Document:

SECOND AMENDMENT TO THE AMENDED AND RESTATED CREDIT AGREEMENT

 EXHIBIT 10 (a) 
  
 SECOND AMENDMENT TO THE AMENDED AND RESTATED CREDIT AGREEMENT 
  
 SECOND AMENDMENT, dated as of March 18, 2005 (this “Amendment”), to the Credit Agreement initially dated as of
March 25, 2003, amended and restated as of July 1, 2004 and amended as of September 30, 2004 (as amended, restated, supplemented or otherwise modified, the “Credit Agreement”) among K2 Inc. and each of its Subsidiaries party hereto, each
of the lending institutions from time to time party hereto (such lending institutions, together with their respective successors and assigns, are referred to herein individually as a “Lender” and collectively as the “Lenders”),
JPMorgan Chase Bank, N.A., as a contractual representative for the Lenders (the “Administrative Agent”), Bank One, NA, a national banking association having its principal office in Chicago, Illinois, as a contractual representative for the
Lenders (the “Collateral Agent”), and acting through its London branch as the “U.K. Security Trustee”. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Credit Agreement.

  
 W I T N E S S
E T H : 
  
 WHEREAS, the Obligated Parties
have requested that the Lenders amend the Credit Agreement in the manner provided for herein; and 
  
 WHEREAS, the Administrative Agent and the Lenders are willing to amend the Credit Agreement in the manner and on the conditions provided for herein.

  
 NOW THEREFORE, in consideration of the premises and mutual
covenants hereinafter set forth, the parties agree as follows: 
  
 1. Amendment to Section 6.13 of the Credit Agreement: Section 6.13 of the Credit Agreement is hereby amended by deleting the “and” at the end of clause (a) thereof and substituting “,” in lieu therefor and
striking the “.” ending clause (b) thereof and substituting in lieu therefor the following: 
  
 “and (c) the Parent may make restricted payments in the form of repurchases of its own Capital Stock in an aggregate amount not to exceed $50,000,000
less any amount used to prepay, purchase, or redeem the 2004 Senior Notes, the Convertible Subordinated Debentures, the 2003 Convertible Notes and its other Subordinated Indebtedness as provided in Section 6.34, provided that no Default exists or
would result therefrom and Unused Availability after giving effect to any such transactions exceeds $50,000,000.” 

 2. Amendment to Section 6.34 of the Credit Agreement: Section 6.34 of the Credit Agreement is
hereby amended by deleting the last sentence thereof in its entirety and substituting in lieu therefor the following: 
  
 “Notwithstanding the foregoing, the Parent may prepay, purchase, or redeem the 2004 Senior Notes, the Convertible Subordinated Debentures, the 2003
Convertible Notes and its other Subordinated Indebtedness for an aggregate amount not to exceed $50,000,000 less any amount used to repurchase Capital Stock as provided in Section 6.13, provided that no Default exists or would result therefrom and
Unused Availability after giving effect to any such transactions exceeds $50,000,000.” 
  
 3. Effectiveness. This Amendment shall become effective on the date the Administrative Agent has received counterparts of this Amendment executed by the Obligated Parties, the Administrative Agent and the
Lenders. 
  
 4. Payment of Fees and Expenses. The Borrowers
agree to pay or reimburse the Administrative Agent for all of its out-of-pocket costs and reasonable expenses incurred in connection with this Amendment and any other documents prepared in connection herewith and the transactions contemplated
hereby, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent. 
  
 5. Representations and Warranties. After giving effect to this Amendment, each Obligated Party hereby confirms, reaffirms and restates the
representations and warranties set forth in Section 5 of the Credit Agreement as if made on and as of the date hereof except for any representation or warranty made as of the earlier date, which representation or warranty shall have been true and
correct in all material respects as of such earlier date. 
  
 6.
Severability; Headings. Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction, shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. The section and subsection headings used in this Amendment are for
convenience of reference only and are not to affect the construction hereof or to be taken into consideration in the interpretation hereof. 
  
 7. Continuing Effect of Other Documents. This Amendment shall not constitute an amendment or waiver of any other provision of the Credit Agreement
not expressly referred to herein and shall not be construed as a waiver or consent to any further or future action on the part of the Obligated Parties that would require a waiver or consent of the Lenders or the Administrative Agent. Except as
expressly amended, modified and supplemented hereby, the provisions of the Credit Agreement are and shall remain in full force and effect. 
  
 8. Governing Law; Counterparts. (a) This Amendment and the rights and obligations of the parties hereto shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York. 

 (b) This Amendment may be executed by one or more of the parties to this Agreement in any number of
separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Amendment signed by all the parties shall be lodged with the Borrowers and the Administrative
Agent. This Amendment may be delivered by facsimile transmission of the relevant signature pages hereof. 
  
 [SIGNATURE PAGES FOLLOW] 

 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by
their proper and duly authorized officers as of the day and year first above written. 
  

					
	 OBLIGATED PARTIES:

	
	 K2 INC.

		
	 By:
	 	 /s/ DUDLEY W. MENDENHALL

	 	 	 Dudley W. Mendenhall

	 	 	 Senior Vice President - Finance

	
	 BRASS EAGLE, LLC

	 EX OFFICIO LLC

	 K2 EYEWEAR, LLC

	 WGP, LLC

		
	 By:
	 	 K2 Inc., its sole Member

			
	 	 	 By:
	 	 /s/ DUDLEY W. MENDENHALL

	 	 	 	 	 Dudley W. Mendenhall

	 	 	 	 	 Senior Vice President - Finance

	
	 HILTON CORPORATE CASUALS, LLC

	 SHAKESPEARE COMPANY, LLC

	 SHAKESPEARE CONDUCTIVE FIBERS, LLC

	 WORTH, LLC

		
	 By:
	 	 K2 Inc., its Manager

			
	 	 	 By:
	 	 /s/ DUDLEY W. MENDENHALL

	 	 	 	 	 Dudley W. Mendenhall

	 	 	 	 	 Senior Vice President - Finance

			
	 BRASS EAGLE CHALLENGE PARK, INC.

	 BRASS EAGLE MISSISSIPPI LLC

	 EX OFFICIO INTERNET COMPANY, LLC

	 J. DEBEER & SON, INC.

	 JT PROTECTIVE GEAR LLC

	 JT USA LLC

	 K2 BIKE, INC.

	 K-2 CORPORATION

	 K2 CORPORATION OF CANADA

	 K-2 INTERNATIONAL, INC.

	 K2 LICENSING & PROMOTIONS, INC.

	 K2 MERCHANDISING, INC.

	 K2 SNOWSHOES, INC.

	 MARMOT MOUNTAIN, LLC

	 MORROW SNOWBOARDS, INC.

	 RAWLINGS CANADA INCORPORATED

	 RAWLINGS SPORTING GOODS COMPANY

	 RIDE, INC.

	 RIDE SNOWBOARD COMPANY

	 SHAKESPEARE COMPANY (UK) LIMITED

	 SHAKESPEARE INDUSTRIES, INC.

	 SHAKESPEARE INTERNATIONAL LIMITED

	 SHAKESPEARE MONOFILAMENT UK LIMITED

	 SITCA CORPORATION

	 SMCA, INC.

	 SPORTS RECREATION COMPANY LTD.

	 STEARNS INC.

	 WORTH ACCESSORIES, INC.

	 WORTH BAT COMPANY, INC.

		
	 By:
	 	 /s/ DIANA C. CRAWFORD

	 	 	 Diana C. Crawford

	 	 	 Secretary

							
	 SATV, LLC

	 SOSPENDERS LLC

	
	 By: Stearns Inc., as sole Member

			
	 	 	 By:
	 	 /s/ DIANA C. CRAWFORD

	 	 	 	 	 Diana C. Crawford

	 	 	 	 	 Secretary

	
	 SHAKESPEARE ALL STAR ACQUISITION LLC

		
	 By:
	 	 Shakespeare Company, LLC, as sole Member

			
	 	 	 By:
	 	 K2 Inc., its Manager

				
	 	 	 	 	 By:
	 	 /s/ DUDLEY W. MENDENHALL

	 	 	 	 	 	 	 Dudley W. Mendenhall

	 	 	 	 	 	 	 Senior Vice President - Finance

	
	 EARTH PRODUCTS, INC.

	 KATIN, INC.

		
	 By:
	 	 /s/ DIANA C. CRAWFORD

	 	 	 Diana C. Crawford

	 	 	 Secretary

	
	 MARKER USA, INC.

	 MIKEN SPORTS, LLC

	 VOLKL SPORTS AMERICA CORP.

		
	 By:
	 	 /s/ DUDLEY W. MENDENHALL

	 	 	 Dudley W. Mendenhall

	 	 	 Senior Vice President - Finance

					
	 ADMINISTRATIVE AGENT:

	 JPMORGAN CHASE BANK

		
	 By:
	 	 /s/ KEVIN D. PADGETT

	 Name:
	 	 Kevin D. Padgett

	 Title:
	 	 Vice President

					
	 K-2 SIGNATURE PAGE TO SECOND
 AMENDMENT DATED AS OF MARCH 18, 2005

					
		
	 Name of Institution:
	 	 Union Bank of California, N.A.

			
		
	 By:
	 	 /s/ NANCY A. PERKINS

	 	 	 Name: Nancy A. Perkins

	 	 	 Title: Vice President

					
	 K-2 SIGNATURE PAGE TO SECOND
 AMENDMENT DATED AS OF MARCH 18, 2005

					
		
	 Name of Institution:
	 	 General Electric Capital
 Corporation

			
		
	 By:
	 	 /s/ LAWRENCE E. RIDGEWAY

	 	 	 Name: Lawrence E. Ridgeway

	 	 	 Title: Duly Authorized Signatory

					
	 K-2 SIGNATURE PAGE TO SECOND
 AMENDMENT DATED AS OF MARCH 18, 2005

					
		
	 Name of Institution:
	 	 Wells Fargo Bank, N.A.

			
		
	 By:
	 	 /s/ JUTTA S. GRAHAM

	 	 	 Name:

	 	 	 Title:

					
	 K-2 SIGNATURE PAGE TO SECOND
 AMENDMENT DATED AS OF MARCH 18, 2005

					
		
	 Name of Institution:
	 	 La Salle Bank National
 Association

			
		
	 By:
	 	 /s/ NICHOLAS DEVILDER

	 	 	 Name: Nicholas Devilder

	 	 	 Title: AVP

					
	 K-2 SIGNATURE PAGE TO SECOND
 AMENDMENT DATED AS OF MARCH 18, 2005

					
		
	 Name of Institution:
	 	 SUNTRUST BANK

			
		
	 By:
	 	 /s/ MARK PICKERING

	 	 	 Name: Mark Pickering

	 	 	 Title: Vice President

					
	 K-2 SIGNATURE PAGE TO SECOND
 AMENDMENT DATED AS OF MARCH 18, 2005

					
		
	 Name of Institution:
	 	 THE CIT GROUP/BUSINESS
 CREDIT, INC.

			
		
	 By:
	 	 /s/ KIRK WOLVERTON

	 	 	 Name: Kirk Wolverton

	 	 	 Title: Vice President

					
	 K-2 SIGNATURE PAGE TO SECOND
 AMENDMENT DATED AS OF MARCH 18, 2005

					
		
	 Name of Institution:
	 	 WELLS FARGO FOOTHILL,
 LLC

			
		
	 By:
	 	 /s/ DENNIS KING

	 	 	 Name: Dennis King

	 	 	 Title: Vice President

					
	 K-2 SIGNATURE PAGE TO SECOND
 AMENDMENT DATED AS OF MARCH 18, 2005

					
		
	 Name of Institution:
	 	 BANK OF THE WEST

			
		
	 By:
	 	 /s/ ALYSSA PEARSON

	 	 	 Name: Alyssa Pearson

	 	 	 Title: Vice PresidentSixth Supplemental Indenture

 EXHIBIT 4.01 
  
 THIS INSTRUMENT GRANTS A SECURITY INTEREST BY A UTILITY. 
  
 THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS. 
  

  
 SIXTH 
  
 SUPPLEMENTAL INDENTURE 
  

  
 EL PASO ELECTRIC COMPANY 
  
 To 
  
 U.S. BANK NATIONAL ASSOCIATION 
  
 Trustee 
  
 Dated as of
May 5, 2005 
  

  
 Supplemental to General Mortgage Indenture 
 and Deed of Trust 
  
 Dated as of February 1,
1996 
  

  
 THIS IS A SECURITY AGREEMENT GRANTING A SECURITY INTEREST IN PERSONAL PROPERTY INCLUDING PERSONAL PROPERTY AFFIXED TO REALTY AS WELL AS A MORTGAGE UPON
REAL ESTATE AND OTHER PROPERTY. 

 SIXTH SUPPLEMENTAL INDENTURE 
  
 THIS SIXTH SUPPLEMENTAL INDENTURE, dated as of May 5, 2005 (the “Supplemental Indenture”), between EL PASO
ELECTRIC COMPANY, a Texas corporation (the “Company”), whose principal office is located at Stanton Tower, 100 North Stanton, El Paso, Texas, 79901, and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized under
the laws of the United States, as Trustee (the “Trustee”), whose corporate trust office is located at One Federal Street, 3rd Floor, Boston, Massachusetts, 02110. 
  
 WITNESSETH 
  
 WHEREAS, the Company and the Trustee have
entered into that (i) General Mortgage Indenture and Deed of Trust, dated as of February 1, 1996 (the “Original Indenture”), relating to the issuance of Bonds as may be created and established from time to time in one or more series; (ii)
First Supplemental Indenture dated as of February 1, 1996 (the “First Supplemental Indenture”); (iii) Second Supplemental Indenture dated as of August 19, 1997 (the “Second Supplemental Indenture”); (iv) Third Supplemental
Indenture dated as of January 29, 1999 (the “Third Supplemental Indenture”); (v) Fourth Supplemental Indenture dated as of January 25, 2002 (the “Fourth Supplemental Indenture”); and (vi) Fifth Supplemental Indenture dated as of
December 17, 2004 (the “Fifth Supplemental Indenture” and, together with the Original Indenture, the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture and the Fourth Supplemental Indenture,
the “Indenture”); 
  
 WHEREAS, the Company issued Bonds
pursuant to the terms of the Indenture and mortgaged and pledged the Mortgaged Property to secure payment of the Bonds; 
  
 WHEREAS, it is provided in the Original Indenture, among other things, that the Company shall execute and file with the Trustee, and the Trustee at the
request of the Company, when required by the Original Indenture, shall join in, indentures supplemental thereto, and which thereafter shall form a part thereof, for the purpose, among others, of amending the Indenture as permitted by Section 14.02
thereof; 
  
 WHEREAS, Section 14.02 of the Original Indenture
permits the Indenture or the Bonds to be amended or supplemented with the consent of the Holders of not less than a majority in principal amount of the then Outstanding Bonds; provided that if the proposed amendment or waiver affects only the
Holders of certain series of Outstanding Bonds, then the consent only of the Holders of a majority in aggregate principal amount of Outstanding Bonds of such affected series, considered as one class, shall be required; 
  
 WHEREAS, the Company proposes to eliminate the financial and other covenants
and the events of default contained in Articles 4 and 5 of the First Supplemental Indenture following the retirement or repayment of the Series D and Series E Bonds, and such proposed amendment affects only the Holders of Series H Bonds; 

 
 WHEREAS, the Company has obtained and delivered to the Trustee the written
consent of the sole Holder of the Outstanding Bond of Series H to the proposed amendments set forth in this Supplemental Indenture; and 

 WHEREAS, all acts and things have been done and performed which are necessary to make this Supplemental
Indenture, when duly executed and delivered, a valid, binding and legal instrument in accordance with its terms and for the purposes herein expressed; and the execution and delivery of this Supplemental Indenture have been in all respects duly
authorized. 
  
 NOW, THEREFORE, in consideration of the premises
and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, it is agreed by and between the Company and the Trustee as follows: 
  
 ARTICLE 1 
 DEFINITIONS 
  
 Section 1.01. Terms
Incorporated By Reference. Except for the terms defined in this Supplemental Indenture, all capitalized terms used in this Supplemental Indenture have the respective meanings set forth in the Indenture. 
  
 ARTICLE 2 
 AMENDMENT OF FIRST SUPPLEMENTAL INDENTURE 
  
 Section 2.01. Amendment of Section 2.02(c). The first sentence of Section 2.02 (c) of the First Supplemental
Indenture is hereby deleted in its entirety and replaced with the following: 
  
 “On and as of the date upon which none of the Investor Series Bonds remain Outstanding (as set forth in a written notice delivered to the Trustee by the Company), the Collateral Series H Bonds shall no longer be
entitled to the protections of the covenants contained in Article 4 hereof and shall no longer be subject to the provisions pertaining to Events of Default contained in Article 5 hereof.” 
  
 Section 2.02. Deletion of Section 4.12. Section 4.12 of the First
Supplemental Indenture, which was added pursuant to the Fifth Supplemental Indenture, is hereby deleted. 
  
 Section 2.03. Exhibit H. Exhibit H to the First Supplemental Indenture is hereby replaced in its entirety with Exhibit H hereto. 
  
 ARTICLE 3 
 AMENDMENT AND REPLACEMENT OF SERIES H BONDS 
  
 Section 3.01. Amendment to Reflect Deletion of Section 4.12 of the Indenture and Amendment of Section 2.02(c) of the
Indenture. In order to reflect the deletion of Section 4.12 of the Indenture, and the amendment of Section 2.02(c) thereof as provided in Sections 2.01 and 2.02 above, each of the Series H Bonds is amended by replacing the last sentence of the
ninth paragraph thereof with the following: 
  

 2 

 “Notwithstanding the foregoing proviso, without the consent of the Holders, on and as of the date
upon which none of the Investor Series Bonds remain Outstanding (as set forth in a notice delivered to the Trustee by the Company), the Series H Bonds shall no longer be entitled to the protections of the covenants contained in Article 4 of the
First Supplemental Indenture and shall no longer be subject to the provisions pertaining to Events of Default contained in Article 5 of the First Supplemental Indenture.” 
  
 Section 3.02. Replacement of Series H Bond. Upon surrender of the Outstanding Series H Bond by the sole Holder
thereof, the Company shall execute, and the Trustee shall, and is hereby authorized and directed, to authenticate, in each case as provided in the Indenture, a replacement Bond substantially in the form of Exhibit H hereto. 
  
 ARTICLE 4 
 THE TRUSTEE 
  
 Section 4.01. Trustee’s Disclaimer. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or the due execution hereof
by the Company, or for or in respect of the recitals and statements contained herein, all of which recitals and statements are made solely by the Company. 
  
 Except as herein otherwise provided, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed, by the Trustee by reason
of this Supplemental Indenture other than as set forth in the Indenture, and this Supplemental Indenture is executed and accepted on behalf of the Trustee, subject to all the terms and conditions set forth in the Indenture, as fully to all intents
as if the same were set forth at length herein. 
  
 ARTICLE 5

 MISCELLANEOUS 
  
 Section 5.01. Reference to Original Indenture. Except insofar as otherwise expressly provided herein, all the provisions, definitions, terms and
conditions of the Original Indenture, as it has been and may from time to time be amended, shall be deemed to be incorporated in and made a part of this Supplemental Indenture; and the Original Indenture as heretofore supplemented and as
supplemented by this Supplemental Indenture is in all respects ratified and confirmed; and the Original Indenture, as amended, and this Supplemental Indenture shall be read, taken and construed as one and the same instrument. 
  
 Section 5.02. Governing Law. In view of the fact that Bondholders may
reside in various states and the desire to establish with certainty that this Supplemental Indenture will be governed by and construed and interpreted in accordance with the law of a state having a well developed body of commercial and financial law
relevant to transactions of the type contemplated herein, this Supplemental Indenture shall be construed in accordance with and governed by the laws of the State of New York (without regard to the conflict of laws provisions 

  

 3 

 
thereof) applicable to agreements made and to be performed therein, except to the extent that the TIA shall be applicable and except to the extent that the
TIA shall be applicable and except to the extent the law of any jurisdiction wherein any portion of the Mortgaged Property is located shall mandatorily govern the perfection, priority or enforcement of the Lien of the Indenture with respect to such
portion of the Mortgaged Property. 
  
 Section 5.03.
Successors. All covenants, stipulations and agreements of the Company in this Supplemental Indenture shall bind its successors and assigns. All agreements of the Trustee in this Supplemental Indenture shall bind its successor. 
  
 Section 5.04. Counterparts. This Supplemental Indenture may be
executed in any number of counterparts, and each of such counterparts when so executed shall be deemed to be an original, but all such counterparts shall together constitute by one and the same instrument. 
  

 4 

 IN WITNESS WHEREOF, EL PASO ELECTRIC COMPANY has caused this Supplemental Indenture to be executed by its
Chairman of the Board, Chief Executive Officer, President or one of its Vice Presidents, and duly attested by its Secretary or one of its Assistant Secretaries, and U.S. BANK NATIONAL ASSOCIATION has caused the same to be executed by one of its Vice
Presidents or Assistant Vice Presidents and its corporate seal to be hereunto affixed, and duly attested by one of its Assistant Secretaries, as of the day and year first above written. 
  

					
	 	 	 EL PASO ELECTRIC COMPANY

			
	 	 	 By:
	 	 /s/ Scott D. Wilson

	 	 	 Name:
	 	 Scott D. Wilson

	 	 	 Title:
	 	 Senior Vice President and CFO

			
	 Attest:
	 	 	 	 
			
	 /s/ Gary Sanders

	 	 	 	 
	 Asst. Secretary
	 	 	 	 
		
	 	 	 U.S. BANK NATIONAL

	 	 	 ASSOCIATION, as Trustee

			
	 	 	 By:
	 	 /s/ George Davison

	 	 	 Name:
	 	 George Davison

	 	 	 Title:
	 	 Officer

			
	 [Corporate Seal]
	 	 	 	 
			
	 Attest:
	 	 	 	 
			
	  

	 	 	 	 
	 Title:
	 	 	 	 

  

 5 

 ACKNOWLEDGEMENT 
  

					
	 STATE OF TEXAS
	 	)	  	 
	 	 	)	  	 SS.

	 COUNTY OF EL PASO
	 	)	  	 

  
 On the 5th day
of May, 2005, before me personally came Scott D. Wilson, to me known, who, being by me duly sworn, did depose and say that he resides in El Paso County, Texas; that he is the Senior VP and CFO of El Paso Electric Company, a Texas
corporation, the corporation described in and which executed the foregoing instrument; and that he signed his name thereto by authority of the board of directors of said corporation. 
  

	
	  
 /s/ Hilda Vargas

	 Notary Public

  
 (Notary Seal) 

 ACKNOWLEDGEMENT 
  

					
	 COMMONWEALTH OF MASSACHUSETTS
	 	)	    	 
	 	 	)	    	 SS.

	 COUNTY OF SUFFOLK
	 	)	    	 

  
 On the
     day of May, 2005, before me personally came                     , to me known, who, being by me duly sworn,
did depose and say that s/he resides in                     , Massachusetts; s/he is a
                     of U.S. Bank National Association, a banking corporation organized under the laws of The Commonwealth of Massachusetts,
the corporation described in and which executed the foregoing instrument; that s/he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the board of directors of
said corporation, and that s/he signed her/his name thereto by his authority. 
  

	
	  

	 Notary Public

  
 (Notary Seal) 

 Exhibit H 
  
 [Form of Series H Bond] 
  
 THIS BOND IS NOT TRANSFERABLE EXCEPT TO A SUCCESSOR COLLATERAL AGENT UNDER THE CREDIT AGREEMENT, DATED AS OF DECEMBER 17, 2004, AMONG THE COMPANY, JPMORGAN CHASE BANK, AS
TRUSTEE OF THE RIO GRANDE RESOURCES TRUST II, THE LENDERS SPECIFIED THEREIN (THE “LENDERS”), AND JPMORGAN CHASE BANK, AS ISSUING BANK, AS ADMINISTRATIVE AGENT, AND AS COLLATERAL AGENT (THE “COLLATERAL AGENT”) (SUCH CREDIT
AGREEMENT, AS AMENDED FROM TIME TO TIME, THE “REVOLVING CREDIT AGREEMENT”). 
  
 EL PASO ELECTRIC COMPANY 
  

			
	 No.
	 	$100,000,000

  
 COLLATERAL SERIES H
FIRST MORTGAGE BONDS 
  
 El Paso Electric Company, a Texas
corporation (herein, together with its successors and assigns, the “Company”), for value received promises to pay to
                    , or registered assigns the principal sum of ONE HUNDRED MILLION DOLLARS or such lesser principal amount as is equal to
the aggregate principal amount of the outstanding Loans and L/C Disbursements (as defined in the Revolving Credit Agreement) in whole or installments on such date or dates as the Company has any obligation to make payments under the Revolving Credit
Agreement, but not later than the Maturity Date (as defined in the Revolving Credit Agreement) or December 17, 2009, whichever shall occur first, at the same place or places as such payments are required to be made by the Company, in any coin or
currency of the United States of America which at the time of such payment shall be legal tender for the payment of public and private debts, and to pay interest on the unpaid principal amount hereof in like coin or currency to the registered owner
hereof at said place or places at such rate per annum on each interest payment date (as hereinafter defined) as shall cause the amount of interest payable on such interest payment date on this Series H Bond to equal the amount of interest, fees,
charges and expenses payable on such interest payment date under the Revolving Credit Agreement. Such interest shall be payable on the same dates as interest is payable from time to time pursuant to the Revolving Credit Agreement (each such date
hereinafter called an “interest payment date”), until maturity of this Series H Bond, or if the Collateral Agent shall demand redemption of this Series H Bond, until the redemption date, or, if the Company shall default in the payment of
principal due on this Series H Bond, until such principal and interest, shall have been paid in full and the Company’s obligations with respect thereto discharged as provided in the Indenture (as hereinafter defined). The amount of interest and
fees and types of charges and expenses payable from time to time under the Revolving Credit Agreement, the basis on which such amounts are computed and the dates on which such amounts are 

 
payable are set forth in the Revolving Credit Agreement. 
  
 Except as hereinafter provided, this Series H Bond shall bear interest (a) from the interest payment date next preceding the date of this Series H Bond to
which interest has been paid, or (b) if the date of this Series H Bond is an interest payment date to which interest has been paid, then from such date, or (c) if no interest has been paid on this Series H Bond, then from the date of initial issue.

  
 This Series H Bond is one of the bonds of the Company known as
its First Mortgage Bonds (the “Bonds”), issued and to be issued in one or more series under and secured by a General Mortgage Indenture and Deed of Trust, dated as of February 1, 1996, duly executed by the Company to U.S. Bank National
Association, a banking corporation organized under the laws of The Commonwealth of Massachusetts, Trustee (“Trustee”), and indentures supplemental thereto, heretofore or hereafter executed, to which General Mortgage Indenture and Deed of
Trust and all indentures supplemental thereto (collectively referred to as the “Indenture”) reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security, the terms and conditions
upon which the Bonds are, and are to be, issued and secured, and the rights of the owners of the Bonds and the Trustee in respect of such security. As provided in the Indenture, the Bonds may be in various principal sums, are issuable in series, may
mature at different times, may bear interest at different rates and may otherwise vary as therein provided; and this Bond is the only Bond of a series entitled “Collateral Series H First Mortgage Bonds”, created by a First Supplemental
Indenture dated as of February 1, 1996, as provided for in the Indenture. The terms of this Series H Bond include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code §§77aaa-77bbbb) (the “Act”), as in effect on the date of the Indenture. 
  
 The Indenture authorizes the issuance of up to $100,000,000 aggregate principal amount of Series H Bonds, but the aggregate principal amount hereof
outstanding at any time shall not exceed such lesser amount as is equal to the amount of the Total Commitment under the Revolving Credit Agreement or, if such Total Commitment shall have terminated, the aggregate outstanding principal amount of the
Loans and L/C Disbursements under the Revolving Credit Agreement. 
  
 This Series H Bond has been issued by the Company to the Collateral Agent (i) to provide for the payment of the Company’s obligations to make payments to any person under the Revolving Credit Agreement and (ii) to provide to such
persons the benefits of the security provided for by this Series H Bond. 
  
 Any payment made in respect to the Company’s obligations under the Revolving Credit Agreement shall be deemed a payment in respect of this Series H Bond, but such payment shall not reduce the principal amount of
this Series H Bond unless, and then only to the extent, the aggregate amount of the Total Commitment is irrevocably reduced concurrently with such payment. In the event that all of the Company’s obligations under the Revolving Credit Agreement
have been paid in full and discharged, this Series H Bond shall be deemed paid in full and the Collateral Agent shall surrender this Series H Bond to the Trustee for cancellation. This 

  

 2 

 
Series H Bond shall also be surrendered to the Trustee, or to the Company for delivery to the Trustee, for cancellation on the Collateral Release Date, as
that term is defined in Section 10.04 of the Revolving Credit Agreement, if the conditions enumerated in such Section 10.04 have been satisfied. 
  
 In the manner provided in the Indenture, this Series H Bond shall be redeemed at a redemption price of 100% (expressed as a percentage of principal
amount) plus accrued interest thereon to the redemption date, in cash, upon receipt by the Trustee of a written demand for redemption of this Series H Bond from the Collateral Agent (the “Collateral Series Redemption Demand”). This Series
H Bond shall be redeemed in the amount specified in the Collateral Series Redemption Demand, which amount shall be equal to the outstanding principal, interest and other amounts then due and owing under the Revolving Credit Agreement. The Collateral
Series Redemption Demand shall also state (i) that an “Event of Default” has occurred and is continuing under the terms of the Revolving Credit Agreement, (ii) that payment of the principal amount outstanding under the Revolving Credit
Agreement, all interest thereon and all other amounts payable thereunder are immediately due and payable, and (iii) that the Collateral Agent has demanded payment thereof from the Company. The portion of this Series H Bond subject to redemption
shall be redeemed on the fifth Business Day following receipt by the Trustee of the Collateral Series Redemption Demand. Any payment made to the Collateral Agent pursuant to a Collateral Series Redemption Demand shall constitute a payment by the
Company in respect of its obligations under the Revolving Credit Agreement. The Collateral Series Redemption Demand shall be rescinded and shall be null and void for all purposes of the Indenture upon receipt by the Trustee, no later than the
Business Day prior to the date fixed for redemption, of a certificate of the Collateral Agent (a) stating that there has been a waiver of such Event of Default, or (b) withdrawing said Collateral Series Redemption Demand. 
  
 The principal of this Series H Bond may be declared or may become due before
the maturity hereof, on the conditions, in the manner and at the times set forth in the Indenture, upon the happening of an Event of Default as therein defined. 
  

With the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Bonds which would be affected by the
action to be taken, the Company and the Trustee may from time to time and at any time, enter into a Supplemental Indenture for the purpose of adding any provision or changing in any manner or eliminating any provision of the Indenture or of any
Supplemental Indenture or of modifying in any manner the rights of the Holders of Bonds and any coupons; provided, however, that (i) no such Supplemental Indenture shall, without the consent of the Holder of each Outstanding Bond
affected thereby (a) reduce the principal amount of Bonds whose Holders must consent to an amendment, supplement or waiver, (b) reduce the Principal of or change the fixed maturity of any Bond, or alter the provisions with respect to any sinking,
improvement, maintenance, replacement or analogous fund or conversion, redemption or repurchase rights with respect to any Bond, (c) reduce the rate of or change the time for payment of interest on any Bond, (d) waive a Default or Event of Default
in the payment of Principal of or interest on the Bonds (except a rescission of acceleration of the Bonds pursuant to the Indenture where the Event of Default has been remedied), (e) make any Bond payable in money other than that stated in such
Bond, (f) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders of Bonds to receive payments of Principal of or interest on the Bonds, (g) waive a redemption payment with respect 

  

 3 

 
to any Bond, (h) limit the right of a Holder of Bonds to institute suit for the enforcement of payment of Principal of or interest on such Bonds in
accordance with the terms of said Bonds, (i) permit the creation by the Company of any Prior Lien (but no merger or consolidation permitted under the Indenture of the Company with any other Person owning property which is subject to a Prior Lien,
shall be deemed the creation of a Prior Lien), or (j) make any change in the Indenture pertaining to amendments, supplements or waivers to the Indenture or any Supplemental Indenture with the consent of the Holders, and (ii) if there shall be Bonds
of more than one series of Bonds outstanding and if such proposed action shall materially adversely affect the rights of Holders of Bonds of one or more such series, then the consent (including consents obtained in connection with a tender offer or
exchange offer for Bonds) only of the Holders of a majority in aggregate principal amount of the outstanding Bonds of all series so affected, considered as one class, shall be required. Notwithstanding the foregoing proviso, without the consent of
the Holders, on and as of the date upon which none of the Investor Series Bonds remain Outstanding (as set forth in a notice delivered to the Trustee by the Company), the Series H Bonds shall no longer be entitled to the protections of the covenants
contained in Article 4 of the First Supplemental Indenture and shall no longer be subject to the provisions pertaining to Events of Default contained in Article 5 of the First Supplemental Indenture. 
  
 No incorporator, stockholder, director, officer or employee of the Company
shall have any liability for any obligations of the Company under this Series H Bond and the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Any and all such rights and claims against every
such incorporator, stockholder, director, officer or employee, as such, whether arising at common law or in equity, or created by rule of law, statute, constitution or otherwise, are expressly released and waived as a condition of, and as part of
the consideration for, the execution of the Indenture and the issuance of this Series H Bond. 
  
 This Series H Bond is nontransferable except to effect transfer to any successor to the Collateral Agent under the Revolving Credit Agreement, but is exchangeable by the registered holder hereof, in person or by
attorney duly authorized, at the corporate trust office of the Trustee, any such permitted transfer or exchange to be made in the manner and upon the conditions prescribed in the Indenture, upon the surrender and cancellation of this Series H Bond
and the payment of any applicable taxes and fees required by law, and upon any such transfer or exchange a new registered bond or bonds or the same series and tenor, will be issued to the authorized transferee, or the registered holder, as the case
may be. 
  
 This Series H Bond shall not be valid until
authenticated by the manual signature of the Trustee, or a successor trustee or authenticating agent appointed pursuant to the Indenture. 
  

 4 

 IN WITNESS WHEREOF, the Company has caused this Series H Bond to be executed in its name by the manual or
facsimile signature of its Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents, and attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. 
  
 Issue Date: 
 Authentication Date: 
  

							
	 This Bond is one of the Bonds of the series
 designated therein, described in the within-
 mentioned Indenture.
	 	 EL PASO ELECTRIC COMPANY,
 as Issuer

			
	 U.S. BANK NATIONAL
 ASSOCIATION,
	 	 By:
	 	  

	 as Trustee
	 	 Title:
	 	 
	 	 	 	 	 
		
	 	 	 Attest:

			
	 By:
	  	  

	 	  

	 	  	 Authorized Officer
	 	 Title:

  

 5 

 ASSIGNMENT 
  
 To assign this Series H Bond, fill in the form below: 
  

	
	 (I) or (we) assign and transfer this Series H Bond to

	
	________________________________________________________________________________________________________________________________________________________________________
	                                       
                                     (Insert assignee’s soc.
sec. or tax I.D. no.)
	  
 ________________________________________________________________________________________________________________________________________________________________________

	  
 ________________________________________________________________________________________________________________________________________________________________________

	  
 ________________________________________________________________________________________________________________________________________________________________________

	  
 ________________________________________________________________________________________________________________________________________________________________________

	 (Print or type assignee’s name, address and zip code)

	
	 and irrevocably appoint ______________________________________________________________________________________

 agent to transfer this Series H Bond on the books of the Company. The agent may substitute another to act
for him. 
  
 Date:
                              
  
 Your Signature: 
  

	
	  
 ________________________________________________________________________________________________________________________________________________________________________

	 (Sign exactly as your name appears on this Series H Bond)

  

	
	 Signature

	 Guarantee: __________________________________________________________________________________________________

			
	 	  	(Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements will include membership or participation in STAMP
or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Exchange Act.)

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