short-Term Interest Rate Period, an Interest Payment Date on which
         interest is payable for the Daily or Weekly Interest Rate Period or
         Bond Interest Term from which the adjustment is to be made; provided,
         however, that if prior to the Company's making such election, any Bonds
         shall have been called for redemption and such redemption shall not
         have theretofore been effected, the effective date of such Long-Term
         Interest Rate Period shall not precede such redemption date. In
         addition, such notice (i) shall specify the last day of such Long-Term
         Interest Rate Period, and (ii) if the adjustment is from a Daily,
         Weekly or Short-Term Interest Rate Period, shall be accompanied by a
         Favorable Opinion of Bond Counsel to the effect that such adjustment

                                      A-7

<PAGE>

         (a) is authorized or permitted by the Ordinance and the Act, and (b)
         will not adversely affect the Tax-Exempt status of interest on the
         Bonds.

         (4)  Bond Interest Term Rate.

         (i)  Determination of Bond Interest Terms and Bond Interest Term Rates.
         During each Short-Term Interest Rate Period, each Bond shall bear
         interest during each Bond Interest Term for such Bond at the Bond
         Interest Term Rate for such Bond. Each Bond Interest Terms and Bond
         Interest Term Rates for any Bond shall be a period of at least one day
         but not more than the lesser of (x) 270 days or (y) the number of days
         of interest coverage on the Bonds provided for in any Credit Facility
         then in effect plus five (5) days. When a Credit Facility, if any,
         other than a letter of credit is in effect with respect to the Bonds or
         no Credit Facility is in effect with respect to the Bonds, each Bond
         Interest Term for any Bond shall be a period of at least one day but
         not more than 270 days. Each Bond Interest Term for any Bond shall be a
         period determined by the Remarketing Agent to be, in its judgment, the
         period which, taking into account prevailing market conditions and all
         other Bond Interest Terms and Bond Interest Term Rates for all Bonds
         then Outstanding, is likely to result in the lowest overall net
         interest expense on all such Bonds; provided, however, that any such
         Bond purchased on behalf of the Company and remaining unsold in the
         hands of the Remarketing Agent as of 1:00 p.m. (New York City time) on
         the effective date of the Bond Interest Term for such Bond shall have a
         Bond Interest Term of one day or, if such Bond Interest Term would not
         end on a day immediately preceding a Business Day, a Bond Interest Term
         of more than one day ending on the day immediately preceding the next
         Business Day; provided, further, however, that (1) each Bond Interest
         Term shall end on a day which immediately precedes a Business Day and
         no Bond Interest Term shall extend beyond the day immediately preceding
         the final maturity date of the Bonds or, if a Credit Facility, if any,
         is then in effect with respect to the Bonds, the scheduled expiration
         date of such Credit Facility, and (2) if for any reason the Remarketing
         Agent fails or is unable to determine a Bond Interest Term on any Bond,
         the Bond Interest Term for such Bond shall be one day, unless such Bond
         Interest Term would end on a day which does not precede a Business Day,
         in which case such Bond Interest Term shall end on the day immediately
         preceding the next succeeding Business Day.

                   The Bond Interest Term Rate for each Bond Interest Term for
         each Bond shall be the rate of interest per annum determined by the
         Remarketing Agent no later than 1:00 p.m. (New York City time) on the
         first day of such Bond Interest Term to be the lowest interest rate
         which would enable the Remarketing Agent to sell such Bonds on the
         effective date of such interest rate at a price (without regard to
         accrued interest) equal to 100% of the principal amount thereof. The
         Remarketing Agent shall provide the Trustee and the Company with
         telephonic or Electronic notice of each Bond Interest Term Rate and
         Bond Interest Term by 1:00 p.m. (New York City time) on the date of
         determination. If a Bond Interest Term Rate for a Bond Interest Term of
         one day is not determined or effective by 1:00 p.m. (New York City
         time) on such day, the Bond Interest Term Rate for such Bond Interest
         Term of one day shall be equal to the TBMA Municipal Index. In no event
         shall any Bond Interest Term Rate exceed the Maximum Interest Rate.

                                      A-8

<PAGE>

                   Notwithstanding the foregoing, in the event that notice of
         redemption with respect to any Bond in a Short-Term Interest Rate
         Period shall have been given to the holder of such Bond by the Trustee
         pursuant to Section 3.03 hereof, no subsequent Bond Interest Terms or
         Bond Interest Term Rates shall be determined with respect to such Bond.

         (ii)  Adjustment to Bond Interest Term Rates. At any time, the Company,
         by written direction to the City, the Trustee, the Bank, the Tender
         Agent and the Remarketing Agent, may elect that the Bonds shall bear
         interest at Bond Interest Term Rates. Such direction shall specify the
         effective date of the Short-Term Interest Rate Period during which the
         Bonds shall bear interest at Bond Interest Term Rates, which shall be
         (A) a Business Day not earlier than twenty-five (25) days after
         delivery of such notice (or such shorter period as shall be acceptable
         to the Trustee), (B) in the case of an adjustment from a Long-Term
         Interest Rate Period, a day on which the Bonds would be permitted to be
         redeemed at the option of the Company pursuant to Section 3.01(b)
         hereof; and (C) in the case of an adjustment from a Daily or Weekly
         Interest Rate Period, an Interest Payment Date on which interest is
         payable for the Daily or Weekly Interest Rate Period from which the
         adjustment is to be made; provided, however, that if prior to the
         Company's making such election any Bonds shall have been called for
         redemption and such redemption shall not have theretofore been
         effected, the effective date of such Short-Term Interest Rate Period
         shall not precede such redemption date; and (2) shall be accompanied by
         a Favorable Opinion of Bond Counsel addressed to the Trustee to the
         effect that such adjustment (a) is authorized or permitted by the
         Ordinance and the Act and (b) will not adversely affect the Tax-Exempt
         status of interest on the Bonds.

         (iii) Adjustment from Short-Term Interest Rate Period. At any time
         during a Short-Term Interest Rate Period, the Company may elect that
         the Bonds shall no longer bear interest at Bond Interest Term Rates and
         shall instead bear interest as otherwise permitted under this
         Ordinance. The Company shall give written notice to the City, the
         Trustee, the Paying Agent and the Remarketing Agent, if any, of such
         election and shall specify the Interest Rate Period to follow with
         respect to such Bonds upon cessation of the Short-Term Interest Rate
         Period and instruct the Remarketing Agent to (1) determine Bond
         Interest Terms of such duration that, as soon as possible, all Bond
         Interest Terms shall end on the same date, not earlier than twenty-four
         (24) days (or such shorter period acceptable to the Trustee) following
         the delivery by the Company of such written notice, and upon the
         establishment of such Bond Interest Term the day next succeeding the
         last day of all such Bond Interest Terms shall be the effective date of
         the Interest Rate Period elected by the Company; or (2) determine Bond
         Interest Terms of that will best promote an orderly transition to the
         next succeeding Interest Rate Period to apply to the Bonds, beginning
         not earlier than twenty-four (24) days (or such shorter period
         acceptable to the Trustee) following the delivery by the Company of
         such written notice. If the alternative in clause (2) above is
         selected, the day next succeeding the last day of the Bond Interest
         Term for each Bond shall be with respect to such Bond the effective
         date of the Interest Rate Period elected by the Company. The
         Remarketing Agent, promptly upon the determination thereof, shall give
         written notice of such last day and such effective dates to the City,
         the Company, the Trustee and the Tender Agent. During any transitional
         period from a Short-Term Interest Rate Period to the next succeeding
         Interest Rate Period

                                      A-9

<PAGE>

         in accordance with clause (2) above, the provisions of this Ordinance
         shall be deemed to apply to the Bonds as follows: the Bonds continuing
         to bear interest at Bond Interest Term Rates shall have applicable to
         them the provisions hereunder theretofore applicable to such Bonds as
         if all Bonds were continuing to bear interest at Bond Interest Term
         Rates and the Bonds bearing interest in the Interest Rate Period to
         which the transition is being made will have applicable to them the
         provisions hereunder as if all Bonds were bearing interest in such
         Interest Rate Period.

         (5) Limitation on Adjustment of Interest Rate Periods. In connection
with any adjustment of Interest Rate Periods, the Company may not, if a Credit
Facility is to be in effect with respect to the Bonds, adjust to an Interest
Rate Period unless a Credit Facility shall be in effect providing for sufficient
coverage of principal and interest on the Bonds in respect of such Interest Rate
Period to permit the Bonds to continue to be rated in a rating category
reflecting the corresponding rating of the obligor on a Credit Facility by both
Moody's and S&P. Notwithstanding any term or provision of this Ordinance to the
contrary, without the prior written consent of the Bank, the Company may not
elect that the Bonds bear interest at a Bond Interest Term Rate or a Long-Term
Interest Rate Period. Any such consent of the Bank may be limited to a Bond
Interest Term or a Long-Term Interest Rate Period of a specified maximum
duration.

         (6) Notice of Adjustment to Daily. Weekly or Long-Term Interest Rate or
Bond Interest Terms Rates: Bonds Counsel Opinions: Remarketing Agent: Tender
Agent.

             (i)   Except as otherwise provided in the Ordinance, the Trustee
shall give notice by first-class mail of an adjustment to a Daily, Weekly,
Short-Term or Long-Term Interest Rate Period, as the case may be, to the Owners
of the Bonds not less than fifteen (15) days (thirty (30) days if the then
current Interest Rate Period is a Long-Term Interest Rate Period) prior to the
effective date of such Daily, Weekly, Short-Term or Long-Term Interest Rate
Period.

             (ii)  Adjustment to a Daily, Weekly, Short-Term or Long-Term
Interest Rate Period, except for successive Long-Term Interest Rate Periods,
requires a contemporaneous Favorable Opinion of Bond Counsel. "Favorable Opinion
of Bond Counsel" means an opinion of Bond Counsel to the effect that the action
proposed to be taken is authorized by the laws of the State of New Mexico and
the Ordinance and will not adversely affect any exclusion from gross income for
federal income tax purposes of interest on the Bonds.

             (iii) The initial Remarketing Agent appointed under the Ordinance
shall be Salomon Smith Barney

             (iv)  The initial Tender Agent appointed under the Ordinance shall
be Salomon Smith Barney

         (7) (i)   Purchase of Bonds During Daily Interest Rate Period. During
any Daily Interest Rate Period, this Bond or any portion hereof in an Authorized
Denomination shall be purchased from its Owner at the option of the Owner on any
Business Day at a purchase price equal to the principal amount hereof plus
accrued interest from the Interest Accrual Date immediately preceding the date
of purchase through the day immediately preceding the date of purchase, unless
the date of purchase shall be an Interest Accrual Date, in which case at a

                                      A-10

<PAGE>

purchase price equal to the principal amount hereof, payable in immediately
available funds, upon delivery to the Tender Agent at its principal office, by
no later than 10:30 a.m., New York time, on such Business Day, of an irrevocable
written notice or an irrevocable telephonic notice, promptly confirmed by tested
telex, telecopy or other writing, which states the principal amount of this Bond
or such portion hereof and the date of purchase. For payment of such purchase
price on the date specified in such notice, this Bond must be delivered, at or
prior to 1:00 p.m., New York time, on such Business Day, to the Tender Agent at
its principal office, accompanied by an instrument of transfer hereof, in form
satisfactory to the Tender Agent, executed in blank by the owner hereof or his
duly authorized attorney, with such signature guaranteed by a bank, trust
company or member firm of the New York Stock Exchange, Inc.

             (ii)  Purchase of Bonds During Weekly Interest Rate Period. During
any Weekly Interest Rate Period, this Bond or any portion hereof in an
Authorized Denomination shall be purchased from its Owner at the option of the
Owner on any Business Day at a purchase price equal to the principal amount
hereof plus accrued interest, if any, from the Interest Accrual Date immediately
preceding the date of purchase through the day immediately preceding the date of
purchase, unless the date of purchase shall be an Interest Accrual Date, in
which case at a purchase price equal to the principal amount hereof, payable in
immediately available funds, upon delivery to the Tender Agent at its principal
office of an irrevocable written notice or an irrevocable telephonic notice,
promptly confirmed by tested telex, telecopy or other writing, which states the
principal amount of this Bond or such portion hereof and the date on which the
same shall be purchased, which date shall be a Business Day not prior to the
seventh day next succeeding the date of the delivery of such notice to the
Tender Agent. For payment of such purchase price on the date specified in such
notice, this Bond must be delivered, at or prior to 10:00 a.m., New York time,
on the date specified in such notice, to the Tender Agent at its principal
office, accompanied by an instrument of transfer hereof, in form satisfactory to
the Tender Agent, executed in blank by the owner hereof or his duly authorized
attorney, with such signature guaranteed by a bank, trust company or member firm
of the New York Stock Exchange, Inc.

             (iii) Mandatory Tender for Purchase On Day Next Succeeding the Last
Day of Each Bond Interest Term. On the day next succeeding the last day of each
Bond Interest Term for this Bond, unless such day is the first day of a new
Interest Rate Period (in which event Paragraph 7(iv) hereof shall be
applicable), this Bond shall be purchased from its Owner, at a purchase price
equal to the principal amount hereof, payable in immediately available funds.
The purchase price of this Bond if so purchased shall be payable only upon
surrender of this Bond to the Tender Agent at its principal office, accompanied
by an instrument of transfer hereof, in form satisfactory to the Tender Agent,
executed in blank by the Owner hereof or his duly authorized attorney, with such
signature guaranteed by a bank, trust company or member firm of the New York
Stock Exchange, Inc.

             (iv)  Mandatory Tender for Purchase on First Day of Each Interest
Rate Period. This Bond shall be subject to mandatory tender for purchase, at the
purchase price, payable in immediately available funds, specified in the
Ordinance, on the first day of each Interest Rate Period if the Interest Rate
Period immediately preceding such Interest Rate Period was different than that
of the Interest Rate Period becoming effective.

                                      A-11

<PAGE>

             (v)    Mandatory Tender for Purchase on First Day of Long-Term
Interest Rate Period Following Prior Long-Term Interest Rate Period. This Bond
shall be subject to mandatory tender for purchase, at the purchase price,
payable in immediately available funds, specified in the Ordinance, on the first
day of each Long-Term Interest Rate Period which was preceded by a Long-Term
Interest Rate Period.

             (vi)   Mandatory Tender for Purchase on Termination or Expiration
of Credit Facility. This Bond shall be subject to mandatory tender for purchase
on the date and at the purchase price, payable in immediately available funds,
specified in the Ordinance in the event that any Credit Facility either is to
terminate or is to expire in accordance with its terms (other than because a
final drawing thereunder shall have been made in accordance with its terms),
unless the term of a Credit Facility shall be extended or unless the Company
shall provide the Trustee with a substitute Credit Facility with evidence from
the rating agency or agencies rating the Bonds to the effect that such
substitute Credit Facility will not, by itself, result in a reduction or
withdrawal of the rating on the Bonds by such rating agency or agencies.

             (vii)  Notice of Mandatory Tender for Purchase. In connection with
any mandatory tender for purchase of this Bond in accordance with paragraph
7(iii), (iv), (v) or (vi) above, the Trustee shall give notice by first-class
mail to the Owner of this Bond at the time and in the form specified in the
Ordinance.

             (viii) Irrevocable Notice Deemed to be Tender of Bond: Undelivered
Bonds.

             (y)    The giving of notice by an Owner of this Bond as provided in
paragraph 7(i) or (ii) hereof, shall constitute the irrevocable tender for
purchase of this Bond with respect to which such notice shall have been given,
irrespective of whether this Bond shall be delivered as provided in such
Paragraph.

             (z)    The Tender Agent may refuse to accept delivery of any Bonds
for which a proper instrument of transfer has not been provided. In the event
that any Owner of a Bond who shall have given notice of tender of purchase
pursuant to paragraph 7(i) or (ii) hereof or shall have been sent a notice of
mandatory tender pursuant to paragraph 7(vii) hereof shall fail to deliver such
Bond to the Tender Agent at the place and on the applicable date and time
specified, or shall fail to deliver such Bond properly endorsed, such Bond shall
constitute an Undelivered Bond. If funds in the amount of the purchase price of
the Undelivered Bond are available for payment to the Owner thereof on the date
at the time specified, from and after the date and time of that required
delivery, (A) the Undelivered Bond shall no longer be deemed to be outstanding
pursuant to the Ordinance entitled to be paid with the proceeds of a Credit
Facility, (B) interest shall no longer accrue thereon; and (C) funds in the
amount of the purchase price of the Undelivered Bond shall be held by the Tender
Agent for the benefit of the owner thereof (provided that the Owner shall have
no right to any investment proceeds derived from such funds), to be paid on
delivery (or proper endorsement) of the Undelivered Bond to the Tender Agent.
Any funds held by the Tender Agent as described in clause (C) of the preceding
sentence shall be held uninvested.

         (8) Redemption Provisions. The Bonds shall be subject to redemption
prior to maturity as follows:

                                      A-12

<PAGE>

             (i)   On any Business Day during a Daily Interest Rate Period or a
Weekly Interest Rate Period, the Bonds shall be subject to optional redemption
by the City, upon the exercise by the Company of any of its options to prepay
all or a part of the unpaid balance of the purchase price of the Project and
cause the Bonds to be redeemed, in whole or in part, at 100% of the principal
amount thereof, plus accrued interest, if any, to the redemption date.

             (ii)  On the day succeeding the last day of any Bond Interest Term
with respect to any Bond, such Bond shall be subject to optional redemption by
the City, upon the exercise by the Company of any of its options to prepay all
or a part of the unpaid balance of the purchase price of the Project and cause
the Bonds to be redeemed, in whole or in part, at 100% of the principal amount
thereof.

             (iii) During any Long-Term Interest Rate Period, the Bonds shall be
subject to optional redemption by the City, upon the exercise by the Company of
any of its options to prepay all or a part of the unpaid balance of the purchase
price of the Project and cause the Bonds to be redeemed, on the first day
thereof, in whole or in part, at the redemption price of 100% of the principal
amount thereof, and thereafter, during the periods specified below (or such
longer or shorter periods as may be specified in accordance with the Ordinance)
in whole at any time or in part on any Interest Payment Date from time to time,
at the redemption prices (expressed as percentages of principal amount)
hereinafter indicated (or such redemption prices as may be specified in
accordance with the Ordinance), plus accrued interest, if any, to the redemption
date:

<TABLE>
<CAPTION>
                     Length of
           Long-Term Interest Rate Period
                (expressed in years)                 Redemption Prices
           ------------------------------            -----------------
           <S>                                <C>
           Greater than 17                    After 10 years at 102% declining by
                                              1% every 12 months to 100%

           Less than or equal to 17 and       After 8 years at 102%, declining by
              greater than 10                 1% every 12 months to 100%

           Less than or equal to 10 and       After 6 years at 101%, declining by
              greater than 7                  1/2 of 1% every 6 months to 100%

           Less than or equal to 7 and        After 3 years at 101%, declining by
              greater than 4                  1/2 of 1% every 6 months to 100%

           Less than or equal to 4 and        After 2 years at 100 1/2%, declining
              greater than 3                  by 1/2 of 1% after 6 months to 100%

           Less than or equal to 3 and        After 1 year at 100 1/2%,
</TABLE>

                                      A-13

<PAGE>

<TABLE>
         <S>                                <C>
            greater than 2                  declining by 1/2 of 1% after 6
                                            months to 100%

         Less than or equal to 2 and        After 1 year at 100%
            greater than 1

         1 year or less                     Not redeemable
</TABLE>

             (iv) The Bonds shall be subject to extraordinary optional
redemption by the City, in whole or in part, at the redemption price of 100% of
the principal amount thereof plus accrued interest, if any, to the redemption
date, upon the exercise by the Company of its option to prepay all, or part of,
the unpaid balance of the loan in accordance with Section 9.01 of the Agreement
if the Company determines that the continued operation of the Facilities, or any
part thereof is impractical, uneconomical or undesirable for any reason
including, but not limited to, damage to, or destruction or condemnation of, the
Facilities, or a portion thereof.

             (v)  The Bonds shall be subject to mandatory redemption by the
City, in whole, or in part, at the redemption price of 100% of the principal
amount thereof plus accrued interest, if any, to the redemption date, on the
180th day (or such earlier date as may be designated by the Company) after a
final determination by a court of competent jurisdiction or an administrative
agency (following all permitted administrative or judicial appeals or the
expiration of the time for commencing any such appeal), to the effect that, as a
result of the failure by the Company to observe or perform any covenant or
agreement in the Agreement, the interest payable on the Bonds is included for
federal income tax purposes in the gross income of the owners thereof, other
than any owner of a Bond who is a "substantial user" of the Facilities or a
"related person" within the meaning of the Internal Revenue Code of 1986, as
amended (the "Code").

        (9)  Selection of Bonds for Partial Redemption. I If less than all the
Bonds shall be called for redemption the Trustee shall select the Bonds or any
given portion thereof to be redeemed, from Outstanding Bonds or any given
portion thereof not previously called for redemption, by lot. For the purpose of
any such selection the Trustee shall assign a separate number for each minimum
Authorized Denomination of each Bond of a denomination of more than such
minimum; provided that following any such selection, both the portion of such
Bond to be redeemed and the portion remaining shall be in Authorized
Denominations. The Trustee shall promptly notify the City and the Company in
writing of the numbers of the Bonds or portions thereof so selected for
redemption.

        (10) Miscellaneous.

             (i)  The transfer of this Bond shall be registered upon the
registration books kept at the principal corporate trust office of the Trustee,
as Registrar, at the written request of the Owner hereof or his attorney duly
authorized in writing, upon surrender of this Bond at said office, together with
the attached instrument of transfer duly executed by the Owner or his duly
authorized attorney.

             (ii) The Owner of this Bond shall have no right to enforce the
provisions of the Ordinance, or to institute action to enforce the covenants
therein, or to take any action with

                                      A-14

<PAGE>

respect to any default under the Ordinance, or to institute, appear in or defend
any suit or other proceeding with respect thereto, except as provided in the
Ordinance.

         (iii) With certain exceptions as provided therein, the Ordinance and
the Agreement may be modified or amended only with the consent of the owners of
not less than a majority in aggregate principal amount of all Bonds outstanding
under the Ordinance.

         (iv)  Reference is hereby made to the Ordinance and the Agreement,
copies of which are on file with the Trustee, and to a Credit Facility which is
held by the Trustee, for the provisions, among others, with respect to the
nature and extent of the rights, duties and obligations of the City, the
Company, the Trustee, the Tender Agent and the Remarketing Agent appointed
pursuant to the Ordinance and the Owners of the Bonds. The owner of this Bond,
by the acceptance hereof, is deemed to have agreed and consented to the terms
and provisions of the Ordinance, the Agreement and a Credit Facility.

         (v)   The City, the Trustee, the Registrar, the Paying Agent, the
Tender Agent, the Remarketing Agent and the Bank may deem and treat the person
in whose name this Bond is registered on the registration books of the City
maintained by the Registrar as the absolute owner hereof for all purposes,
whether or not this Bond is overdue, and neither the City, the Trustee, the
Registrar, the Paying Agent, the Tender Agent, the Remarketing Agent nor the
Bank shall be affected by any notice to the contrary.

         (vi)  No covenant or agreement contained in this Bond or the Ordinance
shall be deemed to be the covenant or agreement of any elected or appointed
commissioner, official, officer, agent, servant or employee of the City in his
individual capacity, and neither the members of the City Council of the City,
nor any official executing this Bond, shall he liable personally on this Bond or
be subject to any personal liability or accountability by reason of the issuance
of this Bond.

         IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions
and things required by the Constitution and the statutes of the State of New
Mexico, the governing rules and procedures of the City and the Ordinance to
exist, to have happened and to have been performed precedent to and in the
issuance of this Bond, do exist, have happened and have been performed.

         No officer or official of the City shall be individually or personally
liable for payment of the Bonds or the interest thereon or be subject to any
personal liability or accountability by reason of the issuance thereof.

         This Bond shall not be entitled to any right or benefit under the
Ordinance, or be valid or become obligatory for any purpose, until this Bond
shall have been authenticated by the manual execution by the Trustee, or its
successor as Trustee, of the certificate of authentication inscribed hereon.

                                      A-15

<PAGE>

          IN WITNESS WHEREOF, the City of Farmington, New Mexico has caused this
Bond to be authenticated by its Mayor and its Treasurer, each by his or her
manual or facsimile signature and has caused the corporate seal of the City to
be affixed, impressed, or reproduced hereon and attested by the City Clerk with
his or her manual or facsimile signature, one of the foregoing signatures being
manual.

Dated as of the Original
Issue Date set forth above.

                                                     CITY OF FARMINGTON,
                                                        NEW MEXICO

                                                     By: _______________________
                                                         Mayor

                                                     By: _______________________
                                                         Treasurer

SEAL

ATTEST:

_________________________
City Clerk

                                      A-16

<PAGE>

               (Form of Trustee's Certificate of Authentication).

                          CERTIFICATE OF AUTHENTICATION

          This is to certify that this Bond is one of the Bonds described in the
within-mentioned Ordinance.

                                      TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
                                        as Trustee

                                      By: ______________________________________
                                          Authorized Signature

                                      Date of Authentication: __________________

                                      A-17

<PAGE>

                               (Form for Transfer)

                         COMPLETE AND SIGN THIS FORM FOR
                      REGISTRATION OF TRANSFER OR TRANSFER

          For value received __________ hereby sells, assigns and transfers unto
__________ this Bond and hereby irrevocably constitutes and appoints
____________________ Attorney to register such transfer on the books of
registration in the office of the Registrar with full power of substitution in
the premises.

Dated: ___________________________             _________________________________

Signatures Guaranteed by.                      NOTE: The signatures on this
                                               assignment must correspond with
                                               the names as written on the face
                                               of this Bond in every particular,
                                               without  alteration, enlargement
                                               or any change whatsoever.

__________________________________
Signatures must be guaranteed in
accordance with the terms of one of
the nationally recognized medallion
signature guarantee programs.

                                      A-18

<PAGE>

                         ACCEPTANCE OF DUTIES BY TRUSTEE

          JPMorgan Chase Bank, as Trustee, hereby accepts as of August 1, 2002
the trust imposed under the foregoing Ordinance and the duties and obligations
imposed on the Trustee thereby.

                                                 By: /s/ Cary W. Gilliam
                                                     ---------------------------
                                                     Title: Vice President<PAGE>
                                                                    EXHIBIT 4.23

                                                                  EXECUTION COPY

================================================================================

                                TENDER AGREEMENT

                                     Between

                            EL PASO ELECTRIC COMPANY

                                       and

                                SMITH BARNEY INC.

                                   $33,300,000
                         CITY OF FARMINGTON, NEW MEXICO
                   Pollution Control Revenue Refunding Bonds,
                                  2002 Series A
                (El Paso Electric Company, Four Corners Project)

                           Dated as of August 1, 2002

================================================================================

<PAGE>

                                TENDER AGREEMENT

     THIS TENDER AGREEMENT is dated as of August 1, 2002 (the "Agreement"),
between EL PASO ELECTRIC COMPANY, a corporation organized and existing under the
laws of the State of Texas (the "Company"), and SALOMON SMITH BARNEY (the
"Tender Agent"). Capitalized terms used herein and not otherwise defined shall
have the meaning given to such terms in the Ordinance (defined below).

                              W I T N E S S E T H :

     WHEREAS, at the request of the Company, the City of Farmington (the "City")
adopted on July 9, 2002 the City's Ordinance No. 2002-1134 ("Ordinance No.
94-1018"), as supplemented by Resolution No. 2002-1046 adopted July 23, 2002
(the "Resolution", and together with Ordinance No. 2002-1134, the "Ordinance")
(as amended and supplemented, the "Ordinance"), JPMorgan Chase Bank has accepted
its appointment as trustee under the Ordinance (the "Trustee"), and the
Ordinance provides that owners of the $33,300,000 principal amount of the City's
Pollution Control Revenue Refunding Bonds, 2002 Series A (El Paso Electric
Company, Four Corners Project) due June 1, 2032 (the "Bonds") may deliver their
Bonds (or portions thereof) to the Tender Agent for purchase in accordance with
the Ordinance;

     WHEREAS, concurrently with the execution and delivery of this Agreement,
the Company is entering into a Remarketing Agreement, dated as of the date
hereof (the "Remarketing Agreement"), with Salomon Smith Barney, as remarketing
agent.

     NOW, THEREFORE, in consideration of the premises the parties hereto do
hereby covenant and agree as follows:

     Section 1. The Tender Agent hereby accepts and assumes all the obligations,
duties and rights of the tender agent under the Ordinance.

     Section 2. Compensation paid by the Company to the Tender Agent for
services rendered hereunder as Tender Agent shall be at such rate as the parties
hereto may from time to time agree.

     Section 3. The Tender Agent represents that it is a corporation duly
organized under the laws of the United States of America or any state or
territory thereof, having a combined capital stock, surplus and undivided
profits of at least $25,000,000 and authorized by law to perform all the duties
imposed upon it hereunder and under the Ordinance.

     Section 4. (a) The Tender Agent may at any time resign and be discharged of
its duties and obligations hereunder and under the Ordinance by giving at least
thirty (30) days' notice to the City, the Company, the Trustee and the
Remarketing Agent. Such resignation shall take effect on the day a successor
Tender Agent shall have been appointed by the Company and shall have accepted
such appointment.

          (b) The Tender Agent may be removed at any time by an instrument
signed by the Company, filed with the Tender Agent, the City, the Trustee and
the Remarketing Agent.

                                       2

<PAGE>

          (c) In the event of the resignation or removal of the Tender Agent,
the Tender Agent shall deliver any Bonds and moneys held by it in such capacity
to its successor or, if there is no successor, to the Trustee.

     Section 5. At any time the Tender Agent may consult counsel for the Company
or its own counsel in respect of any matter arising in connection with the
agency hereunder, and it shall not be liable or accountable for any action taken
or omitted by it in good faith in accordance with the opinion of such counsel.

     Section 6. The Tender Agent shall be protected:

          (a) in acting upon any paper or document reasonably believed by it to
be genuine and to have been signed by the proper person or persons; and

          (b) in recognizing Bonds which it reasonably believes to bear the
proper manual or facsimile signatures of the officers of the City.

     The Tender Agent shall not be held to have notice of any change of
authority of any officer, employee or agent of the Company until receipt of
written notification thereof from the Company.

     Section 7. The following sections of the Remarketing Agreement are hereby
incorporated into this Agreement and all references to the "Agent" in those
sections shall be deemed to refer to the Tender Agent:

          (a) Section 3, Representations, Warranties, Covenants and Agreements
of the Company; and

          (b) Section 4, Conditions to Agent's Obligations.

     Section 8. The indemnification provisions, Section 7, of the Remarketing
Agreement are hereby incorporated in full into this Agreement.

     Section 9. The principal office of the Tender Agent is hereby designated to
be:

     Salomon Smith Barney Inc.
     390 Greenwich Street, 2nd Floor
     New York, New York  10013
     Attention:  Municipal Syndicate Operations

     Section 10. This Agreement may be amended in any respect but only by
written agreement of the parties hereto, subject to the limitations upon such
amendments set forth in the Ordinance.

     Section 11. This Agreement may be executed in any number of counterparts,
each of which, when so executed and delivered, shall be an original; but such
counterparts shall together constitute but one and the same Agreement.

                                        3

<PAGE>

     Section 12. If any clause, provision or section of this Agreement be held
illegal or invalid by any court, the invalidity of such clause, provision or
section shall not affect any of the remaining clauses, provisions or sections
hereof, and this Agreement shall be construed and enforced as if such illegal or
invalid clause, provision or section had not been contained herein. In case any
agreement or obligation contained in this Agreement shall be held to be in
violation of law, then such agreement or obligation shall be deemed to be the
agreement or obligation of the City or the Company, as the case may be, to the
full extent permitted by law.

     Section 13. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.

                                        4

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Tender
Agreement to be duly executed as of the date first above written.

                                                     EL PASO ELECTRIC COMPANY

                                                     By /s/ Kathryn Hood
                                                        ------------------------
                                                        Name: Kathryn Hood
                                                        Title: Treasurer

                                                     SALOMON SMITH BARNEY

                                                     By /s/ James A. Brodt
                                                        ------------------------
                                                        Name: James A. Brodt
                                                        Title: Director

                                        5

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