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| | document type = CORRESPONDENCE-LETTERS, INCOMING CORRESPONDENCE, LEGAL/LAW FIRM TO NRC | | | document type = CORRESPONDENCE-LETTERS, INCOMING CORRESPONDENCE, LEGAL/LAW FIRM TO NRC |
| | page count = 804 | | | page count = 804 |
| | | project = TAC:61752, TAC:63146 |
| | | stage = Other |
| }} | | }} |
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| =Text= | | =Text= |
| {{#Wiki_filter:REGULA Y XNFORMATION DXSTRIBUTIO YSTEM (RXDS) | | {{#Wiki_filter:}} |
| ACCESSION NBR: 8802240342 DOC. DATE: 88/02/i8 NOTARIZED: NO DOCKET 0 FACXL: STN-50-529'alo Verde Nuclear Stations Unit 2d Arizona Publi 05000529 AUTH. NAME AUTHOR AFFILIATION CQUGHLINs F. J. Mudged Roses Guthrie. Alexander h Ferden RECXP. NAME RECIPIENT AFFILIATION KNIGHTONi G. M. Of f ice of Nuclear Reactor Regulationd Director <Post 8704ii
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| ==SUBJECT:==
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| Fonmands amends to eight ga oil i tg leases ne sale 8c leasehacg transactions bg util to. equity investors. Amends do not affect licensed activities or responsibilities. 6'"onlcs- l DIS'fRIBUTION CODE: B005D COPIES RECEIVED: LTR i ENCL SIZE:
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| TITLE: Licensing Submittal: Application/General Info Amdt NOTES: Standardized plant. 05000529 RECXPXENT CQP IES REC IP IENT COPIES ID CODE/NAME LTTR ENCL ID CODE/NAME LTTR ENCL PD5 L* ig PD5 PD LICXTRAiE i+ DAVIS> M i
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| INTERNAL: *CRS *EOD/DOA AEOD/DSP/TPAB ARM/DAF/LFMB NRR DLPG/GABiOA OGC i5-B-i8 F IL Oi SP
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| ~ I EXTERNAL: LPDR OS NRC PDR 02 NSIC 06 1
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| 1$
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| NOTES:
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| TOTAL NUMBER OF, COPIES REQUIRED: LTTR 19 ENCL
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| MUDGE ROSE GUTHRIE ALEXANDER K FERDON 2IEI K STRECT. N. YA I 60 MAIDEN LANE SVITC 900, NORTHBRIDGC CENTRE WASHINGTOIL D. C 20037 SI5 NORTH FLAGLCR DRIVE 202 429 9355 N EW YORK, N. Y. I 0036 WEST PALM BEACH, FI 33401 305 550 BIOO SVI'TC 2020 333 SOUTH GRAND AVENUE 2I2- SI0-7000 l2r RUC DC LA PAIX LOS ANGCLESy CALIF. BOO7I 75002 PARISH FRANCE 2I3 BI3 I II2 CABLE ADDRCSSI BALTUCHINS NCW YORK (V 42. OI 57 7I
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| TCLCXI WU I27959 TELCCOPICRI 2I2 249 2555 February 18, 1988 Director of Nuclear Reactor Regulation Attention: Mr. George W. Knighton, Project Director PWR Project Directorate N7 Division of Pressurized Water Reactor Licensing-B Nuclear Regulatory Commission Washington, D.C. 20555 Re: Xn the Matter of El Paso Electric Company (Palo Uerde Nuclear Generating Station, Unit 2) Docket No. STN 50-529, License No. NPF-51
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| ==Dear Mr. Knighton:==
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| Amendment No. 3 issued August 15, 1986 and Amendment No. 6 issued December 11, 1986 to NRC License No. NPF-51 authorized sale and leaseback transactions by El Paso Electric Company (the Company) to six and two equity investors, respectively, require that the NRC be notified of any change in the facility leases. Enclosed are copies of amendments to the eight facility leases which the Company entered into pursuant to the authori-zations above. The amendments do not affect licensed activities or responsibilities.
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| 1021.8050.2683.01:8 8802240342 880218 PDR ADOCK 05000M9 I PDR
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| As stated by the Company in Amendment No. 1 to Form S-3 f iled with the Securities and Exchange Commission on February 12, 1988 (Registration No. 33-19656) (Amendment No. 1 to Form S-3) (capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in Amendment No. 1 to Form S-3):
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| [c]ontemporaneously with the consummation of the Sale and Leaseback Transactions, the Company and the equity investors in the 1986 Sale and Leaseback Transactions agreed to mod-ifications of the documents for those transactions. The modifications require that the Company provide each of the six equity investors in the August 1986 Sale and Leaseback Transactions with a bank letter of credit, having a term expiring not earlier than December 31, 1991, in support of the equity portion of rent under the related lease. In addition, the Company agreed to certain financial covenants with each of the eight equity investors in the 1986 Sale and Leaseback Transactions requiring the Company to be in compliance at June 30, 1991 with specified interest and rental payment coverage ratios and debt (as defined) to capitalization tests. If the Company fails to meet such financial covenants at that time, the equity investor can, in lieu of exercising remedies under the related lease, including drawing on the letter of credit, elect to require that the letter of credit be renewed for successive one year periods until such financial cove-nants are met as of June 30 in a subsequent year.
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| As part of the modifications, the Company placed in a bank escrow account, pending the satisfaction of the conditions described below, $ 243.1 million, to be used to retire all of the long-term debt of the Company maturing during the period from June 1988 through February 1991. As described [in Amendment No. 1 to Form S-3] under "Use of Proceeds," 9138 million of the proceeds from the Sale and Leaseback Transactions were placed in the escrow, and the Company funded 1021.8050.2683.01:8
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| the balance of the escrow by transferring certain cash investments to the escrow account.
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| The escrowed funds are to be released upon (i) delivery of the letters of credit to the six equity investors in the August 1986 Sale and Leaseback Transactions and (ii) execution and delivery of the amendments documents for the 1986 Sale to the transaction and Leaseback Transactions required to imple-ment the agreed upon modifications. If such letters of credit are not delivered by rent payment April 30, 1988, each subsequent under the six related leases is, under the terms of the modified agreements, to be increased by .35 percent of facility cost, such rent increase to continue until the ear-lier to occur of (x) the date of delivery of the required letter of credit and (y) the date as of which such letter of credit would have expired had it been in effect as required.
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| The Company has commenced negotiations to secure. the required letters of credit and expects that it will be able to provide such letters of credit prior to April 30, 1988 and terminate the escrow.
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| In connection with the above agreements, certain covenants in the 1986 Sale and Leaseback Transaction documents restricting the incurrence of additional debt by the Company and its subsidiaries were modified.
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| After giving effect to the retirement of debt, described [in Amendment No. 1 to Form S-3]
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| under "Use of Proceeds," the retirement after December 31, 1987 of certain short-term debt and the implementation of the required escrow of funds, the Company and its subsidiaries could, under the modified provisions of the 1986 Sale and Leaseback Transactions, incur approximately $ 41 million of additional long-term debt and $ 173 million of additional short-term debt, although regulatory authori-zation presently would limit the Company to incurring no more than $ 152 million of addi-tional short-term debt. However, principally because of the effect of the losses incurred on the Company's investments in marketable 1021.8050.2683.01:8
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| j securities (see Note (1) [in Amendment No. 1 to Form S-3] under "Summary Information Relating to the Company Selected Consolidated Financial Data" ) on the Company's ability to meet incurrence tests, the Company expects to be precluded, effective April 13, 1988, from issuing additional long-term debt until after December 31, 1988, at the earliest. At such time, the Company may be required to establish a new escrow of cash for debt retirement, which, under the modified provisions of the 1986 Sale and Leaseback Transactions, serves as a defeasance of debt for financial covenant purposes, in order to issue additional long-term debt. After the release of the currently escrowed funds, additional short-term debt aggregating $ 204 million could be incurred by the Company and its subsidiaries, although regulatory authorization would continue to limit the Companyshort-term to incurring no more than
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| $ 152 million of debt.
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| Sincerely, Francis J. C ghlin, Jr.
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| Copies without enclosures to:
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| Elaine Chan, Esq.
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| Joseph F. Scinto, Esq.
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| Office of General Counsel Nuclear Regulatory Commission 7735 Old Georgetown Road Bethesda, Maryland 21930 Edwin J. Reis, Esq.
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| Assistant Chief Hearing Counsel Nuclear Regulatory Commission 7735 Old Georgetown Road Bethesda, Maryland 21930 1021.8050.2683.01:8
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| Mr. James C. Peterson Mr. Michael Davis Nuclear Regulatory Commission Air Rights III Building 4550 Montgomery Avenue Bethesda, Maryland 20814 Dane George, Esq.
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| Kemp, Smith, Duncan & Hammond 2000 MBank Plaza El Paso, Texas 79901 Arthur C. Gehr, Esq.
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| Snell & Wilmer 3100 Valley Bank Center Phoenix, Arizona 85073 Mr. E.E. Van Brunt Executive Vice President Arizona Nuclear Power Project 11226 North 23rd Ave. Building B Phoenix, Arizona 85029 Mr. W.E. Royer Senior Vice President El Paso Electric Company 303 North Oregon Street El Paso, Texas 79901 Mr. W.J. Johnson Senior Vice President and Treasurer El Paso Electric Company 303 North. Oregon Street El Paso, Texas 79901 Robert B. Michel, Esq.
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| Mudge Rose Guthrie Alexander & Ferdon 180 Maiden Lane New York, New York 10038 1021.8050.2683.01:8
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| ,.8802240342 AMENDMENT No. 2, dated as of December 31, 1987, to Facility Lease dated as of August 1, 1986, between THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee ("Lessor" ) under a Trust Agreement, dated as of August 1,, 1986 with ALE3004DER HAMILTON LIFE INSURANCE'OMPANY OF AMERICA, and EL PASO ELECTRIC COMPANY; as Lessee ("Lessee" ).
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| The parties hereto have previously entered into the Facility Lease (as heretofore amended, modified or. supplemented, the "Facility Lease" ) providing for the lease by Lessor to Lessee of the Undivided Interest and the Real Property Interest. The parties now desire to make certain amendments to the Facility Lease.
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| NOW, THEREFORE, in consideration of the premises and other good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows:
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| SECTION 1. Definitions. For purposes hereof, capital-ized terms used herein and not defined herein shall have the meanings ascribed thereto in Appendix A to the Facility Lease.
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| SECTION 2. Amendments. (a) Section 3 (b) . Section 3 (b) is hereby amended by inserting at the end of a clause (iii), in lieu of ".", "; and" and by inserting thereafter and before the next to last sentence of Section 3(c) a new clause (iv) reading as follows:
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| (iv) in the event that the Lessee shall fail to provide on or before April 30, 1988, a letter of credit which complies with the terms of the Agreement dated as of December 31, 1987 (the "Commitment Agreement" ), among the Lessee, the Lessor and the Owner Participant, a copy of which is annexed hereto, on each Basic Rent Payment Date, commencing October 1, 1988 and ending on the Basic Rent Payment Date next following the earlier to occur of- (A) -the providing by the Lessee of such letter of credit .and (B) the date as of which such letter of credit would have expired had it been in effect as required by the terms of the Commitment 'Agreement, an amount equal to .354 of Facility Cost multiplied by a fraction the numerator of which is the number of days from and including the preceding Basic Rent Payment Date (or, in the case of the Basic Rent Payment Date occurring on October 1, 1988, from and including April 30, 1988) to but excluding such Basic Rent Payment Date (or, if earli-er, to the date on which such letter of credit is pro-vided or the date such letter of credit would have so expired), and the denominator of which is the number of days from and including the preceding Basic Rent 1021 '500.2754.22:4
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| Payment Date to but excluding such Basic Rent Payment Date.
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| (b) Section 7. Section 7 of the Facility Lease is hereby amended by inserting "(a) Liens." prior to the existing paragraph and inserting the following at the end thereof:
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| (b) Retirement of Debt. Unless the Owner Participant
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| .shall otherwise consent, on or before each date set forth in Schedule 8 hereto', the Lessee shall retire, legally defease or deposit with the lender or its trustee funds sufficient to retire the principal amount of the Debt set forth opposite the reference to such date on such Schedule.
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| (c) Merger, Sale, etc. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, convey, transfer or lease to any Person any asset except for fair value.
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| Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, (1) consolidate with any Person, (2) merge with or into any Person or (3) except for (i) payments, in accordance with normal dividend policy of the Lessee, of cash dividends to holders of common stock and preferred 'stock, (ii) exchanges of fixed assets for other fixed assets whose fair value is equal to or greater than the fair value of the fixed assets exchanged or (iii) conveyances, transfers or leases of assets for cash where such cash is to be recorded by the Lessee, convey, transfer, lease or dividend to any Person, in any single transaction or series of related transac-tions, any asset or assets if the book value of such asset or assets exceeds 54 of its total assets as shown on the most recent consolidated balance sheet of the Lessee deliv-ered to the Owner Participant pursuant to Section 10 (b) (1) (i) (A) of the Participation Agreement; unless immediately after giving effect to such transaction:
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| (A) the Person who is the "Lessee" under the Facility Lease immediately following such consolidation, merger, conveyance, transfer, 'lease or dividend (the "Surviving Lessee" ) shall be a corporation which (i) is organized under the laws of the United States of, America, a state thereof or the District of Columbia, (ii) is a "public utility" under applicable law, (iii) is an ANPP Participant under the ANPP Participation Agreement with respect to Unit 2 (including the 1021 '500.2754.22:4
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| 0 0
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| Undivided Interest), (iv) shall have assumed each covenant and condition of the Lessee under the ANPP Participation Agreement and each other ANPP Project Agreement and (v) holds a valid and subsisting license from the NRC to possess Unit 2 (including the Undivided Interest);
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| (B) the Surviving Lessee, if other than the Lessee immediately prior to such transaction, shall execute and deliver to the Owner Participant an agreement, in form and substance reasonably satisfactory to the Owner Participant, containing the assumption by the Surviving Lessee of each covenant and condition of this Facility Lease, each other Transaction Document and each Financing Document to which the Lessee imme-diately prior to such transaction was a party immedi-ately preceding such transaction; (C) no Default (other than a failure to deliver docu-ments and other information specified in Section 10(b) (1) (vi) of the Participation Agreement) and no Event of Default shall have occurred and be continuing, no Event of Loss shall have occurred and no Deemed Loss Event shall have been declared; (D) the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) after giving effect to such transaction, (1) shall be rated at least "investment grade" by Standard & Poor's Corporation and Moody's Investors Service, Inc. and (2) shall have an investment rating by Standard &
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| Poor's Corporation and Moody's Investors Service, Inc. not less than one "smallest notch" below the rating assigned to the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) immediately prior to such transaction (or, if neither of such .rating organizations shall rate the Bonds (or, if applicable, the preferred stock of the Surviving Lessee) at the time, by any nationally rec-ognized rating organization in the United States of America);
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| (E) the Surviving Lessee shall have a Net Worth equal to or greater than the Net Worth of the Lessee immedi-ately prior to such transactions and equal to or greater than $ 500,000,000; (F) the Surviving Lessee shall have delivered to the Owner Participant and the Indenture Trustee an 1021.7500.2754.22:4
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| ~O Officers'ertificate and an opinion, reasonably satisfactory to the Owner Participant, of counsel to the Surviving Lessee', each stating that (1) such transaction compl ies with this subclause (c) and (2) all conditions precedent to the consummation of such transaction have been satisfied and any Governmental Action required in connection with such transaction has been obtained, given or accomplished; (G) the Surviving Lessee shall have delivered to the Owner Participant an opinion, reasonably satisfactory to the Owner Participant, of independent counseL to the Surviving Lessee stating that such transaction would not result in a loss of any of the tax benefits described in Section 13(c) (1) of the Participation Agreement; (H) such transaction is otherwise permitted by and in compliance with the ANPP Participation Agreement; and (I) the New Coverage Ratio of the Surviving Lessee shall be at least 1.6 to 1.
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| Upon the consummation of such transaction the Surviving Lessee, if other than the Lessee, shall succeed to, and be substi-tuted for, and may exercise every right and power of, the Lessee immediately prior to such transaction under this Lease, each other Transaction Document and each Financing Document to which the Lessee immediately prior to such transaction was a party immediately prior to such transaction, with the same effect as if the Surviving Lessee had been named herein and therein.
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| (d) Incurrence of Debt. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries (whether consolidated or unconsolidated) to, issue, assume or become liable in respect of (A) any Debt maturing more than one year after the date of such issuance, assumption or liability (including current maturities of Debt with an original maturity of more than one year) if, immediately thereafter, of all Debt of the Lessee and its sub-(i) the total amountconsolidated'r sidiaries (whether unconsolidated) maturing more than one year after the date of such issuance, assump-tion or becoming liable (reduced by. Cash Available for Investment) shall exceed 70< (or, at any time after January 1, 1992 when there is not in effect a letter'of credit com-plying in all respects with the Commitment Agreement, shown65<)
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| of New Consolidated Capitalization, in each. case as on a pro forma consolidated balance sheet on and as of the 1021.7500.2754.22:4
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| ~lh date of such issuance, assumption or becoming liable, or (ii) the New Coverage Ratio of the Lessee would be less than 1.6 to 1 or (B) any Debt maturing one year or less after the date of such issuance, assumption or becoming liable (excluding current maturities of Debt with an origi-nal maturity of more than one year) if, immediately there-after, the total amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) maturing one year or less after the date of 'such issuance, assumption or becoming liable shall exceed 12.54 of New Consolidated Capitalization, in each case as shown on a pro forma; consolidated balance sheet on and as of the date of such issuance, assumption or becoming liable. For purposes of the foregoing clause (A), there shall be excluded any Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow and any refunding of the debt issued on December 31, 1987 by the lessors in the sale and leaseback transactions relating to Unit 3 at PVNGS shall not constitute the Lessee issuing, assuming, or becoming liable in respect of any Debt within the meaning of this subclause (d).
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| (e) Escrow Agreement. The Lessee shall deposit with Chemical Bank as escrow agent (the "Agent" ) any amount required to be deposited under the Escrow Agreement dated as of December 31, 1987 between the Lessee and the Agent within 5 Business Days after notice from the Owner Participant and shall otherwise comply with its other obli-.
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| gations under such Agreement within 15 days after notice from the Owner Participant.
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| (f) Definitions. For purposes of this Section 7, the terms New Consolidated Capitalization and New Coverage Ratio shall be defined as follows:
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| (A) "New Coverage Ratio" shall mean the ratio of (x) the sum of (a) consolidated net income of the Lessee for the twelve-month period ending on a date no later than 135 days prior to the date as of which New Coverage Ratio is being determined plus (or minus) (b) all extraordinary items deducted (or added) of in deter-this defini-mining said net income (for purposes tion of New Coverage Ratio, any charge against income resulting from a write-off of utility plant pursuant to (i) an order of any governmental authority having jurisdiction or (ii) a provisionbe for an estimated deemed to be an regulatory disallowance shall extraordinary item deducted in determining said net 1021.7500.2754.22:4
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| income) plus (or minus) (c) all income taxes deducted (or tax credits added) in determining said net income minus (d) for all or any portion of, such. period ending on or prior to December 31, 1990, 504 of "allowance for funds used during construction" (net of deferred taxes) as such item is referred to in the consolidated income statement of the Lessee and its subsidiaries),
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| and, for all or any portion of such period ending after December 31, 1990, 1004 of such item plus (e) the sum of all interest and lease payments paid by the Lessee and its subsidiaries (whether consolidated or unconsolidated) during such twelve-month period to (y) total interest and lease payments that will be consoli-payable by the Lessee and its subsidiaries (whether dated or unconsolidated) during the twelve-month period following the date as of which New Coverage Ratio is being determined. There shall be excluded from interest and lease payments included under clauses (x) and (y) above (i) lease payments to the Rio Grande Resources Trust, (ii) lease, payments under any operating lease of computers, office equipment or the like, the original term, of which (including options to renew) is less than five years and (iii) interest on Debt maturing one year or less from the date of incurrence thereof. There shall be excluded from interest and lease payments included under clause (y) above interest on Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow.
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| (B) "New l Consolidated Capitalization" s h a 1 m e a n the total of consolidated capital and surplus. of the Lessee plus the principal amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) which matures more than one year. after the date as of which New Consolidated Capitali'zation is being determined.
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| (c) Schedule 8. Schedule 8 hereto is hereby added as Schedule 8 to the Facility Lease.
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| 1021.7500.2754.22:4
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| SECTION 3. Miscellaneous (a) Effective Date of Amendments. The amendments set forth in Section 2 hereof shall be and become effective upon the execution hereof by the parties hereto.
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| (b) Counterpart Execution. This Amendment No. 2 may be executed in any number of counterparts and by each of the parties hereto on separate counterparts; all such coun-terparts shall together constitute but one and the same instrument.
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| (c) Governing Law. This Amendment No. 2 has been negotiated and delivered in the State of New York and shall be governed by and be construed in accordance with the laws of the State of New York, except to the extort that pursu-ant to the law of the State of Arizona such law is mandato-rily applicable hereto.
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| (d) Disclosure. Pursuant to Arizona Revised Statutes Section 33-404, the beneficiary of the Trust Agreement is Alexander Hamilton Life Insurance Company of America, a.
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| corporation. The address of the beneficiary is 33045 Hamilton Boulevard, Farmington Hills, Michigan, Attention:
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| Richard Egan, General Counsel. A copy of the Trust Agreement is available for inspection at the offices of the Owner Trustee at 100 Federal Street, Boston, Massachusetts 02110, Attention of Corporate Trust Division.
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| 1021.7500.2754.22:4
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| 0
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| <Ik
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| IN WITNESS WHEREOF, each of the parties hereto has caused
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| 'hi's Amendment No. 2 to be duly executed in New York, New York on December 31, 1987.
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| THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity, but solely as Owner Trustee under a Trust Agreement, dated as of August 1, 1986 with Alexander Hamilton Life Insurance Company of America, Senior Manager EL PASO ELECTRIC COMPANY, By ice President
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| l ib 4l if'
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| STATE OF TEXAS )
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| ) ss.:
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| COUNTY OF EL PASO )
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| The foregoing instrument was acknowledged before me this 6th day of January, 1988 by William J. Johnson, a Vice President of EL PASO ELECTRIC COMPANY, a Texas corporation, on behalf of the corporation.
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| No ary Public
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| t)
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| ~ls
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| COMMONWEALTH OF MASSACHUSETTS )
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| ) ss.:,
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| COUNTY OF SUFFOLK )
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| The foregoing instrument was acknowledged before me this day of January, 1988, by Mark Nelson, a Senior Manager of THE IRST NATIONAL'BANKOF BOSTON, a national banking association, on behalf of the banking association as trustee under that certain Trust Agreement dated as of August 1, 1986 with Alexander Hamilton Life.
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| Insurance Company of America.
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| Notary Public MARJA NRLSOLA My Commlssjon Expire September $ 0i $ 994
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| '021.7500.2754.06A:1
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| 5 ~
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| SCHEDULE 8 EL PASO OBLIGATIONS Principal Payment Amount Date Description
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| $ 60,000,000 Jan. 31, 1988 16.20> First mortgage bonds due 2012
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| $ 25,000,000 Jan. 31, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 50,000,000 June 30, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 6,100,000 July, 20',
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| 1988 4.254 First mortgage bonds due July 1988
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| $ 22 / 000 i 000 May 20, 1989 12.754 First mortgage bonds due May 1989
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| $ 25 / 000 000 Aug. 15 f 14.54 First mortgage bonds due August 1989 g
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| 1989
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| $ 50,000,000 Nov. 20, 1989 14> First mortgage bonds due November 1989
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| $ 20 / 000 i 000 Dec. 1, 1990 Long-term, notes unsecured-The Bank of America
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| $ 70, 000, 000 Mar. 1, 1991 Second mortgage bonds-The'ank of America 1021.7500.2754.22:4
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| 8 (i
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| II 0
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| AGREEMENT dated as of December 31, 1987 among ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF AMERICA (" Owner Participant" ), THE FIRST NATIONAL BANK OF BOSTON, not in its i.ndividual capacity but solely as Owner Trustee ("Owner Trustee" ) under a Trust Agreement dated as of August 1, 1986 with Owner Participant, and EL PASO ELECTRIC COMPANY (" Lessee" ).
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| Owner Trustee and Lessee are parties to the Facility Lease dated as of August 1, 1986, as amended (the "Facility Lease" ). All terms used but not defined herein have the meanings ascribed to them in Appendix A to the Facility Lease.
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| Lessee, Owner Trustee and Owner Participant desire to modify certain provisions of the Facility Lease, provide credit enhancement for the benefit of Owner Participant in the form of a letter of credit to support the payment of rent and, until such time as a letter of credit has been. delivered, provide for the creation of an escrow account into which Lessee will deposit funds to be held for the retirement of certain of its outstanding Debt. Accordingly, the parties hereto agree as follows:
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| : 1. Letter of Credit.
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| A. Lessee shall cause, to be delivered to Owner Participant a letter of credit (the "LC") with drawing amounts not less than Special Casualty Value from time to time during the period the LC is outstanding less the principal amount of and accrued interest on the Notes Outstanding from time to time. If the Lessee shall fail to cause the LC to be delivered by April 30, 1988 in accordance with the terms hereof, the Escrow Agreement (as defined in Section 2) shall continue in full force and effect, and the Lessee shall pay to the Owner Trustee all amounts set forth in Section 3(b)(iv) of the Facility Lease in accordance with the terms thereof, but such failure shall not constitute an Event of Default.
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| B. The unsecured long-term debt securities of the bank issuing the LC shall be rated by Moody's not less than A2, in the case of a United States bank, or Aa3, in the case of a United States branch or agency of a foreign bank, and such bank shall be otherwise acceptable to Owner Participant. Owner Participant will be reason-able in determining such acceptability, but may consider such matters as (i) legal or regulatory constraints on the issuance to or holding by Owner Participant of letters of credit from such bank and (ii) policy constraints in effect for Owner Participant on the issu-ance to or 'holding by Owner Participant of letters of credit from such bank, so long as such policy constraints are then applicable by Owner Participant generally to such bank .and have been applied by Owner Participant without regard to the nature of PVNGS or the Unit 2 sale and leaseback transactions or the identity or credit of Lessee.
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| 1021.7500.2754.20:3
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| 0 C. The LC (1) shall have an expiry date of December 31, 1991, (2) may be drawn upon Event is declared, an Event if of an Event of Loss occurs, a Deemed Loss Default occurs and is continuing or in any and all events prior to termination of the LC should a termina-tion event under the LC occur, (3) shall permit partial drawings, (4) shall permit Owner Participant to assign all of its interest therein to a successor Owner Participant without the issuing bank's or Lessee's consent (5) shall provide for reinstatement upon reim-bursement in respect of a draw thereunder for Supplemental Rent and (6) shall be otherwise satisfactory in form and substance to Owner Participant in its reasonable judgment. Appropriate provision will be made for replacing the LC if there is a decline in the rating by Moody's of the unsecured long-term debt securities of the issuing bank below A3.'.
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| The reimbursement agreement between Lessee and the issu-ing bank relating to the LC shall (1) not contain any default or ter-mination provisions that are less favorable to Lessee or Owner Participant than those contained in Lessee's Reimbursement Agreement dated as of December 1, 1987, with The Fuji Bank Limited, (2) require the issuing bank to pay any draws on the LC from its general funds, (3) not permit the issuing bank to exercise any right of set off during the pendency of any bankruptcy, proceeding of Lessee, (4) not:
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| permit Lessee,'s. reimbursement obligation to be collateralized at any time by the grant of a security interest in Lessee's interest in the Undivided Interest or the Real Property Interest or in any other property unless a subordinate (to the security interest of the issu-ing bank) security interest in such property is. also granted to Owner Participant, (5) not permit amendment of any provision of the LC or the reimbursement agreement in a manner which is materially adverse to the interest of Owner Participant without its prior written con-sent and (6) otherwise be satisfactory in form and substance to Owner Participant in its reasonable judgment.
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| E. The LC need not be renewed or replaced as of December 31, 1991, if (i) all the Debt listed on Schedule 8 to the Facility Lease has been retired in accordance with such Schedule 8, (ii) the New Coverage Ratio of Lessee, determined as of June 30, 1991, is not less than 1.6 to 1, (iii)'he aggregate Debt maturing more than one year after the date of issuance, assumption or liabil-ity (including current maturities of Debt with an original maturity in excess of one year) of Lessee shall not be in- excess of 65< of New Consolidated Capitalization, all's derived from the Lessee's finan-cial books and records as of June 30, 1991, and (iv) the aggregate
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| ~ Debt maturing one year or less after the date of such issuance, assumption or liability (excluding current maturities of Debt with an original maturity in excess of one year) of Lessee shall not be in excess of 12.54 of such New Consolidated Capitalization (clauses (i) through (iv) above being herein called the "Tests" ). Lessee 1021. 7500. 2754. 20: 3
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| shall prepare for and provide to Owner Participant not later than October 1, 1991 (and October 1 of succeeding years under the circum-stances set forth below) calculations showing whether Lessee has sat-isfied the Tests and the financial data upon which such calculations were based. If Lessee has failed to meet the Tests, Owner Participant may, at its option (and without affecting any other rights of Owner Participant to draw on the LC), draw on the LC or require that Lessee provide a renewal or replacement LC or itself obtain for Lessee, at Lessee's expense, a renewal or replacement LC on substantially the same terms as the existing LC, except that the annual fee payable under such renewal or replacement LC shall not be more than 100 basis points greater than the annual fee to Lessee of the existing LC. The Owner Participant shall exercise such option within a period of time to be determined but not more than thirty (30) days after the Lessee shall furnish the Owner Participant the aforesaid calculations and financial data. Such renewal or replace-ment LC shall have a term commencing not later than the expiry date of the existing LC and ending not earlier than one year after such expiry date, and shall have terms (including the terms of the related reimbursement agreement) not less favorable to Owner Participant than the terms contained in the existing LC and reimbursement agreement.
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| Such renewal or replacement LC may provide for its early expiration not earlier than December 31 of the year during which Lessee meets the Tests. The procedures set forth above (the New Coverage Ratio being determined, and deriving New Consolidated Capitalization from the Lessee's financial books and records, as of June 30 in each such year) shall be repeated each year until no renewal or replacement LC is required.
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| : 2. Escrow A ee ent. Lessee shall enter into an Escrow Agreement with Chemical Bank substantially in the form of Exhibit A hereto. The Owner Participant agrees that, upon delivery and accep-tance of the LC, it shall deliver the notice required by clause (i) of Section 7.2 of the Escrow Agreement.
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| : 3. Amendment to Lease. Owner Trustee and Lessee shall execute Amendment No. 2 to the Facility Lease substantially in the form of Exhibit B hereto.
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| : 4. Further Chan es. Concurrent with the procurement of the LC, and subject to obtaining any required consents of third par-ties to the Transaction Documents, the parties will amend the Facility Lease and other Transaction Documents to and implement the obtaining of and to reflect the existence of the LC to further implement the terms of this Agreement. Such amendments will include provisions affording Lessee, in the event Owner Participant has determined to draw on the LC when Lessee has failed to meet the Tests and unless an Event of Default shall have otherwise occurred and be continuing or an Event of Loss shall have occurred or Deemed Loss 1021.7500.2754.20:3
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| 0 Event shall have been declared, the right to purchase the 'Undivided Interest and the Real Property Interest on or before some period prior to the expiration or termination date of the existing LC, for an amount based on the greater of (i) Enhanced Casualty Value, which will be calculated on an assumed 25% residual,, and (ii) Fair Market Sales Value of the Undivided Interest and the Real Property Interest.
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| : 5. Consent. Owner Participant irrevocably consents to any and all transactions which would require its consent under Section 10(b)(3)(ii) or 10(b)(3)(v) of the Participation Agreement.
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| : 6. Owner Trustee Di ective. Owner Participant hereby authorizes and directs Owner Trustee to execute this Agreement, Amendment No. 2 to the Facility Lease and such other agreements, doc-uments and certificates as shall be required in order to facilitate the execution and delivery of this Agreement and such Amendment No. 2.
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| : 7. Taxes. All the provisions of Sections 13(b) and (c) of the Participation Agreement shall be applicable as though the mat-ters set forth in this Agreement (including the exhibits hereto) had been included in the Transaction Documents:at all times since August 18, 1986 except that the execution and delivery of this Agreement, as opposed to its provisions, shall not be considered to be the execution and delivery of a Transaction Document or a Financing Document or an act specifically required or expressly per-mitted to be performed by the Lessee for the purposes of Section 13 (c) (4) (i) (B) of the Participation Agreement.
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| : 8. Miscellaneous'. This Agreement may be executed by the parties hereto in separate counterparts, and all to it shall not be neces-sary for the signatures of parties appear on any one counterpart. The headings of the various sections of this Agreement are for convenience of reference only and shall not modify,, define, expand or limit any of the terms or provisions hereof. This Agreement may not be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by the party against whom enforcement of such transaction, amendment, sup-plement, waiver or modification is sought. This Agreement in all respects shall he governed by and construed in accordance with the laws of the State of New York, including all matters of constmction, validity and performance.
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| 1021.7500.2754.20:3
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| XN WITNESS WHEREOF oa"h ot >>ia PaZ'KB'ecato hae aaused this Agreement to be duly execute as ~i the day an4 year first abave wr1,t.ten.
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| pZkÃMDSZ mRXiflON X,XFE YNSVRANCE CONPANY OP AHERICA
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| al'E FIRST uATZQNAI MNK OF 80STGN, not in its indiVMual capacity but salary as 'Owner TL",l8589 8)':
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| f X. PASO ELECTRIC CCOSABY
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| t iO iO iO
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| Exhibit A to the Agreement ESCROW'GREEMENT Dated as of December 31, 1987 between CHEMICAL BANK, Escrow Agent and EL PASO ELECTRIC COMPANY 1021.7500..2704.13:20
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| TABLE OF Parcae CONTENTS'ARTICLE I
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| DEFINITIONS Section 1.1. Certain Defined Terms. . . . . . . . . . .:. 1 ARTICLE II APPOINTMENT OF AGENT AND CREATION OF ESCRCN ACCOUNT Section 2.1. Appointment of Agent. . . . . . ; . . . . . . 3 Section 2.2. The Escrow Account. . . . .,. . . . ... . . . 3 Section 2.3. Statement of Purpose. . . . . . . . . . . . . 4 ARTICLE III, LEASE PROCEEDS DEPOSIT BY THE'O11PANY'ection 3.1. Lease Proceeds Escrow Deposit. . .-. . . . . 4 ARTICLE IV TRANSFER AND DEPOSIT BY THE COMPANY OF EXISTING INVESTMENTS Section 4.1. Transferred Investments Escrow Deposit. . . . 4 ARTICLE V INVESTMENTS AND PAYMENTS BY AGENT
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| . Section 5.1. Payments by Agent to Company from Lease Proceeds Escrow Sub-Account. . . . . . . . . 5
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| TABLE OF CONTENTS, Continued Pacae Section 5.2. Monthly Disbursement from both Sub-accountso ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 6 J
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| Section 5.3. Investments; Agreement as to Value of Clauses 6, 7 and 8 on December 31, 1988. ~ ~ 7 Section 5.4. Valuation of Investments; Payment of Deficiency. 8 ARTICLE VI CONCERNING THE AGENT Section 6.1. Duties of Agent. .10 Section 6.2. Lxabz.lz.ty. F 10 Section 6.3. Delivery of Documents and Further Acts. .10 Section 6.4. Legal Proceedings.
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| Section 6.5. Resignation; Appointment of Succ.=ssor. .11 Section 6.6. Indemnification. .11 ARTICLE VII MISCELLANEOUS Section 7.1. Payments. .12 Section 7.2. Termination. .12 Section 7.3. Amendments, Etc. .12 Section 7.4. Addresses for Notices, Etc. .12 Section 7.5. Successors and Assigns. .13 Section 7.6. Severability of Provisions. .13 Section 7.7. Headings, etc. .13
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| TABLE OF'ONTENTS, Continued Pacae Section 7.8. Governing Law. . . . . . . . . . . . . . . .13 Section 7.9. Counterpart Execution. . . . . . . . . . . .13
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| II,
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| ESCROW AGREEMENT ESCROW AGREEMENT, dated as of December 31, 1987, among CHEMICAL BANK,,a New York banking'orporation (the Agent), and EL PASO ELECTRIC COMPANY, a Texas corporation (th Company).
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| WITNESSETH:
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| WHEREAS, pursuant to eight separate Commitment Agreements, dated as of December 31, 1987 with each of the Owner Participants (as described in Schedule I hereto) and the related Owner Trustee, the Company has agreed to establish and maintain an escrow account of certain moneys and securities (such terms and all other capitalized terms used herein having the meanings set forth or referred to in Section 1 hereof) until such time as Acceptable Letters of Credit are obtained; and
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| WHEREAS, the Commitment Agreements contemplate that certain moneys and securities are to be held in an escrow account to be established with the Agent and are to be disbursed by the Agent pur-suant to directions from the Company until the cccurrence of certain events, all in accordance with the terms and conditions set forth herein; and WHEREAS, the Company desires that the E.gent be appointed as escrow agent, and the Agent desires to accept (uch appointment, all in accordance with the terms and conditions se= forth herein.
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| NOW, THEREFORE, in consideration of the mutual agreements herein contained and o f other good and valu.able consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows:
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| ARTICLE I DEFINITIONS SECTION 1.1. Certain Defined Terms. As used in this Agreement and unless otherwise expressly indicated, or unless the context clearly requires otherwise:
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| (a) The terms Agent and the Company have the meanings assigned in the caption of this Agreement.
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| (b) The following terms have the respective meanings set forth below (such meanings to be equally applicable to both the sin-gular and plural forms of the terms defined):
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| Acceptable Letter of Credit means a letter of credit complying with the requirements therefor a-: set forth in 1021.7500.2704.13:20
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| the relevant Commitment Agreement, which toe Company has agreed to provide to each August Owner Participant.
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| August Owner Participants means each of the six enti-ties listed in Schedule I hereto, each as an owner partici-pant under its related August Participation Agreement.
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| August Participation Agreement(s) means each of six separate Participation Agreements, dated a- of August 1, 1986, as amended by Amendment No. 1, dated October 1, 1986 among the Company, El Paso Funding Corporation, the Owner Trustee, First', City National Bank of Houston, as Indenture Trustee, and each August Owner Participant.
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| Commitment Agreements means the eight separate Agreements, dated as of December 31, 1987, by and between El Paso, the related Owner Trustee and each of the Owner Participants.
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| December Participation Agreement(s) means the Participation Agreement dated as of December 1, 1986, among the Company, El Paso Funding Corporation, the Owner Trustee, First City National Bank of Houston, as Indenture Trustee and Chrysler Financial Corporation and the Participation Agreement, dated as of December 1, 1986, among the Company, El Paso Funding Corpora=ion, the Owner Trustee, First City National Bank of Houston, as Indenture Trustee and Commercial Federal Investmen'orporation.
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| El Paso Obligations means the principa'mount of the indebtedness of the Company set forth in Schedule II1 hereof.
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| Escrow Account means said term 'cs defined in Section 2.2 hereof.
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| Escrow Sub-accounts means the Transferred Investments Escrow Sub-account and the Lease Proceeds Escrow Sub-account, collectively.
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| Lease Proceeds Escrow Deposit means said term as defined in Section 3.1 hereof.
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| Lease Proceeds Escrow Sub-Account means said term as defined in Section 2.2 hereof.
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| Owner Participant(s) means the August Owner Participants and Chrysler Financial Corporation and 1021.7500.2704.13:20
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| ~5 Commercial Federal Investment Corporation, as Owner Participants under the December Participation Agreements.
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| Owner Trustee means The First National Bank of Boston, as trustee for an'wner Participant under ea:;h of six sepa-rate Trust Agreements, dated as of August 1, 1986 and two separate Trust Agreements, dated as of December 1, 1986.
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| Participation Agreements means the August Participation Agreements .and the December Participation Agreements.
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| Permitted Investments means the certificates, obliga-tions and, investments set forth in Schedule II hereto, the investments constituting the Transferred Investments Escrow Deposit and reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment fea-ture o f any o f the investments l'isted in clauses (ii),
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| (iii) and (iv) of the first paragraph of Section 4.1 hereof.
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| Transferred Xnvestments Escrow Deposit means said term as defined. in Section 2..2 hereof.
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| Transferred Xnvestments Escrow Sub-account means,'said term as defined in Section 2.2 hereof.
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| (c) As used herein, any capitalized term not otherwise defined herein has the meaning assigned to such term in the respec-tive Participation Agreements.
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| ARTICLE XX APPOINTMENT OF AGENT AND CREATION OP ESCROW ACCOUNT SECTION 2.1. Appointment of Agent. For the purposes and subject to the terms and conditions set forth in this Agreement, the Company hereby appoints Chemical Bank as escrow agent, and Chemical Bank hereby accepts such appointment.
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| SECTION 2.2. The Escrow Account. The Agent shall estab-lish and maintain for the benefit of the Owner Participants. an Escrow Account. (the Escrow Account), within which there shall be two sepa-rate sub-accounts 'to be known as the Lease Proceeds Escrow Sub-account,(the Lease Proceeds Escrow Sub-account) and the Transferred Investments Escrow Sub-account (the Transferred Xnvestments Escrow Sub-account). The Agent shall deposit in the Escrow Account (i) for 1021.7500.2704.13:20
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| credit: to the Lease Proceeds Escrow Sub-account, any Lease Proceeds Escrow Deposit made by the Company to the Agent. pur. uant to Section 3.1 hereof, and (ii) for credit to the Transferre.d Investments Escrow Sub-account, the Transferred Investments Escrow Deposit made by the Company to the Agent pursuant to Section 4.1 hereof. So long as any amounts remain in the Escrow Account, such amounts shall be consid-ered as, and shall be and remain, the property of the Company. The Agent shall invest or re-invest any amounts in the Escrow Account and make applications. thereof as provided in Art'cle V hereof. The Escrow Account shall be funded by the deposits by the Company to the appropriate sub-accounts in the manner describ d herein.
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| SECTION 2.3. Statement of Purpose. The Company represents that the purpose of this Agreement and the creation and establishment of the Escrow Account is to pay or provide for the payment of the El Paso Obligations and certain short-term indebtedness of El Paso in accordance with Section 5.1(b) hereof.
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| ARTICLE III LEASE PROCEEDS DEPOSIT BY THE COMPANY SECTION 3.1. Lease Proceeds Escrow Deposit. The Company hereby represents that it has deposited with the Agent $ 163,000,000 for deposit by the Agent in the Lease Proceeds Escrow Sub-account.
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| ARTICLE IV TRANSFER AND DEPOSIT BY THE COMPANY OF EXISTING INVESTMENTS SECTION 4.1. Transferred Investments Escrow Deposit.
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| Subject to the terms and provisions of this Agreement, the Company hereby agrees that by February 1, 1988 it will cause to be deposited into the Transferred Investments Escrow Sub-Account by change of account reference to that of the Agent or'ssignment of all right, title and interest of the Company to the Agent'. (exclusive of any obligations or liabilities of the Company) as the case may be, of the following (collectively, the Transferred Investments Escrow Deposit):
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| (i) Account of El Paso Electric Co., 'Account No. 9-6191-03 01 at MBank Houston, P.O. Box 2629, Attn: Capital Market.s Division, Houston, Texas; (ii) The limited partnership interest of the Company if in and to the Weiss Qual ied Income Fund Limited 1021.7500.2704.13:20
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| Partnership I, obtained on November 13, 1986 pursuant to the Neiss Qualified, Income Fund Limited Partnership I Amended and Restated Agreement of Limited Partnership, dated as of September 9, 1986; (iii) Account of El Paso 97061 at Merrill Lynch, Electric, Ac .ount Pierce, Fenner No. 530-
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| & Smith Incorporated, One Liberty Plaza, 165 Broadway, New York, NY 10080; and (iv) Account of El Paso Electric Company, Account No.
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| 30 B Z0009 354 at Kidder, Peabody & Co., Incorporated, 20 Exchange Place, New York, NY 10005.
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| The Agent is hereby authorized by the Company to enter into any arrangement or agreement (including but not limited to, manage-ment agreements) as the Company may determine is necessary to evi-dence ownership of the foregoing investments by the Agent.
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| The Company represents that the aggregate "book value" as of the end of November, 1987 of the Transferred Investments Escrow Deposit was not less than $ 135 million.
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| Company Notwithstanding the foregoing, fails to if for any reason the consummate any of the -transfers, in whole or in part, to the Agent referred to in clauses (i) .-.hrough (iv) of the
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| .first paragraph of this Section 4.1, such fail<re shall not consti-tute a breach of, or default under, this Agreement, so long as the Company shall have on deposit in the Transferred Investments Escrow Sub-Account with the Agent on February 1, 1988, moneys or securities having an aggregate "book value" as of the end of November, 1987 of not less than $ 135 million.
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| ARTICLE V INVESTMENTS AND PAYMENTS BY AGENT SECTION 5. 1. Payments by Agent to Company from Lease Proceeds Escrow Sub-Account. (a) In order to provide for the pay-ment of the El Paso Obligation that is to be paid on or prior to January 31, 1988, and prior to the valuation of the money and securi-ties in the Escrow Account, upon the receipt by the of Agent (with request in copies to each Owner Participant) from the Company a writing for disbursement, the Agent shall pay to the party indicated in the written request of the Company in immediately available funds, out of the funds then on deposit in the Lease Proceeds Escrow Sub-account, an amount. equal to the amount that is due and owing to The-Bank of New York as a prepayment of the El Paso Obligation for which 1021. 7500. 2704. 13: 20'
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| payment is due in January 1988. Such request by the Company to the Agent pursuant to this Section 5.1 'shall specify (i) the applicable prepayment date and (ii) wire or transfer instructions.
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| (b) The Agent will prepare a market valuation of all moneys and securities on deposit in the Escrow Accounc in accordance with the requirements of Section 5.4 hereof within 10 calendar days fol-lowing receipt by the Agent of all monthly closing valuations for the month of January 1988. Upon completion of such valuation, the Agent shall promptly provide a certificate to the Company and each of the Owner Participants setting forth the value of such moneys and securities. To the extent that the amount of such market valuation exceeds $ 243, 100, 000, upon receipt of such certificate of valuation from the Agent, the Company shall deliver a written request to the Agent (with copies to each Owner Participant), directing release of such excess to the Company for payment of indebtedness of the Company having a maturity of one year or less specified in such request, and upon receipt of such request the Agent shall release such excess to the Company. To the extent that the amount of such market valuation is less than $ 243, 100,000, the Company shall provide the Agent, within five business days after receipt of the certificate of valua-tion from the Agent, with money or Permitted Investments (with a market value as of the date of such valuation) sufficient to cover the deficiency.
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| SECTION 5.2. Monthly Disbursement from both Sub-accounts.
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| Except as specifically provided in Section 5.1 hereof, as soon as practicable following each'onthly valuation pursuant to Section 5.4 hereof of the moneys and securities on deposit in the Escrow Account, amounts on deposit in the Escrow Account shall be disbursed monthly in accordance with and in amounts as set forth in a written certifi-cate of the Company (with copies of such certificate delivered to each Owner Participant) specifying the applicable payment date, payee, sub-account and wire or transfer instructions: first, to the party named in such certificate of the amount as set forth therein in order to permit the payment of El Paso Obligations with a Payment Date as determined in accordance with Schedule III hereto within 45 days after the date as of which the Escrow Account is valued and then second to the Company all amounts on deposit in the Escrow Account in excess of the amount necessary to pay the principal amount of the remaining El Paso Obligations, determined by reference to Schedule III hereto and confirmed in the certificate of the Company requesting such disbursement.
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| Notwithstanding the foregoing the Company may direct the Agent to make a disbursement from the Escrow Account solely for the purposes of paying an El Paso Obligation if for any reason the valuation and disbursement procedure heretofore described does not provide for timely and adequate payment of any such El Paso 1021.7500.2704.13:20
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| Igp Obligation and such direction of the Company shall expressly so state. The Agent shall be entitled to liquidate any investments held in the Escrow Account in order to provide for payment of the El Paso Obligations or any other payments in accordance herewith. The Agent shall have no liability for losses resulting from the liquidation of securities on deposit in the Escrow Account.
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| SECTION 5.3. Investments; Agreement as to Value of Clauses 6, 7 and 8 on December 31, 1988. (a) The Agent shall invest and reinvest (which shall include the application of (A) the proceeds of maturing investments and (B) the sale of investments) the moneys in the Escrow Account only in Permitted Investments and shall sell investments in the Escrow Account, as specifically identified in a written direction of the Company which shall, in the case of any such investment or reinvestment expressly state that each such investment is a Permitted Investment and further that such Permitted Investment is in'ompliance with the limitations set forth in the next sentence, it being understood that the Agent shall have no duty to monitor such compliance; provided, however, that such identification of the investment or reinvestment and certification as to compliance with the limitations set forth in the next sentence shall not be appli-cable to the nondiscretionary reinvestment feature of the investments.
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| described in clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof. Any such investments and reinvestments shall be subject to the following limitations:
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| (i) no investment or reinvestment shall be made in any of clauses 6, 7 and 8 contained in Schedule II hereto if as a result of such investment or reinvestment (a) at the date thereof, but no later than December 31, 1988, the
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| : total aggregate amount invested pursuant to clauses 6, 7 and 8 contained in Schedule II hereto would exceed the lesser of (x) sixty percent (604) of the 'market value of the amounts then on deposit in the Escrow Account and (y) the total so invested at any time immediately prior to such investment or reinvestment; provided, however, that for purposes of determining compliance with this subclause (y),
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| there shaI1 be excluded from the total aggregate amount invested pursuant to clauses (6), (7') and (8) of Schedule II hereto any amounts attributable to the invest-ment and reinvestment of income, dividends and capital gains resulting from the nondiscretionary reinvestment fea-ture of .any of the investments listed in clauses (ii),
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| (iii) and (iv) of the first paragraph of Section 4.1 on deposit in the Transferred Investment Escrow Sub-Account and (b) at the date thereof, but only after December 31, 1988, the total aggregate amount invested pursuant to such clauses would exceed twenty-five percent (25.) of the 1021. 7500. 2704.. 13: 20
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| market value of the amounts then on deposi"'n the Escrow Account; (ii) no investment or reinvestment in Permitted Investments shall be made if the result thereof would be to cause any of clauses 1, 3, 4, 5, 9 and 10 contained in Schedule II hereto to exceed twenty-five percent (25~~) of the market value of the amounts on deposit in the Escrow Account; and (iii) the average life of any investment (other than investments described in clause 2 contained in Schedule II hereto) shall not exceed seven years..
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| (b) The Company agrees that the market value as of December 31, 1988 of investments in the .Escrow Account (including the Transferred Investments Escrow Deposit) in clauses 6, 7 and 8 con-tained in Schedule II hereto will not exceed $ 45 million. The represents that it will attempt to undertake an orderly Company liquidation of the Transferred Investments Escrow Deposit so as to be in a position to comply with this Article V. The Company anticipates that, under current market conditions and recognizing that sale of investments will be designed to protect the Company from incurring any losses due to such investments, reductions, within the bands and for the quarters of calendar year 1988 indicated below, of the Transferred Investments Escrow Deposit would b achievabl'e:
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| 1988 Reduction uarter 1st 20 to 45 2nd 20 to 30 3rd 30 to 20 4th ~38 to 3 Total for 1988 1'08 SECTION 5. 4. Valuation of Investments; Payment of Deficiency. The Agent shall cause a monthly fair market valuation of the Escrow Account to be undertaken. In undertaking its obligation.
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| to make a monthly valuati'on of the Escrow Account, (i) the Agent shall be ent,itled to assume that the monthly market valuations fur-nished to the Agent of the investments held in the Transferred Investments Escrow Sub-Account shall constitute the market value of any such investments and (ii) to the extent the Agent is unable to value any Permitted'nvestments in accordance with its customary prac'tice as a corporate trustee, the Company hereby agrees to promptly provide the Agent with, and the Agent shall be entitled to rely upon, an independent market valuation of any such investment.
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| The Company agrees to cause the monthly market. valuations of the 1021. 7500. 2704. 13: 20
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| investments constituting the Transferred Investments Escrow Sub-Account to be sent directly to the Agent. Copies of all such valuations by the Agent shall be sent to the Owner Participants and the Company.
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| The Agent shall undertake such valu. tion of the Escrow Account monthly, commencing in February, 1988, such valuation to be as of the end of the immediately preceding .month and in no event shall such valuation be completed later than ten calendar days after receipt by the Agent of the monthly valuation report for all such Permitted Investments on deposit in the Transferred Investments Escrow Subaccount (including any monthly valuation report provided pursuant to the second sentence of the first paragraph of Section 5.4 hereof) . In connection with its valuation of the Escrow Account, the Agent shall deduct from the valuation of the investments on deposit in the Transferred Investments Escrow Sub-Account that amount which represents the aggregate value attributable (determined on a cumula-tive basis, i.e., including the month of valuation and preceding months) to reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment feature of any of the investments listed in clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof. For purposes of the monthly valua-tion only, any proceeds derived from a sale or upon maturity (other than pursuant to the nondiscretionary reinvestment feature of any of the investments listed in clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof) of any investment made pursuant to clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof shall be allocated to reducing the aggregate value, if any, of the investments in the Transferred Investments Escrow Sub-Account attributable to reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment feature of any such investment, which aggregate value was deducted irom the valuation of investments on deposit in the Transferred Investments Escrow Sub-Account pursuant to the preceding sentence (it heing understood that an amount equal to any such reduction, except to the extent that such amount was otherwise withdrawn from the Escrow Account pursuant to Section 5.2 hereof, shall be included in the Transferred Investments Escrow Sub-Account for purposes of the monthly valuation thereof).
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| The Agent shall derive the amount. attributable to each month repre-senting such reinvestment from the monthly market valuations fur-nished to the Agent with respect to such investments and if such amount cannot be derived from such valuations, the amount attribut-able to such month and the aggregate to be so deducted shall be as directed in writing by the Company to the Agent, copies of which shall be furnished to the Owner Participants, together with the cal-culations and data upon which such direction is based', all as certi-fied by the Chief Financial Officer of the Company. To the extent the amount of such valuation of the Escrow Account, as adjusted for the amount, if any, to be deducted from such monthly valuati:on as 1021. 7500. 2704. 13: 20
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| provided in this paragraph, is less than the principal amount of the remaining El Paso Obligations which are schedu'ed to come due more than forty-five (45) days subsequent to such valuation, the Company shall provide the Agent within five business days .after receipt from the Agent of such monthly valuation with money or Permitted Investments (with a market value as of the dat of such valuation) sufficient to cover the deficiency. The Agent shall notify the Owner Participants in. writing of the date and receipt by the Agent of any money or Permitted Investments provided to meet such deficiency.
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| ARTICLE VI CONCERNING THE AGENT SECTION 6.1. Duties of Agent. The Agent shall have no duties or responsibilities other than those expressly set forth in.
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| this Agreement and shall have no duty to enforce any obligation of any person to make any payment or delivery, or to direct or cause any payment or delivery to be made, or to enforce any obligation of any person to perform any other act or to perform any calculations except as herein expressly set forth. In addition, the Agent shall have no duty to make any payment under this Agreement from its own funds.
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| SECTION '6.2. Liability. The Agent shall not be liable for.
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| any action taken or omitted by it, or any action suffered by it to be taken or omitted, in good faith and in the exercise of its own best judgment, excepting only its own willful misconduct or gross negli-gence, and may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion and advice of counsel (including counsel selected by the Agent), statement, instru-ment, report or other instrument or document (not only as to its due execution and the validity and effectiveness thereof, but also as to the truth and acceptability of any information therein contained) which is believed by the Agent to be genuine, and to be signed (or in the case of oral communication, given) by the proper person or persons. The Agent shall not be bound by any notice or demand, or any waiver,, modification, termination or rescission of this Agreement or any of the terms hereof, unless expressly provided for herein and delivered as provided in this Agreement.
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| SECTION 6.3. Delivery of Documents and Further Acts.
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| From time to time on and after the date hereof, the Company shall deliver or cause to be delivered to the Agent, such further documents and instruments and shall do and 'cause to; be done such further acts as the Agent may reasonably request (it being understood that the Agent shall have no obligation to make any such request) to carry out more effectively the provisions and purposes of this Agreement, to 1021.7500'.2704.13:20
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| evidence compliance herewith or to assure itself that it is protected in acting hereunder.
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| SECTION 6.4. Legal Proceedings. The Agent shall not be required to defend any legal proceedings which may be instituted against it in respect of the subject matter of this Agreement unless requested to do so by the Company and indemnifiec. to its satisfaction against the cost and expenses of such defense ('.ncluding counsel and investigatory fees) by the Company and shall not 'be required to institute legal proceedings of any kind.
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| SECTION 6.5. Resignation; Appointment of Successor. The Agent (or any successor escrow and paying agent) may resign at any time and be discharged from its duties as escrow and paying agent under this Agreement by giving to the Company and the Owner Participants at least 30 days'otice thereof, such resignation to be effective on the date of appointment of a successor escrow and paying agent as hereinafter provided. As soon as practicable after any such resignation, the Agent shall turn over to a successor escrow and paying agent appointed by the Company all monies and property held hereunder upon presentation of the document appointing such successor escrow and paying agent and its acceptance of such appointment. If no successor escrow and paying agent is so appointed within the sixty-day period following such notice of resignation, the Agent shall deposit all monies and funds held hereunder with the Supreme Court of the State of New York for the County of New York (together with a petition to said Court for the appointment of a successor to act until such time, if any, as a successor shall have been appointed as hereinbefore provided). Upon turning over to the successor escrow and paying agent or to the Supreme Court of the State of New York as aforesaid, all monies and property held hereunder, the predecessor escrow and paying agent shall be released of any further responsibil-ity hereunder. Any successor escrow and paying agent shall be a bank or trust company organized under the laws of the United States or any jurisdiction thereof, having a combined capita'nd surplusableof and at least $ 250, 000i000i if there be such an institution willing, legally qualified to perform the duties of the Agent hereunder upon reasonable or customary terms.
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| SECTION 6.6. Indemnification. The Company agrees that the Agent shall not be liable for any matter or thing, arising out of the performance by the Agent. of its obligations under this Agreement, except as provided in Section 6.2 hereof. The Company agrees to indemnify the Agent, and to hold the Agent harmless, from and against any and all liability, loss, damage or expense {including reasonable attorneys'ees and actual out-of-pocket expenses) which theaction Agent may or might incur by reason of this Agreement, or for any taken by the Agent hereunder, or by reason or in defense of any and 1021.7500.2704.13:20
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| all claims and demands whatsoever which may be asserted against the Agent arising out of this Agreement.
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| ARTICLE VII MISCELLANEOUS SECTION 7.1. Payments. Payments to or upon the direction of the Company by the Agent pursuant to Article V hereof shall be made in accordance with such written instructions as the Company may provide to the Agent (with copies to the Owner Participants) from time to time for such purposes. Whenever any payment to be made pur-suant hereto shall be required to be made on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day.
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| SECTION 7.2. Termination. This Agreement shall terminate upon the earliest to occur of (i) receipt by tne Agent of written notice from each Owner Participant that as to such Owner Participant this Agreement is terminated, (ii) disbursement by the Agent of all of the payments to be made by the Agent under Article V hereof with respect to the El Paso Obligations and (iii) receipt by the Agent of joint notice from the Company and each of the Owner Participants with respect to such termination. Upon the termination of this Agreement as aforesaid, any securities and moneys on deposit in the Escrow Account shall be applied at the direction of the Company.
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| SECTION 7.3. Amendments, Etc. No amendment to this Agreement shall be made or be effective without the written consent, of the Owner Participants. No amendment, modification, termination or waiver of any provision of this Agreement shall in any event, be effective unless the same shall be in writing and signed by the par-ties hereto, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment of any other agreement or instrument shall affect the Agent or its duties 'hereunder. No notice to or demand on any party hereto in any case shall entitle such party to any other or further notice or demand in similar or other circumstances unless herein otherwise provided.
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| SECTION 7.4. Addresses for Notices, Etc. Except as oth-erwise expressly provided herein, all notices and other communica-tions provided for hereunder shall be in writing and mailed (postage prepaid), hand delivered or sent by overnight courier, if to the Company, c/o William J. Johnson at its address at 303 North Oregon Street, P;O. Box 982, El Paso, Texa's 79960, with a copy similarly delivered to Kemp, Smith,'uncan & Hammond, 2000 MBank Plaza, P.O. Drawer 2800, El Paso, Texas 79999, Attention: Dane George, 1021.7500.2704.13:20
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| Esq., and York, New if York to the Agent, at its address at 55 Water Street, New 10041, Attention: Corporate Trustee Administration, with a copy similarly delivered to Willkie Farr Gallagher, 153 East E.
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| 53rd Street, New York, New York 10022, Attention: Brian O'rien, Esq., and, Owner if to the Company or the Agent, with copies to each of the Participants at its address specified in Schedule I hereto, with a copy similarly delivered to Cravath, Swaine & Moore, One Chase Manhattan Plaza, New York, N.Y. 10005, Attention: Richard M. Allen, Esq., or, as to any of the foregoing, at such other address as shall be designated by such person in a written notice to the others. All such written notices and communications shall be effective when received at the address specified as aforesaid.
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| SECTION 7.5. Successors and Assigns. All of the provi-sions of this Agreement shall be binding upon and inure to the bene-fit of the parties hereto and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement other than to a per-mitted transferee under the Participation Agreements. Upon such assignment or transfer, the Company shall notify the Agent, whereupon the Agent shall recognize such assignment or transfer.
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| SECTION 7.6. Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable in the State of New York or in any jurisdiction in the United States which shall be applicable to this Agreement shall, as to the State of New York or such jurisdiction in the United States, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceabil-ity of such provision in any other jurisdiction.
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| SECTION 7.7. Headings, etc. The heail ings o f various Articles and Sections of this Agreement are for convenience of refer-ence only and shall not define or limit any of the terms and provi-sions hereof.
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| SECTION 7.8. Governing Law. This Agreement shall be gov-erned by, and construed in accordance with, the law of the State of New York.
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| SECTION i
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| : 7. 9. Counterpart, Execution. Th s Agreement and any amendment to this Agreement may be signed in any number of coun-terparts, each of which shall be an original, and all of which taken together shall constitute a single instrument, with the same effect as if the signatures thereto and hereto were upon the same instrument.
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| 1021. 7500. 2704, 13: 20 fi
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| IN WITNESS WHEREOF, the parties hereto have caused this Agreement: to be duly executed by their officers thereunto duly as of the day and year first above written. autho-'ized CHEMICAL BANK By:
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| Senior Trust Officer EL PASO ELECTRIC'OMPANY By:
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| Vice President 1021.7500.2704.13:20
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| SCHEDULE I Commercial Federal Investment Corporation Jeff Bainbridge Commercial Federal Investment Corporation 1300 Commercial Fed'eral Tower 2120 South 72nd Street Omaha, Nebraska 68124 Chrysler Financial Corporation Chrysler Financial Corporation Greenwich Office Park I Greenwich, Connecticut 06836 Leasing and Investment Services Attention: Mike Abandond Palantine Hills Leasing, Inc.
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| Palantine Hills Leasing, Inc.
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| 1415 S. Roselle Road Palantine, IL 60067 Attention: President, with copies to Household Commercial Financial Services Attention: Lee Hyatt and Julia Sarron, Esq.
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| 2700 Sanders Road Prospect Heights, IL 60070 1021. 7500. 2704. 13: 20
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| UCU Properties, Inc.
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| (Formerly, Energy Investments, Inc.)
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| Donald Claar Suite 2000 Commercial Tower Kansas City, Missouri 64105 Alexander Hamilton Life Insurance Company of America Richard Egan, General Counsel Alexander Hamilton Life Insurance Company of America 33045 Hamilton Boulevard Farmington Hills, Michigan Burnham Leasing Corporation Burnham Leasing Corporation 55 Broad Street New York, New York Attention: Dianne Rudo 1021. 7500 2704 13: 20
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| SCHEDULE II Certificates of deposit maturing within 180 days and issued by any Federally insured commercial bank; provided, however, that if the face amount of any such Certificate of Deposit shall be
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| $ 1,000,000 or more, the issuing bank shall have a capital and surplus exceeding $ 500,000,000 and a senior debt rating of not Below the Level of Investment Grade;
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| : 2. Readily marketable obligations issued or guaranteed by the United States Government or issued by the Government Nati'onal Mortgage Association, the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation;
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| : 3. Repurchase obligations maturing within 30 days with respect to obligations of the type described in Clause 2 above issued by any. Federally insured commercial bank; provided, however, that if the face amount of such repurchase obligation is $ 10,000,000 or more, the issuing bank shall have a capital and surplus exceeding $ 500,000,000 and a senior debt rating of not,Below the Level of Investment Grade; 4 ~ Repurchase obligations maturing within 30 days with respect to obligations of the type described in Claus 2 above issued by any nationally recognized dealer which reports to the Market Reports Division of the Federal Reserve Bank of New York;
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| : 5. Investments. in readily marketable money market funds managed by a nationally recognized fund manager, the assets of which fund (or the issuers thereof) are as described in Clauses 1, 2, 3, 4, or 9 herein;
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| : 6. Investments in readily marketable bonds, whi;ch are not Below the Level of Investment Grade, or bond funds managed by a nationally recognized fund manager, the assets of wh'ch (or the issuers thereof) are not Below the Level of Investment Grade; 7 ~ Investments, in stock or stock funds managed by a nationally rec-ognized fund manager;
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| : 8. Mortgage backed securities;
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| : 9. Commercial paper maturing within 180 days and having a rating of P-1 or better by Moody's Investors Service or A-1 or better by Standard & Poor's Corporation;,or
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| : 10. Investments iq municipal obligations, the issuers of which are not rated Below the Level of Investment Grade, or the obligations of which are backed by a Letter of Credit from a commercial bank as described in Clause 1 above.
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| 1021.7500.2704.13:20
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| "Below the Level of Investment Grade" means (i) in the case of .
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| Moody's Investors Service, a rating of less than Baa3 or the current equivalent, (ii) in the case of Standard & Poors Corporation, a rating of less than BBB- or current equivalent ~nd (iii) in the case of Duff and Phelps, a rating greater than ten or the current, equivalent.
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| 1021. 7500. 2704. 13: 20
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| SCHEDULE III EL. PASO OBLIGATIONS Principal Payment Amount Date Description
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| $ 25, 000, 000 Jan. 31, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 50,000,000 June 30, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 6,100,000 July 20, 1988 4.25% First mortgage bonds due July 1988
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| $ 22,000,000 May 20, 1989 12.75% First mortgage bonds due May 1989
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| $ 25,000,000 Aug. 15, 1989 14.54 First mortgage bonds due August 1989
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| $ 50,000,000 Nov. 20, 1989 144 First mortgage bonds due November 1989
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| $ 20,000,000 Dec. 1, 1990 Long-term notes unsecured-The Bank of America
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| $ 70,000,000 Mar. 1, 1991 Second, mortgage bonds-The Bank of America 1021. 7500. 2704. 13: 20
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| Exhibit B AMENDMENT No. 2, dated as of December 31, 1987, to Facility Lease dated as of August 1, 1986, between THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee ("Lessor" ) under a Trust Agreement, dated as of August 1, 1986 with ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF AMERICA, and EL PASO ELECTRIC COMPANY, as Lessee (" Lessee" ).
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| The parties hereto'ave previously entered into the Facility Lease (as heretofore amended, modified or supplemented, the "Facility Lease" ) providing for the lease by Lessor to Lessee of the Undivided Interest and the Real Property Interest,. The parties now desire to make certain amendments to the Facility Lease.
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| NOW, THEREFORE, in consideration of the premises and other good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows:
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| SECTION 1. Definitions. For purposes hereof, capital-ized terms used herein and not defined herein shall have the meanings ascribed thereto in Appendix A to the Facility Lease.
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| SECTION 2. Amendments. (a) Section 3 (b) . Section 3 (b) is hereby amended by inserting at the end of a clause (iii), in lieu
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| of "-.",
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| ~ "; and"- and by inserting
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| thereafter and before the next to last sentence of Section 3(c) a new clause (iv) reading as follows:
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| (iv) in the event that the Lessee shall fail of to provide on or before April 30, 1988, a letter credit which complies with the terms of the Agreement dated as of December 31, 1987 (the "Commitment Agreement" ), among the Lessee,. the Lessor and the Owner Participant, a copy of which is annexed hereto, on each Basic Rent Payment Date, commencing October 1, 1988 and ending on the Basic Rent Payment Date next following the earlier to occur of (A) the providing by the Lessee of such letter of credit and'B) the date as of which such letter of credit would have expired had it been in effect as required by the terms of Commitment Agreement, an amount equal to .354 of the Facility Cost multiplied by a fraction the numerator the of which is the number of days from and including of preceding Basic Rent Payment. Date (or, in the case the Basic Rent Payment Date occurring on October 1, 1988, from and including April 30, 1988) to but excluding such Basic Rent Payment Date (or, letter of credit if earli,-
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| is pro-er, to the date on which such vided or the date such letter of credit would have-.so expired), and the denominator of which is Basic the number Rent of days from and including the preceding 1021. 7500 2754. 22:
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| ~ 4
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| if'gf Payment Date to but excluding such Basic Rent Payment Date.
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| (b) Section 7. Section 7 of the Facility Lease is hereby amended by inserting ",(a) Liens. " prior to the existing paragraph and inserting the following at the end thereof:
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| (b) Retirement of Debt. Unless the Owner Participant shall otherwise consent, on or before each date set forth in Schedule 8 hereto', the Lessee shall retire, legally defease or deposit with the lender or its trustee funds sufficient to retire the principal amount of the Debtsuch set forth opposite the reference to such date on Schedule.
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| (c) Merger, Sale, etc. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, convey, transfer or lease to any Person any asset except for fair value.
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| Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, (1) consolidate with any Person, (2) merge with or into any Person or (3) except for (i) payments, in accordance with normal dividend policy of the Lessee, of cash dividends to holders of common stock and preferred stock, (ii) exchanges of fixed assets for other fixed assets whose fair value is equal to or greater than the fair value of the fixed assets exchanged or,(iii). conveyances, transfers or leases of assets for cash, where such cash is to be recorded'y the L'essee, convey, 'transfer, lease or dividend to any Person, in any single transaction or series of related such transac-tions, any asset or assets of its if the total book assets value of shown on asset the or assets exceeds 54 as, deliv-most recent consolidated balance sheet of the Lessee ered to the Owner Participant pursuant to Section 10(b) (1) (i) (A) of the Participation Agreement; unless immediately after giving effect to such transaction:
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| (A) the Person who is the "Lessee" under the Facility Lease immediately following:such consolidation, merger, conveyance, transfer, lease or dividend (the "Surviving Lessee" ) shall be a corporation which (i) is organized under the laws of the United States of America, a state thereof or'the District of Columbia, (ii) is a "public utility" under applicable law, (iii) is an ANPP'articipant under 'Unit the ANPP Participation Agreement with respect to 2 (including the 1021.7500.2754.22:4
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| Undivided Interest), (iv) shall have assumed each covenant and condition of the Lessee under the ANPP Participation Agreement and each other ANPP Project Agreement and (v) holds a val'id and subsisting license from the NRC to possess Unit 2 (including the Undivided Interest);
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| (B) the Surviving Lessee, if other 'than the Lessee immediately prior to such transaction, shall execute and deliver to the Owner Participant an agreement, in, form and substance reasonably satisfactory to the Owner Participant, containing the assumption by the Surviving Lessee of each covenant and condition of this Facility Lease,, each other Transaction Document and each Financing Document to which the Lessee imme-diately prior to such transaction was a party immedi-ately preceding such transaction; (C) no Default (other than a failure to deliver docu-ments and other information specified in Section 10(b) (1) (vi) of the Participation Agreement) and no Event of Default shall have occurred and be continuing, no Event of Loss shall have occurred and no Deemed Loss Event shall have been declared; (D) the Bonds (or, the preferred stock if the Bonds are not then rated, of the Surviving, Lessee) after giving effect to such transaction, (1) shall be rated at least "investment grade" by Standard & Poor '
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| and Moody's Investors Service, Inc. and 'orporation (2) shall have an investment rating by Standard 6 Poor's Corporation and Moody's Investors Service, Inc. not less than one "smallest notch" below, the rating assigned to the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) immediately prior to such transaction (or, if neither of such rating organizations shall rate the Bonds (or, if applicable, the preferred stock of the Surviving Lessee) at the time, by any nationally rec-ognized rating organization in the United States of America);
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| (E) the Surviving Lessee shall have a Net Worth equal to or greater than the Net Worth of the Lessee immedi-ately prior to such transactions and equal to or greater than $ 500,000,000; (F) the Surviving. Lessee shall have delivered to the Owner Participant and the Indenture Trustee an, 1021.7500.2754.22:4
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| Officers Certificate and an opinion, reasonably satisfactory to the Owner Participant, of counsel to the Surviving Lessee, each stating that. (1) such transaction complies with this subclause (c) and (2) all conditions precedent to the consummation of such transaction have been satisfied and any Governmental Action required in connection with such transaction has been obtained, given or accomplished; (G) the Surviving Lessee shall have delivered to the Owner P'articipant an opinion, reasonably satisfactory to the Owner Participant, of independent counseL to the Surviving Lessee stating that such transaction would not result in a loss of any of .the tax benefits described in Section 13(c)(1) of the Participation Agreement; (H) such transaction is otherwise permitted by and in compliance with the ANPP Participation Agreement; and (I) the New Coverage Ratio of the Surviving Lessee shall be at least 1.6 to 1.
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| Upon the consummation of such transaction the Surviving Lessee, if other than the Lessee, shall succeed to, and be substi-tuted for, and may exercise every right and power of, the Lessee immediately prior to such transaction under this Lease, each other Transaction Document and each Financing Document to which the Lessee immediately prior to such transaction was a party immediately prior to such transaction, with the same effect as if,the Surviving Lessee had been named herein and therein.
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| (d) Incurrence of Debt. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries (whether consolidated or unconsolidated) to, issue, assume or become liable in respect of (A) any Debt maturing more than one year after the date of such issuance, assumption or liability (including current maturities of Debt with anthereafter, original maturity of more than one year) if, immediately of all Debt of the Lessee and its sub-(i) the total amountconsolidated sidiaries (whether or unconsolidated) maturing more than one year after the date of such issuance, assump-tion or becoming liable (reduced by. Cash Available for Investment) shall exceed 70< (or, at any time after January 1, 1992 when there is not in effect a letter of credit com-plying in all respects with the Commitment Agreement, 654) of New Consolidated Capitalization, in each case as shown on a pro forma consolidated balance sheet on and as of the 1021.7500.2754.22:4
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| b Cl t
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| e date of such issuance, assumption or becoming liable, or (ii) the New Coverage Ratio of the Lessee would be less than 1.6 to 1 or (B) any Debt maturing one year or less after the date of such issuance, assumption or becoming liable (excluding current maturities of Debt with an origi-nal maturity of more than one year) if, immediately there-after, the total amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) maturing one year or less after the date of such issuance, assumption or becoming liable shall exceed 12.54 of New Consolidated Capitalization, in each case as shown on a pro forma consolidated balance sheet on and as of the date of such issuance, assumption or becoming liable. For purposes of the foregoing clause (A), there shall be excluded any Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated 'in escrow and any refunding of the debt issued on December .31, .1987 by the lessors in the sale and leaseback transactions relating to Unit 3 at PVNGS shall not constitute the Lessee issuing, assuming, or becoming liable in respect of any Debt within the meaning of this subclause (d) .
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| (e) Escrow Agreement. The Lessee shall deposit with Chemical Bank as escrow agent (the "Agent" ) any amount required to be deposited under the Escrow Agreement dated as of December 31, 1987 between the Lessee and the Agent within 5 Business Days after notice with from the Owner its other obli-Participant and shall otherwise comply gations under such Agreement within 15 days after notice from the Owner Participant.
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| (f) Definitions. For purposes of this Section 7, the terms New Consolidated Capitalization and New Coverage Ratio shall be defined as follows:
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| (A) "New Coverage Ratio" shall mean the ratio of (x) the sum of (a) consolidated net income of the Lessee for the twelve-month period ending on a date no later than 135 days prior to the date as of which New Coverage Ratio is being determined plus (or minus) (b) all extraordinary items deducted (or added) in deter-mining said net income (for purposes of this defini-tion of New Coverage Ratio, any charge against income resulting from a write-off of utility plant pursuant to (i) an order of any governmental authority having jurisdiction or (ii) a provision for an estimated
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| . regulatory disallowance shall be deemed to be an extraordinary item deducted in determining said net 1021.7500.2754.22:4
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| if' income) plus (or minus) (c) all income taxes deducted (or tax credits added) in determining said net income minus (d) for all or any portion of such period ending on or prior to December 31, 1990, 504 of "allowance for funds used during construction" (net of deferred taxes) as such item is referred to in the consolidated income statement of the Lessee and its subsidiaries) and, for all or any portion. of such period ending after December 31, 1990, 1004 of such item plus (e) the sum of all interest and lease payments paid by the Lessee and its subsidiaries (whether consolidated or unconsolidated) during such twelve-month period to (y) total interest and lease payments that will be consoli-payable by the Lessee and its subsidiaries (whether dated or unconsolidated) during. the twelve-month period following the date as of which New Coverage Ratio is being determined. There shall be excluded from interest and lease payments included under clauses (x) and'y) above (i) lease payments to the Rio Grande Resources Trust, (ii) lease payments under any operating lease of computers, office equipment or the like, the original term'f which (including options to renew) is less than five years and (iii) interest on Debt maturing one year or less from the date of incurrence thereof. There shall be excluded from interest and lease payments included under clause (y) above interest on Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow.
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| (B) "New Consolidated Capitalization" s h a 1 1 m e a n the total of consolidated capital and. surplus of'he Lessee plus the principal amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) which matures more than one year. after the date as of which New Consolidated Capitalization is being determined.
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| (c) Schedule 8. Schedule 8 hereto .is hereby added as Schedule 8 to the Facility Lease.
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| 1021.7500.2754.22:4
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| ~O iO
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| SECTION 3. Miscellaneous (a) Effective Date of Amendments. The amendments set forth in Section 2 hereof shall be and become effective upon the execution hereof by the parties hereto.
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| (b) Counterpart Execution. This Amendment No. 2 may be executed in any number of counterparts and by each of the parties hereto on separate counterparts; all such coun-terparts shall together constitute but one and the same instrument.
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| (c) Governing Law. This Amendment No. 2 has been negotiated and delivered in the State of New York and shall be governed by and be construed in accovtance with the laws of the State of New York, except to the extent that pursu-ant to the law of the State of Arizona such law is mandato-rily applicable hereto.
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| (d) Disclosure. Pursuant to Arizona Revised Statutes Section 33-404, the beneficiary of the Trust Agreement is Alexander Hamilton Life Insurance Company of America, a corporation. 'he address of the beneficiary is 33045 Hamilton Boulevard, Farmington Hills, Michigan, Attention:
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| Richard Egan, General Counsel. A copy of the Trust Agreement is available for inspection at the offices of the Owner Trustee at 100 Federal Street, Boston, Massachusetts 02110, Attention of Corporate Trust Division.
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| 1021.7500.2754.22:4
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| IN .WITNESS WHEREOF, each o f the parties hereto has caused this Amendment No. 2 to be duly executed in New York, New York on December 31, 1987.
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| THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity, but solely as Owner Trustee under a Trust Agreement, dated as of August 1, 1986 with Alexander Hamilton Life Insurance Company. of America, Senior Manager EL PASO ELECTRIC COMPANY, By 4 Vice President
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| STATE OF TEXAS )
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| ) ss.:
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| COUNTY OF EL PASO )
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| The foregoing instrument was acknowledged before me this 6th. day of January, 1988 by William J. Johnson, a Vice President of EL PASO ELECTRIC COMPANY, a Texas corporation, on behalf of the corporation.
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| N ary Public
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| ilk
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| COMMONWEALTH OF MASSACHUSETTS )
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| COUNTY OF SUFFOLK )
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| The 'foregoing instrument was acknowledged before me this day of January, 1988, by Mark Nelson, a Senior Manager of THE IRST NATIONAL BANK OF BOSTON, a national banking association, on
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| .behalf of the banking association as trustee under that certain Trust, Agreement dated as of August 1, 1986 with Palatine Hills Leasing, Inc.
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| Notary Public MARJA MIRSQLA My Commission Expo+
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| September 80, 1804 1021.7500.2754.06A:1
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| COMMONWEALTH OF MASSACHUSETTS )
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| ) SS ~ ~
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| COUNTY 'OF 'SUFFOLK )
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| The foregoing instrument was acknowledged before me this day of January, 1988, by Mark Nelson, a Senior Manager of THE FIRST NATIONAL BANK OF BOSTON, a national banking association, on behalf of the banking association as trustee under that certain Trust Agreement dated as of August 1, 1986 with Burnham Leasing Corporation.
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| Notary Public 1021.. 7500'. 2754. 22: 4
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| SCHEDULE 8 EL PASO OBLIGATIONS Principal Payment Amount Date Description
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| $ 60,000,000 Jan. 31, 1988 16.204 First mortgage bonds due 2012
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| $ 25,000,000 Jan-. 31, 1988 Second mortgage bonds-The, Bank of New York, due June 1988
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| $ 50,000,000 June 30, 1988 Second, mortgage bonds-The Bank of New York due June 1988
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| $ 6 i 100 i 000 'July 20, 'I 1988 4.254 First mortgage bonds due July 1988
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| $ 22,000,000 May 20, 1989 12.754 First mortgage bonds due May 1989
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| $ 25 000 f 000 Aug 15i 14.5% First mortgage bonds due August 1989
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| ~
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| 1989
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| $ 50 i 000 i 000 Nov. 20, 1989 144 First mortgage bonds due November. 1989
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| $ 20,000,000 Dec. 1, 1990 Long-term notes unsecured-The Bank of America
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| $ 70,000,000 Mar. 1, 1991 Second mortgage bonds-The Bank of America 1021.7500.2754.22:4
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| AMENDMENT No. 2,, dated as of December 31, 1987, to Facility Lease dated as of August 1, 1986, between THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee ("Lessor" ) under a Trust Agreement, dated as of August, 1, 1986 with UCU PROPERTIES, INC., and EL PASO ELECTRIC COMPANY, as Lessee (" Lessee" ).
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| The parties hereto have previously entered into the Facility Lease (as heretofore amended, modified or supplemented, the "Facility Lease" ) providing for the lease by Lessor to Lessee of the Undivided Interest and the Real Property Interest. The parties now desire to make certain amendments to the Facility Lease.
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| NOW, THEREFORE, in consideration of the premises and other good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows:
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| SECTION 1. Definitions. For purposes hereof, capital-ized terms used herein and not defined herein shall have the meanings ascribed thereto in Appendix A to the Facility Lease.
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| SECTION 2. Amendments. (a) Section 3(b). Section 3(b) is hereby amended by inserting at the end of a clause (iii)', in lieu of ".", "; and" and by inserting thereafter and before the next to last sentence of Section 3(c) a new clause (iv). reading as follows:
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| 4 (iv) in the event that the Lessee shall fail to provide on or before April 30, 1988, a letter of credit which complies with the terms of the Agreement dated as of December 31, 1987 (the "Commitment Agreement" ), among the Lessee, the Lessor and the Owner Participant, a -copy of which is annexed hereto, on each Basic Rent Payment Date, commencing October 1, 1988 and ending on the Basic Rent Payment Date next following the earlier to occur of (A) the providing by the Lessee of such letter of credit and (B) the date as of which such letter of credit would have expired had it been in effect as required by the terms of the Commitment Agreement, an amount equal to . 354 of Facility Cost multiplied by a fraction the numerator of which is the number of days from and including the preceding Basic Rent Payment Date (or, in the case of the Basic Rent Payment Date occurring on October 1, 1988, from and including April 30, 1988) to but excluding such Basic Rent Payment Date (or, if earli-.
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| er, to the date on which such letter of credit is pro-vided or the date such letter of credit would have so expired), and the denominator of which is the number of days from and including the preceding Basic Rent 1021.7500.2754.22:4
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| Payment Date to but excluding such Basic Rent Payment Date.
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| (b) Section 7. Section 7 of the Facility Lease is hereby amended by inserting " (a) Liens. " prior to the existing paragraph and inserting the following at the end thereof:
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| (b) Retirement of Debt. Unless the Owner Participant shall otherwise consent, on or before each date set forth in Schedule 8 hereto, the Lessee shall retire, legally defease or deposit with the lender or its trustee funds sufficient to retire the principal amount of the Debt set forth opposite the reference to such date on such Schedule.
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| (c) Merger, Sale, etc. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, convey, transfer or lease to any Person any asset except for fair value.
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| Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, (1) consolidate with any Person, (2) merge with or into any Person or (3) except for (i) payments, in accordance with normal dividend policy of the Lessee, of cash dividends to holders of common stock and preferred stock, (ii) exchanges of fixed assets for other fixed assets whose fair value is equal to or greater than the fair value of the fixed assets exchanged or (iii) conveyances, 'transfers or leases of assets for cash where such cash is to be recorded by the Lessee, convey, transfer, lease or dividend to any Person, in any single transaction or series of. related transac-tions, any asset or assets if the book value of such asset or assets exceeds 54 of its total assets as shown on the most recent consolidated balance sheet of the Lessee deliv-ered to the Owner Participant pursuant to Section 10 (b) (1) (i) (A) of the Participation Agreement; unless immediately a f ter giving ef feet to s'uch transaction:
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| (A) the Person who is the "Lessee" under the Facility Lease immediately following such consolidation, merger, conveyance, transfer, lease or dividend (the
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| ."Surviving Lessee" ) shall be a corporation which (i) is organized under the laws of the United States of America, a state thereof or the District of Columbia, (ii) is a "public utility" under applicable -law, (iii) is an ANPP Participant under the ANPP Participation Agreement with respect to Unit 2 (including the 1021.7500.2754.22:4
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| Undivided Interest), (iv) shall have assumed each covenant and condition of the Lessee under the ANPP e Participation Agreement and each other ANPP Project Agreement and (v) holds a valid and subsisting license f rom the NRC to possess Unit 2 (including the Undivided Interest);
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| (B) the Surviving Lessee, if other than the Lessee immediately prior to such transaction, shall execute and deliver to the Owner Participant an agreement, in form and substance reasonably satisfactory to the Owner Participant,, containing the assumption by the Surviving Lessee of each covenant and condition of this Facility Lease, each other Transaction Document and each Financing Document to which the Lessee imme-diately prior to such transaction was a party immedi-ately preceding such transaction; (C) no Default (other than a failure to deliver docu-ments and other inf ormation specif ied in Section 10(b) (1) (vi) of the Participation Agreement) and no Event of Default shall have occurred and be continuing, no Event of Loss shall have occurred and no Deemed Loss Event shall have been declared; (D) the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) after giving effect to such transaction, (1) shall be rated at least "investment grade" by Standard & Poor's Corporation and Moody's Investors Service, Inc. and (2) shall have an investment rating by Standard &
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| Poor's Corporation and Moody's Investors Service, Inc. not less than one "smallest notch" below the rating assigned to the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) immediately prior to such transaction (or, if neither of such rating organizations shall rate the Bonds (or, if applicable, the preferred stock of the Surviving Lessee) at the time, by any nationally rec-ognized rating organization in the United States of America);
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| (E) the Surviving Lessee shall have a Net Worth equal to or greater than the Net Worth of the Lessee immedi-ately prior to such transactions and equal to or greater than $ 500,000,000; (F) the Surviving Lessee shall have delivered to the Owner Participant and the Indenture Trustee an 1021.7500.2754.22:4
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| Officers'ertificate and an opinion, reasonably satisfactory to the Owner Participant, of counsel to the Surviving Lessee, each stating that (1),such transaction complies with this subclause (c) and (2) all conditions- precedent to the consummation of such transaction have been satisfied and any Governmental Action required in connection with such transaction has been obtained, given or accomplished; (G) the Surviving Lessee shall have delivered to the Owner Participant an opinion, reasonably satisfactory to the Owner Participant, of independent counseL to the Surviving Lessee stating that such transaction would not, result in a loss of any of the tax benefits described in Section 13(c)(1) of the Participation Agreement; (H) such transaction is otherwise permitted by and in compliance with the ANPP Participation Agreement; and (I) the New Coverage Ratio of the Surviving Lessee shall be at least 1.6 to 1.
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| Upon the consummation of such transaction the Surviving Lessee, if other than the Lessee, shall succeed to, and be substi-tuted for, and may exercise every right and power of, the Les'see immediately prior to such transaction under this Lease, each other e Transaction Document and each Financing Document to which the Lessee immediately prior to such transaction was a party immediately prior to such transaction, with the same effect as if the Surviving Lessee had been named herein and therein.
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| (d) Incurrence of Debt. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries (whether consolidated or unconsolidated) to, issue, assume or become liable in respect of (A) any Debt maturing more than one year after the date o f such issuance, assumption or liability, (including current maturities of Debt with an original maturity of more than one year) if, immediately thereafter, (i) the total amount of all Debt of the Lessee and its sub-sidiaries (whether consolidated or unconsolidated) maturing more than one year after the date of such issuance, assump-tion or becoming liable (reduced by Cash Available for Investment) shall exceed 70< (or, at any time after January 1, 1992 when there is not in effect a letter of credit com-plying in all respects with the Commitment Agreement, 65~)
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| of New Consolidated Capitalization, in each case as shown on a pro forma consolidated balance sheet on and as of the 1021.7500.2754.22:4
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| 0 if'
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| date of such issuance,,assumption or becoming liable, or (ii) the New Coverage Ratio of the Lessee would be less than 1.6 to 1 or (B) any Debt maturing one year or less after the date of such issuance, assumption or becoming liable (excluding current maturities of Debt with an origi-nal maturity of more than one year) if, immediately there-after, the total amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) maturing one year or less after the date of such issuance, assumption or becoming liable shall exceed 12.5% of New Consolidated Capitalization, in each case as shown on a pro forma consolidated balance sheet on and as of the date of such issuance, assumption or becoming liable. For purposes of the foregoing clause (A), there shall be excluded any Debt which has been legally defeased or for the payment of which funds equal to-the principal amount of such Debt have been segregated in escrow and any refunding of the debt issued on December 31, 1987 by the lessors in the sale and leaseback transactions relating to Unit 3 at PVNGS shall not constitute the Lessee issuing, assuming, or becoming liable in respect of any Debt within the meaning of this subclause (d).
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| (e) Escrow Agreement. The Lessee shall deposit with Chemical Bank as escrow agent (the "Agent" ) any amount required to be deposited under the Escrow Agreement dated as of December 31, 1987 between the Lessee and the Agent within 5 Business Days after notice from the Owner Participant and shall otherwise comply with its other obli-gations under such Agreement within 15 days after notice from the Owner Participant.
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| (f) Definitions. For purposes of this Section 7, the terms New Consolidated Capitalization and New Coverage Ratio shall be defined as follows:
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| (A) "New Coverage Ratio" shall mean the ratio of (x) the sum of (a) consolidated net income of the Lessee for the twelve-month period ending on a date no later than 135 days prior to the date as of which New Coverage Ratio is being determined plus (or minus) (b) all extraordinary items deducted (or added) in deter-mining said net income ( for purposes of this def ini-tion of New Coverage Ratio, any charge against income resulting from a write-off of utility plant pursuant to (i) an order of any governmental authority having jurisdiction or (ii) a provision for an estimated regulatory disallowance shall be deemed to be an extraordinary item deducted in determining said net 1021.7500.2754.22:4
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| income) plus (or minus) (c) all income taxes deducted (or tax credits added) in determining said net income minus (d) for all or any portion of such period ending on or prior to December 31, 1990,, 50< of "allowance for funds used during construction" (net of deferred taxes) as such item is referred to in the consolidated income statement of the Lessee and its subsidiaries) and, for all or any portion of such 'eriod ending after December 31, 1990, 100% of such item plus (e) the sum of all interest and lease payments paid by, the Lessee and its subsidiaries (whether consolidated or unconsolidated) during such twelve-month period to (y) total interest and'ease payments that will be payable by the Lessee and its subsidiaries (whether consoli-dated or unconsolidated) during the twelve-month period following the date as of which New Coverage Ratio is being'etermined. There shall be excluded from interest and lease payments included under clauses (x) and (y) above (i) lease payments to the Rio Grande Resources Trust, (ii) lease payments under any operating lease of computers, office equipment or the like, the original term of which (including options to renew) is less than five years and (iii) interest on Debt maturing one year or less from the date of incurrence thereof. There shall be excluded from interest and lease payments included under clause (y) above interest on Debt which has, been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow.
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| (B) "New Consolidated Capitalization"' h a 1 1 me a n the total of. consolidated capital and surplus of the Lessee plus the principal amount of. all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) which matures more than one year after the date as of which New Consolidated Capitalization is being determined.
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| (c) Schedule 8. Schedule 8 hereto is hereby added as Schedule 8 to the Facility Lease.
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| 1021.7500.2754.22:4
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| I) iO iO
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| SECTION 3. Miscellaneous (a) Effective Date of Amendments. The amendments set forth in Section 2 hereof shall be and become effective upon the execution hereof by the parties hereto.
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| (b) Counterpart Execution. This Amendment No. 2 may be executed in any number of counterparts and by each of the parties hereto on separate counterparts; all such coun-terparts shall together constitute but one and "the same instrument.
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| (c) Governing Law. This Amendment No. 2 has been negotiated and delivered in the State of New York and shall be governed by and be const~ed in accordance with the laws of the State of New York, except to the actent that pursu-ant to the law of the State of Arizona such law is mandato-rily applicable hereto.
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| (d) Disclosure. Pursuant to Arizona Revised Statutes Section 33-404, the beneficiary of the Trust Agreement is UCU Properties, Inc., a corporation. 'The address of the beneficiary is Suite 2000 Commercial Tower, Kansas City, Missouri 64105, Attention: Donald Claar. A copy of the Trust Agreement is available for inspection at the offices of the Owner Trustee at 100 Federal Street, Boston, Massachusetts 02110, Attention of Corporate Trust Division.
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| 1021.7500.2754.22:4
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| IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment No. 2 to be duly executed'n New York, New York on December 31, 1987.
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| THE FIRST NATIONAL BANK OF BOSTON, not in its, individual capacity, but solely as Owner Trustee under a Trust Agreement, dated as of August 1, 1986 with Energy Investments, Inc.,
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| Senior Manager EL PASO ELECTRIC COMPANY, By Vice, President
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| STATE OF TEXAS )
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| ) ss.:
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| COUNTY OF EL PASO )
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| The foregoing instrument was acknowledged before me this 6th day of January, l988 by William J. Johnson, a Vice President of EL. PASO ELECTRIC COMPANY, a Texas corporation, on behalf of the corporation.
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| N ary Public
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| SCHEDULE 8 EL PASO OBLIGATIONS Principal Payment Amount Date Description
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| $ 60~ 000~ 000 Jan. 31, 1988 16.204 First mortgage bonds due 2012
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| $ 25 i 000 i 000 Jan. 31, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 50,000,000 June 30, 1988 Second mortgage bonds-The Bank of New York due June 1988 6,100,000 July 20, 1988 4.25< First mortgage bonds due July 1988
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| $ 22 / 000 '00 May 20, 1989 12.75% First mortgage bonds due May 1989
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| $ 25 i 000 i 000 Aug. 15, 1989 14.5'. First mortgage bonds due August 1989
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| $ 50,000,000 Nov. 20, 1989 14~ First mortgage bonds due November 1989
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| $ 20i000i000 Dec. 1, 1990 Long-term notes - unsecured-The Bank of America
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| $ 70~000i000 Mar. 1, 1991 Second mortgage bonds-The Bank of America 1021.7500.2754.22:4
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| AGREEMENT dated's of December 31, 1987 among ENERGY. INVESTMENTS INC. (" Owner Participant" ), THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee ("Owner Trustee" ) under a Trust Agreement dated as of August 1., 1986 with Owner Participant, and EL PASO ELECTRIC COMPANY (" Lessee" ).
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| Owner Trustee and Lessee are parties to the Facility Lease dated as of August 1, 1986, as amended (the "Facility Lease" ). All terms used but not defined herein have the meanings ascribed to them in Appendix A to the Facility Lease.
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| Lessee, Owner Trustee and Owner Participant desire to modify certain provisions of the Facility Lease, provide credit enhancement for the benefit of Owner Participant in the form of a letter of credit to support the payment of rent and, until such time as a letter of credit has been delivered, provide for the creation of an escrow account into which Lessee will deposit funds to be held for the retirement of certain of its outstanding Debt. Accordingly, the parties hereto agree as follows:
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| : 1. Letter of Credit.
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| A. Lessee shall cause to be delivered to Owner Participant a letter of credit (the "LC") with drawing amounts not less than Special Casualty Value from time to time during the period the LC 'is.
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| outstanding less the principal amount of and accrued interest on the Notes Outstanding from time to time. If the Lessee shall fail to cause the LC to be delivered by April 30, 1988 in accordance with the terms hereof, the Escrow Agreement (as defined in Section 2) shall continue in full force and effect, and the Lessee shall pay to the Owner Trustee all amounts set forth in Section 3 (b) (iv) of the Facility Lease in accordance with the terms thereof, but such failure shall not constitute an Event of Default.
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| B. The unsecured long-term debt securities of the bank issuing the LC shall be rated by Moody's, not less than A2, in the case of a United States bank, or Aa3, in the case of a United States branch or agency of a foreign bank, and such bank shall be otherwise acceptable to Owner Participant. Owner Participant will be reason-able in determining such acceptabilit'y, but may consider such matters as (i) legal or regulatory constraints on the issuance to or holding by Owner Participant of letters of credit from such bank and (ii) policy constraints in effect for Owner Participant on the issu-ance to or holding by Owner Participant of letters of credit from such bank, so long as such policy constraints are then applicable by Owner Participant generally to such bank and have been applied by Owner Participant without regard to- the nature of PVNGS or the Unit 2 sale and leaseback transactions or the identity or credit of Lessee.
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| 1021.7500.2754.20:3
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| C. The LC (1) shall have an expiry date, of December 31, 1991, (2) may be drawn upon Event is declared, an Event if of an Event of Loss occurs, a Deemed Loss Default occurs and is continuing or in any and all events prior to termination of the LC should a termina-tion event under the LC occur, (3) shall permit partial drawings, (4) shall permit Owner Participant to assign all of its interest therein to a successor Owner Participant without the issuing bank's or Lessee's consent (5) shall provide for reinstatement upon reim-bursement in respect of a draw thereunder for Supplemental Rent and (6) shall be otherwise satisfactory in form and substance to Owner Participant in its reasonable judgment. Appropriate provision will be made for replacing the LC if there is a decline in the rating by Moody's of the unsecured long-term debt securities of the issuing bank below A3.
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| D. The reimbursement, agreement between Lessee and the issu-ing bank relating to the LC shall (1) not contain any default or ter-mination provisions that are less favorable to Lessee or Owner Participant than those contained in Lessee's Reimbursement Agreement dated as of December 1, 1987, with The Fuji Bank Limited, (2) require the, issuing bank to pay any draws on the LC from its general funds, (3) not permit the issuing bank to exercise any right of set off during the pendency of any bankruptcy proceeding of Lessee, (4) not permit Lessee's reimbursement obligation to be collateralized at any time by the grant, of a security interest in.Lessee's interest in the Undivided Interest or the Real Property Xnt'crest or in any other property unless a subordinate (to the security interest of the issu-ing bank) security interest. in such property is also granted to 'LC Owner Participant, (5) not permit amendment of any provision of the or the ..reimbursement agreement in a manner which is materially adverse to the interest of Owner Participant without its prior written con-sent and (6) otherwise be satisfactory in form and substance to Owner Participant in its reasonable judgment.
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| E. The LC need not be renewed or replaced as of December 31, 1991, if (i) all the Debt, listed on Schedule 8 to the Facility Lease has been retired in accordance with such Schedule 8, (ii) the New Coverage Ratio of Lessee, determined as of June 30, 1991, is not less than 1.6 to 1, (iii) the aggregate Debt maturing more than one year after the date of issuance, assumption or liabil-ity in (including current maturities of Debt with an original maturity excess of one year) of. Lessee shall not be in excess of 65> of New Consolidated Capitalization, all as derived, from the Lessee's finan-cial books and records as of June 30, 1991, and (iv) the aggregate Debt maturing one year or less after the date of such issuance, assumption or liability (excluding current maturities of Debt with an original maturity in excess of one year) of Lessee shall not be in excess of 12.5%. of such New Consolidated Capitalization (clauses (i) through (iv) above being herein called the "Tests" ). Lessee 1021. 7500. 2754. 20: 3
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| shall prepare for and provide to Owner Participant not later than October isfiedd 1, 1991 (and October 1 of succeeding years under the circum-stances set forth below) calculations showing whether Lessee has sat-the Tests and the financial data upon which such calculations were based. If Lessee has failed to meet the Tests, Owner Participant may, at its option (and without affecting any other rights of Owner Participant to draw on the LC), draw on the LC or require that Lessee provide a renewal or replacement LC or itself obtain for Lessee, at Lessee's expense, a renewal or replacement LC on, substantially the same terms as the existing LC, except that the annual fee payable under such renewal or replacement LC shall not be more than 100 basis points greater than the: annual fee to Lessee of the existing LC. The Owner Participant shall exercise such option.
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| within a period of time to be determined but not more than thirty (30) days after the Lessee shall furnish the Owner Participant the aforesaid calculations and financial data. Such renewal or replace-ment LC shall have a term commencing not later than the expiry date of the existing LC and ending not earlier than one year after such expiry date, and shall have terms (including the terms of the related reimbursement agreement) not less favorable to Owner Participant than the terms contained in the existing LC and reimbursement agreement.
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| Such renewal or replacement LC may provide for its early expiration not earlier than December 31 of the year during which Lessee meets the Tests. The procedures set forth above (the New Coverage Ratio being determined, and deriving New Consolidated Capitalization from the Lessee's financial books and records, as of June 30 in each such year) shall be repeated each year until no renewal .or replacement LC is required.
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| : 2. Escrow A reement. Lessee shall enter into an Escrow Agreement with Chemical Bank substantially in the form of Exhibit A hereto. The Owner Participant agrees that, upon delivery and accep-tance of the LC, of Section 7.2 of it shall the deliver Escrow the Agreement.
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| notice required by clause (i)
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| : 3. Amendment to Lease. Owner Trustee and Lessee shall execute Amendment No. 2 to the Facility Lease .substantially in the form of Exhibit B hereto.
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| : 4. Further Chan es. Concurrent with the procurement of the LC, and subject to obtaining any'required consents of third par-ties to the Transaction Documents, the partiestowill amend the
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| 'Facility Lease and other Transaction Documents implement the obtaining of and to reflect the existence of the LC and to further implement the terms of this Agreement. Such amendments will include provisions affording Lessee, in the event Owner Participant'Tests has determined to draw on the LC when Lessee has failed to meet the and unless an Event of Default shall have otherwise occurred and be continuing or an Event of Loss shall have occurred or Deemed Loss 1021.7500.2754.20:3
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| if'O Event shall'ave been declared, the right to purchase the Undivided Interest and the Real Property Interest on or before some period prior to the expiration or termination date of the existing LC, for an amount based on the greater of (i) Enhanced Casualty Value, which will be calculated on an assumed 25% residual, and (ii) Fair Market Sales Value of the Undivided Interest and the Real Property Interest.
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| : 5. Consent. Owner Participant irrevocably consents to any and all transactions which would require its consent under Section 10(b) (3) (ii) or 10(b) (3) (v) of the Participation Agreement.
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| : 6. Owner Trustee Directive. Owner Participant hereby authorizes and directs Owner Trustee to execute this Agreement, Amendment No. 2 to the Facility Lease and such other agreements, doc-and certificates as shall be required in order to facilitate 'ments execution and delivery of this Agreement and such Amendment 'he No. 2.
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| : 7. Taxes. All the provisions of Sections 13,(b) and (c) of, the Participation Agreement shall be applicable as though the mat-ters set forth in this Agreement (including the exhibits hereto) had been included in the Transaction Documents at all times since August 18, 1986 except that the execution and delivery of this Agreement, as opposed to its provisions, .shall not be considered to 0 be the execution and delivery of a Transaction Document or Financing Document or an act specifically. required or expressly per-mitted to be performed by the, Lessee for the purposes of Section 13(c) (4)(i)(B) of the Participation Agreement.
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| a
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| : 8. Miscellaneous. This Agreement may be executed by the parties hereto in separate counterparts, and it shall not be neces-sary for the signatures of all parties to appear on any one counterpart. The headings of the various sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any, of the terms or provisions hereof. This Agreement may not be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by the party against whom enforcement of such transaction, amendment, sup-plement, waiver or modification is sought. This Agreement in all respects shall be governed by and construed in accordance with the laws of the State of New York, including all math~ of consttxction, validity and performance.
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| 1021.7500.2754.20:3
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| XEROX TELECOP IER 486 t 81-12-87'2: OS'' 8184728281] 1 2 XN WXTNZSs NHEREOF each of the parties hereto has caused this Agreement to be duly executed as of the day and year first above wx'itten THE FXRST NATIONAL SANK OF BOSTON, not in its ind1vidual capacity but solely as awner
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| - 'Testee.
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| EL PASO RLRCTRXC CONPANf aY~
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| Exhibit A to the Agreement ESCROW AGREEMENT Dated as of December 31, 1987 between CHEM X CAL BANK, Escrow Agent and EL PASO ELECTRXC COMPANY 1021. 7500. 2704. 13: 20,
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| TABLE OF CONTENTS
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| ~acae ARTICLE I DEFINITIONS Section 1.1. Certain Defined Terms. . . . . . . . . . . . 1 ARTICLE II ~
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| APPOINTMENT OF AGENT AND CREATION OF ESCROW ACCOUNT Section 2.1. Appointment of Agent. . . . . . . . . . . . . 3 Section 2.2. The Escrow Account. . . . . . . . . . . . . . 3 Section 2.3. Statement of Purpose. . . . . . . . . . . . . 4 ARTICLE II1 LEASE PROCEEDS DEPOSIT BY THE COI1PANY Section 3.1. Lease Proceeds Escrow Deposit. . . . . . . . 4 ARTICLE IV TRANSFER AND DEPOSIT BY THE COMPANY OF EXISTING INVESTMENTS Section 4.1. Transferred Investments Escrow Deposit. . . . 4 ARTICLE V INVESTMENTS AND PAYMENTS BY AGENT Section 5.1. Payments by Agent to Company from Lease Proceeds Escrow Sub-Account. . . . . . . . . 5
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| TABLE OF CONTENTS, Continued Pacae Section 5.2. Monthly Disbursement from both Sub-accounts. 6 Section 5.3. Investments; Agreement as to Value of Clauses 6, 7 and 8 on December 31, 1988. ~ t 7 Section 5.4. Valuation of Investments; Payment of Deficiency. 8 ARTICLE VI CONCERNING THE AGENT Section 6.1. Duties of Agent. .10 Section 6.2. Liable.lz.ty. .'10 Section 6.3. Delivery of Documents and Further Acts. .10 Section 6.4. Legal Proceedings.
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| Section 6.5. Resignation; Appointment of Succ.~ssor.
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| Secti'on 6.6. Indemnification.
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| ARTICLE VIX MISCELLANEOUS Section 7.1. Payments. ~ ~ 12 Section 7.2. Termination. .12 Section 7.3. Amendments, Etc. .12 Section 7.4. Addresses for Notices, Etc. .12 Section 7.5. Successors and. Assigns. .13 Section 7.6. Severability of Provisions. .13
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| 'I Section 7.7. Headings, etc. .13
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| TABLE OF CONTENTS, Continued Pacae Section 7.8. Governing Law. ~ ~ ~ ~ 13 Section 7.9. Counterpart Execution. . . . . . . . . . . .13
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| ~O k
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| ESCROW AGREIBEllT ESCROW AGREEMENT, dated as of December 31, 1987, among CHEMICAL BANK, a New York banking corporation (the Agent,), and EL PASO ELECTRIC COMPANY, a Texas corporation (th. Company).
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| WITNESSETH:
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| WHEREAS, pursuant to eight separate Commitment Agreements, dated as of December 31, 1987 with each. of the Owner Participants (as described in Schedule I hereto) and the related Owner Trustee, the Company has agreed to establish and maintain an escrow account of certain moneys and securities (such terms and all other capitalized terms used herein having the meanings set forth or referred to in Section 1 hereof) until such time as Acceptable Letters of Credit are obtained; and WHEREAS, the Commitment Agreements contemplate that certain moneys and securities are to be held in an escrow account to be established with the Agent and are to be disbursed by the Agent, pur-suant to directions from the Company until the cccurrence of certain events, all in accordance with the terms and conditions set forth herein; and WHEREAS, the Company desires that the E.gent be appointed as escrow agent, and the Agent desires to accept <<uch appointment, all in accordance with the terms and conditions se= forth herein.
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| NOW, THEREFORE, in consideration of the mutual agreements herein contained and of other good and valu.able consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows:
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| ARTICLE DEFINITIONS SECTION 1.1. Certain Defined Terms. As used in this Agreement and unless otherwise expressly indicated, or unless the context clearly requires otherwise:
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| (a) The terms Agent and the Company have the meanings assigned in, the caption of this Agreement.
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| (b) The following terms have the respective meanings set forth below (such meanings to be equally applicable to both the sin-gular and plural'orms of the terms defined):
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| Acceptable Letter of Credit means a letter of credit complying with the requirements therefor a: set forth in 1021.7500.2704.13:20
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| the relevant Commitment Agreement, which toe Company has agreed to provide to each August Owner Participant.
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| August Owner Participants means each of the six enti-ties listed in .Schedule I hereto, each as an owner partici-pant under its related August Participation Agreement.
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| August Participation Agreement(s) means each of six separate Participation Agreements, dated a- of August 1, 1986, as amended by Amendment No. 1, dated October 1, 1986 among the Company, El Paso Funding Corporation,'the Owner Trustee, First City National Bank of Houston, as Indenture Trustee, and each August Owner Participant.
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| Commitment Agreements means the eight separate Agreements, dated as of December 31, 1987, by and between El Paso, the related Owner Trustee and each of the Owner Participants.
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| December Participation Agreement(s) means the Participation Agreement dated as of December 1, 1986, among the Company, El Paso Funding Corporation, the Owner Trustee, First City National Bank of Houston, as Indenture Trustee and Chrysler Financial Corporation and the Participation Agreement, dated as of December 1, 1986, among the Company, El Paso Funding Corpora'=ion, the Owner Trustee, First City National Bank of Houston, as Indenture Trustee and Commercial Federal Investmen Corporation.
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| El Paso Obligations means the principa'mount of the indebtedness of the Company set forth in Schedule III hereof.
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| Escrow Account means said term:is defined in Section 2.2 hereof.
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| Escrow Sub-accounts means the Transferred Investments Escrow Sub-account and the Lease Proceeds Escrow Sub-account, collectively.
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| Lease Proceeds Escrow Deposit means said term as defined in Section 3.1 hereof.
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| Lease Proceeds Escrow Sub-Account means said term as defined in Section 2.2 hereof.
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| Owner Participant(s) means the August Owner Participants and Chrysler Financial Corporation and 1021.7500.2704.13:20
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| if' Commercial Federal Investment Corporation, as Owner e Participants under the December Participation Agreements.-
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| Owner Trustee means The First National Bank of Boston, as trustee for an Owner Participant under ea:;h of six sepa-rate Trust Agieements, dated as of August 1, 1986 and. two separate Trust Agreements, dated as of December 1, 1986.
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| Participation Agreements means the August Participation Agreements and the December Participation Agreements.
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| Permitted Investments means the certificates, obliga-tions and investments set forth in Schedule II hereto, the investments constituting the Transferred Investments Escrow Deposit and reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment fea-ture o f any o f the investments listed in clauses (ii),
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| (iii) and (iv) of the first paragraph of Section 4.1 hereof.
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| Transferred Investments Escrow Deposit means said term as defined 'in Section 2.2 hereof.
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| Transferred Investments Escrow Sub-account means said term as defined in Section 2.2 hereof.
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| (c) As used herein, any capitalized term not otherwise defined herein has the meaning assigned to such term in the respec-tive Participation Agreements.
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| ARTICLE II APPOINTMENT OF AGENT'ND CREATION OF ESCROW ACCOUNT SECTION 2.1. Appointment of Agent. For the purposes and subject to the terms and conditions. set forth in this Agreement, the Company hereby appoints Chemical Bank as escrow agent, and Chemical Bank hereby accepts such appointment.
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| SECTION 2.2. The Escrow Account. The Agent shall estab-lish and maintain for the benefit of the Owner Participants shall an Escrow Account (the Escrow Account), within which there be two sepa-rate sub-accounts 'to be known as the Lease Proceeds Escrow Sub-account (the Lease Proceeds Escrow Sub-account) and the Transferred Investments Escrow Sub-account (the Transferred Investments Escrow Sub-account). The Agent shall deposit in the Escrow Account (i) for 1021.7500.2704.13:20
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| ~ll V,
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| II
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| credit to the Lease Proceeds Escrow Sub-account, any Lease Proceeds Escrow Deposit made by the Company to the Agent pursuant to Section
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| : 3. 1 hereof, and (ii) for credit to the Transferred Investments Escrow Sub-account, the Transferred Investments Escrow Deposit made by the Company to the Agent pursuant to Section 4.1 hereof. So long as any amounts remain in the Escrow Account, such amounts shall be consid-ered as, and shall be and remain, the property of the Company. The Agent shall invest or re-invest any amounts in the Escrow Account and make applications thereof as provided in Art'cle V hereof. The Escrow Account shall be funded by the deposits by the Company to the appropriate sub-accounts in the manner describ d herein.
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| SECTION 2.3. Statement of Purpose. The Company represents that the purpose of this Agreement and the creation and establishment of the Escrow Account is to pay or provide for the payment of the El Paso Obligations and certain short-term indebtedness of El Paso in accordance with Section 5.1(b) hereof.
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| ARTICLE III LEASE PROCEEDS DEPOSIT BY THE COMPANY SECTION 3.1. Lease. Proceeds Escrow Deposit. The Company hereby represents that it has deposited with the Agent $ 163,000,000 for deposit by the Agent in the Lease Proceeds Escrow Sub-account.
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| I ART CLE IV TRANSFER AND DEPOSIT BY THE COMPAtPC OF EXISTING INVESTMENTS SECTION 4.1. Transferred Investments Escrow Deposit.
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| Subject to the terms and provisions of this Agreement, the Company hereby agrees that by February 1, 1988 it will cause to be deposited into the Transferred Investments Escrow Sub-Account by change of account reference to that of the Agent or assignment of all right, title and interest of the Company to the Agent (exclusive of any obligations or liabilities of the Company) as the case may be, of the following (collectively, the Transferred Investments Escrow Deposit):
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| (i) Account of El Paso Electric Co., Account No. 9-6191-03 01 at MBank Houston, P.O. Box 2629, Attn: Capital Markets Division, Houston, Texas; in and (ii) to The limited partnership interest of the Company if the Weiss Qual ied Income Fund Limited 1021. 7500. 2704. 13: 20
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| 0 Partnership I, obtained on November 13, 1986 pursuant to the Neiss Qualified Income Fund Limited Partnership I Amended and Restated Agreement of Limited Partnership, dated as of September 9, 1986; 97061 (iii) at Account of El Paso Merrill Lynch, Electric, Ac .ount Pierce, Fenner No. 530-
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| & Smith Incorporated, One Liberty Plaza, 165 Broadway, New York, NY 10080; and (iv) Account of El Paso Electric Company, Account No.
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| 30 B Z0009 354 at Kidder, Peabody & Co., Incorporated, 20 Exchange Place, New York, NY 10005.
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| The Agent is hereby authorized by the Company to enter into any arrangement or agreement (including but not limited to, manage-ment agreements) as the Company may determine is necessary to evi-dence ownership of the foregoing investments by the Agent.
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| The Company represents that the aggregate "book value" as of the end of November, 1987 of the Transferred Investments Escrow Deposit was not less than $ 135 million; Notwithstanding the foregoing, Company fails to consummate any of the if for any reason the transfers, in whole or in part, to the Agent referred to in clauses (i) ;.hrough (iv) of the first paragraph oforthis Section default 4.1, such this failure shall not consti-tute a breach of, under, Agreement, so long as the Company shall have on deposit in the Transferred Investments Escrow Sub-Account with the Agent on February 1, 1988, moneys or securities having an aggregate "book value" as of the end of November, 1987 of not less than $ 135 million.
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| ARTICLE V INVESTMENTS AND PAYMENTS BY AGENT SECTION 5. 1. Payments by Agent to Company from Lease Proceeds Escrow Sub-Account. (a) In order to provide for the pay-ment of the El Paso Obligation that is to be paid on or prior to January 31, 1988, and prior to the valuation of the money and securi-ties in, the Escrow Account, upon the receipt by the of Agent (with request in copies to each Owner Participant) from the Company a writing for disbursement, the Agent shall pay to the party indicated in the written request of the Company in immediately available funds, out of the funds then on deposit in the Lease Proceeds Escrow Sub-account, .an amount equal to the amount that is due and owing to The Bank of New York as a prepayment of the El Paso Obligation'or which
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| 1021. 7500. 2704. 13: 20'
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| 0 payment is due in January 1988. Such request by the Company to the Agent pursuant to this Section 5.1 shall specify (i) the applicable prepayment date and (ii) wire or transfer instructions.
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| (b) The Agent will prepare a market valuation of all moneys and securities on deposit in the Escrow Accounc in accordance with the requirements of Section 5.4 hereof within 10 calendar days fol-lowing receipt by the Agent of all monthly closing valuations for the month of January 1988. Upon completion of such valuation, the Agent shall promptly provide a certificate to the Company and each of the Owner Participants setting forth the value of such moneys and securities. To the extent that the amount of such market valuation exceeds $ 243, 100, 000, upon receipt of such certificate of valuation from the Agent, the Company shall deliver a written request to the Agent (with copies to each Owner Participant), directing release of such excess to the Company for payment of indebtedness of the Company having a maturity of one year or less. specified in such request, and upon receipt of such request the Agent shall release such excess to the Company. To the extent that the amount of such market valuation is less than $ 243,100,000, the Company shall provide the Agent, within five business days after receipt of the certificate of valua-tion from the Agent, with money or Permitted Investments (with a market value as of the date of such valuation) sufficient to cover the deficiency.
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| 5.2. Monthly Disbursement from both Sub-accounts.
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| 0 SECTION Except as specifically provided i.n Section 5.1 hereof, as soon as practicable following each monthly valuation pursuant to Section 5.4 hereof of the moneys and securities on deposit in the Escrow Account, amounts on deposit in the Escrow Account shall be disbursed monthly in accordance with and in amounts as set forth in a written certifi-cate of the Company (with copies of such certificate delivered to each Owner Participant)'pecifying the applicable payment date, payee, sub-account and wire or transfer instructions: first, to the party named in such certificate of the amount as set forth therein in order to permit the payment of El Paso Obligations with a Payment Date as determined in accordance with Schedule III hereto within 45 days after the date as of which the Escrow Account is valued and then second to the Company all amounts on deposit in the Escrow Account in excess of the amount necessary to pay the principal amount of the remaining El Paso Obligations, determined by reference to Schedule III hereto and confirmed in the certificate of the Company requesting such disbursement.
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| Notwithstand';ng the foregoing the Company may direct the Agent to make a disbursement from the Escrow Account solely for the purposes of paying an El Paso Obligation if for any reason the valuation and disbursement procedure heretofore described does not provide for timely and adequate payment of any such El Paso 1021.7500.2704.13:20
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| Obligation and such direction of the Company shall expressly so state. The Agent shall be entitled to liquidate any investments held in the Escrow Account in order to provide for payment of the El Paso Obligations. or any other payments-in accordance herewith. The Agent shall have no liability for losses resulting from the liquidation of securities on deposit in the Escrow Account.
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| SECTION 5.3. Investments; Agreement. as to Value of Clauses 6, 7 and 8 on December 31, 1988. (a) The Agent shall invest and reinvest (which shall include the application of (A) the proceeds of maturing investments and (B) the sale of investments) the moneys in the Escrow Account only in Permitted Investments and shall sell investments in the Escrow Account, as specifically identified in a written direction of the Company which shall, in the case of any such investment or reinvestment expressly state that each such investment is a Permitted Investment and further that such Permitted Investment is in compliance with the limitations set forth in the next sentence, it being understood that the Agent shall have no duty to monitor such compliance; provided, however, that such identification of the investment or reinvestment and certification as to compliance with the limitations set forth in the next sentence shall not be appli-cable to the nondiscretionary reinvestment feature of the investments described in clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof. Any such investments and reinvestments shall be subject to the following limitations:
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| (i) no investment or reinvestment shall be made in any of clauses 6, 7 and 8 contained in Schedule II hereto if as a result of such investment or reinvestment (a) at the date thereof, but no later than December 31, 1988, the total aggregate amount invested pursuant to clauses 6, 7 and 8 contained in Schedule II hereto would exceed the lesser of (x) sixty percent (604) of the market value of the amounts then on deposit in the Escrow Account and (y) the total so invested at any time immediately prior to such investment or reinvestment; provided, however, that for purposes of determining compliance with this subclause (y),
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| there shall be excluded from the total aggregate amount invested pursuant to clauses (6), (7') and (8) of Schedule II hereto any amounts attributable to the invest-ment and reinvestment of income, dividends and capital gains resulting from the nondiscretionary reinvestment fea-ture of any of the investments listed in clauses (ii),
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| (iii) and (iv) of the first paragraph of Section 4.1 on deposit in the Transferred Investment Escrow Sub-Account and (b) at the date thereof, but only after December 31, 1988, the total aggregate amount invested pursuant to such clauses would exceed twenty-five percent (25%) of the 1021. 7500. 2704. 13: 20
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| market value of the amounts then on deposit in the Escrow Account; (ii) no investment or if reinvestment in Permitted the result thereof would be to Investments shall be made cause any of clauses 1, 3, 4, 5, 9 and 10 contained in Schedule II hereto to exceed twenty-five percent (25:) of the market value of the amounts on deposit in the Escrow Account; and (iii) the average life of any investment (other than investments described in clause 2 contained in Schedule II hereto) shall not exceed seven years.
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| (b) The Company agrees that the market value as of December 31, 1988 of investments in the Escrow Account (including the Transferred Investments Escrow Deposit) in clauses 6, 7 and 8 con-tained in Schedule II it represents that hereto will not exceed 945 million. The will attempt to undertake an orderly Company liquidation of the Transferred Investments Escrow Deposit so as to be in a position to comply with this Article V. The Company anticipates that, under current market conditions and recognizing that sale of investments will be designed to protect the Company from incurring any losses due to such investments, reductions, within the bands and for the quarters of calendar year 1988 indicated below, of the Transferred Investments Escrow Deposit would be achievable:
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| 1988 Reduction uarter 1st 20 to 45 2nd 20 to 30 3rd 30 to 20 4th 38 to 13 Total for 1988 108 SECTION 5.4. Valuation of Investments; Payment of Deficiency. The Agent shall cause a monthly fair market va'luation of the Escrow Account to be undertaken. In undertaking its obligation to make a monthly valuation of the Escrow Account, (i) the Agent shall be entitled to assume that the monthly market valuations fur-nished to the Agent of the investments held in the Transferred Investments Escrow Sub-Account shall constitute the market value of any such investments and (ii) to the extent the Agent is unable to value any Permitted Investments in accordance with its customary practice as a corporate trustee, the Company hereby agrees to promptly provide the Agent with, and the Agent shall be entitled to rely upon, an independent market valuation of anyvaluations such investment.
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| of the The Company agrees to cause the monthly market 1021.7500.2704.13:20
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| investments constituting the Transferred Investments Escrow Sub-Account to be sent directly to the Agent. Copies of all such valuations by the Agent shall be sent to the Ow~er Participants and the Company.
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| The Agent shall undertake such valu tion of the Escrow Account monthly, commencing in February, 1988, such valuation to be as of the end of the immediately preceding month and in no event shall such valuation be completed later than ten calendar days after receipt by the Agent of the monthly valuation report for all such Permitted Investments on deposit in the Transferred Investments Escrow Subaccount (including any monthly valuation report provided pursuant to the second sentence of the first paragraph of Section 5.4 hereof) ., In connection with its valuation of the Escrow Account, the Agent shall deduct from the valuation of the investments on deposit in the Transferred Investments Escrow Sub-Account that amount which represents the aggregate value attributable (determined on a cumula-tive basis, i.e., including the month of valuation and preceding months) to reinvestments of income, divid'ends and capital gains resulting from the nondiscretionary reinvestment feature of any of the investments listed in clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof. For purposes of the monthly valua-tion only, any proceeds derived from a sale or upon maturity (other than pursuant to the nondiscretionary reinvestment feature of any of the investments listed in clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof) of any investaent made pursuant to 0 clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof shall be allocated to reducing the aggregate value, if any, of the investments in the Transferred Investments Escrow Sub-Account attributable to reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment feature of any such investment, which aggregate value was deducted irom the valuation of investments on deposit in the Transferred Investments Escrow Sub-Account pursuant to the preceding sentence (it heing understood that an amount equal to any such reduction, except to the extent that such amount was otherwise withdrawn from the Escrow Account pursuant to
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| .Section 5.2 hereof, shall be included in the Transferred Investments Escrow Sub-Account for purposes of the monthly valuation thereof).
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| The Agent shall derive the amount attributable to each month repre-senting such reinvestment from the monthly market valuations fur-nished to the Agent with respect to such investments and if such amount cannot be derived from such valuations, the amount attribut-able to such month and the aggregate to be so deducted shall be as directed in writing by the Company to the Agent, copies of which shall be furnished to the Owner Participants, together with the cal-culations and data upon which such direction is based, all as certi-fied by the Chief Financial Officer of the Company. To the extent the amount of such valuation of the Escrow Account, as adjusted for the amount, if any, to be deducted from such monthly valuation as 1021.7500.2704.13:20
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| provided in this paragraph, is less than the principal amount of the remaining El Paso Obligations which are schedu'ed to come due more than forty-five (45) days subsequent to such valuation, the Company shall provide the Agent within five business days after receipt from the Agent of such monthly valuation with money or Permitted Investments (with a market value as of the date of such valuation) sufficient to cover the deficiency. The Agent shall notify the Owner Participants in writing of the date and receipt by the Agent of any money or Permitted Investments provided to meet such deficiency.
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| ARTICLE VI CONCERNING THE AGENT SECTION 6.1. Duties of Agent. The Agent shall have no duties or responsibilities other than those expressly set forth in this Agreement and shall have no duty to enforce any obligation of any person to make any payment or delivery, or to direct or cause any payment or delivery to be made, or to enforce any obligation of any person to perform any other act or to perform any calculations except as herein expressly set forth. In addition, the Agent shall have no duty to make any payment under this Agreement from its own funds.
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| SECTION 6.2. Liability. The Agent shall not be liable for any action taken or omitted by it,. or any action suffered by it to be 0 taken or omitted, in good faith and in the exercise of its own best judgment, excepting only its own willful misconduct or gross negli-gence, and may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion and advice of counsel (including counsel selected by the Agent), statement, instru-ment, report or other instrument or document (not only as to its due execution and the validity and effectiveness thereof, but also as to the truth and acceptability of any information therein contained) which is believed by the Agent to be genuine.and to be signed (or in the case of oral communication, given) by the proper person or persons. The Agent shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement or any of the terms hereof, unless expressly provided for herein and delivered as provided in this Agreement.
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| SECTION 6.3. Delivery of Documents and Further Acts.
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| From time to time on and after the date hereof, the Company shall deliver or cause to be delivered to the Agent such further documents and instruments and shall do and cause to be done such further acts as the Agent may reasonably request (it being understood that the Agent shall have no obligation to make any such request) to carry out more effectively the provisions and purposes of this Agreement, to 1021.7500.2704.13:20
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| ~O 0
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| evidence compliance herewith or to assure itself that it is protected 0 in acting hereunder.
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| SECTION 6.4. Legal Proceedings. The Agent shall not be required to d'efend any legal proceedings which may be instituted against it in respect of the subject matter of this Agreement unless requested to do so by the Company and indemnified to its satisfaction against the cost and expenses of such defense (.'ncluding counsel and investigatory fees) by the Company and shall not be required to institute legal proceedings of any kind.
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| SECTION 6.5. Resignation; Appointment of Successor. The Agent (or any successor escrow and paying agent) may resign at any time and be discharged from its duties as escrow and paying agent under this Agreement by giving to the Company and the Owner Participants at least 30 days'otice thereof, such resignation to be effective on the date of appointment of a successor escrow and paying agent as hereinafter provided. As soon as practicable after any such resignation, the Agent shall turn over to a successor. escrow and paying agent appointed by the Company all monies and property held hereunder upon presentation of the document appointing such successor escrow and paying agent and its acceptance of such appointment. If no successor escrow and paying agent is so appointed within the sixty-day period following such notice of resignation, the Agent shall deposit all monies and funds held hereunder with the Supreme Court of the State of New York for the County of New York (together with a petition to said Court for the appointment of a successor to act until such time, if any, as a successor shall have been appointed as hereinbefore provided). Upon turning over to the successor escrow and paying agent or to the Supreme Court of the State of New York as aforesaid, all monies and property held hereunder, the predecessor escrow and paying agent shall be released of any further responsibil-itytrust hereunder. Any successor escrow and paying agent shall be a bank or company organized under the laws of the United States or any jurisdiction thereof, having a combined'apita'nd surplus of at least $ 250, 000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Agent hereunder upon reasonable or customary terms.
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| SECTION 6.6. Indemnification. The Company agrees that the Agent shall not be liable for any matter or thing arising out of the performance by the Agent of its obligations under this Agreement, except as provided in Section 6.2 hereof. The Company agrees to indemnify the Agent, and to hold the Agent harmless, from and against any and all liability, loss, damage or expense (including reasonable attorneys'ees and actual out-of-pocket expen'"es) which theaction Agent may or might incur by reason of this Agreement, or for any taken by the Agent hereunder, or by reason or in defense of any and 1021.7500.2704.13:20
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| all claims and demands whatsoever which may .be asserted against the 0 Agent arising out of this Agreement.
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| ARTICLE VII MISCELLANEOUS SECTION 7.1., Payments. Payments to or upon the direction of the Company by the Agent pursuant to Article V hereof shall. be made in accordance with such written instructions as the Company may provide to the Agent (with copies to the Owner Participants) from time to time for such purposes. Whenever any payment to be made pur-suant hereto shall be required to be made on .a day which is not a Business Day, such payment .shall be made on the next succeeding Business Day.
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| SECTION 7.2. Termination. This Agreement shall terminate upon the earliest to occur of (i) receipt by tne Agent of written notice from each Owner Participant that as to such Owner Participant th'is Agreement is terminated, (ii) disbursement by the Agent of all of the payments to be made by. the Agent under Article V hereof with respect to the El Paso Obligations and (iii). receipt by the Agent of joint notice from the Company and each of the Owner Participants with respect to such termination. Upon the termination of this Agreement as aforesaid, any securities and moneys on deposit in the Escrow e Account shall be applied at the direction of the Company.
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| SECTION 7.3. Amendments, Etc. No amendment to this Agreement shall be made or be effective without. the written consent o f the Owner Participants. No amendment, modir'ication, termination or waiver of any provision of this Agreement shall in any event be effective unless the same shall be in writing and signed by the par-ties hereto, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment of any other agreement or instrument shall a ffect the Agent or its duties hereunder. No notice to or demand on any party hereto in any case shall entitle such party to any other or further notice or demand in similar or other circumstances unless herein otherwise provided.
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| SECTION 7.4. Addresses for Notices, Etc. Except as oth-erwise expressly provided herein, all notices and other communica-tions provided for hereunder shall be in writing and mailed (postage prepaid), hand delivered or sent by overnight courier, if to the Company, c/o William J. Johnson at its address at 303 North Oregon Street, P.O. Box 982, El Paso, Texas 79960, with a copy similarly delivered to Kemp, Smith, Duncan & Hammond, 2000 MBank Plaza, P.O. Drawer 2800, El Paso, Texas 79999, Attention: Dane George, 1021.7500.2704.13:20
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| Esq., and York, New if to the Agent, at its address at 55 Water Street, New, York 10041, Attention: Corporate Trustee Administration, with a copy similarly delivered to Willkie Farr 6 Gallagher, 153 East 53rd Street, New York, New York 10022, Attention: Brian O'rien, Esq., and, if to the Company or the Agent, with copies to each of the Owner Participants at its address specified in Schedule I hereto, with.a copy similarly delivered to Cravath, Swaine & Moore, One Chase Manhattan Plaza, New York, N.Y. 10005, Attention: Richard M. Allen, Esq., or, as to any of the foregoing, at such other address as shall be 'designated by such person in a written notice to the others. All such written notices and communications shal'1 be effective when received at the address specified as aforesaid.
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| SECTION 7.5. Successors and Assigns. All of the provi-sions of this Agreement shall be binding upon and inure to the bene-fit of the parties hereto and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement other than to a per-mitted transferee under the Participation Agreements. Upon such assignment or transfer, the Company shall notify the -Agent,. whereupon the Agent shall recognize such assignment or transfer.
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| SECTION 7.6. Severability of Provisions. Any prov is ion of this Agreement which is prohibited or unenforceable in the State of New York or in any jurisdiction in the United States which shall be applicable to this Agreement shall, as to the State of New York or such jurisdiction in the United States, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceabil-ity of such provision in any. other jurisdiction.
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| SECTION 7.7. Headings, etc. 'The hea~l ings o f various Articles and Sections of this Agreement are for convenience of refer-ence only and shall not define or limit any of the terms and provi-sions hereof.
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| SECTION 7.8. Governing Law. This Agreement shall be gov-erned by, and construed in accordance with, the law of the State of New York.
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| SECTION 7.9. Counterpart Execution. Th i s Agreement and any amendment, to this Agreement may be signed in any number of coun-terparts, each of which shall be an original, and all of which taken together shall constitute a single instrument, with the same effect as if the instrument.
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| signatures thereto and hereto were upon the same 1021.7500.2704.13:20
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| IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their officers thereunto duly autho-rized as of the day and year first above written.
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| CHEMICAL BANK, By:
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| Senior Trust Officer EL PASO ELECTRIC'OMPANY By:
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| Vice President 1021.7500.2704.13:20
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| SCHEDULE I Commercial Federal Investment Corporation Jeff Bainbridge Commercial Federal Investment Corporation 1300 Commercial Federal Tower 2120 South 72nd Street Omaha, Nebraska 68124 Chrysler Financial Corporation Chrysler Financial Corporation Greenwich Office Park I Greenwich, Connecticut 06836 Leasing and Investment Services Attention: Mike Abandond Palantine Hills Leasing, Inc.
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| Palantine Hills Leasing, Inc.
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| 1415 S. Roselle Road Palantine, IL 60067 Attention: President, with cop'ies to Household, Commercial Financial Services Attention: Lee Wyatt and Julia Sarron, Esp.
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| 2700 Sanders Road Prospect Heights, IL 60070 1021.7500.2704.13:20
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| UCU Properties, Inc.
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| (Formerly, Energy Investments, Inc.)
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| Donald Claar Suite 2000 Commercial Tower Kansas City, Missouri 64105 Alexander Hamilton Life Insurance Company of America Richard Egan, General Counsel Alexander Hamilton Life Insurance Company of America 33045 Hamilton Boulevard Farmington Hills, Michigan Burnham Leasing Corporation Burnham Leasing Corporation 55 Broad Street New York, New York Attention: Dianne Rudo 1021. 7500. 2704. 13: 20
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| SCHEDULE II 1 ~ Certificates of deposit maturing within 180 days and issued by any Federally insured commercial bank; provided, however, that if the face amount of any such Certificate of Deposit shall be 91,000,000 or more, the issuing bank shall have a capital and surplus exceeding $ 500,000,000 and a senior debt rating of not Below the Level of Investment Grade; 2 ~ Readily marketable obligations issued or guaranteed by the United States Government or issued by the Government National Mortgage Association, the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation; 3 ~ Repurchase obligations maturing within 30 days with respect to obligations of the type described in Clause 2 above issued by any Federally insured commercial bank; provided, however, that if the face amount of such repurchase obligation is $ 10,000,000 or more, the issuing bank shall have a capital and surplus exceeding $ 500,000,000 and a senior debt rating of not Below the Level of Investment Grade;
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| : 4. Repurchase obligations maturing within 30 days with respect to obligations of the type described in Claus 2 above issued by any nationally recognized dealer which reports to the Market Reports Division of the Federal Reserve Bask of New York;
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| : 5. Investments in readily marketable money market funds managed by a nationally recognized fund manager, the assets of which .fund (or the issuers thereof) are, as described in Clauses 1, 2, 3, 4, or 9 herein;
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| : 6. Investments in readily marketable bonds, which are not Below the Level o f Investment Grade, or bond funds managed by a nationally recognized fund manager, the assets of wh'ch (or the issuers thereof) are not Below the Level of Investment Grade;
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| : 7. Investments in stock or stock funds managed by a nationally rec-ognized fund manager; 8 ~ Mortgage backed securities;
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| : 9. Commercial paper maturing within 180 days and having a rating of P-1 or better by Moody's Investors Service or A-1 or better by Standard & Poor's Corporation; or
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| : 10. Investments iq municipal obligations,,the issuers of which are not rated Below the Level of Investment Grade, or the obligations of which are backed by a Letter of Credit from a commercial bank as described in Clause 1 above.
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| 1021.7500.2704.13:20
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| "Below the Level of Investment Grade" means (i) in the case of Moody's Investors Service, a rating of less than Baa3 or the current equivalent, (ii) in the case of Standard & Poors Corporation, a rating of less than BBB- or current equivalent end (iii) in the case of Duff and Phelps, a rating greater than ten or the current equivalent.
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| 1021.7500.2704.13:20
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| SCHEDULE III EL PASO OBLIGATIONS
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| ,Principal Payment Amount Date Description
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| $ 25, 000, 000 Jan. =31, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 50, 000, 000 June 30, 1988 Second mortgage bonds The Bank of New York due June 1988
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| $ 6, 100, 000 July 20, 1988 . 4.25: First mortgage bonds due July
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| '988
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| $ 22,000,000 May 20, 1989 12.75% First mortgage bonds due May 1989
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| $ 25,000,000 Aug. 15, 1989 14.5% First mortgage bonds due August 1989 S50,000,000 Nov. 20, 1989 14% First mortgage bonds due November 1989
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| $ 20,000,000 Dec. 1, 1990 Long-term notes unsecured-The Bank of America
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| $ 70,000,000 Mar. 1, 1991 Second mortgage bonds-The Bank of America 1021. 7500. 2704. 13: 20
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| Exhibit B AMENDMENT No. 2, dated as of December 31, 1987, to Facility Lease dated as of August 1, 1986, between THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee ("Lessor" ) under a Trust Agreement, dated as of August 1, 1986 with UCU PROPERTIES, INC., and EL PASO ELECTRIC COMPANY, as Lessee (" Lessee" ).
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| The parties hereto have previously entered into the Facility Lease (as heretofore amended, modified or supplemented, the "Facility Lease" ) providing for. the lease by Lessor to Lessee of the Undivided Interest and the Real Property Interest. The parties now desire to make certain amendments to the Facility Lease.
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| NOW, THEREFORE, in consideration of the premises and other good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows:
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| SECTION 1. Definitions. For purposes hereof, capital-ized terms used herein and not defined herein shall have the meanings ascribed thereto in Appendix A to the Facility Lease.
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| SECTION 2. Amendments. (a) Section 3(b). Section 3(b) is h ereby amended by inserting at the end of a clause (iii), in lieu of and" and by inserting thereafter and before the next to last sentence of Section 3(c) a new clause (iv) reading as follows:
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| (iv) in the event that the Lessee shall fail to provide on or before April 30, 1988, a letter of credit which complies with the terms of the Agreement dated as of December 31, 1987 (the "Commitment Agreement" ), among the Lessee, the Lessor and the Owner Participant, a copy of which is annexed hereto, on each Basic Rent Payment Date, commencing October 1, 1988 and ending on the Basic Rent Payment Date next following the earlier to occur of (A) the providing by the Lessee of such letter of credit and (B) the date as of which such letter of credit would have expired had it been in effect as required by the terms of the Commitment Agreement, an amount equal to . 35% of Facility Cost multiplied by a fraction the numerator of which is the number of days from and including the preceding Basic Rent Payment Date (or, in the case of the Basic Rent Payment Date occurring on October 1, 1988, from and including April 30, 1988) to but excluding such Basic Rent Payment Date (or, er, to the date on which such letter of if credit is earli-pro-vided. or the date such letter of credit would have so expired), and the denominator of which is the number of days from and including the preceding Basic Rent 1021 7500. 2754. 22:
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| Payment Date to but excluding such Basic Rent Payment Date.
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| (b) Section 7. Section 7 of the Facility Lease is-
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| ,hereby amended by inserting "(a) ~L'~es." prior to the existing paragraph and inserting the following at the end thereof:
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| (b) Retirement of Debt. Unless the Owner Participant shall otherwise consent, on or before each date set forth in Schedule 8 hereto, the Lessee shall retire, legally defease or deposit with the lender or its trustee funds sufficient to retire the principal amount of the Debt set forth opposite the reference to such date on such Schedule.
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| (c) Merger, Sale, etc. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, convey, transfer or lease to any Person any asset except for fair value.
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| Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, (1) consolidate with any Person, (2) alerge with or into any Person or (3) except for (i) payments, in accordance with normal dividend policy of the Lessee, of cash dividends to holders of common stock and preferred stock, (ii) exchanges of fixed assets for other fixed assets whose fair value is equal to or greater than the fair value of the fixed assets exchanged or (iii) conveyances, transfers or leases of assets for cash where such cash is to be recorded by the Lessee, convey, transfer, lease or dividend to any Person, in any single transaction or series of related transac-tions, any asset or assets if the book value of such asset or assets exceeds 54 of its total assets as shown on the most recent consolidated balance sheet of the Lessee deliv-ered to the Owner Participant pursuant to Section 10 (b) (1) (i) (A) of the .Participation Agreement; unless immediately after giving effect to such transaction:
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| (A) the Person who is the "Lessee" under the Facility Lease immediately following such consolidation, merger, conveyance, transfer, lease. or dividend (the "Surviving Lessee" ) shall be a corporation which (i) is organized under the laws of the United States of America, a state thereof or the District of Columbia, (ii) is a "public utility" under applicable law, (iii) is an ANPP Participant under the ANPP Participation Agreement with respect to Unit 2 (including the 1021.7500.2754.22:4
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| Undivided Interest), (iv) shall have assumed each covenant and condition of the Lessee under the ANPP Participation Agreement and each other ANPP Project Agreement and (v) holds a valid and subsisting license from the NRC to possess Unit 2 (including the Undivided Interest);
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| (B) the Surviving Lessee, if other than the Lessee immediately prior to such transaction, shall execute and deliver to the Owner Participant an agreement, in form and substance reasonably satisfactory to the Owner Participant,. containing the assumption by the Surviving Lessee of each covenant and condition of this Facility Lease, each other Transaction Document and each Financing Document to which the Lessee imme-diately prior to such transaction was a party immedi-ately preceding such transaction; (C) no Default (other than a failure to deliver docu-ments and other inf ormation specif ied in Section 10(b) (1) (vi) of the Participation Agreement) and no Event of Default shall have occurred and be continuing, no Event of Loss shall have occurred and no Deemed Loss Event shall have been declared; (D) the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) after giving effect to such transaction, (1) shall be rated at least "investment grade" by Standard & Poor's Corporation and Moody's Investors Service, Inc. and (2) shall have an investment rating by Standard &
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| Poor's Corporation and Moody's Investors Service, Inc. not less than one "smallest notch" below the rating assigned to the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee)'mmediately prior to such transaction (or, if neither of such rating organizations shall rate the Bonds (or, if applicable, the preferred stock of the Surviving Lessee) at the time, by any nationally rec-ognized rating organization in the United States of America);
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| (E) the Surviving Lessee shall have a Net Worth equal to or greater than the Net Worth of the Lessee immedi-ately prior to such transactions and equal to or greater than $ 500,000,000; (F) the Surviving Lessee shall have delivered to the Owner Participant and the Indenture'Trustee an 1021.7500.2754.22:4
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| Officers'ertificate and an opinion, reasonably satisfactory to the Owner Participant, of counsel to the Surviving Lessee, each stating that (1) such transaction complies with this subclause (c) and (2) all conditions precedent to the consummation of such transaction have been satisfied and any Governmental Action required in connection with such transaction has been obtained, given or accomplished; (G) the Surviving Lessee shall have delivered to the Owner Participant an opinion, reasonably satisfactory to the Owner Participant, of independent counseL to the Surviving Lessee stating that such transaction would not result in a loss of any of the tax benefits described in Section 13(c)(1) of the Participation Agreement; (H) such transaction is otherwise permitted by and in compliance with the ANPP Participation Agreement; and (I) the New Coverage Ratio of the Surviving Lessee shall be at least 1.6 to 1.
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| Upon the consummation of such transaction the Surviving Lessee, if other than the Lessee, shall succeed to, and be substi-tuted for, and may exercise every right and power of, the Lessee immediately prior to such transaction under this Lease, each other Transaction Document and each Financing Document to which the Lessee
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| immediately prior to such transaction was a party immediately prior to such transaction, with the same effect as if the Surviving Lessee
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| had been named herein and therein.
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| (d) Incurrence of Debt. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries (whether consolidated or unconsolidated) to, issue, assume or become liable in respect of (A) any Debt maturing more than one year after the date of such issuance, assumption or liability (including current maturities of Debt with an original maturity of more than one year) if,, immediately thereafter, (i) the total amount of all Debt of the Lessee and its sub-sidiaries (whether consolidated or unconsolidated) maturing more than one year after the date of such issuance, assump-tion or becoming liable (reduced by Cash Available for Investment) shall exceed 70% (or, at any time after January 1, 1992 when there is not in effect a letter of credit com-plying in all respects with the Commitment Agreement, 65%)
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| of New Consolidated Capitalization, in each case as shown on a pro forma consolidated balance sheet on and as of the 1021.7500.2754.22:4
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| date of such issuance, assumption or becoming liable, or (ii) the New Coverage Ratio of the Lessee would be less than 1.6 to 1 or (B) any Debt maturing one year or less after the date of such issuance, assumption or becoming liable (excluding current maturities of Debt with an origi-nal maturity of more than one year) if, immediately there-after, the total amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) maturing one year or less after the date of such issuance, assumption or becoming liable shall exceed 12.5% of New Consolidated Capitalization, in each case as shown on a pro forma consolidated balance sheet on and as of the date of such issuance, assumption or becoming liable. For purposes of the foregoing clause (A), there shall be excluded any Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow and any refunding of the debt issued on December 31, 1987 by the lessors in the sale and leaseback transactions relating to Unit 3 at PVNGS shall not constitute the Lessee issuing, assuming, or becoming liable in respect of any Debt within the meaning of this subclause (d).
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| (e) Escrow Agreement. The Lessee shall deposit with Chemical Bank as escrow agent (the "Agent" ) any amount required to be deposited under the Escrow Agreement dated as of December 31, 1987 between the Lessee and the Agent within 5 Business Days after notice from the Owner Participant and shall otherwise comply with its other obli-gations under such Agreement within 15 days after notice from the Owner Participant.
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| (f) Definitions.. For purposes of this Section 7, the terms New Consolidated Capitalization and New Coverage Ratio shall be defined as follows:
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| (A) ="New Coverage Ratio" shall mean the ratio of. (x) the sum of (a) consolidated net income of the Lessee for the twelve-month period ending on a date no later than 135 days prior to the date as of which New Coverage Ratio is being determined plus (or minus) (b) all extraordinary items deducted (or added) in deter-mining said net income (for purposes of this defini-tion of New Coverage Ratio, any charge against income resulting from a write-off of utility plant pursuant to (i) an order of any governmental authority having jurisdiction or (ii) a provision for an estimated regulatory disallowance shall be deemed to be an extraordinary item deducted in determining said net 1021 7500 2754. 22:
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| income) plus (or minus) (c) all income taxes deducted (or tax credits added) in determining said net income minus (d) for all or any portion of such period ending on or prior to December 31, 1990, 50% of "allowance for funds used during construction" (net of deferred taxes) as such item is referred to in the consolidated income statement of the Lessee and its subsidiaries) and, for all or any portion of such period ending after December 31, 1990, 1004 of such item plus (e) the sum of all interest and lease payments paid by the Lessee and its subsidiaries (whether consolidated or unconsolidated) during such twelve-month period to (y) total interest and lease payments that will be payable by the Lessee and its subsidiaries (whether consoli-dated or unconsolidated) during the twelve-month period following the date as of which New Coverage Ratio is being determined. There shall be excluded from interest and lease payments included under clauses (x) and (y) above (i) lease payments to the Rio Grande Resources Trust, (ii) lease payments under any operating lease of computers, office equipment or the like, the original term of which (including options to renew) is less than five years and (iii')
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| interest on Debt maturing one year or less from the date of incurrence thereof. There shall be excluded from interest and lease payments included under clause (y) above interest on Debt which has been legally defeased or for the payment of which funds equal to the principal amount, of such Debt have been segregated in escrow.
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| (B) "New the Consolidated Capitalization" sha1 total of consolidated capital l mean and surplus of the Lessee plus the principal amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) which matures more than one year after the date as of which New Consolidated Capitalization is being determined.
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| (c) Schedule 8. Schedule 8 hereto is hereby added as Schedule 8 to the Facility Lease.
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| 1021.7500.2754.22:4
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| SECTXON 3. Miscellaneous (a) Effective Date of Amendments. The amendments set forth in Section 2 hereof shall be and become effective upon the execution hereof by the parties hereto.
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| (b) Counterpart Execution. This Amendment No. 2 may be executed in any number of counterparts and by each of the parties hereto on separate counterp'arts; all such coun-terparts shall together constitute but, one and the same instrument.
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| (c) Governing Law. This Amendment No. 2 has been negotiated and delivered in the State of New York and shall be governed by and be constxued in accordance with the laws of the State of New York, except to the extent that pursu-ant to the law of .the State of Arizona such law is mandato-rily applicable hereto.
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| (d) Disclosure. Pursuant to Arizona Revised Statutes Section 33-404, the beneficiary of the Trust Agreement is UCU Properties, Znc., a corporation. The address of. the beneficiary is Suite 2000 Commercial Tower, Kansas City, Missouri 64105, Attention: Donald Claar. A copy of the Trust Agreement is available for inspection at the offices of the Owner Trustee at 100 Federal Street, Boston, Massachusetts 02110, Attention of, Corporate Trust Division.
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| 1021.7500.2754.22:4
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| IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment No. 2 to be duly executed in New York, New York on December 31, 1987.
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| THE FIRST .NATIONAL BANK OF BOSTON, not in its individual capacity, but solely. as Owner Trustee. under a Trust Agreement, dated as of August 1, 1986 with Energy Investments, Inc.,
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| Senior Manager EL PASO ELECTRIC, COMPANY, By &
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| ice Pres'ident
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| if' Cl
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| STATE OF TEXAS )
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| ) ss.:
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| COUNTY OF EL PASO )
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| The foregoing instrument was acknowledged before me this 6th day of January, 1988 by William J. Johnson, a Vice President of EL PASO ELECTRIC COMPANY, a Texas corporation, on behalf of the corporation.
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| N ary Public
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| ~O 0
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| COMMONWEALTH OF MASSACHUSETTS )
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| ) Sso:
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| COUNTY OF SUFFOLK )
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| The foregoing instrument was acknowledged before me this day of January, 1988, by Mark Nelson, a Senior Manager of THE FIRST NATIONAL BANK OF BOSTON, a national banking association, on behalf of the banking association as trustee under that certain Trust Agreement dated as of August 1, 1986 with Burnham Leasing Corporation.
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| Notary Public 1021.7500.2754.22:4
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| SCHEDULE 8 EL PASO OB IGATION Principal Payment Amount Date Description
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| $ 60 p 000 i 000 Jane 3lg 1988 16.20% First mortgage bonds due 2012
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| $ 25,000,000 Jan. 31, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 50,000,000 June 30, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 6'/ 1 00 i 000 July 20, 1988 4.25% First mortgage bonds .due July 1988
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| $ 22 g 000 i 000 May 20, 1989 12.754 First mortgage bonds due May 1989
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| $ 25g000g000 Aug. 15, 1989 14.54 First mortgage bonds due August 1989
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| $ 50'00i 000 Nov. 20, 1989 14% First mortgage bonds due November 1989
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| $ 20s000i000 Dec. 1, 1990 Long-term notes - unsecured-The Bank of America
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| $ 70i000i000 Mar. 1, 1991 Second mortgage bonds-The Bank of America 1021.7500.2754.22.4
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| J AMENDMENT No. 2, dated as of December 31, 1987, to Facility Lease dated as of August 1, 1986, between THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee ("Lessor" ) under a Trust .Agreement, dated as of August 1, 1986 wi.'th PALATINE HILLS LEASING, INC., and EL PASO ELECTRIC COMPANY, as Lessee (" Lessee" ).
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| The parties hereto have previously entered into the Facility Lease (as heretofore amended, modified or supplemented, the "Facility Lease" ) providing for the lease by Lessor to Lessee of the Undivided Interest and the Real Property Interest. The parties now desire to make certain amendments to the Facility Lease.
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| C NOW THEREFORE i in consideration of the premises and other good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows:
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| SECTION 1. Definitions. For purposes hereof, capital-ized terms used herein and not defined herein shall have the meanings ascribed thereto in Appendix A to the Facility Lease.
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| SECTION 2. Amendments. (a) Section 3 (b) . Section 3 (b) is hereby amended by inserting at the end of a clause (iii), in lieu of ".", "; and" and by inserting thereafter and before the next to last sentence of Section 3(c) a new clause (iv) reading as follows:
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| (iv) in the event that the Lessee shall fail to provide on or before April 30, 1988, a letter of credit which complies with the terms of the Agreement dated as of December 31, 1987 (the "Commitment Agreement:"), among the Lessee, the Lessor and the Owner Participant, a copy of which is annexed hereto, on each Basic Rent Payment Date, commencing October 1, 1988 and ending on the Basic Rent Payment, Date next following the earlier to occur of (A) the providing by the Lessee of such letter of credit and (B) the date of which such letter of credit would have expired
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| 's had it been in effect as required by the terms of the Commitment Agreement, an amount equal to .354 of Facility Cost multiplied by a fraction the numerator of which is the number of days from and including the preceding Basic Rent Payment Date (or, in the case of the Basic Rent Payment Date occurring on October 1, 1988, from and including April 30, 1988) to but excluding such 'Basic Rent Payment Date (or, if earli-er, .to the date on which such letter of credit is pro-vided or the date such letter .of credit would have so expired), and the denominator of which is 'the number of days from and including the preceding Basic Rent 1021. 7500. 2754. 21: 3
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| I Payment Date Date.
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| to but excluding such Basic Rent Payment (b) Section 7. Section 7 of the Facility Lease is hereby amended by inserting "(a) ~Lie s." prior to the existing paragraph and inserting the following at the end thereof:
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| (b) Retirement of Debt. Unless the Owner Participant shall otherwise consent, on or before each date set forth in Schedule 8 hereto, the Lessee shall retire, legally defease or deposit with, the lender or its trustee funds sufficient to retire the principal amount of the Debt set forth opposite the reference to such date on such Schedule.
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| (c) Merger, Sale, etc. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, convey, transfer or lease to any Person any asset except for fair value.
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| Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, (1) consolidate with any Person, (2) merge with or into any Person or (3) except for (i) payments, in accordance with normal dividend policy of the Lessee, of cash dividends to holders of common stock and preferred stock, (ii) exchanges of fixed assets for other fixed assets whose fair value is equal to or greater than the fair value of the fixed assets exchanged or (iii) conveyances, transfers or leases of assets for cash where such cash is to be recorded by the Lessee, convey, transfer, lease or dividend to any Person, in any single transaction or series of related transac-tions, any asset or assets or assets exceeds 54 of its if the book value of such asset total assets as shown on the most recent consolidated balance sheet of the Lessee deliv-ered to the Owner Participant pursuant to Section 10 (b) (1) (i) (A) of the Participation Agreement; unless immediately a f ter giving ef feet. to such transaction:
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| 1 (A) the Person who is the "Lessee" under the Facility Lease immediately following such consolidation, merger, conveyance, transfer, lease or dividend (the "Surviving Lessee" ) shall be a corporation which (i) is organized under the laws of the United States of America, a state thereof or the District of Columbia, (ii) is a "public utility" under applicable law, (iii) is an ANPP Participant under the ANPP Participation Agreement with respect to Un'it 2 (including the 1021.7500.2754.21:3
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| Undivided Interest), (iv) shall have assumed each covenant and condition of the Lessee under the ANPP Participation Agreement and each other ANPP Project Agreement and (v) holds a valid and subsisting license from the NRC to possess Unit 2 (including the Undivided Interest);
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| (B) the Surviving Lessee, immediately if other than the Lessee prior to such transaction, shall execute and deliver to the Owner Participant an agreement, in form and substance reasonably satisfactory to the Owner Participant, containing the assumption by the Surviving Lessee of each covenant and condition of this Facility Lease, each other Transaction Document and each Financing Document to which the Lessee imme-diately prior to such transaction was a party immedi-ately preceding such transaction; (C) no Default (other than a failure to deliver docu-ments and other information specified i.'n Section 10(b)(1)(vi) of the Participation Agreement) and no Event of Default shall have occurred and be continuing, no Event of Loss* shall have occurred and no Deemed Loss Event shall have been declared; (D) the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) after giving effect to such transaction, (1) shall be rated at least "investment grade" by Standard & Poor's Corporation and Moody's Investors Service, Inc. and (2) shall have an investment rating by Standard &
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| Poor's Corporation and Moody's Investors Service, Inc. not less than one "smallest notch" below the rating assigned to the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) immediately prior to such transaction (or, if neither of such rating organizations shall rate the Bonds (or, if applicable, the preferred stock of the Surviving Lessee) at the time, by any nationally rec-ognized rating organization in the United States of America);
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| (E) the Surviving Lessee shall have a Net Worth equal to or greater than the Net Worth of the Lessee immedi-ately prior to such transactions and equal to or greater than '$500,000,000; (F) the Surviving Lessee shall have delivered to the Owner Participant and the Indenture Trustee an 1021.7500.2754.21:3
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| Officers'ertificate and an opinion, reasonably satisfactory to the Owner Participant, of counsel to the Surviving Lessee, each stating that (1) such transaction complies with. this subclause (c) and (2) all conditions precedent to the consummation of such "transaction have been satisfied and any Governmental Action required in connection with such transaction has been obtained, given or accomplished; (G) the Surviving Lessee shall have delivered to the Owner Participant an opinion, reasonably satisfactory to the Owner Participant, of independent counseL to the Surviving Lessee stating that such transaction would not result in a loss of any of the tax benefits described in Section 13 (c) (1) of the Participation Agreement; (H) such transaction is otherwise permitted by and in compliance with the ANPP Participation Agreement; and (I) the New Coverage Ratio of the Surviving Lessee shall be at least 1.6 to 1.
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| Upon the consummation of such transaction the Surviving Lessee, if other than the Lessee, shall succeed to, and be substi-tuted for, and may exercise every right and power of, the Lessee immediately prior to such transaction under this Lease, each other Transaction Document and each Financing Document to which the Lessee immediately prior to such transaction was a party immediately prior to such transaction, with the same effect as if the Surviving, Lessee had been named herein and therein.
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| (d) Incurrence of Debt. Without the consent of the Owner Participant', the Lessee shall not, and shall not permit, any of its subsidiaries (whether consolidated or unconsolidated) to, issue, assume or become liable in respect of (A) any Debt maturing more than one year after the date of such issuance, assumption or liability
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| ( including current maturities of Debt with an original maturity of more than one year) if, immediately thereafter, (i) the total amount of all Debt of the Lessee and. its sub-sidiaries (whether consolidated or unconsolidated) maturing more than one year after the date of such issuance, assump-tion or becoming liable (reduced by Cash Available for Investment) shall exceed 70% (or, at any time after January 1, 1992 when there is not in effect a letter of 'credit com-
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| .plying in all respects with the Commitment Agreement, shown654) of New Consolidated Capitalization, in each case as on a pro forma consolidated balance sheet on and as of the 1021.7500.2754.21:3
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| ~O date of such issuance, assumption or becoming liable, or (ii) the New Coverage Ratio of the Lessee would be less than 1.6 to 1 or (B) any Debt maturing one year or less after the date of such issuance, assumption or becoming, liable (excluding current maturities of Debt with an origi-nal maturity of more than one year) if, immediately there-after, the total amount of all Debt of the Lessee and its subsidiaries (whether consolidated or'nconsolidated) maturing one year or less after the date of such, issuance, assumption or becoming liable shall exceed 12.54 of New Consolidated Capitalization, in each case as shown .on a pro forma consolidated balance sheet, on and as of the date of such issuance, assumption or becoming liable. For purposes of the foregoing clause (A), there shall be excluded any
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| . Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow and any refunding of the debt issued on December 31, 1987 by the lessors in the sale and leaseback transactions relating to Unit 3 at PVNGS'hall not constitute the Lessee issuing, assuming, or becoming liable in respect of any Debt within the meaning of this subclause (d) .
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| I (e) Escrow Agreement. The Lessee shall deposit with Chemical Bank as escrow agent (the "Agent" ) any amount required to be deposited under the Escrow Agreement dated as of December 31, 1987 between the Lessee and the Agent within 5 Business .Days after notice from the Owner Participant and shall otherwise comply with its other obli-.
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| gations under such Agreement within 15 days after notice from the Owner Participant.
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| (f) Definitions. For purposes of this Section 7, the terms New Consolidated Capitalization and New Coverage Ratio shall be defined as'follows:
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| (A) "New Coverage Ratio" shall mean the ratio of (x) the sum of (a) consolidated net income of the Lessee for the twelve-month period ending on a date no later than 135 days prior to the date as of which New Coverage Ratio is being determined plus (or minus) (b) all extraordinaryincome items deducted (or added) -in deter-mining said net (for purposes of this defini-tion of New Coverage Ratio, any charge against income resulting from a write-off of. utility plant pursuant to (i) an order of any governmental authority having jurisdiction or (ii) a provision for an estimated regulatory disallowance shall be deemed to be net an extraordinary item deducted in determining said 1021.7500.2754.21:3
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| income) plus (or minus) (c) all income taxes deducted (or tax credits added) in determining said net income minus (d) for all or any portion of such period ending on or prior to December 31, 1990, 504 of "allowance for funds used during construction" (net of deferred taxes) as such item is referred to in the consolidated income statement of the Lessee and its subsidiaries) and, for all or any portion of such period ending after December 31, 1990, 100% of such item plus (e) the sum of all interest and lease payments paid by the Lessee and its subsidiaries (whether consolidated or unconsolidated) during such twelve-month period to (y) total interest and lease payments that will be payable by the Lessee and its subsidiaries (whether consoli-dated or unconsolidated) during the twelve-month period following the date as of which New Coverage Ratio is being determined. There shall be excluded from interest and lease payments included under clauses (x) and (y) above (i') lease payments to the Rio Grande Resources Trust, (ii) lease payments under any operating lease of computers, office equipment or the like, the original term of which (including options to renew) is less than five years and (iii) interest on Debt maturing one year or less from the date of incurrence thereof. There shall be excluded from interest and lease payments included under clause (y) above interest on Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow.
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| (B) "New Consolidated Capitalization" s h a 1 1 m e a n the total of consolidated capital and surplus of the Lessee plus the principal amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) which matures more than one year after the date as of which New Consolidated Capitali:zation is being determined.
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| (c) Schedule 8. Schedule 8 hereto is hereby added as Schedule 8 to the Facility Lease.
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| 1021. 7500. 2754. 21: 3
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| 3 SECTION 3. Miscellaneous (a) Effective Date of Amendments. The amendments set forth in Section 2 hereof shall be and .become effective upon the execution hereof by the parties hereto.
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| (b) Counterpart Execution. This Amendment No. 2 may be executed in any number of counterparts and by each of the parties hereto on separate counterparts; all such coun-terparts shall together constitute but one and the same instrument.
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| (c) Governing Law. This Amendment No. 2 has been negotiated and delivered in the State of New York and shall be governed by and be construed in accordance with the laws of the State of New York, except to the extent that pursu-ant to the law of the State of Arizona such law is mandato-rily applicable hereto.
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| (d) Disclosure. Pursuant to Arizona Revised Statutes Section 33-404, the beneficiary of the Trust Agreement is Palatine Hills Leasing, Inc., a corporation. The address of the beneficiary is 1415 S. Roselle Rd., Palatine, IL 60067, Attention: President. A copy of the Trust Agreement is available for inspection at the offices of the Owner Trustee at 100 Federal Street, Boston, Massachusetts 02110, Attention of Corporate Trust Division.
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| 1021.7500.2754.21:3
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| IN WITNESS WHEREOF, each of the parti.es hereto has caused this
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| Amendment No. 2 to be duly executed in New York, New York on
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| December 31, 1987.
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| THE FIRST NATIONAL BANK OF BOSTON,. not in its individual capacity, but solely as Owner Trustee under a Trust Agreement, dated as of, August 1, 1986 with Palatine Hills Leasing, Inc.,
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| /r,',/,.(X~
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| Senior Manager EL PASO ELECTRIC COMPANY, By A ice President
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| STATE OF TEXAS )
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| ) ss.:
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| COUNTY OF EL PASO )
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| The foregoing instrument was acknowledged before me this 6th day of January,, 1988 by William J. Johnson, a Vice President of EL PASO ELECTRIC COMPANY, a 'Texas corporation, on behalf of the corporation.
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| tary Public
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| 8)
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| COMMONWEALTH OF MASSACHUSETTS )
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| COUNTY OF SUFFOLK n The foregoing instrument was acknowledged before me this day of January, 1988, by Mark Nelson, a Senior Manager of THE FIRST NATIONAL BANK OF BOSTON, a national banking association, on behalf of the banking association as trustee under that certain Trust Agreement dated as of August 1, 1986 with Pala'tine Hills Leasing, Inc.
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| Notar . Public MiRlSOLA
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| ~ Commission ExplfN
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| ~ember 30 <984 I
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| 1021.7500.2754.06A:1
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| 0 SCHEDULE 8 EL PASO ~OBLIGATlONS Principal Payment Amount Date Description
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| $ 60,000,000 Jan. 31, 1988 16.204 First mortgage bonds due 2012
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| $ 25,000,000 Jan. 31, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 50,000,000. June 30, 1988 Second mortgage bonds-The Bank of New York due June 1988 6,100,,000 July 20, 1988 4.25% First mortgage bonds due July 1988
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| $ 22 I 000 000 May 20, 12.754 First mortgage bonds due May 1989
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| 1989
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| $ 25 I 000 I 000 Aug. 15, 1989 14.54 First mortgage bonds due August 1989
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| $ 50,000,000 Nov. 20, 1989 14< First mortgage bonds due November 1989
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| $ 20IOOOI000 Dec. 1, 1990 Long-term notes unsecured-The Bank of America
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| .$ 70,000,000 Mar. 1, 1991 .Second mortgage bonds-The Bank of America 1021. 7500. 2754. 21: 3
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| AGREEMENT dated as of December 31, 1987 among PALATINE HILLS LEASING, INC. (" Owner Participant" ), THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee ("Owner Trustee" ) under a Trust Agreement dated as of August 1, 1986 with Owner Participant, and EL PASO ELECTRIC COMPANY (" Lessee" ).
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| Owner Trustee and Lessee are parties to the Facility Lease dated as of August 1, 1986, as'amended (the "Facility Lease" ). All terms used'ut not defined herein have the meanings ascribed to them
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| 'in Appendix A to the Facility Lease.
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| Lessee, Owner Trustee and Owner Participant desire to modify certain provisions of the Facility Lease, provide credit enhancement for the benefit of Owner Participant in the form of a letter of credit to support the payment of rent and, until,such time as a letter of credit has been delivered, provide for the creation of an escrow account into which Lessee will deposit funds to be held for the retirement of certain of its outstanding Debt. Accordingly, the parties hereto agree as follows:
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| : 1. Letter of Credit.
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| A. Lessee shall cause to,be delivered to Owner Participant a letter of credit (the "LC") with drawing amounts not less than Special Casualty Value from time to time during the period the LC is outstanding less the principal amount of and accrued interest on the Notes Outstanding from time to time. If the Lessee shall fail to cause the LC to be delivered by April 30, 1988 in accordance with the terms hereof, the Escrow Agreement (as defined in Section 2) shall continue in full force and effect, and the Lessee shall pay to the Owner Trustee all amounts set forth in Section 3(b)(iv) of the Facility Lease in accordance with the terms thereof, .but such failure shall not constitute an Event of Default.
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| B. The unsecured long-term debt securities of the bank issuing the LC .shall be rated by Moody's not less than A2, in the case of a United States bank, or Aa3, in the case of a United States branch or agency of a foreign bank, and such bank shall be otherwise acceptable to Owner Participant. Owner Participant will be reason-able in determining such acceptability, but may consider such matters as (i) legal or regulatory constraints on the issuance to or holding by Owner Participant of letters of credit from such bank and (ii) policy constraints in effect for Owner Participant on the issu-ance to or holding by Owner Participant of letters of credit from such bank, so long as such policy constraints are then applicable by Owner Participant generally to such bank and have been applied by Owner Participant without regard to the nature of PVNGS or the Unit 2 sale and leaseback transactions or the identity or credit of Lessee.
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| 1021.7500.2754.20 3
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| C. The LC (1)- shall have an expiry date of December 31,
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| : 1991, Event (2) may be drawn upon is declared, an Event if of an Event of Loss occurs, a Deemed Loss Default occurs and is continuing or in any and'll events prior to termination of the LC should a termina-tion event under the LC occur, (3) shall permit partial drawings, (4) shall permit Owner Participant to assign all of its interest therein to a successor Owner Participant, without the issuing bank's or Lessee's consent (5) shall provide for reinstatement upon reim-bursement in respect of a draw thereunder for Supplemental Rent and (6) shall be otherwise satisfactory in form and substance to Owner Participant in its reasonable judgment. Appropriate provision will be made for replacing the LC if there is a decline in the rating by Moody's of the unsecured long-term debt securities of the issuing bank below A3.
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| D. The reimbursement agreement between Lessee and the issu-ing bank relating to the LC shall (1) not contain any default or ter-mination provisions, that are less favorable to Lessee or Owner Participant than those contained in Lessee's Reimbursement Agreement dated as of December 1, 1987, with The Fuji Bank Limited, (2) require the issuing bank to pay any draws on the LC from its general funds, (3) not permit the issuing bank to exercise any right of set off during the pendency of any bankruptcy proceeding of Lessee, (4) not permit Lessee's reimbursement obligation to be collateralized at, any time by the grant of a security interest in Lessee's interest in the Undivided Interest or the Real Property Interest or in any other property unless a subordinate (to the security interest of the issu-ing bank) security interest in such property is also granted to Owner Participant, (5) not permit amendment of any provision of the LC or the reimbursement agreement in a manner which is materially adverse to the interest of Owner Participant without its prior written con-sent and (6) otherwise be satisfactory in form and substance to Owner Participant in its reasonable .judgment.
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| E. The LC need not be renewed or replaced as of December 31, 1991, if (i) all the Debt listed on Schedule 8 to the Facility Lease has been retired in accordance with such Schedule 8, (ii) the New Coverage Ratio of Lessee, determined as of June 30, 1991, is not less than 1.6 to 1, (iii) the aggregate Debt, maturing more than one year after the date of issuance, assumption or liabil-ityexcess (including current maturities of Debt with an original maturity of one year) of Lessee shall not be in excess of 65% of New in Consolidated Capitalization, all as derived from the Lessee's finan-cial books and records as of June 30, 1991, and (iv) the aggregate Debt maturing one year or less after the date of such issuance, assumption or liability (excluding current maturities of Debt with an
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| 'original maturity in excess of one year) of Lessee shall not be in excess of 12.54 of such New Consolidated Capitalization (clauses (i) through (iv) above being herein called the "Tests" ). Lessee 1021. 7500. 2754 . 20: 3
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| shall prepare for and provide to Owner Participant not later than October 1, 1991 (and October 1 of succeeding years under the circum-stances set forth, below) calculations showing whether Lessee has sat-isfied the Tests and the financial data upon which such calculations were based. If Lessee has failed to meet the Testsi Owner Participant may, at its option (and without affecting. any other rights of, Owner Participant to draw on the LC), draw on the LC or require that Lessee provide a renewal or replacement LC or itself obtain for Lessee, at Lessee's expense, a renewal or replacement LC on substantially the same terms as the existing LC, except that the annual fee payable under such renewal or replacement LC shall not be more than 100 basis points greater than the annual fee to Lessee of the existing LC. The Owner Participant shall exercise such option within a period of time to be determined but not more than thirty (30) days after the Lessee shall furnish the Owner Participant the aforesaid calculations and financial data. Such renewal or replace-ment LC shall have a term commencing not later than the expiry date of the existing LC and ending not earlier than one year'after such expiry date, and shall have terms (including the .terms of the related reimbursement agreement) not less favorable to Owner Participant than the terms contained in the existing LC and reimbursement agreement.
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| Such renewal or replacement LC may provide for its early expiration not earlier than December 31 of the year during which Lessee meets the Tests. The procedures set forth above (the New Coverage Ratio being determined, and deriving New Consolidated Capitalization from the Lessee's financial books and records, as of June 30 in each such year) shall be repeated each year until no renewal or replacement LC is required.
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| : 2. Escrow A reement. Lessee shall enter into an Escrow Agreement with Chemical Bank substantially in the form of Exhibit A hereto. The Owner Participant agrees that, upon delivery and accep-tance of the LC, it shall deliver the notice required by clause (i) of Section 7.2 of the Escrow Agreement.
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| : 3. Amendment to Lease. Owner Trustee and Lessee shall execute Amendment No. 2 to the Facility Lease substantially in the form of Exhibit B hereto.
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| : 4. u t er Chan es. Concurrent with the procurement of the LC, and subject to obtaining any required consents of third par-ties to the Transaction Documents, the, parties, will amend the Facility Lease and other Transaction Documents to implement the obtaining of and to reflect the existence of the LC and to further implement the terms of this Agreement. Such amendments will include provisions affording Lessee, in the event Owner Participant has determined to draw on the LC when Lessee has failed to meet the Tests and unless an Event of Default shall have otherwise occurred and be continuing or an Event of Loss shall have occurred'or Deemed Loss 1021. 7500. 2754 . 20: 3
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| Event shall have been declared, the right to purchase the Undivided
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| Interest and the Real Property Interest on or before some period prior to the expiration or termination date of the existing LC, for an amount based on the greater of (i) Enhanced Casualty Value, which will be calculated on an assumed 254 residual, and (ii) Fair Market Sales Value of the Undivided Interest and the Real Property Interest.
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| : 5. Consent. Owner Participant irrevocably consents to any and all transactions which would require its consent under Section 10 (b) (3) (ii) or 10,(b) (3) (v) of the Participation Agreement.
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| : 6. Owner Trustee Directive. Owner Participant hereby authorizes and directs Owner Trustee to execute this Agreement, Amendment No. 2 to the Facility Lease and such other agreements, doc-uments and certificates as shall be required in order to facilitate the execution and delivery of this Agreement. and such Amendment No. 2.
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| : 7. Taxes. All the provisions of Sections 13(b) and (c) of the Participation Agreement shall be applicable as though the mat-ters. set forth in this Agreement (including the exhibits hereto) had been included in the Transaction Documents at all times since August 18, 1986 except that the execution and delivery of this Agreement, as opposed to its provisions, shall not be considered to be the execution and delivery of a Transaction Document or a Financing Document or an act specifically required or expressly per-mitted'o be performed by the Lessee for the purposes of Section 13 (c) (4) (i) (B) of the Participation Agreement.
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| : 8. Miscellaneous. This Agreement may be executed by the parties hereto in separate counterparts, all and it shall not be neces-sary for the signatures. of parties to appear on any one counterpart. The headings of the various sections of this Agreement are for convenience of reference only and shall not modify, define,,
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| expand or limit any of the terms or provisions hereof. This Agreement, may not be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by the party against whom enforcement of such transaction, amendment, sup-plement, waiver or modification is sought. This Agreement in all respects shall be governed by and construed in accordance with the laws of the State of New York, including all matters of construction, validity and performance.
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| 1021.7500.2754.20:3
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| if'f' IN WITNESS wHEREOP earJ. ~;~f -..he partakes heLOto has. oaused this Ayraceont ta ke duly execute c"; ~f the day aM >ac C'@at abave viitten.
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| W,~hTX'l3i f!ILLS LEASXNGg XNC.
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| d);
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| V~S rIRST NMXONM RNK Ot BOSTON, met in its iadiVidua3.
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| capacity but soLa3,y 0'a owner Trustee ~
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| n /C~
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| PhgO ELECTRIC CQNPANY
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| Exhibit A to the Agreement ESCROW 'GREEMENT Dated as of December 31, 1987 between CHEMICAL BANK, Escrow Agent and EL .PASO ELECTRIC COMPANY 1021. 7500. 2704. 13: 20
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| TABLE OF CONTENTS Pacae ARTICLE I DEFINITIONS Section 1.1. Certain Defined Terms. . . . . . . . . . . . 1 ARTICLE II APPOINTMENT OF AGENT AND CREATION OF ESCROW ACCOUNT Section 2.1. Appointment of -Agent. ~ ~ ~ 3 Section 2.2. The Escrow Account. ~ ~ ~ 3 Section 2.3. Statement of'urpose. ~ ~ o 4.
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| .ARTICLE III LEASE PROCEEDS DEPOSIT BY THE CO1!PANY Section 3.1. Lease Proceeds Escrow Deposit. . . . . . . . 4 ARTICLE IV TRANSFER AND DEPOSIT BY .THE COMPANY OF EXISTING INVESTMENTS Section 4.1. Transferred Investments Escrow Deposit. . . ; 4 ARTICLE V INVESTMENTS AND PAYMENTS BY AGENT 4
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| Section 5.1. Payments by Agent to Company from Lease Proceeds Escrow Sub-Account. . . . . . . . . 5
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| II
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| TABLE OP CONTENTS, Continued Pacae Section 5.2. Monthly Disbursement from both Sub-accounts. 6 Section 5.3. Investments; Agreement as to Value of Clauses 6, 7 and 8 on December 31, 1988. ~ ~ 7 Section 5.4. Valuation of Investments; Payment of Deficiency. 8 ARTICLE VI CONCERNING THE AGENT Section 6.1. Duties of Agent. .10 Section 6.2. Liability. .10 Section 6.3. Delivery of Documents and Further Acts. .10 Section 6.4. Legal Proceedings. ~ .11 Section 6.5. Resignation; Appointment of Successor. .11 Section 6.6. Indemnification.
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| ARTICLE VII MISCELLANEOUS Section 7.1. Payments. .12 Section 7.2. Termination. .12 Section 7.3. Amendments, Etc. .12 Section 7.4. Addresses for Notices, Etc. .12 Section 7.5. Successors and Assigns. ~ ~ .13 Section 7.6. Severability of Provisions. ~ ~ ~ 13
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| Section 7.7. Headings, etc. ~ ~ ..13
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| TABLE OF CONTENTS, Continued Pacae Section 7.8. Governing Law. . . . . . . . . .-. . . . . .13 Section 7.9. Counterpart Execution. . . . . . . . . . . .13
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| ESCROW AGREEMENT I ESCROW AGREEMENT, dated as of December 31, 1987, among CHEMICAL BANK, a New York banking corporation (the Agent: ), and EL PASO ELECTRIC COMPANY, a Texas corporation (th Company).
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| WITNESSETH:
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| WHEREAS, pursuant to eight separate Commitment Agreements, dated as of December 31, 1987 with each of the Owner Participants (as described in Schedule I hereto) and the related Owner Trustee, the Company has agreed to establish and maintain an escrow account of certain moneys and securities (such terms and all other capitalized terms used herein having the meanings set forth or referred to in Section 1 hereof) until such time as Acceptable Letters of Credit are obtained; and WHEREAS, the Commitment Agreements contemplate that certain moneys and securities are to be held in an escrow account to be established with the Agent and are to be disbursed by the Agent pur-suant to directions from the Company until the cccurrence of certain events, all in accordance with the terms and conditions set forth herein; and WHEREAS, the Company desires that the E.gent be appointed as escrow agent, and the Agent desires to accept <<uch appointment, all in accordance with the terms and conditions se= forth herein.
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| I NOW, THEREFORE, in consideration of the mutual agreements herein contained and of other good and valu,able consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows:
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| ARTICLE I DEFINITIONS SECTION 1.1. Certain Defined Terms. As used in this Agreement and unless otherwise expressly indicated, or unless the context clearly requires otherwise:
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| (a) The terms Agent and the Company have the meanings assigned in the caption of this Agreement.
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| (b) The following terms have the respective meanings set forth below (such meanings to be equally applicable to both the sin-gular and plural forms of the terms defined):
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| Acceptable Letter of Credit, means a letter of credit complying with the requirements therefor a:. set forth in 1021.7500.2704.13:20
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| the relevant Commitment Agreement, which toe Company has agreed to provide to each August Owner Participant.
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| August Owner Participants means each of the six enti-ties listed in Schedule I hereto, each as an owner partici-pant under its related August Participation Agreement.
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| August Participation Agreement(s) means each of six separate Participation Agreements, dated a- of August 1, 1986, as amended by Amendment No. 1, dated October 1, 1986 among the Company, El Paso Funding Corporation, the Owner Trustee, First, City National Bank of Houston, as Indenture Trustee, and each August Owner Participant.
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| Commitment Agreements means the eight separate Agreements, dated as of December 31, 1987, by and between El Paso, the related Owner Trustee and each of the Owner Participants.
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| December Participation Agreement(s) means the Participation Agreement dated as of December 1, 1986, among the Company, El Paso Funding Corporation, the Owner Trustee, First City National Bank of Houston, as Indenture Trustee and Chrysler Financial Corporation and the Participation Agreement, dated as of December 1, 1986, among the Company, El Paso Funding Corpora'=ion, the Owner Trustee, First City National Bank of Houston, as Indenture Trustee and Commercial Federal Investmen Corporation.
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| El Paso Obligations means the principa'mount of the indebtedness of the Company set forth i>> Schedule III hereof.
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| Escrow Account means said term:~s defined in Section 2.2 hereof.
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| Escrow Sub-accounts means the Transferred Investments Escrow Sub-account and the Lease Proceeds Escrow Sub-account, collectively.
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| Lease Proceeds Escrow Deposit means said term as defined in Section 3.1 hereof.
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| Lease Proceeds Escrow Sub-Account means said term as defined in Section 2.2 hereof.
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| Owner Participant(s) means the August Owner Participants and Chrysler Financial Corporation. and 1021.7500.2704 '3:20
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| Commercial Federal Investment Corporation, as Owner 0 Participants under the December Participation Agreements.
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| Owner Trustee means The First National Bank of Boston, as trustee for an Owner Participant under ea:"h of six sepa-rate Trust Agr'eements, dated as of August 1, 1986 and two separate Trust Agreements, dated as of December 1, 1986.
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| Participation Agreements means the August Participation Agreements and the December Participation Agreements.
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| Permitted Investments means the certificates, obliga-tions and investments set forth in Schedule II hereto, the investments constituting the Transferred Investments Escrow Deposit and reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment fea-ture of any of the investments listed in clauses (ii),
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| (iii) and (iv) of. the first paragraph of Section 4.1 hereof.
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| Transferred Investments Escrow Deposit means said term
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| .as defined in Section 2.2 hereof.
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| Transferred Investments Escrow Sub-account means said term as defined in Section 2.2 hereof.
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| (c) As used herein, any capitalized term not otherwise defined herein has the meaning assigned to such term in the respec-tive Participation Agreements.
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| ARTICLE II APPOINTMENT OF AGENT AND CREATION OP ESCROW ACCOUNT SECTION 2.1. Appointment of Agent. For the purposes and subject to the terms and conditions set forth in this Agreement, the Company hereby appoints Chemical Bank as escrow agent, and Chemical Bank hereby accepts such appointment.
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| SECTION 2.2. The Escrow Account. The Agent shall estab-lish and maintain for the benefit of the Owner Participants an Escrow Account (the Escrow Account), within which there shall be two sepa-rate sub-accounts 'to be known as the Lease Proceeds Escrow Sub-account (the Lease Proceeds Escrow Sub-account) and the Transferred Investments Escrow Sub-account (the Transferred Investments Escrow Sub-account). The Agent shall deposit in the Escrow Account (i) for 1021.7500.2704.13:20
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| credit to the Lease Proceeds Escrow Sub-account, any Lease Proceeds Escrow Deposit made by the Company to the Agent pursuant to Section 3 . 1, hereof, and (ii) for credit to the Transferrc:d Investments Escrow Sub-account, the Transferred Investments Escro~ Deposit made by the Company to the Agent pursuant to Section 4.1 hereof. So long as any amounts remain in the Escrow Account, such amounts shall be consid-ered as, and shall be and remain, the property of the Company. The Agent shall invest or re-invest any amounts in the Escrow Account and make applications thereof as provided in Art'cle V hereof. The Escrow Account shall be funded by the deposits by the Company to the appropriate sub-accounts in the manner describ d herein.
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| SECTION 2.3. Statement of Purpose. The Company represents that the purpose of this Agreement and the creation and establishment of the Escrow Account is to pay or provide for the payment of the El Paso Obligations and certain short-term indebtedness of El Paso in accordance with Section 5.1(b) hereof.
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| ARTICLE III LEASE PROCEEDS DEPOSIT BY THE COMPANY SECTION 3.1. 'Lease Proceeds Escrow Deposit. The Company hereby represents that it has deposited with the Agent $ 163,000,000 for deposit by the Agent in the Lease Proceeds Escrow Sub-account.
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| ARTICLE IV TRANSFER AND DEPOSIT BY THE COMPANY OF EXISTING INVESTMENTS SECTION 4.1. Transferred Investments Escrow Deposit.
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| Subject to the terms and provisions of this Agreement, the Company hereby agrees that by February 1, 1988 it will cause to be deposited into the Transferred Investments Escrow Sub-Account by change of account reference to that of the Agent or assignment of all right, title and interest of the Company to the Agent (exclusive of any obligations or liabilities of the Company) as the case may be, of the following (collectively, the Transferred Investments Escrow Deposit):
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| (i) Account of El Paso Electric Co., Account No. 9-6191-03 01 at MBank Houston, P.O. Box 2629, Attn: Capital Markets Division, Houston, Texas; (ii) The limited partnership interest of the Company if in and to the,Weiss Qual ied Income Fund Limited 1021. 7500. 2704. 13: 20
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| Partnership I, obtained on November 13,, 1986 pursuant to the Neiss Qualified Income Fund Limited Partnership I Amended and Restated Agreement of Limited Partnership, dated as of September 9, 1986; (iii) Account of El Paso Electric, Ac .ount No. 530-97061 at Merrill Lynch, Pierce, Fenner & Smith Incorporated, One Liberty Plaza, 165 Broadway, New York, NY 10080; and (iv) Account of El Paso Electric Company, Account No.
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| 30 B Z0009 354 at Kidder, Peabody & Co., Incorporated, 20 Exchange Place, Hew York, NY 10005.
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| The Agent is hereby authorized by the Company to enter into any arrangement or agreement (including but not limited to, manage-ment agreements) as the Company may determine is necessary to evi-dence ownership of the foregoing investments by the Agent.
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| The Company represents that the aggregate "book value" as of the end of November, 1987 of the Transferred Investments Escrow Deposit was not less than 9135 million.
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| Company Notwithstanding the foregoing, fails to consummate any of the if:
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| transfers, or any reason the in whole or in part, to the Agent referred to in clauses (i) -..hrough (iv) of the first paragraph of this Section 4.1, such failure shall not consti-tute a breach of, or default under, this Agreement, so long as the Company shall have on deposit in the Transferre'd Investments Escrow Sub-Account with the Agent on February 1, 1988, moneys or securities having an aggregate "book value" as of the end of November, 1987 of not less than $ 135 million.
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| ARTICLE V INVESTMENTS AND PAYMENTS BY AGENT SECTION 5. 1. Payments by Agent to Company from Lease Proceeds Escrow Sub-Account. (a) In order to provide for the pay-ment. of the El Paso Obligation that is to be paid on or prior to January 31, 1988, and prior to the valuation of the money and securi-ties in the Escrow Account, upon the receipt by the of Agent (with request in copies to each Owner Participant) from the Company a writing for disbursement, the Agent shall pay to the party indicated in the written request of the Company in immediately available funds, out of the funds then on deposit in the Lease Proceeds Escrow Sub-account, an amount equal to the amount that is due and owing to The Bank of New York as a prepayment of the El Paso Obligation for which 1021.7500.2704.13:20
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| payment is due in January 1988. Such request by the Company to the Agent pursuant to this Section 5.1 shall specify (i) the applicable prepayment date and (ii) wire or transfer instructions.
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| (b) The Agent will prepare a market valuation of all moneys and securities on deposit in the Escrow Accoun'c in accordance with the requirements of Section 5.4 hereof within 10 calendar days fol-lowing receipt by the Agent of all monthly closing valuations for the month of January 1988. Upon completion of such valuation, the Agent shall promptly provide a certificate to the Company and each of the Owner Participants setting forth the value of such moneys and securities. To the extent that the amount of such market valuation exceeds $ 243, 100,000, upon receipt of such certificate of valuation from the Agent, the Company shall deliver a written request to the Agent (with copies to each Owner Participant), directing release of such excess to the Company for payment of indebtedness of the Company having a maturity of one year or less specified in such request, and upon receipt of such request the Agent shall release such excess to the Company. To the extent that the amount of such market valuation is less than $ 243, 100,000, the Company shall provide the Agent, within five business days after receipt of the certificate of valua-tion from the Agent, with money or Permitted Investments (with a market, value as of the date of such valuation) sufficient to cover t: he deficiency.
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| SECTION 5.2. Monthly Disbursement from both Sub-accounts.
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| Except as specifically provided in Section 5.1 hereof, as soon as practicable following each monthly valuation pursuant to Section 5.4 hereof of the moneys and securities on deposit in the Escrow Account,,
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| amounts on deposit in the Escrow Account shall be disbursed monthly in accordance with and in amounts as set forth in a written certifi-cate of the Company (with copies of such certificate delivered to each Owner Participant) specifying the applicable payment date, payee, sub-account and wire or transfer instructions: first, to the party named in such certificate of the amount as set forth therein in order to permit the payment of El Paso Obligations with a Payment Date as determined in accordance with Schedule III hereto within 45 days after the date as of which the Escrow Account is valued and then second to the Company all amounts on deposit in the Escrow Account in excess of the amount necessary to pay the principal amount of the remaining El Paso Obligations, determined by reference to Schedule III hereto and confirmed in the certificate of the Company requesting such disbursement.
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| Notwithstanding the foregoing the Company may direct the Agent to make a disbursement from the Escrow Account solely for the purposes of paying an El Paso Obligation if for any reason the valuation and disbursement, procedure heretofore described does not provide for timely and adequate payment of any such El Paso 1021. 7500. 2704. 13: 20
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| Obligation and such direction of the Company shall expressly so 0 state. The Agent shall be entitled to liquidate any investments held in the Escrow Account in order to provide for payment of the El Paso Obligations or any other payments in accordance herewith. The Agent shall have no liability for losses resulting from the liquidation of securities on deposit in the Escrow Account.
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| SECTION 5.3. Investments; Agreement as to Value of Clauses 6, 7 and 8 on December 31, 1988. (a) The Agent shall invest and reinvest (which shall include the application of (A) the proceeds of maturing investments and (B) the sale of investments) the moneys in the Escrow Account only in Permitted Investments and shall sell investments in the Escrow Account, as specifically identified in a written direction of the Company which shall, in the case of any such investment or reinvestment expressly state that each such investment is a Permitted Investment and further that such Permitted Investment is in compliance with the limitations set forth in the next sentence,,
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| it being understood that the Agent shall have no duty to monitor such compliance; provided, however, that such identif ication of the investment or reinvestment and certification's to compliance with the limitations set forth in the next sentence shall not be appli.-
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| cable to the nondiscretionary reinvestment feature of the investments described in clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof. Any such investments and reinvestments shall be subject to the following limitations:
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| (i) no investment or reinvestment shall be made in any of clauses 6, 7 and 8 contained in Schedule II hereto if as a result of such investment or reinvestment (a) at the date thereof, but no later than December 31, 1988, the total aggregate amount invested pursuant to clauses 6, 7 and 8 contained in Schedule II hereto would exceed. the lesser of (x) sixty percent (60%) of the market value of the amounts then on deposit in the Escrow Account and (y) the total so invested at any time immediately prior to such investment or reinvestment; provided, however, that for purposes of determining compliance with this subclause (y),
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| there shall be excluded from the total aggregate amount invested pursuant to clauses (6), (7') and (8) of Schedule II hereto any amounts attributable to the invest-ment and reinvestment of income, dividends and capital gains resulting from the nondiscretionary reinvestment fea-ture of any of the investments listed in clauses (ii),
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| (iii) and (iv) of the first paragraph of Section 4.1 on deposit in the Transferred Investment Escrow Sub-Account and (b) at the date thereof, but only after December 31, 1988, the total aggregate amount invested pursuant to such clauses would exceed twenty-five percent (25%) of the 1021. 7500. 2704 13: 20
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| market value of the amounts then on deposi" in the Escrow Account; (ii) no investment or if reinvestment in Permitted the result thereof would be to Investments shall be made cause any o f clauses 1, 3, 4, 5, 9 and 10 contained in Schedule II hereto to exceed twenty-five percent (25%) of the market value of the amounts on deposit in the Escrow Account; and (iii) the average life of any investment (other than investments described in clause 2 contained in Schedule II hereto) shall not exceed seven years.
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| (b) The Company agrees that the market value as of December 31, 1988 of investments in the Escrow Account (including the Transferred Investments Escrow Deposit) in clauses 6, 7 and 8 con-tained in Schedule represents II it that hereto will not exceed $ 45 million. The will attempt to undertake an orderly Company liquidation of the Transferred Investments Escrow Deposit so as to be in a position to comply with this Article V. The Company anticipates that, under current market conditions .and recognizing that sale of investments will be designed to protect the Company from incurring any losses due to such investments, reductions, within the bands and for the quarters of calendar year 1988 indicated below, of the Transferred Investments Escrow Deposit would b achievable:
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| 1988 Reduction uarter 1st 20 to 45 2nd 20 to 30 3rd 30 to 20 4th 38 to 13 Total for 1988 108 SECTION 5. 4. Valuation of Investments; Payment of Deficiency. The Agent shall cause a monthly fair market valuation of the Escrow Account to be undertaken. In undertaking its obligation to make a monthly valuation of the Escrow Account, (i) the Agent shall be entitled to assume that the monthly market valuations fur-nished to the Agent of the investments held in the Transferred Investments Escrow Sub-Account shall constitute the market value of any such investments and (ii) to the extent the Agent is unable to value any Permitted Investments in accordance with its customary practice as a corporate trustee, the Company hereby agrees to promptly provide the Agent with, and the Agent shall be entitled to of any such investment'.
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| rely upon, an independent market valuationmarket'aluations The Company agrees to cause the monthly of the 1021.7500.2704.13:20
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| ~O investments constituting the Transferred Investments Escrow Sub-Account to be sent directly to the Agent. Copies of all such valuations by the Agent shall be sent to the Owner Participants and the Company.
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| The Agent shall undertake such valuation of the Escrow Account monthly, commencing in February, 1988, such valuation to be as of the end of the immediately preceding month and in no event shall such valuation be completed later than ten calendar days after receipt by the Agent of the monthly valuation report for all such Permitted Investments on deposit in the Transferred Investments Escrow Subaccount (including any monthly valuation report provided pursuant, to the second sentence of the first paragraph of Section 5.4 hereof) . In connection with its valuation of the Escrow Account, the Agent shall deduct from the valuation of the investments on deposit in the Transferred Investments Escrow Sub-Account that amount which represents the aggregate value attributable (determined on a cumula-tive basis, i.e., including the month of valuation and preceding months) to reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment feature of any of the investments listed in clauses (ii), (iii) and (iv) of the first paragraph of Section 4. 1 hereof. For purposes of the monthly valua-tion only, any proceeds derived from a sale or upon maturity (other than pursuant to the nondiscretionary reinvestment feature of any of the investments listed in clauses (ii), (ii;i) and (iv) of the first paragraph of Section 4.1 hereof) of any investment made pursuant to clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof shall be allocated to reducing the aggregate value, if any, of the investments in the Transferred Investments Escrow Sub-Account attributable to reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment feature of any such investment, which aggregate value was deducted >rom the valuation of investments on deposit in the Transferred Inve.-tments Escrow Sub-Account pursuant to the preceding sentence (it heing understood that an amount equal to any such reduction, except to the extent that such amount was otherwise withdrawn from the Escrow Account pursuant to Section 5.2 hereof, shall be included in the Transferred Investments Escrow Sub-Account for .purposes of the monthly valuation thereof).
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| The Agent shall derive the amount attributable,to each month repre-senting such reinvestment from the monthly market valuations fur-nished to the Agent with respect to such investments and amount cannot be derived from such valuations, the amount if such attribut-able to such month and the aggregate to be so deducted shall be as directed in writing by the Company to the Agent, copies of which shall be furnished to the Owner Participants, together with the cal-culations and data upon which such direction is based, all as certi-fied by the Chief Financial Officer of the Company. To the extent the amount of such valuation of the Escrow Account, as adjusted for the amount, if any, to be deducted from such monthly valuation as 1021.7500.2704.13:20
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| provided in this paragraph, is less than the principal amount of the remaining El Paso Obligations which are schedu'ed to come due more than forty-five (45) days subsequent to such valuation, the Company shall provide the Agent within five business days after receipt from the .Agent of such monthly valuation with money or Permitted Investments (with a market value as of the date of such valuation) sufficient to cover the deficiency. The Agent shall notify the Owner Participants in writing of the date and receipt by the Agent of any money or Permitted Investments provided to meet such deficiency.
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| ARTICLE'I CONCERNING THE AGENT A
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| SECTION 6.1. Duties of Agent. The Agent shall have no duties or responsibilities other than those expressly set forth in this Agreement and shall have no duty to enforce any obligation of any person to make any payment or delivery, or to direct or cause any payment or delivery to be made, or to enforce any obligation of any person to perform any other act or to perform any calculations except as herein expressly set forth. In addition, the Agent shall have. no duty to make any payment under this Agreement from its own funds.
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| SECTION 6.2. Liability. The Agent shall not be liable for any action taken or omitted by it, or any action suffered by it to be taken .or omitted, in good faith,and in the exercise of its own best judgment, excepting only its own willful misconduct or gross negli-gence, and may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion and advice of counsel (including counsel selected by the Agent), statement, instru-ment, report or other instrument or document (not only as to its due execution and the validity and effectiveness thereof, but also as to the truth and acceptability of any information therein contained) which is believed by the Agent to be genuine. and to be signed (or in the case of oral communication, given) by the proper person or persons. The Agent shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement or any of the terms hereof, unless expressly provided for herein and delivered as provided in this Agreement.
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| SECTION 6.3. Delivery of Documents and Further Acts.
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| From time to time on and after the date hereof, the Company shall deliver or cause to be delivered to the Agent such further documents and instruments and shall do and cause to be done such further acts as the Agent may reasonably request (it being understood that the Agent shall have no obligation to make any such request) to carry out more effectively the provisions and purposes of this Agreement, to 1021.7500.2704.13:20
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| evidence compliance herewith or to assure itself that it is protected in acting hereunder.
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| SECTION 6.4. Legal Proceedings. The F gent shall not be required to defend any legal proceedings which may be instituted against it in respect of the subject matter of this Agreement unless requested to do so by the Company and indemnifiec. to its satisfaction against the cost and expenses of such defense (.'.ncluding counsel and investigatory fees) by the Company and shall not be required to institute legal proceedings of any kind.
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| SECTION 6.5. Resignation; Appointment of Successor. The Agent (or any successor escrow and paying agent) may resign at any time and be discharged from its duties as escrow and paying agent under this Agreement by giving to the Company and the Owner Participants at least 30 days'otice thereof, such resignation to be effective on the date of appointment of a successor escrow and paying agent as hereinafter provided. As soon as practicable after any such resignation, the Agent shall turn over to a successor escrow and paying agent appointed by the Company all monies and property held hereunder upon presentation of the document appointing such successor escrow and paying agent and its acceptance of such appointment. If no successor escrow and paying agent is so appointed within the sixty-day period following such notice of resignation, the Agent shall deposit all monies and funds held hereunder with the Supreme Court of the State of New York for the County of New York (together with a petition to said Court for the appointment of a successor to act until such time, if any, as a successor shall have been appointed as hereinbefore provided). Upon turning over to the successor escrow and paying agent or to the Supreme Court of the State of New York as aforesaid, all monies and -property held hereunder, the predecessor escrow and paying agent shall be released of any further responsibil-ity hereunder. Any successor escrow and paying agent shall be a bank or trust company organized under the laws of the United States or any jurisdiction thereof, having a combined capita. and surplus of at least $ 250, 000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Agent hereunder upon reasonable or customary terms.
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| SECTION 6.6. Indemnification. The Company agrees that the Agent shall not be liable for any matter or thing arising out of the performance by the Agent of its obligations under this Agreement, except as provided in Section 6.2 hereof. The Company agrees to.
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| indemnify the Agent, and to hold the Agent harmless, from and against any and all liability, loss, damage or expense (including reasonable attorneys'ees and actual out-of-pocket expen'-es) which theaction Agent may or might-incur by reason of this Agreement, or for any taken by the Agent hereunder, or by reason or in defense of any and 1021.7500.2704.13:20
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| all claims and demands whatsoever which may be asserted against the Agent arising out of this Agreement.
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| ARTICLE VII MISCELLANEOUS SECTION 7.1. Payments. Payments to or upon the direction of the Company by the Agent pursuant to Article V hereof shall be made in accordance with such written instructions as the Company may provide to the Agent (with copies to the Owner Participants) from time to time for such purposes. Whenever any payment to be made pur-suant hereto shall be required to be made on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day.
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| SECTION 7.2. Termination. This Agreement shall terminate upon the earliest to occur of (i) receipt by tne Agent of written notice from each Owner Participant that as to such Owner Participant this Agreement is terminated, (ii) disbursement by the Agent of all of the payments to be made by the Agent under Article V hereof with respect to the El Paso Obligations and (iii) receipt by the Agent of joint notice from the Company and each of the Owner Participants with respect to such termination. Upon the termination of this Agreement as aforesaid, any securities and moneys on deposit in the Escrow Account shall be applied at the direction of the Company.
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| SECTION 7.3.,Amendments, Etc., No amendment to this Agreement shall be made or be effective without the written consent of the Owner Participants. No amendment, modification, termination or waiver of any provision of this Agreement shall in any event be effective unless the. same shall be in writing and signed by the par-ties hereto, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment of any other agreement or instrument shall affect the Agent or its duties hereunder. No notice to or demand on any party hereto in any case shall entitle such party to any other or further notice or demand in similar or other circumstances unless herein otherwise provided.
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| SECTION 7.4. Addresses for Notices, Etc. Except as oth-erwise expressly provided herein, all notices and other communica-tions provided for hereunder shall be in writing and mailed (postage prepaid), hand delivered or sent by overnight courier, if to the Company, c/o William J. Johnson at its address at 303 North Oregon Street, P.O. Box 982, El Paso, Texas 79960, with a copy similarly del.ivered to Kemp, Smith, Duncan & Hammond, 2000 MBank Plaza, P.O. Drawer 2800, El Paso, Texas 79999, Attention: Dane George, 1021.7500.2704.13:20
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| Esq., and York, New if to the Agent, at its address at 55 Water Street, New York 10041, Attention: Corporate Trustee Administration, with a copy similarly delivered to Willkie Farr & Gallagher, 153 East 53rd Street, New York, New York 10022, Attention: Brian O'rien, Esq., and, if to the Company or the Agent, with copies to each of the Owner Participants at its address specified in Schedule I hereto, with a copy similarly delivered to Cravath, Swaine & Moore, One Chase Manhattan Plaza, New York, N.Y. 10005, Attention: Richard M. Allen, Esq., or, as to any of the foregoing, at such other address as shall be designated by such person in a written notice to the others. All such written notices and communications shall be effective when received at the address specified as aforesaid.
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| SECTION 7.5. Successors and Assigns. All of the provi-sions of this Agreement shall be binding upon and inure to the bene-fit of the parties hereto and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement other than to a per-mitted transferee under the Participation Agreements. Upon such assignment or transfer, the Company shall notify the Agent, whereupon the Agent .shall recognize such assignment or transfer.
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| SECTION 7.6. Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable in the State of New York or in any jurisdiction in the United States which shall be applicable to this Agreement, shall, as to the State of New York or 0 such jurisdiction in the United States, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceabil-ity of such provision in any other jurisdiction.
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| SECTION 7.7. Headings, etc. The heail ings o f various Articles and Sections of this Agreement are for convenience of refer-ence only and shall not define or limit any of the terms and provi-sions hereof.
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| SECTION 7.8. Governing Law. This Agreement shall be gov-erned by, and construed in accordance with, the law of the State of New York.
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| SECTION 7.9. Counterpart Execution. Th i s Agreement and any amendment to this Agreement may be signed in any number of coun-terparts, each of which shall be an original, and all of which taken together shall constitute a single instrument, with the same effect as if the signatures thereto and 'hereto were upon the same instrument.
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| 1021.7500.2704.13:20
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| \
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| 0 II 4l
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| IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their, officers thereunto duly autho-rized as of the day and year first above written.
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| CHEMICAL BANK By:
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| Senior Trust Officer EL 'PASO ELECTRIC COMPANY By:
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| Vice President 1021.7500.2704.13:20
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| ~O 0
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| SCHEDULE I Commercial Federal Investment Corporation Jeff Bainbridge Commercial Federal Investment Corporation 1300 Commercial Federal Tower 2120 South 72nd Street Omaha, Nebraska 68124 Chrysler Financial Corporation Chrysler Financial Corporation Greenwich Office Park I Greenwich, Connecticut 06836 Leasing and Investment Services Attention: Mike Abandond Palantine Hills Leasing, Inc.
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| Palantine Hills Leasing, Inc.
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| 1415 S. Roselle Road Palantine, IL 60067 Attention: President, with copies to Household Commercial Financial Services Attention: Lee Wyatt and Julia Sarron, Esq.
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| 2700 Sanders Road Prospect Heights, IL 60070 1021.7500.2704.13:20
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| 4l II
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| UCU Properties, Inc.
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| (Formerly, Energy Investments, Inc.)
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| Donald Claar Suite 2000 Commercial Tower Kansas City, Missouri 64105 Alexander Hamilton Life Insurance Company of America Richard Egan, General, Counsel Alexander Hamilton Life Insurance Company of America 33045 Hamilton Boulevard Farmington Hills, Michigan Burnham Leasing Corporation Burnham Leasing Corporation 55 Broad Street New York, New York Attention: Dianne Rudo 1021. 7500. 2704. 13: 20
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| 0 0
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| SCHEDULE II 1 ~ Certificates of deposit maturing within 180 days and issued by any Federally insured commercial bank; provided, however, that if the face amount of any such Certificate of Deposit shall be
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| $ 1,000,000 or more, the issuing bank shall have a capital and surplus exceeding $ 500,000,000 and a senior debt rating of not Below the Level of Investment Grade; 2 ~ Readily marketable obligations issued or guaranteed by the United States Government or issued by the Government, National Mortgage Association, the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation; 0
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| 3 ~ Repurchase obligations maturing within 30 .days with respect to obligations of the type described in Clause 2 above issued by any Federally insured commercial bank; provided, however, that if. the face amount of such repurchase obligation is $ 10,000,000 or more, the issuing bank shall have a capital and surplus exceeding $ 500,000,000 and a senior debt rating of not Below the Level of Investment Grade; 4 ~ Repurchase obligations maturing within 30 days with respect to obligations of the type described in Claus 2 above issued by any nationally recognized dealer which reports to the Market Reports Division of the Federal Reserve Ba.ak of New York;
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| : 5. Investments in readily marketable money market funds managed by a nationally recognized fund manager, the assets of which fund (or the issuers thereof) are as described in Clauses 1, 2, 3, 4, or 9 herein;
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| : 6. Investments in readily marketable bonds, which are not, Below the Level of Investment Grade, or bond funds managed by a nationally recognized fund manager, the assets of wh'ch (or the issuers thereof) are not Below the Level of Investment Grade; 7 4 Investments in stock or stock funds managed by a nationally rec-ognized fund manager;
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| : 8. Mortgage backed securities;
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| : 9. Commercial paper maturing within 180 days and having a rating of P-1 or better by Moody's Investors Service or A-1 or better by Standard & Poor's Corporation; or
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| : 10. Investments in, municipal obligations, the issuers of which are not rated Below the Level of Investment Grade, or the obligations .of which are backed by a Letter of Credit from a commercial bank as described in Clause 1 above.
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| 1021.7500.2704.13:20
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| c
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| 'J if' 0
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| ".Below, the Level of Investment Grade" .means (i) in the case of Moody's Investors Service, a rating of less than Baa3,or the current equivalent, (ii) in the case of 'Standard & Poors Corporation, a rating of less than BBB- or current equivalent end (iii) in the case of Duff and Phelps, a rating. greater than ten or the current equivalent.
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| 1021.7500.2704.13:20
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| II 0
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| SCHEDULE III EL PASO OB IGATIO S Principal Payment Amount Date Description
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| $ 25, 000, 000 Jan. 31, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 50,000,000 June 30, 1988 Second mortgage bonds-The Bank of New York due June 1988 6,100,000 July 20, 1988 4.254 First mortgage bonds due July 1988
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| $ 22,000,000 May 20, 1989 12.75% First mortgage bonds due May 1989
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| $ 25,000,000 Aug. 15, 1989 14.54 First, mortgage bonds due August 1989
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| $ 50,000,000 Nov. 20, 1989 144 First mortgage bonds due
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| .November 1989
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| $ 20,000,000 Dec. 1, 1990 Long-term notes unsecured-The Bank of America
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| $ 70,000,000 Mar. 1, 1991 Second mortgage bonds-The Bank of America 1021.7500.2704.13:20
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| iO Exhibit B AMENDMENT No. 2, dated as of December 31, 1987, to Facility Lease dated as of August 1, 1986, between THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee ("Lessor" ) under a Trust Agreement, dated as of August 1, 1986 with PALATINE HILLS LEASING, INC., and EL PASO ELECTRIC COMPANY, as Lessee (" Lessee" ).
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| The parties hereto have previously entered into the Facility Lease (as heretofore amended, modified or supplemented, the "Facility Lease" ) providing for the lease by Lessor to Lessee of the Undivided Interest and the Real Property Interest. The parties now desire to make certain amendments to the Facility Lease.
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| NOW, THEREFORE, in consideration of the premises and'other good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows:
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| SECTION 1. Definitions. For purposes hereof, capital-ized terms used herein and not defined herein shall have the meanings ascribed thereto in Appendix A to the Facility Lease.
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| SECTION 2. Amendments. (a) Section 3(b). Section 3(b) is hereby amended by inserting at the end of a clause (iii), in lieu
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| ~
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| of ".", "; and" and by inserting thereafter and before the next to
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| ~
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| ~
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| ~
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| last sentence of Section 3(c) a new clause (iv) reading as follows:
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| (iv) in the event that. the Lessee shall fail to
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| ~ ~
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| provide on or before April 30, 1988, a letter of credit which complies with the terms of the Agreement dated as o f December 31, 1987 (the "Commitment Agreement" ), among the Lessee, the Lessor and the Owner Participant, a copy of which is annexed hereto, on each Basic Rent Payment Date, commencing October 1, 1988 and ending on the Basic Rent Payment Date next following the earlier to occur of (A) the providing by the Lessee of such letter of credit and (B) the date as of which such letter of credit would have expired had it been in effect as required by the terms of the Commitment Agreement, an amount equal to .354 of Facility Cost multiplied by a fraction the numerator of which is the number of days from and including the preceding Basic Rent Payment Date (or, in the case of the Basic Rent Payment Date occurring on October 1, 1988, from and including April 30, 1988) to but excluding such Basic Rent Payment, Date '(or, if earli-er, to the date on which such letter of credit is pro-vided or the date such letter of credit would have so expired), and the denominator of which .is the number of days from and including the preced'ing Basic Rent 1021. 7500. 2754. 21: 3
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| 0 0
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| Payment Date to but excluding such Basic .Rent Payment Date.
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| (b) Section 7. Section 7 of the Facility Lease is hereby amended by inserting <<(a). ~Lie s.<< prior to the existing paragraph and', inserting the following at the end thereof:
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| (b) Retirement of Debt. Unless the. Owner Participant shall otherwise consent, on or before each date set forth in Schedule 8 hereto, the'essee shall retire, legally defease or deposit with the lender or its trustee funds sufficient to retire the principal amount of the Debt set forth opposite the reference to such date on such Schedule.
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| (c) Merger, .Sale, etc. Without the consent of the Owner Participant,.the Lessee shall not, and shall not permit any of its subsidiaries to, convey, transfer or lease to any Person any asset except for fair value.
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| Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, (1) consolidate with any Person, (2) merge with or into any Person or (3) except for '(i) payments, in accordance with normal dividend policy of the Lessee, of cash dividends to holders of common stock and preferred stock, (ii) exchanges of fixed assets for other fixed assets whose fair value is equal to or greater than the fair value of the fixed assets exchanged or (iii) conveyances, transfers or leases of assets for cash where such cash is to be recorded by the Lessee, convey, transfer, lease or dividend to any Person, in any single transaction or series of related transac-tions, any asset or assets if the book, value of such asset or assets exceeds 54 of its total assets as shown on the most recent consolidated balance sheet of the Lessee deliv-ered to the Owner Participant pursuant to Section, 10(b) (1) (i) (A) of the Participation Agreement; unless immediately a'fter giving effect to such transaction:
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| (A) the Person who is the "Lessee" under the Facility Lease immediately following such consolidation, merger, conveyance, transfer, lease or dividend (the "Surviving Lessee" ) shall be a corporation which (i) is organized under the laws of the United States of America, a state thereof or the District of Columbia, (ii) is a "public utility'nder applicable law, (iii) is an ANPP Participant under the ANPP 'Participation Agreement with respect to Unit 2 (including, the 1021 7500 2754 21:
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| ~ ~ ~ 3
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| 0 0
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| Undivided Interest), (iv) shall have assumed each covenant and condition of the Lessee under the ANPP Participation Agreement and each other ANPP Project Agreement and (v) holds a valid and subsisting license from the NRC to possess Unit 2 (including the Undivided Interest);
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| (B) the Surviving Lessee, if other than the Lessee
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| ,immediately prior to such transaction, shall execute and deliver to the Owner Participant an agreement, in form and substance reasonably satisfactory to the Owner Participant, containing the assumption by the Surviving Lessee of each covenant and condition of this Facility Lease, each other Transaction Document and each Financing Document to which the Lessee imme-diately prior to such transaction was a party immedi-ately preceding such transaction; (C) no Default (other than a failure to deliver docu-ments and other .information specified in Section 10(b) (1) (vi) of the Participation ,.Agreement) and no Event of Default shall have occurred and be continuing, no Event of Loss shall have occurred and no Deemed Loss Event shall have been declared; (D) the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) after giving effect to such transaction, (1) shall bePoor's rated at least "investment grade" by Standard &
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| Corporation and Moody's Investors Service, Inc. and-(2) shall have an investment rat'ing by Standard &
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| Poor's Corporation and Moody's Investors Service, Inc. not less than one "smallest notch" below the rating assigned to the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) immediately prior to such transaction (or, if neither of such rating organizations shall rate the Bonds (or, if applicable, the preferred stock of the Surviving Lessee) at the time, by any nationally rec-ognized rating organization in the United States of America);
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| (E) the Surviving Lessee shall .have a Net Worth equal to or greater than the Net Worth of the Lessee immedi-ately prior to such transactions and equal to or greater than $ 500,000,000; (F) the Surviving Lessee shall have delivered to the Owner Participant and the Indenture Trustee an 1021.7500 '754.21:3
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| ~O 0
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| Officers Certificate and an opinion, reasonably satisfactory to the Owner Participant, of counsel to the Surviving Lessee, each stating that (1) such transaction complies with this subclause (c) and (2) all conditions precedent to the consummation of such transaction have been satisfied and any Governmental Action required in connection with. such transaction has been obtained, given or accomplished; (G) the Surviving Lessee shall have delivered to the Owner Participant an opinion, reasonably satisfactory to the Owner Participant, of independent counseL to the Surviving Lessee stating that such transaction would not result in a loss of any of the tax benefits described in Section 13 (c) (1) of the Participation Agreement; (H) such transaction is otherwise permitted by and in compliance with the ANPP Participation. Agreement; and (I) the New Coverage Ratio of the Surviving Lessee shall be at least 1.6 to 1.
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| Upon the consummation of such transaction the Surviving Lessee, if other than the Lessee, shall succeed to, and be substi-tuted for, and may exercise every right and power of, the Lessee immediately prior. to such transaction under this Lease, each other Transaction Document and each Financing Document to which the Lessee immediately prior to such transaction was a party immediately prior to such transaction, with the same effect as i.f the Surviving Lessee had been named herein and therein.
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| (d) Incurrence of Debt. Without the consent of the Owner .Participant, the'Lessee shall not, and shall not permit any of its subsidiaries (whether consolidated or unconsolidated) to, issue, assume or become liable in respect of (A) any Debt maturing more than one year after the date of such issuance, assumption or 1'iability (including current maturities of Debt with anthereafter, original maturity of more than one year) if, izamediately (i) the total amount of all Debt of the Lessee and its sub-sidiaries (whether consolidated or unconsolidated) maturing more than one year after the date of such issuance, assump-tion or becoming liable (reduced by Cash Available for Investment) shall exceed 704 (or, at any time after January 1, 1992 when there is not in effect a letter of credit com-plying in all respects with the Commitment Agreement, 65%)
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| of New Consolidated Capitalization, in each case as shown on a pro forma consolidated balance sheet on and as of the 1021. 7500. 2754. 21: 3
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| 0 i
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| 0
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| date of such issuance, assumption or becoming liable, or (ii) the New Coverage Ratio of the Lessee would be less than 1.6 to 1 or (B) any Debt maturing one year, or less after the date of such issuance, assumption or becoming liable (excluding current maturities of Debt with an origi-nal maturity of more than one year) if, immediately there-after, the total amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) maturing one year or less after the date of such issuance, assumption or becoming liable shall exceed 12.54 of New Consolidated Capitalization, in each case as shown on a pro forma consolidated balance sheet on and.as of the date of such issuance, assumption or becoming liable. For purposes of the foregoing clause (A), there shal'l be excluded any Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow and any refunding of the debt issued on December 31, 1987 by the lessors in the sale and leaseback transactions relating to Unit 3 at PVNGS shall not constitute the Lessee issuing, assuming, or becoming liable in respect of any Debt within the meaning of this subclause (d).
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| (e) Escrow Agreement. The Lessee shall deposit with Chemical Bank as escrow agent (the "Agent" ) any amount required to be deposited under the Escrow Agreement dated as of December 31, 1987 between the Lessee and the Agent within 5 Business Days after notice from 'the Owner Participant and shall otherwise comply with its other obli-gations under such Agreement within 15 days after notice from the Owner Participant.
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| (f) Definitions. For purposes of this Section 7, the terms New Consolidated Capitalization and New Coverage Ratio shall be defined as follows:
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| (A) "New Coverage Ratio" shall, mean the ratio of (x) the sum of (a) consolidated net income of the Lessee for the twelve-month period ending on a date no later than 135 days prior to the date as of which New Coverage Ratio is being determined plus (or minus) (b) all'xtraordinary items deducted (or added)thisindefini-deter-mining said net income (for purposes of tion of New Coverage Ratio, any charge against income resulting from a write-off of utility plant pursuant to (i) an order of any governmental authority having jurisdiction or (ii) a provisionbe for an estimated deemed to be an regulatory disallowance shall extraordinary item deducted in determining said net 1021. 7500. 2754. 21: 3
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| : ill, income). plus (or minus) (c) all income taxes deducted (or tax credits added) in determining said net-income minus (d) for all or any portion of such period ending on or prior to December 31, 1990, 504 of "allowance for funds used during construction" (net of deferred taxes) .as such item is referred to in the consolidated income statement of the Lessee and its subsidiaries) and, for all or any portion of such period ending after December 31, 1990, 100~ of such item plus (e) the sum of .all interest and lease, payments paid by the Lessee and its subsidiaries (whether consolidated or unconsolidated) during such twelve-month period to (y) total interest and lease payments that will be payable by the Lessee and its subsidiaries (whether consoli-dated or unconsolidated) during the twelve-month period following the date as of which New Coverage Ratio is being determined. There shall be excluded from interest and lease payments included under clauses (x) and (y) above (i) leas'e payments to the Rio Grande Resources Trust, (ii) lease payments under any operating lease of computers,. office equipment or the. like, the original term of which (including options to renew) is less than five years and (iii) interest on Debt maturing one year or less from the date of incurrence thereof. 'There shall be excluded from interest and lease payments included under clause (y) above interest on Debt which has been .legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow.
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| (B) "New Consolidated Capitalization" shal 1 mean the total of consolidated capital and surplus of the
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| -Lessee plus the principal amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) which matures more than one year'fter the date as of which New Consolidated Capitalization is being determined.
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| (c) Schedule 8. Schedule 8 hereto is hereby added as Schedule 8 to the Facility Lease.
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| 1021. 7500. 2754. 21: 3
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| ~O SECTION 3. Miscellaneous (a) Effective Date of Amendments. The amendments set forth in Section 2 hereof shall be and become effective upon the execution hereof by the parties hereto.
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| (b) Counterpart Execution.-This Amendment No. 2 executed in any number of counterparts and by each of may'e the parties hereto on separate counterparts; all such coun-terparts shall together constitute but one and the same instrument.
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| (c) Governing Law. This Amendment No. 2 has been negotiated and delivered in the State of New York and shall be governed by and be construed in accordance with the laws of the State of New York, accept to the actent that germx-ant to the law of the State of Arizona such law is mandato-rily applicable hereto.
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| (d) Disclosure. Pursuant to Arizona Revised Statutes Section 33-404, the beneficiary of the Trust Agreement is Palatine Hills Leasing, Inc., a corporation. The address of the beneficiary is 1415 S. Roselle Rd., Palatine, IL 60067, Attention: President. A copy of the Trust Agreement is available for inspection at the offices of the Owner Trustee at 100 Federal Street, Boston, Massachusetts 02110, Attention of Corporate, Trust Division.
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| 1021 7500. 2754 21:
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| ~ ~ 3
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| ~O 0
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| IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment No. 2 to be duly executed in New York, New York on December 31, 1987.
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| THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity, but solely. as Owner Trustee under a Trust Agreement, dated as of August 1, 1986 with Palatine Hills Leasing, Inc.,
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| By Senior Manager EL PASO- ELECTRIC COMPANY, By ice President
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| ~O 0
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| STATE OF TEXAS SS ~
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| COUNTY OF, EL PASO The foregoing instrument was acknowledged before me this 6th day of January, 1988 by William J. Johnson, a Vice President of EL PASO ELECTRIC COMPANY, a Texas corporation, on behalf of the'orporation.
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| N ary Public
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| COMMONWEALTH OF MASSACHUSETTS )
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| ) SS ~ ~
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| COUNTY OF SUFFOLK )
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| The foregoing instrument was acknowledged before me this day of January, 1988, by Mark Nelson; a Senior Manager of THE FIRST NATIONAL BANK OF BOSTON, a national banking association, on behalf of the banking association as trustee under that certain Trust Agreement dated as o f August 1, 1986 with Burnham Leasing Corporation.
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| Notary Public
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| <<10>>
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| 1021.7500.2754.21:3
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| ~O 0
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| II
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| SCHEDULE 8 SO OBL GAT ONS Principal Payment Amount Date Description
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| $ 60 i 000I 000 Jan. 31 1988 g
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| 16.204 First mortgage bonds due 2012
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| $ 25,000,000 Jan. 31, 1988 Second mortgage bonds-The Bank of New York due June 1988
| |
| $ 50,000,000 June 30, 1988 Second mortgage bonds-The Bank of New York due June -1988
| |
| $ 6,100,000 July 20, 1988 4.254 First mortgage- bonds due July 1988
| |
| $ 22,000,000 May 20, 1989 12".754 First mortgage bonds due May 1989
| |
| $ 25 f 000 I 000 Aug. 15, 1989 14.54 First mortgage bonds due August 1989
| |
| $ 50,000,000 Nov. 20, 1989 144 First mortgage bonds due November 1989
| |
| $ 20 I 000 I 000 Dec. 1, 1990 Long-term notes unsecured-The Bank of America
| |
| $ 70,000,000 Mar. 1, 1991 Second mortgage bonds-The Bank of America 1021. 7500. 2754. 21: 3
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| O.
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| 0
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| ~ ~
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| AMENDMENT No. 2, dated as of December 31, 1987, to Facility Lease dated as of August 1, 1986, between THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee ("Lessor" ) under a Trust Agreement, dated as of August 1, 1986 with CHRYSLER FINANCIAL CORPORATION, and EL PASO ELECTRIC COMPANY, as Lessee (" Lessee" ).
| |
| The parties hereto have previously entered into the Facility Lease (as heretofore amended, modified or supplemented, the "Facilxty Lease" ) providing for the lease by Lessor to Lessee of the Undivided Interest and the Real Property Interest. The parties now desire to make certain amendments to the Facility Lease.
| |
| NOW, THEREFORE, in consideration of the premises and other good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows:
| |
| SECTION 1. Definitions. For purposes hereof, capital-ized terms used herein and not defined herein shall have the meanings ascribed thereto in Appendix A to the Facility Lease.
| |
| SECTION 2. Amendments. (a) Section 3(b). Section 3(b) is hereby amended by inserting at the end of a clause (iii), in lieu of ".", "; and" and by inserting thereafter and before the next to last sentence of Section 3(c) a new clause (iv) reading as follows:
| |
| (iv) in the event that the Lessee shall fail to provide on or before April 30, 1988, a letter of credit which complies with the terms of the Agreement dated as of December 3 1, 1987 (the "Commitment Agreement" ), among the Lessee, the Lessor and the Owner Participant, a copy of which is annexed hereto, on each Basic Rent Payment Date, commencing October 1, 1988 and ending on the Basic Rent Payment Date next following the earlier to occur of (A) the providing by the Lessee of such letter of credit and (B) the date as of which such letter of credit would have expired had it been in effect as required by the terms of the Commitment Agreement, an amount equal to .354 of Facility Cost multiplied by a fraction the numerator of which is the number of days from and including the preceding Basic Rent Payment Date (or, in the case of the Basic Rent Payment Date occurring on October 1, 1988, from and including April 30, 1988) to but excluding such Basic Rent Payment Date (or, if earli-er, to the date on which such letter of credit is pro-vided or the date such letter of credit would have so expired), and the denominator of which is the number of days from and including the preceding Basic Rent 1021.7500.2754.22:4
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| ~ ~ ~
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| I ilk
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| Payment Date to but excluding such Basic Rent Payment Date.
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| (b) Section 7. Section 7 of the Facility Lease is hereby amended by inserting "(a) Liens." prior to the existing paragraph and inserting the following at the end thereof:
| |
| (b) Retirement of Debt. Unless the Owner Participant shall otherwise consent, on or before each date set forth in Schedule 8 hereto, the Lessee shall retire, legally defease or deposit with the lender or its trustee funds sufficient to retire the principal amount of the Debt set forth opposite the reference to such date on such Schedule.
| |
| (c) Merger, Sale, etc. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, convey, transfer or lease to any Person any asset except for fair value.
| |
| Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, ereded (1) consolidate with any Person, (2) merge with or into any Person or (3) except for (i) payments, in accordance with normal dividend policy of the Lessee, of cash dividends to holders of common stock and preferred stock, (i'i) exchanges of fixed assets for other fixed assets whose fair value is equal to or greater than the fair value of the fixed assets exchanged or (iii) conveyances, transfers or leases of assets for cash where such cash is to be recorded by the Lessee, convey, transfer, lease or dividend to any Person,,
| |
| in any single transaction or series of related transac-tions, any asset or assets if the book value of such asset or assets exceeds 54 of its total assets as shown on the most recent consolidated balance sheet of the Lessee deliv-to t'he Own e r Part ic ipant pursuant to Section 10 (b) (1) (i) (A) of the Participation Agreement; unless immediately after giving effect to such transaction:
| |
| (A) the Person who is the "Lessee" under the Facility Lease immediately following such consolidation, merger, conveyance, transfer, lease or dividend (the "Surviving Lessee" ) shall be a corporation which (i) is organized under the laws of the United States of America, a state thereof or the District of Columbia, (ii) is a "public utility" under applicable law, (iii) is an ANPP Participant under the ANPP Participation Agreement with respect to Unit 2 (including .the 1021.7500.2754.22:4
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| ~ ~ ~
| |
| | |
| ~ ~
| |
| ~
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| y
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| | |
| Undivided Interest), (iv) shall have assumed each covenant and condition of the Lessee under the ANPP Participation Agreement and each other ANPP Project Agreement and (v) holds a valid and subsisting license from the NRC to possess Unit 2 (including the Undivided Interest);
| |
| (B) the Surviving Lessee, if other than the Lessee immediately prior to such transaction, shall execute and deliver to the Owner Participant an agreement, in form and substance reasonably satisfactory to the Owner Participant,. containing the assumption by the Surviving Lessee of each covenant and condition of this .Facility Lease, each other Transaction Document and each Financing Document to which the Lessee imme-diately prior to such transaction was a party immedi-ately preceding such transaction; (C) no Default (other than a failure to deliver docu-ments and other information specif ied in Section 10(b) (1) (vi) of the Participation Agreement) and no Event of Default shall have occurred and be continuing, no Event of L'oss shall have occurred and no Deemed Loss Event shall have been declared; (D) the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) after giving effect to such transaction, (1) shall be rated at least "investment grade" by Standard & Poor's Corporation and Moody's Investors Service, Inc. and (2) shall have an investment rating by Standard &
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| Poor's Corporation and Moody's Investors Service, Inc. not less than one "smallest notch" below the rating assigned to the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) immediately prior to such transaction (or, if neither of such rating organizations shall rate the Bonds (or., if applicable, the preferred stock of the Surviving Lessee) at the time, by any nationally rec-ognized rating organization in the United States of America);
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| (E) the Surviving Lessee shall have a Net Worth equal to or greater than the Net Worth of the Lessee immedi-ately prior to such transactions and equal to or greater than $ 500,000,000; (F) the Surviving Lessee shall have delivered to the Owner Participant and the Indenture Trustee an 1021.7500.2754.22:4
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| Officers'ertificate and an opinion, reasonably satisfactory to the Owner Participant, of counsel to the Surviving Lessee, each stating that (1) such transaction complies with this subclause (c) and (2) all conditions precedent to the consummation of such transaction have been satisfied and any Governmental Action required in connection with 'such transaction has been obtained, given or accomplished; (G) the Surviving Lessee shall have delivered to the Owner Participant an opinion, reasonably satisfactory to the Owner Participant, of independent counseL to the Surviving Lessee stating that such transaction would not result in a loss of any of the tax benefits described in Section 13(c) (1) of the Participation Agreement; (H) such transaction is otherwise permitted by and in compliance with the ANPP Participation Agreement; and (I) the New Coverage Ratio of the Surviving Lessee shall be at least 1.6 to 1.
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| Upon the consummation of such transaction the Surviving Lessee, if other than the Lessee, shall succeed to, and be substi-tuted for, and may exercise every right and power of, the Lessee immediately prior to such transaction under this Lease, each other Transaction Document and each Financing Document to which the Lessee
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| ~ ~ ~
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| immediately prior to such transaction was a party immediately prior to such transaction, with the same effect as if the Surviving Lessee
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| ~
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| had been named herein and therein. ~
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| ~
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| (d) Incurrence" of Debt. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries (whether consolidated or unconsolidated) to, issue, assume or become liable in respect of (A) any Debt maturing more than one year after the date of such issuance, assumption or liability (including current maturities of Debt with an original maturity of more than one year) if, immediately thereafter, (i) the total amount of all Debt of the Lessee and its sub-sidiaries (whether consolidated or unconsolidated) maturing more than one year after the date of such issuance, assump-tion or becoming liable (reduced by Cash Available for Investment) shall exceed 70> (or, at any time after January 1, 1992 when there is not in effect a letter of credit com-plying in all respects with the Commitment Agreement, 65%)
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| of New Consolidated Capitalization, in each case as shown on a pro forma consolidated balance sheet on and as of the 1021.7500.2754.22:4
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| date of such issuance, assumption or becoming liable, or (ii) the New Coverage Ratio of the Lessee would be less than 1.6 to 1 or (B) any Debt maturing one year or less after the date of such issuance, assumption or becoming liable (excluding current maturities of Debt with an origi-nal maturity of more than one year) if, immediately there-after., the total amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) maturing one year or less a fter the date of such issuance, assumption or becoming liable shall exceed 12.5< of New Consolidated Capitalization, in each case as shown on a pro forma consolidated balance sheet on and as of the date of such issuance, assumption or becoming liable. For purposes of the foregoing clause (A), there shall be excluded any Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow and any refunding of the debt issued on December 31, 1987 by the lessors in the sale and leaseback transactions relating to Unit 3 at PVNGS shall not constitute the Lessee issuing, assuming, or becoming liable in respect of any Debt within the meaning of this subclause (d).
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| (e) Escrow Agreement. The Lessee shall deposit with Chemical Bank as escrow agent (the "Agent" ) any amount required to be deposited under the Escrow Agreement dated as of December 31, 1987 between the Lessee and the Agent within 5 Business Days after notice from the Owner Participant and shall otherwise comply with its other obli-gations under such Agreement within 15 days after notice from the Owner Participant.
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| (f) Definitions. For purposes of this Section 7, the terms New Consolidated Capitalization and New Coverage Ratio shall be defined as follows:
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| (A) "New Coverage Ratio" shall mean the ratio of (x) the sum of (a) consolidated net income of the Lessee for the twelve-month period ending on a date no later than 135 days prior to the date as of which New Coverage Ratio is being determined plus (or minus) (b) all extraordinary items deducted (or added) in deter-mining said net income (for purposes of this defini-tion of New Coverage Ratio, any charge against income resulting from a write-off of utility plant pursuant to (i) an order of any governmental authority having jurisdiction or (ii) a provision for an estimated regulatory disallowance. shall be deemed to be an extraordinary item deducted in determining said net 1021.7500.2754.22:4
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| ly '
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| ~ . t, 0
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| income) plus (or minus) (c) all income taxes deducted (or tax credits added) in determining said net income minus (d) for all or any portion of such period ending on or prior to December 31,,1990, 504 of "allowance for funds used during construction",(net of deferred taxes) as such item is referred to in the consolidated income statement of the Lessee and its subsidiaries) and,, for all or any portion of such period ending after December 31, 1990, 1004 of such item plus (e) the sum of all interest and lease payments paid by the Lessee and its subsidiaries (whether consoli:dated or unconsolidated) during such twelve-month period to (y) total interest and lease payments that will be payable by the Lessee and its subsidiaries (whether consoli-dated or unconsolidated) during the twelve-month period following the date as of which New Coverage Ratio is being determined. There shall, be excluded from interest and lease payments included'nder clauses (x) and (y): above (i) lease payments to the Rio Grande Resources Trust, (ii) lease payments under any operating lease of computers, office equipment or the like, the -original term of which (including options to renew) is less than five years and (iii) interest on Debt maturing one year. or less from the date of incurrence thereof. There shall be excluded from interest and lease payments included under clause (y) above interest on Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow.
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| (B) "New Consolidated Capitalization" s h a l l' e a n the total of consolidated capital and surplus of the Lessee plus the principal amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) which matures more than one year after the date as of which New Consolidated Capitalization is being determined.
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| (c) Schedule 8. Schedule 8 hereto is hereby added as Schedule 8. to the Facility Lease.
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| 1021.7500.2754.22:4
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| SECTION 3. Miscellaneous (a) Effective Date of Amendments. The amendments set forth in Section 2 hereof shall be and become effective upon the. execution hereof by the parties hereto.
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| (b) Counterpart Execution. This Amendment No. 2 may be executed in any number of counterparts and by each of the parties hereto on separate counterparts; all such coun-terparts shall together constitute but one and the same instrument.
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| (c) Governing Law. This Amendment No. 2 has been negotiated and delivered in the State of New York and shall be governed by and be construed in accordance with the laws of the State of New York, except to the actent that pursu-ant to the law of the State of Arizona such law is mandato-rily applicable hereto.
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| (d) Disclosure. Pursuant to Arizona Revised Statutes Section 33-404, the beneficiary of the Trust Agreement is Chrysler Financial Corporation, a corporation, The address
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| . of the beneficiary is Greenwich Office Park I, Greenwich, Connecticut 06836, Leasing and Investment Services, Attention: Mike Abandond. A copy of the Trust Agreement is available for inspection at the offices of the Owner Trustee at 100 Federal Street, Boston, Massachusetts 02110I Attention of Corporate Trust Division.
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| 1021.7500.2754.22:4
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| , f) ill
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| IN, WITNESS WHEREOF, each of the parties hereto has caused this Amendment No. 2 to be duly executed in New York, New York on December 31, 1987.
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| THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity, but solely as Owner Trustee under a Trust Agreement, dated as of August 1, 1986 with Chrysler Financial Corporation, By
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| ( Senior Manager EL PASO ELECTRIC COMPANY, By A ice President
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| r
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| STATE "OF TEXAS )
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| ) ss.:
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| COUNTY OF EL PASO )
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| The foregoing instrument was acknowledged before me this 6th day of January, 1988 by William J. Johnson, a Vice President of EL PASO ELECTRIC COMPANY, a Texas corporation, on behalf of the corporation.
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| .(
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| COMMONWEA'LTH OF MASSACHUSETTS
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| )'S
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| )
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| ~ o COUNTY OF SUFFOLK The foregoing instrument was acknowledged before me this day of January, 1988, by Mark Nelson, a Senior Manager of THE FIRST NATIONAL BANK OF BOSTON, a national banking association, on behalf of the banking association as trustee under that certain Trust Agreement dated as of August 1, 1986 with Chrysler Financial Corporation.
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| Notary Public MOURN MNlso~
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| Q Commission Expiree I+Omter 80, i894 1021.7500.2754.'06A:1
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| SCHEDULE 8 EL PASO OBLIGATIONS Principal Payment Amount Date Description
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| $ 60,000,000 Jan. 31, 1988 16.20% First mortgage bonds due 2012
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| $ 25'00/ 000 Jan 31 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 50,000,000 June 30, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 6,100,000 July 20, 1988 4.25: First mortgage bonds due July 1988
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| $ 22 / 000'00 May 20, 1989 12.75: First mortgage bonds due May 1989
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| $ 25/ 000'00 Aug. 15, 1989 14.5> First mortgage bonds due August. 1989
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| $ 50,000,000 Nov..20, 1989 144 First mortgage bonds due November 1989
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| $ 20 / 000 i 000 Dec. 1, 1990 Long-term notes unsecured-The Bank of America
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| $ 70,000,000 Mar. 1,
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| ,1991 Second mortgage bonds-The Bank of America 1021.7500.2754.22:4
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| 41 0
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| AGREEMENT dated as of December 31, 1987 among CHRYSLER FINANCIAL CORPORATION (" Owner Participant" ), THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee ("Owner Trustee" ) under a Trust Agreement dated as of August 1, 1986 with Owner Participant, and EL PASO ELECTRIC COMPANY ("Lessee" ) .
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| Owner Trustee and Lessee are parties to the Facility Lease dated as of August 1, 1986, as amended (the "Facility Lease" ). All terms used but not defined herein have the meanings ascribed to them in Appendix A to the Facility Lease.
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| Lessee, Owner Trustee and Owner Participant desire to modify certain provisions of the Facility Lease, provide credit enhancement 'for the benefit of Owner Participant in the form of a letter of credit to support the payment of rent and, until such time as a letter of credit has been delivered, provide for the creation of an escrow account into which Lessee will deposit funds to be held for the retirement of certain of its outstanding Debt. Accordingly, the parties hereto agree as follows:
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| : 1. Letter of Credit.
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| A. Lessee shall cause to be delivered to Owner Participant a letter of credit (the "LC") with drawing amounts not less than Special Casualty Value from time to time during the period the LC is outstanding less the principal amount of and accrued interest on the Notes Outstanding from time to time. If the Lessee shall fail to cause the LC to be delivered by April 30, 1988 in accordance with the terms hereof, the Escrow Agreement (as defined in Section 2) shall
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| .continue in full force and effect, and the Lessee shall pay to the Owner Trustee all amounts set forth in Section 3(b)(iv) of the Facility Lease in accordance with the terms thereof, but such failure shall not constitute an Event of Default.
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| B. The unsecured long-term debt securities of the bank issuing the LC shall be rated by Moody's not less than A2, in the case of a United States bank, or Aa3, in the case of a United States branch or agency of a foreign bank, and such bank shall be otherwise acceptable to Owner Participant. Owner Participant will be reason-able in determining such acceptability, but may consider such matters as (i) legal or regulatory constraints on the issuance to or holding by Owner Participant of letters of credit from such bank and (ii) policy constraints in effect for Owner Participant on the issu-ance to or holding by Owner Participant of letters of credit from such bank, so long as such policy constraints are then applicable by Owner Participant. generally to such bank and have been applied by Owner Participant without regard to the nature of PVNGS or the Unit 2 sale and leaseback transactions or the identity or credit of Lessee.
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| 1021. 7500. 2754. 20: 3
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| C. The LC (1) shall have an expiry date of December 31, 1991, (2) may be drawn upon if an Event of Loss occurs, a Deemed Loss Event is declared, an Event of Default occurs and is continuing or in any and'll events prior to termination of the LC should a termina-.
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| tion event under the LC occur, (3) shall permit partial drawings, (4) shall permit Owner Participant to assign all of its interest therein to a successor Owner Participant without the issuing bank's or Lessee's consent (5) shall provide for reinstatement upon reim-bursement in respect of a draw thereunder for Supplemental Rent and (6) shall be otherwise satisfactory in form and substance to Owner Participant in its reasonable judgment. Appropriate provision will be made for replacing the LC if there is a decline in the rating by Moody's of the unsecured long-term debt securities of the issuing bank below A3.
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| D. The reimbursement agreement between Lessee and the issu-ing bank relating to the LC shall (1) not contain any default or ter-mination provisions that are less favorable to Lessee or Owner Participant than those contained in Lessee's Reimbursement Agreement dated as of December 1, 1987, with The Fuji Bank Limited, (2). require the issuing bank to pay any draws on the LC from its general funds, (3) not permit. the issuing bank to exercise any right of set off during the pendency of any bankruptcy proceeding of Lessee, (4) not permit Lessee's reimbursement obligation to be collateralized at any time by the grant of a security interest in Lessee's interest in the Undivided Interest or the Real Property Interest or in any other property unless a subordinate (to the security interest of the issu-ing bank) security interest in such property is also granted to Owner Participant, (5) not permit amendment of any provision of the LC or the reimbursement agreement in a manner which is materially adverse to the interest of Owner Participant without its prior written con-sent and. (6) otherwise be satisfactory in form and substance to Owner Participant in its reasonable judgment.
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| E. The LC need not be renewed or replaced as of December 31, 1991, if (i) all the Debt listed on Schedule 8 to the Facility Lease has been retired in accordance with such Schedule 8, (ii) the. New Coverage Ratio of Lessee, determined as of June 30, 1991, is not less than 1.6 to 1, (iii) the aggregate Debt maturing more than one year after the date of issuance, assumption or liabil-ity (including current maturities of Debt with an original maturity in excess of one year) of Lessee shall not be in excess of 65< of New Consolidated Capitalization, all as derived from the Lessee's finan-cial books and records as of June 30, 1991, and (iv) 'the aggregate Debt maturing one year or less after the date of such issuance, assumption or liability (excluding current maturities of Debt with an original maturity in excess of one year) of Lessee shall not be in excess of 12.5% of such New Consolidated Capitalization (clauses (i) through (iv) above being herein called the "Tests" ). Lessee 1021. 7500. 2754. 20: 3
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| shall prepare for and provide to Owner Participant not later than October 1, 1991 (and October 1 of succeeding years under the circum-stances set forth below) calculations showing whether Lessee has sat-isfied the Tests and the financial data upon which such calculations were based. If Lessee has failed to meet the Tests, Owner Participant may, at its option (and without affecting any other rights of Owner Participant to draw on the LC), draw on the LC or require that Lessee provide a renewal or replacement LC or itself obtain for Lessee, at Lessee's expense, a,renewal or replacement LC on substantially the same terms as the existing LC, .except that the annual fee payable under such renewal or replacement LC shall not be more than 100 basis points greater than the annual fee to Lessee of the existing LC. The Owner Participant shall exercise such option within a period of time to be determined but not more than thirty (30) days after the Lessee shall furnish the Owner Participant the aforesaid calculations and financial data. Such renewal or replace-ment LC shall have a term commencing not later than the expiry date of the existing LC and ending not earlier than one year .after such expiry date, and shall have terms (including the terms of the related reimbursement agreement) not less favorable to Owner Participant than the terms contained in the existing LC and reimbursement agreement.
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| Such renewal or replacement LC may provide for its early expiration not earlier than December 31 of the year during which Lessee meets the Tests. The procedures set forth above (the New Coverage Ratio being determined, and deriving New Consolidated Capitalization from the Lessee's financial books and 'records, as of June 30'n each such year), shall be repeated each year until no renewal or replacement LC is required.
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| : 2. Escrow A reement. Lessee shall enter into an Escrow Agreement with Chemical Bank substantially in the form of Exhibit A hereto. The Owner Participant agrees that, upon delivery and accep-tance of the LC, of Section 7.2 of it shal'1 deliver the notice required by clause (i) the Escrow Agreement.
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| : 3. Amendment to Lease. Owner Trustee and Lessee shall execute Amendment No. 2 to the Facility Lease substantially in the form of Exhibit B hereto.
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| : 4. Further Chan es. Concurrent with the procurement of the LC, and subject to obtaining any required consents of third par-ties to the Transaction Documents, the parties will amend the Facility Lease and other Transaction Documents to implement the obtaining of and to reflect the existence of the LC and to further implement the terms of this Agreement. Such amendments will include provisions affording Lessee, in the event Owner Participant has determined to draw on the LC when Lessee has failed to meet the Tests and unless an 'Event of Default shall have otherwise occurred and be continuing or an Event of Loss shall have occurred or .Deemed Loss 1021.7500.2754.20:3
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| Event shall have been declared, the right to purchase the Undivided Interest and the Real Property Interest on or before some period prior to the .expiration or termination date of the existing LC', for an amount based on the greater of (i) Enhanced Casualty Value, which will be calculated on an assumed 25% residual, and (ii) Fair Market Sales Value of the Undivided Interest and the Real Property Interest.
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| : 5. Consent. Owner Participant irrevocably consents to any and all transactions which would require its consent under Section 10(b) (3) (ii) or 10(b) (3) (v) of the Participation Agreement.
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| : 6. Owner Trustee Directive. Owner Participant hereby authorizes and directs Owner Trustee to execute this Agreement, Amendment No. 2 to the Facility Lease and such other agreements, doc-uments and certificates as shall be required in order to facilitate the execution and del'ivery of this Agreement and such Amendment No. 2.
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| : 7. Taxes. All the provisions of Sections 13'(b) and (c) of the Participation Agreement shall be applicable as though the mat-ters set forth in this Agreement (including the exhibits hereto) had been included in the Transaction Documents at all times since August 18, 1986 except that the execution and delivery of this Agreement, as opposed to its provisions, shall not be considered to be the execution and delivery of a Transaction 'Document or a Financing Document or an act specifically required or expressly per-mitted to be performed by the Lessee for the purposes of Se'ction 13(c)(4)(i)'(B) of the Participation Agreement.
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| : 8. Miscellaneous. This Agreement may be executed by the parties hereto in separate counterparts, all and to it shall not be neces-sary for the signatures of parties appear on any one counterpart. The headings of the various sections of this Agreement are for convenience of reference only and shall not modify, define,
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| .expand or limit any of the terms or provisions hereof. This Agreement may not be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by the party against whom enforcement of such transaction, amendment, sup-plement, waiver or modification is sought. This Agreement in all respects shall be governed by and construed in accordance with the laws of the State of New York, including all matters of construction,.
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| validity and performance.
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| 1021. 7500. 2754. 20: 3
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| ZN %ITNESS RKREDP eaoh oC the parties hereto has oaused this Agreement to be 4uly exeoute4 as of the day and year first above written.
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| CHRYSLER FINANCIAL CORPORATION bY> CHRYS CAPITAL CORPOBATXON A E IN ACT bYi He ASSISTANT SECRETARY THE FIRST NATIONAL BANK OP SOSTON, not in its indivi4ual capaaity but solely as Owner T tee SYt Axles~~
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| .EL PASO ELECTRIC COMPANY
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| 0 0
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| .Exhibit A to the Agreement ESCROW 'GREEM1%T Dated as of December 31, 1987 between CHEMICAL BANK, Escrow Agent and EL PASO ELECTRIC COMPANY 1021.7500.2704.13:20
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| 1P,
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| TABLE OF CONTENTS'RTICLE
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| ~acae I
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| DEFINITIONS Section 1.1. Certain Defined Terms. ... . . . . . . . . . 1 ARTICLE II APPOINTMENT OF AGENT AND CREATION OF ESCROW ACCOUNT Section 2.1. Appointment of Agent. . . . . . . . . . . . . 3 Section 2.2. The Escrow Account. . . . . . . . . . . . . . 3 Section 2.3. Statement of Purpose. . . . . . . . . . . . . 4 ARTICLE III LEASE PROCEEDS DEPOSIT BY THE CO?G?ANY Section 3.1. Lease Proceeds Escrow Deposit. . . . . . . . 4 ARTICLE IV TRANSFER AND DEPOSIT BY THE COMPANY OF EXISTING INVESTMENTS Section 4.1. Transferred Investments Escrow Deposit. ... . 4 ARTICLE V INVESTMENTS AND PAYMENTS BY AGENT Section 5.1. Payments by Agent to Company from Lease, Proceeds Escrow Sub-Account. . . . . . . . . 5
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| 0 0
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| TABLE OF CONTENTS, Continued Pacae Section 5.2. Monthly Disbursement from both
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| 'ub-accounts. 6 Section 5.3. Investments; Agreement as to Value of Clauses 6, 7 and 8 on December 31, 1988. ~ ~ 7 Section 5.4. Valuation of Investments; Payment of Defxczency.
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| 8 ARTICLE VI CONCERNING TEE AGENT Section 6.1. Duties of Agent. .10 Section 6.2. Liabzlzty. .10 Section 6.3. Delivery of Documents and Further Acts. .10 Section 6.4. Legal Proceedings.
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| Section 6.5. Resignation; Appointment of Succ.. ssor. .11 Section 6.6. Indemnification. .11 ARTICLE VII MISCELLANEOUS Section 7.1. Payments. .12 Section 7.2. Termination. .12 Section 7.3. Amendments, Etc. .12 Section 7.4. Addresses for Notices, Etc. .12 Section 7.5. Successors and Assigns. .13 Section. 7.6. Severability of Provisions. .13
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| ~
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| Section 7.7. Headings, etc. .13 0
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| TABLE OP CONTENTS, Continued Pacae Section 7.8. Governing Law. ., . . . . . . . . . . . . . .13 Section 7.9. Counterpart Execution. . . . . . . . . . . .13
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| -111-
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| ESCROW AGRE1962lT ESCROW AGREEMENT, dated as of December 31, 1987, among CHEMICAL BANK, a New York banking corporation (the Agent), and EL PASO ELECTRIC COMPANY, a Texas corporation (th. Company).
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| WITNESSETH:
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| WHEREAS, pursuant to eight separate Commitment Agreements, dated as of December 31, 1987 with each of the Owner Participants (as described in Schedule I hereto) and the related Owner Trustee, the Company has agreed to establish and maintain an escrow account of certain moneys and securities (such terms and all other capitalized terms used herein having the meanings set forth or referred to in Section 1 hereof) until such time as Acceptable Letters of Credit are obtained; and, WHEREAS, the Commitment Agreements contemplate that certain moneys and securities are to be held in an escrow account to be established with the Agent and are to be disbursed by the Agent pur-suant to directions from the Company until the ccurrence of certain c
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| events, all in accordance with the terms and conditions set forth herein; and WHEREAS, the Company desires that the E.gent be appointed as escrow agent, and the Agent desires to accept ~uch appointment, all in accordance with the terms and conditions se= forth herein.
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| NOW, THEREFORE, in consideration of the mutual agreements herein contained and of other good and valu.able considerati'on',
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| receipt of which is hereby acknowledged, the parties hereto agree as follows:
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| ARTICLE I DEFINITIONS SECTION 1.1. Certain Defined Terms. As used in t.h i s Agreement, and unless otherwise expressly indicated, or unless the context clearly requires otherwise:
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| (a) The terms Agent and the Company have the meanings assigned in the caption of this Agreement.
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| (b) The following terms have the respective meanings set forth below (such meanings to be equally applicable to both the sin-gular and plural forms of the terms defined):
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| Acceptable Letter of Credit means a letter of credit complying with the requirements" therefor a set forth in 1021.7500.2704.13:20
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| Igg
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| ~g>
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| the relevant Commitment Agreement, which toe Company has agreed to provide to each August Owner Participant.
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| August Owner Participants means each of the six enti-ties listed in Schedule I hereto, each as an owner partici-pant under its related August Participation Agreement.
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| August Participation Agreement(s) means each of six separate Participation Agreements, dated as of August 1, 1986, as amended by Amendment No. 1, dated October 1, 1986 among the Company, El Paso Funding Corporation, the Owner Trustee, First. City National Bank of Houston, as Indenture Trustee, and each August Owner Participant.
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| Commitment Agreements means the eight separate Agreements, dated as of December 31, 1987, by and between El Paso, the related Owner Trustee and each of the Owner Participants.
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| December Participation Agreement(s) means the Participation Agreement dated as of December 1, 1986, among the Company, El Paso Funding Corporation, the Owner Trustee, First City National Bank of Houston, as Indenture Trustee and Chrysler Financial Corporation and the Participation Agreement, dated as of December 1, 1986, among the Company, El Paso Funding Corpora'=ion, the Owner Trustee, First City National Bank of Houston, as Indenture Trustee and Commercial Federal Investmen Corporation.
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| El Paso Obligations means the principa'mount of the indebtedness of the Company set forth i>> Schedule III hereof.
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| Escrow Account means said term 'is defined in Section 2.2 hereof.
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| Escrow Sub-accounts means the Transferred Investments Escrow Sub-account and the Lease Proceeds Escrow Sub-account, collectively.
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| Lease Proceeds Escrow Deposit means said term as defined in Section 3.1 hereof.
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| Lease Proceeds Escrow Sub-Account means said term as defined in Section 2.2 hereof.
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| Owner Participant(s) means the August Owner Participants and Chrysler Financial Corporation and 1021.7500.2704.13:20
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| Commercial Federal Investment Corporation, as Owner Participants under the December Participation Agreements.
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| Owner Trustee means The First National Bank of Boston, as trustee for an Owner Partic'ipant under ea:;h of six sepa-rate Trust Agreements, dated as of August l, 1986 and two separate Trust Agreements, dated as of December 1, 1986.
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| Participation Agreements means the August Participation Agreements and the December Participation Agreements.
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| Permitted Investments means the certificates, obliga-tions and investments set forth in Schedule II hereto, the investments constituting the Transferred Investments Escrow Deposit and reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment fea-ture of any of the investments listed in clauses (ii),
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| (iii) and (iv) of the first paragraph of Section 4.1 hereof.
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| Transferred Investments Escrow Deposit means said term as defined in Section 2.2 hereof.
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| Transferred Investments Escrow Sub-account means said term as defined in Section 2.2 hereof.
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| ~
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| (c) As used herein, any capitalized term not otherwise defined herein has the meaning assigned to such term in the respec-
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| ~
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| tive Participation Agreements.
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| ARTICLE II APPOINTMENT OF AGENT AND CREATION OF ESCROW ACCOUNT SECTION 2.1. Appointment of Agent. For the purposes and subject to the terms and conditions set forth in this Agreement, the Company hereby appoints Chemical Bank as escrow agent, and Chemical Bank hereby accepts such appointment.
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| SECTION 2.2. The Escrow Account. The Agent shall estab-lish and maintain for the benefit of the Owner Participants an Escrow Account (the Escrow Account), within which there shall be two sepa-rate sub-accounts 'to be known as the Lease Proceeds Escrow Sub-account (the Lease Proceeds Escrow Sub-account) and the Transferred Investments Escrow Sub-account (the Transferred Investments Escrow Sub-account). The Agent shall deposit in the Escrow Account (i) for 1021.7500.2704.13:20
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| Igg if'
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| credit to the Lease Proceeds Escrow Sub-account, any Lease Proceeds Escrow Deposit made by the Company to the Agent. pursuant to Section
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| : 3. 1 hereof, and (ii) for credit to the Transferrc:d Investments Escrow Sub-account, the Transferred Investments Escro~ Deposit, made by the Company to the Agent pursuant to Section 4.1 hereof. So long as any amounts remain in the Escrow Account, such amounts shall be consid-ered as, and shall be and remain, the property of the Company. The Agent shall invest or re-invest any amounts in the Escrow Account and make applications thereof as provided in Art'cle V hereof. The Escrow Account shall be funded by the deposits by the Company to the appropriate sub-accounts in the manner describ d herein.
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| SECTION 2.3. Statement of Purpose. The Company represents t.hat the purpose of this Agreement and the creation and establishment of the Escrow Account is to pay or provide for the payment of the El Paso Obligations and certain short-term indebtedness of El Paso in accordance with Section 5.1(b) .hereof.
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| ARTICLE III LEASE PROCEEDS DEPOSIT BY THE COMPANY SECTION 3.1. Lease Proceeds Escrow Deposit. The Company hereby represents that it has deposited with the Agent $ 163,000,000 for deposit by the Agent in the Lease Proceeds Escrow Sub-account.
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| ARTICLE IV TRANSFER 'AND DEPOSIT BY THE COMPAtK OF EXISTING INVESTMENTS SECTION 4.1. Transferred Investments Escrow Deposit.
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| Subject to the terms and provisions of this Agreement, the Company hereby agrees that by February 1, 1988 it will cause to be deposited into the Transferred Investments Escrow Sub-Account by change of account reference to that of the Agent or assignment of all right, title and interest of the Company to the Agent (exclusive of any obligations or liabilities of the Company) as the case may be, of the following (collectively, the Transferred Investments Escrow Deposit):
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| (i) Account of El Paso. Electric Co., Account No. 9-6191-03 01 at MBank Houston, P.O. Box 2629, Attn: Capital Markets Division, Houston, Texas; (ii) The limited partnership interest, of the Company in and to the Weiss Qualified Income Fund Limited 1021. 7500. 2704. 13: 20
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| Partnership I, obtained on November 13, 1986 pursuant to the Weiss Qualified Income Fund Limited Partnership I Amended and Restated Agreement of Limited Partnership, dated as of September 9, 1986; 97061 (iii) at Account of El Paso Merrill Lynch, Electric, Ac .ount Pierce, Fenner No. 530-
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| & Smith Incorporated, One Liberty Plaza, 165 Broadway, New York, NY 10080; and (iv) Account of El Paso Electric Company, Account No.
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| 30 B Z0009 354 at Kidder, Peabody & Co., Incorporated, 20 Exchange Place, Hew York, NY 10005.
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| The Agent is hereby authorized by the Company to enter into any arrangement or agreement (including but not limited to, manage-ment agreements) as the Company may determine is necessary to evi-dence ownership of the foregoing investments by the Agent.
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| The Company represents that the aggregate "book value" as of the end of November, 1987 of the Transferred Investments Escrow Deposit was not less than $ 135 million.
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| Notwithstanding the foregoing, Company fails to consummate any of the if for any reason the transfers, in whole or in part, to the Agent referred to in clauses (i) ;.hrough (iv) of the first paragraph of this Section 4. 1, this such failure shall not consti-tute a breach of, or default under, Agreement, so long as the Company shall have on deposit in the Transferred Investments Escrow Sub-Account with the Agent on February 1, 1988, moneys or securities having an aggregate "book value" as of the end of November, 1987 of not less than $ 135 million.
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| ARTICLE V INVESTMENTS AND PAYMENTS BY AGENT SECTION 5.1. Payments by Agent to Company from Lease Proceeds Escrow Sub-Account. (a) In order to provide for the pay-ment of the El Paso Obligation that is to be paid on or prior to January 31, 1988, and prior to the valuation of the money and securi-ties in the Escrow Account, upon the receipt by the Agent (with copies to each Owner Participant) from the Company of a request in writing for disbursement, the Agent shall pay to the party indicated in the written request, of the Company in immediately available funds, out of the funds then on deposit in the Lease Proceeds Escrow Sub-account, an amount equal to the amount that is due and owing to The Bank of New York as a prepayment of the El Paso Obligation for which 1021.7500.2704.13:20
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| payment is due in January 1988. Such request by the Company to the Agent pursuant to this Section 5.1 shall specify (i) the applicable prepayment date and (ii) wire or transfer instructions.
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| (b) The Agent will prepare a market valuation of all moneys and securities on deposit in the Escrow Accounc in accordance with the requirements of Section 5.4 hereof within 10 calendar days fol-lowing receipt by the Agent of all monthly closing valuations for the month of January 1988. Upon completion of such valuation, the Agent shall promptly provide a certificate to the Company and each of the Owner Participants setting forth the value of such moneys and securities. To the extent that the amount of such market valuation exceeds $ 243, 100, 000, upon receipt of such certificate of valuation from the Agent, the Company shall deliver a written request to the Agent (with copies to each Owner Participant), directing release of such excess to the Company for payment of indebtedness of the Company having a maturity of one year or less specified in such request, and upon receipt of such request the Agent shall release such excess to the Company. To the extent that the amount of such market valuation is less than $ 243, 100,000, the Company shall provide the Agent, within five business days after receipt of the certificate of valua-tion from the Agent, with money or Permitted Investments (with a market value as of the date of such valuation) sufficient to cover the deficiency.
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| SECTION 5.2. Monthly Disbursement from both Sub-accounts.
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| Except as specifi:cally provided in Section 5.1 hereof, as soon as practicable following each monthly valuation pursuant to Section 5.4 hereof of the moneys and securities on deposit in the Escrow Account, amounts on deposit in the Escrow Account shall be disbursed monthly in accordance with and in amounts as set forth in a written certifi-cate of the Company (with copies of such certificate delivered to each Owner Participant) specifying the applicable payment date, payee, sub-account and wire or transfer instructions: first,* to the party named in such certificate of the amount as set forth therein in order to permit the payment of El Paso Obligations with a Payment Date as determined in accordance with Schedule III hereto within 45 days. after the date as of which the Escrow Account is valued and then second to the Company all amounts on deposit in the Escrow Account in excess of the amount necessary to pay the principal amount of the remaining El Paso Obligations, determined by reference to Schedule III hereto and confirmed in the certificate of the Company requesting such disbursement.
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| Notwithstanding the foregoing the Company may direct the Agent to make a disbursement from the Escrow Account solely for the purposes of paying an El Paso Obligation if for any reason the valuation and disbursement, procedure heretofore described does not provide for timely and adequate payment of any such El Paso 1021. 7500. 2704. 13: 20
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| C iO
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| Obligation and such direction of the Company shall expressly so state. The Agent shall be entitled to liquidate any investments held in the Escrow Account in order to provide for payment of the El Paso Obligations or any other payments in accordance herewith. The Agent shall have no liability for losses resulting from the liquidation of securities on deposit in the Escrow Account.
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| SECTION 5.3. Investments; Agreement as to Value of Clauses 6, 7 and 8 on December 31, 1988. (a) The Agent shall invest and reinvest (which shall include the application of (A) the proceeds of maturing investments and (B) the sale of investments) the moneys in the Escrow Account only in Permitted Investments and shall sell investments in the Escrow Account, as specifically identified in a written direction of the Company which shall, in the case of any such investment or reinvestment expressly state that each such investment is a Permitted Investment and further that such Permitted Investment is in compliance with the limitations set forth in the next sentence, it being understood that the Agent shall have no duty to monitor such compliance; provided, however, that such identification of the investment or reinvestment and certification as to compliance with the limitations set forth in the next sentence shall not be appli-cable to the nondiscretionary reinvestment feature of the investments described in clauses (ii), (iii) and (iv) of the first paragraph of Section 4. 1 hereof'. Any such investments and reinvestments shall be subject to the following limitations:
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| (i) no investment or reinvestment shall be made in any of clauses 6, 7 and 8 contained in Schedule II hereto if as a result of such investment or reinvestment (a) at the date thereof, but no later than December 31, 1988, the total aggregate amount invested pursuant to clauses 6, 7 and 8 contained in Schedule II hereto would exceed the lesser of (x) sixty percent (60%) of the market value of the amounts then on deposit in the Escrow Account and (y) the total so invested at any time immediately prior to such investment or reinvestment; provided, however, that for purposes of determining compliance with this subclause (y),
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| there shaIl be excluded from the total aggregate amount invested pursuant to clauses (6), (7') and (8) of Schedule II hereto any amounts attributable to the invest-ment and reinvestment, 'of income, dividends and capital gains resulting from the nondiscretionary reinvestment fea-ture of any of the investments listed in clauses (ii),
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| (iii) and (iv) of the first paragraph of Section 4.1 on deposit in the Transferred Investment Escrow Sub-Account and (b) at the date thereof, but only after December 31, 1988, the total aggregate amount invested pursuant to such clauses would exceed twenty-five percent (25>) of the 1021.7500.2704.13:20
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| i
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| market value of the amounts then on deposi in the Escrow Account; (ii) no investment or reinvestment in Permitted Investments shall be made if the result thereof would be to cause any of clauses 1, 3, 4, 5, 9 and 10 contained in Schedule II hereto to exceed twenty-five percent (25:) of the market value of the amounts on deposit in the Escrow Account; and (iii) the average life of any investment (other than investments described in, clause 2 contained in Schedule II hereto) shall not exceed seven years.
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| (b) The Company agrees that the market value as of December 31, 1988 of investments in the Escrow Account (including the Transferred Investments Escrow Deposit) in clauses 6, 7 and 8 con-tained in Schedule Company II hereto will not exceed $ 45 million. The represents that it will attempt to undertake an orderly liquidation of the Transferred Investments Escrow Deposit so as to be in a position to comply with this Article V. The Company anticipates that, under current market conditions and recognizing that sale of investments will be designed to protect the Company from incurring any losses due to such investments, reductions, within,the bands and for the quarters of calendar year 1988 indicated, below, of .the Transferred Investments Escrow Deposit would be achievable:
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| 1988 Reduction uarter 1st 20 to 45 2nd 20 to 30 3rd 30 to 20 4th 38 to 13 Total for 1988 108 SECTION 5.4. Valuation of Investments; Payment of Deficiency. The Agent shall cause a monthly fair market valuation of the Escrow Account to be* undertaken'. In undertaking its obligation to make a monthly valuation of the Escrow Account, (i) the Agent shall be entitled to assume that the monthly market valuations fur-nished to the Agent of the investments held in the Transferred Investments Escrow Sub-Account shall constitute the market value of any such investments and (ii) to the extent the Agent is unable to value any Permitted Investments in accordance with its customary practice as a corporate trustee, the Company hereby agrees to promptly provide the Agent with, and the Agent shall be entitled to rely upon, an independent market valuation of any such investment.
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| The Company agrees to cause the monthly market valuations of the 1021. 7500. 2704. 13': 20
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| investments constituting the Transferred Investments Escrow Sub-Account to be sent directly to the Agent. Copies of all such valuations by the Agent shall be sent,to the Oozier Participants and the Company.
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| The'gent shall undertake such valuation of the Escrow Account monthly, commencing in February, 1988, such valuation to be as of the end of the immediately preceding .month and in no event shall such valuation be completed later than ten calendar days after receipt by the Agent of the monthly valuation report for all such Permitted Investments on deposit in the Transferred Investments Escrow Subaccount (including any monthly valuation report provided pursuant to the second sentence of the first paragraph of Section 5.4 hereof) . In connection with its valuation of the Escrow Account, the Agent shall deduct from the valuation of the investments on deposit in the Transferred Investments Escrow Sub-Account that amount which represents the aggregate value attributable (determined on a cumula-tive basis, i.e., including the month of valuation and preceding months) to reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment feature of any. of the investments listed in clauses (ii), (iii) and (iv) of the first paragraph of Section 4. 1 hereof. For purposes of the monthly valua-tion only, any proceeds derived from a sale or upon maturity (other than pursuant to the nondiscretionary reinvestment feature of any of the investments listed in clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof) of any investzent made pursuant to clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof shall be allocated to reducing the aggregate value, if any, of the investments in the Transferred Investments Escrow Sub-Account attributable to reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment feature of any such investment, which aggregate value was deducted,from the valuation of investments on deposit in the Transferred Investments Escrow Sub-Account pursuant to the preceding sentence (it heing understood that an amount equal to any such reduction, except to the extent that such amount was otherwise withdrawn from the Escrow Account pursuant to Section 5.2 hereof, shall be included in the Transferred Investments Escrow Sub-Account for purposes of the monthly valuation thereof).
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| The Agent shall derive the amount attributable to each month repre-senting such reinvestment from the monthly market valuations fur-nished to the Agent. with respect to such investments and if such amount cannot be derived from such valuations, the amount attribut-able to such month and the aggregate to be so deducted shall be as directed in writing by the Company to the Agent, copies of which shall be furnished to the Owner Participants, together with the cal-culations and data upon which such direction is based, all as certi-fied by the Chief Financial Officer of the Company. To the extent the amount of such valuation of the Escrow Account, as adjusted for the amount, if any, to be deducted from such monthly valuation as 1021.7500.2704.13:20
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| provided in this paragraph, is less than the principal amount of the remaining El Paso Obligations which are schedu'ed to come due more than forty- f ive (45) days subsequent to such valuation, the Company shall provide the Agent within five business days after receipt from the Agent of such monthly valuation with money or Permitted Xnvestments (with a market value as of the date of such valuation) sufficient to cover the deficiency. The Agent shall notify the Owner Participants in writing of the date and receipt by the Agent of any money or Permitted Investments provided to meet such deficiency.
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| ARTXCLE VX CONCERNING THE AGENT SECTXON 6.1. Duties of Agent. The Agent shall have no duties or responsibilities other than those expressly set forth in this Agreement and shall have no duty to enforce any obligation of any person to make any payment or delivery, or to direct or cause any payment or delivery to be made, or to enforce any obligation of any person to perform any other act or to perform any calculations except as herein expressly set forth. In addition, the Agent shall have no duty to make any payment under this Agreement from its own funds.
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| SECTION 6.2. Liability. The Agent shall not be liable for any action taken or omitted by it, or any action suffered by it to be taken or omitted, in good faith and in the exercise of its own best judgment, excepting only its own willful misconduct or gross negli-gence, and may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion and advice of counsel (including counsel selected by the Agent), statement, instru-ment, report or other instrument or document (not only as to its due execution and the validity and effectiveness thereof, but also as to the truth and acceptability of any information therein contained) which is believed by the Agent to be genuineand to be signed (or in the case of oral communication, given) by the propeq person or persons. The Agent shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement or any of the terms hereof, unless expressly provided for herein and delivered as provided in this Agreement.
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| SECTION 6.3. Delivery of Documents and Further Acts.
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| From time to time on and after the date hereof, the Company shall deliver or cause to be delivered to the Agent such further documents and instruments and shall do and cause to be done such further acts as the Agent may reasonably request (it being understood .that the Agent shall have no obligation to make any such request) to carry out more effectively the provisions and purposes of this Agreement, to, 1021.7500.2704.13:20
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| evidence compliance herewith or to assure itself that it is protected in acting hereunder.
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| SECTION 6.4. Legal Proceedings. The Fgent shall not be required to defend any legal proceedings which may be instituted against it in respect of the subject matter of this Agreement unless requested to do so by the Company and indemnifiec. to its satisfaction against the cost and expenses of such defense (.'.ncluding counsel and investigatory fees) by the Company and shall not be required to institute legal proceedings of any kind.
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| SECTION 6.5. Resignation; Appointment of Successor. The Agent (or any successor escrow and paying agent) may resign at any time and be discharged from its duties as escrow and paying agent under this Agreement. by giving to the Company and the Owner Participants at least 30 days'otice thereof, such resignation to be effective on the date of appointment of a successor escrow and paying agent as hereinafter provided. As soon as practicable after any such resignation, the Agent shall turn over to a successor escrow and paying agent appointed by the Company all monies and property held hereunder upon presentation of the document appointing such successor escrow and paying agent and its acceptance of such appointment. If no successor escrow and paying agent is so appointed within the sixty-day period following such notice of resignation, the Agent shall deposit all monies and funds held hereunder with the Supreme Court of the State of New York for the County of New York (together with a petition to said Court for the appointment of a successor to act until such time, if any, as a successor shall have been appointed as hereinbefore provided). Upon turning over to the successor escrow and paying agent or to the Supreme Court of the 'State of New York as aforesaid, all monies and property held hereunder, the predecessor escrow and paying agent shall be released of any further responsibil-ity hereunder. Any successorunderescrow and paying agent shall be a bank or trust company organized the laws of the United States or any jurisdiction thereof, having a combined capita'nd surplus of a' least $ 250; 000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Agent hereunder upon.
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| reasonable or customary terms.
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| SECTION 6.6. Indemnification. The Company agrees that the Agent shall not be liable for any matter or thing arising out of the performance by the Agent. of its obligations under this Agreement, except as provided in Section 6.2 hereof. The Company agrees to indemnify the Agent, and to hold the Agent harmless, from and against any and all liability, loss, damage or expense (including reasonable attorneys'ees and actual out-of-pocket expen-es) which theaction Agent may or might incur by reason of this Agreement, or for any taken by the Agent hereunder, or by reason or in defense of any and 1021.7500.2704.13:20
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| all claims and demands whatsoever which may be asserted against the Agent arising out of this Agreement.
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| ARTICLE VII MISCELLANEOUS SECTION 7.1. Payments. Payments to or upon the direction of the Company by the Agent pursuant to Article V hereof shall be made'n accordance with such written instructions as the Company may provide to the Agent (with copies to the Owner Participants) from time to time for .such purposes. Whenever any payment to be made pur-.
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| suant hereto shall be required to be made on a day which. is not a Business Day, such payment shall be made on the next, succeeding Business Day.
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| SECTION 7.'2. Termination. This Agreement shall terminate upon the earliest to occur of (i) receipt by tne Agent of written notice from each Owner Participant that as to such Owner Participant this Agreement is terminated, (ii) disbursement by the Agent of all of the payments to be made by the Agent under Article V hereof with respect to the El Paso Obligations and (iii) receipt by the Agent of joint notice from the Company and each of the Owner Participants with respect to such termination. Upon the termination of this Agreement as aforesaid, any securities and moneys on deposit in the Escrow Account shall be applied at the direction .of the. Company.
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| SECTION 7.3. Amendments, Etc. No amendment to this Agreement shall be made or be effective without the written consent of the Owner Participants. No amendment, modish'ication, termination or waiver of any provision of this Agreement shall in any event be effective unless the same shall be in writing and signed by the par-ties hereto, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment of any other agreement or instrument shall-affect the Agent or its duties hereunder. No notice to or demand on any party hereto in any case shall entitle such party to any other or further notice or demand in similar or other circumstances unless herein otherwise provided.
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| SECTION 7.4. Addresses for Notices, Etc. Except as oth-erwise expressly provided herein, all notices and other communica-tions provided for hereunder shall be in writing and mailed (postage prepaid), hand delivered or sent by overnight courier, if Company, c/o William J. Johnson at its address at 303 North Oregon to the Street, P.O. Box 982, El Paso, Texas 79960, wi+h a copy similarly delivered to Kemp, Smith, Duncan & Hammond, 2000 MBank Plaza, P.O. Drawer 2800, El Paso, Texas 79999,, Attention: Dane George, 1021.7500.2704.1'3:20
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| 0
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| Esq., and if to the Agent, at its address at 55 Water Street, New York, New York 10041, Attention: Corporate Trustee Administration, with a copy similarly delivered to Willkie Farr & Gallagher, 153 East 53rd Street, New York, New York 10022, Attention: Brian O'rien, Esq., and, if to the Company or the Agent,. with copies to each of the Owner Participants at its address specified in Schedule I hereto, with a copy similarly delivered to Cravath, Swaine & Moore, One Chase Manhattan Plaza, New York, N.Y. 10005, Attention: Richard M. Allen, Esq., or, as to any of the foregoing, at such other address as shall be designated by such person in a written notice to the others. All such written notices and communications shall be effective when received at the address specified as aforesaid.
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| SECTION 7.5. Successors and Assigns. All of the provi-sions of this Agreement shall be binding upon and inure to the bene-fit of the parties hereto and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement other than to a per-mitted transferee under the Participation Agreements. Upon such assignment or transfer, the Company shall notify the Agent, whereupon the Agent shall recognize such assignment or transfer.
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| SECTION 7.6. Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable in the State of New York or in any jurisdiction in the United States which shall be applicable to this Agreement shall, as to the State of New York or such jurisdiction in the United States, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceabil-ity of such provision in any other jurisdiction.
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| SECTION 7.7. Headings, etc. The heaij ings o f various Articles and Sections of this Agreement are for convenience of refer-ence o'nly and shall not define or limit any of the terms and provi-sions hereof.
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| SECTION 7.8. Governing Law. This Agreement shall be gov-erned by, and construed in accordance with, the law of the State of New York.
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| SECTION 7.9. Counterpart Execution. Th is Agreement and any amendment to this Agreement may be signed in any number of coun-terparts, each of which shall be an original, and all of which taken together shall constitute a single instrument, with the same effect as if the signatures thereto and hereto were upon the same instrument.
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| 1021.7500.2704. 13:20
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| IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their officers thereunto duly autho-rized as of the day and year first above written.
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| CHEMICAL BANK By:
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| Senior Trust Officer EL PASO ELECTRIC COMPANY'y:
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| Vice President 1021. 7500. 2704. 13: 20
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| SCHEDULE I Commercial Federal Investment Corporation Jeff Bainbridge Commercial Federal Investment Corporation 1300 Commercial Federal Tower 2120 South 72nd Street Omaha, Nebraska 68124 Chrysler Financial Corporation Chrysler Financial Corporation Greenwich Office Park I Greenwich, Connecticut 06836 Leasing and Investment Services Attention: Mike Abandond Palantine Hills Leasing, Inc.
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| Palantine Hills Leasing, Inc.
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| 1415 S. Roselle Road Palantine, IL 60067 Attention: President, with copies to Household Commercial Financial Services Attention: Lee Wyatt and Julia Sarron, Esq.
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| 2700 Sanders Road Prospect Heights, IL 60070 1021.7500.2704.,13:20
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| f rt'g5 C'O iO
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| UCU Properties,
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| ~
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| Inc. ~
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| (Formerly, Energy Investments, Inc.)
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| ~
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| Donald Claar Suite 2000 Commercial Tow'er
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| ~
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| Kansas City, Missouri 64105 Alexander Hamilton, Life Insurance Company of America Richard Egan, General Counsel Alexander Hamilton Life Insurance Company of America 33045 Hamilton Boulevard Farmington Hills, Michigan Burnham Leasing Corporation Burnham Leasing Corporation 55 Broad Street New York, -New York Attention: Dianne Rudo 1021.7500.2704.13:20
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| SCHEDULE II Certificates of deposit maturing within 180 days and issued by any Federally insured commercial bank; provided, however, that if the face amount of any such Certificate of Deposit shall be
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| $ 1,000,000 or more, the issuing bank shall have a capital and surplus exceeding $ 500,000,000 and a senior debt rating of not Below the Level of Investment Grade; 2 ~ Readily marketable obligations issued or guaranteed by the United States Government or issued by the Government National Mortgage Association, the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation; 3 ~ Repurchase obligations maturing within 30 days with respect to obligations of the type described in Clause 2 above issued by any Federally insured commercial bank; provided, however, that if the face amount of such repurchase obligation is $ 10,000,000 or more, the issuing bank shall have a capital and surplus exceeding $ 500,000,000 and a senior debt rating of not Below the Level of Investment Grade; 4 ~ Repurchase obligations maturing within 30 days with respect to obligations of the type described in Claus 2 above issued by any nationally recognized dealer which reports to the Market Reports Division of the Federal Reserve Ba.ak of New York;
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| : 5. Investments in readily marketable money market funds managed by a nationally recognized fund manager, the assets of which fund (or the issuers thereof) are as described in Clauses 1, 2, 3, 4, or 9 herein;
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| : 6. Investments in readily marketable bonds, which are not Below the Level of Investment Grade, or bond funds managed by a nationally recognized fund manager, the assets of wh'ch (or the issuers thereof) are not Below the Level of Investment Grade; 7 ~ Investments in stock or stock funds managed by a nationally rec-ognized fund manager; 8 ~ Mortgage backed securities;
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| : 9. Commercial paper maturing within 180 days and having a rating of P-1 or better by Moody's Investors Service or A-1 or better by Standard & Poor's Corporation; or
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| : 10. Investments iq municipal obligations, the issuers of which are not rated Below the Level of Investment Grade, or the obligations of which are backed by a Letter of Credit from a commercial bank as described in Clause 1 above.
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| 1021.7500.2704.13:20
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| 1 if'k iO
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| "Below the Level of Investment Grade" means (i) in the case of Moody's Investors Service, a rating of less than Baa3 or the current equivalent, (ii) in the case of Standard 6 Poors Corporation, a rating of less than BBB- or current equivalent e.nd (iii) in the case of Duff and Phelps, a rating greater than ten or the current equivalent.
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| 1021.7500.2704.13:20
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| SCHEDULE III EL PASO OB IGATIO S Principal Payment Amount Date Description
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| $ 25, 000, 000 Jan. 31, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 50,000,000 June 30, 1988 Second mortgage bonds.
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| The Bank of New York due June 1988
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| $ 6,,100,000 July 20, 1988 4.25: First mortgage bonds due July 1988
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| $ 22,000,000 May 20, 1989 12.75: First mortgage bonds due May 1989
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| $ 25,000,000 Aug. 15, 1989 14.54 First mortgage bonds due August 1989
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| $ 50,000,000 Nov. 20, 1989 144 First mortgage bonds due November 1989
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| $ 20,000,000 Dec. 1, 1990 Long-term notes unsecured-The Bank of America
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| $ 70,000,000 Mar. 1, 1991 Second mortgage bonds-The Bank of America 1021. 7500. 2704. 13: 20
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| Exhibit B AMENDMENT No. 2, dated as of December 31, 1987, to Facility Lease dated as of August 1, 1986, between THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee ("Lessor" ) under a Trust Agreement, dated as of August 1, 1986 with CHRYSLER FINANCIAL CORPORATION, and EL PASO ELECTRIC COMPANY, as Lessee (" Lessee" ).
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| The parties hereto have previously entered into the Facility Lease (as heretofore amended, modified or supplemented, the "Facility Lease" ) providing for the lease by Lessor to Lessee of the Undivided Interest and the Real Property Interest. The parties now desire to make certain amendments to the Facility Lease.
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| NOW i THEREFORE g in cons ideration of the premises and other good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows:
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| SECTION 1. Definitions. For purposes hereof, capital-ized terms used herein and not defined herein shall have the meanings ascribed thereto in Appendix A to the Facility Lease.
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| SECTION 2. Amendments. (a) Section 3(b). Section 3(b) is hereby amended by inserting at the end of a clause (iii), in lieu of ".", "; and" and by inserting thereafter and before the next to last sentence of Section 3(c) a new clause (iv) reading as follows:
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| (iv) in the event that the Lessee shall fail to provide on or before April 30, 1988, a letter of credit which complies with the terms of the Agreement dated as of December 31, 1987 (the "Commitment Agreement" ), among the Lessee, the Lessor and the Owner Participant, a copy of which. is annexed hereto, on each Basic Rent Payment Date, commencing October 1, 1988 and ending on the Basic Rent Payment Date next following the earlier to occur of (A) the providing by the Lessee of such letter of credit and (B) the date as of which such letter of credit would have expired had it been in effect as required by the terms of the Commitment Agreement, an amount equal to .354 of Facility Cost multiplied by a fraction the numerator of which is the number of days from and including the preceding Basic Rent Payment Date (or, in the case of the Basic Rent Payment Date occurring on October 1, 1988, from and including April 30, 1988) to but excluding such Basic Rent Payment Date (or, if earli-er, to the date on which such letter of credit is pro-vided or the date such letter of credit, would have so expired), and the denominator of which is the number of days from and including the preceding Basic Rent 1021.7500
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| Payment Date to but excluding such Basic Rent Payment Date.
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| (b) Section 7. Section 7 of the Facility Lease is hereby amended by inserting "(a) ~L'ens." prior to the existing paragraph and inserting the following at the end thereof:
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| (b) Retirement of Debt. Unless the Owner Participant shall otherwise consent, on or before each date set forth in Schedule 8 hereto, the Lessee shall retire, legally defease or deposit. with the lender or its trustee funds sufficient to retire the principal amount of the Debt set forth opposite the reference to such date on such Schedule.
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| (c) Merger, Sale, etc. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, convey, transfer or lease to any Person any asset except for fair value.
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| Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, (1) consolidate with any Person, (2) merge with or into any Person or (3) except for (i) payments, in accordance with normal dividend policy of the Lessee, of cash dividends to holders of common stock and preferred stock, (ii) exchanges of fixed assets for other fixed assets whose fair value is equal to or greater than the fair value of the fixed assets exchanged or (iii) conveyances, transfers or leases of assets for cash where such cash is to be recorded by the Lessee, convey, transfer, lease or dividend to any Person, in any single transaction or series of related transac-tions, any asset or assets if the book, value of such asset or assets exceeds 54 of its total assets as shown on the most recent consolidated balance sheet of the Lessee deliv-ered to "the Owner Participant pursuant to Section 10 (b) (1) (i) (A) of the Participation Agreement; unless immediately after giving effect to such transaction:
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| (A) the Person who is the "Lessee" under the Facility Lease immediately following such consolidation, merger, conveyance, transfer, lease or dividend (the "Surviving Lessee" ) shall be a corporation which (i) is organized under the laws of the United States of America, a state thereof or the District of Columbia, (ii) is a "public utility" under applicable. law, (iii) is an ANPP Participant under the ANPP Participation Agreement with respect to Unit 2 (including the I
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| 1021.7500.2754.22:4
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| Undivided Interest), (iv) shall have assumed each 4 covenant and condition of the Lessee under the ANPP Participation Agreement and each other ANPP Project Agreement and (v) holds a valid and subsisting license f rom the NRC to possess Unit 2 (including the Undivided Interest);
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| (B) the Surviving Lessee, if other than the Lessee immediately prior to such transaction, shall execute and deliver to the Owner Participant an agreement, in form and substance reasonably satisfactory to the Owner Participant,, containing the assumption by the Surviving Lessee of each covenant and condition of this Facility Lease, each other Transaction Document and each Financing Document to which the Lessee imme-diately prior to such transaction was a party immedi-ately preceding such transaction; (C) no Default (other than a failure to deliver docu-ments and other inf ormation specif ied in Section 10(b) (1) (vi') of the Participation Agreement) and no Event of Default shall have occurred and be continuing, no Event of Loss shall have occurred and no Deemed Loss Event shall have been declared; (D) the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) after giving effect to such transaction, (1) shall be rated at least "investment grade" by Standard & Poor's Corporation and Moody's Investors Service, Inc. and (2) shall have an investment rating by Standard &
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| Poor's Corporation and Moody's Investors Service, Inc. not less than one "smallest notch" below the rating assigned to the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) immediately prior to such transaction (or, if neither of such rating organizations shall rate the Bonds (or, if applicable, the preferred stock of. the Surviving Lessee) at the time, by any nationally rec-ognized rating organization in the United States of America);
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| (E) the Surviving Lessee shall have a Net Worth equal to or greater than the Net Worth of the Lessee immedi-ately prior to such transactions and equal to or greater than $ 500,000,000; (F) the Surviving Lessee shall have delivered to the Owner Participant and the Indenture Trustee an 1021.7500.2754.22:4
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| ~li Officers 'ertificate and an opinion, reasonably satisfactory to the Owner Participant, of counsel to the Surviving Lessee, each stating that (1) such transaction complies with this subclause (c) and (2) all conditions precedent to the consummation of such transaction have been satisfied and any Governmental Action required in connection with such transaction has been obtained, given or accomplished; (G) the Surviving Lessee shall have delivered to the Owner Participant an opinion, reasonably satisfactory to the Owner Participant, of independent counseL to the Surviving Lessee stating that such transaction would not result in a loss of any of the tax benefits described in Section 13(c)(1) of the Participation Agreement; (H) such transaction is otherwise permitted by and in compliance with the ANPP Participation Agreement; and (I) the New Coverage Ratio of the Surviving Lessee shall be at least 1.6 to 1.
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| Upon the consummation of such transaction the Surviving Lessee, if other than the Lessee, shall succeed to, and be substi-tuted for, and may exercise every right and power of, the Lessee immediately prior to such transaction under this Lease, each other Transaction Document and each Financing Donunent to which the Lessee
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| immediately prior to such transaction was a party immediately prior to such transaction, with the same effect as if the Surviving Lessee
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| had been named herein. and therein.
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| (d) Incurrence of Debt. Wi'thout'he consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries (whether consolidated, or unconsolidated) to,, issue, assume or become liable in respect of (A) any Debt maturing more than one year after the date of such, issuance, assumption or liability (including current maturities of Debt with an original maturity of more than one year) if, immediately thereafter, (i) the total amount of all Debt of the Lessee and its sub-sidiaries (whether consolidated or unconsolidated) maturing more than one year after the date of such issuance, assump-tion or becoming liable, (reduced by Cash Available for Investment) shall exceed 70% (or, at any time after January 1, 1992 when there is not in effect a letter of credit com-plying in all respects with the Commitment Agreement, 65%)
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| of New Consolidated Capitalization, in each case as. shown on a pro forma consolidated balance sheet on and as. of the 1021.7500.2754.22:4
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| date of such issuance, assumption or becoming liable, or (ii) the New Coverage Ratio of the Lessee would be less than 1.6 to 1 or (B) any Debt maturing one year or less after the date of such issuance, assumption or becoming liable (excluding current maturities of Debt with an origi-nal maturity of more than one year) if, immediately there-after, the total amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) maturing one year or less after the date of such issuance, assumption or becoming liable shall exceed 12.54 of New Consolidated Capitalization, in each case as shown on a pro forma consolidated balance sheet on and as of the date of such issuance, assumption or becoming liable. For purposes of the foregoing clause (A), there shall be excluded any Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow and any refunding of the debt issued on December 31, 1987 by the lessors in the sale and leaseback transactions relating to Unit 3 at PVNGS shall not constitute the Lessee issuing, assuming, or becoming liable in respect of any Debt within the meaning of this subclause (d) .
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| (e) Escrow Agreement. The Lessee shall deposit with Chemical Bank as escrow agent (the "Agent" ) any amount required to be deposited under the Escrow Agreement dated as of December 31, 1987 between the Lessee and the Agent within 5 Business Days after notice from.-the Owner Participant and shall otherwise comply with its other obli-gations under such Agreement within 15 days after notice from the Owner Participant.
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| (f) Definitions. For purposes of'this Section', the terms New Consolidated Capitali;zation and New Coverage.
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| Ratio shall be defined as follows:
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| (A) "New Coverage Ratio" shall mean the ratio of (x) the sum of (a) consolidated net income of the Lessee for the twelve-month period ending on a date no later than 135 days prior to the date as of which New Coverage Ratio is being determined plus (or minus) (b) all extraordinary items deducted (or added) in deter-mining said net income (for purposes of this defini-tion of New Coverage Ratio, any charge against income resulting from a write-off of utility plant pursuant to (i) an order of any governmental authority having jurisdiction or (ii) a provision for an estimated regulatory disallowance shall be deemed to be an extraordinary item deducted in determining said net 1021.7500.2754.22:4
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| income) plus (or minus) (c) all income taxes deducted (or tax credits added) in determining said net income minus (d) for all or any portion of such period ending on or prior to December 31, 1990, 50~ of "allowance for funds used during construction" (net of deferred taxes) as such item is referred to in the consolidated income statement of the Lessee and its subsidiaries) and, for all or any portion of such period ending after December 31, 1990, 1004 of such item plus (e) the sum of all interest and lease payments paid by the Lessee and its subsidiaries (whether consolidated or unconsolidated) during such twelve-month period to (y) total interest and lease payments that will be payable by the Lessee and its subsidiaries (whether consoli-dated or unconsolidated) during the twelve-month period following the date as of which New Coverage Ratio is being determined. There shall be excluded from interest and lease payments included under clauses (x) and (y) above (i) lease payments to the Rio Grande Resources Trust, (ii) lease payments under any operating lease of computers, office equipment or the like, the original term of which (including options to renew) is less than five years and (iii) interest on Debt maturing one year or less from the date of incurrence thereof. There shall be excluded from interest and lease payments included under clause (y) abo've interest on Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow.
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| (B) "New Consolidated Capitalization" sha 1 l mean the total of consolidated capital and surplus of the Lessee plus the principal amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) which matures more than one year after the date as of which New Consolidated Capitalization is being determined.
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| (c) Schedule 8. Schedule 8 hereto is hereby added as Schedule 8 to the Facility Lease.
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| 1021.7500.2754.22:4
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| SECTION 3. Miscellaneous (a) Effective Date of Amendments. The amendments set forth in Section 2 hereof shall be and become effective upon the execution hereof by the parties hereto.
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| (b) Counterpart Execution. This Amendment No. 2 may be executed in any number of counterparts and by each of the parties, hereto on separate counterparts;. all such coun-terparts shall together constitute but one and the same instrument.
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| (c) Governing Law. This Amendment No. 2 has been negotiated and delivered in the State of New York and shall be governed by and be construed in accordance with the laws of the State of New York, except 'to the actent that pursu-ant. to the law of the State of Arizona such law is mandato-rily applicable hereto.
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| (d) Disclosure. Pursuant to Arizona Revised Statutes Section 33-404, the beneficiary of the Trust Agreement is Chrysler Financial Corporation, a corporation. The address of the beneficiary is Greenwich Office Park I, Greenwich, Connecticut 06836, Leasing and Investment Services, Attention: Mike Abandond. A copy of the Trust Agreement is available for inspection at the offices of the Owner Trustee at 100 Federal Street, Boston, Massachusetts 02110, Attention of Corporate Trust Division.
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| 1021 7500. 2754. 22:
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| IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment No. 2 to be duly executed in New York, New York on December 31, 1987.
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| THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity, but solely as Owner Trustee under a Trust Agreement, dated as of August 1, 1986 with Chrysler Financial Corporation,
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| /l/(,/g(u
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| / Senior Manager EL PASO ELECTRIC COMPANY g By ice President
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| STATE OF TEXAS )
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| ) ss.:
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| COUNTY OF EL PASO )
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| The foregoing instrument was acknowledged before me this 6th day of January, l988 by= William J. Johnson, a Vice President of EL PASO ELECTRIC COMPANY, a Texas corporation, on behalf of the corporation.
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| N ary. Public
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| ~O if'
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| COMMONNEALTH OF MASSACHUSETTS )
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| COUNTY OF SUFFOLK' The foregoing instrument was acknowledged before me this day of January, 1988, by Mark Nelson, a Senior Manager of THE FIRST NATIONAL BANK OF BOSTON, a national banking association, on behalf of the banking association as trustee under that certain Trust Agreement dated as of August 1, 1986 with Palatine Hills Leasing, Inc.
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| Notary Public hlARIANRI80LA My QannAeke Expires 5opiembe'80,'1QQ4 1021.7500.2754.06A:1
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| SCHEDULE, 8 EAOOB ONS Principal Payment Amount Date Description
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| $ 60/ 000/ 000 Jan ~ 31/
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| 1988 16.20% First mortgage bonds due 2012
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| $ 25,000,000 Jan. 31, 1988 Second mortgage bonds-The Bank- of New York due June 1988
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| $ 50/ 000/ 000 June 30, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 6/ 100/000 July 20, 1988 4.254 First mortgage bonds due July 1988
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| $ 22 / 000 / 000 May 20, 1989 12-.754 First mortgage bonds due, May 1989
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| $ 25/ 000/ 000 Aug. 15, 1989 14.54 First mortgage bonds due August 1989
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| $ 50 / 000/ 000 Nov. 20, 1989 144 First mortgage bonds due November 1989
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| $ 20 / 000/ 000 Dec. 1, 1990 Long-term notes unsecured-The Bank of America
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| $ 70,000,000 Mar. 1, 1991 Second mortgage bonds-The Bank of America 1021.7500.2754.22:4
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| ~p AMENDMENT No. 1, dated as of December 31, 1987, to Facility Lease dated as of December 1, 1986, between THE FIRST NATIONAL BANK OF BOSTON, not in its individ-ual capacity but solely as Owner Trustee ("Lessor" )
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| under a Trust Agreement, dated as of December 1, 1986 with CHRYSLER FINANCIAL CORPORATION, and EL PASO ELECTRIC COMPANY, as Lessee (" Lessee" ).
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| The parties hereto have previously entered into the Facility Lease (as heretofore amended, modified or supplemented, the "Facility Lease" ) providing for the lease by Lessor to Lessee of the Undivided Interest and the Real Property Interest. The parties now desire to make certain amendments to the Facility Lease.
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| NOW, THEREFORE, in consideration of the premises and other good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows:
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| SECTION 1. Definitions. For purposes hereof, capital-ized terms used herein and not defined herein shall have the meanings ascribed thereto in Appendix A to the Facility Lease.
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| SECTION 2. Amendments. (a) Section 7. Section 7 of the Facility Lease is hereby amended by inserting "(a) Liens." prior to the existing paragraph and inserting the following at the end thereof:
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| (b) Retirement of Debt. Unless the Owner Participant shall otherwise consent, on or before each date set forth in Schedule 7 hereto, the Lessee shall retire, legally defease or deposit with the lender or its trustee funds sufficient to retire the principal amount ofdate the Debt set forth opposite the reference to such on such Schedule.
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| (c) Merger, Sale, etc. Without the consent o f the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, convey, transfer or lease to any Person any asset except for fair value.
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| Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, (1) consolidate with any Person, (2) merge with or into any Person or (3) except for (i) payments, in accordance with normal dividend policy of the Lessee, of cash dividends to holders of common stock and preferred stock, (ii) exchanges of fixed assets for other fixed assets whose fair value is equal to or greater than the fair value of the fixed assets exchanged or (iii) conveyances, transfers or leases of assets for cash where such cash is to be recorded by the Lessee, convey, transfer, lease or dividend to any Person, in any single transaction or series of related 1021.7500.2754.08:2
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| transactions, any asset or assets if the book value of such asset or assets exceeds 54 of its total assets as shown on the most recent consolidated balance sheet of the Lessee delivered to the Owner Participant pursuant to Section 10 (b) (1) (i) (A) of the Participation Agreement; unless immediately af ter giving effect .to such transaction:
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| (A) the Person who is the "Lessee" under the Facility Lease immediately following such consolidation, merger, conveyance, transfer, lease or dividend (the "Surviving Lessee" ) shall be a corporation which (i) is organized under the laws of the United States of America, a state thereof or the District of Columbia, (ii) is a "public utility" under applicable law, (iii) is an ANPP Participant under the ANPP Participation Agreement with respect to Unit 2 (including the Undivided Interest), (iv) shall have assumed each cov-enant, and condition o f the Lessee under the ANPP Participation Agreement and each other ANPP Project Agreement and (v) holds a valid and subsisting license from the NRC to possess Unit 2 (including the Undivided Interest);
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| (B) the Surviving Lessee, if other than the Lessee immediately prior to such transaction, shall execute and deliver to the Owner Participant an agreement, in form and substance reasonably satisfactory to the Owner Participant, containing the assumption by the Surviving Lessee of each covenant and condition of this Facility Lease, each other Transaction Document and each Financing Document to which the Lessee imme-diately prior to such transaction was a party immedi-ately preceding such transaction; (C) no Default (other than a failure to deliver docu-ments and other information specif ied in Section 10 (b) (1) (vi) of the Participation Agreement) and no Event of Default shall have occurred and be continuing, no Event of Loss shall have occurred and no Deemed Loss Event shall have been declared; (D) the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) after giving effect to such transaction, (1) shall bePoor's rated at least "investment grade" by Standard 6 Corporation and Moody's Investors Service, Inc. and (2) shall have an investment rating by Standard &
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| Poor's Corporation and Moody's Investors Service, 1021.7500.2754.08:2
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| Inc. not less than one "smallest notch" below the rating assigned to the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) immediately prior to such transaction (or, if neither of such rating organizations shall rate the Bonds (or, if applicable, the preferred stock of the Surviving, Lessee) at the time, by any nationally rec-ognized rating organization in the United States of America);
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| (E) the Surviving Lessee shall have a Net Worth equal to or greater than the Net Worth of the Lessee immedi-ately prior to such transactions and equal to or greater than $ 500,000,000; (F) the Surviving Lessee shall have delivered to the Owner Participant and the Indenture Trustee an Officers'ertificate and an opinion, reasonably sat-isfactory to the Owner Participant, of counsel to the Surviving Lessee, each stating that (1) such transac-tion complies with this subclause (c) and (2) all con-ditions precedent to the consummation of such transac-tion have been satisfied and any Governmental Action required in connection with such transaction has been obtained, given or accomplished; (G) the Surviving Lessee shall have delivered to the Owner Participant an opinion, reasonably satisfactory to the Owner Participant, of independent counseL to the Surviving Lessee stating that such transaction would not result in a loss of any of the tax benefits described in Section 13(c)(1) of the Participation Agreement; (H) such transaction is otherwise permitted by and in compliance with the ANPP Participation Agreement; (I) the New Coverage Ratio of the Surviving Lessee shall be at least 16 to 1; and (J) the Surviving Lessee, if other than the Lessee immediately prior to such transaction, shall have pro-vided a Letter of Credit which meets the requirements set f orth in Section 10 (b) (3) (xvii) of the Participation Agreement to the Owner Participant in the same amount as was available immediately prior to such transaction.
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| 1021.7500.2754 F 08:2
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| Upon the consummation of such transaction the Surviving Lessee, if other substituted for, and than the Lessee, shall succeed to, and be may exercise every right and power of, the Lessee immediately prior to such transaction under this Lease, each other Transaction Document and each Financing Document to which the Lessee immediately prior to such transaction was a party immediately prior to such transaction, with the same effect as if the Surviving Lessee had been, named herein and therein.
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| (d) Incurrence of Debt. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries (whether consolidated or unconsolidated) to, issue, assume or become liable in respect, of (A) any Debt maturing more than one year after the date of such issuance, assumption or liability (including current maturities of Debt with an original maturity of more than one year) if, immediately thereafter, the Lessee and its sub-(i) the total amount of all Debt of unconsolidated) sidiaries (whether consolidated or maturing more than one year after the date of such issuance, assump-tion or becoming liable (reduced by Cash Available for Investment) shall exceed 70% (or, at any time after January 1, 1992 when there shall not have been delivered and in effect a written election by Owner Participant to permit Lessee to defer compliance with the Tests as defined in subclause (f) hereof, 65%) of New Consolidated Capitalization, in each case as shown on a pro forma con-solidated balance sheet on and as of the date of such issu-ance, assumption or becoming liable, or (ii) the New.
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| Coverage Ratio of the Lessee would be less than 1.6 to 1 or (B) any Debt maturing one year or less after the date of such issuance, assumption or becoming liable (excluding current maturities of Debt with an original maturity of more than one year) if, immediately thereafter, the total amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) maturing one year or less after the date of such issuance, assumption or becoming liable shall exceed 12.5< of New Consolidated Capitalization, in each case as shown on a pro forma issu- con-solidated balance sheet on and as of the date of such ance, assumption or becoming liable. For purposes of the foregoing clause (A'), there shall be excluded any Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been.
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| segregated in escrow and any refunding of the debt issued on December 31, 1987 by the lessors in the sale and: lease-back transactions relating to Unit 3 at PVNGS shall not constitute the Lessee issuing, assuming, or becoming liable 1021. 7500. 2754. 08: 2
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| in respect of any Debt within the meaning of this subclause (d) .
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| (e) Escrow Agreement. Lessee shall deposit with Chemical Bank as escrow agent (the "Agent" ) any amount required to be deposited under the Escrow Agreement dated as of December 31, 1987 between the Lessee and the Agent within 5 Business Days after notice from the Owner Participant and shall otherwise comply with its other obli-gations and agreements under such Agreement within 15 days after notice from the Owner Participant.
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| (f) Financial Ratios. Unless the Owner Participant shall otherwise consent (which consent may be in the form of a deferral of compliance in the manner set forth below),
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| Lessee agrees that as of December 31, 1991 (i) all of the Debt listed on Schedule 7 to the Facility Lease shall be retired in accordance with such Schedule 7, (ii) the New Coverage Ratio of Lessee, determined as of June 30, 1991, shall be not less than 1.6 to 1, (iii) the aggregate Debt maturing more than one year after the date of issuance, assumption or liability (including current maturities of Debt with an original maturity in excess of one year) of Lessee shall not be in excess of 65% of New Consolidated Capitalization, all as derived from Lessee's financial books and records as of June 30, 1991, and (iv) the aggre-gate Debt maturing one year or less after the date of such issuance, assumption or liability (excluding current matu-rities of Debt with an original maturity 12.54 in excess of one of such New year) of Lessee shall not be in excess of Consolidated Capitalization (clauses (i) through (iv) above being herein called the "Tests" ). Lessee shall prepare for and provide to Owner Participant not later than October 1, 1991 (and October 1 of succeeding years under the circum-stances set forth below) calculations showing whether Lessee has satisfied the Tests and the financial data. upon which such calculations were based.
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| Participant If Lessee has failed written notice to meet the Tests, Owner may, by to Lessee, elect to defer requiring Lessee to comply with the Tests for one year. If Owner Participant makes such election, Lessee's failure to meet the Tests shall not con-stitute an Event of Default hereunder. The procedures set forth above (the New Coverage Ratio being determined, and deriving New Consolidated Capitalization from Lessee's financial books and records, as of June 30 in each such year) shall be repeated each year until Owner Participant ceases to be entitled to make such election of deferral.
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| 1021.7500.2754.08:2
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| (g) Definitions. For purposes of this Section 7, the terms New Consolidated Capitalization and New Coverage Ratio shall be defined as follows:
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| (A) "New Coverage Ratio" shall mean the ratio of (x) the sum of (a) consolidated net income of the Lessee for the twelve-month period ending on a date no later than 135 days prior to the date as of which New Coverage Ratio is being determined plus (or minus) (b) all extraordinary items deducted (or added) in deter-mining said net income (for purposes of this defini-tion of New Coverage Ratio, any charge against income resulting from a write-off of utility plant pursuant to (i) an order of any governmental authority having jurisdiction or (ii) a provision for an estimated regulatory disallowance shall be deemed to be an extraordinary item deducted in determining said net income) plus (or minus) (c) all income taxes deducted (or tax credits added) in determining said net income minus (d) for all or any portion of such period ending on or prior to December 31, 1990, 504 of "allowance for funds used during construction" (net of deferred taxes) as such item is referred to in the consolidated income statement of the Lessee and its subsidiaries) and, for all or any portion of such period ending after December 31, 1990, 100% of such item plus (e) the sum of all interest and lease payments paid by the Lessee and its subsidiaries (whether consolidated or unconsolidated) during such twelve-month period to (y) total interest and lease payments that will be payable by the Lessee and its subsidiaries (whether consol'i-dated or unconsolidated) during the twelve-month period following the date as of which New Coverage Ratio is being determined. There shall be excluded from interest and lease payments included under clauses (x) and (y) above (i) lease payments to the Rio Grande Resources Trust, (ii) lease payments under any operating lease of computers, office equipment or the like, the original term of which (including options to renew) is less than five years and (iii) interest on Debt maturing one year or less from the date of incurrence thereof. There shall be excluded from interest and lease payments included under clause (y) above interest .on Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow.
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| 1021.7500.2754.08:2
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| (B) "New Consolidated Capitalization" sha1'l .mean the total of consolidated capital and surplus of the Lessee. plus the principal amount of all Debt of the Lessee and its subsidiaries (whether consolidated -or unconsolidated) which matures more than one year after the date as of which New Consolidated Capitalization is being determined.
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| (b) Schedule 7. Schedule 7 hereto i;s hereby added as Schedule 7 to the Facility Lease.
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| SECTION 3. Miscellaneous (a) Effective Date of Amendments. The amendments set forth in Section 2 hereof shall be and become effective upon the execution hereof by the parties hereto.
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| (b) Counterpart Execution. This Amendment No. 1 may be executed in any number of counterparts and by each of the parties hereto on separate counterparts; all such coun-terparts shall together constitute but one and the same instrument.
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| (c) Governing Law. This Amendment No. 1 has been negotiated and delivered in the State of New York and shall be governed by and be const+@ed in accordance with the laws of the State of New York, except to the actent that pursu-ant to the law of the State of Arizona such law is mx3ato-rily applicable hereto.
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| (d) Disclosure. Pursuant to Arizona Revised Statutes Section 33-404, the beneficiary of th'e Trust Agreement is Chrysler Financial Corporation, a Michigan corporation.
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| The address of the beneficiary is Greenwich Office Park I, Greenwich CT 06836, Attention: Leasing and Investment Services. A copy of the Trust Agreement is available for inspection at the offices of the Owner Trustee at 100 Federal Str'eet,, Boston, Massachusetts 02110, Attention of Corporate Trust Division.
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| 1021.7500.2754.08:2,
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| IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment No. 1 to be duly executed in New York, New. York on December 31, 1987.
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| THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity, but solely as Owner Trustee under a Trust December 1, 198G with Chrysler Financial Corporation, Senior Manager EL PASO ELECTRIC COMPANY, By Vice President
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| STATE OF TEXAS )
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| ) ss COUNTY OF EL PASO )
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| The foregoing instrument was acknowledged before me this 6th day of January, 1988 by William J. Johnson, a Vice President of EL PASO ELECTRIC COMPANY, a Texas corporation, on behalf of the corporation.
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| No ary Public
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| SCHEDULE 7 TO FACILITY LEASE EL PASO OBLIGATIONS Principal Payment Amount Date Description
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| $ 60,000,000 Jan. 31, 1988 16..20% First mortgage bonds due 2012
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| $ 25,000,000 Jan. 31, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 50 i 000 000 June 30, Second mortgage bonds-g 1988 The Bank of New York 'due June 1988 6 i 1 00'i 000 July 20, 1988 4.25% First mortgage bonds due'July 1988
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| $ 22 1 000 '00 May 20, 1989 12.754 First mortgage bonds due May 1989
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| $ 25i 000i 000 Aug. 15, 1989 14 '~o First mortgage bonds due August 1989
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| $ 50,000,000 Nov. 20, 1989 144 First mortgage bonds due November 1989
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| $ 20 i 000 i 000 Dec. 1, 1990 Long-term notes unsecured-The Bank of America
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| $ 70,000,000 Mar. 1, 1991 Second mortgage bonds-The Bank of America 1021. 7500. 2754. 08,: 2
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| AGREEMENT dated as of December 31, 1987 among CHRYSLER FINANCIAL CORPORATION (" Owner Participant" ), THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee ("Owner Trustee" ) under a Trust Agreement dated as of December 1, 1986 with Owner Participant, and EL PASO ELECTRIC COMPANY (" Lessee" ) .
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| Owner Trustee and Lessee are parties to the Facility Lease dated as of December 1, 1986, as amended (the "Facility Lease~~) . All terms used but not defined herein have the meanings ascribed to them in Appendix A to the Facility Lease.
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| Lessee, Owner Trustee and Owner Participant desire to modify certain provisions of the Facility Lease, and to provide for the creation of an escrow account into which Lessee will deposit funds to be held for the retirement of certain of its outstanding Debt. Accordingly, the parties hereto agree as follows:
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| : 1. Financial Tests. Lessee agrees that as o f December 31, 1991 (i) all the Debt listed on Schedule 7 to the Facility Lease shall be retired in accordance with such Schedule 7, (ii) the 'New Coverage Ratio of Lessee, determined as, of June 30, 1991, shall be not less than. 1.6 to 1, (iii) the aggregate Debt maturing more than one year after the date of issuance, assumption or liability (include;ng current maturities of Debt with an original
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| maturity in, excess of one year) of Lessee shall not be in excess of
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| 65% of New Consolidated Capitalization, all as derived from the
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| Lessee's .financial books and records as of June 30, 1991, and
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| (iv) the aggregate Debt maturing one year or less after. the date of such issuance, assumption or liability (excluding current maturities of Debt with an original maturity in excess of one year) of Lessee shall not be in excess of 12.5: of such New Consolidated Capitalization (clauses (,i) through (iv) above being herein called the "Tests" ). Lessee shall prepare for and provide to Owner Participant not later than October 1, 1991 (and. October 1 of succeed-ing years under the circumstances set forth below) calculations show-ing whether Lessee has satisfied the Tests and the financial data upon which such calculations were based. If Lessee has failed to meet the Tests, Owner Participant may, at its option (and without affecting any other rights of Owner Participant to draw on the Letter of Credit), draw on the Letter of Credit or by written notice to Lessee elect to defer requiring Lessee to comply. with the Tests for one year, and in the event of such election by Owner Participant to defer compliance, Lessee's failure to comply with the Tests shall not constitute an Event of Default under the Facility Lease. The Owner Participant shall exercise such option within a period of time .to be determined but not. more than thirty (30)'ays after the Lessee shall furnish the Owner Participant the aforesaid c'alculations and financial data. The procedures set forth above (the New Coverage Ratio being determined, and deriving New Consolidated Capitalization
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| 1021.7500.2754.11:2
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| from the Lessee's financial books and recoids, as of June 30 in each such year) shall be repeated each year until the Owner Participant ceases to be entitled to such option.
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| : 2. Escrow A reement. Lessee shall enter into an Escrow Agreement with Chemical Bank substantially in the form of Exhibit A hereto. The Owner Participant agrees that, upon execution and deliv-ery of the amendments required by Section 4 hereof, it shall deliver to the escrow agent the notice of termination required by clause (i) of the Escrow Agreement.
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| : 3. Amendment to Lease. Owner Trustee and Lessee shall execute Amendment No. 1 to the'acility Lease substantially in the form of Exhibit B hereto.
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| : 4. Further Chan es. The parties will, subject to obtain-ing any required consents of third parties to the Transaction Documents, amend the Facility Lease and other Transaction Documents in order to implement the Lessee ' obligation to comply with the Tests and Owner Participant's right to defer such compliance and to further implement the terms of this Agreement. Such amendments will include provisions affording Lessee, in the event Owner Participant has determined to draw on the Letter of Credit when Lessee has failed to meet the Tests and unless an Event of Default shall have otherwise occurred and be continuing or an Event of Loss shall have occurred or Deemed Loss Event shall have been declared, the right to purchase the Undivided Interest and the Real Property Interest on or before some period prior to the expiration or termination date of the existing Letter of Credit, for an amount based on the greater of (i) Enhanced Casualty Value, which will be calculated on an assumed 25: residual, and (ii) Fair Market Sales Value of the Undivided Interest and the Real Property Interest. All such amendments will be entered into no later than the date of the issuance and delivery of the letter of credit to Chrysler Financial Corporation pursuant to that certain Agreement, dated as of December 31, 1987, among Chrysler Financial Corporation, The First National Bank of Boston,.not in its individual capacity but solely as Owner Trustee under a Trust Agreement dated as of August 1, 1986, and El Paso Electric Company.
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| : 5. Consent. Owner Participant irrevocably consents to any and all transactions which would require its consent under Section 10(b) (3) (ii) or 10(b) (3) (v) of the Participation Agreement.
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| : 6. Owner Trustee Direct've. Owner Participant hereby authorizes and directs Owner Trustee to execute this Agreement, Amendment No. 1 to the Facility Lease and such other agreements, doc-uments and certificates as shall be required in order to facilitate the execution and delivery of this Agreement and such Amendment, No. l.
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| 1021.7500.2754.11.:2
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| : 7. Taxes. All the provisions of, Sections 13 (b) and (c) of the Participation Agreement shall be applicable as though the mat-ters set forth in this Agreement (including the exhibits hereto) had
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| been included in the Transaction Documents at all times since
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| December 18, 1986 except that the execution and delivery of this Agreement, as opposed to its provisions, shall not be considered to be the execution and delivery of a Transaction Document or a Financirig Document or an act specifically recyired or expressly per-mitted to be performed by the Lessee for the purposes of Section 13(c)(4)(i).(B) of the Participation Agreement.
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| : 8. Miscellaneous. This Agreement may be executed by the parties hereto in separate counterparts, and- it shall,not be neces-sary for the signatures of all parties to appear on any one counterpart. The headings of the various sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. This Agreement may not be terminated, amended, supplemented, waived or modified orally., but only by an instrument in .writing signed by the party against whom enforcement of such transaction, amendment, sup-plement, waiver or modification is sought. This Agreement in all respects shall be governed by and construed in accordance with the laws of the State of New York, including all matters, of construction, validity and performance.
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| 1021; 7500. 2754. 11:
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| PAGE.84 IN WITNESS WHEREOF eaoh of the yartiei hereto has aauled this Agreement to ba duly executed as of thee daay an d year first abois written.
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| CHRYSLER FINANCIAL CORPORATION BY ! CHRYS CAPITAL CORPORATION A E -IN-FACT SYi RI He ASSISTANT SECRETARY THE F,ZRST NATIONAL BANK QP SOSTON, not in its individual capacity
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| , but solely aa Owner T tee c4dl~
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| 8Yg
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| '~y" EL PASO ELECTRIC COMPANY BY<
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| Exhibit A to the Agreement ESCROW 'GREEMENT Dated as of December 31, 1987 between CHEMICAL BANK, Escrow Agent and EL PASO ELECTRIC COMPANY je
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| - 1021.7500.2704.13:20
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| TABLZ OF CONTENTS Pacae ARTICLZ I DEFINITIONS Section 1.1. Certain Defined Terms............ 1 ARTICLE II APPOINTMENT OF AGENT AND CREATION OF ESCROW ACCOUNT Section 2.1. Appointment of Agent. ~ ~ ~ 3 Section 2.2. The Escrow Account. ~ ~ ~ 3 Section 2.3. Statement of Purpose. ~ ~ ~ 4 ARTICLE III LEASE PROCEEDS DEPOSIT BY THE COl!PANY Section 3.1. Lease Proceeds Escrow Deposit. . . . . . . . 4 ARTICLE IV TRANSFER AND DEPOSIT BY THE COMPANY OF EXISTING INVESTMENTS Section 4.1. Transferred Investments Escrow Deposit. . . . 4 ARTICLZ V INVESTMENTS AND PAYMENTS BY AGENT Section 5.1. Payments by Agent to Company from Lease Proceeds Escrow Sub-Account. . . . . . . . . 5
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| TABLE OF CONTENTS, Continued Pacae Section 5.2. Monthly Disbursement from both Sub-accounts. ~ ~ ~ ~ ~ ~ ~ 0 ~ ~ ~ ~ ~ ~ 6 Section 5.3. Investments; Agreement as to Value of Clauses 6, 7 and 8 on December 31, 1988. ~ ~ 7 Section 5.4. Valuation of Investments; Payment of Deficiency. 8 ARTICLE VI CONCERNING THE AGENT Section. 6.1. Duties of Agent. .10 Section 6.2. Liabilz.ty.
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| .10 Section 6.3. Delivery of Documents and Further Acts. .10 Section 6.4. Legal Proceedings.
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| Section 6.5. Resignation; Appointment of Successor.
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| Section 6.6. Indemnification.
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| ARTICLE VII MISCELLANEOUS Section 7.1. Payments. .12 Section 7.2. Termination. .12 Section 7.3. Amendments, Etc. ~ 12 Section 7.4. Addresses for Notices, Etc. .12 Section 7.5. Successors and Assigns. .13 Section 7.6. Severability of Provisions. ~ 13 Section 7.7. Headings, etc. .13 IQ
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| ~gg
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| TABLE OF CONTENTS, Continued Pacae Section 7.8. Governing Law. . . . . . . . . . . . . . . .13 Section 7.9. Counterpart Execution. . . . . . . . . . . .13
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| ESCROW AGRE196BIT ESCROW AGREEMENT, dated as of December 31, 1987, among CHEMICAL BANK, a New York banking corporation (the Agent), and EL PASO ELECTRIC COMPANY, a Texas corporation (th Company).
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| WITNESSETH:
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| WHEREAS, pursuant to eight separate Commitment Agreements, dated as of December 31, 1987 with each of the Owner Participants (as described in Schedule I hereto) and the related Owner Trustee, the Company has agreed to establish and maintain an escrow account of certain moneys and securities (such terms and all other capitalized terms used herein having the meanings set forth or referred to in Section 1 hereof) until such time as Acceptable Letters of Credit are obtained; and WHEREAS, the Commitment Agreements contemplate that certain moneys and securities are to. be held in an escrow account to be established with the Agent and are to be disbursed by the Agent pur-suant to directions from the Company until the cccurrence of certain events, all in accordance with the terms and conditions set forth herein; and WHEREAS, the Company desires that the E.gent be appointed as escrow agent, and the Agent desires to accept uch appointment, all in accordance with the terms and conditions se= forth herein.
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| NOW, THEREFORE, in consideration of the mutual agreements herein contained and of other good and valu,able consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows:
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| ARTICLE I DEFINITIONS SECTION 1.1. Certain Defined Terms. As used in this Agreement and unless otherwise expressly indicated, or unless the context clearly requires otherwise:
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| (a) The terms Agent and the Company have the meanings assigned in the caption of this Agreement.
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| (b) The following terms have the respective meanings set forth below (such meanings to be equally applicable to both the sin-gular and plural forms of the terms defined):
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| Acceptable Letter of Credit means a letter of credit complying with the requirements therefor a set forth in 1021.7500.2704.13:20
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| the relevant Commitment Agreement, which the Company has agreed to provide to each August Owner Participant.
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| August Owner Participants means each of the six enti-ties listed in Schedule I hereto, each as an owner partici-pant under its related August Participat'ion Agreement.
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| August Participation Agreement(s) means each of six separate Participation Agreements, dated a- of August 1, 1986, as amended by Amendment No. 1, dated October 1, 1986 among the Company, El Paso Funding Corporation, the Owner Trustee, First City National Bank of Houston,, as Indenture Trustee, and each August Owner Participant.
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| Commitment Agreements means the eight separate Agreements, dated as of December 31, 1987, by and between El Paso, the related Owner Trustee and each of the Owner Participants.
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| December Participation Agreement(s) means the Participation Agreement dated as of December 1, 1986, among the Company, El Paso Funding Corporation, the Owner Trustee, First City National Bank of Houston, as Indenture Trustee and Chrysler Financial Corporation and the Participation Agreement, dated as of December 1, 1986, among the Company, El Paso Funding Corpora'=ion, the Owner Trustee, First City National Bank of Houston, as Indenture Trustee and Commercial Federal Investmen. Corporation.
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| El Paso Obligations means the principa'mount of the indebtedness of the Company set forth iii Schedule III hereof.
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| Escrow Account means said term:is defined in Section 2.2 hereof.
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| Escrow Sub-accounts means the Transferred Investments Escrow Sub-account and the Lease Proceeds Escrow Sub-account, collectively.
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| Lease Proceeds Escrow Dep'osit means said term as defined in Section 3.1 hereof.
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| Lease Proceeds Escrow Sub-Account means said term as defined in Section 2.2 hereof.
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| Owner Participant,(s) means the August Owner Participants and Chrysler Financial Corporation and 1021. 7500. 2704. 13: 20
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| ilk Commercial Federal Investment Corporation, as Owner Participants under the December Participation Agreements.
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| Owner Trustee means The First National Bank of Boston, as trustee for an Owner Participant under ea;"h of six sepa-rate Trust Agreements, dated as of August 1, 1986 and two separate 'Trust Agreements, dated as of December 1, 1986.
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| Participation Agreements means the August Participation Agreements and the December Participation Agreements.
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| Permitted Investments means the certificates, obliga-tions and investments set forth in Schedule II hereto, the investments constituting the Transferred Investments Escrow Deposit and reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment fea-ture o f any o f the investments listed in clauses (ii),
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| (iii) and (iv) of the first paragraph of Section 4.1'ereof.
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| Transferred Investments Escrow Deposit means said term as defined in Section 2.2 hereof.
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| Transferred Investments Escrow Sub-account means said term as defined in. Section 2.2 hereof.
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| (c) As used herein, any capitalized term not otherwis'e defined herein has the meaning assigned to such term in the respec-
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| tive Participation
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| Agreements.
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| ARTICLE II APPOINTMENT OF AGENT AND CREATION OF ESCRCN ACCOUNT SECTION 2.1. Appointment, of Agent. For the purposes and subject to the terms and conditions set forth in this Agreement, the Company hereby appoints Chemical Bank as escrow agent, and Chemical Bank hereby'ccepts such appointment.
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| SECTION 2.2. The Escrow Account. The Agent shall estab-lish and maintain for the benefit of the Owner Participants two an Escrow Account (the Escrow Account), within which there shall be sepa-rate sub-accounts to be known as the Lease Proceeds Escrow Sub-account (the Lease Proceeds Escrow 'Sub-account) and the Transferred Investments Escrow Sub-account (the Transferred Investments Escrow Sub-account). The Agent shall deposit in the Escrow Account (i) for 1021.7500.2704.13:20
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| credit to the Lease Proceeds Escrow Sub-account, any Lease Proceeds Escrow Deposit made by the Company to the Agent pursuant to Section
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| : 3. 1 hereof, and (ii) for credit to the Transferr~:d Investments Escrow Sub-account, the Transferred Investments Escrow Deposit made by the Company to the Agent pursuant to Section 4.1 hereof. So long as any amounts remain in the Escrow Account, such amounts shall be consid-ered as, and shall be and remain, the property of the Company. The Agent shall invest or re-invest any amounts in the Escrow Account and make applications thereof as provided in Art'cle V hereof. 'She Escrow Account shall be funded by the deposits by the Company to the appropriate sub-accounts in the manner describ d herein.
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| SECTION 2.3. Statement of Purpose. The Company represents that the purpose of this Agreement and the creation and establishment of the Escrow Account is to pay or provide for the payment of the El Paso Obligations and certain short-term indebtedness of El Paso in accordance with Section 5.1(b) hereof.
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| ARTICLE III LEASE PROCEEDS DEPOSIT BY THE COMPANY SECTION 3.1. Lease Proceeds Escrow Deposit. The Company hereby represents that it has deposited with the Agent $ 163,000,000 for deposit by the Agent in the Lease Proceeds Escrow Sub-account.
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| ARTICLE IV TRANSFER AND DEPOSIT BY THE COMPAtPZ OF EXISTING INVESTMENTS SECTION 4.1. Transferred Investments Escrow Deposit.
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| Subject to the terms and provisions of this Agreement, the Company hereby agrees that by February 1, 1988 it will cause to be deposited into the Transferred Investments Escrow Sub-Account by change of account reference to that of the Agent or assignment of all right, title and interest of the Company to the Agent (exclusive of any obligations .or liabilities of the Company) as the case may be, of the following (collectively, the Transferred Investments Escrow Deposit):
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| (i) Account of El Paso Electric Co., Account No. 9-6191-03 01 at MBank Houston, P.O. Box 2629, Attn: Capital Markets Division, Houston, Texas; I
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| (ii) The limited partnership interest of the Company in and to the Weiss Qualified Income Fund Limited 1021. 7500. 2704. 13: 20
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| Partnership I, obtained on November 13, 1936 pursuant to the Neiss Qualified Income Fund Limited Partnership I Amended and Restated Agreement of Limited Partnership, dated as of September 9, 1986; (iii) Account of El Paso Electric, Ac .ount No. 530-97061 at Merrill Lynch, Pierce,- Fenner & Smith Incorporated, One Liberty Plaza, 165 Broadway, New York, NY 10080; and (iv) Account of El Paso Electric Company, Account No.
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| 30 B Z0009 354 at Kidder, Peabody & Co., Incorporated, 20 Exchange Place, New York, NY 10005.
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| The Agent is hereby authorized by the Company to. enter into any arrangement or agreement (including but not limited to, manage-ment agreements) as the Company may determine is necessary to evi-dence ownership of the foregoing investments by the Agent.
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| The Company represents that the aggregate "book value" as of the end of November, 1987 of the Transferred Investments Escrow Deposit was not less than $ 135 million.
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| Company Notwithstanding the foregoing, fails to if for any reason the consummate any of the transfers, in whole or in part, to the Agent referred to in clauses (i) ;.hrough (iv) of the first paragraph of this Section 4.1, such failure shall not consti-tute a breach of, or default under, this Agreement, so long as the Company shall have on deposit in the Transferred Investments Escrow Sub-Account with the Agent on February 1, 1988, moneys or securities having an aggregate "book value" as of the end of November, 1987 of not less than $ 135 million.
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| ARTICLE V
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| INVESTMENTS AND PAYMENTS BY AGENT SECTION 5.1. Payments by Agent to Company from Lease Proceeds Escrow Sub-Account. (a) In order to provide for the pay-ment of the El Paso Obligation that is to be paid on or prior to January 31, 1988, and prior to the valuation of the money and securi-ties in the Escrow Account, upon the receipt by the Agent (with copies to each Owner Participant) from the. Company of a request in writing for disbursement, the Agent shall pay to the party indicated in the written request of the Company in immediately available funds, out of the funds then on deposit in the Lease Proceeds Escrow Sub-account, an amount, equal to the amount that is due and owing to The Bank of New York as a prepayment of the El Paso Obligation for which 1'021. 7500. 2704. 13: 20'
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| payment is due in January 1988. Such request by the Company to the Agent pursuant to this Section 5.1 shall specify (i) the applicable prepayment date and (ii) w'ire or transfer instructions.
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| (b) The Agent will prepare a market valuation of all moneys and securities on deposit in the Escrow Accounc in accordance with the requirements of Section 5.4 hereof within 10 calendar days fol-lowing receipt by the Agent of all monthly closirg valuations for the month of January 1988. Upon completion of such valuation, the Agent shall promptly provide a certificate to the Company and each of the Owner Participants setting forth the value of such moneys and securities. To the extent that the amount of such market valuation exceeds $ 243,100,000, upon receipt of such certificate of valuation from the Agent, the Company shall deliver a written request to the Agent (with copies to each Owner Participant), directing release of-such excess to the Company for payment of indebtedness of the Company having a maturity of one year or less specified in such request, and upon receipt of such request the Agent shall release such excess to the Company. To the extent that the amount of such market valuation is less than $ 243, 100,000, the Company shall provide the Agent, within five business days after receipt of the certificate of valua-tion from the Agent, with money or Permitted Investments (wi.th a market, value as of the date of such valuation) sufficient to cover the deficiency.
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| SECTION 5.2. Monthly Disbursement from both Sub-accounts.
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| Except as specifically provided in Section 5.1 hereof, as soon as practicable following each monthly valuation pursuant to Section 5.4 hereof of the moneys and securities on deposit in the Escrow Account, amounts on deposit in the Escrow Account shall be disbursed monthly in accordance with and in amounts as set forth in a written certifi-cate of the Company (with copies of such certificate delivered to each Owner Participant) specifying the applicable payment date, payee, sub-account and wire or transfer instructions: first, to the party named in such certificate of the amount as set forth therein in order to permit the payment of El Paso Obligations with a Payment Date as determined in accordance with Schedule III hereto within 45 days after the date as of which the Escrow Account is valued and then second to the Company all amounts on deposit in the Escrow Account in excess of the amount necessary to pay the principal amount of the remaining El Paso Obligations, determined by reference to Schedule III hereto and confirmed in the certificate of the Company requesting such disbursement.
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| Notwithstanding the foregoing the Company may direct the Agent to make a disbursement from the Escrow Account solely for the purposes of paying an El Paso Obligation if for any reason the valuation and disbursement, procedure heretofore described does not ~
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| provide for timely and adequate payment of any such El Paso 4
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| 1021. 7500. 2704. 13: 20
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| ~O Obligation and such direction of the Company shall expressly so state. The Agent shall be entitled to liquidate any investments held
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| in the Escrow Account in order to provide for payment of the El Paso
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| Obligations or any other payments in accordance herewith. The Agent shall have no liability for losses resulting from the liquidation of
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| securities on deposit in the Escrow Account.
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| SECTION 5.3. Investments; Agreement as to Value of Clauses 6, 7 and 8 on December 31, 1988. (a) The Agent shall invest and reinvest (which shall include the application of (A) the proceeds of maturing investments and (B) the sale of investments) the moneys in the Escrow Account only in Permitted Investments and shall sell investments in the Escrow Account, as specifically identified in a written direction of the Company which shall, in the case of any such investment or reinvestment expressly state that each such investment is a Permitted Investment and further that such Permitted Investment is in compliance with the limitations set forth in the next sentence, it being understood that the Agent shall have no duty to monitor such compliance; provided, however, that such identification of the investment or reinvestment and certification as to compliance with the limitations set forth in the next sentence shall not be appli-cable to the nondiscretionary reinvestment feature of the investments described in clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof. Any such investments and reinvestments shall be subject to the following limitations:
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| (i) no investment or reinvestment shall be made in any of clauses 6, 7 and 8 contained in Schedule II hereto if as a result of such investment or reinvestment (a) at, the date thereof, but no later than December 31, 1988, the total aggregate amount invested pursuant to clauses 6, 7 and 8 contained in Schedule II hereto would exceed the lesser of (x) sixty percent (60%) of the market value of the amounts then on deposit in the Escrow Account and (y) the total so invested at any time immediately. prior to such investment, or reinvestment; provided, however, that for purposes of determining compliance with this subclause (y),
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| there shall be excluded from the total aggregate amount invested pursuant to clauses (6), (7') and (8) of Schedule II hereto any amounts attributable to the invest-ment and reinvestment of income, dividends and capital gains resulting from the nondiscr'etionary reinvestment fea-ture of any of the investments listed in clauses (ii),
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| (iii) and (iv) of the first paragraph of Section 4.1 on deposit in the Transferred Investment Escrow Sub-Account and (b) at the date thereof, but only after December 31, 1 988 i the tota 1 aggregate amount invested pursuant to such clauses would exceed twenty-five percent (25%) of the 1021. 7500. 2704. 13: 20
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| 0 0
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| market value of the amounts then on deposit in the Escrow Account; (ii) no investment or reinvestment in Permitted Investments shall be made if the result thereof would be to cause any of clauses 1, 3, 4, 5, 9 and 10 contained in Schedule II hereto to exceed twenty-five percent (25%) of the market value of the amounts on deposit in the Escrow Account; and (iii) the average life of any investment (other than investments described in clause 2 contained in Schedule II hereto) shall not exceed seven years.
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| (b) The Company agrees that the market value as of December 31, 1988 of investments in the Escrow Account (including the Transferred Investments Escrow Deposit) in clauses 6, 7 and 8 con-tained in Schedule represents that II ithereto will not exceed $ 45 million. The will attempt to undertake an orderly Company liquidation of the Transferred Investments Escrow Deposit so as to be in a position to comply with this Article V. The Company anticipates that, under current market conditions and recognizing that sale of investments will be designed to protect the Company from incurring any losses due to such investments, reductions, within the bands and for the quarters of calendar year 1988 indicated below, of the Transferred Investments Escrow Deposit would be achievable:
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| 1988 Reduction uarter 1st 20 to 45 2nd 20 to 30 3rd 30 to 20 4th 38 to 13 Total for 1988 108 SECTION 5.4. Ualuation of Investments; Payment of Deficiency. The Agent shall cause a monthly fair market valuation of the Escrow Account to be undertaken. In undertaking its obligation to make a monthly valuation of the Escrow Account, (i) the Agent shall be entitled to assume that the monthly market, valuations fur-nished to the Agent of the investments held in the Transferred Investments Escrow Sub-Account shall constitute the market value of any such investments and (ii) to the extent the Agent is unable to value any Permitted Investments in accordance with its customary practice as a corporate trustee, the Company hereby agrees to promptly provide the Agent. with, and the Agent shall be entitled to rely upon, an independent market valuation of any such investment.
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| The Company agrees to cause the monthly market valuations of the 1021.7500.2704.13:20
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| investments constituting the Transferred Investments Escrow Sub-Account to be sent directly to the Agent. Copies of all such valuations by the Agent shall be sent to the Owner Participants and the Company.
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| The Agent shall undertake such valuation of the Escrow Account monthly, commencing in February, 1988, such valuation to be as of the end of the immediately preceding month and in no event shall such valuation be completed later than ten calendar days after receipt by the Agent of the monthly valuation report for all such Permitted Investments on deposit in the Transferred Investments Escrow Subaccount (including any monthly valuation report provided pursuant to the second sentence of the first paragraph of Section 5.4 hereof) . In connection with its valuation of the Escrow Account, the Agent shall deduct from the valuation of the investments on deposit in the Transferred Investments Escrow Sub-Account that amount which represents the aggregate value attributable (determined on a cumula-tive basis, i.e., including the month of valuation and preceding months) to reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment feature of any of the investments listed in clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof. For purposes of the monthly valua-tion only, any proceeds derived from a sale or upon maturity (other than pursuant to the nondiscretionary reinvestment feature of any of the investments listed in clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof) of any investment made pursuant to clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof shall be allocated to reducing the aggregate value, if any, of the investments in the Transferred Investments Escrow Sub-Account attributable to reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment feature of any such investment, which aggregate value was deducted irom the valuation of investments on deposit in the Transferred Inve-tments Escrow Sub-Account pursuant to the preceding sentence (it heing understood that an amount equal to any such reduction, except to the extent that such amount was otherwise withdrawn from the Escrow Account pursuant to Section 5.2 hereof, shall be included in the Transferred Investments Escrow Sub-Account for purposes of the monthly valuation thereof).
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| The Agent shall derive the amount attributable to .each month repre-senting such reinvestment from the monthly market valuations fur-nished to the Agent with respect to such investments and if such amount cannot be derived from such valuations, the amount attribut-able to such'onth and the aggregate to be so deducted shall be as directed in writing by the Company to the Agent, copies of which shall be furnished to the Owner Participants, together with the cal-culations and data upon which such direction is based, all as certi-fied by the Chief Financial Officer of the Company. To the amount of such valuation of the Escrow Account, as adjusted for extent'he the amount, if any, to be deducted from such monthly valuation as 1021. 7500. 2704. 13: 20
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| 0
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| provided in this paragraph, is less than the principal amount of the remaining El Paso Obligations which are schedu'ed to come due more than forty-five (45) days subsequent to such valuation, the Company shall provide the Agent within five business days after receipt from the Agent of such monthly valuation with money or Permitted Investments (with a market value as of the date of such valuation) sufficient to cover the deficiency. The Agent shall notify the Owner Participants in writing of the date and receipt by the Agent of any money or Permitted Investments provided to meet such deficiency.
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| ARTICLE VI CONCERNING THE AGENT SECTION 6.1. Duties of Agent. The Agent shall have'o duties or responsibilities other than those expressly set forth in this Agreement and shall have no duty to enforce any obligation of any person to make any payment or delivery, or to direct or cause any payment or delivery to be made, or to enforce any obligation of any person to perform any other act or to perform any calculations except as herein expressly set forth. In addition, the Agent shall have no duty to make any payment under this Agreement from its own funds.
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| SECTION 6.2. Liability. The Agent shall not be liable for any action taken or omitted by it, or any action suffered by it to be taken or omitted, in good faith and in the exercise of its own best judgment, excepting only its own willful misconduct or gross negli-gence, and may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion and advice of counsel (including counsel selected by the Agent), statement, instru-ment, report or other instrument or document (not only as to its due execution and the validity and effectiveness thereof, but also as to the truth and acceptability of any information therein contained) which is believed by the Agent to be genuine,and to be signed (or in the case of oral communication, given) by the proper person or persons. The Agent shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement or any of the terms hereof, unless expressly provided for herein and delivered as provided in this Agreement.
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| SECTION 6.3. Delivery of Documents and Further Acts.
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| From time to time on and after the date hereof, the Company shall deliver or cause to be delivered to the Agent such further documents and instruments and shall do and cause to be done such further acts as the Agent may reasonably request (it. being understood .that the Agent shall have no obligation to make any such request) to carry out more effectively the provisions and purposes of this Agreement, to 1021.7500.2704.13:20
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| evidence compliance herewith or to assure itself that it is protected in acting hereunder.
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| SECTION 6.4. Legal Proceedings. The Agent shal l not be required to defend any legal proceedings which may be instituted against it in respect of the subject matter of this Agreement unless requested to do so by the Company and indemnifiec. to its satisfaction against the cost and expenses of such defense (.'.ncluding counsel and investigatory fees) by the Company and shall not be required to institute legal proceedings of any kind.
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| SECTION 6.5. Resignation; Appointment of Successor. The Agent (or any successor escrow and paying agent) may resign at any time and be discharged from its duties as escrow and paying agent under this Agreement by giving to the Company and the Owner Participants at least 30 days'otice thereof, such resignation to be effective on the date of appointment of a successor escrow and paying agent as hereinafter provided. As soon as practicable after any such resignation, the Agent shall turn over to a successor escrow and paying agent appointed by the Company all monies and property held hereunder upon presentation of the document appointing such successor escrow and paying agent and its acceptance of such appointment. If no successor escrow and paying agent is so appointed within the sixty-day period following such notice of resignation, the Agent shall deposit all monies and funds held hereunder with the Supreme Court of the State of New York for the County of New York (together with a petition to said Court for the appointment of a successor to act until such time, if any, as a successor shall have been appointed as hereinbefore provided). Upon turning over to the successor .escrow and paying agent or to the Supreme Court of the State of New York as aforesaid, all monies and property held hereunder, the predecessor escrow and paying agent shall be released of any further responsibil-ity hereunder. Any successor escrow and paying agent shall be a bank or trust company organized under the laws of the United States or any jurisdiction thereof, having a combined capita. and surplus of at least $ 250, 000,000, if there be such an institution willing, able and legally qualified to perform the'uties of the Agent hereunder upon reasonable or customary terms.
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| SECTION 6.6. Indemnification. The Company agrees that the Agent shall not be liable for any matter or thing arising out of the performance by the Agent of its obligations under this Agreement, except as provided in Section 6.2 hereof. The Company agrees to indemnify the Agent, and to hold the Agent harmless, from and against any and all'iability, loss, damage or expense (including reasonable attorneys'ees and actual out-of-pocket expenses) which theaction Agent may or might incur by reason of this Agreement, or for any taken by the Agent hereunder,. or by reason or in defense of any and 1021.7500.2704.13:20
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| ~O all claims and demands whatsoever which may be asserted against the Agent arising out of this Agreement.
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| ARTICLE VII MISCELLANEOUS SECTION 7.1. Payments. Payments to or upon the direction of the Company by the Agent pursuant to Article V hereof shall be made in accordance with such written instructions as the Company may provide to the Agent (with copies to the Owner Participants) from time to time for such purposes. Whenever any payment to be made pur-suant hereto shall be required to be made on a day which is not a Business Day, such payment shall be made on +he next succeeding Business Day.
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| SECTION 7.2. Termination. This Agreement shall terminate upon the earliest to occur of (i) receipt by tne Agent of written notice from each Owner Participant that as to such Owner Participant this Agreement is terminated, (ii) disbursement by the Agent of all of the payments to be made by the Agent under Article V hereof with respect to the El Paso Obligations and (iii) receipt by the Agent of joint notice from the Company and each of the Owner Participants with respect to such termination. Upon the termination of this Agreement as aforesaid, any securities and moneys on deposit in the Escrow Account shall be applied at the direction of the Company.
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| SECTION 7.3. Amendments, Etc. No amendment to this Agreement shall be made or be effective without the written consent of the Owner Participants. No amendment, modirication, termination or waiver of any provision of this Agreement shall in any event be effective unless the same shall be in writing and signed 'by the par-ties hereto, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment of any other agreement or instrument shall affect the Agent or its duties hereunder. No notice to or demand on any party hereto in any case shall entitle such party to any other or further notice or demand in similar or other circumstances unless herein otherwise provided.
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| SECTION 7.4. Addresses for Notices, Etc. Except as oth-erwise expressly provided herein, all notices and other communica-tions provided for hereunder shall be in writing and mailed (postage prepaid), hand delivered or sent by overnight courier, its at if to the Company, c/o William J. Johnson at, address 303 North Oregon Street, P.O. Box 982, El Paso, Texas 79960, with a copy similarly delivered to Kemp, Smith, Duncan & Hammond, 2000 MBank Plaza, P.O. Drawer 2800, El Paso, Texas 79999, Attention: Dane George, 1021.7500.2704.13:20
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| Esq., and York, New if York to the Agent, at its address at 55 Water Street, New 10041, Attention: Corporate Tn stee Administration, with a copy similarly delivered to Willkie Farr E.-Gallagher, 153 East 53rd Street, New York, New York 10022, Attention: Brian O'rien, Esq., and, if to the Company or the Agent, with copies to each of the Owner Participants at its address specified in Schedule I hereto, with a copy similarly delivered to Cravath, Swaine & Moore, One Chase Manhattan Plaza, New York, N.Y. 10005, Attention: Richard M. Allen, Esq., or, as to any of the foregoing, at such other address as shall be designated by such person in a written notice to the others. All such written notices and communications shall be effective when received at the address specified as aforesaid.
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| SECTION 7.5. Successors and Assigns. All of the provi-sions of this Agreement shall be binding upon and inure to the bene-fit of the parties hereto and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement other than to a per-mitted transferee under the Participation Agreements. Upon such assignment or transfer, the Company shall notify the Agent, whereupon the Agent shall recognize such assignment or transfer.
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| SECTION 7.6. Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable in the State of New York or in any jurisdiction in the United States which shall be applicable to this Agreement shall, as to the State of New York or such jurisdiction in the United States, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceabil-ity of such provision in any other jurisdiction.
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| SECTION 7.7. Headings, etc. The heail ings o f various Articles and Sections of this Agreement are for convenience of refer-ence only and shall not define or limit any of the terms and provi-sions hereof.
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| SECTION 7.8. Governing Law. This Agreement shall be gov-erned by, and construed in accordance with, the law of the State of New York.
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| SECTION 7.9. Counterpart Execution. Th is Agreement and any amendment to this Agreement .may be signed in any number of coun-terparts, each of which shall be an original, and all of which taken together shall constitute a single instrument, with the same effect as if the signatures thereto and hereto were upon the same instrument.
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| 1021. 7500 2704 13: 20
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| if'O IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their officers thereunto duly autho-rized as of the day and*year first above written.
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| CHEMICAL BANK By:
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| Senior Trust Officer EL PASO ELECTRIC COMPANY By:
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| Vice President 1021. 7500. 2704. 13: 20
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| 'SCHEDULE I Commercial Federal Investment Corporation Jeff Bainbridge Commercial Federal Investment Corporation 1300 Commercial Federal Tower 2120 South 72nd Street Omaha, Nebraska 68124 Chrysler Financial Corporation Chrysler Financial Corporation Greenwich Office Park I Greenwich, Connecticut 06836 Leasing and Investment Services Attention: Mike Abandond Palantine Hills Leasing, Inc.
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| Palantine Hills Leasing, Inc.
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| 1415 S. Roselle Road Palantine, IL 60067 Attention: President, with copies to Household Commercial Financial Services Attention: Lee Wyatt and Julia Sarron, Esq.
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| 2700 Sanders Road Prospect Heights, IL 60070 1021. 7500. 2704. 13: 20
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| 0 UCU Propert;ies, Inc.
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| (Formerly, Energy Investments, Inc.)
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| Donald, Claar Suite 2000 Commercial Tower Kansas City, Missouri 64105 Alexander Hamilton Life Insurance Company of America Richard Egan, General Counsel Alexander Hamilton Life Insurance Company of America 33045 Hamilton Boulevard:
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| Farmington Hills, Michigan Burnham Leasing Corporation Burnham Leasing Corporation Broad Street '5 New York, New York Attention: Dianne Rudo 1021. 7500. 2704. 13: 20
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| SCHEDULE II 1 ~ Certificates of deposit maturing within 180 days and issued by any Federally insured commercial bank; provided, however, that if the face amount of any such Certificate of Deposit shall be
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| $ 1,000,000 or more, the issuing bank shall have a capital and surplus exceeding $ 500,000,000 and a senior debt rating of not Below the Level of Investment Grade; 2 ~ Readily marketable obligations issued or guaranteed by the United States Government or issued by the Government National Mortgage Association, the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation;
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| : 3. Repurchase obligations maturing within 30 days with respect to obligations of the type described in Clause 2 above issued by any Federally insured commercial bank; provided, however, that if the face amount of such repurchase obligation is $ 10,000,000 or more, the issuing bank shall have a capital and surplus exceeding $ 500,000,000 and a senior debt rating of not Below the Level of Investment Grade; 4 ~ Repurchase obligations maturing within 30 days with respect to obligations of the type described in Claus 2 above issued by any nationally recognized dealer which reports to the Market Reports Division of the Federal Reserve Ba.ak of New York;
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| : 5. Investments in readily marketable money market funds managed by a nationally recognized fund manager, the assets of which fund (or the issuers thereof) are as described in Clauses 1, 2, 3, 4, or 9 herein;
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| : 6. Investments in readily marketable bonds, which are not Below the Level of Investment Grade, or bond funds managed by a nationally recognized fund manager, the assets of wh'ch (or the issuers thereof) are not Below the Level of Investment Grade; 7 ~ Investments in stock or stock funds managed by a nationally rec-ognized fund manager;
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| : 8. Mortgage backed securities;
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| : 9. Commercial paper maturing within 180 days and having a rating of P-1 or better by Moody's Investors Service or A-1 or better by Standard & Poor's Corporation; or
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| : 10. Investments iq municipal obligations, the issuers of which are not rated Below the Level of Investment Grade, or the obligations of which are backed by a Letter of Credit from a commercial bank as described in Clause 1 above.
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| 1021.7500.2704.13:20
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| "Below the Level of Inves'tment Grade" means (i) in the case of Moody ' Investors Service, a rating of less than Baa3 or the current equivalent, (ii) in the case of Standard & Poors Corporation, a rating of less than BBB- or current equivalent end (iii) in the case of Duf f and Phelps, a rating greater than t:en or the curre'nt equivalent.
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| 1021.7500.2704.13:20
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| SCHEDULE III EL PASO OBLIGATIO S Principal Payment
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| ,Amount Date Description
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| $ 25,000,000 Jan. 31, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 50,000,000 June 30, 1988 Second mortgage bonds The Bank of New York due June 1988 6,100,000 July 20, 1988 4.25% First mortgage bonds due July 1988
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| $ 22,000,000 May 20, 1989 12.75% First mortgage bonds due May 1989
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| $ 25,000,000 Aug.- 15, 1989 14.5: First mortgage bonds due August 1989
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| $ 50'g 000 000 p Nov. 20, 1989 144 First. mortgage bonds due November 1989
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| $ 20, 000, 000 Dec. 1, 1990 Long-term notes unsecured:
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| The Bank of, America
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| $ 70, 000, 000 Mar. 1, 1991 Second mortgage bonds-The Bank of America, 1021. 7500. 2704. 13: 20
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| t~
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| Exhibit B AMENDMENT No. 1, dated as of December 31, 1987, to Facility Lease dated as of December 1, 1986, between THE FIRST NATIONAL BANK OF BOSTON, not in its individ-ual capacity but solely as Owner Trustee ("Lessor" )
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| - under a Trust Agreement, dated as of December 1, 1986.
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| with CHRYSLER FINANCIAL CORPORATION, and EL PASO-
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| ,ELECTRIC COMPANY, as Lessee (" Lessee" ).
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| The parties hereto have previously, entered into the Facility Lease (as heretofore amended, modified or supplemented, the "Facility Lease" ) providing for the lease by Lessor to Lessee of the Undivided Interest and the Real Property Interest. The parties now desire to make certain amendments to the Facility Lease.
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| NOW, THEREFORE, in consideration of the premises and other good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as fol'lows:
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| SECTION 1. Definitions. For purposes hereof, capital-ized terms used herein and not defined herein shall have the meanings ascribed thereto in Appendix A to the Facility Lease.
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| SECTION 2. Amendments. (a) Section 7. Section' of the Facility Lease is hereby amended by inserting "(a) Liens." prior to the existing paragraph and inserting the following at the end thereof:
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| (b) Retirement of Debt. Unless the Owner Participant shall otherwise consent, on or before each date set forth in Schedule 7 hereto, the Lessee shall retire, legally defease or deposit with the lender or its trustee funds sufficient to retire the principal amount ofdate the Debt set forth opposite the reference to such on such Schedule.
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| (c) Merger, Sale, etc. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, convey, transfer or for fair value.
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| lease to any Person any asset except Without the consent of the Owner Participant, the Lessee shall not, and,shall not permit any of its subsidiaries into to, (1) consolidate with any Person, (2) merge with or any Person or (3) except for (i) payments, in accordance with normal dividend policy of the- Lessee, of cash dividends to holders of common stock and preferred stock, (ii) exchangesis of fixed assets for other fixed assets whose fair value equal to or greater than the fair value of the fixed assets exchanged or (iii) conveyances, transfers or leases of assets for cash where such cash is to be recorded by the Lessee, convey, transfer, lease or dividend to any Person, in any single transaction or series of related 1021. 7500. 2754. 08: 2
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| 0
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| transactions, any asset or assets if the book value of or assets exceeds 54 of its total assets as shown on such'sset the most recent consolidated balance sheet of the Lessee delivered to the Owner Participant pursuant to Section 10 (b) (1) (i) (A) of the Participation Agreement; unless immediately after giving effect,to such transaction:
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| (A) the Person who is the "Lessee" under the Facility Lease immediately following such consolidation, merger, conveyance, transfer, lease or dividend'the "Surviving Lessee" ) shall be a corporation which (i) is organized under the .laws of the United States of America, a state thereof or the District of Columbia, (ii) is a "public utility" under applicable law, (iii) is an ANPP Participant under the ANPP Participation Agreement wi'th respect to Unit 2 (including the Undivided Interest), (iv) shall have assumed each cov-enant and condition of the Lessee under the ANPP Participation Agreement and each other ANPP Project Agreement and (v) holds a valid and subsisting license from the NRC to possess Unit 2 (including the Undivided Interest);
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| (B) the Surviving, Lessee, if other than the Lessee immediately prior to such transaction, shall execute and deliver to the Owner Participant an agreement, in form and substance reasonably satisfactory to the Owner. Participant, containing the assumption by the Surviving Lessee of each covenant and condition of this Facility Lease, each other Transaction Document and each Financing Document to which the Lessee imme-diately prior to such transaction was a party immedi-ately preceding such transaction; (C) no Default (other than a failure to deliver docu-ment s and other information speci f ied. in Section 10(b)(1)(vi) of the Participation Agreement) and no Event of Default shall have occurred and be continuing, no Event of Loss shall have occurred and no Deemed Loss Event shall have been declared; (D) the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) after giving effect to such transaction, (1) shall &bePoor's rated at least "investment grade" by Standard Inc. and Corporation and Moody's Investors Service, (2) shall have an investment rating by Standard &
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| Poor's Corporation and Moody's Investors'ervice, 1021. 7500. 2754. 08: 2
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| 0
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| Inc. not less than one "smallest notch" below the rating assigned to the Bonds (or, if the Bonds are not then rated, the pre ferred stock o f the Surviving Lessee) immediately prior to such transaction (or,'if neither of such rating organizations shall rate the Bonds (or, if applicable, the preferred stock of the Surviving Lessee) at the time,. by any nationally rec-ognized rating organization in the United States of America);
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| (E) the Surviving. Lessee shall have a Net Worth equal to or greater than the Net Worth of the Lessee immedi-ately prior to such transactions and equal" to or
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| 'greater than $ 500,000,000; (F) the Surviving Lessee shall have delivered to the.
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| Owner Participant and the Indenture Trustee an Officers'ertificate and an opinion, reasonably sat-
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| -isfactory to the Owner Participant, of counsel to the Surviving Lessee, each stating that (1) such transac-tion complies with this subclause (c) and (2) all con-ditions precedent to the consummation of such transac-tion have been satisfied and any Governmental Action required in connection with such transaction has been obtained, given or accomplished; (G) the Surviving Lessee shall have delivered to the Owner Participant an opinion, reasonably satisfactory to the Owner Participant, of independent counseL to the Surviving Lessee stating that such transaction would not result 'in a loss of any of the tax benefits described in Section 13(c)'(1) of the Participation Agreement; (H) such transaction is otherwise permitted by and in compliance with the ANPP Participation Agreement; (I) the New Coverage toRatio of the Surviving Lessee shall be at least 16 1; and (J) the Surviving Lessee, if other than the Lessee immediately prior to such transaction, shall have pro-vided a Letter of. Credit which meets the requirements set f orth in Section 10 (b)Owner (3) (xvii) of the Participation Agreement to the Participant in the same amount as was available immediately prior to such transaction. il 1021.7500.2754.08:2
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| ill
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| Upon the consummation of such transaction the Surviving Lessee, if other than the Lessee, shall succeed to, and be substituted for, and may exercise every right and power of, the Lessee immediately prior to such transaction under this Lease, each other Transaction Document and each Financing Document to which the Lessee immediately prior to such transaction was a party immediately prior to such transaction, with the same effect as if the Surviving Lessee had been named herein and therein.
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| (d) Incurrence of Debt. Without the consent of the Owner Participant, the .Lessee shall not, and shall not permit any of its subsidiaries (whether consolidated or unconsolidated) to, issue, assume or become liable in respect of (A) any Debt maturing more than one year after the date of such issuance, assumption or liability (including current maturities of Debt. with an original maturity of more than one year) if, immediately thereafter, the Lessee and its sub-(i) the total amount of all Debt orof unconsolidated) sidiaries (whether consolidated maturing more than one year after. the date of such issuance, assump-tion or becoming liable (reduced by Cash Available for Investment) shall exceed 70% (or, at any time after January 1, 1992 when there shall not .have been delivered and in effect a written election by Owner Participant to permit Lessee to defer compliance with the Tests as defined in subclause (f) hereof, 654) of New Consolidated Capitalization, in each case as shown on a pro forma con-solidated balance sheet on and as of the date of such issu-ance, assumption or becoming liable, or (ii) the New Coverage Ratio of the Lessee would be less than 1.6 to 1 or (B) any Debt maturing one year or less after the date of such issuance, assumption or becoming liable (excluding current maturities of Debt with an original maturity of more than one year) if, immediately thereafter, the total amount of all Debt of the Lessee and its subsidiaries.
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| (whether consolidated, or unconsolidated) maturing one year or less after the date of such issuance, assumption or becoming liable shall exceed 12..54 of New Consolidated con-Capitalization, in each case as shown on a pro forma issu-solidated balance sheet on and as of the date of such ance, assumption or becoming liable. For purposes of the foregoing clause (A), there shall be excluded any which Debt which has been legally defeased or for the payment of funds equal to the principal amount of such Debt have been segregated in escrow and any refunding of the debt issued on December 31, 1987 by the lessors in the sale and lease-back transactions relating to Unit 3 at PVNGS shall not constitute the Lessee issuing, assuming, or becoming liable 1021. 7500. 2754. 08: 2
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| ilk if'O
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| in respect of any Debt within the meaning of this subclause (d) .
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| (e) Escrow Agreement. Lessee shall deposit with Chemical Bank as escrow agent (the "Agent" ) any amount required to be deposited under the Escrow Agreement dated as of December 31, 1987 between the Lessee and the Agent within 5 Business Days after notice from the Owner obli-Participant and shall otherwise comply with its other gations and agreements under such Agreement within 15 days after notice from the Owner Participant.
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| (f) Financial Ratios. Unless the Owner Participant shall otherwise consent (which consent may be in the form of a deferral of compliance in the manner set forth below),
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| Lessee agrees that as of December 31, 1991 (i) all of the Debt listed on Schedule 7 to the Facility Lease shall be retired in accordance with such Schedule 7, (ii) the New Coverage Ratio of Lessee, determined as of June 30, 1991, shall be not less than 1.6 to 1, (iii) the aggregate Debt maturing more than one year after the date of issuance, assumption or liability (including current maturities of Debt with an original maturity in excess of one year) of Lessee shall not be in excess of 654 of New Consolidated Capitalization, all as derived from Lessee's financial books and records as of June 30, 1991, and (iv) the aggre-gate Debt maturing one year or less after the date of such issuance, assumption or liability (excluding current matu-rities of Debt. with an originalexcess maturity in excess of of 12.5% of such New of Lessee shall not be in one'ear)
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| Consolidated Capitalization (clauses (i) through (iv) above being herein called the "Tests" ). Lessee shall prepare for and provide to Owner Participant not later than October 1, 1991 (and October 1 of succeeding years under the circum-stances set forth below) calculations showing whether Lessee has satisfied the Tests and the financial data upon which such calculations were based.
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| Participant If Lessee has failed may, by written notice to meet the Tests, Owner to Lessee, elect to defer requiring Lessee to comply with the Tests for one year. If Owner Participant makes such election, Lessee's failure to meet the Tests shall not con-procedures set stitute an Event of Default hereunder. The determined, forth above (the New Coverage Ratio being and Lessee's deriving New Consolidated Capitalization30 from financial books and records, as of June OwnerinParticipant each such year) shall be repeated each year until ceases to be entitled to make such election of deferral.
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| 1021. 7500. 2754. 08: 2
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| if' 0
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| (g) Definitions. For purposes of this Section 7, the terms New Consolidated Capitalization and New Coverage Ratio shall be defined as follows:
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| (A) "New Coverage Ratio" shall mean the ratio of (x)
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| ,the sum of (a) consolidated net income of the Lessee for the twelve-month period ending on a date no later than 135 days prior to the date as of which New Coverage Ratio is being determined plus (or minus) (b) all extraordinary items deducted (or added) in deter-mining said net income (for purposes of this defini-tion of New Coverage Ratio, any charge against income resulting from a write-off of utility plant pursuant to (i) an order of any governmental authority having jurisdiction or (ii) a provision for an estimated regulatory disallowance shall be deemed to be, an extraordinary item deducted in determining said net income) plus (or minus) (c) all income taxes deducted (or tax credits added) in determining said net income minus, (d) for all or any portion of such period ending on or prior to December 31, 1990, 50% of "allowance for funds used during construction" (net of deferred taxes) as such item is referred to in the consolidated income statement of the Lessee and its subsidiaries) and, for all or any portion of such period ending after December 31, 1990, 1004 of such item plus (e) the sum of all interest and lease payments paid by the Lessee and its subsidiaries (whether consolidated or unconsolidated) during such twelve-month period to (y).
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| total interest and lease payments that will be consoli-payable by the Lessee and its subsidiaries (whether dated or unconsolidated) during the twelve-month period following the date as'f which New Coverage
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| ,Ratio is being determined. There shall be excluded from interest and lease'ayments included under clauses (x) and (y) above (i) lease payments to the Rio Grande Resources Trust, (ii) lease payments under any operating lease of computers, office equipment or the like, the original term of which (including options to renew) is less than five years and (iii) interest on Debt maturing one year or lessbe from the date of incurrence thereof. There shall excluded from interest and lease payments included under clause (y) above interest on Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow.
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| 1021.7500.2754.08:2
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| iO 0
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| 0
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| (B) "New the Consolidated Capitalization" sha 1 mean total of consolidated capital l
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| and surplus of the Lessee plus the principal amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) which matures more than one year after the date as of which New Consolidated Capitalization is being determined.
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| (b) Schedule 7. Schedule 7 hereto. is hereby added as Schedule 7 to the Facility Lease.
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| SECTION 3. Miscellaneous'a)
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| Effective Date of Amendments. The amendments set forth in Section 2. hereof shall be and become effective upon the execution hereof by the parties hereto.
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| (b) Counterpart Execution. This Amendment.No., 1 may be executed in any number of counterparts and by each of the parties hereto on separate counterparts; all such coun-
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| ,terparts shall together constitute but one and the same instrument.
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| (c) Governing Law. This Amendment No. 1 has been negotiated and delivered in the State of New York and shall be governed by and he construed in accoa3ance with the laws of the State of New York, except to the extent that pursu-ant to the law of the State of Arizona such law is mandato-rily applicable hereto.
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| (d) Disclosure. Pursuant to Arizona Revised Statutes Section 33-404, the beneficiary of the Trust Agreement is Chrysler Financial Corporation, a Michigan corporation.
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| The address of the beneficiary is. Greenwich Office Park I, Greenwich CT 06836, Attention:. Leasing and Investment Services. A copy of the Trust Agreement is available for inspection at the o ffices o f the Owner Trustee at 100 Federal Street, Boston, Massachusetts 02110, Attention of Corporate Trust Division.
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| 1021.7500.2754.08:2
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| iO 0
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| '0
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| IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment No. 1 to be duly executed in New York, New York on December 31, 1987.
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| THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity, but solely as Owner Trustee under a Trust December 1, 1986 with Chrysler Financial Corporation, g/i //(
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| Senior Manager EL PASO ELECTRIC COMPANY, By Vice President
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| III
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| ~O
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| STATE OF TEXAS )
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| ) ss ~
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| COUNTY OF EL PASO )
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| 'he foregoing instrument was acknowledged before me this 6th day of January, 1988 by William J. Johnson, a Vice President of EL PASO ELECTRIC COMPANY, a Texas; corporation, on behalf of the corporation.
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| No ry Public
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| ~O
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| COMMONWEALTH OF MASSACHUSETTS )
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| ) SS ~ ~
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| COUNTY OF SUFFOLK The foregoing instrument was acknowledged before me this day of January, 1988, by Mark Nelson, a Senior Manager of THE FIRST NATIONAL BANK OF BOSTON, a national banking association, on behalf of the banking association as trustee under that certain Trust Agreement dated as of August 1', 1986 with Palatine Hills Leasing, Inc.
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| No ic Commission Expires 80, )QQ4 1021.7500.2754.06A:1
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| ~ ~ ~
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| ~O
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| ~O
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| SCHEDULE 7 TO FACILITY LEASE P SO OBLIG 0 S Principal Payment Amount Date Description
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| .$ 60,000,000 Jan. 31, 1988 16.204 First mortgage bonds due 2012
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| $ 25 000 i'000 Jan 31 Second mortgage bonds-g 1988 The Bank of New York due June 1988
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| $ 50,.000,000 June 30, 1988 Second mortgage .bonds-The Bank of New York due June 1988
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| $ 6, 100, 000 July 20, 1988 4.254 First mortgage bonds due July 1988
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| $ 22,000,000 May 20, 1989 12.754 First mortgage bonds due May 1989
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| $ 25 i 000 ~ 000 Aug. 15, 1989 14.54 First mortgage bonds due August 1989
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| $ 50,000,000 Nov. 20, 1989 144 First mortgage bonds due November 1989
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| $ 20 000 000 Dec. 1, Long-term notes unsecured-g g 1990 The Bank of America
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| $ 70,000,000 Mar. 1, 1991 Second mortgage bonds-The Bank of America 1021.7500.2754.08:2
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| ~p AMENDMENT No. 2, dated as of December 31, 1987, to Facility Lease dated as of August 1, 1986, between THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee ("Lessor" ) under a Trust Agreement, dated as of August 1, 1986 with BURNHAM LEASING CORPORATION, and EL PASO ELECTRIC COMPANY, as Lessee (" Lessee" ).
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| The parties hereto have previ;ously entered into the Facility Lease (as heretofore amended, modified or supplemented, the "Facility Lease" ) providing for the lease by Lessor to Lessee of the Undivided Interest and the Real Property Interest. The parties now desire to make certain amendments to the Facility Lease.
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| NOW, THEREFORE, in consideration of the premises and other good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows:
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| SECTION 1. Definitions. For purposes hereof, capital-:
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| ized terms used herein and not defined herein shall have the meanings ascribed thereto in Appendix A to the Facility Lease.
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| SECTION 2. Amendments. (a) Section 3(b). Section 3(b) is hereby amended by inserting at the end of a clause (iii), next in lieu of ".", "; and" and by inserting thereafter and before the to last sentence of Section .3(c) a new clause (iv) reading as follows:
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| (iv) in the event that the Lessee shall fail of to provide on or before April 30, 1988, a letter credit which complies with the terms of the Agreement dated as of December 31, 1987 (the "Commitment Agreement" ), among the Lessee, the Lessor and the Owner Participant, a copy of which is annexed hereto, on each Basic Rent Payment Date, commencing October 1, 1988 and ending on the Basic Rent Payment Date next following the earlier to occur of (A) the providing by the Lessee of such letter of credit and (B) the date as of which such letter of credit would have expired had it been in effect as required by the terms of the Commitment Agreement, an amount equal to . 354 of Facility Cost multiplied by a fraction the numerator of which is the number of days from and including the preceding Basic Rent Payment Date (or, in the case of the Basic Rent Payment Date occurring on October 1, 1988, from and including April 30, 1988) to but excluding such Basic Rent Payment Date (or, letter of if credit earli-is pro-er, to the date on which such vided or the date such letter of credit would have so expired), and the denominator of which is the number of days from and including the preceding Basic Rent.
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| 1021.7500.2754.22:4
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| 0 if'
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| Payment Date to but excluding such Basic Rent Payment Date.
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| (b) Section 7. Section 7 o f the Facility Lease is hereby amended by inserting "(a) Liens." prior to the existing paragraph and inserting the following at the end thereof:
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| (b) Retirement of Debt. Unless the Owner Participant shall otherwise consent, on or before each date set forth in Schedule 8 hereto, the Lessee shall retire, legally defease or deposit with the lender or its 'trustee funds sufficient to retire the principal amount of the Debt set forth opposite the reference to such date on such Schedule.
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| (c) Merger, Sale, etc. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, convey, transfer or lease to any Person any asset except for fair value.
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| Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, (1) consolidate with any Person, (2) merge with or into any Person or (3) except for (i) payments, in accordance with normal dividend policy of the Lessee, of cash dividends to holders of common stock and preferred stock, (ii) exchanges of fixed assets for other fixed assets whose fair value is equal to or greater than the fair value of the fixed assets exchanged or (iii) conveyances, transfers or leases of assets for cash where such cash is to be recorded by the Lessee, convey, transfer, lease or dividend to any Person, in any single transaction or series of related such transac-tions, any asset or assets if the book value of or assets exceeds 5< of its total assets as shown on the asset, most recent consolidated balance sheet of the Lessee deliv-ered to the Owner Participant pursuant to Section 10(b) (1) (i) (A) of the Participation Agreement; unless immediately after giving effect to such transaction:
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| (A) the Person who is the "Lessee" under the Facility Lease immediately following such consolidation, merger, conveyance, transfer, lease or dividend (the "Surviving Lessee" ) shall be a corporation which (i) is organized under the laws of the United States of America, a state thereof 'or the District of Columbia, (ii) is a "public utility" under applicable law, (iii) is an ANPP Partici'pant under the ANPP Participation Agreement with respect to Unit 2 (including the 1021. 7500. 2754. 22: 4
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| 0 Undivided Interest), (iv) shall have assumed each covenant and condition of the Lessee under the ANPP Participation Agreement and each other ANPP Project Agreement and (v) holds a valid and subsisting license from the NRC to possess Unit 2 (including the Undivided Interest);
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| (B) the Surviving Lessee, if other than the Lessee immediately prior to such transaction, shall execute and deliver to the Owner Participant an agreement, in form and substance reasonably satisfactory to the Owner Participant, containing the assumption by the Surviving Lessee of each covenant and condition of this Facility Lease, each other Transaction Document and each Financing Document to which the Lessee imme-diately prior to such transaction was a party immedi-ately preceding such transaction; (C) no Default (other than a failure to deliver docu-ments and other information specified in Section 10(b) (1) (vi) of the Participation Agreement) and no Event of Default shall have occurred and be continuing, no Event of Loss shall have occurred and no Deemed Loss Event shall have been declared; (D) the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) after giving effect to such transaction, (1) shall be rated at least "investment grade" by Standard & Poor's Corporation and Moody's Investors Service, Inc. and (2) shall have an investment rating by Standard &
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| Poor's Corporation and Moody's Investors Service, Inc. not less than one "smallest notch" below the rating assigned to the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) immediately prior to such transaction. (or, if neither of such rating organizations shall rate the Bonds (or, if applicable, the preferred stock of the Surviving Lessee) at the time, by any nationally rec-ognized rating organization in the United'tates of America);
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| (E) the Surviving Lessee shall have a Net Worth equal to or greater than the Net Worth of the Lessee immedi-ately prior to such transactions and equal to or greater than 9500,000,000; (F) the Surviving Lessee shall have delivered to the Owner Participant and the Indenture Trustee an 1021 '500 '754.22:4
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| ~O 0
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| Officers'ertificate and an opinion, reasonably satisfactory to the Owner Participant, of counsel to the Surviving Lessee, each stating that (1) such transaction complies with this subclause (c) and (2) all conditions precedent to the consummation of such transaction have been satisfied and any Governmental Action required in connection with such transaction has been obtained, given or accomplished; (G) the Surviving Lessee shall have delivered to the Owner Participant an opinion, reasonably satisfactory to the Owner Participant, of independent counseL to the Surviving Lessee stating that such transaction would not result in a loss of any of the tax benefits described in Section 13(c) (1) of the Participation Agreement; (H) such transaction is otherwise permitted by and in
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| ~
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| compliance with the ANPP Participation Agreement; and (I) the New Coverage Ratio of the Surviving Lessee shall be at least 1.6 to 1.
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| Upon the consummation of such transaction the Surviving Lessee, if other than the Lessee, shall succeed to, and be substi-tuted for, and may exercise every right and power of, the Lessee immediately prior to such transaction under this Lease, each other Transaction Document and .each Financing Document to which the Lessee immediately prior to such transaction was a party immediately prior to such transaction, with the same effect as if the Surviving Lessee had been named herein and therein.
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| (d) Incurrence of Debt. Without the 'consent of the Owner Participant, the Lessee shall not,. and shall not permit any of its subsidiaries (whether consolidated or unconsolidated) to, issue, assume or become liable in respect of (A) any Debt maturing more than one year after the date of such issuance, assumption or liability (including current maturities of Debt with anthereafter, original maturity of more than one year) if, immediately (i) the total amount of all Debt of the Lessee and its sub-sidiaries (whether consolidated or unconsolidated) maturing more than one year after the date of such issuance, assump-tion or becoming liable (reduced by Cash Available for Investment) shall exceed 70% (or, at any time after January 1, 1992 when there is not in effect a letter of credit com-plying in all respects with the Commitment Agreement, 654) of New Consolidated Capitalization, in each case as shown on a pro forma consolidated balance sheet on and as of the 1021.7500.2754.22:4
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| i 4l
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| date of such issuance, assumption or becoming liable, or (ii) the New Coverage Ratio of the Lessee would be less than 1.6 to 1 or (B) any Debt maturing one year or less after the date of such issuance, assumption or becoming liable (excluding current maturities of Debt with an origi-nal maturity of more than one year) if, immediately there-after, the total amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) maturing one year or less after the date of such issuance, assumption or becoming liable shall exceed 12.5% of New Consolidated Capitalization, in each case as shown on a pro forma consolidated balance sheet on and as of the date of such issuance, assumption or becoming liable. For purposes of the foregoing clause (A), there shall be excluded any Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow and any refunding of the debt issued on December 31, 1987 by the lessors in the sale and leaseback transactions relating to Unit 3 at PVNGS shall not constitute the Lessee issuing, assuming, or becoming liable in respect of any Debt within the meaning of this subclause (d).
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| (e) Escrow Agreement. The Lessee shall deposit with Chemical Bank as .escrow agent (the "Agent" ) any amount required to be deposited under the Escrow Agreement dated as of December 31, 1987 between the Lessee and the Agent within 5 Business Days after notice from other the Owner Participant and shall otherwise comply .with its obli-gations under such Agreement within 15 days after notice from the Owner Participant.
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| (f) Definitions. For purposes of this Section 7, the terms New Consolidated Capitalization- and New Coverage Ratio shall be defined as follows:
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| (A) "New Coverage Ratio" shall mean the ratio of (x) the sum of (a) consolidated net income of the Lessee for the twelve-month period ending on a date no later than 135 days prior to the date as of which New Coverage Ratio is being determined plus (or minus) (b) all extraordinaryincome items deducted (or added) in deter-mining said net (for purposes of this defini-tion of New Coverage Ratio, any charge, against income resulting from a write-off of utility plant pursuant to (i) an order of any governmental authority having jurisdiction or (ii) a provisionbe for an estimated deemed to be an regulatory disallowance shall extraordinary item deducted in determining said net 1021.7500.2754.22:4
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| iO 0
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| income) plus (or minus) (c) all income taxes deducted (or tax credits added) in determining said net income minus (d) for all or any portion of such period ending on or prior to December 31, 1990, 504 of "allowance for funds used during construction" (net of, deferred taxes) as such item is referred to in the consolidated income statement of the Lessee and its subsidiaries) and, for all or any portion of such period ending after December 31, 1990, 1004 of such item plus (e) the sum of all interest and lease payments paid by the Lessee and its subsidiaries (whether consolidated or unconsolidated) during such twelve-month period to interest and lease .payments that will be payable (y)'otal by the Lessee and its subsidiaries (whether consoli-dated or unconsolidated) during the twelve-month period following the date as of which New Coverage Ratio is being determined. There shall be excluded from interest and lease payments included under clauses (x) and (y) above (i) lease payments to the Rio Grande Resources Trust, (ii) lease payments under any operating lease of computers, office .equipment or the like, the original term of which (including options to renew) is less than five years -and (iii) interest on Debt maturing one year or less from the date of incurrence thereof. There shall be excluded from interest and lease payments included under clause (y) above interest on Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow.
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| (B) "New the total of consolidated capital l
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| Consolidated Capitalization" s h a 1 m e a n and surplus of the Lessee plus the principal amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) whi'ch matures more than one year after the date as of which New Consolidated Capitalization is being determined.
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| (c) Schedule 8. Schedule 8 hereto is 'hereby added as Schedule 8 to the Facility Lease.
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| 1021. 7500. 2754. 22: 4
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| 0 0
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| SECTION 3. Miscellaneous (a) Effective Date of Amendments. The amendments set forth in Section 2 hereof shall be and become effective upon the execution hereof by the parties hereto.
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| (b) Counterpart Execution. This Amendment. No. 2 may be executed in any number of counterparts and by each of the parties hereto on separate counterparts; all such coun-terparts shall together constitute but one and the same instrument.
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| (c) Governing Law. This Amendment No. 2 has been negotiated and delivered in the State of New York and. shall ~
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| be governed by and be construed in accordance with thei laws of the State of New York, except to the actent that pursu-ant to the law of the State of Arizona such law is mandato-rily applicable hereto.
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| (d) Disclosure. Pursuant to Arizona Revised Statutes Section 33-404, the beneficiary of the Trust Agreement is Burnham Leasing Corporation, a corporation. The address of the beneficiary is 55 Broad Street, New York, New York, Attention: Dianne Rudo. A copy of the Trust Agreement is available for inspection at the offices of the Owner Trustee at 100 Federal Street, Boston, Massachusetts 02110, Attention of Corporate Trust. Division.
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| 1021.7500.2754.22:4
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| IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment No. 2 to be duly executed in New York, New York on December 31, 1987.
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| THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity, but solely as Owner Trustee under a Trust Agreement, dated as of August 1, 1986 with Burnham Leasing Corporation, By
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| / Senior Manager EL PASO ELECTRIC COMPANY, ice President
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| ~li
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| ~O
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| STATE OF TEXAS )
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| ) ss.:
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| COUNTY OF EL PASO )
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| The foregoing instrument was acknowledged before me this 6th day of January, 1988 by William J. Johnson, a Vice President of EL PA'SO ELECTRIC COMPANY, a Texas corporation, on behalf of the corporation.
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| N ary Public
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| ~O
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| ~O
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| COMMONNEALTH OF MASSACHUSETTS )
| |
| ) SS ~ '.
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| COUNTY OF SUFFOLK )
| |
| The foregoing instrument was acknowledged before me this day of January, 1988, by Mark Nelson, a Senior Manager of THE
| |
| 'FIRST NATIONAL BANK OF BOSTON, a national banking association, on behalf of the banking association as trustee under that certain Trust Agreement dated as of August 1, 1986 with Palatine Hills.Leasing, Inc.
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| Notar Public MNSOLA Qy Commlaslon Expires Soyteebe 80, 1QQ4 1021.7500.2754.06A:1
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| ~ ~ ~
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| i
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| ~
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| 'll
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| SCHEDULE 8 EL PASO OBLIGATIONS Principal Payment Amount Date Description
| |
| $ 60,.000,000 Jan. 31, 1988 16.204 First mortgage bonds due 2012
| |
| $ 25/ 000 i 000 Jan. 31, 1988 Second mortgage bonds-The Bank of New York due.June 1988
| |
| $ 50,000,000 June 30, 1988 Second mortgage bonds-The Bank of New York due June 1988
| |
| $ 6,100,000 July 20, 1988 4.25% First mortgage bonds due July 1988
| |
| $ 22,000,000 May 20, 1989 12.754 First mortgage bonds due May 1989
| |
| $ 25,000,000 Aug. 15, 1989 14.5< First mortgage bonds due August 1989
| |
| $ 50,000,000 Nov. 20, 1989 144 First mortgage bonds due November 1989
| |
| $ 20,000,000 Dec. 1, 1990 Long-term notes unsecured-The Bank of America
| |
| $ 70, 000, 000 Mar. 1, 1991 Second mortgage bonds-The Bank of America 1021.7500.2754.22:4
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| | |
| ~O AGREEMENT dated as of December 31, 1987 among BURNHAM LEAS ING CORPORATION ( "Owner Participant"), THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee ("Owner Trustee" ) under a Trust Agreement dated as of August 1, 1986 with Owner Participant, and EL PASO ELECTRIC COMPANY ("Lessee" ).
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| Owner Trustee and Lessee are parties to the Facility Lease dated as of August 1, 1986, as amended (the "Facility Lease" ) .
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| used but not defined herein have the meanings ascribed to them All'erms in Appendix A to the Facility Lease.
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| Lessee, Owner Trustee and Owner Participant desire to modify certain provisions of the Facility Lease, provide credit enhancement for the benefit of Owner Participant in the form of a letter of credit to support the payment of rent and, until such time as a letter of credit has been delivered, provide for the creation of an escrow account into which Lessee will deposit funds to be held for the retirement of certAin of its outstanding Debt. Accordingly, the parties hereto agree as follows:
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| : 1. Letter of Credit.
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| A. Lessee shall cause to be delivered to Owner Participant a 1epter of credit (the "LC") with drawing amounts not less than Special Casualty Value from time to time during the period the LC is outstanding less the principal amount of and accrued interest on the Notes Outstanding from time to time. If the Lessee shall fail to cause the LC to be delivered by April 30, 1988 in accordance with the terms hereof, the Escrow Agreement (as defined in Section 2) shall continue in full force and effect, and the Lessee shall pay to the Owner Trustee all amounts set forth in Section 3(b)(iv) of the Facility Lease in accordance with the terms thereof, but such failure shall not constitute an Event of Default.
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| B. The unsecured long-term debt securities of the bank issuing the LC shall be rated by Moody's not less than A2, in the case of a United States bank, or Aa3, in the case of a United States branch or agency of a foreign bank, and such bank shall be otherwise acceptable to Owner Participant. Owner Participant will be reason-able in determining such acceptability, but may consider such matters as (i) legal or regulatory constraints on the issuance to or holding by Owner Participant of letters of 'credit from such b'ank and (ii) policy constraints in effect for Owner Participant on the issu-ance to or holding by Owner Participant of letters of credit from such bank, so long as such policy constraints are then applicable by Owner Participant generally to such bank and have been applied by Owner Participant without regard to the nature of PVNGS or the Unit 2 sale and leaseback transactions or the identity or credit of Lessee.
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| 1021 '500 '754.20:3
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| iO
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| '0 4b
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| C. The LC (1) shall have an expiry date of December 31, 1991, (2) may be drawn upon if an Event of Loss occurs, a Deemed Loss Event is declared, an Event of Default occurs and is continuing or in any and all events prior to termination of the LC should a termina-tion event under the LC occur, (3) shall permit partial drawings, (4) shall permit Owner Participant to assign all of its interest therein to a successor Owner Participant without the issuing bank's or Lessee's consent (5) shall provide for reinstatement upon reim-bursement in respect of a draw thereunder for Supplemental Rent and (6) shall be otherwise satisfactory in form and substance to Owner Participant in its reasonable judgment. Appropriate provision will be made for replacing the LC if there is a decline in the rating by Moody's of the unsecured long-term debt securities of the issuing bank below A3.
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| D. The reimbursement agreement between Lessee and the issu-ing bank relating to the LC shall (1) not contain any default or ter-mination provisions that are less favorable to Lessee or Owner Participant than those contained in Lessee's Reimbursement Agreement dated as of December 1, 1987, with The Fuji Bank Limited, (2) require the issuing bank to pay any draws on the LC from its general funds, (3) not permit the issuing bank to exercise any right of set off during the pendency of any bankruptcy proceeding of Lessee, (4) not permit Lessee's reimbursement obligation to be collateralized at any time by the grant of a security interest in Lessee's interest in the Undivided Interest or the Real Property Interest or in any other property unless a subordinate (to the security interest of the issu-ing bank) security interest in such property is also granted to Owner Participant, (5) not permit amendment of any provision of the LC or the reimbursement agreement in a manner which is materially adverse to the interest of Owner Participant without its prior written con-sent and (6) otherwise be satisfactory in form and substance to Owner Participant in its reasonable judgment.
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| E. The LC need not be renewed or replaced as of December 31, 1991, if (i) all the Debt listed on Schedule 8 to the Facility Lease has been retired in accordance with such Schedule 8, (ii) the New Coverage Ratio of Lessee, determined as of June 30, 1991, is not less than 1.6 to 1, (iii) the aggregate Debt maturing more than one year after the date of issuance, assumption or liabil-ity (includingonecurrent ofmaturities of Debt with an original maturity Lessee shall not be in excess of 654 of New in excess of year)
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| Consolidated Capitalization, all as derived from the Lessee's finan-cial books and records as of June 30, 1991, and (iv) the aggregate Debt maturing one year or less after. the date of such issuance, assumption or liability (excluding current maturities of Debt with an original maturity in excess of one year) of Lessee shall not be in excess of 12.54 of such New Consolidated Capitalization (clauses (i) through (iv) above being herein called the "Tests" ). Lessee 1021.7500.2754.20:3
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| III Ii
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| shall prepare for and provide to Owner Participant not later than October 1, 1991 (and October 1 of succeeding years under the circum-stances set forth below) calculations showing whether Lessee has sat-isfied the Tests and the financial data upon which such calculations were based. If Lessee has failed to meet the Tests, Owner Participant may, at its option (and without affecting any other rights of Owner Participant to draw on the LC), draw on the LC or require that Lessee provide a renewal or replacement LC or itself obtain for Lessee, at Lessee's expense, a renewal or replacement LC on substantially the same terms as the existing LC, except that the annual fee payable under such renewal or replacement LC shall not be more than 100 basis points greater than the annual fee to Lessee of the existing LC. The Owner Participant shall exercise such option within a period of time to be determined but not more than thirty (30) days after the Lessee shall furnish the Owner Participant the aforesaid calculations and financial data. Such renewal or replace-ment LC shall have a 'term commencing not later than the expiry date of the existing LC and ending not earlier than one year after such expiry date, and shall have terms (including the terms of the related reimbursement agreement) not less favorable to Owner Participant than the terms contained in the existing LC and reimbursement agreement.
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| Such renewal or replacement LC may provide for its early expiration not earlier than December 31 of the year during which Lessee meets the Tests. The procedures set forth above (the New Coverage Ratio being determined, and deriving New Consolidated Capitalization from the Lessee's financial books and records, as of June 30 'in each such year) shall be repeated each year until no renewal or replacement LC is required.
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| : 2. Escrow A ree ent. Lessee shall enter into an Escrow Agreement with Chemical Bank substantially in the form of Mibit A hereto. The Owner Participant agrees that, upon delivery and accep-tance of the LC, it shall deliver the notice required by clause (i) of Section 7.2 of the Escrow Agreement.
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| : 3. Amendment to Lease. Owner Trustee and Lessee shall execute Amendment No. 2 to the Facility Lease substantially in the form of Exhibit B hereto.
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| : 4. Further Cha es. Concurrent with the procurement of the LC, and subject to obtaining any required consents of third par-
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| ,ties to the Transaction Documents, the parties will amend the Facility Lease and other Transaction Documents to implement the obtaining of and to reflect the existence of the LC and to further implement the terms of this Agreement. Such amendments will include provisions affording Lessee, in, the event Owner Participant has determined to draw on the LC when Lessee has failed to meet the Tests and unless an Event of Default shall have otherwise occurred and be continuing or an Event of Loss shall have occurred or Deemed Loss 1021. 7500. 2754. 20: 3
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| ~g>
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| Event shall have been declared, the right to purchase the Undivided Interest and the Real Property Interest on or before some period prior to the expiration or termination date of the existing LC, for an amount based on the greater of (i) Enhanced Casualty Value, which will be calculated on an assumed 25% residual, and (ii) Fair Market Sales Value of the Undivided Interest and the Real Property Interest.
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| : 5. Consent. Owner Participant .irrevocably consents to any and all transactions which would require its consent under Section 10(b) (3) (ii) or. 10(b) (3) (v) of the Participation Agreement.
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| : 6. Owner Trustee Directive. Owner Participant hereby authorizes and directs Owner Trustee to execute this Agreement, Amendment No. 2 to the Facility Lease and such other agreements, doc-uments and certificates as shall be required in order to facilitate the execution and delivery of this Agreement and such Amendment No. 2.
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| : 7. Taxes. All the provisions of Sections 13(b) and (c) of the Participation Agreement shall be applicable as though the mat-ters set forth in this Agreement (including the exhibits hereto) had.
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| been included in the Transaction Documents at all times since August 18, 1986 except that the execution and delivery of this Agreement, as opposed to its provisions, shall not be considered to be the execution and delivery of a Transaction Document or a Financing Document or an act specifically required or expressly per-mitted to be performed by the Lessee for the purposes of Section 13(c)(4)(i)(B) of the Participation Agreement.
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| : 8. M'seel a eous. This Agreement may be executed by the parties hereto in separate counterparts, and it shall not be neces-sary for the signatures of all parties to appear on any one counterpart. The headings of the various sections of this Agreement are for convenience of reference only and shall not modify,'efine, expand or limit any of the terms or provisions hereof. This Agreement may not be terminated, amended, supplemented, waived or modified orally, but only by an instrument in .writing signed by the party against whom enforcement of such transaction, amendment, sup-plement, waiver or modification is sought. This Agreement in all respects shall be governed by and construed in accord-mce with the laws of the State of New York, including all math~vs of constxuction, validity and perfonnance.
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| 1021. 7500. 2754. 20: 3
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| 0 0
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| IN WITNESS WHEREOF each of the parties hereto 'has caused this Agreement to be duly executed as of the day and year first above written.
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| BURNHAM LEASING CORPORATION By:
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| THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee By:
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| Senior Manager EL PASO ELECTRIC COMPANY By:
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| V5.ce President 1021.7500.2754.20:3
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| if' Exhibit A, to the Agreement ESCROW AGREEMENT Dated as of December 31, 1987 between CHEMICAL BANK, Escrow Agent and EL PASO ELECTRIC COMPANY 1021. 7500. 2704. 13: 20
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| TABLE OF CONTENTS Pacae ARTICLE I DEFINITIONS Section 1.1. Certain Defined Terms. . . . . . . . . . . . 1 ARTICLE II APPOINTMENT OF AGENT AND CREATION OF ESCROW ACCOUNT Section 2.1. Appointment of Agent. . . . . . . . . . . , . 3 I
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| Section 2.2. The Escrow Account. . . . . . . . . . . . . . 3 Section 2.3. Statement of Purpose. . . . . . . . . . . . . 4 ARTICLE III LEASE PROCEEDS DEPOSIT BY THE CCRE'ANY Section 3.1. Lease Proceeds Escrow Deposit. . . . . . . ., 4 ARTICLE IV TRANSFER AND DEPOSIT BY THE COMPANY OF EXISTING INVESTMENTS Section 4.1. Transferred Investments Escrow Deposit. . ... 4 ARTICLE V INVESTMENTS AND PAYMENTS BY AGZ2iT Section 5.1. Payments by Agent to Company from Lease Proceeds Escrow Sub-Account. . : . . . . . . 5
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| iO TABLE OP CONTENTS, Continued Pacae Section 5.2. Monthly Disbursement from both Sub-accounts. . . . . . . . . . . . . . . . . 6 Section 5.3. Investments; Agreement as to Value of Clauses 6, 7 and 8 on December 31, 1988. . . 7 Section 5.4. Valuation of Investments; Payment of Defxczency. . . . . . . . . . . . . . . . . . 8 ARTICLE VI CONCERNING TEE AGENT Section 6.1. Duties of Agent. .10 Section 6.2. Liability. .10 Section 6.3. Delivery of Documents and Further Acts. .10 Section 6.4. Legal'roceedings.
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| Section 6.5. Resignation; Appointment o f Succ.~ssor.
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| Section 6.6. Indemnification.
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| ARTICLE VII MISCELLANEOUS Section 7.1. Paymentst ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 12 Section 7.2. Termination. ~ ~ ~ 12 Section 7.3. Amendments, Etc. .12 Section 7.4. Addresses for Notices, Etc. ."12 Section 7.5. Successors and Assigns. .13 Section 7.6. Severability of Provisions. .13 I
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| Section 7.7. Headings, etc. .13
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| TABLE OF CONTENTS, Continued, Pacae Section 7.8. Governing Law. . . . . . . . . . . . . . . .1Z Section 7.9. Counterpart Execution. . . . . . . . . . ...13
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| ~li C!
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| ESCROW AGREEMENT ESCROW AGREEMENT,. dated as of December 31, 1987, among CHEMICAL BANK, a New York banking corporation (the Agent), and EL
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| 'PASO ELECTRIC COMPANY, a Texas corporation (th Company).
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| WITNESSETH WHEREAS, pursuant to eight separate Commitment Agreements, dated as of December 31, 1987 with each of the Owner Participants (as described in Schedule I hereto) and the related Owner Trustee, the Company has agreed to establish and maintain an escrow account of certain moneys and securities (such terms and all other capitalized terms used herein having the meanings set forth or referred to in Section 1 hereof) until such time as Acceptable Letters of Credit are obtained; and WHEREAS, the Commitment Agreements contemplate that certain moneys and securities are to be held in an escrow account to be established with the Agent and are to be disbursed by the Agent, pur-suant to directions from the Company until the occurrence of certain events, all in accordance with the terms and conditions set forth herein; and WHEREAS, the Company desires that the E.yent be appointed as escrow agent, and the Agent desires to accept such appointment, all in accordance with the terms and conditions se= forth herein.
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| NOW, THEREFORE, in consideration of the mutual agreements herein contained and of other good and valu.able consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows:
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| ARTICLE I DEFINITIONS SECTION 1.1. Certain Defined Terms. As used in this Agreement and unless otherwise expressly indicated, or unless the context clearly requires otherwise:
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| (a) The terms Agent and the Company have the meanings assigned in the caption of this Agreement.
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| (b) The following terms have the respective meanings sin- set forth below (such meanings to be equally applicable to both the gular and plural forms. of the terms defined):
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| Acceptable Letter of Credit means a letter of credit complying with the requirements therefor a': set forth in 1021. 7500. 2704 . 13: 20
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| ill 0
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| the relevant Commitment Agreement, which toe Company has agreed to provide to each, August Owner Participant.,
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| August Owner Participants means each oi the six enti-ties listed in Schedule I hereto, each as an owner partici-pant under its related August Participation Agreement.
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| August Participation Agreement(s) means each of six separate Participation Agreements, dated as of August 1, 1986, as amended by Amendment No. 1, dated October 1, 1986 among the Company, El Paso Funding Corporation, the. Owner Trustee, First. City National Bank of Houston, as Indenture Trustee, and each August Owner Participant.
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| Commitment Agreements means the eight separate Agreements, dated as of December 31, 1987, by and between El Paso, the related Owner Trustee and each of the Owner Participants.
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| December. Participation Agreement(s) means the Participation Agreement dated as of December 1, 1986, among the Company, El Paso Funding Corporation, the Owner Trustee, First City National Bank of Houston, as Indenture Trustee and Chrysler Financial Corporation and the Participation Agreement, dated as of December 1, 1986, among the Company, El Paso Funding Corpora..:ion, the Owner Trustee, First City National Bank of Houston, as Indenture Trustee and Commercial Federal Investmen. Corporation.
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| El Paso Obligations means the principa'mount of the indebtedness of the Company set forth i i Schedule III hereof.
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| Escrow Account mea'ns said term .is defined in Section 2.2 hereof.
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| Escrow Sub-accounts means the Transferred Investments Escrow Sub-account and the Lease Proceeds Escrow Sub-account, collectively.
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| Lease Proceeds Escrow Deposit means said term as defined in Section 3.1 hereof.
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| Lease Proceeds Escrow Sub-Account means said term as defined in Section 2.2 hereof.
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| Owner Participant(s) means the August Owner Participants and Chrysler Financial Corporation and 1021. 7500. 2704. 13: 20
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| ~O Commercial Federal Investment Corporation, as Owner Participants under the December Participation Agreements.
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| Owner Trustee means The First National ~nk of Boston, as trustee for an Owner Participant under ea 'h of six sepa-rate Trust Agreements, dated as of August 1, 1986 and two separate Trust Agreements, dated as of December 1, 1986.
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| Participation Agreements means the August Participation Agreements and the December Participation Agreements.
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| Permitted Investments means, the certificates, obliga-tions and investments set forth in Schedule II hereto, the investments constituting the Transferred Investments Escrow Deposit and reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment fea-ture of any of the investments listed in clauses (ii),
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| (iii) and (iv) of the first paragraph of Section 4.1 hereof.
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| Transferred Investments Escrow Deposit means said term as defined in Section, 2.2 hereof.
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| Transferred Investments Escrow Sub-account means said term as defined in Section 2.2 hereof.
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| (c) As used herein, any capitalized term not otherwise defined herein has the meaning assigned'o such term in the respec-tive Participation Agreements.
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| ARTICLE II APPOINTMENT OF AGENT AND CREATION OP ESCROW ACCOUNT SECTION 2.1. Appointment of Agent. For the purposes and subject to the terms and conditions set forth in this Agreement, the Company hereby appoints Chemical Bank as escrow agent, and Chemical Bank hereby accepts such appointment.
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| SECTION 2.2. The Escrow Account. The Agent shall estab-lish and maintain for the benefit of the Owner Participants an Escrow Account (the Escrow Account), within which there shall'e two sepa-rate sub-accounts 'to be known as the Lease Proceeds Escrow Sub-account (the Lease Proceeds Escrow Sub-account) and the Transferred Investments Escrow Sub-account (the Transferred Investments Escrow Sub-account) . The Agent shall deposit in the Escrow Account (i) for 1021. 7500. 2704. 13: 20
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| ~O credit to th'e Lease Proceeds Escrow Sub-'account, any Lease Proceeds Escrow Deposit made by the Company to the Agent pur..uant to Section
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| : 3. 1 hereof, and (ii) for credit to the Transferre;d Investments Escrow Sub-account, the Transferred Investments Escrow Deposit made by the Company to the Agent pursuant to Section 4.1 hereof. So long as any
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| .amounts remain in the Escrow Account, such amounts shall be consid-ered as, and shall be and remain, the property of the Company. The Agent shall invest or re-invest any amounts in the Escrow Account and make applications thereof as provided in Art cle V hereof. The Escrow Account shall be funded by the deposits by the Company to the appropriate sub-accounts in the manner describ d herein.
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| SECTION 2.3. Statement of Purpose. The Company represents that the purpose of this Agreement and the creation and establishment of the Escrow Account is to pay or provide. for the payment, of the El Paso Obligations and certain short-term indebtedness of El Paso in accordance with Section 5.1(b) hereof.
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| ARTICLE III LEASE PROCEEDS DEPOSIT BY THE COMPANY'ECTION 3.1. Lease Proceeds Escrow Deposit. The Company hereby represents that it has deposited with the Agent $ 163,000,000 for deposit by the Agent in the Lease Proceeds Escrow Sub-account.
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| I ART CLE IV TRANSFER AND DEPOSIT BY THE COMPANY OF EXISTING INVESTMENTS SECTION 4.1. Transferred Investments Escrow Deposit.
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| Subject to. the terms and provisions of this Agreement, the Company hereby agrees that by February 1, 1988 it will cause to be deposited change of into the Transferred Investments Escrow Sub-Account by all account reference to that of the Agent or assignment of right, title and interest of the Company obligations or liabilities of the to the Company) as Agent the (exclusive case may be, of of any the following (collectively, the Transferred Investments Escrow Deposit):
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| (i) Account of'l. Paso Electric Co., Account No. 9-6191-03 01 at MBank Houston, P.O. Box 2629, Attn: Capital Markets Division, Houston, Texas; (ii) The limited partnership interest and to the Weiss Qualif ied Income of the Company Limited in Fund 1021.7500.2704.13:20
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| Partnership I, obtained on November 13, 1986 pursuant to, the Weiss Qualified Income Fund Limited Partnership I Amended and Restated Agreement of .Limited Partnership, dated as of September 9, '1986; (iii) Account of El Paso 97061 at Merrill Lynch, Electric, Ac .ount Pierce, Fenner No. 530-
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| & Smith Incorporated, One Liberty Plaza, 165 Broadway, New York, NY 10080; and
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| (.iv) Account of El Paso Electric Company, Account No.
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| 30 B Z0009 354 at Kidder, Peabody & Co., Incorporated, 20 Exchange Place, llew York, NY 10005.
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| The Agent is hereby authorized by the Company to enter into any arrangement or agreement (including but not limited to, manage-ment agreements) as the Company may determine is necessary to evi-dence ownership of the foregoing investments by the Agent.
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| The Company represents that the aggregate "book value>> as of the end of November, 1987 of the Transferred Investments Escrow Deposit was not less than $ 135 million.
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| Notwithstanding the foregoing, fails to if for any reason the consummate any of the transfers, in whole or in Company part, to the Agent referred to in clauses (i) .-.hrough (iv) of the first paragraph oforthis Section 4.1, such failure shall not consti-default under, this Agreement, so long as the tute a breach of, Company shall have on deposit in the Transferred Investments Escrow Sub-Account with the Agent on February 1, 1988, moneys or securities having an aggregate "book value" as of the end of November, 1987 of not less than $ 135 million.
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| ARTICLE V INVESTMENTS AND PAYMENTS'Y AGENT SECTION 5.1. Payments by Agent to Company from Lease Proceeds Escrow Sub-Account. (a) In order to provide for the pay-ment of the El Paso Obligation that is to be paid on or prior to January 31, 1988, and prior to the valuation of the money and securi-ties in the Escrow Account, upon the receipt by the Agent (with copies to each Owner Participant) from the. Company of a request in writing for disbursement, the Agent shall pay to the availableparty indicated in the written request of the Company in immediately funds, out of the funds then on deposit in the Lease Proceeds Escrow Sub-account, an amount equal to the amount that is due and owing to The Bank of New York as a prepayment of the El Paso Obligation for which 1021.7500.2704.13:20
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| ~O 0
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| payment is due in January 1988. Such request by the Company to the Agent pursuant to this Section 5.1 shall specify (i) the applicable prepayment date and (ii) wire or transfer instructions.
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| .(b) The Agent will prepare a market va3uation of all moneys and securities on deposit in the Escrow Accounc in accordance with the requirements of Section 5.4 hereof within 10 calendar days fol-lowing receipt by the Agent of all monthly closing valuations for the month of January 1988. Upon completion of such valuation, the Agent shall promptly provide a certificate to the Company and each of .and the Owner Participants setting forth the value of such moneys securities. To the extent. that the amount of such market valuation exceeds $ 243,100,000, upon receipt of such certificate of valuation from the Agent, the Company shall deliver a written request to the Agent (with copies to each Owner Participant), directing release of such excess to the Company for payment of indebtedness of the Company having a maturity of one year or less specified in such request, and upon receipt of such request the. Agent shall release such excess to the Company. To the extent that the amount of such market valuation is less than $ 243,100,000, the Company shall provide the Agent, within five business days after receipt of the certificate of valua-a tion from the Agent, with money or Permitted Investments (with market value as of the date of such valuation) sufficient to cover the deficiency.
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| SECTION 5.2. Monthly Disbursement from both Sub-accounts.
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| Except as specifically provided in Section 5.1 hereof, as soon as practicable following each monthly valuation pursuant to Section 5.4 hereof of the moneys and securities on deposit in the Escrow Account, amounts on deposit in the Escrow Account shall be disbursed monthly in accordance with and in amounts as set forth in a written certifi-cate of the Company (with copies of such certificate delivered to each Owner Participant) specifying the applicable payment date, payee, sub-account and wire or transfer instructions: first, to the in party named in such certificate of the amount as set forth therein order to permit the payment of El Paso Obligations with a Payment Date as determined in accordance with Schedule III hereto within 45 days after the date as of which the Escrow Account is valued and then second to the Company all amounts on deposit in the Escrow Account in excess of the amount necessary to pay the principal amount of the remaining El Paso Obligations, determined by reference to Schedule III hereto and confirmed in the certificate of the Company requesting such disbursement.
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| Notwithstanding the foregoing the Company may direct the Agent to a disbursement from the Escrow Account solely for the make purposes of paying an El Paso Obligation if for any reason the does not valuation and disbursement procedure heretofore described El provide for timely and adequate payment of any such Paso 1021. 7500. 2704. 13: 20
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| ~O Cl
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| Obligation and such direction of the Company shall expressly so state. The Agent shall be entitled to liquidate any investments held in the Escrow Account in order to provide for payment of the. El Paso Obligations or any other payments in accordance herewith. The Agent shall have no liability for losses resulting from the liquidation of securit'ies on deposit in the Escrow Account.
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| SECTION 5.3. Investments; Agreement as to Value of Clauses 6, 7 and 8 on December- 31, 1988. (a) The Agent sh'all invest and reinvest (which shall include the application of (A) the proceeds of maturing investments and (B) the sale of investments) the moneys in the Escrow Account only in Permitted Investments and shall sell investments in the Escrow Account, as specifically identified in a written direction of the Company which shall, in the case of any such investment or reinvestment expressly state that each such investment is a 'Permitted Investment and further that such Permitted Investment is in compliance with the limitations set forth, in the next sentence, it being understood that the Agent shall have no duty to monitor. such compliance; provided, however, that such identification of the investment or reinvestment and certification as to compliance with the limitations set forth in the next sentence shall not be appli-cable to the nondiscretionary reinvestment feature of the investments described in clauses (ii), (iii) and (iv) of the first paragraph of Section 4 . 1 here'of. Any such investments and reinvestments shall be subject to the following limitations:
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| (i) no investment or reinvestment shall be made in any of clauses 6, 7 and 8 contained in Schedule II hereto if as a result of such investment or reinvestment (a). at the date thereof, but no later than December 31, 1988, the total aggregate amount invested pursuant to clauses 6, 7 and 8 contained in Schedule II hereto would exceed the lesser of (x) sixty percent (60%) of the market value of the amounts then on deposit in the Escrow Account and (y) the total so invested at any time immediately prior to such investment or reinvestment; provided, however, that for purposes of determining compliance with this subclause (y),
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| there shall be excluded from the total aggregate amount invested pursuant to clauses (6), (7) and (8) of Schedule II hereto any amounts attributable to the invest-ment and reinvestment of income, dividends and. capital gains resulting from the nondiscretionary reinvestment fea-ture of any of the investments listed in clauses (ii),
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| (iii) and (iv) of the first paragraph of Section 4.1 on deposit in the Transferred Investment Escrow Sub-Account and (b) at the date thereof, but only after December 31, 1 98 8 the tota 1 aggregate amount invested pursuant to such clauses would exceed twenty-five percent (25%) of the g
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| 1021. 7500. 2704. 13: 20
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| iO market value of the amounts then on deposit in the Escrow Account; (ii) no investment or reinvestment in Permitted Investments shall be made if the result thereof would be to cause any of clauses 1, 3, 4,,5, 9 and 10 contained in Schedule II hereto to exceed twenty-five percent (25:) of the market value of the amounts on deposit in the Escrow Account; and (iii) the average life of any investment (other than investments described in clause 2 contained in Schedule II hereto) shall not exceed seven years.
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| (b) The Company agrees that the market value as of December 31, 1988 of investments in the Escrow Account (including the.
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| Transferred Investments Escrow Deposit) in clauses 6, 7 and 8 con-tained in Schedule II hereto will not exceed $ 45 million. The Company represents that it will attempt to undertake an orderly liquidation of the Transferred Investments Escrow Deposit so as to be in a position to comply with this Article V. The Company anticipates that, under current market conditions and recognizing that sale of investments will be designed to protect the Company from incurring any losses due to such investments, reductions, within the bands and for the quarters of calendar year 1988 indicated below, of the Transferred Investments Escrow Deposit would be achievable:
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| 1988 Reduction uarter 1st 20 to 45 2nd 20 to 30 3rd 30 to 20 4th 38 to 13 Total for 1988 108 SECTION 5.4. Valuation of Investments; Payment of Deficiency. The Agent shall cause a monthly fair market valuation of the Escrow Account to be undertaken. In undertaking its obligation to make a monthly valuation of the Escrow Account, valuations (i) the Agent fur-shall be entitled to assume that the monthly market nished to the Agent of the investments held in the Transferred Investments Escrow Sub-Account shal'1 constitute the market value of any such investments and (ii) to the extent the Agent is unable to value any Permitted Investments in accordance with its customary practice as a corporate trustee, the Companyshall hereby agrees to promptly provide the Agent with, and the Agent be entitled to rely upon, an independent market valuation of any such investment.
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| The Company agrees to cause the monthly market valuations of the 1021. 7500. 2704. 13: 20
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| investments constituting the Transferred Investments Escrow Sub-Account to be sent directly to the Agent. Copies of all such valuations by the Agent shall be sent to the Owner Participants and the Company.
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| The Agent shall undertake such valu tion of the Escrow Account monthly, commencing in February, 1988, such valuation to be as of the end of the immediately preceding month and in no event shall such valuation be completed later- than ten calendar days after receipt by the Agent of the monthly valuation report for all such Permitted Investments on deposit in the Transferred Investments Escrow Subaccount (including any monthly valuation report provided pursuant to the second sentence of the first paragraph of Section 5.4 hereof) . In connection with its valuation of the Escrow Account, the Agent shall deduct from the valuation of the investments on deposit in the Transferred Investments Escrow Sub-Account that, amount which represents the aggregate value attributable (determined on a cumula-tive basis, i.e., including the month of valuation and preceding months) to reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment feature of any of the investments listed in clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof. For purposes of the monthly valua-tion only, any proceeds derived from a sale or upon maturity (other than pursuant to the nondiscretionary reinvestment feature of any of the investments listed in clauses (ii), (iii) and (iv) of the first paragraph of Section 4. 1 hereof) of any investment made pursuant to clauses (ii), (iii) a'nd (iv) of the first paragraph of Section 4.1 hereof shall be allocated to reducing the aggregate value, if any, of the investments in the Transferred Investments Escrow Sub-Account attributable to reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment feature of any such investment, which aggregate value was deducted jrom the valuation of investments on deposit in the Transferred Inve-tments Escrow Sub-Account pursuant to the preceding sentence (it heing understood that an amount equal to any such reduction, except to the extent that such amount was otherwise withdrawn from the Escrow Account pursuant to Section 5.2 hereof, shall be included in the Transferred Investments Escrow Sub-Account for purposes of the monthly valuation thereof).
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| The Agent shall derive the amount attributable to each month repre-senting such reinvestment from. the monthly market valuations fur-nished to the Agent with respect to such investments and valuations, the if such attribut-amount cannot be derived from such amount able to such month and the aggregate to be so deducted shall be as directed in writing by the Company to the Agent, copies of which cal-shall be furnished to the Owner Participants, together withasthecerti-culations and data upon which such direction is based, all fied by the Chief Financial Officer of the Company. as Toadjusted,the extent for the amount of such valuation of the Escrow Account, the amount, if any, to be deducted from such monthly valuation as 1021. 7500. 2704. 13: 20
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| ~li
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| ~Ci
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| provided in this paragraph, is less than the principal amount of the remaining El Paso Obligations which are schedu'ed to come due more than forty-five (45) days subsequent to such valuation, the Company shall provide the Agent within five business days after. receipt from the Agent of such monthly valuation with money or Permitted Investments (with a market value as of the dat of such valuation) sufficient to cover the deficiency. The Agent shall notify the Owner Participants in writing of the date and receipt by the Agent of, any money or Permitted Investments provided to meet such deficiency.
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| ARTICLE VX CONCERNING THE AGENT SECTION 6 1. Duties of Agent. The Agent shall have no duties or responsibilities other than those expressly set forth in this Agreement and shall have no duty to enforce any obligation of any person to make any payment or delivery, or to direct or cause any payment or delivery to be made, or to enforce any obligation of any person to perform any other act or to perform any calculations except as herein expressly set forth. In addition, the, Agent shall have no duty to make any payment under this Agreement from, its own funds.
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| SECTION 6.2. Liability. The Agent shall not be liable for any action taken or omitted by it, or any action suffered by it to be taken or omitted, in good faith and in the exercise of its own best judgment, excepting only its own willful misconduct or gross negli-gence, and may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion and advice of counsel (including counsel selected by the Agent)', statement, instru-ment, report or other instrument or document (not only as to its due execution and the validity and effectiveness thereof, but also as to the truth and acceptability of any information therein contained) which is believed by the Agent to be genuine and to be signed (or in the case of oral communication, given) by the proper person or persons. The Agent shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement or any of the terms hereof, unless expressly provided for herein and delivered as provided in this Agreement.
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| ~
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| SECTION 6.3. Delivery of Documents and Further Acts.
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| From time to time on and after the date hereof, the Company shall deliver or cause to be delivered to the Agent such further documents and instruments and shall do and cause to be done such further acts as the Agent may reasonably request (.it being understood that the Agent shall have no obligation to make any such request) to carry out more effectively the provisions .and purposes of this Agreement, to 1021.7500.2704.13,:20
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| 0 evidence compliance herewith or to assure itself that it is protected in acting hereunder.
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| SECTION 6.4. Legal Proceedings. The Agent shall not be required to defend any legal proceedings which may be instituted against it in respect of the subject matter of this Agreement unless requested to do so by the Company and indemnifiec. to its satisfaction against" the cost and expenses of such defense (.'ncluding counsel and investigatory fees) by the Company and shall not be required to institute legal proceedings of any kind.
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| SECTION 6.5. Resignation; Appointment of Successor. The Agent (or any successor escrow and paying agent) may resign at any time and be discharged from its duties as escrow and paying agent under this Agreement by giving to the Company and the Owner Participants at least 30 days'otice thereof, such resignation to be effective on the date of appointment of a successor escrow and paying agent as hereinafter provided. As soon as practicable after any such resignation, the Agent shall turn over to a successor escrow and paying agent; appointed by the Company all monies and property held hereunder upon presentation of the document appointing such successor escrow and paying agent and its acceptance of such appointment. If no successor escrow and paying agent is so appointed within the sixty-day period following such notice of resignation,. the Agent shall deposit all monies and funds held hereunder with the Supreme Court of the State of New York for the County of New York (together with a petition to .said Court for the appointment of a successor to act until .such time, if any, as a successor shall have been appointed as hereinbefore provided). Upon turning over to the successor escrow and paying agent or to the Supreme Court of the State of New York as aforesaid, all monies and property held hereunder, the predecessor escrow and paying agent shall be released of any further responsibil-ity hereunder. Any successor escrow and paying agent shall be a bank or trust company organized under the laws of the United States or any capita'nd surplus of at jurisdiction thereof, having a combinedinstitution least $ 250, 000,000, if there be such an willing, able and legally qualified to perform the duties of the Agent hereunder upon reasonable or customary terms.
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| SECTION 6.6. Indemnification. The Company agrees that the Agent shall not be liable for any matter or thing arising out of the performance by the Agent of its obligations under this Agreement, except as provided in Section 6.2 hereof. The Company agrees to indemnify the Agent, and to hold. the Agent harmless, from and against any and all liability, loss, damage or expense (including reasonable attorneys'ees and actual out-of-pocket expen'-es)or which for the Agent any action may or might incur by reason of this Agreement, taken by the Agent hereunder, or by reason or in defense of any and 1021.7500.2704.13:20
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| i~
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| ~li 0
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| all claims and -demands whatsoever which may be asserted against the Agent arising out of this Agreement.
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| ARTICLE VII MISCELLANEOUS SECTION 7.1. Payments. Payments to or upon the direction of the Company by the Agent pursuant to Article V hereof shall be made in accordance with such written instructions as the Company may provide to the Agent (with copies to the Owner Participants) from time to time for such purposes. Whenever any payment, to be made pur-suant hereto shall be required to be made on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day.
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| SECTION 7.2. Termination. This Agreement shall terminate upon the earliest to occur of (i) receipt by tne Agent of written notice from each Owner Participant that as to such Owner Participant this Agreement is terminated, (ii) disbursement by the Agent of all of the payments to be made by the Agent under Article V hereof with respect to the El Paso Obligations and (iii) receipt by the Agent of joint notice from the Company and each of the Owner of Participants with this Agreement respect to such termination. Upon the termination as aforesaid, any securities and moneys on deposit in the Escrow Account shall be applied at the direction of the Company.
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| SECTION 7.3. Amendments, Etc. No amendment to this Agreement shall be made or be effective without the written consent o f the Owner Participants. No amendment, modir ication, termination or waiver of any provision of this Agreement shall in any event be effective unless the same shall be in writing and signed by the par-ties hereto, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment of any other agreement or instrument shall affect the Agent or its duties hereunder. No notice to or demand on any party hereto in any case shall entitle such party to any other or further notice or demand in similar or other circumstances unless herein otherwise provided.
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| SECTION 7.4. Addresses for Notices, Etc. Except as oth-erwise expressly provided herein, all notices and other communica-tions provided for hereunder shall be in writing and mailed (postage if prepaid), hand delivered or sent by overnight courier,North to the Company, c/o William J. Johnson at its address at 303 Oregon Street, P.O. Box 982, El Paso, Texas 79960, with a copy similarly delivered to Kemp, Smith, Duncan 6 Hammond, 2000 MBank Plaza,
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| : p. O. Drawer 2800, El paso, Texas 79999, Attention: Dane George, 1021.7500.2704.13:20
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| ~li Esq., and if to the Agent, at its address at 55 Water Street, New York, New York 10041, Attention: Corporate Trustee Administration, with a copy similarly, delivered to Willkie Parr Gallagher, 153 East, E.
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| 53rd Street, New York, New York 10022, Attention: Brian O'rien, Esq., and, if to the Company or the Agent, with copies to each of the Owner Participants at its address specified in- Schedule I hereto, with a copy similarly delivered to Cravath, Swaire & Moore, One Chase Manhattan Plaza, New York, N.Y. 10005, Attentior.'. Richard M. Allen, Esq., or, as to any of the foregoing, at such other address as shall be designated by such person in a written notice to the others. All such written notices and communications shall be effective when received at the address specified as aforesaid.
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| SECTION 7.5. Successors and Assigns. All of the provi-sions of this Agreement shall be binding upon and inure to the bene-it f o f the parties hereto and their respectiveor successors assigns, except that the Company may not assign transfer and any of its rights or obligations under this Agreement other than to a per-mitted transferee under the Participation Agreements. Upon such assignment or transfer, the Company shall notify the Agent, whereupon the Agent shall recognize such assignment or transfer.
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| SECTION 7.6. Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable in the State of New York or in any jurisdiction in the United States which shall be applicable to this Agreement shall, as to the State of New York or such jurisdiction in the United States, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceabil-ity of such provision in any other jurisdiction.
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| SECTION 7.7. Headings, etc. The heail ings o f various Articles and Sections of this Agreement are for convenience of refer-ence only and shall not define or limit any of the terms and provi-sions hereof.
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| SECTION 7.8. Governing Law. This Agreement shall be gov-erned by, and construed in accordance with, the law of the State of New York.
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| SECTION 7.9. Counterpart Execution. Th i s Agreement and any amendment to this Agreement may be signed in any number of coun-terparts, each of which shall be an original, andwith all of which taken together shall constitute a single instrument, the same effect as if the instrument.
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| signatures thereto and hereto were upon the same 1021. 7500. 2704. 13: 20
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| 0 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their officers thereunto duly autho-rized as of the day and year first above written.
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| CHEMICAL BANK By:
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| Senior Trust Officer EL PASO ELECTRIC COMPANY By:
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| Vice President 1021 7500 2704 13: 20
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| ~ ~ ~
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| 4i
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| '0
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| SCHEDULE I Commercial Federal Investment Corporation Jeff Bainbridge Commercial Federal Investment Corporation 1300 Commercial Federal Tower 2120 South 72nd Street Omaha, Nebraska 68124 Chrysler Financial Corporation Chrysler Financial Corporation Greenwich Office Park I Greenwich, Connecticut 06836 Leasing and Investment Services Attention: Mike Abandond Palantine -Hills Leasing, Inc.
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| Palantine Hills Leasing, Inc.
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| 1415 S. Roselle Road Palantine, IL 60067 Attention: President, with copies to Household Commercial Financial Services Attention: Lee Wyatt and Julia Sarron, Esq.
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| 2700 Sanders Road Prospect Heights, IL 60070 1021. 7500. 2704 13: 20
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| ~
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| '0 0
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| UCU Properties, Inc.
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| {Formerly, Energy Investments, Inc.)
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| Donald Claar Suite 2000 Commercial Tower Kansas City, Missouri 64105 Alexander Hamilton Life Insurance Company of A~rica Richard Egan, General Counsel Alexander Hamilton Life Insurance Company of America 33045 Hamilton Boulevard Farmington Hills, Michigan Burnham Leasing Corporation Burnham Leasing Corporation 55 Broad Street New York, New York Attention: Dianne Rudo 1021 7500.. 2704. 13: 20
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| ~
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| ill 0
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| SCHEDULE II 1 ~ Certificates of deposit maturing within 180 days and issued by any Federally insured commercial bank; provided, however, that if1,000,000 the face amount of any such Certificate of Deposit shall be or more, the issuing bank shall have a capital and surplus exceeding $ 500,000,000 and a senior debt rating of not Below the Level of Investment Grade; 2 ~ Readily marketable obligations issued or guaranteed by the United States Government or issued by the Government National Mortgage Association, the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation; 3 ~ Repurchase obligations maturing within 30 days with respect. to obligations of the type described in Clause 2 above issued by any Federally insured commercial bank; provided, however, that if the face amount of such repurchase obligation is $ 10,000,000 or more, the issuing bank shall have a capital and surplus exceeding $ 500,000,000 and a senior debt rating of not Below the Level of Investment Grade; 4 ~ Repurchase obligations maturing within 30 days with respect to obligations of the type described in Claus 2 above issued by any nationally recognized dealer which reports to the Market Reports Division of the Federal Reserve Ba.ak of New York;
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| : 5. Investments in readily marketable money market funds managed by a nationally recognized fund manager., the assets of which fund (or the issuers thereof) are as described in Clauses 1, 2, 3, 4, or 9 herein;
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| : 6. Investments in readily marketable bonds, which are not Below the Level of Investment Grade, or bond funds managed by a nationally recognized fund manager, the assets of wh'ch,(or the issuers thereof) are not Below the Level of Investment 'Grade; 7 in stock or stock funds managed by a nationally rec-
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| 'nvestments
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| ~
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| ognized fund manager;
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| : 8. Mortgage backed securities;
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| : 9. Commercial paper maturing within 180 days and having,a rating of P-,l or better by Moody's Investors Service or A-1 or better by Standard & Poor's Corporation; or 10 Investments iq municipal obligations, the issuers of which are not rated Below the Level of, Investment Grade, or. the obligations of which are backed by a Letter of Credit from a commercial bank as described in Clause 1 above.
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| 1021.7500.2704.13:20
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| ~O Cl
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| "Below the Level of Investment Grade" means (i) in the case of Moody~s Investors Service, a rating of less .than Baa3 or the current equivalent, (ii) in the case of Standard & Poors Corporation, a rating of less than BBB- or current equivalent and (iii) in the case of Duff and Phelps, a rating greater than ten or the current equivalent.
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| 1021.7500.2704.13:20
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| SCHEDULE III EL PASO OBLIG IO S Principal Payment Amount Date Description
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| $ 25 i 000 i 000 Jan. 31, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 50'00/ 000 June 30, 1988 Second mortgage bonds The Bank of New York due June 1988
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| $ 6, 100, 000 July 20, 1988 4.25~ First mortgage bonds. due July 1988
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| $ 22,000,000 May 20, 1989 12.75: First mortgage bonds due May 1989
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| $ 25<000,000 Aug. 15, 1989 14.54 First mortgage bonds due August 1989
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| $ 50 g 000 000 g
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| Nov ~ 20 g 1989 144 First mortgage bonds due November 1989
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| $ 20, 000, 000 Dec. 1, 1990 Long-term notes - unsecured-The Bank of America
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| $ 70, 000, 000 Mar. 1, 1991 Second mortgage bonds The Bank of America 1021.7500 '704 '3:20
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| iO 0
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| 0
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| 'Exhibit B AMENDMENT No. 2, dated as of December 31, 1987, to Facility Lease dated as of August 1, 1986, between THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee (<<Lessor<<) under
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| ,a Trust Agreement,, dated as of August 1, 1986 with BURNHAM LEASING CORPORATION, and EL PASO ELECTRIC COMPANY, as Lessee (<<Lessee<<).
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| The parties hereto have previously entered into the Facility Lease (as heretofore amended, modified or supplemented, the "Facility Lease" ) providing for the lease by Lessor to Lessee of the Undivided Interest and the Rea'l Property Interest. The, parties now desi're to make certain amendments to the Facility Lease.
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| NOW, THEREFORE, in consideration of the premises and other good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows:
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| SECTION 1. Definitions. For purposes hereof, capital-ized terms used herein and not defined herein shall have the meanings ascribed thereto in Appendix A to the Facility Lease.
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| SECTION 2. Amendments. (a) Section 3(b). Section 3(b) is hereby amended by inserting at the end of a clause (iii), in lieu of <<.<<, <<; and<< and by inserting thereafter and before the next to last sentence of Section 3(c) a new clause (iv) reading as follows:
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| (iv) in the event that the Lessee shall fail to provide on or before April 30, 1988, a letter of credit which complies with the terms of the Agreement dated as of December 31, 1987 (the "Commitment Agreement" ), among the Lessee, the Lessor and the Owner Participant, a copy of which is annexed hereto, on each Basic Rent Payment Date, commencing October 1, 1988 and ending on the Basic Rent. Payment Date next following the earlier to occur of (A) the providing by the Lessee of such letter of credit and (B) the date as of which such letter of credit would have expired had it been in effect as required by the terms of the Commitment Agreement, an amount equal to .35% of Facility Cost multiplied by a fraction the numerator of which is the number of days from and including the preceding Basic Rent Payment Date (or, in the case of the Basic Rent Payment Date occurring on October 1, 1988, from and including April 30, 1988) to but excluding such Basic Rent Payment Date (or, if earli-er, to the date .on which such letter of credit is pro-vided or the date such letter of credit would have so expired),, and the denominator of which is the number of days from and including the preceding Basic Rent 1021.7500 '754.22:4
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| iO
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| ~ll 0
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| Payment Date to but excluding such Basic Rent Payment Date.
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| (b) Section 7. Section 7 of the Facility Lease is hereby amended by inserting "(a) Liens." prior to the existing paragraph and inserting the following at the end thereof:
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| (b) Retirement of Debt. Unless the Owner Participant shall otherwise consent,. on or before each date set forth in Schedule 8 hereto, the Lessee shall retire, legally defease or deposit with the lender or its trustee funds sufficient to -retire the principal amount of the Debtsuch set forth opposite the reference to such date on Schedule.
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| (c) Merger, Sale, etc. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, convey, transfer or lease to any Person any asset except for fair value.
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| Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, (1) consolidate with any Person, (2) merge with or into any Person or (3) except for (i) payments, in accordance with normal dividend policy of the Lessee, of cash dividends to holders of common stock and preferred stock, (ii) exchanges of fixed assets for other fixed assets whose fair value is equal to or greater than the fair value of the fixed assets exchanged or (iii) conveyances, transfers or leases of assets for cash where such cash is to be recorded by the Lessee, convey, transfer, lease or dividend to any Person, in any single transaction or series of related transac-tions, any asset or assets of its if the total book value assets as of such shown asset on'the or assets exceeds 54 most recent consolidated balance sheet of the Lessee deliv-ered to the Owner Participant pursuant to Section 10 (b) (1) (i) (A) of the Participation Agreement; unless immediately after giving effect to such transaction:
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| (A) the Person who is the "Lessee" under the Facility Lease immediately following such consolidation, merger, conveyance, transfer, lease or dividend (the "Surviving Lessee" ) shall be a corporation which (i) is organized under the laws of the United States of America, a state thereof or the District of Columbia,.
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| (ii) is a "public utility" under applicable law, (iii) is an ANPP Participant under the ANPP Participation Agreement with respect to Unit 2 (including the 1021.7500.2754.22:4
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| ~O 0
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| Undivided Interest), (iv) shall have assumed each covenant and condition of the Lessee under the ANPP Participation Agreement and each other ANPP Project Agreement and (v) holds a valid and subsisting license f rom the NRC to possess Unit 2 (including the Undivided Interest);
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| (B) the Surviving Lessee, if other than the Lessee immediately prior to such transaction, shall execute and deliver to the Owner Participant an agreement, in form and substance reasonably satisfactory to the Owner Participant, containing the assumption by the Surviving Lessee of each covenant and condition of this Facility Lease, each other Transaction Document and each Financing Document to which the Lessee imme-diately prior to such transaction was a party immedi-ately preceding such transaction; (C) no Default (other than a failure to deliver docu-ments and other information specified in Section 10(b) (1) (vi) of the Participation Agreement) and no Event of Default shall have occurred and be continuing, no Event of Loss shall have occurred and no Deemed Loss Event shall have been declared; (D) the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) after giving effect to such transaction, (1) shall be rated.
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| at least "investment grade" by Standard & Poor's Corporation and Moody's Investors Service, Inc. and (2) shall have an investment rating by Standard &
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| Poor's Corporation and Moody's Investors Service, Inc. not less than one "smallest notch" below the rating assigned to the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) immediately prior to such transaction (or, if neither of such rating organizations shall rate the Bonds (or, if applicable, the preferred stock of the Surviving Lessee) at the time, by any nationally rec-ognized rating organization in the United States of-America);
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| (E) the Surviving Lessee shall have a Net Worth equal to or greater than the Net Worth of the Lessee immedi-ately prior to such transactions and equal to or greater than $ 500,000,000; (F) the Surviving Lessee shall have delivered to the Owner Participant. and the Indenture Trustee an 1021.7500.2754.22:4
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| Officers'ertificate and an opinion, reasonably satisfactory to the Owner Participant, of counsel to the Surviving Lessee, each stating that (1) such transaction complies with this subclause (c) and (2) all conditions precedent to the consummation of such transaction have been satisfied and any Governmental Action required in connection with such transaction has been obtained, given or accomplished; (G) the Surviving Lessee shall have delivered to the Owner Participant an opinion, reasonably satisfactory to the Owner Participant, of independent counseL to the Surviving Lessee stating that such transaction would not result in a loss of any of the tax benefits described in Section 13 (c)'(1) of the Participation Agreement; (H) such transaction is otherwise permitted by and in compliance with the ANPP Participation Agreement; and (I) the New Coverage Ratio of the Surviving Lessee shall be at least 1.6 to 1.
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| Upon the consummation of such transaction the Surviving Lessee, if other than the Lessee, shall succeed to, and be substi-tuted for, and may exercise every right and power of, the Lessee immediately prior to such transaction under this Lease, each other Transaction Document and each Financing Document to which the Lessee immediately prior to such transaction was a party immediately prior to such transaction, with the same effect as if the Surviving Lessee had been named herein and therein.
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| (d) Incurrence of Debt. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries (whether consolidated or unconsolidated) to, issue, assume. or become liable in respect of (A) any Debt maturing more than one year after the date of such issuance, assumption or liability (including current maturities of Debt with an original maturity of more than one all year) if, immediately thereafter, its sub-(i) the total amount of Debt of the Lessee and sidiaries (whether consolidated or unconsolidated) maturing more than one year after the date of such issuance, assump-tion or becoming liable (reduced by Cash Available for Investment.) shall exceed 70~ (or, at any time after January 1, 1992 when there is not in effect a letter of credit com-plying in all respects with the Commitment, Agreement, 654) of New Consolidated Capitalization, in each case as shown on a pro forma consolidated balance sheet on and as of the 1021.7500.2754 '2:4
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| 0 Cl 0
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| date of such issuance, assumption or becoming liable, or (ii) the New Coverage Ratio of the Lessee would be less than 1.6 to 1 or (B) any Debt maturing one year or less after the date of such issuance, assumption or becoming liable (excluding current maturities of Debt with an origi-nal maturity of more than one year) if, immediately there-after, the total amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) maturing one year or less after the date of such issuance, assumption or becoming liable shall exceed 12.54 of New Consolidated Capitalization, in each case as shown on a pro forma consolidated balance sheet on and as of the date of such issuance, assumption or becoming liable. For purposes of the foregoing clause (A), there shall be excluded any Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow and any refunding of the debt issued on December 31, 1987 by the lessors in the sale and leaseback transactions relating to Unit 3 at PVNGS shall not constitute the Lessee issuing, assuming, or becoming liable in respect of any Debt within the meaning of this subclause (d).
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| (e) Escrow Agreement. The Lessee shall deposit with Chemical Bank as escrow agent (the "Agent" ) any amount required to be deposited under the Escrow Agreement dated as of December 31, 1987 between the Lessee and the Agent within 5 Business Days after notice from the Owner Participant and shall otherwise comply with its other obli-gations under such Agreement within 15 days after notice from the Owner Participant.
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| (f). Definitions. For purposes of this Section 7, the terms New Consolidated Capitalization and New Coverage Ratio shall be defined as follows:
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| (A) "Nev Coverage Ratio" shall mean the ratio of (x) the sum of (a) consolidated net income of the Lessee for the twelve-month period ending on a datewhich no later than 135 days prior to the date as of New Coverage Ratio is being determined plus (or minus) (b) all extraordinary items deducted (or added) in deter-mining said net income (for purposes of this defini-tion of New Coverage Ratio, any charge againstpursuant income resulting from a write-off of utility plant having to (i) an order of any governmental authority jurisdiction or (ii) a provision for an estimated.
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| regulatory disallowance shall be deemed to said be an net extraordinary item deducted in determining 1021.7500.2754.22:4
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| ~O 0
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| income) plus (or minus) (c) all income taxes deducted (or tax credits added) in determining said net income
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| 'minus (d) for all or any portion of such period ending on or prior to December 31, 1990, 504 of "allowance for funds used during construction" (net of deferred taxes) as such item is referred to in the consolidated income statement of the Lessee and its subsidiaries) and, for all or any portion of such period ending after. December 31, 1990, 1004 of such item plus (e) the sum of all interest and lease payments paid by the Lessee and its subsidiaries (whether consolidated or unconsolidated) during such twelve-month period'o (y) total interest and lease .payments that will be payable by the Lessee and its subsidiaries (whether consoli-dated or unconsolidated) during the twelve-month period following the date as of which New Coverage Ratio is being determined. There shall be excluded from interest and lease payments included under clauses (x) and (y) above (i) lease payments to the Rio Grande Resources Trust, (ii) lease payments under any operating lease of computers, office equipment or the like, the original term of which (including options to renew) is less than five years and (iii) interest on Debt maturing one year or less from the date of incurrence thereof. There shall be excluded from interest and lease payments included .under clause (y) above interest on Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow.
| |
| (B) "New Consolidated Capitalization" sha1 1 mean the total of consolidated capital and surplus of the Lessee plus the principal amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) which matures more than one year after the date as of which New Consolidated Capitalization is being determined.
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| (c) Schedule 8. Schedule 8 hereto is hereby added as Schedule 8 to the Facility Lease.
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| 1021.7500 '754.22:4
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| 0 II
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| SECTION 3. Miscellaneous (a) Effective Date of Amendments. The amendments set forth in Section 2 hereof shall be and become effective upon the execution hereof by the parties hereto.
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| (b) Counterpart Execution. This Amendment No. 2 may be executed in any number of counterparts and by each of the parties hereto on separate counterparts; all such coun-terparts shall together constitute but one and the same instrument.
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| (c) Governing Law. This Amendment No. 2 has been negotiated and delivered in the State of New York and shall be governed by and be construed in accordance with the laws of the State of New York, except to the extent that pursu-ant to the law of the State of Arizona such law is mmx3ato-rily applicable hereto.
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| (d) Disclosure. Pursuant to Arizona Revised Statutes Section 33-404, the beneficiary of the Trust Agreement is Burnham Leasing Corporation, a corporation. The address of the beneficiary is 55 Broad Street, New York, New York, Attention: Dianne Rudo. A copy of the Trust Agreement, is available for inspection at the offices of the Owner Trustee at 100 Federal Street, Boston, Massachusetts 02110, Attention of Corporate Trust Division.
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| 1021 7500 2754 22:
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| ~ ~ ~ 4
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| ~O
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| ~ll 0
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| IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment No. 2 to be duly executed in New York, New York on December 31, 1987.
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| THE FIRST NATIONAL BANK OF BOSTON, not, in its individual capacity, but solely as Owner Trustee under a Trust Agreement, dated as of August 1, 1986 with Burnham Leasing Corporation, By
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| ~ Senior Manager EL PASO ELECTRIC COMPANY, ice President
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| ill
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| ~O 0
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| STATE OF TEXAS )
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| ) Ss.:
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| COUNTY OF EL PASO )-
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| The foregoing instrument was acknowledged before me this 6th day of January, 1988 by Nilliam J. Johnson, a Vice President of EL PASO ELECTRIC COMPANY, a Texas corporation, on behalf of the corporation.
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| N ary Public
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| 0 i
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| ~li
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| COMMONWEALTH OF MASSACHUSETTS )
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| ) SS ~ ~
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| COUNTY OF SUFFOLK )
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| The foregoing instrument was acknowledged be fore me this day of January, 1988, by Mark Nelson, a Senior Manager of THE
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| 'FIRST NATIONAL BANK OF BOSTON, .a national banking association, on behalf of the banking association as trustee under that certain Trust, Agreement dated as of August 1, 1986 with Palatine Hills Leasing, Inc.
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| Notar Public N$ 50lA QO~Ogg& Respires j+eebor 80, 1094 1021.7500.2754.06A:1
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| ~ ~ ~
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| 4l 0
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| SCHEDULE 8 E SO 0 G ON Principal Payment Amount Date Description
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| $ 60,000,000 Jan. 31, 1988 16.204 First mortgage bonds due 2012
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| $ 25,000,000 Jan. 31, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 50i000i000 June 30, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 6, 100, 000 July 20, 1988 4.254 First mortgage bonds due July 1988
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| $ 22 I 000 I 000 May 20, 1989 12.754 First mortgage bonds due May 1989
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| $ 25,000i000 Aug. 15,-
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| 1989 14.54 First mortgage bonds due August 1989
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| $ 50 000 i 000 Nov. 20, 144 First mortgage bonds due November 1989 g
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| 1989
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| $ 20 I 000 I 000 Dec. 1, 1990 Long-term notes unsecured-The Bank of America
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| $ 70, 000, 000 Mar. 1, 1991 Second mortgage bonds-The Bank of America 1021.7500.2754.22:4
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| if'Cl AMENDMENT No. 1, dated as of December 31, 1987,, to Facility Lease dated as of December 1; 1986, between THE FIRST NATIONAL BANK OF BOSTON, not in its individ-ual capacity but solely as Owner Trustee (" Lessor" )
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| under a Trust Agreement, dated as of December 1, 1986
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| 'ith COMMERCIAL FEDERAL INVESTMEZT CORPORATION, and EL PASO ELECTRI C COMPANY g as Lessee ( "Lessee" )
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| The parties hereto have previously entered into the Facility Lease (as heretofore amended, modified or supplemented, the "Facility Lease" ) providing for the lease by Lessor to Lessee of the Undivided Interest and the Real Property Interest. The parties now desire to make certain amendments to the Facility Lease.
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| NOW, THEREFORE, in consideration of the premises and other good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows:
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| SECTION 1. Definitions. For purposes hereof, capital-ized terms used herein and not defined herein shall have the meanings ascribed thereto in Appendix A to the Facility Lease.
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| SECTION 2. Amendments. (a) Section 7. Section 7 of the Facility Lease is hereby amended by inserting "(a) Liens." prior to the existing paragraph and inserting the following at, the end thereof:
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| (b) Retirement of Debt. Unless the Owner Participant shall otherwise consent, on or before each date set forth in Schedule 7 hereto, the Lessee shall retire, legally defease or deposit with the lender or its trustee funds sufficient to retire the principal amount of the Debt set forth opposite the reference to such date on such Schedule.
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| (c) Merger, Sale, etc. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, convey, transfer or lease to any Person any asset except for fair value.
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| Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to,
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| (.1) consolidate with any Person, (2) merge with or into any Person or (3) except for (i) payments, in accordance with normal dividend policy of the Lessee, of cash dividends to holders of common stock and preferred stock, (ii) exchanges of fixed assets for other fixed assets whose fair. value is equal to or greater than the fair value of the fixed assets exchanged or (.iii) conveyances, transfers or leases of assets for cash where such cash is to be recorded by the Lessee, convey, transfer,, lease or dividend to any Person, in any single transaction or series of related transactions, any asset or assets if the book value of such asset or assets exceeds 5% of its total assets as shown on 1021.7500.2754.09:2
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| i ili
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| the most recent consolidated balance sheet of the Lessee delivered to the Owner Participant pursuant to Section 10(b) (1) (i) (A) of. the Participation Agreement; unless immediately after giving effect to such
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| 'ransaction:
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| (A) the Person 'who is the "Lessee" under the Facility Lease immediately'ollowing such consolidation, merger, conveyance, transfer, lease or dividend (the "Surviving Lessee" ) shall be a corporation which (i) is organized under the laws of the United States of America, a state thereof or the District of Columbia, (ii) is a "public utility" under applicable law, (iii) is an ANPP Participant under the ANPP Participation Agreement with respect to Unit 2 (including the Undivided Interest), (iv) shall have assumed each cov-enant and condition of the Lessee under the ANPP Participation Agreement and each other ANPP Project Agreement and (v) holds a valid and subsisting license from the NRC to possess Unit 2 (including the.
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| Undivided Interest);
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| (B) the Surviving Lessee, immediately prior to such if other than the Lessee transaction, shall execute and deliver to the Owner Participant an agreement, in form and substance reasonably satisfactory to the Owner Participant, containing the assumption by the Surviving Lessee of each covenant and condition of this Facility Lease,, each other Transaction Document and each Financing Document to which the Lessee imme-diately prior to such transaction was a party immedi-ately preceding such transaction; (C) no Default (other than a failure to deliver docu-ments and other information specified in Section 10 (b) (1) (vi) of the Participation Agreement) and no Event, of Default shall have occurred and be continuing, no Event of Loss shall have occurred and no Deemed Loss Event shall have, been declared; (D) the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) after giving effect to such transaction, (1) shall '&be rated at least "investment grade" by Standard Poor's Corporation and Moody's Investors Service, Inc. and (2) shall have an investment rating by Standard &
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| Poor's Corporation and Moody's Investors Service, Inc. not less than one "smallest notch" below the rating assigned to the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) immediately prior to. such transaction (or, if 1021.7500.2754.09:2
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| ~ ~
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| iO
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| neither of such rating organizations shall rate the Bonds (or, if applicable, the preferred stock of the Surviving Lessee) at the time, by any nationally rec-ognized rating organization in the United States of America);
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| (E) the Surviving Lessee shall have a Net Worth equal to or greater than the Net Worth of the Lessee immedi-ately prior to such transactions and equal to or greater than $ 500,000,000; (F) the Surviving Lessee shall have delivered to the Owner Participant and the Indenture Trustee an Officers'ertificate and an opinion, reasonably sat-isfactory to the Owner Participant, of counsel to the Surviving Lessee, each stating that (1) such transac-tion complies with this subclause (c) and (2) all 'con-ditions precedent to the consummation of such transac-tion have been satisfied and any Governmental Action required in connection with such transaction has been obtained, given or accomplished; (G) the Surviving Lessee shall have delivered to the Owner Participant an opinion, reasonably satisfactory to the Owner Participant, of independent counsel to the Surviving Lessee stating that such transaction would not result in a loss of any of the tax benefits described in Section 13(c)(1) of the Participation Agreement; (H) such transaction is otherwise permitted by and in compliance with the ANPP Participation Agreement; (I) the New Coverage Ratio of the Surviving Lessee shall be at least 1.6 to 1; and (J) such transaction does not affect the term or cov-erage of the Letter of Credit, time, or, if such term or if coverage in effect at the is affected, the Lessee, or the Surviving Lessee if other than the Lessee immediately prior to such transaction, shall have provided to the Owner Participant a Letter of Credit, if required by Section 10(b)(3)(xvii) of the Participation Agreement, which meets the requirements set forth in such Section 10(b)(3)(xvii) and is in the same amount as the Letter of Credit in effect immedi-ately prior to such transaction; unless the term or coverage of the Letter of Credit affected is that of a Letter of Credit which has been delivered to the Owner Participant pursuant to the Agreement, dated as of December 31, 1987, among the Lessee, the Lessor and 1021.7500.2754.09:2
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| if' if'
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| the Owner Participant (the "Commitment Agreement" ), a copy of which is annexed hereto, in which event such Lessee or Surviving Lessee, as the case may be, shall have provided to the Owner Participant a Letter of Credit which meets the requirements set forth in the Participation Agreement and the Commitment Agreement and is in the same amount as the Letter of Credit in effect immediately prior to such transaction.
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| Upon the consummation of such transaction the Surviving Lessee, if other than the Lessee, shall succeed to, and be substi-tuted for, and may exercise every right and power of, the Lessee immediately prior to such transaction under this Lease, each other Transaction Document and each, Financing Document to which the Lessee immediately prior to such transaction was a party immediately prior to such transaction, with the same effect as if the Surviving Lessee had been named herein and therein.
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| (d) Incurrence of Debt. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries (whether consolidated or unconsolidated) to, issue, assume or become liable in respect of (A) any Debt maturing more than one year after the date of such issuance, assumption or liability (including current maturities of Debt with an original maturity of more than one year) if, immediately thereafter, (i). the total amount of all Debt of the Lessee and its sub-sidiaries (whether consolidated or unconsolidated) maturing more than one year after the date of such issuance, assump-tion or becoming liable (reduced by Cash Available for Investment) shall exceed 70: (or, at any time after January 2, 1992 when there is not in effect a Letter of Credit com-plying in all respects with the Participation Agreement and the Commitment Agreement, 65>) of New Consolidated Capitalization, in each case as shown on a pro forma con-solidated balance sheet on and as of the date of such issu-ance, assumption or becoming liab'le, or (ii) the New Coverage Ratio of the Lessee would be less than 1.6 to 1 or (B) any Debt maturing one year or less after the date of such issuance, assumption or becoming liable (excluding current maturities of Debt with an original maturity of more than one year) if, immediately thereafter, the total amount o f all Debt o f the Lessee and its subsidiaries (whether consolidated or unconsolidated) maturing one year or less after the date of such issuance, assumption or becoming liable shall exceed 12.54 of New Consolidated Capitalization, in each case as shown on a pro forma con-solidated balance sheet on and as of the date of such issu-ance, assumption or becoming liable. For purposes of the foregoing clause (A), there shall be excluded any Debt which has been legally defeased or for the payment of which 1021. 7500. 2754. 09: 2
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| I funds equal to the principal amount of such Debt have been segregated in escrow and any refunding of the debt issued on December 31, 1987 by the lessors in the sale and lease-back transactions relating to Unit 3 at PVNGS shall not constitute the Lessee issuing', assuming, or becoming liable in respect of any Debt within the meaning of this subclause (d) .
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| (e) Escrow Agreement. Lessee shall deposit with Chemical Bank as escrow agent (the "Agent" ) any amount required to be deposited under the Escrow Agreement dated as of December 31, 1987 between the Lessee and the Agent within 5 Business Days after notice from the Owner Participant and shall otherwise comply with its other obli-gations and agreements under such Agreement within 15 days after notice from the Owner Participant.
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| (f) Financial Ratios. Unless the Owner Participant shall otherwise consent (which may be by way of acceptance of delivery of a letter of credit which complies with the requirement's of the Participation Agreement and the Commitment Agreement, Lessee agrees that as of January 2, 1992 (i) all the Debt .listed on Schedule 7 to the Facility Lease shall be retired in accordance with such Schedule 7, (ii) the New Coverage Ratio of Lessee, determined as of June 30, 1991, shall be not less than 1.6 to 1, (iii) the aggregate Debt maturing more than one year after the date of issuance, assumption or liability (including current maturities of Debt with an original maturity in excess of one year) of Lessee shall not be in excess of 65% of New Consolidated Capitalization, all as derived from Lessee's financial books and records as of June 30, 1991, and (iv) the aggregate Debt maturing one year or less after the date of such issuance, assumption or liability (excluding cur-rent maturities of Debt with an original maturity in excess of one year) of Lessee shall not be in excess of 12.5w of such New Consolidated Capitalization (clauses (i) through (iv) above being herein called the "Tests" ). Lessee shall prepare for and provide to Owner Participant not later than October 1, 1991 (and October 1 of succeeding years under the circumstances set forth below) calculations showing whether Lessee has satisfied the Tests and the financial data upon which calculations were based. If Lessee, has failed to meet the Tests, Owner Participant may, by written notice to Lessee, require that Lessee provide, at its expense, a renewal or replacement Letter of Credit comply-ing in all. respects with the Commitment Agreement and the Participant Agreement and, if such Letter of Credit is in effect on or prior to January 2, 1992 (or with respect to any subsequent, year, January 2 of such year), Lessee's failure to meet the Tests shall not constitute an Event of 1021.7500.2754.09:2
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| e, f
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| ~lk i
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| ~
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| ~O
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| Default hereunder. The procedures set forth above (the New Coverage Ratio being determined, and derivi.'ng New Consolidated Capitalization from Lessee's financial books and records, as of June 30 in each such year) shall be repeated each year until no such renewal or replacement Letter of Credit is required under the Commitment Agreement or the Participation Agreement.
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| (g) Definitions. For purposes of this Section 7, the terms New Consolidated Capitalization and New Coverage Ratio shall be defined as follows:
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| (A) "New Coverage Ratio" shall mean the ratio of (x) the sum of (a) consolidated net income of the Lessee for the twelve-month period ending on a date no later than 135 days pri,'or to the date as of which, New Coverage Ratio is being determined plus (or minus) (b) all extraordinary items deducted (or added) in deter-mining said net income (for purposes of this defini-tion of New Coverage Ratio, any charge against income resulting from a write-off of utility plant pursuant to (i) an order of any governmental authority having jurisdiction or (ii) a provision for an estimated regulatory disallowance shall be deemed to be an extraordinary item deducted in determining said net income) plus (or minus) (c) all income taxes deducted (or'ax credits added) in determining said net income minus (d) for all or any portion of such period'nding on or prior to December 31, 1990, 50~ of "allowance for funds used during construction" (net of deferred taxes) as such item is referred to in the consolidated income statement of the Lessee and its subsidiaries) and, for all or any portion of such period ending after December 31, 1990, 100< of such item plus (e) the sum of all interest and lease payments paid by the Lessee and its subsidiaries (whether consolidated or unconsolidated) during such twelve-month period to (y) total interest and lease, payments that will be payable by the Lessee and its subsidiaries (whether consoli-dated or unconsolidated) during the twelve-month period following the date as of which New Coverage Ratio is being determined. There shall be excluded from interest and lease payments 'included under clauses (x) and (y) above (i) lease payments to the Rio Grande Resources Trust, (ii) lease payments under any operating lease of computers, office equipment or the like, the original term of whi.'ch (including.
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| options to renew) is less than five years and (iii) interest on Debt maturing one year or .less from the date of incurrence thereof. There shall be interest and lease payments included under clause excluded'rom 1021. 7500. 2754. 09: 2
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| ~O (y) above interest on Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow.
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| (B) "New the total of consolidated capital l
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| Consolidated Capitalization" s h a 1, m e a n and surplus of the Lessee plus the principal amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) which matures more than one year after the date as of which New Consolidated Capitalization is being determined.
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| (b) Schedule 7. Schedule 7 hereto is hereby added as Schedule 7 to the Facility Lease.
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| SECTION 3. Miscellaneous (a) Effective Date of Amendments. The amendments set forth in Section 2 hereof shall be and become effective upon the execution hereof by the parties hereto.
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| (b) Counterpart Execution. This Amendment No. 1 may be executed in any number of counterparts and by each of the parties hereto on separate counterparts; all such coun-terparts shall together constitute but one and the same instrument.
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| (c) Governing Law. This Amendment No. 1 has been negotiated and delivered in the State of New York and shall be governed by and be constzued in accordance with the. laws of the State of New York, except to the actent that pursu-ant to the law of the State of Arizona such law is mandato-rily applicable hereto.
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| (d) Disclosure. Pursuant to Arizona Revised Statutes Section 33-404, the beneficiary of the Trust Agreement is Commercial Federal Investment Corporation, a corporation.
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| The address of the beneficiary is Commercial Federal Tower, 2120 South 72nd Street, Omaha, Nebraska 68124, Attention:
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| Jeff Bainbridge'. A copy of the Trust Agreement is avail-able for inspection at the offices of the Owner Trustee at 100 Federal Street, Boston, Massachusetts 02110, Attention of Corporate Trust Division.
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| 1021.7500.2754.09:2
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| iO 0
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| IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment No. 1 to be duly executed in New York, New York on December 31, 1987.
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| THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity, but solely as Owner Trustee under a Trust December 1, 1986 with Commercial Federal Investment Corporation, By Senior Manager EL PASO ELECTRIC COMPANY, By Vice President
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| II 1
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| i~
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| i if'
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| STATE OF TEXAS )
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| ) ss.:
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| COUNTY OF EL PASO )
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| The foregoing instrument was acknowledged before me this 6th day of January, 1988 by William J. Johnson, a Vice President of EL PASO ELECTRIC COMPANY, a Texas corporation, on behalf of the corporation.
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| N ary Public
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| ~O i
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| ~
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| COMMONWEALTH OF MASSACHUSETTS )
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| ) ss.:
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| COUNTY OF SUFFOLK )
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| The foregoing instrument was acknowledged before me this day of January, 1988, by
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| /IRST NATIONAL Mark Nelson, a Senior Manager of THE BANK OF BOSTON, a national banking association, on behalf of the banking association as trustee under that certain Trust Agreement dated as of December 1, 1986 with Commercial Federal Investment Corporation.
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| u.
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| Notary Public QARIA iNAISOLA Qy Coeeheke Explain
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| /giber 30, 19S4' 1021.7500.2754.09:1
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| ill if'
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| SCHEDULE 7 TO FACILITY LEASE EL PASO OBLIGATIONS Principal Payment Amount Date Description
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| $ 60,000,000 Jan. 31, 1988 16.204 First mortgage bonds due 2012
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| $ 25,000,000 Jan. 31, 1988 Second mortgage bonds The Bank of New York due June 1988
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| $ 50,000,000 June 30, 1988 Second mortgage bonds The Bank of .New York due June 1988 6,100,000 July 20, 1988 4.254 First mortgage bonds due July 1988
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| $ 22'00'00 May 20, 1989 12.754 First mortgage bonds due May 1989
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| $ 25'00'00 Aug. 15, 1989 14.5% First mortgage bonds due August 1989
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| $ 50,000,000 Nov. 20, 1989 14< First mortgage bonds due November 1989
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| $ 20,000,000 Dec. 1, 1990 Long-term notes unsecured The Bank'f America
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| $ 70,000,000 Mar. 1, 1991 Second mortgage'bonds The Bank of America 1021.7500.2754.09:2
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| +L AGREEMENT dated as of December 31, 1987 among COMMERCIAL FEDERAL INVESTMENT CORPORATION
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| ("Owner Participant" ), THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee ("Owner Trustee" ) under a Trust. Agreement dated as of December 1, 1986 with 'Owner Participant, and EL PASO ELECTRIC COMPANY (" Lessee" ).
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| Owner Trustee and Lessee are parties to the Facility Lease dated as of December 1, 1986, as amended (the "Facility Lease" ). All terms used but not defined herein have the meanings ascribed to them in Appendix A to the Facility Lease.
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| Lessee, Owner Trustee and Owner Participant desire to modify certain provisions of the Facility Lease, and to provide for the creation of an escrow account into which Lessee will deposit funds to be held for the retirement of certain of its outstanding Debt. Accordingly, the parties hereto agree as follows:
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| : 1. Renewal or Re lacement of Letter of Credit. The existing Letter of Credit shall be renewed or replaced as of January 2, 1992, if (i) all of the Debt listed on Schedule 7 to the Facility Lease has not been retired in accordance with such
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| ,Schedule 7, (ii) the New Coverage Ratio of Lessee, determined as of June 30, 1991, is less than 1.6 to 1, .(iii) the aggregate Debt matur-ing more than one year after the date of issuance, assumption or liability (including current maturities of Debt with an original maturity in excess of one year) of Lessee shall be in excess of 65%
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| of New Consolidated Capitalization, all as derived from the Lessee's financial books and records as of June 30,, 1991, or (iv) the aggre-gate Debt maturing one year or less after the date of such issuance, assumption or liability (excluding current maturities of Debt with an original maturity in excess of one year) of Lessee shall be in excess of 12. 5< of such New Consolidated Capitalization (clauses (i) through (iv) above being herein called the "Tests" ). Lessee shall prepare for and provide to Owner Participant not later than October 1, 1991 (and October 1 of succeeding years under the circumstances set forth below) calculations showing whether Lessee has satisfied the Tests and the financial data upon which such calculations were based. If Lessee has failed to meet the Tests, Owner Participant, may, at its option (and without affecting any other rights of Owner Participant
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| .to draw on the Letter of Credit), draw on the Letter of Credit or require that Lessee provide, at Lessee's expense, a renewal or replacement Letter of Credit or itself obtain for Lessee, at Lessee's
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| .expense, a renewal or replacement Letter of Credit on substantially the same terms as the existing Letter of Credit (other than with respect to any fees and expenses incurred which. shall be, in each case, at Lessee's expense), except that the annual fee payabl'e under such renewal or replacement Letter of Credit shall not be more than 100 basis points, greater than the annual fee of the existing Letter of Credit. If Owner Participant requires such renewal or replacement 1021.7500.2754.12:2
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| 41 ilk 0
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| Letter of Credit .and if such Letter of Credit is in effect on or prior to January 2, 1992,. Lessee's failure to meet the Tests shall not constitute an Event of'efault under the Facility Lease. The Owner Participant shall exercise such option within a period of time to be determined but not more than thirty (30) days after the Lessee shall furnish the Owner Participant the aforesaid calculations and financial data. Such renewal or replacement Letter of Credit shall have a term commencing not later than the expiry date of the existing Letter of Credit and ending not earlier than one year after such expiry date, and shall have terms (including the terms of the related reimbursement agreement) not less favorable to Owner Participant than the terms contained in the existing Letter of Credit and reimburse-ment agreement. Such renewal or replacement Letter of Credit may provide for its early expiration not earlier than December 31 of the year during which Lessee meets the Tests. The procedures set forth above (the New Coverage Ratio being determined, and deriving New Consolidated Capitalization from the Lessee's financial books and records, as of June 30 in each such year) shall be repeated each year until no renewal or replacement Letter of Credit is required.
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| : 2. Escrow A reement. Lessee shall enter into an Escrow Agreement with Chemical Bank substantially in the form of Exhibit, A hereto. The Owner Participant agrees that, upon execution and deliv-ery of the amendments required by Section 4 hereof, it shall deliver to the escrow agent the notice of termination required by clause (i) of the Escrow Agreement.
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| : 3. Amendment, to Lease. Owner Trustee and Lessee shall execute Amendment No. 1 to the Facility Lease substantially in the form of Exhibit B hereto..
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| : 4. Further Chan es. The parties will, subject to obtain-ing any required consents of third parties to the Transaction Documents, amend the Facility Lease and other Transaction Documents in order to implement the Lessee's obligation to comply with the Tests, Owner Participant's right to require, as herein provided, a renewal or replacement Letter of Credit as a result of Lessee's fail-ure to -satisfy the Tests, to implement the obtaining of and reflect the existence of such a renewal or replacement Letter of Credit should one be so required and to further implement the terms of this Agreement. Such amendments wz.ll include provxsxons affording Lessee, in the event Owner Participant has determined to draw on the Letter
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| ~
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| of Credit when Lessee has failed to satisfy the Tests and unless an Event of Default shall have otherwise occurred and be continuing or an Event of Loss shall have occurred or Deemed Loss Event shall have been declared, the right to purchase -the Undivided Interest and the Real Property Interest on or before some period prior to the expiration or termination date of the then existing Letter of Credit, for an amount based on the greater of (i) Enhanced Casualty Value, 1021 ..7500. 2754. 12,: 2
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| iO II
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| which will be calculated on an assumed 25: residual, and (ii) Fair Market Sales Value of the Undivided Interest and the Real Property Interest. All such amendments will be entered into no later than the date of the issuance and delivery of the letter of credit to Commercial Federal Investment Corporation pursuant to that certain Agreement, dated as of December 31, 1987, among Commercial Federal Investment Corporation, The First National Bank of Boston, not in its individual capacity but solely as Owner Trustee under a Trust Agreement dated as of August 1, 1986, and El Paso Electric Company.
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| : 5. Consent. Owner Participant irrevocably consents to any and all transactions which would require its consent under Section 10(b).(3) (ii) or 10(b) (3) (v) of the Participation Agr'cement.
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| : 6. Owner Trustee Directive. Owner Participant hereby authorizes and directs Owner Trustee to execute this Agreement, Amendment No. 1 to the Facility Lease and such other agreements, doc-uments and certificates as shall be required in order to facilitate the execution and delivery of this Agreement and such Amendment No. 1.
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| : 7. Taxes. All the provisions of Sections 13(b) and (c) of the Participation Agreement shall be applicable as though the mat-ters set forth in this Agreement (including the mddbits heieto), had been included in the Transaction Documents at all times since December 18, 1986 except that the execution and delivery of this Agreement, as opposed to its provisions, shall not be considered to be the execution and delivery of a Transaction Document or a Financing Document or an act specifically required or expressly per-mitted to be performed by the Lessee for the purposes of Section 13(c)(4)(i)'(B) of the Participation Agreement.
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| : 8. Miscellaneous. This- Agreement may be executed by the parties hereto in separate counterparts, and it shall not be, neces-sary for the signatures of all parties to appear on any one counterpart. The headings of the various sections of. this Agreement are for convenience of refere'nce only and shall not modify, define, expand or limit any of the terms or provisions hereof. This Agreement may not be terminated, amended, supplemented, waived or modified orally, but only by an an instrument in writing signed by the party against whom enforcement of such transaction, amendment,,
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| supplement, waiver or modification is sought. This Agreement in a'll respects shall be governed by and construed in accordance with the laws of the State of New York, including all matters of construction, validity and performance.
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| 1021. 7500. 2754. 12: 2
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| ee 588'BBUd 1tlJOJ 12-31-87 13'18 T~E ROSE 248 2657 ~ P83 ZN MZTNESS MHRREOP each of the parties heretO has caused this Agreement to he du1y executed. as of the 4'nd year'irst a5oVe wx'itten, COMMERCIAL FEDERAL XNVSSTNSY CORPORATX ON By:
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| Ronald P. Cheffer, Assistant Vice President THE FXRST NATIONAL BANK Ot BOSTONI Plot in itS indiVidual capacity but so3.el's Owner Trustee By:
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| EL PASO ELECTRXC COMPANY
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| Exhibit A to the Agreement ESCROW AGREE24ZÃZ Dated as of December 31, 198/
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| between CHEMICAL BANK, Escrow Agent and EL PASO ELECTRIC COMPANY 1021. 7500. 2704. 13: 20
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| TABLE OF CONTENTS ARTICLE I DEFINITIONS Section 1.1. Certain Defined Terms. . . . . . . . . . . . 1 ARTXCLE II APPOINTMENT OF AGENT AND CREATION OF ESCROW
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| .ACCOUNT Section 2.1. Appointment of Agent. ~' ~ ~ 3 Section 2.2. The Escrow Account. ~ ~ ~ ~ 3 Section 2.3. Statement of Purpose. ~ ~ ~ ~ 4 ARTICLE III LEASE PROCEEDS DEPOSIT 'BY THE COIE'ANY Section 3.1. Lease Proceeds Escrow Deposit. . . . .' . . 4
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| 'ARTICLE IV TRANSFER AND DEPOSIT BY THE COMPANY OF EXXSTING INVESTMENTS Section 4.1. Transferred Investments Escrow Deposit. . . . 4 ARTICLE V XNVESTMENTS AND PAYMENTS BY. AGENT Section 5.1. Payments by Agent to Company from Lease Proceeds Escrow Sub-Account. . . . . . . . . 5
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| TABLE OF CONTENTS, Continued Pacae Section 5.2. Monthly Disbursement from both Sub-accounts. t ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 6 Section 5.3. Investments; Agreement as to Value of Clauses 6, 7 and 8 on December 31, 1988. ~ ~ 7 Section 5.4. Valuation of Investments; Payment of Deficiency. 8 ARTICLE VI CONCERNING TEE AGENT Section 6.1. Duties of Agent. .10 Section 6.2. Lzabl.lz.ty. .10 Section 6.3. Delivery of Documents and Further Acts. .10 I
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| Section 6.4. Legal Proceedings.
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| Section 6.5. Resignation; Appointment of Successor.
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| Section 6.6. .Indemnification.
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| ARTICLE VII MISCELLANEOUS Section 7.1. P'ayments. .12 Section 7.2. Termination. .12 Section 7.3. Amendments, Etc. .12 Section 7.4. Addresses for Notices, Etc. .12 Section 7.5. Successors and Assigns. .13 Section 7.6. Severability of Provisions. .13
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| Section 7.7. Headings, etc. .13
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| TABLE OF CONTENTS, Continued Pacae Section 7.8. Governing Law. . . . . . . . . . . . . . . .13 Section 7.9. Counterpart Execution. . . . . . . . . . . .13
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| ESCROW AGREEl69lT ESCROW AGREEMENT, dated as of December 31, 1987, among CHEMICAL BANK, a New York banking corporation (the Agent), and EL PASO ELECTRIC COMPANY, a Texas corporation (th. Company).
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| WITNESSETH:
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| WHEREAS, pursuant to eight separate Commitment Agreements, dated as of December 31, 1987 with each of the Owner Participants (as described in Schedule I hereto) and the related Owner Trustee, the Company has agreed to establish and maintain .an escrow account of certain moneys and securities (such terms and all other capitalized terms used herein having the meanings set forth or referred to in Section 1 hereof) until such time as Acceptable Letters of Credit are obtained; and WHEREAS, the Commitment Agreements contemplate that certain moneys and securities are to be held in an escrow account to be established with the Agent and are to be disbursed by the Agent pur-suant to directions from the Company until the cccurrence of certain events, all in accordance with the terms and conditions set forth herein; and WHEREAS, the Company desires that the E.gent be appointed as escrow agent, and the Agent desires to accept ~uch appointment,, all in accordance with the terms and conditions se= forth herein.
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| NOW, THEREFORE, in consideration of the mutual agreements herein contained and of other good and valu.able consideration, receipt of which is hereby acknowledged, the paxties hereto agree as follows:
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| ARTICLE I DEFINITIONS SECTION 1.1. Certain Defined Terms. As used in this Agreement and unless otherwise expressly indicated, or unless the context clearly requires otherwise:
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| (a) The terms Agent and the Company have the meanings assigned in the caption of this Agreement.
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| (b) The following terms have the respective meanings set forth below (such meanings to be equally appliable to both the sin-gular and plural forms of the terms defined):
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| Acceptable Letter of Credit means a letter of credit complying with the requirements therefor a set, forth in 1021.7500.2704.13:20
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| the relevant Commitment Agreement, which toe Company has agreed to provide to each August Owner Participant.
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| August Owner Participants means each of the six enti-ties listed in Schedule I hereto, each as an owner partici-pant under its related August Participation Agreement.
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| August Participation Agreement(s) means each of six separate Participation Agreements, dated a- of August 1, 1986, as amended by Amendment No. 1, dated October 1, 1986 among the Company, El Paso Funding Corporation, the Owner Trustee, First, Ci.ty National Bank'f Houston, as Indenture Trustee, and each August Owner Participant.
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| Commitment Agreements means the eight separate Agreements, dated as of December 31, 1987, by and between El Paso, the related Owner Trustee and,each of the Owner Participants.
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| December Participation Agreement(s) means the Participation Agreement dated as of December 1, 1986, among the Company, El Paso Funding Corporation, the Owner Trustee, First City National 'Bank .of Houston, as Indenture Trustee and Chrysler Financial Corporation and Agreement, dated as of December 1, 1986,the'articipation among the Company, El Paso Funding Corpora'=ion, the Owner Trustee, First City National Bank of Houston, as Indenture Trustee and Commercial Federal Investmen Corporation.
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| El Paso Obligations means the principa~ amount of the indebtedness of the Company set forth in Schedule III hereof .
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| Escrow Account means said term '~s defined i: n Section 2.2 hereof.
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| Escrow Sub-accounts means the Transferred Investments Escrow Sub-account and the Lease Proceeds Escrow Sub-account, collectively.
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| Lease Proceeds Escrow Deposit means said term as defined in Section 3.1 hereof.
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| Lease Proceeds Escrow Sub-Account means said term as defined in Section 2.2 hereof.
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| Owner Participant(s) means the August Owner Participants and Chrysler Financial Corporation and 1021.7500.2704.13:20
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| Commercial Federal Investment Corporation, as Owner Participants under the December Participation Agreements.
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| Owner Trustee means The First National Bank of Boston, as trustee for an Owner Participant under ea h of six sepa-rate Trust Agreements, dated as of August 1, 1986 and two separate Trust Agreements, dated as of December 1, 1986.
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| Participation Agreements means the August Participation Agreements and the December Participation Agreements.
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| Permitted Investments means the certificates, obliga-tions and investments set forth in Schedule ZI hereto, the investments constituting the Transferred Investments Escrow Deposit and reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment fea-ture of any of the investments listed in clauses (ii),
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| (iii) and (iv) of the first paragraph of Section 4.1 hereof.
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| Transferred Investments Escrow Deposit means said term as defined in Section 2.2 hereof.
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| Transferred Investments Escrow Sub-account means said term as defined in Section 2.2 hereof.
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| (c) As used herein, any capitalized term not otherwise defined herein has the meaning assigned to such term in the respec-tive Participation
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| Agreements.
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| ARTICLE II APPOINTMENT OP AGENT AND CREATION OP ESCROW ACCOUNT SECTION 2.1. Appointment of Agent. For the purposes and subject to the terms and conditions set forth in this Agreement, the Company hereby appoints Chemical Bank as escrow agent, and Chemical Bank hereby accepts such appointment.
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| SECTION 2.2. The Escrow Account. The Agent shall estab-lish and maintain for the benefit of the Owner Participants an Escrow Account, (the Escrow Account), within which there shall be two sepa-rate sub-accounts 'to be known as the Lease Proceeds Escrow Sub-account (the Lease Proceeds Escrow Sub-account) and the Transferred Investments Escrow Sub-account (the Transferred Investments Escrow Sub-account). The Agent shall deposit in the Escrow Account (i) for 1021. 7500. 2704. 13: 20
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| iO credit to the Lease Proceeds Escrow Sub-account, any Lease Proceeds Escrow Deposit made by the Company to the Agent pursuant to Section
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| : 3. 1 hereof, and (ii) for credit to the Transferred Investments Escrow Sub-account, the Transferred Investments Escrow Deposit made by the Company to the Agent pursuant to Section 4.1 hereof. So long as any amounts remain in the Escrow Account, such amounts shall be consid-ered as, and sh'all be and remain, the property of the Company. The Agent shall invest or re-invest any amounts in the Escrow Account and make applications thereof as provided in Art'cle V hereof. The Escrow Account shall be funded by the deposits by the Company to the appropriate sub-accounts in the manner describ d herein.
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| SECTION 2.3. Statement of Purpose. The Company represents that the purpose of this Agreement and the creation and establishment of the Escrow Account is to pay or provide for the payment of the El Paso Obligations and certain short-term indebtedness of El Paso in accordance with Section 5.1(b) hereof.
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| ARTICLE III LEASE PROCEEDS DEPOSIT BY THE COMPANY SECTION 3.1. Lease Proceeds Escrow Deposit. The Company hereby represents that it has deposited with the Agent $ 163,.000,000 for deposit by the Agent in the Lease Proceeds Escrow Sub-account.
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| ARTICLE IV TRANSFER AND DEPOSIT BY THE COMPAtlY OF EXISTING INVESTMENTS SECTION 4.1. Transferred Investments Escrow Deposit.
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| Subject to the terms and provisions of this Agreement, the Company hereby agrees that by February 1, 1988 it will cause to be deposited into the Transferred Investments Escrow Sub-Account by change of account reference to that of the Agent or assignment of all right, title and interest of the Company to the Agent (exclusive of any obligations or liabilities of the Company) as the case may be, of the following (collectively, the Transferred Investments Escrow Deposit):
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| (i) Account of El Paso Electric Co., Account No. 9-6191-03 01 at MBank Houston, P.O. Box 2629, Attn: Capital Markets Division, Houston, Texas; in (ii)toThethelimited and partnership interest Weiss Qualified Income of the Fund Company Limited 1021.7500.2704.13:20
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| Partnership I, obtained on November 13, 1936 pursuant to the Neiss Qualified Income Fund Limited Partnership I Amended and Restated Agreement of Limited Partnership, dated as of September 9, 1986; (iii) Account of El Paso Electric, Ac ount No. 530-97061 at Merrill Lynch, Pierce, Fenner 6 Smith Incorporated, One Liberty Plaza, 165 Broadway, New York, NY 10080; and (iv) Account of El Paso Electric Company, Account No.
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| 30 B Z0009 354 at Kidder, Peabody & Co., Incorporated, 20 Exchange Place, Hew York, NY 10005.
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| The Agent is hereby authorized by the Company to enter into any arrangement or agreement (including but not limited to, manage-ment agreements) as the Company may determine is necessary to evi-dence ownership of the foregoing investments by the Agent.
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| The Company represents that the aggregate "book value" as of the end of November, 1987 of the Transferred Investments Escrow Deposit was not, less than $ 135. million.
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| Notwithstanding the foregoing,, if :or any reason the Company fails to consummate any of the transfers, in whole or in part, to the -Agent referred to in clauses (i) -..hrough (iv) of the first paragraph of this Section 4.1, this such failure shall not consti-tute a breach of, or default under, Agreement, so long as the Company shall have on deposit in the Transferr<<d Investments Escrow Sub-Account with the Agent on February 1, 1988, moneys or securities having an aggregate "book value" as of the end of November, 1987 of not less than $ 135 million.
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| ARTICLE V INVESTMENTS AND PAYMENTS BY AGENT SECTION 5. 1. Payments by Agent to Company from Lease Proceeds Escrow Sub-Account. (a) In order to provide for the pay-ment of the El Paso Obligation that is to be paid on or .prior to January 31, 1988, and prior to the valuation of the money and securi-ties in the Escrow Account, upon the receipt by the Agent (with copies to each Owner Participant) from the Company of a request in writing for disbursement, the Agent shall pay 'to the party indicated in the written request of the Company'n immediately available funds, out of the funds then on deposit in the. Lease 'Proceeds Escrow Sub-account, an amount equal to the amount that is due and owing to The Bank of New York as a prepayment of the El Paso Obligation for which 1021.7500.2704.13:20'
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| payment is due in January 1988. Such request by the Company to the Agent pursuant to this Section 5.1 shall specify (i) the applicable prepayment date and (ii) wire or transfer instructions.
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| (b) The Agent will prepare a market valuation of all moneys and securities on deposit in the Escrow Accounc in accordance with the requirements of Section 5.4 hereof within 10 calendar days fol-lowing receipt by the Agent of all monthly closing valuations for the month of January 1988. Upon completion of such valuation, the Agent shall promptly provide a certificate to the Company and each of the Owner Participants setting forth the value of such moneys and securities. To the extent that the amount of such market valuation exceeds $ 243,100,000, upon receipt of such certificate of valuation from the Agent, the Company shall deliver a written request to the Agent (with copies to each Owner Participant), directing release of such excess to the Company for payment of indebtedness of the Company having a maturity of one year or less specified in such request, and upon receipt of such request the Agent shall release such excess to the Company. To the extent that the amount of such market valuation is less than $ 243, 100,000, the Company shall provide the Agent, within five business days after receipt of the certificate of valua-tion from the Agent, with money or Permitted investments (with a market value as of the date of such valuation) sufficient to cover the deficiency.
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| SECTION 5.2. Monthly Disbursement from both Sub-accounts.
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| Except as specifically provided in Section 5.1 hereof, as soon as practicable following each monthly valuation pursuant to Section 5.4 hereof of the moneys and securities on deposit in the Escrow Account, amounts on deposit in the Escrow Account shall be disbursed monthly in accordance with and in amounts as set forth in a written certifi-cate of the Company (with copies of such certificate delivered to each Owner Part'icipant) specifying the applicable payment 'date, payee, sub-account and wire or transfer instructions: first, to the party named in such certificate of the amount as set forth therein in order to permit the payment of El Paso Obligations with a Payment Date as determined in accordance with Schedule III hereto within 45 days after the date as of which the Escrow Account is valued and then second to the Company all amounts on deposit in the Escrow Account in excess of the amount necessary to pay the principal amount of the remaining El Paso Obligations, determined by reference to Schedule III hereto and confirmed in the certificate of the Company requesting such disbursement.
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| Notwithstanding the foregoing the Company may direct the Agent to make a disbursement from the Escrow Account solely for the purposes of paying an El Paso Obligation if for any reason the valuation and disbursement procedure heretofore described does not provide for timely and adequate payment of any such El Paso 1021. 7500. 2704 13: 20
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| Obligation and such direction of the Company shall expressly so state. The Agent shall be entitled to liquidate any investments held in the Escrow Account in order to provide for payment of the El Paso Obligations or any other payments in accordance herewith. The Agent shall have no liability for losses resulting from the liquidation of securities on deposit in the Escrow Account."
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| SECTION 5.3. Investments; Agreement as to Value of Clauses 6, 7 and 8 on December 31, 1988. (a) The Agent shall invest and reinvest (which shall include the application of (A) the proceeds of maturing investments and (B) the sale of investments) the moneys in the Escrow Account only in Permitted Investments and shall sell investments in the Escrow Account, as specifically identified in a written direction of the Company which shall, in the case of any such investment or reinvestment expressly state that each such investment is a Permitted Investment and further that such Permitted Investment is in compliance with the limitations set forth in the next sentence,,
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| it being understood that the Agent shall have no duty to monitor such compliance; provided, however, that such identification of the investment or reinvestment and certification as to compliance with the limitations set forth in the next sentence shall not be appli-cable to the nondiscretionary reinvestment feature of the investments described in clauses (ii), (iii) and (iv) of the first paragraph of Section 4. 1 hereof. Any such investments and reinvestments shall be subject to the following limitations:
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| (i) no investment or reinvestment shall be made in any of clauses 6, 7 and 8 contained in Schedule II hereto if as a result of such investment or reinvestment (a) at the date thereof, but no later than December 31, 1988, the total aggregate amount invested pursuant to clauses 6, 7 and 8 contained in Schedule II hereto would exceed the lesser of (x) sixty percent (604) of the market value of the amounts then on deposit in the Escrow Account and (y) the total so invested at any time immediately prior to such investment or reinvestment; provided, however, that for purposes of determining compliance with this subclause (y),
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| there shall be excluded from the total aggregate amount invested pursuant to clauses (6), (7') and (8) of Schedule II hereto any amounts attributable to the invest-ment and reinvestment of income, dividends and capital gains resulting from the nondiscretionary reinvestment fea-ture of any of the investments listed in clauses (ii),
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| (iii) and (iv) of the first paragraph of Section 4.1 on deposit in the Transferred Investment Escrow Sub-Account and (b) at the date thereof, but only after December 31, 1988, the total aggregate amount invested pursuant to such clauses would exceed twenty-five percent (25>) of the 1021.7500.2704.13:20
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| market value of the amounts then on deposit in the Escrow Account; (ii) no investment or reinvestment in Permitted Investments shall be made if 'the result thereof would be to cause any of clauses 1, 3, 4, 5, 9 and 10 contained in Schedule II hereto to exceed twenty-five percent (25%) of the market value of the amounts on deposit in the Escrow Account; and (iii) the average life of, any investment (other than investments described in clause 2 contained in Schedule II hereto) shall not exceed seven years.
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| (b) The Company agrees that the market value as of December 31, 1988 of investments in the Escrow Account (including the Transferred Investments Escrow Deposit) in clauses 6, 7 and 8 con-tained in Schedule II it represents that hereto will not exceed $ 45 million. The wi;ll attempt to undertake an orderly Company liquidation of the Transferred Investments Escrow Deposit so as to be in a position to comply with this Article V. The Company anticipates that, under current market conditions and recognizing .that sale of investments will be designed to protect the Company from incurring any losses due to such investments, reductions, within the bands and for the quarters of calendar year 1988 indicated below, of the Transferred Investments Escrow Deposit would b achievable:
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| 1988 Reduction uarter 1st 20 to 45 2nd 20 to 30 3rd 30 to 20 4th 38 to 13 Total for 1988 SECTION 5.4. Valuation of Investments; Payment of Deficiency. The Agent shall cause a monthly fair market valuation of the Escrow Account to be undertaken. In undertaking its obligation to make a monthly valuation of the Escrow Account, (i) the Agent shall be entitled to assume that the monthly market valuations to the Agent of the investments held in the Transferred fur-'ished Investments Escrow Sub-Account shall constitute the market value of any such investments and (ii) to the extent the Agent is unable to value any. Permitted Investments in accordance with its customary practice as a corporate trustee, the Company hereby agrees to promptly provide the Agent with, and the Agent shall be entitled to rely upon, an independent market valuation of any, such investment.
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| The Company agrees to cause the monthly .market valuations of the 1021.7500.2704.13:20
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| investments constituting the Transferred Investments Escrow Sub-Account to be sent directly to the Agent. Copies of all such valuations by the Agent shall be sent to the Owner Participants and the Company.
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| The Agent shall undertake such valuation of the Escrow Account monthly, commencing in February, 1988, such valuation to be as of the end of the .immediately preceding month and in no event shall such valuation be completed later than ten calendar days after receipt by the Agent of the monthly valuation report for all such Permitted Investments on deposit in the Transferred Investments Escrow Subaccount (including 'any monthly valuation report provided pursuant to the second sentence of the first paragraph of Section 5.4 hereof) . In connection with its valuation of the Escrow Account, the Agent shall deduct from the valuation of the investments on deposit in the Transferred Investments Escrow Sub-Account that amount which represents the aggregate value attributable (determined on a cumula-tive basis, i.e., including the month of valuation and preceding months) to reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment feature of any of the investments listed in clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof. For purposes of the monthly valua-tion only, any proceeds derived from a sale or upon maturity (other than pursuant to the nondiscretionary reinvestment feature of any of the investments listed in clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof) of any investzent made pursuant to clauses (ii), (iii) and (iv) of the first, paragraph of Section 4.1 hereof shall be allocated to reducing the aggregate value, if any, of the investments in the Transferred Investments Escrow Sub-Account attributable to reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment feature of any such investment, which aggregate value was deducted irom the valuation of investments on deposit in the Transferred Inve.-tments Escrow Sub-Account pursuant to the preceding sentence (it heing understood that an amount equal to any such reduction, except to the extent that such amount was .otherwise withdrawn from the Escrow Account pursuant to Section 5.2 hereof,; shall be included in the Transferred Investments Escrow Sub-Account for purposes of the monthly valuation thereof).
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| The Agent shall derive the amount attributable to each month repre-senting such reinvestment from the monthly market valuations fur-nished to the Agent with respect to such investments and if such amount cannot be derived from such valuations, the amount attribut-able to such month and the aggregate to be so deducted shall be as directed in writing by the Company to the Agent, copies of which shall be furnished to the Owner Participants, together with the cal-culations and data upon which such direction is based, all as certi-fied by the Chief Financial Officer of the Company. To the extent the amount of such valuation of the Escrow Account, as adjusted for the amount, if any, to be deducted from such monthly valuation as 1021.7500.2704.13:20
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| provided in this paragraph, is less than the principal amount of the remaining El Paso Obligations which are schedu'ed to come. due more than forty-five (45) days subsequent to such valuation, the Company shall provide the Agent within five business days after receipt from the Agent of such monthly valuation with money or Permitted Investments (with a market value as of the date of such valuation) sufficient to cover the deficiency. The Agent shall notify the Owner Participants in writing of the date and receipt by the Agent of any money or Permitted Investments provided to meet such deficiency.
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| ARTICLE VI CONCERNING THE AGENT SECTION 6.1. Duties of Agent. The Agent shall have no duties or responsibilities other than. those expressly set forth in this Agreement and shall have no duty to enforce any obligation of any person to make any payment or delivery, or to direct or cause any payment or delivery to be made, or to enforce any obligation of any person to perform any other act or to perform any calculations except as herein expressly set forth. In addition, the Agent shall have no duty to make any payment under this Agreement from its own funds.
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| SECTION 6.2. Liability. The Agent shall not be liable for any action taken or omitted by it, or any action suffered by it to be taken or omitted, in good faith and in the exercise of its own best judgment, excepting only its own willful misconduct or gross negli-gence, and may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion and advice of counsel (including counsel selected by the Agent), statement, instru-ment, report or other instrument or document (not only as to its due execution and the validity and effectiveness thereof, but also as to the truth and acceptability of any, information therein contained) which is believed by the Agent to be genuine. and to be signed (or in the case of oral communication, given) by the proper person or persons. The Agent shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement or any of the terms hereof, unless expressly provided for herein and delivered as provided in this Agreement.
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| SECTION 6.3. Delivery of Documents and Further Acts.
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| From time to time on and after the date hereof, the Company shall deliver or cause to be delivered to the Agent such further documents and instruments and shall do and cause to be done such further acts as the Agent may reasonably request (it being understood that the Agent shall have no obligation to make any such request) to carry out more effectively the provisions and purposes of this Agreement, to 1021.7500.2704.13:20
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| evidence compliance herewith or to assure itself that it is protected in acting hereunder.
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| SECTION 6.4. Legal Proceedings. The Agent shall not be required to defend any legal proceedings which may be instituted against requested it in to respect of the subject matter of this Agreement unless do so by the Company and indemnifiec. to its satisfaction against the cost and expenses of such defense (.',ncluding counsel and investigatory fees) by the Company and shall not be required to institute legal proceedings of any kind.
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| SECTION 6.5. Resignation; Appointment of Successor. The Agent (or any successor escrow and paying agent) may resign at any time and be discharged from its duties as escrow and paying agent under this Agreement by giving to the Company and the Owner Participants at least 30 days'otice thereof, such resignation to be effective on the date of appointment of a successor escrow and paying agent as hereinafter provided. As soon as practicable after any such resignation, the Agent shall turn over to a successor escrow and paying agent appointed by the Company all monies and property held hereunder upon presentation of the document appointing such successor escrow and paying agent and its acceptance of such appointment. If no successor escrow and paying agent is so appointed within the sixty-day period following such notice of resignation, the Agent shall deposit all monies and funds held hereunder with the Supreme Court of the State of New York for the County of New York (together with a petition to said Court for the appointment of a successor to act until such time, if any, as a successor shall have been appointed as hereinbefore provided). Upon turning over to the successor, escrow and paying agent or to the Supreme Court of the State of New York as aforesaid, all monies and property held hereunder, the predecessor escrow and paying agent shall be released of any further responsibil-ity hereunder. Any successor escrow and paying agent shall be a bank or trust company organized under the laws of the United States or any jurisdiction thereof, having a combined capita" and surplus of at least $ 250, 000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Agent hereunder upon reasonable or customary terms.
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| SECTION 6.6. Indemnification. The Company agrees that the Agent shall not be liable for any matter or thing arising out of the performance by the Agent of its obligations under this Agreement, except as provided in Section 6.2 hereof. The Company agrees to indemnify the Agent, and to hold the Agent harmless, from and against, any and all liability, loss, damage or expense (including reasonable attorneys'ees and actual out-of-pocket expen'-es) which theaction Agent may or might incur by reason of this Agreement, or for any taken by the Agent hereunder, or by reason or in defense of any and 1021.7500.2704.13:20
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| all claims and demands whatsoever which may be asserted against the Agent arising out of this Agreement.
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| ARTICLE VII MISCELLANEOUS SECTION 7.1. Payments. Payments to or upon the direction of the Company by the Agent pursuant to Article V hereof shall be made in accordance with such written instructions as the Company may provide to the Agent (with copies to the Owner Participants) from time to time for such purposes. Whenever any payment to be made pur-suant hereto shall be required to be made on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day.
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| SECTION 7.2. Termination. This Agreement shall terminate upon the earliest to occur of (i) receipt by the Agent of written notice from each Owner Participant that as to such Owner Participant this Agreement is terminated, (ii) disbursement by the Agent of all of the payments to be made by the Agent under Article V hereof with respect to the El Paso Obligations and (iii) receipt by the Agent of joint notice from the Company and each of the Owner Participants with respect to such termination. Upon the termination of this Agreement as aforesaid, any securities and moneys on deposit in the Escrow Account shall be applied at the direction of the Company.
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| SECTION 7.3. Amendments, Etc. No amendment to this Agreement shall be made or be effective without the written consent of the Owner Participants. No amendment, modir'ication, termination or waiver of any provision of this Agreement shall in any event be effective unless the same shall be in writing and signed by the par-ties hereto, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment of any other agreement or instrument. shall affect the Agent or its duties hereunder. No notice to or demand on any party hereto in any case shall entitle such party to any other or further notice or demand in similar or other circumstances unless herein otherwise provided.
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| SECTION 7.4. Addresses for Notices, Etc. Except as oth-erwise expressly provided herein, all notices and other communica-tions provided for hereunder shall be in writing and mailed (postage prepaid),'and delivered or sent by overnight courier, if to the Company, c/o William J. Johnson at its address at 303 North Oregon Street, P.O. Box 982, El Paso, Texas 79960, with a copy similarly delivered to Kemp, Smith, Duncan & Hammond, 2000 MBank Plaza, P.O. Drawer 2800, El Paso, Texas 79999, Attention: Dane George, 1021. 7500. 2704. 13: 20
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| Esq., and if to the Agent, at its address at 55 Water Street, New York, New York 10041, Attention: Corporate Tn stee Administration, with a copy similarly delivered to Willkie Farr Gallagher, 153 East E.
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| 53rd Street, New York, New York 10022, Attention: Brian O'rien, Esq., and, if to the Company or the Agent, with copies to each of the Owner Participants at its address specified in Schedule I hereto, with a copy similarly delivered to Cravath, Swaine & Moore, One Chase Manhattan Plaza, New York, N.Y. 10005, Attention: Richard M. Allen, Esq., or, as. to any of the foregoing, at such other address as shall be designated by such person in a written notice to the others. All such written notices and communications shall be effective when received at the address specified as aforesaid.
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| SECTION 7.5. Successors and Assigns. All of the provi-sions of this Agreement shall be binding upon and inure to the bene-fit of the parties hereto and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement other than to a per-mitted transferee under the Participation Agreements. Upon such assignment or transfer, the Company shall notify the Agent, whereupon the Agent shall recognize such assignment or transfer.
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| SECTION 7.6. Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable in the State of New York or in any jurisdiction in the United States which shall be applicable to this Agreement shall, as to the State of New York or such jurisdiction in the United States, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceabil-ity of such provision in any other jurisdiction.
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| SECTION 7.7. Headings, etc. The heail ings o f various Articles and Sections of this Agreement are for convenience of refer-ence only and shall not define or limit any of the terms and provi-sions hereof.
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| SECTION 7.8. Governing Law. This Agreement shall be gov-erned by, and construed in accordance with, the law of the State of New York.
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| SECTION 7.9. Counterpart Execution. Th i s Agreement, and any amendment to this Agreement may be signed in any number of coun-terparts, each of which shall be an original, and all of which taken together shall constitute a single instrument, with the same effect as if the signatures instrument.
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| thereto and hereto were upon the same 1021 '500 '704 '3:20
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| IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their officers thereunto duly autho-rized as of the day and year first above written.
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| CHEMICAL BANK By:
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| Senior Trust Officer EL PASO ELECTRIC COMPANY By:
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| Vice President 1021.7500.2704.13:20
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| SCHEDULE I Commercial Federal Investment Corporation Jeff Bainbridge Commercial Federal Investment Corporation 1300 Commercial Federal Tower 2120 South 72nd Street Omaha, Nebraska 68124 Chrysler Financial Corporation Chrysler Financial Corporation Greenwich Office Park I Greenwich, Connecticut 06836 Leasing and Investment Services Attention: Mike Abandond Palantine Hills Leasing, Inc.
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| Palantine Hills Leasing, Inc.
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| 1415 S. Roselle Road Palantine, IL 60067 Attention: President, with copies to Household Commercial Financial Services Attention: Lee Wyatt and Julia Sarron, Esq.
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| 2700 Sanders Road Prospect Heights, IL 60070 1021.7500.2704.13:20
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| ill if'O
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| UCU Properties, Inc.
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| (Formerly, Energy Investments, Inc.)
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| Donald Claar Suite 2000 Commercial Tower Kansas City, 'Missouri 64105 Alexander Hamilton Life Insurance Company of America Richard Egan, General Counsel Alexander Hamilton Life Insurance Company of America 33045 Hamilton Boulevard Farmington Hills, .Michigan Burnham Leasing Corporation Burnham Leasing Corporation 55 Broad Street New York, New York Attention: Dianne Rudo 1021. 7500. 2704. 13: 20
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| ilk
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| SCHEDULE II 1 ~ Certificates of deposit maturing within 180 days and issued by any Federally insured commercial bank; provided, however, that if1,000,000 the face amount of any such Certificate of Deposit shall be or more, the issuing bank shall have a capital and surplus exceeding $ 500,000,000 and a senior debt rating of not Below the Level of Investment Grade; 2 ~ Readily marketable -obligations issued or guaranteed by the United States Government or issued by the Government National Mortgage Association, the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation; 3 ~ Repurchase obligations maturing within 30 days with respect to obligations of the type described in Clause 2 above issued by any Federally insured commeicial bank; provided, however, that iorf the face amount o f such repurchase obligation is $ 10, 000, 000 more, the issuing- bank shall have a capital and surplus exceeding $ 500,000,000 and a senior debt rating of not Below the Level of Investment Grade; 4 ~ Repurchase obligations maturing within 30 days with respect to obligations of the type described in Claus 2 above issued by any nationally recognized dealer which reports to the Market Reports Division of the Federal Reserve Ba;ik. of New York;
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| : 5. Investments in readily marketable money market funds managed by a nationally recognized fund manager, the assets,of which fund (or the issuers thereof) are as described in Clauses 1, 2, 3, 4, or 9 herein;
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| : 6. Investments in readily marketable bonds, which are not Below the Level of Investment Grade, or bond funds managed by a nationally recognized fund manager, the assets of wh'ch (or the issuers thereof) are not Below the Level of Investment Grade; 7 ~ Investments in stock or stock funds managed by a nationally rec-ognized fund manager;
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| : 8. Mortgage backed securities; 9 ~ Commercial paper maturing within 180 days and having a rating of P-1 or better by Moody's Investors Service or A-1 or better by Standard & Poor's Corporation; or
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| : 10. Investments iq municipal obligations, the issuers of which are not rated Below the Level of Investment Grade, or the obligations of which are backed by a Letter of Credit from a commercial bank as described in Clause 1 above.
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| 1021..7500.2704.13:20
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| ~g$
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| ~O Cl
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| "Below the Level of Investment Grade,"'eans (i) in the case of Moody's Investors Service, a rating of less than Baa3 or the current equivalent, (ii) in the case of Standard & Poors Corporation, a rating of less than BBB- or current equivalent ~nd (iii) in the case of Duff and Phelps, a rating greater than ten or the current, equivalent.
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| 1021.7500.2704.13:20.
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| ~O iO 0
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| SCHEDULE III EL PASO OB IGATIONS Principal Payment Amount Date Description
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| $ 25, 000, 000 Jan. 31, 1988 Second mortgage bonds-I The Bank of New York due June 1988
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| $ 50, 000, 000 June 30, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 6, 100, 000 July 20, 1988 4.25: First mortgage bonds due July 1988
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| $ 22,000,000 May 20, 1989 12.75: First mortgage bonds due May 1989
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| $ 25,000,000 Aug. 15', 1989 14.54 First mortgage bonds due August 1989
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| $ 50,000,000 Nov. 20, 1989 144 First; mortgage bonds due November 1989
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| $ 20,000,000 Dec. 1, 1990 Long-term notes unsecured' The Bank of America
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| $ 70,000,000 Mar. 1, 1991 Second mortgage 'bonds-The Bank of America 1021.7500.2704.13:20
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| Exhibit B AMENDMENT No. 1, dated as of December 31, 1987, to Facility Lease dated as of December 1, 1986, between THE FIRST NATIONAL BANK OF BOSTON, not in its individ-ual capacity but solely as Owner Trustee ("Lessor" )
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| under a Trust Agreement, dated as of December 1, 1986 with COMMERCIAL FEDERAL INVES'ITCWZ CORPORATION, and EL PASO ELECTRIC COMPANY, as Lessee (" Lessee" ).
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| The parties hereto have previously entered into the Facility Lease (as heretofore amended, modified or supplemented, the "Faci'lity Lease" ) providing for the lease by Lessor to Lessee of the Undivided Interest and the Real Property Interest. The parties now desire to make certain amendments to the Facility Lease.
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| NOW, THEREFORE, in consideration of the premises and other good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows:
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| SECTION 1. Definitions. For purposes hereof, capi.tal-ized terms used herein and not defined herein shall have the meanings ascribed thereto in Appendix A to the 'Facility Lease.
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| SECTION 2. Amendments. (a) Section 7. Section 7 of the Facility Lease is hereby amended by inserting "(a) Liens." prior to the existing paragraph and inserting the following at the end thereof:
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| (b) Retirement of Debt. Unless the Owner Participant shall otherwise consent, on or before each date set forth in Schedule 7 hereto, the Lessee shall retire, legally defease or deposit with the lender or its truste'e funds sufficient to retire the principal amount of the Debt set forth opposite the ref erence. to such date on such Schedule.
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| (c) Merger, Sale, etc. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, convey, transfer or lease to any Person any asset except for fair value.
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| Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, (1) consolidate with any Person, (2) merge with or into any.
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| Person or (3) except for (i) payments, in accordance with normal dividend policy of the Lessee, of cash dividends to holders of common stock and preferred stock, (ii) exchanges of fixed assets for other fixed assets whose fair value is equal to or greater than the fair value of the fixed assets exchanged or (iii) conveyances, transfers or leases for cash where such cash is to be recorded by the of'ssets Lessee, convey, transfer, lease or dividend to any Person, in any single transaction or series of related transactions, any asset or assets if the book value of such asset or assets exceeds 54 of its total assets as shown on
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| '1021.7500.2754.09:2
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| the most recent consolidated balance sheet of the Lessee delivered to the Owner Participant pursuant, to Section 10(b) (1) (i) (A) of the Participation Agreement; unless immediately after giving effect to such transaction:
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| (A) the Person who is the "Lessee" under the Facility Lease immediately following such consolidation, merger, conveyance, transfer, lease or dividend (the "Surviving Lessee" ) shall be a corporation which (i) is organized under the laws of the United States of America, a state thereof or the District of Columbia, (ii) is a "public utility" under applicable law, (iii) is an ANPP Participant under the ANPP Participation Agreement with respect to Unit 2 (including the Undivided Interest), (iv) shall have assumed each cov-enant and condition of the Lessee under the ANPP Participation Agreement and each other ANPP Project Agreement and (v) holds a valid and subsisting license from the NRC to possess Unit 2'including the Undivided Interest);
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| (B) the Surviving Lessee, if other than the Lessee immediately prior to such transaction, shall execute and deliver to the Owner Participant an agreement, in form and substance reasonably satisfactory to the Owner Participant, containing the assumption by the Surviving Lessee of each covenant and condition of this Facility Lease, each other Transaction Document and each Financing Document to which the Lessee imme-diately prior to such transaction was a party immedi;
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| -ately preceding such transaction; (C) no Default (other than a failure to deliver docu-ments and other information specified in Section 10(b)(1)(vi) of the Participat'ion Agreement) and no Event of Default shall have occurred and be continuing, no Event of Loss shall have occurred and no Deemed Loss Event shall have been declared; (D) the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) after giving effect to such transaction, (1) shall bePoor's rated at least "investment grade" by Standard &
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| Corporation and Moody's Investors Service, Inc. and (2) shall have an investment rating by Standard &
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| Poor's Corporation and Moody's Investors Service, Inc. not less than one "smallest notch" below the rating assigned to the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) immediately prior to such transaction (or,"'if 1021.7500.2754.09:2
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| ~O neither of such rating organizatio'ns shall rate the Bonds (or, if applicable, the preferred stock of the Surviving Lessee) at the time, by any nationally rec-ognized rating organization in the United States of America);
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| (E) the Surviving Lessee shall have a Net Worth equal to or greater than the Net Worth of the Lessee immedi-ately prior to such transactions and equal to or greater than $ 500,000,000; (F) the Surviving Lessee shall have delivered to the Owner Participant and the Indenture Trustee an Officers'ertificate,and an opinion, reasonably sat-isfactory to the Owner Participant, of counsel to the Surviving Lessee, each stating that (1) such transac-tion complies with this subclause (c) and (2) all con-ditions precedent to the consummation of such transac-tion have been satisfied and any Governmental Action required in connection with such transaction has been obtained, given or accomplished; (G) the Surviving Lessee shall have delivered to the Owner Participant an opinion, reasonably satisfactory to the Owner Participant, of independent counsel to the Surviving Lessee stating that such transaction would not'result in a loss of any of the tax benefits described in Section 13(c)(1) of the Participation Agreement; (H) such transaction is otherwise permitted by and in compliance with .the ANPP Participation Agreement; (I) the New Coverage Ratio of the Surviving Lessee shall be at least 1.6 to 1; and.
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| (J) such transaction does not affect the term or cov-erage of the Letter of Credit, if in effect at the time, or, if such term or coverage is affected, the Lessee, or the Surviving Lessee if other than the Lessee immediately prior to such transaction, shall have provided to the Owner Participant a Letter of Credit, if required by Section 10(b)(3)(xvii) of the Participation Agreement, which meets the requirements set forth in such Section 10(b) (3) (xvii) and is in the same amount as the Letter of Credit in effect immedi-ately prior to such transaction; unless the term or coverage of the Letter of Credit affected is that of a Letter of Credit which has been delivered to the Owner Participant puisuant to the Agreement, dated as of December 31, 1987, among the Lessee, the Lessor and 1021.7500.2754.09:2
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| ~
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| the Owner Participant (the "Commitment Agreement" ), a copy of which is annexed hereto, in which. event such Lessee or Surviving Lessee, as the case may.be, shall have provided to the Owner Participant a Letter of Credit which meets the requirements set forth in the Participation Agreement and the Commitment Agreement and is in the same amount as the Letter of Credit in effect immediately prior to such transaction.
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| Upon the consummation of such transaction the Surviving Lessee, if other than the Lessee, shall succeed to, and be substi-tuted for, and may exercise every right and power of, the Lessee immediately prior to such transaction under this Lease, each other Transaction Document and each Financing Document to which the Lessee immediately prior to such transaction was a party immediately prior to such transaction, with the same effect as if the Surviving Lessee had been named herein and therein.
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| (d) Incurrence of Debt. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries (whether consolidated or unconsolidated) to, issue, assume or become liable in respect of (A) any Debt maturing more than one year after the date of such issuance, assumption or liability (including current maturities of Debt with an original maturity of more than one year)'f, immediately thereafter, (i) the total amount of all Debt of the Lessee and its sub-sidiaries (whether consolidated or unconsolidated) maturing more than one year after the date of such issuance, assump-tion or .becoming liable (reduced by Cash Available for Investment) shall exceed 704 (or, at any time after January 2, 1992 when there is not in effect a Letter of Credit com-plying in all respects with the Participation Agreement and the Commitment Agreement, 654) of New Consolidated Capitalization, in each case as shown on a pro forma con-solidated balance sheet on and as of the date of such'ssu-ance, assumption or becoming liable, or (ii) the New Coverage Ratio of the Lessee would be less than 1.6 to 1 or (B) any Debt maturing one year or less after the date of such issuance, assumption or becoming liable (excluding current maturities of Debt with an original maturity of more than one year) if, immediately thereafter, the total amount o f all Debt o f the Lessee and its subsidiaries (whetheri consolidated or unconsolidated) maturing one year or less after the date of such issuance, assumption or becoming liable shall exceed 12.54 of'ew Consolidated Capitalization, in each case as shown on a pro forma con-solidated balance sheet on and as of the date of such issu-ance, assumption or becoming liable. For purposes of the foregoing clause (A), there shall be excluded any Debt which has been legally defeased or for the payment of which 1021.7500.2754.09:2
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| 0 0
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| ~O
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| funds equal to the principal amount of such Debt have been segregated in escrow and any refunding of the debt issued on December 31, 1987 by the lessors in the sale and lease-back transactions relating to Unit 3 at PVNGS shall not constitute the Lessee issuing, assuming, or becoming liable in respect of any Debt within the meaning of this subclause (d)
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| (e) Escrow Agreement. Lessee shall deposit with Chemical Bank as escrow agent (the "Agent" ) any amount required to be deposited under the Escrow Agreement dated as of December 31, 1987 between the Lessee and the Agent within 5 Business Days after notice from the Owner Participant and shall otherwise comply with its other obli-gations and agreements under such Agreement within 15 days after notice from the Owner Participant.
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| (f) Financial Ratios. Unless the Owner Participant shall otherwise consent (which may be by way of acceptance of delivery of a letter of credit which complies with the requirements of the Participation Agreement and the Commitment Agreement, Lessee agrees that as of January 2, 1992 (i) all the Debt listed on Schedule 7 to the Facility Lease shall be retired'n accordance with such Schedule 7, (ii) the New Coverage Ratio of Lessee, determined as of June 30, 1991, shall be not less than 1.6 to 1, (iii) the aggregate Debt maturing more than one year after the date of issuance, assumption or liability (including current maturities of Debt with an original maturity in excess of one year) of Lessee shall not be in excess of 654 of New Consolidated Capitalization, all as derived from Lessee's financial books and records as of June 30, 1991, and (iv) the aggregate Debt maturing one year or less after the date of such issuance, assumption or liability (excluding cur-rent maturities of Debt with an original maturity in excess of one year) of Lessee shall not be in excess of 12.5< of such New Consolidated Capitalization (clauses (i) through (iv) above being herein called the "Tests" ). Lessee shall prepare for and provide to Owner Participant not later than October 1,'991 (and October 1 of succeeding years under the circumstances set forth below) calculations showing whether Lessee has satisfied the Tests and the financial data upon which calculations were based. If Lessee has failed to meet the Tests, Owner Participant may, by written notice to Lessee, require that Lessee provide, at its expense, a renewal or replacement Letter of Credit comply-ing in all respects with the Commitment Agreement and the Participant Agreement and, if such Letter of Credit is in effect on or prior to January 2, 1992 (or with respect to any subsequent year, January 2 o f such year), Lessee '
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| failure to meet the Tests shall not constitute an Event of 1021.7500.2754.09:2
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| ~O 0
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| Default hereunder. The procedures set forth above (the New Coverage Ratio being determined, and deriving New Consolidated Capitalization from Lessee's financial books and records, as o f June 30 in each such year) shall be repeated each year until no such renewal or replacement Letter of Credit is required under the Commitment Agreement or the Participation Agreement.
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| (g) Definitions. For purposes of this Section 7, the terms New Consolidated Capitalization and New Coverage Ratio shall be defined as follows:
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| (A) "New Coverage Ratio" shall mean the ratio of (x) the sum of (a) consolidated net .income of the Lessee for the twelve-month period ending on a date no later than 135 days prior to the date as of which New Coverage Ratio is being determined plus (or minus) (b) all extraordinary items deducted (or added) in deter-mining said net income (for purposes of this defini-tion of New Coverage Ratio, any charge against income resulting from a write-off of utility plant pursuant to (i) an order of any governmental authority having jurisdiction or (ii) a provision for an estimated regulatory disallowance shall be deemed to be an extraordinary item deducted in determining said net income) plus (or minus) (c) all income taxes deducted (or tax credits added) in determining said net income minus (d) for all or any portion of such period ending on or prior to December 31, 1990, 504 of "allowance for funds used during construction" (net of deferred taxes) as such item is referred to in the consolidated income statement of the Lessee and its subsidiaries) and, for all or any p'ortion of such period ending after December 31, 1990, 1004 of such item plus (e) the sum of all interest and lease payments paid by the Lessee and its subsidiaries (whether consolidated or unconsolidated) during such twelve-month period to (y) total interest and lease payments that will be payable by the Lessee and its subsidiaries (whether consoli-dated or unconsolidated) during the twelve-month period following the date as of which New Coverage Ratio is being determined. There shall be excluded from interest and lease payments included under clauses (x) and (y) above (i) lease payments to, the Rio Grande Resources Trust, (ii) lease payments under any operating lease of computers, office equipment or the like, the original term of which (including options to renew) is less than five years and (iii) interest on Debt maturing one year or less from the date of incurrence thereof. There shall be excluded from interest and lease payments included under clause 1021.7500.2754.09:2
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| iO II
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| (y) above interest on Debt -which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow.
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| (B) "New the Consolidated Capitalization" sha 1 mean total of consolidated capital l
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| and surplus of the Lessee plus the principal amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) which matures more than one year after the date as of which New Consolidated Capitalization is being determined.
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| ,(b) Schedule 7. Schedule 7 hereto is hereby added as Schedule 7 to the Facility Lease.
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| SECTION 3. Miscellaneous (a) Effective Date of Amendments. The amendments set forth in Section 2 hereof shal'l be and become effective upon the execution hereof by the parties hereto.
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| (b) Counterpart Execution. This Amendment No. 1 may be executed in any number of counterparts and by each of the parties hereto on separate counterparts; all such coun-terparts shall together constitute but one and the same instrument.
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| (c) Governing Lav. This Amendment No. 1 has been negotiated and delivered in the State of. New York and shall be governed by and be construed ia accordance with the laws of the State of Nev York, except to the extent that Xaxrsu-ant to the lav of the State of Arizona such lav is mandato-rily .applicable hereto.
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| (d) Disclosure. Pursuant to Arizona Revised Statutes Section 33-404,. the beneficiary of the Trust Agreement is Commercial Federal Investment Corporation, a corporation.
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| The address. of the beneficiary is Commercial Federal Tower, 2120 South 72nd Street, Omaha, Nebraska 68124, Attention:
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| Jeff Bainbridge. A copy of the Trust Agreement is avail-able for inspection at the offices of. the Owner Trustee at 100 Federal Street, Boston, Massachusetts 02110, Attention of Corporate Trust Division.
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| 1021.7500.2754.09:2
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| IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment No. 1 to be duly executed in'New York, New York on December 31, 1987.
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| THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity, but solely as Owner Trustee under a Trust December 1, 1986 with Commercial Federal Investment Corporation, Senior Manager EL PASO ELECTRIC COMPANY, Vice President
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| ~O 0
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| STATE OF TEXAS )
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| ) ss.:
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| COUNTY OF EL PASO )
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| The foregoing instrument was acknowledged before me this 6th day of January, 1988 by William J. Johnson, a Vice President of EL PASO ELECTRIC COMPANY, a Texas corporation, on behalf of the corporation.
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| N ary Public
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| igy iO
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| C OMMONNEALTH OF MASSACHUSETTS )
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| ) SS ~ ~
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| COUNTY OF SUFFOLK )
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| The foregoing instrument was acknowledged before me this day of January, 1988, by Mark Nelson, a Senior Manager of THE I ST NATIONAL BANK OF BOSTON, a national banking association, on behalf of the banking association as trustee under that certain Trust Agreement dated as of. August 1, 1986 with Palatine Hills Leasing, Inc.
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| Notary Public MAfe< MlesoiA My COmmlsslon Eel~
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| September 30,. )994 1021.7500.2754.06A:1
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| ~ ~ ~
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| iO iO
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| SCHEDULE 7 TO FACILITY LEASE EL PASO OBLIGATIONS Principal Payment Amount Date Description
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| $ 60,000,000 Jan. 31, 1988 16.204 First mortgage bonds due 2012
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| $ 25,000,000 Jan. 31, 1988 Second mortgage bonds The Bank of New York due June 1988
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| $ 50,000,000 June 30, 1988 Second mortgage bonds The Bank of New York due June 1988
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| $ 6,100,000 July 20, 1988 4.254 First mortgage bonds due July 1988
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| $ 22,000,000 May 2 0, 1989 12.754 First mortgage bonds due May 1989
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| $ 25,000,000 Aug. 15, 1989 14.54 First mortgage bonds due August 1989
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| $ 50,000,000 Nov. 20, 1989 14< First mortgage bonds due November 1989
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| $ 20,000,000 Dec. 1, 1990 Long-term notes - unsecured The Bank of America -
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| $ 70,000,000 Mar. 1, 1991 Second mortgage bonds The Bank of I
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| America 1021.7500.2754.09:2
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| i AMENDMENT No. 2, dated as of December 31, 1987, to Facility Lease dated as of August 1, 1986, between THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee (".Lessor" ) under a Trust Agreement, dated as of August 1, 1986 with COMMERCIAL FEDERAL INVESTMENT CORPORATION, and EL PASO ELECTRI C COMPANY as Lessee ( "Lessee" )
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| g ~
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| The parties hereto have previously entered into the Facility Lease (as heretofore amended, modified or supplemented, the "Facility Lease" ) providing for the lease by Lessor to Lessee of the Undivided Interest and the peal Property Interest. The parties now desire to make certain amendments to the Facility Lease.
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| NOW, THEREFORE, in consideration of the premises and other good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows: V" SECTION 1. Definitions. For purposes hereof, capital-ized terms used herein and not defined herein shall have the meanings ascribed thereto in Appendix A to the Facility Lease.
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| SECTION 2. Amendments. (a) Section 3(b). Section 3(b) is hereby amended by inserting at the end of a clause (iii), in lieu of ".", "; and" and by inserting thereafter and before the next to last sentence of Section 3(c) a new clause (iv) reading as follows:
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| (iv) in the event that the Lessee shall fail to provide on or before April 30, 1988, a letter of credit which complies with the terms of the Agreement dated as o f December 31, 1987 (the "Commitment Agreement" ), among the Lessee, .the Lessor and the Owner Participant, a copy of which is annexed hereto, on each Basic Rent Payment Date, commencing October 1, 1988 and ending on the Basic Rent Payment Date next following the earlier to occur of (A) the providing by the Lessee of such letter of credit and (B) the date as of which such letter of credit would have expired had it been in effect as required by the terms of the Commitment Agreement, an amount, equal to .354 of Facility Cost multiplied by a fraction the numerator of which is the number of days from and including the preceding Basic Rent Payment Date (or, in the case of the Basic Rent Payment Date occurring on October 1, 1988, from and including April 3.0, 1988) to but excluding such Basic Rent Payment Date (or, er, to the date on which such letter of credit if earli-is pro-vided or the date such letter of credit would have so expired), and the denominator of which is the number of days from and including the preceding Basic Rent 1021.7500.2754.22:4
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| Payment Date to but excluding such Basic Rent Payment Date.
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| (b) Section 7. Section 7 of the Facility Lease is hereby amended by inserting " (a) Liens. " prior to the existing paragraph and inserting the following at the end thereof:
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| (b) Retirement of Debt. Unless the Owner Participant shall'therwise consent, on or before each date set forth in Schedule 8 hereto,, the Lessee shall retire, legally defease or deposit with the lender or its trustee funds sufficient to retire the principal amount of the Debt set forth opposite the reference to such date on such Schedule.
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| (c) Merger, Sale, etc. Without the consent'f the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, convey, transfer or lease to any Person any asset except for fair-value.
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| Without the consent of the. Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries to, (1) consolidate with any Person, (2) .merge with or into any Person or (3) except for (i) payments, in accordance with, normal dividend policy of the Lessee, of cash dividends to holders of common stock and preferred stock, (ii) exchanges of fixed assets for other fixed assets whose fair value is equal to or greater than the fair value of the fixed assets exchanged or (iii) conveyances, transfers or leases of assets for cash where such cash is to be recorded by the Lessee, convey, transfer, lease or dividend, to any Person, in any single transaction or series of related transac-tions, any asset or assets if the book value of such asset or assets exceeds 5c of its total assets as shown on the most recent consolidated balance sheet of the Lessee deliv-ered to the Owner Participant pursuant to Section 10 (b) (1) (i) (A) of the Participation Agreement; unless immediately after giving effect to such transaction:
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| (A) the Person who is the "Lessee" under the Facility Lease immediately following such consolidation, merger, conveyance, transfer, lease or dividend (the "Surviving Lessee" ) shall be a corporation which (i).
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| is organized under the laws of the United States of America, a state thereof or the District of Columbia, (ii) is a "public utility" under applicable law, (iii) is an ANPP Participant under the ANPP Participation Agreement with respect to Unit 2 (including the 1021.7500.2754.22:4
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| II 11 0
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| Undivided Interest), (iv) shall have assumed each covenant and condition of the Lessee under the ANPP Participation Agreement and each other ANPP Project Agreement and (v) holds a valid and subsisting license from the NRC to possess Unit 2 (including: the Undivided Interest);
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| (B) the Surviving Lessee, if other than the Lessee immediately prior to such transaction, shall execute and deliver to the Owner, Participant an agreement, in form and substance reasonably satisfactory to the Owner Participant, containing the assumption by the Surviving Lessee of each covenant and condition of this Facility Lease, each other Transaction Document and each Financing Document to which the Lessee imme-diately prior to such transaction was a party immedi-ately preceding such transaction; (C) no Default (other than a failure to deliver docu-ments and other information specified in Section 10(b) (1) (vi) of the Participation Agreement) and no Event of Default shall have occurred and be continuing, no Event of Loss shall have occurred and no Deemed Loss Event shall have been declared; (D) the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) after giving effect to, such transaction, (1) shall be rated at least "investment grade" by Standard & Poor's Corporation and Moody's Investors Service, Inc. and (2) shall have an investment rating by Standard S Poor's Corporation and Moody'.s Investors Service, Inc. not less than one "smallest .notch" below the rating assigned to the Bonds (or, if the Bonds are not then rated, the preferred stock. of the Surviving Lessee) immediately prior to such transaction (or, if neither of such rating organizations shall rate the Bonds (or, if applicable, the preferred stock of the Surviving Lessee) at the time, by any nationally rec-ognized rating organization in the United States of America);
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| (E) the Surviving Lessee shall have a Net Worth equal to or greater than the Net Worth of'he Lessee immedi-ately prior to such transactions and equal to or greater than $ 500,000,000; (F) the Surviving Lessee shall have delivered to the Owner Participant and the Indenture Trustee an 1021.7500.2754.22:4
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| iO Officers'ertificate and an opinion, reasonably satisfactory to the Owner Participant, of counsel to the Surviving Lessee, each stating that (1) such transaction complies with this subclause (c) and (2) all conditions precedent to the consummation of such transaction have been satisfied and any Governmental Action required in connection with such transaction has been obtained, given or accomplished; (G) the Surviving Lessee shall have delivered to the Owner Participant an opinion, reasonably satisfactory to the Owner Participant, of independent counseL to the Surviving Lessee stating that such transaction would not result in a loss of any of the tax benefits described in Section 13(c)(1) of the Participation Agreement; (H) such transaction is otherwise permitted by and in compliance=with the ANPP Participation Agreement; and (I) the New Coverage Ratio of the Surviving Lessee shall be at least 1.6 to 1.
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| Upon the consummation of such transaction the Surviving Lessee, if other than the Lessee, shall succeed to, and be substi-tuted for, and may exercise every right and power of, the Lessee immediately prior to such transaction under this Lease, each other Transaction Document and each Financing Document to which the Lessee immediately prior to such transaction was a party immediately prior to such transaction, with the same effect as if the Surviving Lessee had been named herein and therein.
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| (d) Incurrence of Debt. Without the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries (whether consolidated or unconsolidated) to, issue, assume or become liable in respect of (A) any Debt maturing more than one year after the date of such issuance, assumption or liability
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| (including current maturities of Debt with an original maturity of more than one year) if, immediately thereafter,
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| , (i) the total amount of all Debt of the Lessee and its sub-sidiaries (whether consolidated or unconsolidated) maturing more than one year after the date of such issuance, assump-tion or becoming liable (reduced by Cash Available for Investment) shall exceed 70% (or, at any time .after January 1, 1992 when there is not in effect a letter of credit com-plying in all respects with the Commitment Agreement, 65%)
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| of New Consolidated Capitalization, in each case as shown on a pro forma consolidated balance sheet on and as of the 1021.7500.2754.22:4
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| f date of such issuance, assumption or becoming liable, or (ii) than the New Coverage Ratio of the Lessee would be less 1.6 to 1 or (B) any Debt maturing one year or less after the date of such issuance, assumption or becoming liable (excluding current maturities of Debt with an origi-nal maturity of more than one year) if, immediately there-after, the total amount of all Debt of- the Lessee and its subsidiaries (whether consolidated or unconsolidated) maturing one year or less after the date of, such issuance, assumption or becoming liable shall exceed 12.5~ of New Consolidated Capitalization, in each case as shown on a pro forma consolidated'alance sheet on and as of the date of such issuance, assumption or becoming liable. For purposes of the foregoing clause (A), there shal'l be excluded which has been legally defeased or for the payment of any'ebt which funds equal to. the principal amount of such Debt have been segregated in escrow and any refunding of the debt issued on December 31, 1987 by the lessors in the sale and l'easeback transactions relating to Unit 3 at PVNGS shall not constitute the Lessee issuing, assuming, or becoming liable in respect of any Debt within the meaning of this subclause (d).
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| (e) Escrow Agreement. The Lessee shall deposit with Chemical Bank as escrow agent (the "Agent" ) any amount required to be deposited under the Escrow Agreement dated as of December 31, 1987 between the Lessee and the Agent within 5 Business Days after notice from the Owner Participant and shall otherwise comply with its other obli-gations under such Agreement within 15 days after notice from the Owner Participant.
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| (f) Definitions. For purposes of this Section 7, the terms New Consolidated Capitalization and New Coverage Ratio shall be defined as follows:
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| (A) "New Coverage Ratio" shall mean the ratio of .(x) the sum of (a) consolidated net income of the Lessee for the twelve-month period ending on a date no later than 135 days prior to the date as of which New Coverage Ratio is being determined plus (or minus) (b) all extraordinary items deducted (or added) in deter-mining said net income (for purposes of this defini-tion of New Coverage Ratio, any charge against income resulting from a write-off of utility plant pursuant to (i) an order of any governmental authority having jurisdiction or (ii) a provision for an estimated regulatory disallowance shall be deemed to. be an extraordinary item deducted in determining said net 1021.7500.2754.22:4
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| income) plus (or minus) (c) all income taxes deducted (or tax credits added) in determining said net income minus (d) for all or any portion of such period ending on or prior to December 31, 1990, 504 of "allowance for funds used during construction" (net of deferred taxes) as such item is referred to in the consolidated income statement of the Lessee and its subsidiaries) and, for all .or any portion of such, period ending after December 31, 1990, 100% of such item plus (e) the sum of all interest and lease payments paid by the Lessee and its subsidiaries '(whether consolidated or unconsolidated) during such twelve-month period to (y) total interest and lease payments that will be payable by the Lessee and its subsidiaries: (whether consoli-dated or unconsolidated') during the twelve-month period following the date as of which New Coverage Ratio is being determined. There shall be excluded from interest and lease payments included under clauses (x) and (y) above (i) lease payments to the Rio Grande Resources Trust, (ii) lease payments under any operating lease of computers, office equipment or the like, the original term of which (include;ng options to renew) is less than five years and (iii) interest on Debt maturing, one year or less from the date of incurrence thereof. There shall be excluded from interest and lease payments included under clause (y) above interest on Debt which has,been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been'egregated in escrow.
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| (B) "New Consolidated Capitalization" s h a 1 1 m e a n the total of consolidated capital- and surplus of the Lessee plus the principal amount of'll Debt of the Lessee and its'subsidiaries (whether consolidated or unconsolidated) which matures more than one year after the date as of which New Consolidated Capitalization is being determined.
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| (c) Schedule 8. Schedule 8 hereto is hereby added as Schedule 8 to the Facility Lease.
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| 1021.7500.2754.22:4
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| SECTION 3. Miscellaneous (a) Effective Date of Amendments. The amendments set forth in Section 2 hereof shall be and become effective upon the execution hereof by the parties hereto.
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| (b)-Counterpart Execution. This Amendment No. 2 may be executed in any number of counterparts and by each of the .parties hereto on separate counterparts; all such coun-terparts shall together constitute but one and the same instrument.
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| (c) Governing Law. This Amendment No. 2 has been negotiated and delivered in the State of New York and shall be governed by and be construed in accordance with the laws of the State of New York, except to the actent that pursu-ant to the law of the State of Arizona such law is mandato-rily applicable hereto.
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| (d) Disclosure. Pursuant to Arizona Revised Statutes Section 33-404, the beneficiary of the Trust Agreement is Commercial Federal Investment Corporation, a corporation.
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| The address of the beneficiary is 1300 Commercial Federal Tower, 2120 South 72nd Street, Omaha, Nebraska 68124, Attention: Jeff Bainbridge. A copy of the Trust Agreement is available for inspection at the offices of the Owner Trustee at 100 Federal Street, Boston, Massachusetts 02110, Attention of Corporate Trust Division.
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| 1021.7500.2754.22:4
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| IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment No. 2 to be duly executed in New York, New York on December'1, 1987.
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| THE FIRST NATIONAL BANK. OF BOSTON, not in, its individual capacity, but solely as Owner Trustee under a. Trust Agreement, dated as of August 1, 1986 with Commercial Federal Investment Corporation,'i',Fud-Senior Manager EL PASO ELECTRIC COMPANY, By Vice President 1021.7500.2754.06:6
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| STATE OF TEXAS )
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| ) ss ~ .
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| COUNTY OF EL PASO )
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| The foregoing instrument was acknowledged before me this 6th day of January, 1988 by William .J. Johnson, a Vice President of EL PASO ELECTRIC COMPANY, a 'Texas corporation, on behalf of the corporation.
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| N tary Public
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| COMMONWEALTH OF MASSACHUSETTS )
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| COUNTY OF SUFFOLK The foregoing instrument was acknowledged before me this day of January, 1988, by Mark Nelson, a Senior Manager of THE FIRST NATIONAL BANK OF BOSTON, a national banking 'association, of the banking association as trustee under that certain Trust on'ehalf Agreement dated as of, August 1, 1986 with Commercial Federal Investment Corporation.
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| Notary Public MARlAMlRSQLA My ComelsslOA ExplfOQ' September 80( 1994 1021.7500.2754.06A:1
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| SCHEDULE 8 EL PASO OBLIG ZONS Principal Payment Amount Date Description
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| $ 60I 000 i 000 Jan 31 1988 16.20: First mortgage bonds due 2012
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| $ 25,000,000 Jan 31 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 50,000,000 June 30, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 6,100,000 July 20, 1988 4. 25~ First mortgage bonds due July 1988
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| $ 22 I 000 I 000 May 20, 1989 12.75: First mortgage bonds due May 1989
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| $ 25 I 000'00 Aug. 15, 1989 14.5~ First mortgage bonds due August 1989
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| $ 50,000,000 Nov. 20, 1989 . 14: First mortgage bonds due November 1989
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| $ 20~000I000 Dec. 1, 1990 Long-term notes unsecured-The Bank of America
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| $ 70,000,000 Mar. 1, 1991 Second mortgage bonds-The Bank of America 1021.7500.2754.22:4
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| AGREEMENT dated as of December 31, 1987 among COMMERCIAL FEDERAL INVESTMENT CORPORATION
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| ("Owner Participant" ), THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee ("Owner Trustee" ) under a Trust Agreement dated as of August 1, 1986 with Owner Participant, and EL PASO ELECTRIC COMPANY (" Lessee" ).
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| Owner Trustee and Lessee are parties to the Facility Lease dated as of August 1, 1986, as amended (the "Facility Lease" ). All terms used but not defined herein have the meanings ascribed to them in Appendix A to the Facility Lease.
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| Lessee, Owner Trustee 'and Owner Participant desire to modify certain provisions of the Facility Lease, provide credit enhancement for the benefit of Owner Participant in the form of a letter of credit to support the payment of rent and, until such time as a letter of credit has been delivered, provide for the creation of an escrow account into which Lessee will deposit funds to be held for the retirement, of certain of its outstanding Debt. Accordingly, the parties hereto agree as follows:
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| : 1. Letter of Credit.
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| A. Lessee shall cause to be delivered to Owner Participant a letter of credit (the "LC") with drawing amounts not less than Special Casualty Value from time to time during the period the LC is outstanding less the principal amount of and accrued interest on the Notes Outstanding from time to time. If the Lessee shall 'fail to.
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| cause the ZC to be delivered by April 30, 1988 in accordance with the terms hereof, the Escrow Agreement (as defined in Section 2) shall continue in full force and effect, and the Lessee shall pay to the Owner Trustee all amounts set forth in Section 3(b)(iv) of the Facility Lease in accordance with the terms thereof, but such failure shall not constitute an Event of Default.
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| B. The unsecured long-term debt securities of the bank issuing the LC shall be rated by Moody's not less than A2, in the case of a United States bank, or Aa3, in the case of a United States branch or agency of a foreign bank, and such, bank shall be otherwise acceptable to Owner Participant. Owner Participant will be reason-able in determining such acceptability, but may consider such matters as (i) legal or regul'atory constraints on the issuance to or holding.
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| by Owner Participant of letters of credit from such bank and (ii) policy constraints i;n effect for Owner Participant on the issu-ance to or holding by Owner Participant of letters of credit from such bank, so long as such policy constraints are then applicable by Owner Participant generally to such bank and have been applied by Owner Participant without regard to the nature of PVNGS or the Unit 2 sale and leaseback transactions or the identity or credit of Lessee.
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| 1021.7500.2754..20:3
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| C. The LC (1) shall have an expiry date of December 31, 1991, (2) may be drawn upon if an Event of Loss occurs, a Deemed Zoss Event is declared, an Event of Default occurs and is continuing or in any and all events prior to termination of the LC should a termina-tion event under the LC occur, (3) shall permit partial drawings, (4) shall permit Owner Participant to assign'll of its interest
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| ,therein to a successor Owner Participant without, the issuing bank's or Lessee's consent (5) shall provide for reinstatement upon reim-bursement in respect of a draw thereunder for Supplemental Rent and (6) shall be otherwise satisfactory in form and substance to Owner Participant in its reasonable judgment. Appropriate provision will be made for replacing the LC if there is a decline in the rating by Moody's of the unsecured long-term debt, securities of the issuing bank below A3.
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| D. The reimbursement agreement between Lessee and the issu-ing bank relating to the LC shall (1) not contain any default or ter-mination provisions that are less favorable to Lessee or Owner Participant than those contained in Lessee's Reimbursement Agreement dated as of December 1, 1987, with The Fuji Bank Limited, (2) require the issuing bank to pay any draws on the LC from its general funds, (3) not permit the issuing bank to exercise any right of set off
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| 'during the pendency of any bankruptcy proceeding of Lessee, (4) not permit Lessee's reimbursement obligation to be collateralized at any time by the grant of a security interest, in Lessee's interest in the Undivided Interest or the Real Property Interest or in any other property unless a subordinate (to the security interest of the issu-ing bank) security interest in such property is also granted to Owner Participant, (5) not permit amendment of any provision of the LC or the reimbursement agreement in a manner which is materially adverse to the interest of Owner Participant without its prior written con-sent and (6) otherwise be satisfactory in form and substance to Owner Participant in its reasonable judgment.
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| E; The LC need not be renewed or replaced as of December 31, 1991, if (i) all the Debt listed on Schedule 8 to the Facility Lease has been retired in accordance with such Schedule 8, (ii) the New Coverage Ratio of Lessee, determined as of June 30, 1991, is not less than 1.6 to 1, (iii) the aggregate Debt maturing more than one year after the date of issuance, assumption or liabil-ity (including current maturiti.es of Debt with an original maturity in excess of one year) of Lessee shall not be in excess of 654 of New Consolidated Capitalization, all as derived from the Lessee's finan-cial books and records as of June 30, 1991, and (iv) the aggregate Debt maturing one year or less after the date of such issuance, assumption or liability (excluding current maturities of Debt with an original maturity in excess of one year) of Lessee shall not be in excess of 12.54 of such New Consolidated Capitalization (clauses (i) through (iv) above being herein called the "Tests" ). Lessee 1021.7500.2754.20:3
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| shall prepare for and provide to Owner Participant not later than October 1, 1991 (and October 1 of succeeding, years under the circum-stances set forth below) calculations showing whether Lessee has sat-isfied the Tests and the financial data upon which such calculations were based.
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| 'Participant If may, at Lessee has failed to meet the Tests, Owner its option (and without affecting any other rights of Owner Participant to draw on the LC), draw on the LC or require that Lessee provide a renewal or replacement LC or itself obtain for Lessee, at Lessee's expense, a renewal or replacement LC on substantially the same terms as the existing LC, except that the annual fee payable under such renewal or replacement LC shall not be more than 100 basis points greater than the annual fee to Lessee of the existing LC. The Owner Participant shall exercise such option within a period of time to be determined but not more than thirty (30) days after the Lessee shall furnish the Owner Participant the aforesaid calculations and financial data. Such renewal or replace-ment LC shall have a term commencing not later than the expiry date of the existing LC and ending not earlier than one year after such expiry date, and shall have terms (including the terms of the related reimbursement agreement) not less favorable to Owner Participant than the terms contained in the existing LC and reimbursement agreement.
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| .Such renewal or replacement LC may provide for its early expiration not earl'ier than December 31 of the year during which Lessee meets
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| 'he Tests. The procedures set forth above (the New Coverage Ratio being determined, and deriving New Consolidated Capitalization from the Lessee's financial books and records, as of June 30 in each such year) shall be repeated each year until no renewal or replacement LC is required.
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| : 2. Escrow A reement. Lessee shall enter into an Escrow Agreement with Chemical Bank substantially in the form of Exhibit A hereto. The Owner Participant agrees that; upon delivery and accep-tance of the LC, it shall deliver the notice required by clause (i) of Section 7.2 of the Escrow Agreement.
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| : 3. endment to Lease. Owner Trustee and Lessee shall execute Amendment No. 2 to the Facility Lease substantially. in the form of Exhibit', B hereto.
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| : 4. Fu ther C an es. Concurrent with the procurement of the LC, and subject to obtaining any required consents of third par-ties to the Transaction Documents, the parties will amend the Facility Lease and other Transaction Documents to implement the obtaining of and to reflect the existence of the LC and to further implement the terms of this Agreement. Such amendments will include provisions affording Lessee, in the event Owner Participant, has determined to draw on the LC when Lessee has failed to meet the Tests and unless an Event of Default shall have otherwise occurred and be continuing or an Event of Loss shall have occurred or Deemed Loss 1021. 7500. 2754. 20: 3
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| Event shall have been declared, the right to purchase the Undivided Interest and the Real Property, Interest on or before some period prior to the expiration or termination date of the existing LC, for an amount based on the greater of (i) Enhanced Casualty Value, which will be calculated on an assumed 25% residual, and (ii) Fair Market Sales Value of the Undivided Interest and the Real Property Interest.
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| : 5. Consent. Owner Participant irrevocably consents to any and all transactions which would require its consent under Section 10(b) (3) (ii) or 10(b) (3) (v) of the Participation Agreement.
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| : 6. Owner Trustee Directive. Owner Participant hereby authorizes and directs Owner Trustee to execute this Agreement, Amendment No. 2 to the Facility Lease and such other agreements, doc-uments and certificates as shall be required in order to facilitate the execution and delivery of this Agreement and such Amendment No. 2.
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| : 7. Taxes. All the provisions of Sections 13(b) and (c) of the Participation, Agreement shall be applicable as though the mat-ters set forth in this Agreement (including the exhibits hereto) had been included in the Transaction Documents at all times since August 22, 1986 except that the execution and delivery of this Agreement, as opposed to its provisions, shall not be considered to be the execution and delivery of a Transaction Document or a Financing Document or an act, specifically required or expressly per-mitted to be performed by the Lessee for the purposes of Section 13(c) (4)(i)(B) of the Participation Agreement.
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| : 8. 'scell eous. This Agreement may be executed by the parties hereto in separate counterparts, and it shall not be neces-sary for the signatures of all parties to appear on any one counterpart. The headings of the various sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. This Agreement may not be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by the party against whom enforcement of such transaction, amendment, sup-plement, waiver or modification is sought. This Agreement in all respects shall be governed by and construed in accordance with the laws of the State of New York, including all matters of construction, validity and performance.
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| 1021.7500.2754.20:3
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| XN MlTNESs MHSREOP each of the parties hereto has caused this Agreement to hs du1y exeouted as of the 4ay and'ear first above written>
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| CONMERCXAL PRDER7LL SNVSSTlQST CORPORATXOH By e Ronald P. Cheffer, Assfstant Vice President TBB FXRST. NATIONAL SANK OF BOSTONI 'not in its in54vidual capacity, hut No1oTy as Owner Tmsteo By:
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| IL PASO,ELRCTRXC COMPANY
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| Exhibit A .to 0he Agreement ESCROW AGREEMENT
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| .Dated, as of December 31, 1987 between CHEMICAL BANK, Escrow Agent and EL PASO ELECTRIC COMPANY 1021. 7500. 2.7,04. 13: 20
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| p 41
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| TABLE OF CONTENTS
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| ~Pe ARTICLE I DEFINITIONS Section. 1.1. Certain Defined Terms. . . . . . . . . . . . 1 ARTICLE II APPOINTMENT OF AGENT AND CREATION OF ESCROW ACCOUNT',
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| Section 2.1. Appointment of Agent. . . . . . . ., . . . . . 3 Section 2.2. The Escrow Account. . . . . . . . . . . . . . 3 Section 2.3. Statement of Purpose. . . . . . . . . ... . . 4
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| ,ARTICLE III LEASE PROCEEDS DEPOSIT BY THE COI1PANY Section 3..1. Lease Proceeds Escrow Deposit. . ... . . . . 4 ARTICLE IV TRANSFER AND DEPOSIT 'BY THE COMPANY OF EXISTING INVESTMENTS Section 4.1. Transferred Investments Escrow Deposit. . . . 4 ARTICLE V INVESTMENTS AND PAYMENTS BY AGENT Section 5.1. Payments. by Agent to Company from Lease Proceeds, Escrow Sub-Account. . . . . . . . . 5
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| TABLE OF CONTENTS, Continued Pacae Section 5.2. Monthly Disbursement from both Sub-accountst ~ ~ ~ 0 ~ ' ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 6 Section 5.3. Investments; Agreement as to Value of Clauses 6, 7 and 8 on December 31, 1988... 7 Section 5.4. Valuation of Investments; Payment of Deficiency. . . . . . . . . . . . . . . . . . 8 ARTICLE VI CONCERNING THE AGENT Section 6.1. Duties of Agent. .10 Section 6.2. Liability. .10 Section 6.3. Delivery of Documents and Further Acts. .10 Section 6.4. Legal Proceedings.
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| Section 6.5. Resignation; Appointment of Successor.
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| Section 6.6. Indemnification.
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| ARTICLE VII MISCELLANEOUS Section 7.1. P'ayments. ~ 12 Section 7.2. Termination. .12 Section 7.3. Amendments, Etc. .12 Section 7.4. Addresses for Notices, Etc. .12 Section 7.5. Successors and Assigns. .13 Section 7.6. Severability of Provisions. ~ ~ 13
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| Section 7.7. Headings, etc. .13
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| TABLE OP CONTENTS, Continued Pacae Section 7..8. Governing Law. .. . . . . . . . . . . . . . .13 Section 7.9. Counterpart Execution. . . . . . . ., . . . .13
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| ESCROW AGREEMENT ESCROW AGREEMENT, dated as of December 31, 1987, among CHEMICAL BANK, a New York banking corporation (the Agent), and EL PASO ELECTRIC COMPANY, a Texas corporation (th'ompany).
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| WITNESSETH:
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| WHEREAS, pursuant to eight separate Commitment Agreements, dated as of December 31, 1987 with each of the Owner Participants (as described in Schedule I hereto) and the related Owner Trustee, the Company has agreed to establish and maintain an escrow account of certain moneys and securities (such terms and all other capitalized terms used herein having the meanings set forth or referred to in Section 1 hereof) until such time as Acceptable Letters of Credit are obtained; and WHEREAS, the Commitment Agreements contemplate that certain moneys and securities are to be held in an escrow account to be established with the Agent and are to be disbursed by the Agent pur-suant to directions from the Company until the occurrence of certain events, all in accordance with the terms and conditions set forth herein; and WHEREAS, the Company desires that the E.gent be appointed as escrow agent, and the Agent desires to accept .uch appointment, all in accordance with the terms and conditions se= forth herein.
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| NOW, THEREFORE, in consideration of the mutual agreements herein contained and of other good and valu,able consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows:
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| ARTICLE I DEFINITIONS SECTION 1.1. Certain Defined Terms. As used in this Agreement and unless otherwise expressly indicated, or unless the context clearly requires otherwise:
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| (a) The terms Agent and the Company have the meanings assigned in the caption of this Agreement.
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| (b) The following terms have the respective meanings set forth below (such meanings to be equally applicable to both the sin-gular and plural forms of the terms defined):
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| Acceptable Letter of Credit means a letter of credit complying with the requirements therefor a set forth in
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| 1021. 7500. 2704. 13: 20
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| II
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| the relevant Commitment Agreement, which toe Company has agreed to provide to each August Owner Participant.
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| August Owner Participants means each of the six enti-ties listed in Schedule I hereto, each as an owner partici-pant under its related August Participation Agreement.
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| August Participation. Agreement(s) means each of six separate Participation Agreements, dated a- of August 1, 1986, as amended by Amendment No. 1, dated October 1, 1986 among the Company, El Paso Funding Corporation, the Owner Trustee, First City National Bank of Houston, as Indenture Trustee, and each August Owner Participant.
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| Commitment Agreements means the eight separate Agreements, dated as of December 31, 1987, by and between El Paso, the related Owner Trustee and each of the Owner Participants.
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| December Participation Agreement(s) means the Participation Agreement dated as of December 1; 1986, among the Company, El Paso Funding Corporation, the Owner Trustee, First City National Bank of Houston, as Indenture Trustee and Ch'rysler Financial Corporation and the Participation Agreement, dated as of December 1, 1986, among the Company, El Paso Funding Corpora'=ion, the Owner Trustee, First City National Bank of Houston, as Indenture Trustee and Commercial Federal Investmen Corporation.
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| El Paso Obligations means the principa'~ amount of the indebtedness of the Company set forth i>> Schedule III hereof.
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| Escrow Account means said term:is defined in Section 2.2 hereof.
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| Escrow Sub-accounts means the Transferred Investments Escrow Sub-account and the Lease Proceeds Escrow Sub-account, collectively.
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| Lease Proceeds Escrow Deposit means said term as defined in Section 3.1 hereof.
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| Lease Proceeds Escrow Sub-Account means said term as defined in Section 2.2 hereof.
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| Owner Participant(s) means the August Owner Participants and Chrysler Financial Corporation and 1021.7500.2704'.13:20
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| Commercial Federal Investment Corporation, as Owner Participants under the December Participation Agreements.
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| Owner Trustee means The First National Bank of Boston, as trustee for an Owner Participant under ea h of six sepa-rate Trust Agr'eements, dated as of August l, 1986 and two separate Trust Agreements, dated as of December 1, 1986.
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| Participation Agreements means the August Participation Agreements and the December Participation Agreements.
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| Permitted Investments means the certificates, obliga-tions and investments set forth in Schedule II hereto, the investments constituting the Transferred Investments Escrow Deposit and reinvestments of income, dividends and capital gains resulting prom the nondiscretionary reinvestment fea-ture of any of the investments listed in clauses (ii),
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| (iii) and (iv) of the first paragraph of Section 4.1 hereof.
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| Transferred Investments Escrow Deposit means said term as defined in Section 2.2 hereof.
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| Transferred Investments Escrow Sub-account means said term as defined in Section 2.2 hereof.
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| (c) As used herein, any capitalized term not otherwise defined herein has the meaning assigned to such term in the respec-tive Participation Agreements.
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| ARTICLE XX APPOINTMENT OF AGENT AND CREATXON OF ESCRCN ACCOUNT SECTION 2.1. Appointment of Agent. For the purposes and subject to the terms and conditions set forth in this Agreement, the Company hereby appoints Chemical Bank as escrow agent, and Chemical Bank hereby accepts such appointment.
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| SECTION 2.2. The Escrow Account. The Agent shall estab-lish and maintain for the benefit of the Owner Participants an Escrow Account (the Escrow Account), within which there shall be two sepa-rate sub-accounts 'to be known as the Lease Proceeds Escrow Sub-account (the Lease Proceeds Escrow Sub-account) and the Transferred Investments Escrow Sub-account (the Transferred Investments Escrow Sub-account). The Agent shall deposit in the Escrow Account (i) for 1021. 7500. 2704. 13: 20
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| credit to the Lease Proceeds Escrow Sub-account, any Lease Proceeds Escrow Deposit made by the Company to the Agent pursuant to Section 3.1 hereof, and (ii) for credit to the Transferred Investments Escrow Sub-account, the Transferred Investments Escro~ Deposit made by the Company to the Agent pursuant to Section 4.1 hereof. So long as any amounts remain in the Escrow Account, such amounts shall be consid-ered as, and shall be and remain, the property of the Company. The Agent shall invest or re-invest any amounts in the Escrow Account and make applications thereof as provided in Art-cle V hereof. The Escrow Account shall be funded by the deposits by the Company to the appropriate sub-accounts in the manner describ d herein.
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| SECTION 2.3. Statement of Purpose. The Company represents that the purpose of this Agreement and the creation and establishment of the Escrow Account is to pay or provide for the payment of the El Paso Obligations and certain short-term indebtedness of El Paso in accordance with Section 5.1(b) hereof.
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| ARTICLE III LEASE PROCEEDS DEPOSIT BY THE COMPANY SECTION 3.1. Lease Proceeds Escrow Deposit. The Company hereby represents that it has deposited with the Agent $ 163,000,000 for deposit by the Agent in the Lease Proceeds Escrow Sub-account.
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| . ARTICLE IV TRANSFER AND DEPOSIT BY THE COMPANY OF EXISTING INVESTMENTS SECTION 4.1. Transferred Investments Escrow Deposit.
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| Subject to the terms and provisions of this Agreement, the Company hereby agrees that by February 1, 1988 it will cause to be deposited into the Transferred Investments Escrow Sub-Account by change of account reference to that of the Agent or assignment of all right, title and interest of the Company to the Agent (exclusive of any obligations or liabilities of the Company) as the case may be, of the following (collectively, the Transferred Investments Escrow Deposit):
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| (i) Account of El Paso Electric Co., Account No. 9-6191-03 Ol at MBank Houston, P.O. Box 2629, Attn: Capital Markets Division, Houston, Texas; (ii) The limited partnership interest of the Company in and'o the Weiss Qualif ied Income Fund Limited
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| 0 Partnership I, obtained on November 13, 1986 .pursuant to the Weiss Qualif ied Income Fund Limited Partnership I Amended and Restated Agreement of Limited Partnership, dated as of September 9, 1986; (iii) Account of El Paso Electric, Ac .ount No. 530-97061 at Merrill Lynch, Pierce, Fenner 6 Smith Incorporated, One Liberty Plaza, 165 Broadway, New York, NY 10080; and (iv) Account of El Paso Electric Company, Account No.
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| 30 B Z0009 354 at Kidder, Peabody & Co., Incorporated, 20 Exchange Place, New York, NY 10005.
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| The Agent is hereby authorized by the Company to enter into any arrangement or agreement (including but not limited to, manage-ment agreements) as the Company may determine is necessary to evi-dence ownership of the foregoing investments by the Agent.
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| The Company represents that the aggregate "book value" as of the end of November, 1987 of the Transferred Investments Escrow Deposit was not less than $ 135 million.
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| Company Notwithstanding the foregoing, fails to consummate any of the if for any reason the transfers, in whole or in part, to the Agent referred to in clauses (i) .-.hrough (iv) of the first paragraph of this Section 4.1, this such failure shall not consti-tute a breach of, or default under, Agreement, so long as the Company shall have on deposit in the Transferred Investments Escrow Sub-Account with the Agent on February 1, 1988, moneys or securities having an aggregate "book value" as of the end of November, 1987 of not less than $ 135 million.
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| ARTICLE V INVESTMENTS AND PAYMENTS BY AGENT SECTION 5. 1. Payments by Agent to Company from Lease Proceeds Escrow Sub-Account. (a) In order to provide for the pay-ment of the El Paso Obligation that is to be paid on or prior to January 31, 1988, and prior to the valuation of the money and securi-ties in the Escrow Account, upon the receipt by the Agent (with copies to each Owner Participant) from the Company of a request, in writing for disbursement, the Agent shall pay to the party indicated in the written request of the Company in immediately available funds, out of the funds then on deposit in the Lease Proceeds Escrow Sub-account, an amount equal to the amount that is dye and owing to The Bank of New York as a prepayment of the El Paso Obligation for which 1021. 7500. 2704. 13: 20
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| payment is due in January 1988. Such request by the Company to the Agent pursuant to this Section 5.1 shall specify (i) the applicable prepayment date and (ii) wire or transfer instructions.
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| (b) The Agent will prepare a market valuation of all moneys and securities on deposit in the Escrow Accounc in accordance with the requirements of Section 5.4 hereof within 10 calendar days fol-lowing receipt by the'gent of all monthly closing valuations for the month of January 1988. Upon completion of such valuation, the Agent shall promptly provide a certificate to the Company and each of the Owner Participants setting forth the value of such moneys and securities. To the extent 'that the amount of such market valuation exceeds $ 243, 100, 000, upon receipt of such certificate of valuation from the Agent, the Company shall deliver a written request to the Agent (with copies to each Owner Participant), directing release of such excess to the Company for payment of indebtedness of the Company having a maturity of one year or less specified in such request, and upon receipt of such request the Agent shall release such excess to the Company. To the extent that the amount of such market valuation is less than $ 243, 100,000, the Company shall provide the Agent, within five business days after receipt of the certificate of valua-tion from the Agent, with money or Permitted Investments (with a market value as of the date of such valuation) sufficient to cover the deficiency.
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| SECTION 5.2. Monthly Disbursement from both Sub-accounts.
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| Except as specifically provided in Section 5.1 hereof, as soon as practicable following each monthly valuation pursuant to Section 5.4 hereof of the moneys and securities on deposit in the Escrow Account, amounts on deposit in the Escrow Account shall be disbursed monthly in accordance with and in amounts as set forth in a written certifi-cate of the Company (with copies of such certificate delivered to each Owner Participant) specifying the applicable payment date, payee, sub-account and wire or transfer instructions: first, to the party named in such certificate of the amount as set forth therein in order to permit the payment of El Paso Obligations with a Payment Date as determined in accordance with Schedule III hereto within 45 days after the date as of which the Escrow Account is valued and then second to the Company all amounts on deposit in the Escrow Account in excess of the amount necessary to pay the principal amount of the remaining El Paso Obligations, determined by reference to Schedule III hereto and confirmed in the certificate of the Company requesting such disbursement.
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| Notwithstanding the foregoing the Company may direct the Agent to make a disbursement from the Escrow Account solely for the purposes of paying an El Paso Obligation valuation and disbursement procedure if heretofore for any reason the described does not provide for timely and adequate payment of any such El Paso 1021. 7500. 2704. 13:.20
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| Obligation and such direction of the Company shall expressly so state. The Agent shall be entitled to liquidate any investments held in the-Escrow Account in order to provide for payment, of the El Paso Obligations or any other payments in accordance herewith. The Agent shall have no liabil'ity for losses resulting from the liquidation of securities on deposit in the Escrow Account.
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| SECTION 5.3. Investments; Agreement as to Value of Clauses 6, 7 and 8 on December 31, 1988. (a) The Agent shall invest and reinvest (which shall include the application of (A) the proceeds of maturing investments and (B) the sale of investments) the moneys in the Escrow Account only in Permitted Investments and shall sell investments in the Escrow Account, as specifically identified in a written direction of the Company which shall, in the case of any such investment or reinvestment expressly state that each such investment is a Permitted Investment and further that such Permitted Investment is in compliance with the limitations set forth in the next sentence, it being understood that the Agent, shall have no duty to monitor such compliance; provided, however, that such identification of the investment or reinvestment and certification as to compliance with the limitations set forth in the next sentence shall not be appli-cable to the nondiscretionary reinvestment feature of the investments described in clauses (ii), (iii) and (iv) of the first paragraph of Section 4. 1 hereof. Any such investments and reinvestments shall be subject to the following limitations:
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| (i) no investment or reinvestment shall be made in any of clauses 6, 7 and 8 contained in Schedule II hereto if as a result of such investment or reinvestment (a) at the date thereof, but no later than December 31, 1988, the total aggregate amount invested pursuant to clauses 6, 7 and 8 contained in Schedule II hereto would exceed the lesser of (x) sixty percent (60>) of the market value of the amounts then on deposit in the Escrow Account and (y) the total so invested at any time immediately prior to such investment or reinvestment; provided, however, that for purposes of determining compliance with this subclause (y),
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| there shall be excluded from the total aggregate amount invested pursuant to clauses (6), (7') and (8) of Schedule II hereto any amounts attributable to the invest-ment and reinvestment of income, dividends and capital gains resulting from the nondiscretionary reinvestment fea-ture of any of the investments listed in clauses (ii),
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| (iii) and (iv) of the first paragraph of Section 4.1 on deposit in the Transferred Investment Escrow Sub-Account, and (b) at the date thereof, but only after December 31, 1988, the total aggregate amount invested pursuant to such clauses would exceed twenty-five percent (25%) of the 1021.7500.2704.13:20
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| market value of the amounts then on deposit in the Escrow Account; (ii) no investment or reinvestment in Permitted Investments shall be made if the result thereof would be to cause any o f clauses 1, 3, 4, 5, 9 and 10 contained in Schedule II hereto to exceed twenty-five percent (25:) of the market value of the amounts on deposit in the Escrow Account; and (iii) the average life of any investment (other than investments described in clause 2 contained in Schedule II hereto) shall not exceed seven years.
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| (b) The Company agrees that the market value as of December 31, 1988 of investments in the Escrow Account (including the Transferred Investments Escrow Deposit) in clauses 6, 7 and 8 con-tained in Schedule II it that hereto will not exceed $ 45 million. The will attempt to undertake an orderly Company represents liquidation of the Transferred Investments Escrow Deposit so as to be in a position to comply with this Article V. The Company anticipates that, under current market conditions and recognizing that sale of investments will be designed to protect the Company from incurring any losses due to such investments, reductions, within the bands and for the quarters of calendar year 1988 indicated below, of the Transferred Investments-Escrow Deposit would b achievable:
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| 1988 Reduction uarter 1st 20 to 45 2nd 20 to 30 3rd 30 to 20 4th 38 to 13 Total for 1988 SECTION 5.4. Valuation of Investments; Payment of Deficiency. The Agent shall cause a monthly fair market. valuation of the Escrow Account .to be undertaken. In undertaking its obligation to make a monthly valuation of the Escrow Account, (i) the Agent shall be entitled to assume that the monthly market valuations fur-nished to the Agent of the investments held in the Transferred Investments Escrow Sub-Account shall constitute the market value of any such investments and (ii) to the extent the Agent is unable to value any Permitted Investments in accordance with its customary practice as a corporate trustee, the Company hereby agrees to promptly provide the Agent with, and the Agent shall be entitled to rely upon, an independent market valuation of any such investment.
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| The Company agrees to cause the monthly market valuations of the 1021. 7500. 2704. 13: 20
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| 0 investments constituting the Transferred Investments Escrow Sub-Account to be sent directly to the Agent. Copies of all such valuations by the Agent shall be sent to the Owner Participants and the Company.
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| The Agent shall undertake such valuation of the Escrow Account monthly, commencing in February, 1988, such valuation to be as of the end of the immediately preced'ing month and in no event shall such valuation be completed later than ten calendar days after receipt by the Agent of the monthly valuation report for all such Permitted Investments on deposit in the Transferred Investments Escrow Subaccount (including any monthly valuation report provided pursuant to the second sentence of the first paragraph of Section 5.4 hereof) . In connection with its valuation of the Escrow Account, the Agent shall deduct from the valuation of the investments on deposit in the Transferred Investments Escrow Sub-Account that amount which represents the aggregate value attributable (determined on a cumula-tive basis, i.e., including the month of valuation and preceding months) to reinvestments of income, dividends and capital gains resulting from the nondiscretionary reinvestment feature of any of the investments listed in clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof. For purposes of the monthly valua-tion only, any proceeds derived from a sale or upon maturity (other than pursuant to the nondiscretionary reinvestment feature of any of the investments listed in clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof) of any investaent made pursuant to clauses (ii), (iii) and (iv) of the first paragraph of Section 4.1 hereof shall be allocated to reducing the aggregate value, if any, of the investments in the Transferred Investments Escrow Sub-Account attributable to reinvestments. of income, dividends and capital gains resulting from the nondiscretionary reinvestment feature of any such investment, which aggregate value was deducted from the valuation of investments on deposit in the Transferred Investments Escrow Sub-Account pursuant to the preced'ing sentence (it heing understood that an amount equal to any such reduction, except to the extent that such amount was otherwise withdrawn from the Escrow Account pursuant to Section 5.2 hereof, shall be included in the Transferred Investments Escrow Sub-Account for purposes of the monthly valuation thereof).
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| The Agent shall derive the amount attributable to each month repre-senting such reinvestment from the monthly market valuations fur-nished to the Agent with respect to such investments and if such amount cannot be derived from. such valuations, the amount attribut-able to such month and the aggregate to be so deducted shall be as directed in writing by the Company to the Agent, copies of which shall be furnished to the Owner Participants, together with the cal-culations and data upon which such direction is based, all as certi-fied by the Chief Financial Officer of the Company. To the extent the amount, of such valuation of the Escrow Account, as adjusted for the amount, if any, to be deducted from such monthly valuation as 1021.7500.2704.13:20
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| provided in this paragraph, is less than the principal amount of the remaining El Paso Obligations which are schedu'ed to come due more than forty-five (45) days subsequent to such valuation, the Company shall provide the Agent within five business days after receipt from the Agent of such monthly valuation with money or Permitted Investments (with a market value as of the date of such valuation) sufficient to cover the deficiency. The Agent shall notify the Owner Participants in writing of the date and receipt by the Agent of any money or Permitted Investments provided to meet such deficiency.
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| ARTICLE VI CONCERNING THE AGENT SECTION 6.1. Duties of Agent. The Agent shall have no duties or responsibilities other than those expressly set forth in this Agreement, and shall have no duty to enforce any obligation of any person to make any payment or delivery, or to direct or cause any payment or delivery to be made, or to enforce any obligation of any person to perform any other act or to perform any calculations except as herein expressly set forth. In addition, the Agent shall have no duty to make any payment under this Agreement from its own funds.
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| SECTION 6.2. Liability. The Agent shall not be liable for any action taken or omitted by it, or any, action suffered by it to be taken or omitted, in good faith and in the exercise of its own best judgment, excepting only its own willful misconduct or gross negli-gence, and may,rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion and advice of counsel (including counsel selected by the Agent), statement, instru-ment, report or other instrument or document (not only as to its due execution and the validity and effectiveness thereof, but also as to the truth and acceptability of any information therein contained) which is believed by the Agent to be genuine and to be signed (or in the case of oral communication, given) by the proper person or persons. The Agent shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement or any of the terms hereof, unless expressly provided for herein and delivered as provided in this Agreement.
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| SECTION 6.3. Delivery of Documents and Further Acts.
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| From time to time on and after the date hereof, the Company shall deliver or cause to be delivered to the. Agent such further documents and instruments and shall do and cause to be done such further acts as the Agent may reasonably request (it being understood that the Agent shall have no obligation to make any such request) to carry out more effectively the provisions and purposes of this Agreement, to 1021.7500.2704.13:20
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| 0 evidence compliance herewith or to assure in acting hereunder.
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| itself that it is protected SECTION 6. 4. Legal Proceedings. The Agent sha 1 l not be required to defend any legal proceedings which may be instituted against it in'espect of the subject matter of this Agreement unless requested to do so by the Company and indemnified to its satisfaction against the cost and expenses of such defense. (.'.ncluding counsel and investigatory fees) by the Company and shall not be required to institute legal proceedings of any kind.
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| SECTION 6.5. Resignation; Appointment of Successor. The Agent (or any successor escrow and paying agent) may resign at any time and be discharged from its duties as escrow and paying agent under this Agreement by giving to the Company and the Owner Participants at least 30 days'otice thereof, such resignation to be effective on the date of appointment of a successor escrow and paying agent as hereinafter provided. As soon as practicable after any such resignation, the Agent, shall turn over to a successor escrow and paying agent appointed by the Company all monies and property held hereunder upon presentation of the document appointing such successor escrow and paying agent and its acceptance of such appointment. If no successor escrow and paying agent is so appointed within the sixty-day period following such notice of resignation, the Agent shall deposit all monies and funds held hereunder with the Supreme Court of the State of New York for the County of New York (together with a petition to said Court for the appointment of a successor to act until such time-, if any, as a successor shall have been appointed as hereinbefore provided). Upon turning over to the successor escrow and paying agent or to the Supreme Court of the State of New York as aforesaid, all monies and property held hereunder, the predecessor escrow and paying agent shall be released of any further responsibil-ity hereunder. Any successor escrow and paying agent shall be a bank or trust company organized under the laws of the United States or any jurisdiction thereof, having a combined capita'nd surplus of at least $ 250, 000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Agent hereunder upon reasonable or customary terms.
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| SECTION 6.6. Indemnification. The Company agrees that the Agent, shall not be liable for any matter or thing arising out of the performance by the Agent of its obligations under this Agreement, except as provided in Section 6.2 hereof. The Company agrees to indemnify the Agent, and to hold the Agent harmless, from and against any and all liability, loss, damage or expense (including reasonable attorneys'ees and actual out-of-pocket expen-es) which the Agent may or might incur by reason of this Agreement, or for any action taken by the Agent hereunder, or by reason or in defense of any and 0 1021.7500.2704.13:20 0
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| all claims and demands whatsoever which may be asserted against the Agent arising out of this Agreement.
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| ARTICLE VII MISCELLANEOUS SECTION 7.1. Payments. Payments to or upon the direction of the Company by the Agent pursuant to Article V hereof shall be made in accordance with such written instructions as the Company may provide to the Agent (with copies to the Owner Participants) from
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| .time to time for such purposes. Whenever any payment to be made pur-suant hereto shall be required to be made on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day.
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| SECTION 7.2. Termination. This Agreement shall terminate upon the earliest to occur of (i) receipt .by tne Agent, of written notice from each Owner Participant that as to such Owner Participant this Agreement is terminated, (ii) disbursement by the Agent of all of the payments to be made by the Agent under Article V hereof with respect to the El Paso Obligations and (iii) receipt by the Agent of joint notice from the Company and each, of the Owner Participants with respect to such termination. Upon the termination of this Agreement as aforesaid, any securities and moneys on deposit in the Escrow Account shall be applied at the direction of the Company.
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| SECTION 7.3. Amendments, Etc. No amendment to this Agreement shall be made or be effective without the written consent of the Owner Participants. No amendment, modish'ication, termination or waiver of any provision of this Agreement shall in any event be effective unless the same shall be in writing and signed by the par-ties hereto, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment of any other agreement or instrument shall affect the Agent or its duties hereunder. No notice to or demand on any party hereto in any case shall entitle such party to any other or further notice or demand in similar or other circumstances unless herein otherwise provided.
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| SECTION 7.4. Addresses for Notices, Etc. Except as oth-erwise expressly provided herein, all notices and other communica-tions provided for hereunder shall be in writing and mailed (postage prepaid), hand delivered or sent by overnight courier, William J. at its at if North to the Company, c/o Johnson address 303 Oregon Street, P.O. Box 982, El Paso, Texas 79960, with a copy similarly delivered to Kemp, Smith, Duncan 6 Hammond, 2000 MBank Plaza, P. O. Drawer 2800, El Paso, Texas 79999, Attention: Dane George, 1021.7500.2704.13:20
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| Esq., and if to the Agent, at its address at 55 Water Street, New York, New York 10041, Attention: Corporate Trustee Administration, with a copy similarly delivered to Willkie Farr Gallagher, 153 East E.
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| 53rd Street, New York, New York 10022, Attention: Brian O'rien, Esq., and, if to the Company or the Agent, with copies to each of the Owner Participants at its address specified in Schedule I hereto, with a copy, similarly delivered to Cravath, Swaine & Moore, One Chase Manhattan Plaza, New York, N.Y. 10005, Attention: Richard M. Allen, Esq., or, as to any of the foregoing, at such other address as shall be designated by such person in a written notice to the others. All such written notices and communications shall be effective when received at the address specified as aforesaid.
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| n SECTION 7.5. Successors and Assigns. All of the provi-sions of this Agreement shall be binding upon and inure to the bene-fit of the parties hereto and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement other than to a per-mitted transferee under the Participation Agreements. Upon such assignment or transfer, the Company shall notify the Agent, whereupon the Agent shall recognize such assignment or transfer.
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| N SECTION 7.6. Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable in the State of New York or in any jurisdiction in the United States which shall be applicable to this Agreement shall, as to the State of New York or such jurisdiction in the United States, be ineffective to the extent of such, prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceabil-ity of such provision in any other jurisdiction.
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| SECTION 7.7. Headings, etc. The heaijings o f various Articles .and Sections of this Agreement are for convenience of refer-ence only and shall not define or limit any of the terms and provi-sions hereof.
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| SECTION 7.8. Governing Law. This Agreement shall be gov-erned by, and construed in accordance with, the law of the State of New York.
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| SECTION 7.9. Counterpart Execution. This Agreement and any amendment to this Agreement may be signed in. any number of coun-terparts, each of which shall be an original, and all of which taken together shall constitute a single instrument, with the same effect as if the signatures thereto and hereto were upon the same instrument.
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| IN WITNESS'HEREOF, the parties hereto 'have caused this Agreement to be duly executed by their officers thereunto duly autho-rized as of the day and year first above written.
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| CHEMICAL BANK By:
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| Senior Trust Officer EL PASO ELECTRIC COMPANY By:
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| Vice President 1021. 75'00. 2704 .'1'3'. 20
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| 41 il II
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| SCHEDULE I Commercial Federal Investment Corporation Jeff Bainbridge Commercial Federal Investment Corporation 1300 Commercial Federal Tower 2120 South 72nd Street Omaha, Nebraska 68124 Chrysler Financial Corporation Chrysler Financial Corporation Greenwich Offi;ce Park I Greenwich, Connecticut 06836 Leasing and Investment Services
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| 'ttention: Mike Abandond Palantine Hills- Leasing, Inc.
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| Palantine Hills Leasing, Inc.
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| 1415 S. Roselle Road Palantine, IL 60067 Attention: President, with copies to Household'ommercial Financial Services Attention: Lee Wyatt and Julia Sarron, Esq.
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| 2700 Sanders Road Prospect-Heights, IL 60070 1021. 7500. 2704. 13: 20
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| UCU Properties, Inc.
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| (Formerly, .Energy Investments, Inc.)
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| Donald Claar Suite 2000 Commercial Tower Kansas City, Missouri 64105 Alexander Hamilton Life Insurance Company of America Richard Egan, General Counsel Alexander Hamilton Life Insurance Company of America 33045 Hamilton Boulevard Farmington Hills, Michigan Burnham Leasing Corporation Burnham Leasing Corporation 55 Broad Street New York, New York Attention: Dianne Rudo 1021.7500.2704.13:20'
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| SCHEDULE II Certificates of deposit maturing within 180 days and issued by any Federally insured commercial bank; provided, however, that if the face amount of any such Certificate of Deposit shall be
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| $ 1,000,000 or more, the issuing bank shall have a capital and surplus exceeding $ 500,000,000 and a senior debt rating of not Below the Level of Investment Grade; 2 ~ Readily marketable obligations issued or guaranteed by the United States Government or issued by the Government National Mortgage Association, the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation;
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| : 3. Repurchase obligations maturing within 30 days with respect to obligations of the type described in Clause 2 above issued by any Federally insured commercial bank; provided, however, that if the face amount of such repurchase obligation is $ 10,000,000 or more, the issuing bank shall have a capital and surplus exceeding $ 500,000,000 and a senior debt rating of not Below the Level of Investment Grade; 4 ~ Repurchase obligations maturing within 30 days with respect to obligations of the type descri.'bed in Claus 2 above issued by any nationally recognized dealer which reports to the Market Reports Division of the Federal Reserve Ba.ak of New York;
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| : 5. Investments in readily marketable money market funds managed by a nationally recognized fund manager, the assets of which fund (or the issuers thereof) are as described in Clauses 1, 2, 3, 4, or 9 herein;
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| : 6. Investments in readily marketable bonds, which are not Below the Level of Investment Grade, or bond funds managed by a. nationally recognized fund manager, the assets of wh'ch (or the issuers thereof) are not Below the Level of Investment Grade; 7' Investments in stock or stock funds managed by a nationally rec-ognized fund manager; 8 ~ Mortgage backed securities;
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| : 9. Commercial paper maturing within 180 days and having a rating of P-1 or better by Moody's Investors Service or A-1 or better by Standard & Poor's Corporation; or 10.. Investments iq municipal obligations, the issuers of which are not rated Below the Level of Investment Grade, or the obligations of which are backed by a Letter of Credit from a commercial bank as described in- Clause 1 above.
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| 1021.7500.2704.13:20
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| 0 "Below the Level of Investment Grade" means (i) in the case of Moody's Investors Service; a rating of''ess than Baa3 or the current equivalent, (ii) in the case of Standard & Poors Corporation, a rating of''ess than BBB- or -current equivalent z,nd (iii) in the case of Duff and Phelps,, a rating greater than ten. or the current equivalent.
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| 1021. 7.500'. 2704 13: 20
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| SCHEDULE III EL PASO OBLIGATIONS Principal Payment Amount Date Description
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| $ 25, 000, 000 Jan. 31, 1988 .Second mortgage bonds The Bank of New .York due June 1988,
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| $ 50,000,000 June 30, 1988 Second mortgage bonds The Bank of New York due June 1988
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| $ 6,100,000 July 20, 1988 4.25% First mortgage bonds due July 1988
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| $ 22,000,000 May 20, 1989 12.75% First mortgage bonds due May 1989
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| $ 25,000,000 Aug. 15, 1989 14.5: First mortgage bonds due August 1989
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| $ 50,000,,000 Nov. 20, 1989 14: First mortgage bonds due November 1989
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| $ 20,000,000 Dec.. 1, 1990 Long-term notes unsecured-The Bank of America
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| $ 70,000,,000 Mar. 1, 1991 Second mortgage bonds-The Bank of America.
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| 1021.7500.2704.13:20
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| Exhibit B AMENDMENT No. 2, dated as of December 31, 1987, to Facility Lease dated as of August 1, 1986, between THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity but solely as Owner Trustee (<<Lessor<<) under a Trust Agreement, dated as of August 1, 1986 with COMMERCIAL FEDERAL INVESTMENT CORPORATION, and EL PASO ELECTRIC COMPANY, as Lessee (<<L'essee<<) .
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| 'I The parties'ereto have previously entered into the Facility Lease (as heretofore amended, modified or supplemented, the
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| <<Facility Lease" ) providing for the lease by Lessor to Lessee of the Undivided .Interest and the Real Property Interest. The parties now desire to make certain amendments to the Facility Lease.
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| NOW, THEREFORE, in consideration of the premises and other good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows:
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| SECTION 1. Definitions. For purposes hereof, capital-ized terms used herein and not defined herein shall have the meanings ascribed thereto in Appendix A to the Facility Lease.
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| SECTION 2. Amendments. (a) Section 3(b). Section 3(b) is hereby amended by inserting at the end of a clause (iii), in lieu of ".", "; and<< and by inserting thereafter and before the next to last sentence of Section 3 (c) a new clause (iv) reading as follows:
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| (iv) in the event that the Lessee shall fail to provide on or before April 30, 1988, a letter of credit which complies with the terms of the .Agreement dated as of December 31, 1987 (the "Commitment Agreement" ), among the Lessee, the Lessor and the Owner Participant, a copy of which is annexed hereto, on each Basic Rent Payment Date, commencing October 1, 1988 and ending on the Basic Rent Payment Date .next following the earlier to occur of (A) the providing by the Lessee of such letter of credit and (B) the date as of which such letter of credit would have expired had it been in effect as required by the terms of the Commitment Agreement, an amount equal to .35% of Facility Cost multiplied by a fraction the numerator of which is the number of days from and including the preceding Basic Rent Payment Date (or, in the case of the Basic Rent Payment Date occurring on October 1, 1988, from and including April 30, 1988) to but excluding such Basic Rent Payment Date (or, if earli-er, to the date on which such letter of credit is pro-vided or the date such letter of credit would have. so expired), and the denominator of which is the number of days from and including the preceding Basic Rent 1021. 7500. 2754. 22: 4
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| Payment Date to but excluding such Basic Rent Payment Date.
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| (b) Section 7. Section 7 of the Facility Lease is hereby amended by inserting "(a) Liens." prior to .the existing paragraph and inserting the following at the end thereof:
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| (b) Retirement of Debt. Unless the Owner Participant shall otherwise consent, on or before each date set, forth in Schedule 8 hereto, the Lessee shall retire, legally defease or deposit with the lender or its trustee funds sufficient to retire the principal amount of the Debt set forth opposite the reference to such date on such Schedule.
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| (c) Merger, Sale, etc. Without the consent of the Owner Participant, the Lessee shall not; and shall not permit any of its subsidiaries to, convey, transfer or lease to any Person any asset except for fair value..
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| Without the consent of the Owner Participant, the Lessee shall err not, and shall not permit any of its subsidiaries to, (1) consolidate with any Person, (2) merge with or into any Person or (3) except for (i) payments, in accordance with normal dividend policy of the Lessee, of cash dividends to holders of common stock and preferred stock, (ii) exchanges of fixed assets for other fixed assets whose fair value is equal to or greater than the fair value of the fixed assets exchanged or (iii) conveyances, transfers or leases of assets for cash where such cash is to be recorded by convey, transfer, lease or dividend to any Person, the'essee, in any single transaction or series of related transac-tions, any asset or assets if the book value of such asset or assets, exceeds 54 of. its total assets as shown on the most recent consolidated balance sheet of the Lessee deliv-ed t o the .Own e r Participant pursua'nt to Sect'ion 10(b)(1)(i)(A), of the Participation Agreement; unless immediately after giving effect to such transaction:
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| (A) the Person who is the "Lessee" under the Facility Lease immediately following such consolidation, merger, conveyance, transfer,, lease or dividend (the "Surviving Lessee" ) shall be a corporation which (i) is organized under the laws of the United States of America, a state thereof or the District of Columbia, (ii) is a "public utility" under applicable law, (iii) is an ANPP Participant under the ANPP Participation Agreement with respect to Unit 2 (inqluding the
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| 0 0
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| Cl
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| Undivided Interest), (iv) shall have assumed each covenant and condition of the Lessee under the ANPP Participation Agreement and each other ANPP Project Agreement and (v) holds a valid and subsisting license f rom the NRC to possess Unit 2 (including the Undivided Interest);
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| (B) the Surviving Lessee, if other than the Lessee immediately prior to such transaction, shall execute.
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| and deliver to the Owner Participant an agreement, in form and substance reasonably satisfactory to the Owner Participant, containing the assumption by the Surviving Lessee of each covenant and condition of this Facility Lease, each other Transaction Document and each Financing Document to which the Lessee imme-diately prior to such transaction was a party immedi-ately preceding such transaction; (C) no, Default (other than a failure to deliver docu-ments and other information specified in Section 10(b) (1) (vi) of the Participation Agreement) and no Event of Default shall have occurred and be continuing, no Event of Loss shall have occurred and no Deemed Loss, Event shall have been declared; (D) the Bonds (or, if the Bonds are not then rated, the preferred stock of the Surviving Lessee) after giving effect to such transaction, (1) shall be rated at least "investment grade" by Standard & Poor's Corporation and Moody's Investors Service, Inc. and
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| (,2) shall have an investment rating by Standard &
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| Poor's Corporation and Moody's Investors Service, Inc. not less than one "smallest notch" below the rating assigned to the Bonds (or, if the Bonds are not then .rated, the preferred stock of the Surviving Lessee) immediately prior to such transaction (or, if neither of such rating organizations shall rate. the Bonds (or, if applicable, the preferred stock of the Surviving Lessee) at the time, by any nationally rec-ognized rating organization in the United States of America);
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| (E) the Surviving Lessee shall have a Net Worth equal to or greater than the Net Worth of the Lessee immedi-ately prior to such transactions and equal to or greater than $ 500,000,000; (F) the Surviving Lessee shall have, delivered to the Owner Participant and the Indenture Trustee an 1021.7500'.2754.22:4
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| 0 Cl
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| Officers'ertificate and an opinion, reasonably satisfactory to the Owner Participant, of counsel to the Surviving Lessee, each stating that (1) such transaction complies with this subclause (c) and (2) all conditions precedent to the consummation of such transaction have been satisfied and, any Governmental Action required in connection with such transaction has been obtained, given or accomplished; (G) the Surviving Lessee shall have delivered to the Owner Participant an opinion, reasonably satisfactory to the Owner Participant, of independent counseL to the Surviving Lessee stating that such. transaction would not result in a loss of any of the tax benefits described in Section 13(c)(1) of the Participation Agreement; (H) such transaction is otherwise permitted by and in compliance with the ANPP Participation Agreement; and (I) the New Coverage Ratio of the Surviving Lessee shall be at least 1.6 to 1.
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| Upon the consummation of such transaction the Surviving Lessee, if other than the Lessee, shall succeed to, and be substi-tuted for, and may exercise every right and power of, the Lessee immediately prior to such transaction 'under this Lease, each other Transaction Document and each Financing Document to which the Lessee
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| immediately prior to such transaction was a party immediately prior
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| to such transaction, with the same effect as if the Surviving Lessee had been named herein and therein. ~
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| (d) Incurrence of Debt. Without .the consent of the Owner Participant, the Lessee shall not, and shall not permit any of its subsidiaries (whether consolidated or unconsolidated) to, issue, assume or become liable in respect of (A) any Debt maturing more than one year after the date of such issuance, assumption or liability (including current maturities of Debt with .an original maturity of more than one year) if, immediately thereafter, (i) the total amount of all Debt of the Lessee and its sub-sidiaries (whether consolidated or unconsolidated) maturing more than one year after the date of such issuance, assump-tion or becoming liable (reduced by Cash Available for Investment) shall exceed 70% (or, at any time after January 1, 1992 when there is not in effect a letter of credit com-plying in al'l respects with the Commitment Agreement, 65%)
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| of New Consolidated Capitalization, in each case as shown on a pro forma consolidated balance sheet on and,as of the 1021.7500.2754.22:4
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| date of such issuance, assumption or becoming liable, or (ii) the New Coverage Ratio of the Lessee would be less than 1.6 to 1 or (B) any Debt maturing one year or less after the date of such issuance, assumption or becoming liable (excluding current maturities of Debt with an origi-nal maturity of more than one year) if, immediately there-after, the total amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) maturing one year or less after the date of such issuance, assumption or becoming liable shall exceed 12,5% of New Consolidated Capitalization, in each case as shown on a pro forma consolidated balance sheet, on and as of the date of such issuance, assumption or becoming liable. For purposes of the foregoing clause (A), there shall be excluded any Debt which has been legally defeased or for the payment of which funds equal to the principal amount of such Debt have been segregated in escrow and any refunding of the debt issued on December 31, 1987 by the lessors in the sale and leaseback transactions relating to Unit 3 at PVNGS shall not constitute the Lessee issuing, assuming, or becoming liable in respect of any Debt within the meaning of this subclause (d).
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| (e) Escrow Agreement,. The Lessee shall deposit with Chemical Bank as escrow agent (the "Agent" ) any amount required to be deposited under the Escrow Agreement dated as of December 31, 1987 between the Lessee and the Agent within 5 Business Days after notice from the Owner Participant and shall otherwise comply with its other obli-gations under such Agreement within 15 days after notice from the Owner Participant.
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| (f) Definitions. For purposes of 'this Section 7, the terms New Consolidated Capitalization and New Coverage Ratio shall be defined as follows:
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| (A) "New Coverage Ratio" shall mean the ratio of (x) the sum of (a) consolidated net income of the Lessee for the twelve-month period ending on a date no later than 135 days prior to the date as of which New Coverage Ratio is being determined plus (or minus) (b) all extraordinary items deducted (or added) in deter-mining said net income (for purposes of this defini-tion of New Coverage Ratio, any charge against income resulting from a write-off of utility plant pursuant .
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| to (i) an order of any governmental authority having jurisdiction or (ii) a provision for an estimated regulatory disallowance shall be deemed to be an extraordinary item deducted in determining said net 1021.7500.2754
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| ~ ~ '2:4
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| 0 income) plus (or minus) (c) all income taxes deducted (or tax credits added) in determining said net income minus (d) for all or any portion of such period ending on or prior to December 31, 1990, 50~ of "allowance for funds used during construction" (net of deferred taxes) as such item is referred to in the consolidated income statement of the Lessee and its subsidiaries) and, for all or any portion of such period ending after December 31, 1990, 100~ of such item plus (e) the sum of all interest and lease payments paid by the Lessee and its subsidiaries (whether consolidated or unconsolidated) during such twelve-month period to (y) total interest and lease payments that will be payable by the Lessee and its subsidiaries (whether consoli-dated or unconsolidated) during the twelve-month period following the date as of which New Coverage Ratio is being determined. There shall be excluded from interest and lease payments included under clauses (x) and (y) above (i) lease payments to the Rio Grande Resources Trust, (ii) lease payments under any operating lease of computers, office equipment or the like, the original term of which (including options to renew) is less than, five years and (iii) interest on Debt maturing one year or less from the date of incurrence thereof. There shall be excluded from interest and lease payments included under clause (y) above interest on Debt which has been legally defeased or for the payment of which funds equal to the principal amount. of such Debt have been segregated in escrow.
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| (B) "New Consolidated Capitalization" sha1 1 mean the total of consolidated capital and surplus of the Lessee plus the principal amount of all Debt of the Lessee and its subsidiaries (whether consolidated or unconsolidated) which matures more than one year after the date as of which New Consolidated Capitalization is being determined.
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| (c) Schedule 8'. Schedule 8 hereto is hereby added as Schedule 8 to the Facility Lease.
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| 1021.7500.2754.22:4
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| 0 Cl
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| SECTION 3. Miscellaneous (a) Effective Date of Amendments. The amendments set forth in Section 2 hereof shal'1 be and become effective upon the execution hereof by the parties hereto.
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| (b) Counterpart Execution. This Amendment No. 2 may-be executed in any number of counterparts and by each of
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| ,the parties hereto on separate counterparts; all such coun-terparts shall together constitute but one and the same instrument.
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| (c) Governing Law. This Amendment No. 2 has been negotiated and delivered in the State of New York and shall be governed by and be const~ed in accordance with the laws of the State of New York, except to the.actent that pursu-ant to the law of the State of Arizona such law is mandato-rily applicable hereto.
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| (d) Disclosure. Pursuant to Arizona Revised'tatutes Section 33-404, the beneficiary of the Trust Agreement is Commercial Federal Investment Corporation, a corporation.
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| The address of the beneficiary is 1300 Commercial Federal Tower, 2120 South 72nd S'treet, Omaha, Nebraska 68124, Attention: Jeff Bainbridge. A copy of the Trust Agreement is available for inspection at the offices of the Owner Trustee at 100 Federal Street, Boston, Massachusetts 02110, Attention of Corporate Trust Division.
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| 1021.7500.2754
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| Cl IN'ITNESS WHEREOF, each of t: he parties hereto has caused this Amendment No. 2 to be duly executed in New York, New York on December 31, 1987.
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| THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity, but solely as Owner Trustee under a Trust Agreement, dated as of August 1, 1986 with Commercial Federal Investment Corporation,
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| /,f</i!gi Senior Manager EL PASO ELECTRIC COMPANY, By ice President I
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| 1021.7500.2754.06:6
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| II STATE OF TEXAS )
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| ) ss.:
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| COUNTY OF EL PASO )
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| The foregoing instrument was acknowledged before me this 6th day of January, 1988 by William J. Johnson, a Vice President of EL PASO ELECTRIC COMPANY, a Texas corporation, on behalf of the corporation.
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| N ary Public
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| ~Ci-SCHEDULE 8 P SO OB 0 S Principal Payment Amount Date Description
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| $ 60 I 000 I 000 Jan. 31, 1988 16.204 First mortgage bonds due 2012
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| $ 25 I 000/ 000 Jan. 31, 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 50,000,000 June 30, I
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| 1988 Second mortgage bonds-The Bank of New York due June 1988
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| $ 6I100I 000 July 20, 1988 4.254 First mortgage'onds due July 1988
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| $ 22~000I 000 May 20, 1989 12.75% First mortgage bonds due May 1989
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| $ 25IOOOI 000 Aug. 15, 1989 14.54 First mortgage bonds due August 1989
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| $ 50,000, 000 Nov. 20, 1989 14% First mortgage bonds due November 1989
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| $ 20,000, 000 Dec. 1, 1990 Long-term notes - unsecured-The Bank of America
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| .$ 70, 000, 000 Mar. 1, 1991 Second mortgage bonds-The. Bank of America 1021.7500.2754.22:4
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