CENTRAL & SOUTH WEST CORP, U-1/A, 1994-03-14

CENTRAL & SOUTH WEST CORP
U-1/A, 1994-03-14
ELECTRIC SERVICES

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<PAGE> 1

File No. 70-8339

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 1 TO

FORM U-1 APPLICATION-DECLARATION

UNDER THE

PUBLIC UTILITY HOLDING COMPANY ACT OF 1935

______________________________________

CENTRAL AND SOUTH WEST CORPORATION

1616 Woodall Rodgers Freeway
P.O. Box 660164
Dallas, Texas 75202

(Names of companies filing this statement and
addresses of principal executive offices)

_____________________________________

CENTRAL AND SOUTH WEST CORPORATION

(Name of top registered holding company parent)

____________________________________

Stephen J. McDonnell
Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
P.O. Box 660164
Dallas, Texas 75202

M. Douglas Dunn
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, New York 10005

(Names and addresses of agents for service)

with copies to
George J. Forsyth & Joris M. Hogan
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, New York 10005

<PAGE> 2
Central and South West Corporation ("CSW"), a Delaware corporation
and a holding company registered under the Public Utility Holding Company Act
of 1935, as amended (the "Act"), hereby files this Amendment No. 1 to the
Form U-1 Application-Declaration in File No. 70-8339 for the purpose of
amending Item 6 in the following respects.

Item 6. Exhibits and Financial Statements.
Item 6 is hereby amended to file the following exhibits:

A-13 - Form of Reorganized EPE First Mortgage Bond Indenture,
including forms of bonds.

A-14 - Form of Reorganized EPE Second Mortgage Bond Indenture,
including forms of bonds.

A-15 - Form of Reorganized EPE Senior Debt Securities
Indenture, including forms of notes.

A-20 - Forms of Reorganized EPE Letter of Credit and
Reimbursement Agreements.

B-9.1 - Supplement to APS Settlement Agreement.

D-14.1 - Amended Findings of Fact.

<PAGE> 3
S I G N A T U R E
- - - - - - - - -

Pursuant to the requirements of the Public Utility Holding Company
Act of 1935, as amended, the undersigned company has duly caused this document
to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: March 14, 1994

CENTRAL AND SOUTH WEST CORPORATION

By: /s/ STEPHEN J. MCDONNELL
Stephen J. McDonnell
Treasurer

<PAGE> 1

INDEX OF EXHIBITS

EXHIBIT TRANSMISSION
NUMBER EXHIBIT METHOD
- ------- ------- ------------

A-13 Form of Reorganized EPE First Electronic
Mortgage Bond Indenture, including
forms of bonds.

A-14 Form of Reorganized EPE Second Electronic
Mortgage Bond Indenture, including
forms of bonds.

A-15 Form of Reorganized EPE Senior Electronic
Debt Securities Indenture,
including forms of notes.

A-20 Forms of Reorganized EPE Letter Electronic
of Credit and Reimbursement
Agreements.

B-9.1 Supplement to APS Settlement Agreement Electronic

D-14.1 Amended Findings of Fact Electronic

<PAGE> 1

EXHIBIT A-13

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

INDENTURE

_______________

EL PASO ELECTRIC COMPANY

STATE STREET BANK AND TRUST COMPANY

AS TRUSTEE

_________________

Dated as of , 1994

_________________

(FIRST MORTGAGE BONDS)

THIS INSTRUMENT GRANTS A SECURITY INTEREST BY A UTILITY

THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS

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

<PAGE> 2
Explanations of Dates and Amounts
[Not Part of the Indenture]

* Initial issuance date of bonds

** This amount will equal (1) the amount of bondable
property (determined on a net basis - i.e., net of
retirements and depreciation) of the Company existing on
the Effective Date, less (2) the amount of bondable
property that would be utilized as a basis for the
issuance of the Series A to C and Series X Bonds, if a
66-2/3% issuance test were applicable. For example,
using hypothetical numbers, the Company has bondable
property of $1.5 billion on the Effective Date and $400
million of bonds are issued (on the basis of $600 million
of bondable property), the number inserted will be $900
million ($1.5 billion of bondable property less $600
million of bondable property used).

*** First April 1st after initial issuance of bonds

**** These schedules are included for purposes of complying
with state law requirements and will list the property of
the Company specified in the relevant definition as of
the initial issuance date of bonds. Schedule A will
include all the real property of the Company (other than
as set forth in Schedule B). Schedule B will only
contain certain property, if any, in an immaterial
amount.

<PAGE> 3
EL PASO ELECTRIC COMPANY

INDENTURE DATED AS OF ___________, 1994

TABLE OF CONTENTS
Page

Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Preliminary Statement. . . . . . . . . . . . . . . . . . . . . 1
Property Conveyed. . . . . . . . . . . . . . . . . . . . . . . 2
After-acquired Property. . . . . . . . . . . . . . . . . . . . 3
Excepted Property. . . . . . . . . . . . . . . . . . . . . . . 4
Subject Clause . . . . . . . . . . . . . . . . . . . . . . . . 5
Habendum . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Grant in Trust . . . . . . . . . . . . . . . . . . . . . . . . 5
Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . 5

ARTICLE I

DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION. . . . . . . . . . 6

SECTION 1.01. Construction of Document. . . . . . . . . . . . 6
SECTION 1.02. Certain Defined Terms . . . . . . . . . . . . . 6
affiliate. . . . . . . . . . . . . . . . . . . . . . 6
amount of depreciable property . . . . . . . . . . . 6
application. . . . . . . . . . . . . . . . . . . . . 6
Board of Directors . . . . . . . . . . . . . . . . . 6
bondable property. . . . . . . . . . . . . . . . . . 7
bonds. . . . . . . . . . . . . . . . . . . . . . . . 7
Business Day . . . . . . . . . . . . . . . . . . . . 7
Company. . . . . . . . . . . . . . . . . . . . . . . 7
Commission . . . . . . . . . . . . . . . . . . . . . 7
control. . . . . . . . . . . . . . . . . . . . . . . 7
cost . . . . . . . . . . . . . . . . . . . . . . . . 7
Current Fair Value . . . . . . . . . . . . . . . . . 7
Daily Newspaper. . . . . . . . . . . . . . . . . . . 7
deposited cash . . . . . . . . . . . . . . . . . . . 7
Effective Date . . . . . . . . . . . . . . . . . . . 7
Engineer . . . . . . . . . . . . . . . . . . . . . . 7
Engineer's Certificate . . . . . . . . . . . . . . . 7
Excepted Encumbrances. . . . . . . . . . . . . . . . 8
Excepted Property. . . . . . . . . . . . . . . . . . 9
fair value to the Company. . . . . . . . . . . . . . 9
Funds. . . . . . . . . . . . . . . . . . . . . . . . 9
gross expenditures . . . . . . . . . . . . . . . . . 9
gross retirements of property. . . . . . . . . . . . 9
holder" or "bondholder . . . . . . . . . . . . . . . 9
Independent Engineer . . . . . . . . . . . . . . . . 9
lien hereof" and "lien of this
Indenture . . . . . . . . . . . . . . . . . . . 9
net earnings . . . . . . . . . . . . . . . . . . . . 10

<PAGE> 4
Net Earnings Certificate . . . . . . . . . . . . . . 10
net expenditures . . . . . . . . . . . . . . . . . . 10
Obligor. . . . . . . . . . . . . . . . . . . . . . . 10
Officers' Certificate. . . . . . . . . . . . . . . . 10
Opinion of Counsel . . . . . . . . . . . . . . . . . 10
Original Fair Value. . . . . . . . . . . . . . . . . 10
Outstanding. . . . . . . . . . . . . . . . . . . . . 11
person . . . . . . . . . . . . . . . . . . . . . . . 11
Plan . . . . . . . . . . . . . . . . . . . . . . . . 11
plant or property operated by others . . . . . . . . 11
Prepaid Liens. . . . . . . . . . . . . . . . . . . . 12
Prior Lien . . . . . . . . . . . . . . . . . . . . . 12
purchased property . . . . . . . . . . . . . . . . . 12
Required Percentage. . . . . . . . . . . . . . . . . 12
Resolution . . . . . . . . . . . . . . . . . . . . . 12
Responsible Officers . . . . . . . . . . . . . . . . 12
TIA. . . . . . . . . . . . . . . . . . . . . . . . . 12
title. . . . . . . . . . . . . . . . . . . . . . . . 13
Trustee. . . . . . . . . . . . . . . . . . . . . . . 13
Trust Estate . . . . . . . . . . . . . . . . . . . . 13
U.S. Government Obligations. . . . . . . . . . . . . 13
SECTION 1.03. Compliance Certificates and Opinions. . . . . . . . 13
SECTION 1.04. Amount to be Deposited to Pay or Redeem Bonds, etc. 14
SECTION 1.05. Certificate of Resolutions . . . . . . . . . . . . 15
SECTION 1.06. Incorporation by Reference of Trust Indenture Act . 15
SECTION 1.07. Indenture as Deed of Trust in New Mexico. . . . . . 15
SECTION 1.08. Indenture as Deed of Trust in Arizona . . . . . . . 15

ARTICLE II

THE BONDS. . . . . . . . . . . . . 16

SECTION 2.01. General Limitations; Bonds Issuable in Series . 16
SECTION 2.02. Date of and Interest on Bonds . . . . . . . . . 18
SECTION 2.03. Legends on Bonds. . . . . . . . . . . . . . . . 18
SECTION 2.04. Exchange of Bonds; Transfers. . . . . . . . . . 19
SECTION 2.05. Registration and Transfer of Bonds. . . . . . . 19
SECTION 2.06. Execution of Bonds. . . . . . . . . . . . . . . 20
SECTION 2.07. Temporary Bonds . . . . . . . . . . . . . . . . 20
SECTION 2.08. Lost, Destroyed or Mutilated Bonds. . . . . . . 21
SECTION 2.09. Certificate of the Trustee. . . . . . . . . . . 21
SECTION 2.10. Authorized Denominations. . . . . . . . . . . . 21

ARTICLE III

BOND FORMS. . . . . . . . . . . . . 21

SECTION 3.01. Forms Generally . . . . . . . . . . . . . . . . 21
SECTION 3.02. Trustee's Certificate of Authentication . . . . 27

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ARTICLE IV

ISSUANCE OF BONDS. . . . . . . . . . . 28

SECTION 4.01.Initial Issuance of Bonds . . . . . . . . . . . . 28
SECTION 4.01A.Terms of Initial Issues of Bonds . . . . . . . . 28
SECTION 4.01B. Certain Covenants for Bonds of Series A and
Series B . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.01C.Certain Provisions for Bonds of Series X . . . . 30
SECTION 4.02. Issuance of Bonds Upon Retirement of Bonds
Previously Outstanding Hereunder . . . . . . . 31
SECTION 4.03. Issuance of Bonds Upon the Basis of Property and
Property Additions . . . . . . . . . . . . . . 33
SECTION 4.04. Issuance of Bonds Upon Deposit of Cash With
Trustee; Withdrawal or Application of
Deposited Cash . . . . . . . . . . . . . . . . 39
SECTION 4.05. Net Earnings Certificate. . . . . . . . . . . . 40
SECTION 4.06. Documents to be Delivered . . . . . . . . . . . 42

ARTICLE V

PARTICULAR COVENANTS OF THE COMPANY . . . . . . 44
SECTION 5.01. Seizin and Warranty . . . . . . . . . . . . . . 44
SECTION 5.02. Payment of Principal, Premium and Interest;
Maintenance of Office. . . . . . . . . . . . . 45
SECTION 5.03. Regarding Paying Agent; Funds in Trust. . . . . 46
SECTION 5.04. Limitations on Liens; Payment of Taxes. . . . . 46
SECTION 5.05. To Insure . . . . . . . . . . . . . . . . . . . 48
SECTION 5.06. To Maintain Property, etc.. . . . . . . . . . . 49
SECTION 5.07. To Maintain Corporate Existence and Franchises. 50
SECTION 5.08. Repayment of Advances made by a Receiver, etc.. 50
SECTION 5.09. To Record and File Indenture and Supplemental
Indenture. . . . . . . . . . . . . . . . . . . 50
SECTION 5.10. To Furnish Opinions of Counsel as to Recording. 51
SECTION 5.11. Further Advances and After-acquired Property. . 52
SECTION 5.12. To Appoint a Trustee to Fill Vacancies. . . . . 52
SECTION 5.13. Periodic Examinations as to Maintenance . . . . 52
SECTION 5.14. Annual Statement by Officers as to Default. . . 55
SECTION 5.15. Maintenance and Renewal . . . . . . . . . . . . 55
SECTION 5.16. To Comply With Indenture. . . . . . . . . . . . 58

ARTICLE VI

BONDHOLDERS' LISTS AND REPORTS BY THE COMPANY
AND THE TRUSTEE . . . . . . . . . . . 58

SECTION 6.01. Company to Furnish Lists of Names and Addresses
of Bondholders . . . . . . . . . . . . . . . . 58
SECTION 6.02. Current Lists of Bondholders. . . . . . . . . . 58
SECTION 6.03. Company's Covenants as to Filing Reports. . . . 59
SECTION 6.04. Trustee's Reports . . . . . . . . . . . . . . . 59

<PAGE> 6
ARTICLE VII

REDEMPTION AND PURCHASE OF BONDS . . . . . . . 60

SECTION 7.01. Exercise of Option to Redeem. . . . . . . . . . 60
SECTION 7.02. Notice of Redemption. . . . . . . . . . . . . . 60
SECTION 7.03. Deposit of Cash to Redeem . . . . . . . . . . . 61
SECTION 7.04. Payment of Bonds Called for Redemption and
Cessation of Lien. . . . . . . . . . . . . . . . . 62
SECTION 7.05. Bonds to be Cancelled . . . . . . . . . . . . . 62

ARTICLE VIII

POSSESSION, USE AND RELEASE
OF MORTGAGED PROPERTY. . . . . . . . . . . . 62

SECTION 8.01. Company to Possess Property Until Default;
Disposal of Certain Property Without Release . . . 62
SECTION 8.02. Trustee to Release Property Upon Certain
Conditions . . . . . . . . . . . . . . . . . . . . 64
SECTION 8.03. Eminent Domain. . . . . . . . . . . . . . . . . . . 67
SECTION 8.04. Rights of Purchaser of Released Property. . . . . . 73
SECTION 8.05. Receiver or Trustee May Exercise Company's Rights . 67
SECTION 8.06. Withdrawal, Use and Application of Cash Deposited
with Trustee . . . . . . . . . . . . . . . . . . . . . 67

ARTICLE IX

REMEDIES IN EVENT OF DEFAULT . . . . . . . . . . . . 71

SECTION 9.01. Defaults. . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 9.02. Notice of Defaults. . . . . . . . . . . . . . . . . . . 72
SECTION 9.03. Acceleration of Maturity Date. . . . . . . . . . . . . 73
SECTION 9.04. Right of Entry and Application of Proceeds Received
by Trustee . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 9.05. Power of Sale Upon Default. . . . . . . . . . . . . . . 74
SECTION 9.06. Notice of Sale and Manner of Making Same. . . . . . . . 75
SECTION 9.06A. Operation of Power of Sale. . . . . . . . . . . . . . . 76
SECTION 9.07. Application of Proceeds of Sale . . . . . . . . . . . . 77
SECTION 9.08. Purchaser at Sale May Use Bonds as Payment. . . . . . . 78
SECTION 9.09. Principal and Interest Payable to Trustee After
Default; Proofs of Claim; Judgments. . . . . . . . . . 79
SECTION 9.10. Majority of Bondholders Entitled to Direct Trustee. . . 81
SECTION 9.11. Remedies Cumulative and Not Waived by Failure to Act . 82
SECTION 9.12. Rights of Bondholders to Sue. . . . . . . . . . . . . . 82

ARTICLE X

EVIDENCE OF RIGHTS OF BONDHOLDERS. . . . . . . . . 83

SECTION 10.01. Execution of Requests, etc. by Bondholders . . . . 83
SECTION 10.02. Registered Holders Treated as Absolute Owners. . . 84

<PAGE> 7
ARTICLE XI

DEFEASANCE. . . . . . . . . . . . . . . 84

SECTION 11.01. Release and Discharge of Indenture . . . . . . . . 84
SECTION 11.02. Defeasance of a Series of Bonds. . . . . . . . . . 86
SECTION 11.03. Payment of Deposited Cash to Company . . . . . . . 88

ARTICLE XII

IMMUNITY OF INCORPORATORS, OFFICERS, SHAREHOLDERS AND
DIRECTORS. . . . . . . . . . . . . . . 89
SECTION 12.01. Exemption from Personal Liability. . . . . . . . . 89

ARTICLE XIII

CONSOLIDATIONS, MERGERS, TRANSFERS AND SALES . . . . . . 90

SECTION 13.01. Merger, Consolidation or Sale. . . . . . . . . . . 90
SECTION 13.02. Successor to Succeed to Rights of Company. . . . . 92
SECTION 13.03. Limitation of After-Acquired Clauses . . . . . . . 93

ARTICLE XIV

CONCERNING THE TRUSTEE. . . . . . . . . . . . 94

SECTION 14.01. Capital and Surplus Requirement. . . . . . . . . . 94
SECTION 14.02. Acceptance of Trust and Duties by Trustee. . . . . 94
SECTION 14.03. Limitation on Liability of Trustee . . . . . . . . 94
SECTION 14.04. Recitals are by Company Alone. . . . . . . . . . . 95
SECTION 14.05. Exemption of Trustee from Personal Liability in
Case of Entry . . . . . . . . . . . . . . . . . . 96
SECTION 14.06. Trustee may Rely on Documents, etc.. . . . . . . . 96
SECTION 14.07. Trustee's Responsibility for Selection of Experts. 97
SECTION 14.08. Trustee may be Bondholder, etc.. . . . . . . . . . 97
SECTION 14.09. Cash to be Held in Trust . . . . . . . . . . . . . 97
SECTION 14.10. Trustee Compensation and Reimbursement . . . . . . 97
SECTION 14.11. Certificate of Officers of Company to Constitute
Proof . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 14.12. Trustee to Have Power to Give Notices. . . . . . . 99
SECTION 14.13. Trustee Acquiring Conflicting Interest . . . . . . 99
SECTION 14.14. Preferential Collection of Claims Against the
Company if Trustee Becomes a Creditor . . . . . . 99
SECTION 14.15. Trustee may Resign . . . . . . . . . . . . . . . . 99
SECTION 14.16. Trustee may be Removed . . . . . . . . . . . . . . 99
SECTION 14.17. Appointment of Successor Trustee . . . . . . . . .100
SECTION 14.18. Separate Trustee or Co-trustee may be Appointed . 101
SECTION 14.19. Conditions Upon Appointment of Separate Trustee
or Co-trustee or Successor Trustee. . . . . . . .101

<PAGE> 8
SECTION 14.20. Notices to Trustee . . . . . . . . . . . . . . . .102
SECTION 14.21. Trustee as Agent . . . . . . . . . . . . . . . . .103
SECTION 14.22. Successor Trustee to Execute Acceptance and
Become Vested with Estate . . . . . . . . . . . . . .103
SECTION 14.23. Consolidation or Merger of Trustee . . . . . . . .104

ARTICLE XV

CONCERNING PLEDGED SECURITIES. . . . . . . . . .104

SECTION 15.01. Pledged Securities Deposited with Trustee. . . . .104
SECTION 15.02. Voting . . . . . . . . . . . . . . . . . . . . . .105
SECTION 15.03. Income Before Event of Default . . . . . . . . . .106
SECTION 15.04. Payments Upon Dissolution, etc. of Issuer of
Pledged Securities. . . . . . . . . . . . . . . .107
SECTION 15.05. Renewal and Refunding. . . . . . . . . . . . . . .107
SECTION 15.06. Pledged Securities Not Basis of Issuance . . . . .107

ARTICLE XVI

SUPPLEMENTAL INDENTURES . . . . . . . . . . .108

SECTION 16.01. Supplemental Indentures to be Executed for
Specified Purposes. . . . . . . . . . . . . . . .108
SECTION 16.02. Modification of Indenture with Consent of
Bondholders . . . . . . . . . . . . . . . . . . .110
SECTION 16.03. Effect of Supplemental Indenture . . . . . . . . .112
SECTION 16.04. Opinion of Counsel as Evidence of Compliance . . .112
SECTION 16.05. Notations on Bonds; Provision for New Bonds. . . .112
SECTION 16.06. Supplemental Indenture to Conform to Trust
Indenture Act of 1939 . . . . . . . . . . . . . .112

ARTICLE XVII

BONDHOLDERS' MEETINGS. . . . . . . . . . . .112

SECTION 17.01. Meeting Called for Specified Purposes. . . . . . .112
SECTION 17.02. Meeting Called by Trustee. . . . . . . . . . . . .113
SECTION 17.03. Meeting Called by Company or Bondholders . . . . .113
SECTION 17.04. Bondholders Entitled to Vote . . . . . . . . . . .113
SECTION 17.05. Regulations for Meeting. . . . . . . . . . . . . .114
SECTION 17.06. Bondholders' Vote by Written Ballot. . . . . . . .115
SECTION 17.07. Nothing Authorizes Hindrance or Delay of Rights
of Trustee or Bondholders . . . . . . . . . . . .115

<PAGE> 9
ARTICLE XVIII

MISCELLANEOUS PROVISIONS . . . . . . . . . . .115

SECTION 18.01. Covenants for Sole Benefit of Parties and
Bondholders; Severability . . . . . . . . . . . .115
SECTION 18.02. Court may Require Bond for Costs, Under Certain
Conditions. . . . . . . . . . . . . . . . . . . .116
SECTION 18.03. Provisions of Trust Indenture Act of 1939 to be
Controlling . . . . . . . . . . . . . . . . . . .116
SECTION 18.04. Notice to the Company. . . . . . . . . . . . . . .116
SECTION 18.05. Reference to Parties Includes Successors . . . . .116
SECTION 18.06. Headings Inserted for Convenience Only . . . . . .117
SECTION 18.07. Cancellation and Cremation of Bonds. . . . . . . .117
SECTION 18.08. Execution in Counterparts. . . . . . . . . . . . .117
SECTION 18.09. Deposit of Securities in Lieu of Cash. . . . . . .117
SECTION 18.10. Termination. . . . . . . . . . . . . . . . . . . .118
. .

APPENDIX A-1 Form of bond of Series A
APPENDIX A-2 Form of bond of Series B
APPENDIX A-3 Form of bond of Series C
APPENDIX A-4 Form of bond of Series X

Schedule A Real Property of the Company [****]
Schedule B Certain Excepted Property [****]

<PAGE> 10
INDENTURE, dated as of ____________, 1994, between EL
PASO ELECTRIC COMPANY, a corporation organized and existing under
the laws of the State of Texas, with its principal office in El
Paso, Texas (hereinafter called the "Company") and STATE STREET
BANK AND TRUST COMPANY, a banking corporation organized and
existing under the laws of the Commonwealth of Massachusetts,
with its principal corporate trust office in Boston,
Massachusetts, as Trustee (hereinafter called the "Trustee").

PRELIMINARY STATEMENT

The Company owns and possesses the property hereinafter
described, together with certain franchises, permits, rights and
privileges, and has legal authority to make and execute this
indenture of mortgage or deed of trust (hereinafter called the
"Indenture") upon such property, franchises, permits, rights and
privileges, and to issue its evidences of indebtedness as herein
provided.

The Company is entering into this Indenture pursuant to
the terms of that Modified Third Amended Plan of Reorganization,
dated August 27, 1993 and corrected on September 15, 1993, of the
Company (the "Plan") filed in the United States Bankruptcy Court,
Western District of Texas, Chapter 11 Case No. 92-10148-FM.

The Company desires to issue the bonds provided in
Section 4.01 hereof pursuant to the Plan and, with respect to the
issuance of further series of bonds, to provide funds for and
otherwise to accomplish its lawful corporate purposes from the
sale of bonds issued under and secured by this Indenture and to
that end, as authorized by resolutions duly adopted by its Board
of Directors at meetings duly called and held for that purpose,
has determined to borrow cash (except for the issuance of bonds
pursuant to Section 4.01 hereof) and for that purpose to issue
its bonds in an aggregate amount from time to time outstanding,
which (except as provided in Article IV of this Indenture) shall
not be subject to any limit, under and secured by this Indenture
on the properties of the Company as hereinafter provided. Said
bonds may be issued from time to time in one or more series
subject to the restrictions and provisions contained in this
Indenture with respect thereto. The bonds of each series shall
be in registered form and shall (a) bear such date, (b) be
payable on such date or dates (in the case of serial maturities)
and at such place or places, (c) bear interest at such rate or
rates payable at such time or times and at such place or places,
(d) bear such designation or title herein provided for, and (e)
contain such provisions, if any, with respect to tax exemptions,
tax reimbursements, redemption, sinking fund, conversion into
stock or other securities, limitations, if any, as to aggregate
principal amount of bonds of such series issuable and other
characteristics not in conflict with the terms of this Indenture,
all as set forth herein or as the Board of Directors shall
determine with respect to each successive series prior to the
authentication of any bonds thereof.

<PAGE> 11
All acts and things necessary to make the bonds, when
authenticated by the Trustee and issued as provided in this
Indenture, the valid, binding and legal obligations of the
Company, and to constitute this Indenture a valid, binding and
legal instrument for the security thereof, have been done and
performed, and the creation, execution and delivery of this
Indenture have in all respects been duly authorized.

PROPERTY CONVEYED

NOW THEREFORE, in consideration of the premises, and of
the acceptance and purchase by the holders thereof of the bonds
to be issued under this Indenture, and of the sum of Ten Dollars
($10.00) duly paid by the Trustee to the Company at or before the
ensealing and delivery of these presents, the receipt whereof is
hereby acknowledged, and for the purpose of securing the due and
punctual payment of the principal of and premium, if any, and
interest on all bonds which shall from time to time be issued
hereunder according to their tenor and effect and the faithful
performance and observance of all covenants and conditions hereof
(including any supplemental indentures and any modification made
as provided herein), the Company has given, granted, bargained,
sold, released, transferred, assigned, hypothecated, pledged,
mortgaged, confirmed, set over, warranted, aliened, conveyed, and
created a security interest in, and by these presents does, give,
grant, bargain, sell, release, transfer, assign, hypothecate,
pledge, mortgage, confirm, set over, warrant, alien, convey, and
create a security interest, unto the Trustee as herein provided,
and to its successors or successors in the trust hereby created,
and to its or their assigns forever, all right, title and
interest of the Company in and to (i) the real properties
described on Schedule A annexed hereto and hereby made a part
hereof, and (ii) all other properties of the Company, real,
personal and mixed, of the kind and nature specifically mentioned
herein or of any other kind or nature (except any hereinbefore or
hereinafter expressly excepted) now owned or subject to the
provisions of Section 13.02 hereof hereafter acquired by the
Company (by purchase, consolidation, merger, donation,
construction, erection or in any other way), and wheresoever
situated, including (without in anywise limiting or impairing by
the enumeration of the same, the scope and intent of the
foregoing or of any general description contained in this
Indenture) all real estate, lands, leaseholds, easements, lands
under water, water and riparian rights, servitudes, licenses,
permits, franchises, privileges, rights of way and other rights
in or relating to real estate or the occupancy of the same; all
rights of way and roads or tracks; all plants for the generation
of electricity by steam, water, and/or other power; all power
houses, gas plants, street lighting systems, standards and other
equipment incidental thereto; all telephone, radio and television
systems, air-conditioning systems and equipment incidental
thereto; all offices, buildings and other structures and the
equipment thereof; all machinery, engines, boilers, turbines,
electric, gas and other machines, prime movers, regulators,

<PAGE> 12
meters, transformers, generators (including, but not limited to,
engine driven generators and turbogenerator units), motors,
electrical, gas and mechanical appliances, conduits, cables, gas
or other pipes, gas mains and pipes, service pipes, fittings,
valves and connections, pole and transmission lines, towers,
overhead conductors and devices, underground conduits,
underground conductors and devices, wires, cables, tools,
implements, apparatus, storage battery equipment, and all other
fixtures and personalty; all municipal and other franchises,
consents or permits; all lines for the transmission and
distribution of electric current or gas for any purpose including
towers, poles, wires, cables, pipes, conduits, ducts and all
apparatus for use in connection therewith; and (except as
hereinbefore or hereinafter expressly excepted) all the right,
title and interest of the Company in and to all other property of
any kind or nature appertaining to and/or used and/or occupied
and/or enjoyed in connection with any property hereinbefore
described.

TOGETHER WITH all and singular the tenements,
hereditaments, prescriptions, servitudes and appurtenances
belonging or in anywise appertaining to the aforesaid property or
any part thereof, with the reversion and reversions, remainder
and remainders and (subject to the provisions of Section 8.01
hereof) the tolls, rents, revenues, issues, proceeds, earnings,
income, product and profits thereof, and all the estate, right,
title, and interest and claim whatsoever, at law as well as in
equity, which the Company now has or may hereafter acquire in and
to the aforesaid property and franchises and every part and
parcel thereof, with mortgage covenants and upon the statutory
mortgage conditions for the breach of which such property is
subject to foreclosure as provided by law.

AFTER-ACQUIRED PROPERTY

IT IS HEREBY AGREED by the Company that, subject to the
provisions of Section 13.02 hereof, all the property, rights and
franchises acquired by the Company (by purchase, consolidation,
merger, donation, construction, erection or in any other way)
after the date hereof, except any hereinbefore or hereinafter
expressly excepted, shall be and are as fully granted and
conveyed hereby and as fully embraced within the lien hereof as
if such property, rights and franchises were now owned by the
Company and were specifically described herein and conveyed
hereby.

<PAGE> 13
EXCEPTED PROPERTY

PROVIDED that the following are not and are not
intended to be now or hereafter granted, bargained, sold,
released, conveyed, assigned, transferred, mortgaged,
hypothecated, affected, pledged, set over or confirmed hereunder,
nor is a security interest therein hereby granted or intended to
be granted, and the same are hereby expressly excepted from the
lien hereof and the operation of this Indenture, the following
described property of the Company, herein sometimes referred to
as "Excepted Property": (1) cash, shares of stock, bonds, notes
and other obligations and other securities not hereinbefore or
hereafter specifically pledged, paid, deposited, delivered or
held hereunder or covenanted so to be; (2) bills, notes and other
instruments and accounts receivable, judgments, demands, general
intangibles and choses in action, and all contracts, leases and
operating agreements not specifically pledged hereunder or
hereafter covenanted so to be; (3) rolling stock, buses, motor
coaches, automobiles and other vehicles and all aircraft, boats,
ships and other vessels; merchandise, equipment (including office
furniture, equipment and supplies), apparatus, materials or
supplies held for the purpose of sale, lease, rental, use or
other disposition in the ordinary course of business or for the
purpose of repairing or replacing (in whole or part) any rolling
stock, buses, motor coaches, automobiles or other vehicles or
aircraft or boats, ships, or other vessels and any fuel
(including nuclear), oil and similar materials and supplies
consumable in the operation of any of the properties of the
Company; (4) the last day of the term of any lease or leasehold
which may hereafter become subject to the lien hereof; (5)
electric energy, gas and other materials or products generated,
manufactured, produced or purchased by the Company for sale,
distribution or use in the ordinary course of its business;
(6) timber, oil, gas, casinghead gas, coal, lignite or other
minerals or mineral rights and royalties in place, together with
all rights of ingress and egress thereto, the right to produce
the same and all production therefrom and the proceeds thereof;
(7) the Company's franchise to be a corporation; and (8) the
property described in Schedule B annexed hereto and hereby made a
part hereof.

PROVIDED, HOWEVER, that if, upon the occurrence of a
default as hereinafter in this Indenture defined, the Trustee or
any receiver appointed hereunder or upon the application of the
Trustee or holders of bonds outstanding hereunder shall enter
upon and take possession of the Trust Estate, the Trustee or such
receiver may, to the extent permitted by law, at the same time
likewise take possession of any and all of the property excepted
and reserved from the lien and effect of this Indenture then on
hand which is used or useful in connection with the business of
the Company and use and administer the same, to the extent
permitted by law, to the same extent as if such property were
part of the mortgaged and pledged property, unless and until such
default shall be remedied and possession of the Trust Estate
restored to the Company, its successors or assigns.

<PAGE> 14
SUBJECT CLAUSE

SUBJECT HOWEVER, with respect to premises, property,
and franchises now owned or hereafter acquired and subject to
Excepted Encumbrances as such term is defined in Section 1.02
hereof, and subject, with respect to property hereafter acquired,
to all defects and limitations of title and to all encumbrances
existing at the time of such acquisition.

HABENDUM

TO HAVE AND TO HOLD all said premises, property,
franchises and rights hereby conveyed, assigned, pledged or
mortgaged, or intended so to be, unto the Trustee, its successor
or successors in trust, and their assigns forever.

GRANT IN TRUST

BUT IN TRUST, NEVERTHELESS, with power of sale, for the
equal and proportionate benefit and security of the holders of
all bonds hereafter authenticated and delivered under and secured
by this Indenture pursuant to the provisions of this Indenture
and of any supplemental indenture and for the enforcement of the
payment of said bonds when payable and the performance of and
compliance with the covenants and conditions of this Indenture,
without any preference, distinction or priority as to lien or
otherwise of any bond or bonds over others by reason of the
difference in time of the actual authentication, delivery, issue,
sale or negotiation thereof or for any other reason whatsoever;
and so that each and every bond now or hereafter authenticated
and delivered hereunder shall have the same lien, and so that the
principal of and premium, if any, and interest on every such bond
shall be equally and proportionately secured hereby, as if it had
been made, executed, authenticated, delivered, sold and
negotiated simultaneously with the execution and delivery hereof.

CONDITION

UPON CONDITION that, if the Company, or its successors
or assigns, shall well and truly pay, or cause to be paid, the
principal of (and premium, if any) and interest on the
Outstanding bonds according to the true intent and meaning
thereof, or there shall be deposited with the Trustee such
amounts in such form in order that none of the bonds shall remain
Outstanding as herein defined and provided, and shall pay or
cause to be paid to the Trustee all sums of money due or to
become due to it in accordance with the terms and provisions
hereof, then upon the full and final payment of all such sums and
other amounts secured hereby or upon such deposit, the rights,
titles, liens, security interests, and assignments herein granted
shall cease, determine, and be void and this grant shall be
released by the Trustee in due form at the expense of the
Company, except only as herein provided; otherwise this grant to
be and shall remain in full force and effect.

<PAGE> 15
And it is expressly declared that all bonds issued and
secured hereunder are to be issued, authenticated and delivered,
and all said property, rights and franchises hereby conveyed,
assigned, pledged or mortgaged, or intended so to be, are to be
dealt with and disposed of, under, upon and subject to the terms,
conditions, stipulations, covenants, agreements, trusts, uses and
purposes hereinafter expressed.

ARTICLE I

DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION

SECTION 1.01. Construction of Document. The terms
specified in the next succeeding Section hereof shall, for all
purposes of this Indenture and of any supplemental indenture and
of any certificate, opinion or other document filed with the
Trustee, unless otherwise specified therein, have the meanings
specified in such Section. Unless otherwise defined in this
Indenture, all terms used herein shall, for all such purposes,
have the meanings assigned to such terms in the TIA.

The accounting terms used in this Indenture shall be
construed in accordance with U.S. generally accepted accounting
principles and practices in use at the time by companies engaged
in a business similar to that of the Company and operating like
properties.

SECTION 1.02. Certain Defined Terms. As used herein,
the following terms shall have the following meanings:

"affiliate" shall mean a person controlling, controlled
by, or under common control with, another person, whether
directly or indirectly, and the term "affiliated" shall have a
meaning correlative to the foregoing.

"amount of depreciable property" shall have the meaning
specified in Section 5.15 hereof.

An "application" for the authentication and delivery of
bonds, or the release of property, or the withdrawal of cash,
under any provision of this Indenture, shall consist of, and
shall not be deemed complete until the Trustee shall have been
furnished with, such resolutions, certificates, opinions, cash,
bonds and other instruments as are required by such provisions to
establish the right of the Company to the authentication and
delivery of such bonds, or to such release or withdrawal, as the
case may be, and the date of such application shall be deemed to
be the date upon which such application shall be completed.

"Board of Directors" shall mean the Board of Directors
of the Company and shall also include any executive committee or
other committee of said Board duly authorized to act on behalf of
said Board.

<PAGE> 16
"bondable property" shall have the meaning specified in
Section 4.03 hereof.

"bonds" shall mean the bonds issued under and pursuant
to this Indenture.

"Business Day" shall mean those days which are not
Saturdays, Sundays or days on which banking institutions are
authorized or required by law to close in the city in which the
principal corporate trust office of the Trustee is located.

"Company" shall mean the person named as the "Company"
in the first paragraph of this Indenture, and shall also include
its successors and assigns as provided in Article XIII hereof.

"Commission" means the Securities and Exchange
Commission.

"control" shall mean the power to direct or cause the
direction of, whether directly or indirectly, the management and
policies of a person, directly or through one or more
intermediaries, whether through the ownership of voting
securities or by contract or otherwise, and the terms
"controlling" and "controlled" shall have meanings correlative to
the foregoing.

"cost" shall have the meaning specified in Section 4.03
hereof.

"Current Fair Value", when used with respect to any
particular property described in any certificate required under
this Indenture, shall mean the fair value of such property as of
a date not more than ninety (90) days prior to the date of such
certificate.

"Daily Newspaper" shall mean a newspaper of general
circulation, printed in the English language and customarily
published on each business day in any of the cities wherein any
of such bonds are expressed to be payable.

"deposited cash" shall have the meaning specified in
Section 4.04 hereof.

"Effective Date" shall have the meaning specified in
the Plan.

"Engineer" shall mean any engineer, firm of engineers
or engineering corporation selected by the Company and who or
which may be in the employ of or under retainer by the Company.

<PAGE> 17
Certificate required to be signed by an Independent Engineer
shall contain a statement that the signer is an Independent
Engineer under this Indenture.

"Excepted Encumbrances" shall mean as of any particular
time any of the following:

(a) liens for taxes, assessments or governmental
charges not then delinquent, or if delinquent in course of
contest and secured by sufficient bond, and liens for
worker's compensation awards and similar obligations not
then delinquent and undetermined liens or charges incidental
to labor, materials or supplies not delinquent, and liens
for taxes, assessments or governmental charges then
delinquent but the validity of which is being contested at
the time by the Company in good faith as provided in Section
5.04 hereof;

(b) judgments in course of appeal or otherwise in
contest in good faith and, if required by law, secured by
sufficient bond;

(c) any liens securing indebtedness, neither assumed
nor guaranteed by the Company nor on which it customarily
pays interest, directly or indirectly, existing upon real
estate or rights in or relating to real estate acquired by
the Company for substation, transmission line,
transportation line, distribution line or right of way
purposes;

(d) rights reserved to or vested in any municipality,
political subdivision or public authority by the terms of
any right, power, franchise, grant, license or permit, or by
any provision of law, to terminate such right, power,
franchise, grant, license or permit or to condemn, purchase
or otherwise acquire any of the property of the Company;

(e) rights reserved to or vested in others to take or
use any part of the power, gas, oil or other minerals or
timber generated, developed, manufactured or produced by, or
grown on, or acquired with, any property of the Company;

(f) easements, restrictions, exceptions or
reservations in any property and/or rights of way of the
Company for the purpose of roads, pipe lines, transmission
lines, distribution lines, removal of oil, gas, coal or
other minerals or timber, and other like purposes, or for
the joint or common use of real property, rights of way,
facilities and/or equipment and defects, irregularities and
deficiencies in titles of any property and/or rights of way,
which do not in the reasonable judgment of the Company
materially impair the use of such property and/or rights of
way for the purposes for which such property and/or rights
of way are held by the Company;

<PAGE> 18
(g) rights reserved to or vested in any municipality
or public authority to control or regulate any property of
the Company, or to use such property in a manner which does
not materially impair the use of such property for the
purposes for which it is held by the Company;

(h) any obligations or duties, affecting the property
of the Company, to any municipality or public authority with
respect to any franchise, grant, license or permit;

(i) any controls, liens, restrictions, regulations,
easements, exceptions or reservations of any governmental
authority applying to the property or facilities of the
Company; or

(j) any lien reserved as security for rent or for
compliance with other provisions of the lease in the case of
any leasehold estate.

"Excepted Property" shall have the meaning specified in
the Preliminary Statement hereof.

"fair value to the Company" or "fair value" shall have
the meaning specified in Section 4.03 hereof.

"Funds" means the currency of the United States of
America which at the time is legal tender for public and private
debts and U.S. Government Obligations.

"gross expenditures" shall have the meaning specified
in Section 4.03 hereof.

"gross retirements of property" shall have the meaning
specified in Section 4.03 hereof.

"holder" or "bondholder", when used with reference to
bonds authenticated and delivered hereunder, shall mean the
person in whose name a particular registered bond is at the time
registered on the books of the Company kept for that purpose in
accordance with the provisions of Section 2.05 hereof.

"Independent Engineer" shall mean any engineer, firm of
engineers or engineering corporation appointed by the Company and
satisfactory to the Trustee in the exercise of reasonable care
and who or which shall be in fact independent and shall not be a
director, officer or employee of, or under retainer by, the
Company or any affiliate of the Company.

<PAGE> 19
intended to constitute any property a part of the security held
by the Trustee upon the terms and trusts and subject to the
conditions specified in this Indenture.

"net earnings" shall have the meaning specified in
Section 4.05 hereof.

"Net Earnings Certificate" shall have the meaning
specified in Section 4.05 hereof.

"net expenditures" shall have the meaning specified in
Section 4.03 hereof.

"Obligor", when used with reference to bonds
authenticated and delivered hereunder, shall mean every person
who is liable thereon.

"Officers' Certificate" shall mean a certificate signed
by the President or a Vice President and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company, provided, that in respect of Section 5.14, Officers'
Certificate shall mean a certificate signed by the principal
executive officer, principal financial officer or principal
accounting officer of the Company. Each such certificate shall
comply with the requirements of subsection (b) of Section 1.03
hereof and shall include, in addition to the statements, if any,
required by any other applicable provision of this Indenture, a
statement that the conditions precedent, if any, provided for in
this Indenture (including any covenants compliance with which
constitutes a condition precedent) which relate to any action to
be taken by the Trustee at the request or upon the application of
the Company, as the case may be, have been complied with.

"Opinion of Counsel" shall mean one or more written
opinions of counsel, each of whom may be an employee of or
regular counsel to the Company selected by the Company and
satisfactory to the Trustee. Each such opinion shall conform to
the requirements of subsection (b) of Section 1.03 hereof and
shall include, in addition to the statements, if any, required by
any other applicable provision of this Indenture, a statement
that, in the opinion of such counsel, the conditions precedent,
if any, provided for in this Indenture (including any covenants
compliance with which constitutes a condition precedent) which
relate to any action to be taken by the Trustee at the request or
upon the application of the Company, as the case may be, have
been complied with. Any Opinion of Counsel may contain such
limitations, assumptions and qualifications as are reasonable and
customary in light of the type of opinion being delivered.

"Original Fair Value", when used with respect to any
particular property described in any certificate required under
this Indenture, shall mean the fair value of such property to the
Company as of the time of the actual acquisition thereof by the
Company.

<PAGE> 20
"Outstanding" shall mean, as of any particular time,
with respect to bonds issued, authenticated and delivered under
this Indenture (except where the context otherwise specifically
provides), all bonds which theretofore shall have been issued,
authenticated and delivered under this Indenture by the Trustee,
except (a) bonds theretofore or then paid, retired, cancelled or
redeemed and not held for the benefit of any sinking fund and
bonds for the purchase, payment or redemption of which (for
cancellation and not for holding for the benefit of any sinking
fund) cash (or U.S. Government Obligations to the extent
permitted by Sections 11.01 and 11.02 hereof) in the necessary
amount shall have been or shall be then deposited with or held by
the Trustee in trust with irrevocable direction so to apply the
same, (b) bonds then held by the Trustee under any of the
provisions of this Indenture and (c) bonds in lieu of which bonds
have been authenticated and delivered, as provided in Section
2.08 hereof; provided, however, that, in determining the
percentage of the principal amount of bonds Outstanding (or of
bonds of a particular series Outstanding) entitling the holders
thereof to take any action hereunder, or in determining whether
the holders of the required percentage of the principal amount of
bonds Outstanding (or of bonds of a particular series
Outstanding) have concurred in any direction to the Trustee or in
any consent, bonds owned by the Company or by any other Obligor
upon the bonds or by any affiliate of the Company or any other
Obligor upon the bonds, shall be disregarded, except that for the
purpose of determining whether the Trustee shall be protected in
relying on any such direction or consent, only bonds which the
Trustee knows are so owned shall be disregarded. Bonds so owned
which have been pledged in good faith may be regarded as
Outstanding if the pledgee shall establish to the satisfaction of
the Trustee the pledgee's right to vote such bonds and that the
pledgee is not an affiliate of the Company or any other Obligor
upon the bonds. In case of a dispute as to such right, any
decision by the Trustee taken upon the advice of counsel shall be
full protection to the Trustee.

"person" shall mean and include an individual, a
corporation, a partnership, an association, a joint stock
company, a trust, an estate, any unincorporated organization or
entity or any government or political subdivision thereof.

"Plan" shall have the meaning specified in the
Preliminary Statement hereof.

"plant or property operated by others" shall mean, as
used in Section 5.05 hereof, any bondable property, which, within
six (6) months prior to the date of actual acquisition thereof by
the Company, constituted plant or property used or operated by
others in a business similar to that in which it has been or is
to be used or operated by the Company, and the Original Fair
Value of which, as set forth in the certificate setting forth
such value, is not less than one per centum (1%) of the aggregate
principal amount of all bonds at the time Outstanding hereunder.

<PAGE> 21
"Prepaid Liens" shall mean and include any mortgage or
other lien, equal or prior to the lien of this Indenture,
securing obligations or indebtedness for the payment, purchase or
redemption of which the necessary Funds shall have been deposited
with the trustee under such mortgage or lien or with the Trustee
hereunder, together with instructions in either case to apply
such funds to the payment, purchase or redemption of such
obligations or indebtedness and, until so applied, to hold such
deposited funds irrevocably in trust for the purpose for which
they shall have been deposited, but subject, if so instructed, to
any applicable provision in such mortgage or lien for the return
of any unclaimed portion of such deposited funds to the Company.

"Prior Lien" shall mean any mortgage or other lien,
other than Excepted Encumbrances, which secures obligations
(except obligations for the purchase, payment or redemption of
which cash (or U.S. Government Obligations to the extent
permitted by Sections 11.01 and 11.02 hereof) in the necessary
amount shall have been or shall be then deposited with and held
in trust by, with irrevocable direction so to apply the same, the
Trustee hereunder or the trustee or other holder of the mortgage
or other lien securing such obligations) of any nature, which is
prior to the lien of this Indenture and which, as of any
particular time, exists upon any of the Trust Estate or upon any
property which is about to become part of the Trust Estate.

"purchased property" shall have the meaning specified
in Section 4.03 hereof.

"Required Percentage" shall have the meaning specified
in Section 5.15 hereof.

"Resolution" shall mean a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been
duly adopted by the Board of Directors and to be in full force
and effect on the date certified.

"Responsible Officers" of the Trustee shall mean and
include any officer assigned to and working in the Trustee's
corporate trust department or similar group administering the
trust hereunder, and every other officer and assistant officer of
the Trustee customarily performing functions similar to those
performed by the persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred
because of his or her knowledge of, and familiarity with, a
particular subject; and the term "Responsible Officer" shall mean
and include any of said officers or persons.

"TIA" shall mean the Trust Indenture Act of 1939, as
amended and in force on the date of this Indenture; provided,
however that, in the event the Trust Indenture Act of 1939 is
amended after such date, TIA shall mean, to the extent required
by any such amendment, the Trust Indenture Act of 1939 as so
amended.

<PAGE> 22
"title" shall mean such title, whether fairly deducible
of record or based on prescriptive right, as, in the Opinion of
Counsel, is satisfactory for the needs and operations of the
Company in its business, and counsel in giving such opinion may
disregard irregularities or deficiencies in the record evidence
of title which, in the Opinion of such Counsel, can be cured by
proceedings within the power of the Company or which, in the
Opinion of Counsel, do not materially impair the use of such
property in the operation of the business of the Company, and
such counsel may base such opinion on such counsel's own
investigation and/or upon abstracts, affidavits, certificates,
statements and/or investigations made by persons in whom such
counsel has confidence and/or upon examination of a certificate
or guarantee of title or a policy of title insurance in which
such counsel has confidence. For such purpose a perfected or a
valid and legally protected security interest created pursuant to
the Uniform Commercial Code in effect or other provision of law
in favor of the Company encumbering property consisting of
components of, or partially completed, products, not yet
delivered to the Company, being constructed, manufactured or
otherwise prepared pursuant to a contract between the Company and
another person providing for partial or progress payments by the
Company during the course of such construction, manufacturing or
preparation shall be deemed title to such property to the extent
of the partial or progress payments made by the Company.

"Trustee" shall mean the person named as the "Trustee"
in the first paragraph of this Indenture, or its successor from
time to time as trustee hereunder as provided in Article XIV
hereof.

"Trust Estate" shall mean as of any particular time the
property which at said time is subject to the lien of this
Indenture whether such lien be created by these presents
(including the lien created by the after-acquired property
clauses hereof) or by subsequent conveyance, delivery or pledge
to the Trustee hereunder or otherwise.

"U.S. Government Obligations" means direct obligations
of the United States of America for the payment of which its full
faith and credit is pledged, or obligations of a person
controlled or supervised by and acting as an agency or
instrumentality of the United States of America and the payment
of which is unconditionally guaranteed by the United States of
America.

SECTION 1.03. Compliance Certificates and Opinions.

(a) Each certificate or opinion with respect to
compliance with a condition or covenant contained in this
Indenture shall include (1) a statement that the person making
such certificate or opinion has read such covenant or condition
and the definitions, if any, relevant to such covenant or
condition; (2) a brief statement as to the nature and scope of

<PAGE> 23
the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based; (3)
a statement that, in the opinion of such person, he or she has
made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and (4) a statement
as to whether or not, in the opinion of such person, such
condition or covenant has been complied with.

Any certificate or opinion of an officer of the Company
may be based, in so far as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless
such officer knows that the certificate or opinion or
representations with respect to the matters upon which such
officer's certificate or opinion may be based as aforesaid are
erroneous or, in the exercise of reasonable care, should have
known that the same were erroneous. Any such certificate or
opinion may be based, in so far as it relates to factual matters
and information which is in the possession of the Company, upon a
certificate or opinion of, or representations by, an officer or
officers of the Company, unless such officer knows that the
certificate or opinion or representations with respect to the
matters upon which his or her certificate or opinion may be based
as aforesaid are erroneous or, in the exercise of reasonable
care, should have known that the same were erroneous. Any
officer or counsel shall, in the performance of his or her
duties, be fully protected in relying in good faith upon the
books of account or reports made to the Company by any of its
officers, or by an independent public accountant, or by an
appraiser or Engineer selected with reasonable care by the
Company, or in relying in good faith upon other records of the
Company.

(b) Any certificate to be executed by a Treasurer or
an Assistant Treasurer of the Company may be signed, in lieu
thereof, by a person (who need not be an employee or officer of
the Company) designated to the Trustee by the Company and
evidenced by a Resolution.

<PAGE> 24
deposited or held shall be the principal amount of such bonds,
obligations or indebtedness and all unpaid interest thereon to
the redemption date, together with the redemption premium, if
any. Notwithstanding the foregoing, for the purpose of
determining the sufficiency of the amount of any U.S. Government
Obligations deposited by the Company under Sections 11.01 or
11.02 hereof, the amount of interest scheduled to be received
with respect to those U.S. Government Obligations, shall be taken
into account in calculating the amount thereof as provided in
said Sections.

SECTION 1.05. Certificate of Resolutions. Any
resolution of the Board of Directors or shareholders of the
Company required or permitted under any provision of this
Indenture to be delivered to the Trustee hereunder shall have
attached thereto a certificate of the Secretary or an Assistant
Secretary of the Company certifying the adoption and the then
effectiveness of such resolution.

SECTION 1.06. Incorporation by Reference of Trust
Indenture Act. Whenever this Indenture refers to a provision of
the TIA, such provision (and any related definitions) is
incorporated by reference in and made a part of this Indenture.

SECTION 1.07. Indenture as Deed of Trust in New
Mexico. The Company, trustor under this Indenture, expressly
agrees pursuant to the New Mexico Deed of Trust Act, 48-10-1 to
48-10-21 NMSA 1978 (the "Deed of Trust Act" or the "Act"), that
all the real and personal property comprising the Trust Estate
which is located entirely within the State of New Mexico (the
"New Mexico Trust Estate"), as more specifically described
herein, shall be and hereby is subject to the Deed of Trust Act,
thereby conferring upon the Trustee the power of sale as provided
therein with respect to the New Mexico Trust Estate. This
Indenture, as filed in New Mexico, shall encumber only the New
Mexico Trust Estate and shall not purport to encumber any real
estate located in one or more other states. The Company agrees
to execute and file in each county in New Mexico in which the New
Mexico Trust Estate is situated, additional instruments or deeds
of trust encumbering the New Mexico Trust Estate necessary to
secure performance of this Indenture as a Deed of Trust under the
Deed of Trust Act.

<PAGE> 25
encumber only the Arizona Trust Estate and shall not purport to
encumber any real estate located in one or more other states.
The Company agrees to execute and file in each county in Arizona
in which Arizona Trust Estate is situated, additional instruments
or deeds of trust encumbering the Arizona Trust Estate necessary
to secure performance of this Indenture as a Deed of Trust under
the Deed of Trust Law.

ARTICLE II

THE BONDS

SECTION 2.01. General Limitations; Bonds Issuable in
Series. This Indenture may secure an unlimited aggregate
principal amount of bonds which may be issued from time to time
hereunder. All advances and other indebtedness and sums which
may be secured by this Indenture shall be secured equally, to the
same extent and with the same priority, as the amount originally
advanced on the security of this Indenture.

At the option of the Company, bonds may be issued in
one or more series, the bonds of each series maturing on such
dates and bearing interest at such rates as the Board of
Directors prior to the authentication thereof may determine. The
form and terms of each series of bonds authenticated and
delivered hereunder shall be as established by Resolution of the
Board of Directors and the text thereof shall be as set forth in
the Appendices hereto or in the supplemental indenture creating
the series. The bonds of any one or more series may be expressed
in one or more foreign languages, if also expressed in the
English language. The English text shall govern the construction
thereof and both or all texts shall constitute but a single
obligation. The English text of the registered bonds and the
Trustee's certificate of authentication shall be substantially of
the tenor and purport hereinafter recited; provided, however,
that the form and terms of each series, as established by the
Board of Directors, shall specify the descriptive title of the
bonds (which shall contain the words "First Mortgage Bond"), the
designation of the series, the rate or rates of interest to be
borne by the bonds of that series, the coin or currency,
including composite currencies such as the european currency
unit, in which payable (which need not be coin or currency of the
United States), the date or dates of maturity, the dates for the
payment of interest, record dates for the payment of interest, a
place or places for the payment of principal and interest and a
place or places for the registration and transfer of bonds. Any
series of bonds may also have such omissions or modifications or
contain such other provisions as the Board of Directors may, in
its discretion, cause to be inserted therein including, but not
limited to, the following:

(a) specifying any additional place or places, either
in the United States of America or elsewhere, for the
payment of principal or interest or a place or places for

<PAGE> 26
the registration of bonds or transfer of bonds (provided
that, at the option of the Company, payment of interest may
be made by check mailed to the address of the person
entitled thereto as shown on the registration books of the
Trustee);

(b) expressing any obligation of the Company for the
payment of the principal of the bonds of that series or the
interest thereon, or both, without deduction for taxes or
for the reimbursement of taxes in case of payment by the
bondholders, it being agreed that such obligation may be
limited to taxes imposed by taxing authorities of a
specified class and may exclude from its operation or be
limited to any specified tax or taxes or any portion
thereof;

(c) expressing any obligation of the Company for the
creation of a sinking, purchase, improvement or other
analogous fund for bonds of that series, or expressing any
obligation of the Company to permit the conversion of bonds
of that series into stock or other securities of the Company
or of any other corporation;

(d) permitting the bondholders to make, at a specified
place or places, either or both of the following exchanges,
in each instance the exchange to be for a like aggregate
principal amount of bonds: exchanges of registered bonds for
registered bonds of other denominations, and exchanges of
bonds of one series for bonds of another series; such
privilege of exchange may in any case be made subject to
such conditions, limitations or restrictions as the Board of
Directors shall determine and the privilege of exchange may
in any case be conferred upon the holders of bonds of one or
more denominations and withheld from the holders of bonds of
other denominations of the same series;

(e) reserving to the Company the right to redeem all
or any part of the bonds of that series before maturity at a
time or times and at a redemption price or prices which
shall be specified in the form of bond;

(f) specifying, if other than such coin or currency of
the United States of America as at the time of payment is
legal tender for payment of public or private debts, the
coin or currency, including composite currencies such as the
european currency unit, in which payment of the principal of
(and premium, if any) and interest, if any, on the bonds of
the series shall be payable, and any currency conversion
methods to be used in connection with Article IV hereof;

<PAGE> 27
in which the bonds are stated to be payable, the period or
periods within which, and the terms and conditions upon
which, such election may be made;

(h) specifying, if the amount of payments of principal
of (and premium, if any) or interest, if any, on the bonds
of the series may be determined with reference to an index
based on a coin, currency, including a composite currency
such as the european currency unit, other than that in which
the bonds are stated to be payable, the manner in which such
amounts shall be determined;

(i) reserving to the Company the right to create fully
registered bonds that may be registered as to the payment of
principal to one holder and to the payment of interest to
another holder;

(j) complying with any law or with any rules or
regulations of any stock exchange or conforming to usage;

(k) providing for book entry certificate bonds; and

(l) expressing any other terms and conditions, not
inconsistent with the provisions hereof, upon which such
bonds are to be issued and secured by this Indenture.

SECTION 2.02. Date of and Interest on Bonds. Unless
otherwise specifically provided with respect to a series of
bonds, bonds shall be dated as of the date of the interest
payment date thereof to which interest was paid next preceding
the date of issue, unless (a) issued on an interest payment date
thereof to which interest was paid, in which event it shall be
dated as of the date of issue, or (b) issued prior to the
occurrence of the first interest payment date thereof to which
interest was paid, in which event it shall be dated the date of
initial issuance of such bonds. Unless other provisions
(including, but not limited to, provisions establishing record
dates for the payment of interest) are specifically provided with
respect to a series of bonds, bonds shall bear interest from the
beginning of the current interest period for that series;
provided, however, that if any bond shall be authenticated and
delivered upon a transfer of, or in exchange for or in lieu of,
any bond or bonds upon which interest is in default, it shall be
dated so that such bond shall bear interest from the last
preceding date to which interest shall have been paid on the bond
or bonds in respect of which such bond shall have been delivered,
unless otherwise specifically provided with respect to a series
of bonds. Unless otherwise specifically provided with respect to
a series of bonds, interest, if any, on the bonds of each series
shall be computed based on a 360-day year of twelve 30-day
months.

SECTION 2.03. Legends on Bonds. Any bond may have
imprinted thereon or included therein any legend or legends
required in order to comply with any law or with any rules or

<PAGE> 28
regulations or with the rules or regulations of any stock
exchange or to conform to general usage, and the Board of
Directors by resolution may at any time amend the form of any
legend to be used on bonds then Outstanding so as to comply with
any such law, rule or regulation or so as to conform to such
usage.

SECTION 2.04. Exchange of Bonds; Transfers. Unless
otherwise specifically provided with respect to a series of
bonds, bonds of a series may be exchanged by the holder thereof
for bonds of the same series, of authorized denominations as set
forth in Section 2.10 hereof and in the same aggregate principal
amount, and any bonds to be exchanged shall be surrendered at
such place or places as shall be designated by the Board of
Directors for the purpose (or, if no such place is at the time so
designated for the purpose, at the principal corporate trust
office of the Trustee), and the Trustee shall authenticate and
deliver in exchange therefor such bond or bonds of authorized
denominations as denominated by the surrendering bondholder (or
as selected by the Trustee in its discretion in the absence of
such designation) aggregating in principal amount the principal
amount of the bonds surrendered.

All bonds so surrendered for exchange shall be
cancelled by the Trustee. Upon every transfer of bonds as
permitted by the next succeeding Section hereof, and upon every
exchange of bonds, the Company shall be entitled to receive funds
sufficient to reimburse it for any tax or taxes or other
governmental charge required to be paid by the Company as a
direct consequence of such transfer or exchange which amounts
shall be paid by the party requesting such transfer or exchange
as a condition precedent to the exercise of the privilege of
making such transfer or exchange. The Company shall not be
required to make transfers or exchanges of bonds of any series
for a period of ten (10) days next preceding any designation of
bonds of said series to be redeemed. The Company shall not be
required to make transfers or exchanges of the principal amount
of any bonds of any such series called or selected for
redemption. Each bond delivered pursuant to any provision of
this Indenture in exchange or substitution for, or upon the
transfer of, the whole or any part of one or more other bonds,
shall carry all of the rights to interest accrued and unpaid and
to accrue which were carried by the whole or such part, as the
case may be, of such one or more other bonds.

SECTION 2.05. Registration and Transfer of Bonds. The
Company shall cause to be kept, at such place or places as shall
be designated for the purpose (which shall be at the principal
corporate trust office of the Trustee, unless otherwise
specifically provided with respect to a series of bonds), books
for the registration and transfer of bonds issued hereunder,
which, at all reasonable times, shall be open for inspection by
the Company; and upon the presentation for such purpose at any
such place or places, the Trustee will register or cause to be

<PAGE> 29
registered therein, and permit to be transferred thereon, under
such reasonable regulations as it may prescribe, any bonds issued
under this Indenture and entitled to registration or transfer at
such office. Upon the surrender for transfer of any fully
registered bond, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the transferee or
transferees a new registered bond or new registered bonds of the
same series and of authorized denominations for a like principal
amount. All registered bonds so surrendered for transfer shall
be cancelled by the Trustee and upon a request signed by the
President or a Vice President of the Company a certificate
evidencing the cancellation thereof shall be delivered to the
Company.

SECTION 2.06. Execution of Bonds. All bonds issued
hereunder shall, from time to time, be executed on behalf of the
Company by its President or a Vice-President and its corporate
seal shall be thereunto affixed or a facsimile thereof shall be
printed, lithographed or engraved thereon and attested by its
Secretary or an Assistant Secretary. The signatures of any such
President or Vice-President and/or of any such Secretary or
Assistant Secretary may be facsimile. In case any of the
officers who shall have signed any bonds or attested the seal
thereon or whose facsimile signature appears on any bonds shall
cease to be such officers of the Company before the bonds so
signed and sealed shall have been authenticated and delivered by
the Trustee or issued by the Company, such bonds nevertheless may
be authenticated, delivered and issued with the same force and
effect as though the person or persons who signed such bonds and
attested the seal thereon or whose facsimile signature appears on
any bonds had not ceased to be such officer or officers of the
Company.

SECTION 2.07. Temporary Bonds. There may be
authenticated, delivered and issued in lieu of any definitive
bonds of any series a temporary typewritten, printed,
lithographed or engraved bond or bonds substantially of the tenor
of the bonds of such series, with or without specification of the
redemption premium or premiums, if any, and such temporary bond
or bonds shall be in such denomination or denominations as the
Board of Directors may determine. Until a definitive bond or
bonds secured hereby are delivered in exchange therefor, each
such temporary bond or bonds shall be entitled to the lien and
benefit of this Indenture. Upon exchange thereof for definitive
bonds of the same series, which the Company shall make without
any charge therefor, such temporary bond or bonds shall be
cancelled by the Trustee and upon a request signed by the
President or a Vice President of the Company a certificate of
such cancellation shall be delivered to it. The holder of one or
more temporary bonds may exchange the same, upon payment, if the
Company shall require, of the charges provided in Section 2.04
hereof, upon the surrender of such temporary bonds, properly
endorsed for transfer, to the Trustee for cancellation, and shall
be entitled to receive temporary bonds of the same series of like
aggregate principal amount of other authorized denominations.

<PAGE> 30
SECTION 2.08. Lost, Destroyed or Mutilated Bonds.
Upon receipt by the Company and the Trustee of evidence
satisfactory to them of the theft, loss, destruction, defacement
or mutilation of any bond Outstanding hereunder not then matured
or subject to payment, and of indemnity satisfactory to them, and
upon payment, if the Company or the Trustee shall require it, of
an amount sufficient to reimburse it for stamp tax or other
governmental charge or expense connected therewith, and upon
surrender and cancellation of such bond, if defaced or mutilated,
the Company shall execute, and upon the request signed by the
President or a Vice President of the Company the Trustee shall
authenticate and deliver, a new bond of like tenor and of the
same series in lieu of such stolen, lost, destroyed, defaced or
mutilated bond. In case of the theft, loss, destruction,
defacement or mutilation of any bond Outstanding hereunder which
has matured or is then subject to payment by redemption, purchase
or otherwise, the Trustee and the Company, upon receipt from the
owner of such bond or of evidence satisfactory to them of such
theft, loss, destruction, defacement or mutilation and upon
surrender and cancellation of such bond if defaced or mutilated
and upon receipt of indemnity satisfactory to them, may pay to
the owner of such bond the amount payable thereon without the
execution, authentication and delivery of a substitute bond.

Every new bond issued pursuant to this Section in lieu
of any destroyed, lost or stolen bond shall constitute an
original additional contractual obligation of the Company,
whether or not the destroyed, lost, defaced, mutilated or stolen
bond shall be at any time enforceable by anyone, and shall be
entitled to all the security and benefits of this Indenture
equally and ratably with all other Outstanding bonds.

SECTION 2.09. Certificate of the Trustee. No bonds
shall be secured hereby unless there shall be endorsed thereon
the certificate of authentication of the Trustee, substantially
in the form recited in Section 3.02 hereof, that it is one of the
bonds (or temporary bonds) of the series therein designated, or
herein described or provided for; and such certificate on any
such bond shall be conclusive evidence, and the only evidence,
that such bond has been duly authenticated and delivered by the
Trustee and when delivered by the Company will be secured hereby
and is secured hereby.

SECTION 2.10. Authorized Denominations. Unless
otherwise specified in a supplemental indenture with respect to a
series of bonds, the bonds of each series shall be issuable in
denominations of $1,000 original principal amount and in integral
multiples thereof.

<PAGE> 31
ARTICLE III

BOND FORMS

SECTION 3.01. Forms Generally. The bonds of each
series (other than book entry bonds contemplated by Section 16.01
hereof and other than bonds of Series A through C and Series X
for which forms of bonds are set forth in Appendices A-1 through
A-4) are to be substantially in the forms set forth in this
Article, with such modifications thereof and additions thereto or
eliminations therefrom, authorized or permitted by this Indenture
as to any particular series, as in the opinion of the Board of
Directors at the time may be necessary or proper.

<PAGE> 32

[GENERAL FORM OF REGISTERED BOND]

[FACE]

EL PASO ELECTRIC COMPANY

FIRST MORTGAGE BOND, SERIES ___
__% DUE _______, ____

No.

EL PASO ELECTRIC COMPANY, a Texas corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to __________________ or registered assigns, the
principal sum of $___________ Dollars on _________, and to pay
to the registered holder hereof interest on said sum from the
date hereof at the rate of ___ per centum per annum, payable
half-yearly on the ______ day of ______ and the ______ day of
______ in each year, commencing __________, until said principal
sum is paid. Both the principal of and the interest on this bond
shall be payable at the principal office or agency of the Company
in __________, in any coin or currency of the United States of
America which at the time of payment is legal tender for public
and private debts provided that, at the option of the Company,
payment of interest may be made by check mailed to the address of
the person entitled thereto as shown on the registration books of
the Trustee.

The provisions of this bond are continued on the
reverse hereof and such continued provisions shall for all
purposes have the same effect as though fully set forth at this
place.

This bond shall not be valid or become obligatory for
any purpose unless and until it shall have been authenticated by
the execution by or on behalf of the Trustee or its successor in
trust under the Indenture of the certificate hereon.

<PAGE> 33
IN WITNESS WHEREOF, El Paso Electric Company has caused
this bond to be executed in its name by the manual or facsimile
signature of its President or one of its Vice Presidents, and its
corporate seal or a facsimile thereof to be affixed hereto or
imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.

Dated: ______________

EL PASO ELECTRIC COMPANY

By _______________________
[Title]

Attest:

_____________________________
Secretary

<PAGE> 34

[REVERSE]

EL PASO ELECTRIC COMPANY

FIRST MORTGAGE BOND, SERIES ___
___% DUE ________, ___

The interest payable on this bond on any interest
payment date will, subject to certain exceptions provided in the
Indenture hereinafter mentioned, be paid to the person in whose
name this bond is registered at the close of business on the
record date, which shall be the ___________ or __________, as the
case may be, next preceding such interest payment date, or, if
such date shall be a legal holiday or a day on which banking
institutions in _____________________ are authorized or required
to close, the next preceding day which shall not be a legal
holiday or a day on which such institutions are so authorized or
required to close.

This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture dated as of _________, 1994, given by the Company to
State Street Bank and Trust Company (herein sometimes referred to
as the "Trustee"), and indentures supplemental thereto,
heretofore or hereafter executed, to which indenture and
indentures supplemental thereto (herein referred to collectively
as the "Indenture") reference is hereby made for a description of
the property mortgaged and pledged, the nature and extent of the
security and the rights, duties and immunities thereunder of the
Trustee and the rights of the holders of said bonds and of the
Trustee and of the Company in respect of such security, and the
limitations on such rights. By the terms of the Indenture, the
bonds to be secured thereby are issuable in series which may vary
as to date, amount, date of maturity, rate of interest and in
other respects as in the Indenture provided.

[The bonds of Series __, of which this bond is one, are
not redeemable prior to maturity.]

[The bonds of Series ___, of which this bond is one,
are not redeemable prior to __________. On or after that date,
at the option of the Company and upon the notice and in the
manner and with the effect provided in the Indenture, bonds of
Series __ may be redeemed by or on behalf of the Company, as a
whole at any time, or in part from time to time, at the
applicable general redemption price, expressed as a percentage of
the principal amount of the bonds, stated in the following table
under "General Redemption Price," together with accrued interest
on such principal amount to the date fixed for redemption:

<PAGE> 35
If redeemed If redeemed
during the during the
12 months General 12 months General
beginning Redemption beginning Redemption
_______, ___ Price* _______, ___ Price*

__________________
* Stated as a percentage of principal amount of the bonds.]

In case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable in the manner and with the effect provided
in the Indenture.

No recourse shall be had for the payment of the
principal of or premium, if any, or interest on this bond, or for
any claim based hereon, or otherwise in respect hereof or of the
Indenture, to or against any incorporator, shareholder, director
or officer, past, present or future, as such, of the Company, or
of any predecessor or successor company, either directly or
through the Company, or such predecessor or successor company, or
otherwise, under any constitution or statute or rule of law, or
by the enforcement of any assessment or penalty, or otherwise,
all such liability of incorporators, shareholders, directors and
officers, as such, being waived and released by the holder and
owner hereof by the acceptance of this bond and being likewise
waived and released by the terms of the Indenture.

This bond is transferable or exchangeable by the holder
hereof, in person or by attorney duly authorized, at the
corporate trust office of the Trustee, in Boston, Massachusetts,
but only in the manner and upon the conditions prescribed in the
Indenture, upon the surrender and cancellation of this bond and
the payment of any stamp tax or other governmental charge, and
upon any such transfer or exchange a new registered bond or bonds
of the same series and maturity date and for the same aggregate
principal amount, in authorized denominations, will be issued to
the transferee, or the registered holder, as the case may be, in
exchange herefor. The Company shall not register, exchange or
transfer any bonds of this series during the period of ten days
next preceding any designation of bonds of said series to be
redeemed, if applicable, and, as to any bonds selected for
redemption, from and after the date of such selection. The
Company and the Trustee may deem and treat the person in whose
name this bond is registered as the absolute owner for the
purpose of receiving payment and for all other purposes.

This bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

<PAGE> 36
SECTION 3.02. Trustee's Certificate of Authentication.
Each of the registered bonds (other than book entry bonds
contemplated by Section 16.01 hereof) of each and every series
issued under and secured by this Indenture (whether in temporary
or definitive form) is to bear a certificate of the Trustee
substantially in the following form:

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

STATE STREET BANK AND
TRUST COMPANY,
as Trustee

By __________________________
Authorized Signature

<PAGE> 37
ARTICLE IV

ISSUANCE OF BONDS

SECTION 4.01. Initial Issuance of Bonds. There shall
be, and are hereby created, four initial series of bonds, each
known as and titled as, and subject to the maximum aggregate
principal amount, set forth in the table below.

Maximum Principal
Series Designation Amount

Series A, ___% due $100,000,000
Series B, ___% due $
Series C, ___% due $
Series X, Floating Rate due $

The Trustee shall authenticate the bonds of Series A
through C and Series X (up to the maximum aggregate principal
amount set forth above) and deliver the same to or upon the
written order of the President or a Vice-President of the
Company, upon receipt by the Trustee of the Opinions of Counsel,
orders and certificates referred to in Section 4.06 hereof.

SECTION 4.01A. Terms of Initial Issues of Bonds. The
bonds of Series A through C and Series X shall be issued in fully
registered form without coupons, substantially in the forms
thereof attached as Appendices A-1 through A-4, respectively.
All bonds of said Series shall be due and payable as set forth in
the respective form of bond, shall bear interest from the date
set forth in the respective form of bond, at the rate set forth
in the respective form of bond, payable at the times set forth in
the respective form of bond, and shall be payable, both as to
principal and interest, at the office or agency of the Company in
New York, New York, in any coin or currency of the United States
of America which at the time of payment is legal tender for
public and private debts, provided that, at the option of the
Company, payment of interest may be made by check mailed to the
address of the person entitled thereto as shown on the
registration books of the Trustee.

The bonds of Series A through Series C and Series X are
not redeemable except as set forth in the respective form of
bond.

SECTION 4.01B. Certain Covenants for Bonds of Series A
and Series B.

(a) Limitation on Redemption to Satisfy Maintenance
Fund. The Company covenants and agrees that, so long as any of
the bonds of Series A or Series B are outstanding, and
notwithstanding clause (c) of Section 5.15 hereof, any retirement

<PAGE> 38
or redemption of bonds of either of said Series shall not be used
to satisfy the maintenance and renewal obligations set forth in
said Section.

(b) Dividend Limitation. The Company covenants and
agrees that, so long as any of the bonds of Series A or Series B
are outstanding, it will not declare or pay any dividends on its
common stock (except (i) dividends payable in shares of its
common stock, and (ii) dividends payable in cash where
concurrently with the payment thereof an amount in cash equal to
the amount of the cash dividends paid is received by the Company
as a capital contribution or as the proceeds of the issue and
sale of shares of its common stock), or make any other dis-
tributions on shares of its common stock, or purchase or other-
wise acquire for value or retire, or permit any subsidiary to
purchase or otherwise acquire for value, any shares of the
Company's common stock (except in exchange for, or out of the
proceeds from the sale of, other shares of the Company's common
stock) if, after giving effect thereto, the aggregate amount of
all such dividends, distributions, purchases or acquisitions
(other than those excepted above) paid or made subsequent to
___________, 1994[*] would exceed the sum of (x) $300 million,
and (y) the net income of the Company for the period from
____________, 1994[*] to the date of such dividend, distribution,
purchase or acquisition as determined in accordance with
generally accepted accounting principles.

(c) Special Limitation on Dividends. Notwithstanding
paragraph 4.01B(b) above, the Company covenants and agrees that,
so long as any of the bonds of Series A or Series B have been
owned continuously by the initial beneficial owners thereof since
the date of their initial issuance (as evidenced by the
registration books of the Trustee, the records of any applicable
depository company and other information reasonably satisfactory
to the Company which may include certifications from the holders
of the relevant bonds), the Company will not declare any
dividends on its common stock or make any distributions,
purchases or acquisitions described (and not excepted) in
paragraph 4.01B(b) above if the bonds of such applicable Series
do not, at such time, have an Investment Grade Rating (as defined
below). If at any time the bonds of such applicable Series do
not have an Investment Grade Rating, the Company may, with the
unanimous consent of the initial beneficial owners of such bonds
who continue to hold such bonds, amend, modify or waive the
covenant contained in the first sentence of this paragraph. The
consent of the Trustee shall not be required for any such
amendment, modification or waiver. The Company will be deemed to
have received such unanimous consent if (i) the Company offers to
redeem the bonds of such applicable Series held by any dissenting
initial beneficial owners thereof at a redemption price equal to
the principal amount of such bonds, together with accrued
interest on such principal amount to the date fixed for
redemption, and (ii) the Company redeems, in accordance with the
provisions of this Indenture, all bonds of such applicable Series

<PAGE> 39
which such dissenting initial beneficial owners thereof have
elected to have so redeemed. "Investment Grade Rating" means a
rating of BBB- or better (or equivalent rating) by at least two
(2) of Moody's Investors Service, Inc., Standard & Poor's Ratings
Group and Duff & Phelps, Inc.

SECTION 4.01C. Certain Provisions for Bonds of Series
X. The bonds of Series X are issued to partially secure the
payment of the principal and interest due on the Class 3A Secured
Notes (the "Notes") issued by the Company in the aggregate
principal amount of $_________ pursuant to a Term Loan Agreement
dated as of the Effective Date (the "Term Loan Agreement") among
the Company, the creditors named therein (the "Creditors") and
_________, as agent for the Creditors (together with any
successor, the "Agent"). The bonds of Series X will be
registered in the name of the Agent for the benefit of the
Creditors and will be transferable solely to a successor to the
Agent as provided in the Term Loan Agreement. The Trustee shall
be fully protected in registering the transfer of the bonds of
Series X in accordance with the written direction of the Agent.
The bonds of Series X will mature as provided therein and will
bear interest at the same rates as the Notes under the terms of
the Term Loan Agreement, which provide for floating interest
rates.

The obligation of the Company to make payments with
respect to principal and interest on the bonds of Series X shall
be satisfied and discharged to the extent the Company shall have
satisfied and discharged its obligation to pay principal and
interest on the Notes which the bonds of Series X secure. The
Trustee may conclusively presume that the obligations of the
Company to make principal and interest payments on the Notes
which the bonds of Series X secure have been satisfied and
discharged unless and until the Trustee shall have received a
notice of the occurrence of an event of default under the Term
Loan Agreement or a written demand for redemption from the Agent
(which notice or demand has not been subsequently rescinded by
the Agent) as described in the form of bond. The Trustee shall
be fully protected in relying upon any notice or demand from the
Agent or the absence of such notice or demand and shall have no
duty to inquire into the rights, obligations or performance of
any party to the Term Loan Agreement. When such Notes have been
fully satisfied and discharged in accordance with the terms of
the Term Loan Agreement, the Agent will surrender to the Trustee
the bonds of Series X, and upon such surrender the bonds of
Series X will be deemed to have been paid in full and shall cease
to be entitled to the lien of this Indenture.

The bonds of Series X will not be redeemable prior to
maturity except as set forth in the form of bond of Series X set
forth in Appendix A-4.

<PAGE> 40
SECTION 4.02. Issuance of Bonds Upon Retirement of
Bonds Previously Outstanding Hereunder. Bonds of any series
(other than bonds of Series A through C and Series X) may be
executed by the Company and authenticated and delivered hereunder
by the Trustee from time to time in the manner and subject to the
limitations provided in this Section and in Articles II and III
hereof, for or on account of the payment, cancellation,
redemption or other discharge at, before or after maturity, of
bonds of one or more other series theretofore authenticated under
any provision of this Indenture, in a principal amount not
exceeding the aggregate principal amount of the bonds of such
other series so retired, or for the retirement of which the
necessary Funds have been deposited with the Trustee, provided,
however, (1) that such bonds of such other series have not been
previously used as a basis for the authentication of any bonds
issued under any provision of this Indenture or for the
withdrawal of deposited cash or any other moneys under any
provision of this Indenture, have not been certified to the
Trustee to comply with any maintenance or renewal requirement
contained herein or in any supplemental indenture, and have not
been acquired, redeemed or discharged with cash applied to any
such purpose pursuant to Section 4.04 hereof, Section 8.06 hereof
or any maintenance or renewal provisions contained herein or in
any supplemental indenture, and that no part of the expenditures
for the redemption, the payment or the purchase and cancellation
of such bonds has been made out of any insurance moneys or moneys
received from the condemnation, sale or other disposition of any
of the Company's property subject to the lien of this Indenture
or has been used or applied or certified to the Trustee to comply
with any maintenance or renewal requirement contained herein or
in any supplemental indenture, and (2) that such bonds have not
been acquired, redeemed or discharged through the operation of,
or certified to comply with, any sinking fund or analogous fund
created hereafter pursuant to the terms of this Indenture in
respect of any bonds authenticated and delivered hereunder; but
the limitation of this clause (2) of this proviso shall apply
only to the extent to which the provisions relating to any such
fund preclude the authentication of bonds under this Section on
account of bonds so retired through the operation of, or
certified to comply with, any such fund.

Bonds shall be authenticated by the Trustee under this
Section subject to the restrictions hereof and shall be delivered
by it to or upon the written order of the President or a Vice-
President of the Company upon receipt by the Trustee of the
following:

<PAGE> 41
subject to the restrictions of Articles II and III hereof,
and specifying the principal amount and series designation
of the bonds of such other series for or on account of the
payment, cancellation, redemption or discharge of which such
bonds are authorized to be authenticated; and

(b) One of the following:

(x) A principal amount of bonds, properly endorsed
(either cancelled or uncancelled, and in either
temporary or definitive form), theretofore
authenticated hereunder and specified in such
Resolution, equal to the principal amount of bonds then
requested to be authenticated hereunder or if such
bonds have been destroyed a certificate of the
destruction thereof executed on behalf of the Trustee;
or

(y) An amount of Funds equal to the principal
amount, with interest thereon to maturity, of the bonds
of such other series specified in such Resolution for
the purpose of the payment at maturity of such bonds
and the interest thereon from time to time; or

(z) An amount of Funds sufficient to redeem, and
for the purpose of redeeming, the bonds of such other
series specified in such Resolution at a date,
specified by the Company, upon which such bonds can be
redeemed in accordance with the terms of such bonds and
of this Indenture; and

(c) An Officers' Certificate stating that the bonds of
such other series delivered to the Trustee have not
theretofore been used as a basis for the authentication of
any bonds under any provision of this Indenture or for the
withdrawal of deposited cash or any other moneys under any
provision of this Indenture, have not been certified to the
Trustee to comply with any maintenance or renewal
requirement contained herein or in any supplemental
indenture and have not been acquired, redeemed or discharged
with cash applied to any such purpose pursuant to Section
4.04 hereof, Section 8.06 hereof or any maintenance or
renewal provision contained herein or in any supplemental
indenture; that no part of the expenditures for the
redemption, the payment or the purchase and cancellation of
such bonds has been made out of any insurance moneys or
moneys received from the condemnation, sale or other
disposition of any of the Company's property subject to the
lien of this Indenture or has been used or applied or
certified to the Trustee to comply with any maintenance or
renewal requirement contained herein or in any supplemental
indenture; and that such bonds have not been acquired,
redeemed or discharged through the operation of, or

<PAGE> 42
certified to comply with, any sinking fund or analogous fund
created hereafter pursuant to the terms of this Indenture in
respect of any bonds authenticated and delivered under this
Indenture, or, in the alternative, that the provisions
relating to any such fund do not preclude the use of such
bonds retired through the operation of, or certified to
comply with, any such fund as the basis for the
authentication of bonds under this Section; and

(d) The certificates, orders, opinions, supplemental
indentures and/or other instruments, if any, required by
Sections 4.05 and 4.06 hereof.

Any bond which is delivered uncancelled to the Trustee
and on account of which a new bond is authenticated under this
Section shall, when received by the Trustee, immediately be
cancelled and, together with every cancelled bond delivered to
the Trustee under this Section, shall be destroyed, and a
certificate of such destruction shall be delivered to the
Company. Any cash deposited with the Trustee under the
provisions of this Section shall be applied by the Trustee to the
purposes for which such cash was so deposited and, until so
applied, shall (subject to the provisions of Article XI hereof)
be held irrevocably in trust by the Trustee for such purposes;
provided, however, that upon the surrender by the Company to the
Trustee for cancellation of any bond or bonds authenticated
hereunder (properly endorsed), for the payment at maturity or for
the redemption of which cash shall have been deposited with the
Trustee under the provisions of this Section, the Trustee shall
return to the Company out of such cash an amount equal to the
amount deposited for the payment at maturity or the redemption,
as the case may be, of such bond or bonds so surrendered.

SECTION 4.03. Issuance of Bonds Upon the Basis of
Property and Property Additions. Bonds of any series (other than
bonds of Series A through C and Series X) may be executed by the
Company and authenticated and delivered hereunder by the Trustee
from time to time, in the manner and subject to the limitations
provided in this Section and in Articles II and III hereof, up to
a principal amount equal to sixty-six and two-thirds per centum
(66-2/3%) of the sum of (a) $_______ million[**] in respect of
expenditures for bondable property constructed or otherwise
acquired by the Company prior to ______, 1994[*], plus (b) all
net expenditures made by the Company for bondable property
acquired by the Company through construction, purchase,
consolidation, or otherwise, at any time on or after __________,
1994[*]; provided (1) that all bondable property on account of
which bonds are at any time authenticated under the provisions of
this Section shall be subject to the lien of this Indenture and
shall not be subject to any liens or encumbrances equal or prior
in lien to this Indenture, except Excepted Encumbrances and
Prepaid Liens, and (2) that no bonds shall be authenticated and
delivered under the provisions of this Section for or on account
of any expenditures for property which shall previously have been

<PAGE> 43
used as a basis for the authentication of bonds under any
provision of this Indenture or as a basis for the withdrawal of
deposited cash or any other moneys or the release of any property
under any provision of this Indenture, or which shall have been
made out of any insurance moneys or moneys received from the
condemnation, sale or other disposition of any of the Company's
property subject to the lien of this Indenture or which shall
have been certified or used to comply with any maintenance or
renewal requirement contained herein or in any supplemental
indenture, or which shall have been certified or used to comply
with the provisions respecting any sinking fund or analogous fund
created hereafter under the terms of this Indenture in respect of
any bonds authenticated and delivered hereunder, if and to the
extent that the provisions relating to any such fund preclude the
use of such expenditures as a basis for the authentication and
delivery of bonds hereunder.

The term "bondable property" shall mean and include any
property, plant or equipment owned by the Company on
______________, 1994[*], or constructed or otherwise acquired by
it on or after said date, in either case that constitutes a part
of its permanent and fixed investment in the conduct by it of the
business of generating, manufacturing, purchasing, transmitting,
distributing, supplying and/or selling electricity for light,
heat, power or other purposes.

The term "bondable property" shall not include,
however, (a) any Excepted Property, (b) any office furniture and
equipment, (c) any goodwill or going concern value, as such, or
any franchise granted by any municipality, state or subdivision
thereof, or any governmental permit, (d) any property acquired or
constructed by the Company the cost of which is properly
chargeable to maintenance or other operating expense, (e) any
oil, gas and mineral leases, wells and equipment owned, used or
obtained for use for the exploration, drilling, production,
storage and transportation of oil or gas; oil, natural gas or
liquid hydrocarbon gathering or transportation lines connecting
wells with main branch or trunk lines, compressor stations and
all appurtenances thereto; easements, rights-of-way, permits,
licenses relating thereto; and all other works, property, rights,
titles and interests used primarily and principally in the
exploration, production, storage and transportation of oil or
natural gas and liquid hydrocarbons produced in association
therewith (but shall include gas distribution systems and gas
transmission lines interconnecting gas distribution systems, and
gas transmission lines constructed for the purpose of supplying
an electric generating plant or plants of the Company with gas
for fuel supply); and (f) any leasehold interest in property or
permanent improvements constructed on property held by the
Company under lease, but shall include rights-of-way and
easements and any electric or gas transmission or distribution
lines and equipment or appurtenances (other than gas gathering or

<PAGE> 44
transmission lines and equipment and appurtenances of the
character excluded by clause (e) above) thereto located on any
such right-of-way or easement or located upon any street, alley
or public place of any municipality or upon any public highway.

The term "purchased property" shall mean any bondable
property which within six months prior to the date of its
acquisition by the Company has been used or operated by a person
or persons other than the Company in the electric utility or gas
utility business, and shall be included in the term "bondable
property."

The terms "fair value to the Company" or "fair value"
of any property shall mean the fair value to the Company or the
fair value, as the case may be, as determined by an Engineer or
an Independent Engineer (except where some other method of
determination, if any, is specifically provided for in this
Indenture) and evidenced by an Engineer's Certificate signed by
such Engineer or Independent Engineer, as the case may be, and
delivered to the Trustee.

If the fair value to the Company of any purchased
property, as shown by the Engineer's Certificate, is (i) not less
than $25,000 and (ii) not less than one per centum (1%) of the
aggregate principal amount of the bonds then outstanding under
this Indenture, such Engineer's Certificate covering any such
purchased property shall be made and signed by an Independent
Engineer.

"Gross expenditures" shall mean and include cash
payments actually made or agreed to be made and for which
liability shall have been actually incurred by the Company for
the construction or acquisition of bondable property and, in the
case of purchased property, shall mean and include (a) all cash
payments actually made or agreed to be made and for which
liability shall have been actually incurred by the Company for
the purchase thereof (including any expenditures made by the
Company in the payment or discharge of the principal of any
mortgage indebtedness existing on any purchased property at the
time of its acquisition by the Company) in excess of any net
current assets received by the Company or (b) the fair value to
the Company of such purchased property at the time of its
acquisition by the Company, whichever shall be less; provided
that in cases where purchased property is acquired by the Company
without consideration or for a consideration not consisting
wholly of cash payments made or agreed to be made, the fair value
to the Company of such purchased property at the time of its
acquisition by the Company, shall, within the meaning of this
Indenture, be deemed to be a gross expenditure for such property.
The "cost" of any bondable property shall mean the aggregate of
the gross expenditures therefor.

<PAGE> 45
"Net expenditures" for bondable property shall be
determined as of any date as follows: From the total gross
expenditures for bondable property made by the Company during the
period beginning _____________, 1994[*], and ending on the date
as of which the net expenditures are to be determined, there
shall be deducted (a) the aggregate amount of such gross
expenditures, if any, certified for or during such period to
comply with the requirements of sub-paragraph (b) of Section 5.15
hereof, and (b) the aggregate amount of gross retirements of
property, as hereinafter defined, made during such period after
deducting therefrom the sum of (1) the aggregate amount certified
by the Company to the Trustee as expended during such period for
the purposes specified in sub-paragraphs (b) and (c) of Section
5.15 hereof (excluding the aggregate amount certified under
Section 5.15 as a basis for the withdrawal of cash under said
Section), (2) the aggregate amount paid to the Trustee for or
during said period to comply with the requirements of Section
5.15 and (3) the aggregate amount of all net considerations
received by the Company during said period in connection with the
release of property from the lien of this Indenture under the
provisions of Article VIII hereof.

In making any determination of net expenditures for the
purpose of the authentication of bonds under the provisions of
this Section or the withdrawal of deposited cash under the
provisions of Sections 4.04 or 8.06 hereof, the net expenditures
shall be determined as of a date (to be selected by the Company)
not more than ninety days prior to the authentication of such
bonds or the withdrawal of such deposited cash, as the case may
be, and the deductions required by subdivisions (a) and (b) of
the next preceding paragraph to be made from gross expenditures
shall be made for the period beginning ______________, 1994[*],
to such date.

"Gross retirements of property" made during any such
period shall mean and include (a) all retirements made during any
such period as the result of renewals, replacements,
abandonments, losses, sales or other dispositions of bondable
property owned by the Company on _____________, 1994[*], or
constructed or otherwise acquired by it after said date, all such
retirements to be stated and included in "gross retirements of
property" at the amount (estimated by the Company if not
separately shown) at which the property retired was included at
_____________, 1994[*], as tangible property in utility plant
account on the books and records of the Company, if owned by the
Company at said date, or at the cost thereof if constructed or
acquired by the Company after said date, and (b) all other
reductions made during such period in the amount at which
bondable property owned by the Company on _______________,
1994[*], or constructed or otherwise acquired by it after said
date, was included as tangible property in utility plant account
on the books and records of the Company at the beginning of such
period, except any reduction resulting from the transfer of any
portion of such amount to some other property account, tangible

<PAGE> 46
or intangible, of the Company. "Gross retirements of property"
shall not include any reductions in the amounts included in
utility plant account as "intangible property" or as
"intangibles" on the books and records of the Company.

(a) A copy of a Resolution authorizing the execution
and authentication of the bonds proposed to be authenticated
and stating the principal amount thereof and the designation
of the series in which to be authenticated and setting
forth, either expressly or by reference to a Resolution
theretofore adopted, the terms, provisions and
characteristics of such bonds, all in accordance with and
subject to the restrictions of Articles II and III hereof;

(b) An Officers' Certificate setting forth (1) the
remaining aggregate principal amount of bonds which may be
issued with respect to the $___ million in respect of
expenditures for bondable property constructed or otherwise
acquired by the Company prior to ______, 1994[*] (as
specified in the first sentence of this Section), and (2)
the gross expenditures for bondable property (other than
purchased property) made by the Company in the period
covered by the certificate (which shall begin on
______________, 1994[*]), briefly describing such bondable
property and identifying it as such within the definition
thereof contained in this Section, and stating that said
expenditures have been actually made, or a liability
therefor incurred, by the Company, and (3) the gross
expenditures for, and the fair value to the Company at the
time of acquisition (as determined by an Engineer's
Certificate signed by an Engineer or an Independent Engineer
in accordance with the provisions of this Section) of, any
purchased property acquired by the Company during the period
covered by the certificate, a brief description of such
purchased property (identifying the same as purchased
property as defined above), the date of its acquisition, and
the amount and character of the consideration paid therefor,
and (4) the aggregate amount of such gross expenditures, if
any, certified for or during the period covered by the
certificate, to comply with the requirements of sub-
paragraph (b) of Section 5.15 hereof, and (5) (a) the
aggregate amount of gross retirements of property, as
defined above, made during said period, and (b) the sum of
all amounts certified by the Company to the Trustee as
expended during such period for the purposes specified in
sub-paragraphs (b) and (c) of Section 5.15 hereof (excluding
all amounts certified under said Section as a basis for the
withdrawal of cash under said Section), and (c) the

<PAGE> 47
aggregate amount paid to the Trustee for or during said
period to comply with the requirements of Section 5.15
hereof, and (d) the aggregate amount of all net
considerations received by the Company during said period in
connection with the release of property from the lien of
this Indenture under the provisions of Article VIII hereof,
and (6) a computation showing the net expenditures for
bondable property, as defined above, made by the Company
during such period which may be used as the basis for the
authentication of additional bonds, and (7) that all such
bondable property, including such purchased property, if
any, has become subject to the lien of this Indenture and is
not subject to any liens or encumbrances equal or prior in
lien to this Indenture, except Excepted Encumbrances and
Prepaid Liens, and (8) that no part of said net expenditures
for bondable property has been previously used as a basis
for the authentication of any bonds under this Indenture or
as a basis for the withdrawal of deposited cash or any other
moneys or the release of any property under any provision of
this Indenture or has been made out of any insurance moneys
or moneys received from the condemnation, sale or other
disposition of any property of the Company subject to the
lien of this Indenture or has been certified or used to
comply with any maintenance or renewal requirement contained
herein or in a supplemental indenture or has been certified
or used to comply with the provisions respecting any sinking
fund or analogous fund created hereafter pursuant to the
terms of this Indenture or, in the alternative, that the
provisions relating to any such fund then existing do not
preclude the use of any such expenditures as a basis for the
authentication of bonds hereunder, and (9) any other facts
and data (not specifically required to be shown in some
other manner) showing that the Company is entitled under the
foregoing provisions of this Section to have authenticated
the bonds requested to be authenticated;

(c) An Engineer's Certificate signed by an Engineer
certifying to the fair value to the Company, at a date
within ninety days prior to the date of delivery to the
Trustee of the application of the Company for the
authentication of bonds, of the bondable property (other
than purchased property if any be included in such bondable
property) described in the certificate required by
subparagraph (b) of this Section;

(d) An Engineer's Certificate signed by an Engineer or
an Independent Engineer (conforming to and as may be
required by the provisions of this Section) certifying to
the fair value to the Company, at a date within ninety days
prior to the date of delivery to the Trustee of the
application of the Company for the authentication of bonds,
of any purchased property described in the certificate
required by subparagraph (b) of this Section and also its
fair value to the Company at the time of its acquisition;
and

<PAGE> 48
(e) The certificates, orders, opinions, supplemental
indentures and/or other instruments, if any, required by
Sections 4.05 and 4.06 hereof.

"Bondable property" (other than purchased property and
land) may be sufficiently described other than in the granting
clauses for any purpose of this Indenture by stating the
descriptive name or title of the account or accounts (and
subdivisions thereof applicable thereto) under or pursuant to a
standard classification of accounts in general use to which the
expenditures made for such property are applicable or have been
charged or allocated and the amounts thereof.

SECTION 4.04. Issuance of Bonds Upon Deposit of Cash
With Trustee; Withdrawal or Application of Deposited Cash. Bonds
of any series (other than bonds of Series A through C and Series
X) may be executed by the Company and be delivered to the Trustee
for authentication, from time to time, in the manner and subject
to the limitations provided in this Section and in Articles II
and III hereof, and shall be authenticated by the Trustee and
delivered by it to or upon the written order of the President or
a Vice-President of the Company, upon receipt by the Trustee of
the following:

(b) An amount of cash equal to the principal amount of
the bonds requested to be authenticated; and

(c) The certificate, orders, opinions, supplemental
indentures and/or other instruments, if any, required by
Sections 4.05 and 4.06 hereof.

Cash received by the Trustee under the provisions of
this Section is sometimes referred to in this Indenture as
"deposited cash." Whenever the Company shall be entitled to the
authentication and delivery of bonds under the provisions of
either Section 4.02 hereof or Section 4.03 hereof and the Trustee
shall have in its possession deposited cash equal to the
principal amount of such bonds, the Trustee shall, on the request
signed by the President or a Vice President of the Company
evidenced by a Resolution and in lieu of the authentication and
delivery of such bonds, pay over to the Company, on the written
order of its President or a Vice-President, an amount of
deposited cash equal to the principal amount of such bonds, but
only upon receipt by the Trustee of an Officers' Certificate
stating that the Company is not then in default under any

<PAGE> 49
provision of this Indenture and of the certificate or
certificates, order or orders, opinion or opinions and other
instruments (if any) of the character required to be given for
the authentication and delivery of such bonds (excepting only the
certificates, orders, opinions, supplemental indentures and/or
other instruments, if any, required by Section 4.05 and by sub-
divisions (a) to (e), inclusive, of Section 4.06) but with such
changes or differences as may be appropriate or required by
reason of the fact that the Company's application is for the
withdrawal of deposited cash instead of for the authentication of
bonds. All cash received by the Trustee under the provisions of
this Section shall, until paid out as aforesaid, be held by it as
part of the Trust Estate, except that all or any part of such
cash may, upon the written direction of the Company, be applied
by the Trustee to the purchase or redemption of bonds, upon the
terms and conditions set forth in Section 8.06 hereof, and all
such cash remaining on deposit with the Trustee at the end of
three years from the date of deposit of the same shall be so
applied by the Trustee.

SECTION 4.05. Net Earnings Certificate. (a) No bonds
shall be authenticated and delivered by the Trustee under the
provisions of Sections 4.03 or 4.04 hereof, and (b) no bonds
bearing a higher rate of interest than the bonds for or on
account of the payment, cancellation, redemption or discharge of
which they are authenticated shall be authenticated and delivered
by the Trustee under the provisions of Section 4.02 hereof more
than five years prior to the maturity of the bonds for or on
account of the payment, cancellation, redemption or discharge of
which they are authenticated, except, in each case, upon receipt
by the Trustee of a certificate (a "Net Earnings Certificate")
signed by the President or a Vice-President of the Company, by
the Treasurer or an Assistant Treasurer of the Company and by an
accountant, whose qualifications shall conform to the
requirements of this Section. The Net Earnings Certificate shall
show that for a period of twelve consecutive calendar months
ending within ninety days next preceding the authentication and
delivery by the Trustee of any such bonds hereunder the net
earnings, as hereinafter defined, of the Company shall have been
a sum at least equal to twice the interest for one year (1) on
all the bonds to be Outstanding under this Indenture immediately
after such authentication and (2) on all other indebtedness then
secured by a lien equal or prior to the lien of this Indenture on
any part of the Company's property (excepting any such
indebtedness the evidences of which shall then be held in pledge
by the Trustee hereunder or by the trustee under any mortgage
constituting a lien equal or prior to the lien of this Indenture
on any part of the Company's property, and excepting Prepaid
Liens).

<PAGE> 50
proposed to be authenticated hereunder and of other bonds
authenticated and delivered hereunder since the commencement of
the then current calendar year (other than bonds with respect to
which a Net Earnings Certificate is not required by this
Indenture or with respect to which a certificate of an
independent public accountant has previously been furnished) is
ten per centum (10%) or more of the aggregate principal amount of
all bonds at the time outstanding hereunder and (b) the twelve
consecutive calendar months for which the net earnings of the
Company shall be stated in such Net Earnings Certificate are the
period covered by an annual report required to be filed by the
Company. In every other case, the accountant signing such Net
Earnings Certificate may be an accountant who is the chief
accounting officer or other accounting officer or employee of the
Company.

The "net earnings" of the Company shall for any period
mean the earnings of the Company, computed in accordance with
generally accepted accounting principles determined by deducting
from the total gross earnings and income of the Company derived
from all sources for such period, all operating expenses of the
Company for such period including current maintenance and
repairs, rentals, insurance, taxes other than taxes on income,
and all charges or provisions for depreciation, retirements,
renewals, replacements and/or amortization; and by making such
adjustments, if any, of the resulting amount as may be necessary
to comply with the provisions as to net earnings hereinafter
contained in this Section. Not more than ten per centum (10%) of
the net earnings as finally determined shall consist of the
aggregate of (a) net non-operating income, (b) net operating
revenues derived from the operation by the Company of any
properties other than electric utility properties and (c) net
revenues from any properties not owned by the Company. No
dividends or interest received by the Company from any subsidiary
or affiliated company shall be included in the net earnings of
the Company except to the extent that such dividends or interest
were earned by the paying company in the current or the next
preceding fiscal year of such company. No profits or losses
resulting from the sale or other disposition of capital assets
shall be included in computing the net earnings of the Company.
In case any property owned by the Company at the time of the
authentication of bonds under this Indenture shall not have been
owned by it during any part of any such period or shall have been
owned by it only during a part of such period, then and in every
such case the net earnings or net loss of such property during
said period (including net earnings or net loss during such part
thereof as shall have preceded the acquisition of said property
by the Company) shall be included in computing the net earnings
or net loss of the Company for such period. In case any property
owned by the Company during any part of any such period shall not
be owned by the Company at the time of the authentication of
bonds hereunder, the net earnings or the net loss of the Company
from such property during such period shall be excluded in
computing the net earnings or net loss of the Company. In

<PAGE> 51
computing the net earnings of the Company for any period pursuant
to the provisions of this Section, the amounts to be deducted
from the total gross earnings and income as charges or provisions
for depreciation, retirements, renewals and replacements and/or
amortization, shall be not less in the aggregate than an amount
equal to the Required Percentage of the arithmetical average of
the amount of depreciable property of the Company at the
beginning, and the amount thereof at the end, of such period.

SECTION 4.06. Documents to be Delivered. No bonds
shall be authenticated and delivered by the Trustee under the
provisions of Sections 4.01, 4.02, 4.03 or 4.04 hereof except
upon receipt by the Trustee of the following:

(a) An Opinion of Counsel stating each public service
commission or other governmental agency, if any, of the
United States of America or of any state or states thereof
then having or claiming to have jurisdiction over the
issuance of bonds under this Indenture by the Company, and
also stating the principal amount of the bonds then
requested to be authenticated with respect to which a
certificate or order of any such public service commission
or governmental agency is required or claimed to be
required; and a certified copy of each such certificate or
order, shown by said opinion to be required, together with
an Opinion of Counsel to the effect that such certificates
or orders are sufficient to authorize or permit the issuance
of the bonds requested to be authenticated;

(b) An Opinion of Counsel stating that any recording
or other tax or taxes required by law in connection with the
issuance of such bonds or for the effectiveness of the lien
of this Indenture as security for such bonds have been paid,
or that no such tax or taxes are required by law to be paid,
and stating further that such bonds have been duly
authorized to be issued and will be, when authenticated and
issued, the legal and binding obligations of the Company
secured by this Indenture;

(c) An Officers' Certificate stating that the Company
is not then (and will not be, after giving effect to such
authentication and delivery) in default under any provision
of this Indenture, and stating the aggregate principal
amount of all bonds of all series and also the aggregate
principal amount of all bonds of any particular series, of
which any bonds then requested to be authenticated are a
part, which will be outstanding under this Indenture upon
the authentication and issue of the bonds then requested to
be authenticated;

<PAGE> 52
as shown by the certificate provided for in subdivision (c)
of this Section 4.06, will not exceed the amount which at
that time may be lawfully outstanding hereunder nor exceed
any limitation then existing upon the indebtedness of the
Company under its Amended and Restated Certificate of
Incorporation and amendments thereto or, to the best of such
counsel's knowledge, under any contract, indenture or other
instrument to which the Company is a party or under any
applicable law, and that the aggregate principal amount of
all bonds of any particular series, of which any bonds then
requested to be authenticated are a part, will not exceed
the maximum principal amount, if any, fixed with respect to
the bonds of such series;

(e) In case of the first authentication of bonds of
any series (other than an issuance under the provisions of
Section 4.01 hereof), a supplemental indenture, executed as
provided in Article XVI hereof, (1) setting forth the form
and substance of the bonds of said series and the terms,
provisions and characteristics thereof, and (2) limiting the
aggregate principal amount of bonds of such series that may
be outstanding at any one time to an amount stated in such
supplemental indenture, unless such supplemental indenture
be accompanied by an Opinion of Counsel to the effect that
such limitation is not required by law or by this Indenture,
and (3) containing such other provisions, not inconsistent
with the provisions of this Indenture, as may be deemed
necessary or appropriate in the premises and as shall be
satisfactory to the Trustee;

(f) In case of an application for the authentication
of bonds under the provisions of Section 4.03 hereof or in
case of an application for the withdrawal of deposited cash
under the provisions of Section 4.04 hereof on account of
expenditures for bondable property, (1) an Opinion of
Counsel stating that the Company has substantially good
title to any such bondable property included in the
certificate provided for in subdivision (b) of said Section
4.03 or in said Section 4.04 (unless such bondable property
shall have been covered by an Opinion of Counsel theretofore
filed with the Trustee), and that such bondable property is
subject to the lien of this Indenture and is not subject to
any liens or encumbrances equal or prior in lien to this
Indenture, except Excepted Encumbrances and Prepaid Liens,
and (2) all such deeds, conveyances, transfers or
instruments of further assurance as may be necessary for the
purpose of effectually subjecting such bondable property to
the direct lien and operation of this Indenture, together
with an Opinion of Counsel that the same are sufficient for
the purpose, or an Opinion of Counsel that no such deeds,
conveyances, transfers or instruments are necessary for such
purpose;

<PAGE> 53
(g) An Officers' Certificate stating that in the
opinion of the officers signing the certificate all
conditions and requirements of this Indenture relating to
the authentication and delivery of the bonds requested to be
authenticated and delivered have been complied with; or, in
the case of an application for the withdrawal of deposited
cash under the provisions of Section 4.04 hereof, that all
conditions and requirements of this Indenture relating to
the withdrawal of cash requested to be withdrawn have been
complied with; and

(h) An Opinion of Counsel stating that in such
counsel's opinion all conditions and requirements of this
Indenture relating to the authentication and delivery of the
bonds requested to be authenticated and delivered have been
complied with; or, in the case of an application for the
withdrawal of deposited cash under the provisions of Section
4.04 hereof, that in his or her opinion all conditions and
requirements of this Indenture relating to the withdrawal of
cash requested to be withdrawn have been complied with.

To the extent any of the foregoing opinions relate to
enforceability, counsel may express that such opinion is limited
by the following: (i) the rights of any governmental entity under
any statutory lien provisions; (ii) principles of equity which
may limit the availability of certain equitable remedies; and
(iii) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium, and other laws applicable to creditors'
rights or the collection of debtors' obligations generally. Such
opinions may also be expressed to be further subject to the
qualification that the enforceability of certain of the remedial,
waiver and other provisions of this Indenture is limited by all
applicable constitutional, legislative, judicial and
administrative provisions, statutes, regulations, decisions,
rulings and other laws in addition to those described in the
immediately preceding sentence; provided, however, that such laws
do not, in such counsel's opinion, substantially interfere with
the practical realization of the benefits expressed in this
Indenture except for the economic consequences of any procedural
delay which may result from such laws.

ARTICLE V

PARTICULAR COVENANTS OF THE COMPANY

<PAGE> 54
will maintain and preserve the lien of this Indenture so long as
any of the bonds authenticated hereunder are Outstanding; that it
has good right and lawful authority to mortgage and pledge the
Trust Estate, as provided in and by this Indenture; and that said
Trust Estate is not subject to any Prior Lien except Excepted
Encumbrances and Prepaid Liens.

SECTION 5.02. Payment of Principal, Premium and
Interest; Maintenance of Office. (a) The Company hereby
covenants that it will duly and punctually pay the principal of
and premium, if any, and interest on all the bonds Outstanding
hereunder, according to the terms thereof and of this Indenture,
and that so long as any of such bonds shall remain Outstanding
and unpaid, it will not directly or indirectly extend or assent
to the extension of the time for the payment of any bond or claim
for interest of or upon any such bond, and will not directly or
indirectly be a party to any arrangement therefor, either by
purchasing or refunding or in any manner keeping alive such bond
or claim for interest, or otherwise, and that in case the payment
of any such bond or claim for interest shall be so extended by or
with or without the consent of the Company, then, anything
contained in this Indenture to the contrary notwithstanding, such
bond or claim for interest so extended shall not be entitled, in
case of default hereunder, to any benefit of or from this
Indenture, except after the prior payment in full of the
principal of all bonds and claims for interest as shall not have
been so extended.

(b) The Company hereby covenants that it will keep an
office or agency, while any of the bonds issued hereunder are
Outstanding, at any and all places (i) at which the principal of
or interest on and premium, if any, on any of said bonds may be
payable, (ii) where bonds entitled to be registered, transferred,
exchanged, or converted may be presented or surrendered for
registration, transfer, exchange or conversion and (iii) where
notices, presentations and demands to or upon the Company in
respect of such bonds as may be payable at such places or in
respect of this Indenture may be given or made. The Company will
from time to time give the Trustee written notice of the location
of such office or offices or agency or agencies, and in case the
Company shall fail to maintain such office or offices or agency
or agencies or to give the Trustee written notice of the location
thereof, then in addition to any other remedy or right arising as
a result of the violation of the covenants contained in this
Section, the Company agrees that any such notice, presentation or
demand in respect of said bonds or of this Indenture may be given
or made, unless other provision is expressly made herein, to or
upon the Trustee at its principal corporate trust office, and the
Company hereby authorizes such presentation and demand to be made
to and such notice to be served on the Trustee in either of such
events and the principal of and interest and premium, if any, on
said bonds shall in such event be payable at said office of the
Trustee. Unless otherwise provided in a supplemental indenture

<PAGE> 55
or in any notice of redemption pursuant to Section 7.02 hereof,
the principal of or interest on and premium, if any, on any bonds
issued hereunder shall be payable at the principal corporate
trust office of the Trustee.

SECTION 5.03. Regarding Paying Agent; Funds in Trust.
(a) The Company hereby covenants that, if it shall appoint a
paying agent other than the Trustee, it will cause such paying
agent to execute and deliver to the Trustee an instrument in
which it shall agree with the Trustee, subject to the provisions
of this Section, (1) that such paying agent shall hold in trust
for the benefit of the bondholders or the Trustee all sums held
by such paying agent for the payment of the principal of or
interest (and premium, if any) on the bonds; and (2) that such
paying agent shall give the Trustee notice of any default by the
Company or by any other Obligor in the making of any such payment
to or through such paying agent. Such paying agent shall not be
obligated to segregate such sums from other funds of such paying
agent except to the extent required by law.

(b) The Company hereby covenants that, if the Company
acts as its own paying agent, it will, on or before each due date
of each installment of principal or interest (and premium, if
any) on the bonds, set aside and segregate and hold in trust for
the benefit of the bondholders a sum sufficient to pay such
principal or interest (and premium, if any) so becoming due on
the bonds and will notify the Trustee of such action, or of any
failure to take such action.

(c) Anything in this Section to the contrary
notwithstanding, the Company may at any time, for the purpose of
obtaining a release or satisfaction of this Indenture or for any
other reason, pay or cause to be paid to the Trustee all sums
held in trust by it or any paying agent as required by this
Section, such sums to be held by the Trustee upon the trusts
contained in this Indenture.

(d) Anything in this Section to the contrary
notwithstanding, the agreement to hold sums in trust as provided
in this Section is subject to the provisions of Section 11.03
hereof.

SECTION 5.04. Limitations on Liens; Payment of Taxes.

(a) The Company hereby covenants that it will pay all
taxes and assessments and other governmental charges lawfully
levied or assessed upon the Trust Estate, or upon any part
thereof or upon any income therefrom, or upon the interest of the
Trustee in the Trust Estate, when the same shall become due.

<PAGE> 56
Liens, and other than, in the case of property hereafter acquired
by the Company, vendors' liens, purchase money mortgages or trust
deeds incurred or executed in connection with such acquisition
and any lien thereon at the time of acquisition.

(c) The Company hereby covenants that, within 120 days
or such shorter period as may be required by law after any lawful
claim or demand for payment for labor, materials, supplies or
other objects, which if unpaid would or might be given precedence
over the lien of this Indenture as a lien or charge upon any of
the Trust Estate or the income thereof, the Company will pay or
cause to be discharged or make adequate provision to satisfy or
discharge the same.

(d) The Company hereby covenants that it will duly
observe and conform in all material respects to all valid
requirements of any governmental authority relative to any of the
Trust Estate, and all covenants, terms and conditions upon or
under which any of the Trust Estate is held.

(e) The Company hereby covenants that it will comply
in all material respects with all valid laws of the United States
of America and of any state or states thereof applicable to the
Company and to the right of the Company to transact business
under any such laws, and with all lawful ordinances, rules,
orders and regulations of any commission, board or public
authority having jurisdiction in the Trust Estate, in such form
and manner as counsel may advise.

(f) The Company hereby covenants that it will do and
perform all matters or things necessary or expedient to be done
or observed by reason of any law of the United States of America,
or any state thereof, or any other competent authority, for the
purpose of creating, performing and maintaining the trust hereby
created for the security of the payment of the bonds
authenticated hereunder to, and perform all the obligations
hereby imposed upon, the Company.

(g) The Company hereby covenants that books of record
and account will be kept in which full, true and correct entries
will be made of all dealings or transactions of, or in relation
to, the plants, properties, business and affairs of the Company,
such books, records and accounts to be kept, unless in the course
of contest in good faith, in accordance with the valid orders,
rules and regulations of each regulatory body that may from time
to time have jurisdiction in respect thereof and with which the
Company is compelled to comply by any valid provision of law, and
such books, records and accounts shall at all reasonable times be
open to the inspection of such reputable accountants or other
agent of recognized standing as the Trustee may from time to time
designate.

<PAGE> 57
Nothing in this Section contained, however, shall
require the Company to observe or conform to any requirement of
governmental authority or to cause to be paid or discharged, or
to make provision for, any such lien or charge, or any claim or
demand, or to pay any such tax, assessment or governmental
charge, so long as the validity thereof shall be contested by it
in good faith and by appropriate legal proceedings, and nothing
in this Section shall require the Company to pay, discharge or
make provision for any tax, assessment or other governmental
charge, or any claim or demand, the validity of which shall not
be so contested if adequate security for the payment of such tax,
assessment or other governmental charge, or any claim or demand,
and for any damages which may reasonably be anticipated from
failure to pay the same shall be given to the Trustee; and that,
save as aforesaid, it will not suffer any matter or thing whereby
the lien hereof might or could be impaired in contravention of
the provisions hereof.

SECTION 5.05. To Insure. The Company hereby covenants
that it will keep the Trust Estate insured against loss or
damage, to the extent that property of similar character is
usually so insured by companies similarly situated and operating
like properties, to a reasonable amount by insurance companies
believed by the Company to be responsible; any loss (except as to
materials and supplies and except any particular loss of less
than the lesser of Four Million Dollars ($4,000,000) and two per
centum (2%) of the bonds Outstanding hereunder on the date of
such particular loss) to be made payable to the Trustee as its
interest may appear; or that it will, in lieu of or supplementing
such insurance, in whole or in part, adopt and comply with some
other method or plan of protection against loss or damage, to
provide for the payment, consistent with industry practice, to
the Trustee, to the extent provided in such method or plan, in
cash, of the amount made available under such method or plan by
reason of loss or damage to property (except as to materials and
supplies and except any particular loss less than the lesser of
Four Million Dollars ($4,000,000) and two per centum (2%) of the
bonds Outstanding hereunder on the date of such particular loss).

The Company further covenants that it will, in each
year on or before April 1, deliver to the Trustee a statement of
all such policies of insurance or other methods or plans of
insurance and will promptly advise the Trustee of any
cancellation or other change affecting such policies or methods
or plans of insurance. Such statement shall be signed by the
President or a Vice-President or the Treasurer of the Company and
shall certify that all property of the Company required by this
Section to be insured is insured in the manner and to the extent
herein provided and that loss under such insurance is made
payable as hereinabove provided.

<PAGE> 58
($4,000,000) and two per centum (2%) of the bonds Outstanding
hereunder on the date of such particular loss, shall be held by
the Trustee as a part of the Trust Estate, and, subject as
aforesaid, shall be disposed of as provided in Section 8.06
hereof.

The Trustee shall pay over to the Company, by
endorsement or otherwise, any payment received by it on account
of any loss of materials or supplies or on account of any
particular loss of less than the lesser of Four Million Dollars
($4,000,000) and two per centum (2%) of the bonds Outstanding
hereunder on the date of such particular loss upon receipt by the
Trustee of an Officers' Certificate to the effect that such
payment represents the proceeds of insurance on account of loss
of materials or supplies or on account of a particular loss of
less than the lesser of Four Million Dollars ($4,000,000) and two
per centum (2%) of the bonds Outstanding hereunder on the date of
such particular loss. All such cash received by the Company
shall be applied by it to the rebuilding, renewal or replacement
of property or to the acquisition of additional property that
will become subject to the lien of this Indenture.

Any cash received by the Trustee pursuant to the
provisions of this Section and not so applied within twelve (12)
months after its receipt by the Trustee, or in respect of which
notice in writing of intention to apply the same to the work of
rebuilding or renewal then in progress and uncompleted shall not
have been given to the Trustee by the Company within such twelve
(12) months, or which the Company shall at any time notify the
Trustee in writing is not to be so applied, shall thereafter, and
may at any time subsequent to the receipt thereof by the Trustee,
be withdrawn, used or applied in the manner and for the purposes
and subject to the conditions provided in Section 8.06 hereof.

SECTION 5.06. To Maintain Property, etc. The Company
hereby covenants, subject to the last paragraph of Section 5.13
hereof, that: (a) it will at all times maintain, preserve and
keep the Trust Estate in good repair, working order and condition
and equipped with suitable equipment and appliances; (b) it will
make regular charges to expense for the establishment of a
reasonably adequate reserve or reserves for depreciation, and
from time to time will make all needful and proper repairs,
retirements, renewals and replacements of the Trust Estate;
(c) it will not charge to its property, plant and equipment
accounts any expenditures which are properly chargeable to
maintenance or repairs or to any other expense account in
accordance with generally accepted accounting principles; and (d)
it will promptly classify as retired all property that has
permanently ceased to be used or useful in the Company's
business. Nothing in this Section or elsewhere in this Indenture
contained shall be construed to prevent the Company from ceasing
to operate or maintain any of its plants or any other property,
if, in the judgment of the Company, it is advisable not to
operate or maintain the same or if the Company intends to sell or

<PAGE> 59
otherwise dispose of the same and within a reasonable time
endeavors to effectuate such a sale or other disposition;
provided, however, that the operation or maintenance of such
plant or plants or any other property shall not be essential to
the maintenance and continued operation of the rest of the Trust
Estate and the security afforded by this Indenture will not be
substantially impaired by the termination of such operation.

SECTION 5.07. To Maintain Corporate Existence and
Franchises. The Company hereby covenants that it will, subject
to the provisions of Articles VIII and XIII hereof and except as
herein otherwise provided or permitted either expressly or by
implication, at all times maintain its corporate existence and
right to carry on business and will use its reasonable efforts to
procure, maintain, preserve and renew all the rights, powers,
privileges and franchises owned by it as shall be required for
such purpose; provided that the Company may amend, surrender,
abandon or otherwise terminate any right, permit, privilege or
franchise, whenever the Company shall, contemporaneously or as a
part of the same transaction, obtain or shall previously have
obtained a new and, in the opinion of a majority of the Board of
Directors, an equally advantageous right, permit, privilege or
franchise under which the Company may continue to perform the
service and conduct the business theretofore performed or
conducted under or by virtue of the right, permit, privilege or
franchise amended, surrendered, abandoned or terminated, or
whenever the right, permit, privilege or franchise to be amended,
surrendered, abandoned or terminated can no longer be profitably
exercised or availed of or shall not be essential to the
maintenance and continued use of the rest of the Trust Estate,
and consequently the security afforded by this Indenture would
not be substantially impaired.

SECTION 5.08. Repayment of Advances made by a
Receiver, etc. The Company hereby covenants that, if it shall
fail to perform any of the covenants contained in Sections 5.04,
5.05, clause (b) in the first paragraph of Section 5.06, Sections
5.07, 5.09 or 5.13 hereof, any receiver or trustee appointed by
any court, as herein provided, may make advances to perform the
same in its behalf; and all sums so advanced shall be at once
repayable by the Company, and shall bear interest at the prime
commercial loan rate charged by the Company's primary bank to
large corporate borrowers on the date such advance is made until
paid, and shall be secured hereby, having the benefit of the lien
hereby created in priority to the indebtedness evidenced by the
bonds issued hereunder, but no such advance shall be deemed to
relieve the Company from, or constitute a waiver of, any default
hereunder.

<PAGE> 60
and in such places as may be provided by law in order to make
effective the lien intended to be created hereby or thereby and
in order fully to preserve and protect the security of the
bondholders and all rights of the Trustee, and that it will pay
or cause to be paid any mortgage recording tax and filing fees in
connection with such recording and filing, and that it will do
and perform all matters or things necessary or expedient to be
done or observed by reason of any law of the United States of
America, or of any state or states thereof, or any other
competent authority, for the purpose of creating, performing and
maintaining the trust hereby created for the security of the
payment of the bonds, and to perform all the obligations hereby
imposed upon the Company.

SECTION 5.10. To Furnish Opinions of Counsel as to
Recording. The Company hereby covenants that it will furnish to
the Trustee (a copy of which will be available to any holder of
bonds upon request)

(i) promptly, and in any event within ten (10)
Business Days after the execution and delivery of this
Indenture and of each supplemental indenture, an Opinion of
Counsel either stating that, in the opinion of such counsel,
this Indenture or such supplemental indenture and any
appropriate Uniform Commercial Code financing statements
have been properly recorded and filed, so as to make
effective the lien intended to be created hereby or thereby
and fully to preserve and protect the security of the
bondholders and all rights of the Trustee, and reciting the
details of such action, or stating that, in the opinion of
such counsel, no such action is necessary to make such lien
effective. The Company shall have complied with this
subsection (i) if (1) the Opinion of Counsel herein required
to be delivered to the Trustee shall state that this
Indenture or such supplemental indenture has been received
for record or filing in each jurisdiction in which it is
required to be recorded or filed and that, in the Opinion of
Counsel (if such is the case), upon such receipt for record
or filing the lien intended to be created by this Indenture
or such supplemental indenture is effective and fully
preserves and protects such security and rights as
aforesaid, and (2) such opinion is delivered to the Trustee,
notwithstanding the ten (10) Business Day period mentioned
above, within such time, following the date of the execution
and delivery of this Indenture or such supplemental
indenture, as shall be practicable having due regard to the
number and distance of the jurisdictions in which this
Indenture or such supplemental indenture is required to be
recorded or filed; and

(ii) On or before April 1 of each year, beginning
April 1, _____ [***] an Opinion of Counsel either stating
that, in the opinion of such counsel, such action has been
taken, since the date of the most recent Opinion of Counsel

<PAGE> 61
furnished pursuant to this subsection (ii) or of the initial
Opinion of Counsel furnished pursuant to subsection (i) of
this Section, whichever is later, with respect to the
recording, filing, re-recording and re-filing of this
Indenture and each notice with respect thereto and of each
supplemental indenture and of any appropriate Uniform
Commercial Code financing statements, as is necessary to
maintain the lien thereof and so to preserve and protect
such security and rights, and reciting the details of such
action, or stating that, in the opinion of such counsel, no
such action is necessary to maintain such lien and so to
preserve and protect such security and rights.

In rendering the aforementioned Opinions of Counsel,
counsel may rely on the property descriptions contained in this
Indenture or a certificate of an appropriate officer of the
Company as to the jurisdictions in which the bondable property
intended to be subject to the lien of this Indenture is located.
Such counsel may also rely upon and qualify any such Opinion of
Counsel in the manner described in Sections 1.02 (pertaining to
"title") and 4.06 hereof to the extent such counsel deems it
necessary to do so and may rely upon the same type of abstracts,
affidavits, certificates, statements and investigations as
mentioned in the definition of "title" contained in this
Indenture.

SECTION 5.11. Further Advances and After-acquired
Property. The Company hereby covenants that it will execute and
deliver such supplemental indenture or indentures and such
further instruments and do such further acts as the Trustee shall
require (a) for accomplishing the purposes of this Indenture, (b)
to convey to the Trustee any property, both real and personal,
now held or hereafter acquired, made or constructed, intended to
be subject to the lien hereof, or (c) to transfer to any new
trustee or co-trustees, the estate, powers, instruments or funds
held in trust hereunder.

SECTION 5.12. To Appoint a Trustee to Fill Vacancies.
The Company hereby covenants that, whenever necessary to avoid or
fill a vacancy in the office of Trustee, the Company will in the
manner provided in Section 14.17 hereof appoint a Trustee so that
there shall be at all times a Trustee hereunder eligible pursuant
to the TIA to act as such, with a combined capital and surplus of
at least Fifty Million Dollars ($50,000,000).

<PAGE> 62
books and records of the Company for the purpose of such
inspection; but no such inspection shall be made within five
years from the date of filing with the Trustee of the report of
any such inspection previously made hereunder. Such Independent
Engineer, within a reasonable time from the date of its
appointment, shall file with the Trustee and the Company an
Engineer's Certificate signed by such Independent Engineer
stating whether or not the Trust Estate (other than property
which has been retired) is in general being maintained in good
physical condition and in a state of good operating efficiency
for the purposes of the Company and whether or not all of the
Trust Estate that is no longer used or useful in the Company's
business has been duly recorded as retired on the books of the
Company. If such certificate shall state that the Trust Estate
(other than property which has been retired) in general is not
being so maintained, it shall state clearly the character and
extent and the estimated cost of making good such deficiency and
the estimated time reasonably necessary to make good such
deficiency, and, if it shall state that there is a portion of the
Trust Estate that is no longer used or useful in the Company's
business and has not been recorded as retired on the books of the
Company, it shall briefly describe such property and shall state
the aggregate retirement which should be recorded on the books in
respect of such property. Said certificate shall be open to
inspection by any bondholder at any reasonable time. Such
certificate may be modified by a supplemental certificate signed
and filed by the Independent Engineer with the Trustee and with
the Company.

If the Company, within thirty (30) days after the
filing of the certificate of such Independent Engineer, objects
in writing, delivered to the Trustee, to the findings of such
Independent Engineer as to the character and extent of such
maintenance deficiency and/or to the property which should be
retired upon the books of the Company, then the character and
extent of such maintenance deficiency, if any, and/or the
property, if any, so to be retired upon the books of the Company
shall be forthwith referred to a board consisting of three
arbitrators selected in the following manner: The Trustee,
within ten (10) days after the expiration of said period of
thirty (30) days, shall name one arbitrator and give notice of
such selection to the Company. Within ten (10) days after
receipt of such notice, the Company shall name one arbitrator and
give notice of such selection to the Trustee, and failure so to
do shall entitle the Trustee to name an arbitrator on behalf of
the Company. The two thus selected shall, within ten (10) days
after the appointment of the arbitrator representing the Company,
select a third arbitrator, but if said arbitrators are unable,
within said ten (10) days, to agree upon such third arbitrator,
then, upon the election of either the Company or the Trustee, any
District Judge of the United States of America for the District
in which the Trustee has its principal corporate trust office may
appoint such third arbitrator, upon application to said District
Judge by either party after five business days' notice thereof to

<PAGE> 63
the other party. The board of arbitrators so chosen shall
immediately proceed to hear and determine all matters stated in
the certificate which are in dispute, after giving to the Trustee
and the Company not less than five days' notice in writing of the
time and place of such hearing; and at the time and place
appointed they shall proceed summarily to hear and dispose of the
matters in dispute unless in their judgment the hearing should be
postponed to a later day or days, of which postponement like
notice shall be given, unless such notice is waived by both
parties, in which case the hearing may proceed at an earlier
agreed date. The written decision of a majority of such
arbitrators shall be filed as soon as practicable with the
Trustee and a copy thereof delivered to the Company, and shall be
binding upon the Trustee, the Company and the bondholders.

The Company covenants and agrees that, if such
certificate shall state that such a maintenance deficiency
exists, the Company will with all reasonable speed make such
repairs and/or do such other maintenance work as may be necessary
to make good such deficiency as shall exist at the time of such
certificate or at the time of such decision of arbitrators, as
the case may be; whereupon such Independent Engineer (or, in the
case of such Independent Engineer's refusal or inability to act,
some other Independent Engineer) shall file with the Trustee and
the Company an Engineer's Certificate signed by such Independent
Engineer stating that such deficiency has been made good.

The Company further covenants and agrees that, if such
certificate shall state that there has not been recorded as
retired on the books of the Company a portion of the Trust Estate
which is no longer used or useful in the Company's business, the
Company will forthwith make appropriate entries on its books
recording the retirement of such property and will file with the
Trustee an Officers' Certificate stating that such entries have
been made.

All expenses incurred under this Section, including
(without limitation) the reasonable compensation of the
Independent Engineer and of the arbitrators, if any shall be
appointed, shall be borne by the Company.

In the event that any regulatory authority having
jurisdiction over the Company shall determine that the
expenditures for repairs and maintenance necessary to make good
any such maintenance deficiency as shall have been so determined
would be excessive or shall, by order or regulation, prohibit, in
whole or in part, such expenditures for repairs and maintenance,
then, upon filing with the Trustee a certified copy of such
determination, order or regulation, as the case may be, the
Company shall, so long as such determination, order or regulation
remains in effect, be relieved from compliance with the covenants
contained in this Section, in regard to the maintenance of the
Trust Estate, to the extent such expenditures for repairs and
maintenance shall have been held excessive or shall be
prohibited.

<PAGE> 64
SECTION 5.14. Annual Statement by Officers as to
Default. The Company will deliver to the Trustee not less often
than annually, commencing on April 1, 199_ [***], during which
any bonds are Outstanding, a written statement signed by the
principal executive officer, principal financial officer or
principal accounting officer of the Company stating that

(1) a review of the activities of the Company
during such year and of performance under this
Indenture and under the terms of the bonds has been
made under his or her supervision; and

(2) to the best of his or her knowledge, based on
such review, the Company has fulfilled all its
obligations under this Indenture and has complied with
all conditions and covenants on its part contained in
this Indenture through such year, or, if there has been
a default in the fulfillment of any such obligation,
covenant or condition, specifying each such default
known to him or her and the nature and status thereof.

For the purpose of this Section 5.14, default and compliance
shall be determined without regard to any grace period or
requirement of notice provided pursuant to the terms of this
Indenture.

SECTION 5.15. Maintenance and Renewal. The Company
covenants and agrees that during each calendar year, so long as
any bonds issued under and secured by this Indenture shall be
Outstanding, it will, except as otherwise provided in this
Section, expend for one or more of the following purposes:

(a) The maintenance and repair of the electric utility
properties of the Company upon which this Indenture is or
shall be a lien;

(b) The construction or acquisition of bondable
property upon which this Indenture is a first lien, subject
only to Excepted Encumbrances and Prepaid Liens; or

(c) The retirement, through purchase or payment, of
bonds issued under and secured by this Indenture, or
redemption of any bonds issued under and secured by this
Indenture that are subject to redemption;

<PAGE> 65
amount thereof at the end, of such portion of a calendar year.
The term "Required Percentage" shall mean two and one-half per
centum (2.50%) per annum, or such other percentage as at any time
or from time to time hereafter, upon application of the Company,
is authorized or approved by the Securities and Exchange
Commission, or any successor commission thereto, under the Public
Utility Holding Company Act of 1935, as amended. The term
"amount of depreciable property" shall mean as of any date the
amount of bondable property included at such date in plant
accounts on the books of the Company and which is depreciable.
Amounts included in plant acquisition adjustment accounts, or
accounts of similar purpose, shall not be included in the amount
of depreciable property if adequate provision for their
amortization is made by current charges to income or surplus.
The amount of any bonds purchased, paid or redeemed shall be
deemed to be the principal amount thereof for purposes of
Sections 4.02, 5.15(c) and 8.06 hereof.

If in any calendar year the total expenditures for one
or more of the foregoing purposes shall be in excess of the
amount required by this Section to be expended in such year, the
Company shall be entitled to be credited to the extent of such
excess on account of amounts required under the provisions of
this Section to be expended in any subsequent calendar year or
years. For the purposes of this Section the __________ months'
period beginning _____________, 1994[*] and ending December 31,
1995 shall be deemed to be a calendar year. Gross expenditures
made by the Company on or after ___________, 1994[*] for bondable
property may be certified to comply with the provisions of
subparagraph (b) of this Section.

No expenditures which shall have been made the basis
for the authentication of bonds or the withdrawal of deposited
cash or any other moneys or the release of property, under any
provision of this Indenture, or which shall have been made with
cash applied pursuant to any provision of this Section or of
Section 4.04 or Section 8.06 hereof or which shall have been made
out of any insurance moneys or moneys received from the
condemnation, sale or other disposition of any of the Company's
property subject to the lien of this Indenture or out of cash
withdrawn under any provision of this Indenture, and no expen-
ditures which shall have been previously used or certified or
applied to comply with any requirement of this Section or with
any other provision of this Indenture, shall be certified or be
applied for the purpose of complying with this Section.

<PAGE> 66
preceding calendar year for any one or more of the purposes
specified in subparagraphs (a), (b) and (c) of this Section which
the Company desires and is entitled to have applied to the
requirements of this Section for such year; and (3) such excess
amounts, if any, as may have been expended for any one or more of
such purposes in any preceding calendar year or years (not prior
to __________, 1994[*]) which the Company desires, and is
entitled, to have applied to the requirements of this Section for
the calendar year next preceding the date of such certificate;
and stating that no part of the amounts expended which the
Company desires to have applied to the requirements of this
Section for such year has been made the basis for the
authentication of bonds or the withdrawal of deposited cash or
any other moneys or the release of property, under any provision
of this Indenture, or has been made with cash applied pursuant to
any provision of this Section or of Section 4.04 or Section 8.06
hereof or has been made out of any insurance moneys or moneys
received from the condemnation, sale or other disposition of any
of the Company's property subject to the lien of this Indenture
or out of cash withdrawn under any provision of this Indenture or
has been previously used or certified or applied to comply with
any requirement of this Section or with any other provision of
this Indenture.

If in any calendar year, the expenditures of the
Company for any one or more of the purposes set forth in
subparagraphs (a), (b) and (c) of this Section shall be less than
the amount required by this Section to be expended for such
purpose or purposes during such calendar year and if the Company
shall not be entitled to take credit for such calendar year in
the amount of such deficiency on account of excess expenditures
made in some preceding year or years the Company shall pay in
cash to the Trustee on or before April 1st next succeeding the
expiration of such calendar year the amount of any remaining
deficiency. All sums received by the Trustee under this Section
shall be held by it as a part of the Trust Estate until paid out
as hereinafter provided. In case the expenditures made by the
Company for the purpose specified in subparagraph (b) of this
Section shall, in any calendar year, exceed the amount required
to be expended and certified to comply with the requirements of
this Section for such year, any cash theretofore paid to the
Trustee under the provisions of this Section and not withdrawn or
applied under the provisions of Section 8.06 hereof, may be
withdrawn by the Company upon delivery to the Trustee of an
Officers' Certificate certifying the expenditures made for said
purpose during such calendar year and showing that they were in
excess of the expenditures required by this Section to be made in
such calendar year and requesting the payment to or on the order
of the Company of an amount of cash equal to the excess of said
expenditures. Any sums received by the Trustee under this
Section and not withdrawn under the provisions of this paragraph
may be withdrawn or applied in accordance with the provisions of
Section 8.06 hereof.

<PAGE> 67
No expenditures certified or applied to the require-
ments of this Section, and no bonds retired (by purchase, payment
or redemption) through expenditures certified or applied to the
requirements of this Section, shall be available as a basis for
the authentication of bonds or the withdrawal of deposited cash
or any other moneys or the release of property under, or to
comply with, any provision of this Indenture.

SECTION 5.16. To Comply With Indenture. The Company
covenants that it will not issue, or permit to be issued, any
bonds hereby secured in any manner other than in accordance with
the provisions of this Indenture.

ARTICLE VI

BONDHOLDERS' LISTS AND REPORTS BY THE COMPANY
AND THE TRUSTEE

SECTION 6.01. Company to Furnish Lists of Names and
Addresses of Bondholders. The Company covenants and agrees that
it will furnish or cause to be furnished to the Trustee between
March 15 and April 1 and between September 15 and October 1 in
each year beginning with the first such period after the date of
this Indenture, and at such other times as the Trustee may
request in writing, a list in such form as the Trustee may
reasonably require containing all the information in the
possession or control of the Company or of its paying agents, as
to the names and addresses of the holders of bonds obtained since
the date as of which the next previous list, if any, was
furnished. Any such list may be dated as of a date not more than
fifteen (15) days prior to the time such information is furnished
or caused to be furnished, and need not include information
received after such date; and, provided, that the Company need
not furnish or cause to be furnished any such list with respect
to bonds with respect to which the Trustee maintains the books
for the registration and transfer of bonds as provided for in
Section 2.05 hereof.

SECTION 6.02. Current Lists of Bondholders. (a) The
Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the
holders of bonds (1) contained in the most recent list furnished
to it as provided in Section 6.01 hereof, (2) received by it in
the capacity of paying agent hereunder, or (3) filed with it
within two preceding years pursuant to Section 313(c)(2) of the
TIA. The Trustee may (1) destroy any list furnished to it as
provided in Section 6.01 hereof upon receipt of a new list so
furnished; (2) destroy any information received by it as paying
agent upon delivering to itself as Trustee, not earlier than
forty-five (45) days after an interest payment date of the bonds,
a list containing the names and addresses of the holders of bonds
obtained from such information since the delivery of the next
previous list, if any; (3) destroy any list delivered to itself

<PAGE> 68
as Trustee which was compiled from information received by it as
paying agent upon the receipt of a new list so delivered; and (4)
destroy any information received by it pursuant to the provisions
of paragraph (2) of subsection (c) of Section 313 of the TIA, but
not until two years after such information has been filed with
it.

(b) The Company, the Trustee and any paying agent
shall not be held accountable by reason of any disclosure of
information or the mailing of any material required to be
disclosed or mailed by the TIA.

SECTION 6.03. Company's Covenants as to Filing
Reports. The Company shall file with the Trustee and the
Securities and Exchange Commission, and shall cause to be
transmitted to the holders of bonds, such information, documents
and other reports, and such summaries thereof, as may be required
pursuant to Section 314 of the TIA at the times and in the manner
provided pursuant thereto; provided that any such information,
documents or reports required to be filed with the Securities and
Exchange Commission pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934, as amended, shall be filed
with the Trustee within 15 days after the same is so required to
be filed with said Commission.

SECTION 6.04. Trustee's Reports. (a) The Trustee
shall transmit, on or before April 1 in each year beginning with
the year 199_[***], so long as any bonds of any series are
Outstanding, to the bondholders and to the Company, such reports
as may be required pursuant to, and in the manner required by,
Section 313 of the TIA.

(b) A copy of each such report shall, at the time
of such transmission to bondholders, be filed with each stock
exchange upon which the bonds are listed and also with the
Securities and Exchange Commission. The Company will notify the
Trustee when any bonds are listed on any stock exchange.

(c) The provisions of this Section which have been
made specifically applicable to the Trustee shall apply to the
Trustee and, if a separate or co-trustee is appointed pursuant to
Section 14.18 hereof, to any separate or co-trustee to the extent
consistent with the rights, powers, duties and obligations
conferred or imposed upon such separate or co-trustee by the
supplemental indenture appointing such separate or co-trustee.
Notwithstanding any of the provisions of this Section which
require any separate or co-trustee appointed pursuant to Section
14.18 hereof to transmit reports to the bondholders and to file
such reports with each stock exchange upon which the bonds are
listed and also with the Securities and Exchange Commission, such
separate or co-trustee may, if it or he or she so elects, furnish
to the Trustee all information concerning such separate or
co-trustee which such separate or co-trustee is required to
report, and the Trustee shall transmit and file such information,

<PAGE> 69
in accordance with the provisions of this Section, on behalf and
at the expense of such separate or co-trustee; provided, however,
that, subject to the provisions of Article XIV hereof, the
Trustee shall not be responsible for the accuracy or completeness
of any such information or for the failure of any such separate
or co-trustee to report or to furnish any such information. In
the event that any such separate or co-trustee shall elect to
furnish information to the Trustee in accordance with the
provisions of this subsection (c), the information required
pursuant to this Section shall be furnished to the Trustee in
writing not less than fifteen (15) days before the report is
required to be made by the Trustee or within sixty (60) days
after the taking by any such separate or co-trustee of any action
required to be reported, as the case may be.

(d) For the purpose of this Section, all bonds which
have been authenticated and delivered and not returned to the
Trustee and cancelled shall be deemed to be Outstanding.

ARTICLE VII

REDEMPTION AND PURCHASE OF BONDS

SECTION 7.01. Exercise of Option to Redeem. Such of
the bonds of any series issued and authenticated hereunder as
are, by their terms, redeemable before maturity may, at the
option of the Company or pursuant to the requirements of this
Indenture (including any supplemental indentures), be redeemed at
such times, in such amounts and at such prices as may be
specified herein or therein and in accordance with the provisions
of the succeeding Sections of this Article.

SECTION 7.02. Notice of Redemption. If less than all
the bonds of any series are to be redeemed, the particular bonds
to be redeemed shall be selected by the Trustee from the bonds of
such series which have not previously been called for redemption,
by such method as the Trustee shall deem fair and appropriate.
Notwithstanding the foregoing, special provisions for the
selection of the particular bonds to be redeemed within a
particular series may be provided by a supplemental indenture to
this Indenture.

Unless otherwise provided as to a particular series of
bonds, notice of intention to redeem to the holder of any bond
which is to be redeemed in whole or part shall be mailed by or on
behalf and at the expense of the Company not less than thirty
(30) days before the date fixed for redemption to such holder at
his or her last address appearing upon the registry books.

Failure to duly give such notice to the holder of any
bond designated for redemption in whole or part shall not affect
the validity of the proceedings for the redemption of any other
bond.

<PAGE> 70
The Trustee, upon a request signed by the President or
a Vice President of the Company evidenced by a Resolution
delivered to the Trustee at least five business days prior to the
date on which notice of redemption must first be published or
mailed (unless a shorter notice shall be accepted by the Trustee
as sufficient) shall, for and on behalf and at the expense of and
in the name of the Company, call for redemption bonds secured
hereby (whether or not the Trustee shall hold at the time of such
call cash sufficient for such redemption).

Once notice of redemption is given (and accepted by the
holder, in the case of a redemption pursuant to Section 4.01B(c)
hereof), the bonds called for redemption shall become due and
payable on the redemption date specified in such notice.

Any notice of redemption mailed to holders of bonds
shall specify the offices or agencies of the Company where the
bonds may be surrendered for redemption and payment and that,
unless the Company defaults in making the redemption payment,
interest shall cease to accrue on and after the redemption date.

Notwithstanding the foregoing, with respect to a
redemption pursuant to Section 4.01B(c) hereof, there shall be
mailed by or on behalf and at the expense of the Company not less
than thirty (30) days before the date fixed for redemption an
offer to redeem in the manner set forth above to the holders of
bonds set forth in Section 4.01B(c). Any such holder electing to
have his or her bonds redeemed by the Company pursuant to said
Section shall so notify the Company five business days prior to
the date fixed for redemption, and the Company shall redeem such
bonds in the manner set forth in this Article.

SECTION 7.03. Deposit of Cash to Redeem. If the
Company shall complete the giving of the required notice of its
intention to redeem any bonds so redeemable, the Company shall,
and it hereby covenants that it will, on or before the date fixed
for redemption as specified in such notice, deposit with the
Trustee, irrevocably in trust for the purpose, a sum of cash
sufficient to redeem all such bonds so to be redeemed on such
date or irrevocably direct the Trustee to apply from cash held by
it, available to be used for the redemption of bonds, a sum of
cash sufficient to redeem such bonds. If the Company shall fail
so to deposit or direct the application of the cash for the
redemption of said bonds, such failure shall constitute a default
under this Indenture and the said bonds so called for redemption
shall immediately become due and payable, and the holders of said
bonds shall be entitled to receive and the Company shall be
obligated to pay the redemption price of said bonds, including
accrued interest, and thereupon and without the lapse of any
period of time all the remedies provided for in Article IX hereof

<PAGE> 71
with respect to a default in the payment of principal of bonds
Outstanding hereunder shall be available to and enforceable by
the Trustee.

SECTION 7.04. Payment of Bonds Called for Redemption
and Cessation of Lien. All cash deposited by the Company with
the Trustee for the redemption of bonds or which the Company
directs shall be applied by the Trustee to the redemption of
bonds shall, subject to the provisions of Section 11.03 hereof,
no longer be a part of the Trust Estate, but shall be held in
trust solely for account of the holders of the bonds so to be
redeemed, and shall be paid to them, upon presentation and
surrender of said bonds properly endorsed for transfer. On or
after the date fixed for redemption, if the cash necessary for
the redemption of the bonds to be redeemed shall be held by the
Trustee for such purpose, such bonds shall cease to bear interest
and shall cease to be entitled to the lien of this Indenture,
and, as respects the Company's liability thereon, such bonds
shall be deemed to have been paid. If any bond shall be called
for redemption in part only, the notice of redemption shall
specify the principal amount thereof to be redeemed, and such
bond shall be presented for cancellation properly endorsed for
transfer at or after the date fixed for the redemption of said
bond so called for redemption, and thereupon the payment with
respect to said bond shall be made upon surrender of said bond so
endorsed, and bonds for the unpaid balance of the principal
amount of the bond so presented and surrendered shall be executed
by the Company and authenticated and delivered by the Trustee
without charge therefor to the holder thereof.

SECTION 7.05. Bonds to be Cancelled. All bonds issued
hereunder paid, retired or redeemed under any of the provisions
of this Indenture or purchased by the Trustee as provided in
Section 8.06 hereof shall forthwith be cancelled by the Trustee.

ARTICLE VIII

POSSESSION, USE AND RELEASE
OF MORTGAGED PROPERTY

SECTION 8.01. Company to Possess Property Until
Default; Disposal of Certain Property Without Release. Prior to
the occurrence of any default, as defined in Section 9.01, and
after default if such default shall have been cured, or shall
have been waived as provided in Section 9.03, the Company shall
be suffered and permitted by the Trustee to remain in full
possession, enjoyment and control of all the properties, rights,
privileges and franchises hereby mortgaged (other than any cash
and securities deposited or pledged hereunder) and shall be
permitted to manage and operate the same, and subject always to
the observance of the covenants in this Indenture with respect

<PAGE> 72
thereto, to receive, receipt for, take, use, enjoy and dispose of
all rents, tolls, earnings, surplus, profits, revenues and income
thereof, to modify and/or terminate its contracts, rights,
permits, privileges and/or franchises and to make changes in the
location of its lines, structures and equipment in the same
manner and with the same effect as if this Indenture had not been
made.

The Company may at all times and from time to time so
long as it shall remain in possession of the Trust Estate,
without any release by the Trustee:

(i) demolish, dismantle, tear down or use for scrap
any property in the Trust Estate, or abandon any thereof
other than land and interests in land, provided that such
action is, in the opinion of the President or a Vice
President of the Company (or of the Board of Directors where
such action is material to the Company), in the best
interests of the Company and the value and utility of the
Trust Estate as an entirety and the security for the bonds
will not thereby be impaired;

(ii) sell or otherwise dispose of, free from the lien
of this Indenture, any part of the Trust Estate which, in
the opinion of the President or a Vice President of the
Company (or of the Board of Directors where such action is
material to the Company), shall have become old, worn out,
obsolete, inadequate, unfit, unnecessary or unadapted for
use in the operation of the Company;

(iii) abandon, terminate, cancel, release or make
alterations in or substitutions of any and all leases and
rights-of-way grants, provided that such action is, in the
opinion of the President or a Vice President of the Company
(or of the Board of Directors where such action is material
to the Company), in the best interests of the Company;

(iv) surrender or assent to the modification of any
right, power, franchise, license, governmental consent or
permit which it may hold or under which it may be operating,
provided that such surrender or modification is, in the
opinion of the President or a Vice President of the Company
(or of the Board of Directors where such action is material
to the Company), in the best interests of the Company; and

(v) grant rights-of-way and easements over or in
respect of any property-owned by the Company, provided that
such grant will not, in the opinion of the President or a
Vice President of the Company (or of the Board of Directors

<PAGE> 73
where such action is material to the Company), materially
impair the usefulness of such property in the conduct of the
Company's business and will not be unduly prejudicial to the
interests of the holders of the bonds.

SECTION 8.02. Trustee to Release Property Upon Certain
Conditions. The Company may at any time and from time to time so
long as it remains in possession of the Trust Estate sell or
otherwise dispose of any other property of the Company (including
pledged securities) which shall be subject to the lien of this
Indenture (but as to securities pledged under this Indenture
pursuant to the provisions of Article XV hereof, subject to the
provisions of any instrument executed for the purpose of or in
connection with the subjecting of such securities to the lien
hereof) and the Trustee shall release the same from the lien
hereof upon receipt by the Trustee of the following:

1. A copy of a Resolution reasonably identifying, and
requesting the release of, the property to be released;

2. An Engineer's Certificate, which shall be made and
signed by an Independent Engineer if required by the
provisions of Section 314(d) of the TIA, which certificate:

(a) shall state that the Company has sold or
otherwise disposed of, or has contracted to sell or
otherwise dispose of, the property to be released,
describing the same in reasonable detail and stating
the fair value thereof, as of a date within ninety days
prior to the delivery of such certificate to the
Trustee, as determined by such Engineer or Independent
Engineer, as the case may be;

(b) shall show, in reasonable detail, the amount
and character of the consideration to be received by
the Company for the property to be released, which
consideration (subject to the provisions of this
Section) may be cash, purchase money obligations
secured by first lien upon the property to be released,
or other property constituting bondable property as
defined in Section 4.03 hereof;

<PAGE> 74
per centum (66-2/3%) of the fair value of such property
(as stated in such certificate) and that such purchase
money obligations constitute the entire amount of the
purchase money obligations secured by lien upon such
property and that the principal amount of all such
purchase money obligations, together with the principal
amount of all other purchase money obligations, if any,
then held by the Trustee and secured by lien upon
electric utility property previously released, does not
exceed in the aggregate fifteen per centum (15%) of the
principal amount of the bonds then outstanding under
this Indenture;

(d) if all or any part of the consideration to be
received by the Company for the property to be released
shall consist of other property, shall reasonably
identify such property and shall state the fair value
to the Company of such property as of a date within
ninety days prior to the delivery of such certificate
to the Trustee, as determined by the Engineer or
Independent Engineer, as the case may be, signing the
certificate, and that such property constitutes
bondable property as defined in Section 4.03 hereof;

(e) shall show the consideration to be received
by the Company for the property to be released, taking
any purchase money obligations included in such
consideration at their face value and any property
included in such consideration at the fair value
thereof to the Company as shown by said certificate, is
not less than the fair value (as shown by said
certificate) of the property to be released; and

(f) shall state that the retention of the
property to be released is no longer desirable in the
conduct of the business of the Company or that other
property to be acquired, in the case of exchange, is
not less suited to the needs of the business of the
Company than the property to be released, and in each
case, that the security afforded by this Indenture will
not be impaired by such release.

<PAGE> 75
assignment, transfer or release as are sufficient, in the
Opinion of Counsel, to subject the same to the lien of this
Indenture with at least the same degree of priority which it
possessed as a lien on the property to be released, or an
Opinion of Counsel to the effect that no deeds or other
instruments of conveyance, assignment or transfer are
necessary to subject the same to the lien of this Indenture
in the manner stated;

4. An Opinion of Counsel stating in effect that in his
or her opinion any purchase money obligations included in
such consideration and the mortgage or other instrument
securing the same are valid instruments and that such
mortgage or other instrument constitutes a first lien upon
the property released subject to no liens or encumbrances
prior in lien thereto except Excepted Encumbrances and
Prepaid Liens, and that all conditions and requirements of
this Indenture relating to the release of the property
requested to be released have been complied with; and

5. A certified copy of a certificate or order of each
public service commission or other governmental agency of
the United States of America, or of any state or states
thereof, if any, then having jurisdiction over the Trust
Estate, together with an Opinion of Counsel to the effect
that such certificates or orders are such as are required to
be obtained in connection with the sale, exchange or other
disposition of the property to be released and that no
certificate, consent or authorization of any other
commission or agency is required therefor or for the release
of said property, or, in the alternative, an Opinion of
Counsel to the effect that no certificate, consent or
authorization of any such commission or agency is required
in the premises.

In rendering the aforementioned Opinions of Counsel,
counsel may, to the extent such counsel deems necessary, express
the same qualifications and assumptions permitted in connection
with the Opinions of Counsel to be given pursuant to Section 4.06
hereof and may rely upon the same type of abstracts, affidavits,
certificates, statements and investigations as mentioned in the
definition of "title" contained in this Indenture.

Any new property acquired by the Company by exchange,
purchase, or otherwise, to take the place of any property
released from the lien of this Indenture, shall forthwith and
without further conveyance be and become subject to the lien and
be covered by this Indenture, but if requested by the Trustee the
Company shall convey the same to the Trustee by proper deeds upon
the trusts and for the purposes of this Indenture.

<PAGE> 76
SECTION 8.03. Eminent Domain. If any property is
taken by condemnation proceedings, the Trustee may accept any
award made therein, if approved by the Company as representing
its full value, and, if such award is accepted by the Trustee, it
shall, if requested by the President or a Vice President of the
Company evidenced by a Resolution, execute and deliver a release
of the property so taken upon receipt by the Trustee of the
consideration therefor, after deducting from the amount thereof
the amount of any assessments levied on property of the Company
in connection with such condemnation proceedings unless some
other disposition thereof is required in connection with a Prior
Lien. In any such proceedings the Trustee may be represented by
counsel, who may be counsel for the Company, and either the
Company or the Trustee may appeal from any judgment, order or
decree in such proceedings.

SECTION 8.04. Rights of Purchaser of Released
Property. No purchaser in good faith of property purporting to
be released hereunder shall be bound to ascertain the authority
of the Trustee to execute the release or to inquire as to any
facts required by the provisions hereof for the exercise of such
authority; nor shall any purchaser of machinery or equipment be
under obligation to ascertain or inquire into the existence of
any fact on which any such sale is hereby authorized.

SECTION 8.05. Receiver or Trustee May Exercise
Company's Rights. In case any of the Trust Estate shall be in
the possession of a receiver or trustee appointed in judicial
proceedings, the powers hereinbefore conferred upon the Company
with respect to the sale or other disposition of property covered
by this Indenture may be exercised by such receiver or trustee
and, in any such event, the certificates provided by this Article
to be executed by officers of the Company shall be executed by
such receiver or trustee; and if the Trustee shall be in
possession of any of the Trust Estate under any provision of this
Indenture, then such powers may be exercised by the Trustee in
its discretion.

<PAGE> 77
defined in Section 4.03 hereof) upon which this Indenture is a
first lien subject only to Excepted Encumbrances and Prepaid
Liens made by it at any time on or subsequent to __________,
1994[*], which have not been used as the basis for the
authentication of bonds or the withdrawal of deposited cash
hereunder, and whether prior or subsequent to the receipt of such
cash by the Trustee, or (b) expenditures for repairs or
replacements of or substitutions for property damaged or
destroyed as a result of hazards or risks insured against (to the
extent that insurance moneys arising from such loss are then held
by the Trustee).

Such payments shall be made by the Trustee upon receipt
by it of:
(1) A request in writing signed by the President or a
Vice-President and by the Treasurer or an Assistant Treasurer of
the Company for the payment of the amount of cash stated therein;

(2) An Officers' Certificate setting forth:

(a) (i) the remaining amount of the $________[**] in
respect of expenditures for bondable property constructed or
otherwise acquired by the Company prior to _______, 1994[*]
(as specified in the first sentence of Section 4.03 hereof),
taking into account the aggregate principal amount of bonds
issued with respect thereto under Section 4.03 hereof, and
(ii) that on or subsequent to __________, 1994, the Company
has acquired bondable property (as defined in Section 4.03
hereof), briefly describing the same and separately
describing any purchased property, and showing the gross and
the net expenditures (as defined in Section 4.03 hereof)
therefor, and that such net expenditures were usable, but
have not been used, as a basis for the authentication of
bonds under this Indenture, or has made certain repairs or
replacements of or substitutions for property damaged or
destroyed as a result of hazards or risks insured against
(describing the same with reasonable detail), and that such
bondable property or such repairs, replacements or
substitutions, as the case may be, are subject to the lien
of this Indenture and are not subject to any liens or
encumbrances equal or prior in lien to this Indenture except
Excepted Encumbrances and Prepaid Liens;

(b) that the Company has made net expenditures for
such bondable property, or has made expenditures for repairs
or replacements of or substitutions for property damaged or
destroyed as a result of hazards or risks insured against,
in the amount specified in the certificate;

<PAGE> 78
(c) that no part of any such net expenditures for such
bondable property or of any such expenditures for repairs or
replacements of or substitutions for property damaged or
destroyed as a result of hazards or risks insured against,
as the case may be, has been previously used as a basis for
the authentication of any bonds or for the withdrawal of
deposited cash or any other moneys or for the release of any
property under any provision of this Indenture or has been
made out of insurance moneys or out of the proceeds of the
sale, condemnation or other disposition of any property of
the Company subject to the lien of this Indenture, or has
been used or applied or certified to the Trustee to comply
with any maintenance or renewal requirements contained in
this Indenture or to comply with the provisions respecting
any sinking fund or analogous fund created hereafter
pursuant to the terms of this Indenture, or, in the
alternative, that the provisions relating to any such fund
do not preclude the use of any such expenditures as a basis
for the withdrawal of cash under this Section;

(d) that the Company is not, to the knowledge of the
officers signing the certificate, in default in any of the
terms, covenants or conditions of this Indenture; and

(e) that in the opinion of the officers signing the
certificate, all conditions and requirements of this
Indenture relating to the withdrawal of the cash requested
to be withdrawn have been complied with.

(3) (a) An Engineer's Certificate signed by an
Engineer (conforming to the requirements of Section 4.03 hereof)
certifying to the fair value to the Company, at a date within
ninety days prior to the date of the delivery of such certificate
to the Trustee, of the bondable property (except purchased
property if any be included in such bondable property and except
repairs or replacements of or substitutions for property damaged
or destroyed as a result of hazards or risks insured against)
described in the certificate required by subparagraph (2) above
and on account of which cash is requested to be withdrawn; and

(b) An Engineer's Certificate signed by an Engineer or
an Independent Engineer (conforming to and as may be required by
the provisions of Section 4.03 hereof) certifying to the fair
value to the Company, at a date within ninety days prior to the
date of the delivery of such certificate to the Trustee, of any
purchased property (on account of which cash is requested to be
withdrawn) described in the certificate required by subparagraph
(2) above and also the fair value to the Company of such
purchased property at the time of its acquisition;

<PAGE> 79
(4) An Opinion of Counsel (a) stating that in his or
her opinion the Company has acquired substantially good title to,
and has lawful power to own, any bondable property described in
the certificate required by subparagraph (2) above (unless the
bondable property described in such certificate shall have been
covered by an Opinion of Counsel theretofore filed with the
Trustee) and that such bondable property is subject to the lien
of this Indenture and is not subject to any liens or encumbrances
equal or prior in lien to this Indenture, except Excepted
Encumbrances and Prepaid Liens, and (b) stating that in his or
her opinion all conditions and requirements of this Indenture
relating to the withdrawal of the cash requested to be withdrawn
have been complied with; and

(5) All such deeds, conveyances, transfers or
instruments of further assurance as may be necessary for the
purpose of effectually subjecting such bondable property to the
direct lien and operation of this Indenture, together with an
Opinion of Counsel that the same are sufficient for the purpose,
or an Opinion of Counsel that no such deeds, conveyances,
transfers or instruments are necessary for such purpose.

All or any part of any such cash in the hands of the
Trustee and not theretofore paid over or requested to be paid
over to reimburse the Company as aforesaid shall, in accordance
with a request in writing signed by the President or a Vice-
President and by the Treasurer or an Assistant Treasurer of the
Company, be applied by the Trustee (i) to the redemption of bonds
of any series specified in such request (if they are then
redeemable) issued hereunder and Outstanding or (ii) to the
purchase of such bonds at not exceeding their current redemption
price if they are then redeemable, or, if they are not then
redeemable, at not exceeding the price at which they are next
thereafter redeemable, or, if they are never redeemable, at not
exceeding 110% of the principal amount thereof and accrued
interest. Any bonds redeemed or purchased pursuant to the
foregoing provisions hereof shall be cancelled and destroyed by
the Trustee and a certificate of such destruction shall be
delivered to the Company and no other bonds shall be issued, nor
shall any deposited cash or any other moneys be withdrawn, under
any provision of this Indenture by reason of the redemption or
purchase and cancellation of such bonds, nor shall such bonds be
applied or certified for the purpose of complying with any
maintenance or renewal requirements or any other provisions of
this Indenture. The Company covenants and agrees that it will

<PAGE> 80
from time to time upon request of the Trustee immediately pay to
the Trustee, to be held and disposed of pursuant to the
provisions of this Section and Article VII hereof, an amount in
cash equal to the accrued interest and the premium, if any, paid
or required to be paid by the Trustee in purchasing or redeeming
bonds of the Company pursuant to the provisions of this Section.

The provisions of this Section shall not apply to any
cash at any time deposited with the Trustee hereunder for the
purpose of purchasing, redeeming and/or discharging any
obligations secured by any mortgage equal or prior in lien to
this Indenture upon any property now or hereafter owned by the
Company, but all such cash shall be held and applied by the
Trustee to the purposes for which the same were deposited and in
accordance with the terms and provisions under which the same
were deposited.

ARTICLE IX

REMEDIES IN EVENT OF DEFAULT

SECTION 9.01. Defaults. The following events are
hereby defined for all purposes of this Indenture (except where
the term is otherwise defined for specific purposes) as
"defaults":

(a) Failure to pay the principal or premium, if any,
of any bond hereby secured when the same shall become due
and payable, whether at maturity, as therein expressed, upon
redemption, or by declaration or otherwise;

(b) Failure to pay interest upon any bond hereby
secured for a period of sixty (60) days after such interest
shall have become due and payable;

(c) Failure to pay any installment of any sinking fund
for a period of sixty (60) days after the same shall have
become due and payable;

(d) The entry by a court of competent jurisdiction of
an order or decree under the Federal Bankruptcy Code or any
other applicable federal or state law of a similar nature
that (i) is an order for relief against the Company in an
involuntary case or proceeding, (ii) appoints a custodian,
receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of or for the Company or any
substantial part of its property or (iii) orders the
liquidation of the Company or winding up of its affairs; and
in the case of (i), (ii) or (iii) the order or decree
remains unstayed and in effect for ninety (90) days.

<PAGE> 81
(e) The commencement by the Company of a voluntary
case, or the institution by it of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it to
the institution of bankruptcy or insolvency proceedings
against it, or the filing by it of a petition or answer or
consent seeking reorganization, arrangement or relief under
the Federal Bankruptcy Code or any other applicable Federal
or State law of a similar nature, or the consent or
acquiescence by it to the filing of any such petition or the
appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of the Company or any substantial
part of its property, or the making by it of an assignment
for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they
become due, or the taking of corporate action by the Company
in furtherance of any such action; or

(f) Failure to perform any other covenant, condition
or agreement contained herein or in any supplemental
indenture or in any bond issued hereunder for a period of
ninety (90) days following the mailing by the Trustee to the
Company of a written demand that such failure be cured, such
failure not having been cured in the meantime. The Trustee
may, and if requested in writing so to do by the holders of
a majority in principal amount of the bonds then Outstanding
as provided in Article X, shall, make such demand.

SECTION 9.02. Notice of Defaults. The Trustee and, if
a separate or co-trustee is appointed pursuant to Section 14.18
hereof, such separate or co-trustee shall, within ninety (90)
days after the occurrence thereof, give to the bondholders, in
the manner and to the extent provided in Section 6.04(a) hereof,
notice of all defaults known to the Trustee or to such separate
or co-trustee, as the case may be, unless such defaults shall
have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section being hereby defined
to be the events specified in subsections (a), (b), (c), (d), (e)
and (f) of Section 9.01 hereof, provided that, except in the case
of default in the payment of the principal of, premium, if any,
or interest on any of the bonds hereby secured, or in the payment
of any sinking or purchase fund installment, the Trustee shall be
protected in withholding such notice if and so long as the board
of directors, the executive committee, or a trustee committee of
directors and/or Responsible Officers, of the Trustee in good
faith determine that the withholding of such notice is in the
interests of the bondholders and any separate or co-trustee shall
be protected in withholding such notice if and so long as such
separate or co-trustee in good faith determines that the
withholding of such notice is in the interests of the
bondholders.

<PAGE> 82
SECTION 9.03. Acceleration of Maturity Date. Upon the
occurrence of a default, the Trustee may, and upon the written
request of the holders of a majority in principal amount of the
bonds then Outstanding shall, by notice in writing mailed or
delivered to the Company, declare the principal of all the bonds
then Outstanding and the interest accrued thereon to be due and
payable immediately; and upon any such declaration the same shall
become and be immediately due and payable, anything contained in
this Indenture or in said bonds to the contrary notwithstanding.
This provision is, however, subject to the condition that if at
any time after the principal of the bonds shall have been
declared due and payable, the holders of a majority in aggregate
principal amount of all bonds then Outstanding, by written notice
to the Company and to the Trustee, may rescind such declaration
and annul such default and its consequences (except defaults
under subparagraphs (a) and (b) of Section 9.01 hereof), but no
such waiver or rescission and annulment shall extend to or shall
affect any subsequent default, or shall impair any right
consequent thereon.

SECTION 9.04. Right of Entry and Application of
Proceeds Received by Trustee. Upon the occurrence of a default,
the Company, upon demand of the Trustee (which demand the Trustee
shall not be obligated to make), shall (if at the time such
action shall be lawful) forthwith surrender to the Trustee the
actual possession of and the Trustee (if at the time such action
shall be lawful), by its agents or attorneys, may forthwith enter
into and upon all or any part of the Trust Estate, and may
exclude the Company, its agents and attorneys, wholly therefrom
and may use, operate, manage, and control the same, and conduct
the business thereof, by agents or attorneys, for the benefit of
the holders of the bonds issued hereunder, to the fullest extent
authorized by law. Upon every such entry, the Trustee may, from
time to time, at the expense of the Trust Estate and of the
Company, maintain, restore and insure or keep insured, the tools,
machinery, equipment, plants or other properties, buildings and
structures of which possession shall be taken as aforesaid; and
likewise may, from time to time, at the expense of the Trust
Estate and of the Company, make all necessary or proper repairs,
renewals, replacements, alterations, additions, betterments and
improvements thereto and thereon, as to the Trustee may seem
judicious. The Trustee, in case of such entry, shall have the
right to manage the Trust Estate and to carry on the business and
to exercise all the rights, privileges and franchises of the
Company, either in the name of the Company or otherwise as the
Trustee shall deem best. In such case the Trustee shall be
entitled to collect and receive all tolls, rents, revenues,
issues, earnings, income, products and profits of the Trust
Estate and of every part thereof whether accrued at or before the
time of such entry or accruing thereafter, and out of the same

<PAGE> 83
pay all proper costs and expenses of operating the Trust Estate
and of conducting the business thereof, and of all repairs,
maintenance, renewals, replacements, alterations, additions,
betterments and improvements and all payments which may be made
for taxes, assessments, insurance and other proper charges upon
the Trust Estate, or any part thereof, as well as reasonable
compensation for its own services and for the services of all
counsel, agents and attorneys properly engaged and employed by
it, and all other expenses and liabilities incurred without
negligence or bad faith on the part of the Trustee and
disbursements made by the Trustee hereunder. The Trustee shall
apply the remainder of the cash arising as aforesaid after
payment of the costs and expenses provided for in the preceding
sentence, subject to the provisions of Section 5.02 hereof, first
to the payment of the installments of interest which are due and
unpaid (and accrued interest thereon pursuant to Section 9.09
hereof), in the order of their maturity, and next, if the
principal of any of said bonds is due, to the payment of the
principal (and accrued interest thereon pursuant to Section 9.09
hereof) pro rata without any preference or priority whatever,
except as aforesaid.

Whenever all that is then due upon such bonds and
installments of interest and under any of the terms of this
Indenture, notwithstanding any acceleration initiated pursuant to
Section 9.03 hereof, shall have been paid and all defaults cured
or waived, the Trustee shall surrender possession of the Trust
Estate to the Company, its successors or assigns; the same right
of entry, however, to exist upon any subsequent default.

SECTION 9.05. Power of Sale Upon Default. Upon the
occurrence of a default, the Trustee shall, in its discretion, be
entitled with or without entry, either personally or by its agent
or attorneys, to sell, in the manner provided in Section 9.06
hereof and subject to the provisions of applicable law in the
jurisdiction in which the Trust Estate is situated, all and
singular the Trust Estate, including all shares of stock and all
bonds or other securities then pledged hereunder, or, in its
discretion, the Trustee may forthwith proceed to protect and
enforce its rights and the rights of the holders of the bonds
under this Indenture by a suit or suits in equity or at law, for
the specific performance of any covenant or agreement contained
herein, or in aid of the execution of any power herein granted,
or for the foreclosure of this Indenture by nonjudicial exercise
of the Trustee's power of sale in the manner provided in Section
9.06 hereof and as otherwise provided for herein, for interest,
principal or premium, or for the enforcement of any other
appropriate legal or equitable remedy, as the Trustee, being
advised by counsel, shall deem most effectual in support of any

<PAGE> 84
of its rights or duties hereunder. The court may appoint a
special master to make any sale under or by virtue of the power
of sale herein contained, or by virtue of judicial proceedings,
or of any judgment or decree of foreclosure.

SECTION 9.06. Notice of Sale and Manner of Making
Same. In the event of any sale under or by virtue of the power
of sale herein contained, or by virtue of judicial proceedings,
or by virtue of any judgment or decree of foreclosure and sale
thereunder, the whole of the Trust Estate, excluding all stocks,
bonds and other securities which may be pledged under this
Indenture, shall be sold in one parcel, as an entirety, unless
such sale as an entirety be impracticable by reason of some
statute or other cause, or unless the holders of a majority in
aggregate principal amount of all the bonds then Outstanding
shall in writing direct the Trustee to cause said Trust Estate,
or any part thereof, to be sold in parcels; in which case, so far
as lawfully may be, the sales shall be made in such parcels as
may be specified in such direction.

Notice of any sale or sales made under the power of
sale herein conferred shall state the time and place when and
where the same is to made, and shall contain a brief description
of the properties to be sold, and shall be published once in each
week (in each case upon any day of the week) for four consecutive
weeks prior to such sale in at least one Daily Newspaper of
general circulation in each of the cities in which the principal
of any of the bonds is payable; and in such other manner as may
be required by law in the jurisdiction in which the Trust Estate
is situated, and such other notice shall also be given as may be
required to comply with any applicable statute, rule of law or
order or rule of any court. The Trustee may adjourn any sale
under the power of sale herein contained, or cause the same to be
adjourned, from time to time, by announcement at the time and
place fixed for such sale or sales; and, without further notice
or publication, such sale may be made at the time and place to
which the same shall be so adjourned, unless otherwise provided
by law. In case of any sale of the Trust Estate, or any part
thereof, under the provisions of this Indenture, the whole of the
principal of the bonds, together with accrued interest thereon,
if not previously due, shall become immediately due and payable,
anything contained in the bonds or in this Indenture to the
contrary notwithstanding.

Upon the completion of any sale or sales, the Trustee
shall execute and deliver to the accepted purchaser or purchasers
a deed or deeds of the properties sold, or shall execute and
deliver, in conjunction with the deed or deeds of the court
officer conducting such sale, a conveyance of the interests of
the Trustee in such properties. The Trustee and its successors
and assigns are hereby appointed the true and lawful attorney or

<PAGE> 85
attorneys irrevocably by the Company in its name and stead to
make, execute and deliver all necessary deeds and acts of
conveyance, sale, assignment and transfer of such properties, and
to substitute one or more persons or corporations with like
power, the Company hereby ratifying and confirming all that its
said attorney, attorneys or substitutes shall lawfully do or
cause to be done by virtue hereof. Nevertheless, the Company
shall, if so requested by the Trustee, ratify and confirm such
sale by executing and delivering to the Trustee, or to such
purchaser or purchasers, all such proper assignments, deeds,
conveyances and releases as may be designated in such request.
In any deeds or instruments of conveyance, sale or transfer
executed by the Trustee under this Article, the recitals therein
of default, demand that sale be made, notice of sale,
postponement of sale, terms of sale, sale, purchaser, payment of
purchase money and any other fact or facts affecting the legality
or validity of such sale, shall be effectual and conclusive proof
of the facts related therein as against the Company, its
successors and assigns and all other persons. Any such sale made
under or by virtue of this Indenture, either under the power of
sale hereby granted and conferred or under or by virtue of
judicial proceedings, shall divest all right, title, interest,
estate, claim and demand whatsoever, either at law or in equity,
of the Company in, of or to the properties sold and every part
thereof and shall be a perpetual bar, both at law and in equity,
against the Company, its successors and assigns, and against any
and all persons claiming or who may claim the properties sold, or
any part thereof, from, through or under the Company, its
successors or assigns, respectively.

Section 9.06A. Operation of Power of Sale. Upon the
occurrence of a default, should the Trustee determine in its
discretion or be directed pursuant to the terms hereof to
foreclose by exercise of the nonjudicial power of sale herein
contained,

(a) the Trustee shall cause to be recorded, published
and delivered to the Company such notice of default and
notice of Trustee's intention to sell the Trust Estate, as
may be required under the provisions of applicable law in
the jurisdiction(s) in which the Trust Estate is situated
("Notice of Trustee's Sale"). The Trustee shall, without
demand on the Company, after lapse of such time as may then
be required by applicable law and after recordation of such
Notice of Trustee's Sale having been given as and if
required by applicable law, sell the Trust Estate at the
time and place of sale fixed by it in said Notice of
Trustee's Sale, either as a whole, or in separate lots or
parcels or items as the Trustee shall deem expedient
pursuant to the terms hereof, and in such order as it may
determine, at public auction to the highest bidder for cash

<PAGE> 86
in lawful money of the United States payable at the time of
sale. The Trustee shall deliver to such purchaser or
purchasers thereof its good and sufficient deed or deeds
conveying the property so sold, but without any covenant or
warranty, express or implied. The recitals in such deed of
any matters or facts shall be conclusive proof of the
truthfulness thereof. Any person, including, without
limitation, the Company, the Trustee or the bondholders, may
purchase at such sale and, if permitted by applicable law,
may credit the amount of the bid against the amount of any
indebtedness secured hereby and held by such purchaser.

(b) Subject to the provisions hereof and that of
applicable law, the Trustee may postpone the sale of all or
any portion of the Trust Estate by public announcement at
such time and place of sale, and from time to time
thereafter may postpone such sale by public announcement or
subsequently noticed sale, and without further notice make
such sale at the time fixed by the last postponement, or
may, in its discretion, give a new notice of sale.

(c) It is the express understanding and intent of the
parties that as to any personal property interests conveyed
to the Trustee as security under this Indenture, the Trustee
may, consistent with its rights and obligations hereunder
and under applicable law, proceed as to both real and
personal property interests within the Trust Estate in
accordance with the provisions of this Indenture and its
rights and remedies under applicable law in respect to real
property, and treat both real and personal property
interests of the Trust Estate as one parcel or package or
security.

SECTION 9.07. Application of Proceeds of Sale. In
case of any sale of the Trust Estate, or any part thereof,
whether under the power of sale hereby granted or pursuant to
judicial proceedings, the purchase money, proceeds or avails,
together with any other sums which may then be held by or be
payable to the Trustee under any of the provisions of this
Indenture as part of the security hereunder, other than sums held
in trust for the payment or redemption of bonds or for the
payment of interest thereon, shall be applied, subject to the
provisions of applicable law in the jurisdiction in which the
Trust Estate is situated, subject to the provisions of Section
5.02 hereof, as follows:

<PAGE> 87
attorneys, and to the payment of all expenses and
liabilities incurred without negligence or bad faith on the
part of the Trustee and advances or disbursements made by
the Trustee in connection with the management or
administration of the trusts hereby created;

SECOND. To the payment in full of the amount then due
and unpaid either for principal or interest, or for both
principal and interest (and accrued interest thereon
pursuant to Section 9.09 hereof) upon the bonds issued
hereunder then Outstanding, and in case such proceeds shall
be insufficient to pay in full the whole amount so due and
unpaid, then to the payment thereof ratably, according to
the aggregate of such principal and the accrued and unpaid
interest, without preference or priority of any one series
over any other series of bonds, or of principal over
interest, or of interest over principal, or of any
installment of interest over any other installment of
interest, except as to the difference, if any, in the
respective rates of such interest;

THIRD. To the payment of any premium (and accrued
interest thereon pursuant to Section 9.09 hereof) on any
bonds called for redemption and with respect to which
default was made in the payment of the redemption price,
ratably and without preference or priority of any one series
over any other, except as to the rates of premium; and

FOURTH. The remainder, if any, shall be paid over to
the Company, its successors or assigns, or to whomsoever may
be lawfully entitled to receive the same, or as a court of
competent jurisdiction may direct.

Before making any such payment, the Trustee may fix a
date for the distribution of such cash and may require the
presentation of the several bonds and their surrender if fully
paid or for proper notation if only partly paid.

SECTION 9.08. Purchaser at Sale May Use Bonds as
Payment. In case of any sale of the Trust Estate or any part
thereof, subject to applicable law in the jurisdiction in which
the Trust Estate or such part thereof is situated, the purchaser,
for the purpose of making settlement or payment for the property
purchased, shall be entitled to apply towards the payment of the
purchase price the portion of the principal of any bonds issued
under this Indenture plus the portion of any matured claims for
interest to which such bonds and claims for interest would be
entitled upon a distribution among the bondholders of the
proceeds of such sale, after making deductions allowable under
the terms hereof for the costs and expenses of the sale, or
otherwise; but such bonds and claims for interest so applied in

<PAGE> 88
payment by the purchaser shall be deemed to be paid only to the
extent so applied. At any such sale, the Trustee or any holder
of any bond may bid for and purchase such Trust Estate or any
part thereof, and may make payment therefor, as aforesaid, and,
upon compliance with the terms of sale, may hold, retain and
dispose of such properties without further accountability. The
receipt of the Trustee, or of the court officer conducting such
sale, shall be sufficient discharge for the purchase money to any
purchaser of the Trust Estate, or any part thereof, sold as
aforesaid; and no such purchaser, or its representatives,
grantees or assigns, upon becoming entitled to and receiving such
receipt, shall be bound to see to the application of such
purchase money upon or for any trust or purpose of this Indenture
or be answerable in any manner whatsoever for any loss,
misapplication or non-application of any such purchase money, or
any part thereof.

SECTION 9.09. Principal and Interest Payable to
Trustee After Default; Proofs of Claim; Judgments. In case
default shall be made in the payment of any installment of
interest on any bond issued hereunder when and as such interest
shall become due and payable, and any such default shall continue
for a period of sixty (60) days, or in case default shall be made
in the payment of the principal of or premium, if any, on any
such bond when and as the same shall become due and payable,
whether at the maturity of said bond or pursuant to notice of
redemption or by declaration, as authorized by this Indenture, or
by a sale of the Trust Estate, as hereinbefore provided, or
otherwise, then, upon demand of the Trustee, the Company will pay
to the Trustee, for the benefit of the holders of the bonds and
claims for interest hereby secured then Outstanding, the
principal of all such bonds then due and payable, together with
any premium due thereon, and the whole amount then due and
payable for interest on such bonds, with interest upon the
overdue principal and premium, if any, and installments of
interest at the same rates borne by the respective bonds which
are overdue and in addition thereto such further amount as shall
be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and, in case
the Company shall fail to pay the same forthwith upon such
demand, the Trustee, in its own name and as trustee of an express
trust, shall be entitled to recover judgment against the Company
or any other obligor on the bonds (and in the case of the
pendency of any receivership, insolvency, bankruptcy,
reorganization or other similar proceedings affecting the Company
or any other obligor on the bonds, its creditors or its property)
for the whole amount of such principal, premium and interest
remaining unpaid, as well as judgment for any sums that may be

<PAGE> 89
payable hereunder for fees, charges, expenses and liabilities
(incurred without negligence or bad faith on the part of the
Trustee) of the Trustee hereunder and of the holders of the
bonds.

The Trustee may file such proofs of claim and other
papers or documents as may be necessary or advisable in order to
have the claims of the Trustee and of the bondholders allowed in
any judicial proceedings relative to the Company or any other
obligor on the bonds or its creditors, or its property. In case
of any receivership, insolvency, bankruptcy, reorganization or
other similar proceedings affecting the Company or its property,
the Trustee, irrespective of whether the principal of the bonds
shall then be due and payable and irrespective of whether the
Trustee shall have made any demand for such payment, shall be
entitled and empowered either in its own name or as trustee of an
express trust or as attorney in fact for the holders of the
bonds, or in any one or more of such capacities, to file a proof
of claim for the whole amount of principal and interest (with
interest upon such overdue principal and installments of interest
at the same rates borne by the bonds which are overdue) which may
be or become owing and unpaid in respect of the bonds and for any
additional amount (including the reasonable compensation,
expenses, disbursements and advances of the Trustee) which may be
or become payable by the Company hereunder, without regard to or
deduction for any amount which may have been or which may
thereafter be received, collected or realized by the Trustee from
or out of the Trust Estate any part thereof or from or out of the
proceeds thereof or any part thereof and to take such other
action including participating as a member in any official
creditors committee appointed in the matter to have the claims of
the Trustee and the holders allowed in such judicial proceedings;
but nothing in this Indenture contained shall authorize the
Trustee to accept or consent to any composition or plan of
reorganization on behalf of any bondholder.

<PAGE> 90
Outstanding hereunder, for the benefit of the holders thereof,
and the Trustee shall be entitled to recover judgment for any
portion of the debt remaining unpaid, with interest. No recovery
of any such judgment by the Trustee and no levy of any execution
upon any such judgment upon any of the Trust Estate or upon any
other property shall in any manner or to any extent affect the
lien of this Indenture upon the Trust Estate or any part thereof,
or any rights, powers or remedies of the Trustee hereunder, or
any lien, rights, powers or remedies of the holders of the said
bonds, but such lien, rights, powers and remedies of the Trustee
and of the bondholders shall continue unimpaired as before.

Any cash collected by the Trustee under this Section
shall be applied by the Trustee, subject to the provisions of
Section 5.02 hereof, first, to the payment of the costs and
expenses of the proceedings resulting in the collection of such
cash, second, to the payment of the fees, charges, expenses and
liabilities (incurred without negligence or bad faith on the part
of the Trustee) of the Trustee hereunder and of the holders of
the bonds, and third, to the payment of the amounts then due and
unpaid (whether at stated maturity or otherwise) upon the bonds
issued hereunder then Outstanding and claims for interest,
respectively, without any preference or priority of any kind
(except as to the difference, if any, in the respective rates of
such interest and premium, if any), but ratably according to the
amounts due and payable upon such bonds and claims for interest,
respectively, at the date fixed by the Trustee for the
distribution of such cash, on presentation of the several bonds
and their surrender if fully paid or for proper notation if only
partly paid.

All rights of action vested in the Trustee pursuant to
the provisions of this Indenture may be enforced by the Trustee
without the possession of any of the bonds or the production
thereof at any trial or other proceedings relating thereto; and
any suit or proceedings instituted by the Trustee shall be
brought in its name, as Trustee, and any recovery of judgment
shall be for the equal benefit, in accordance with the provisions
of this Indenture, of the holders of the Outstanding bonds
entitled thereto.

<PAGE> 91
however, that such directions shall not be inconsistent with the
terms of this Indenture and that the Trustee shall have the right
to decline to follow any such direction if the Trustee shall be
advised by counsel that the action or proceeding so directed may
not lawfully be taken or if the Trustee in good faith shall by
Responsible Officers determine that the action or proceeding so
directed would involve the Trustee in personal liability or be
unjustly prejudicial to the non-assenting bondholders; and
provided further that the Trustee shall not be required to
exercise the power of entry into or upon all or any part of the
Trust Estate conferred by Section 9.04 hereof or the power of
sale conferred by Section 9.05 hereunder.

SECTION 9.11. Remedies Cumulative and Not Waived by
Failure to Act. Except as herein expressly provided to the
contrary, no remedy herein conferred upon or reserved to the
Trustee or to the holders of the bonds is intended to be
exclusive of any other remedy, but every remedy herein provided
shall be cumulative, and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in
equity, or by statute. Every power and remedy given by this
Indenture to the Trustee or to holders of the bonds may, subject
to the provisions of Section 9.12 hereof, be exercised from time
to time and as often as may be deemed expedient. No delay or
omission by the Trustee or by any holder of any bond to exercise
any right or power arising from any default shall impair any such
right or power or shall be construed to be a waiver of any
default or an acquiescence therein. In case the Trustee shall
have proceeded to enforce any right under this Indenture by
foreclosure, entry or otherwise, and such proceedings shall have
been discontinued or abandoned because of waiver, or for any
other reason, or shall have been determined adversely, then, and
in each and every such case, the Company and the Trustee shall
severally and respectively be restored to their former positions
and rights hereunder in respect of the Trust Estate, and all
rights, remedies and powers of the Trustee shall continue as
though no such proceedings had been taken.

<PAGE> 92
action, suit or proceeding and shall have requested the Trustee
in writing to take action in respect of such default, and the
Trustee shall have declined to take such action or shall have
failed so to do within thirty (30) days thereafter, and (c) no
directions inconsistent with such written request shall have been
given pursuant to Section 9.10 hereof, it being understood and
intended that no holder of any bond shall have any right in any
manner whatever to affect, disturb or prejudice the lien of this
Indenture by his or her action, or to enforce any right
hereunder, except in the manner herein provided, and that all
proceedings hereunder with respect to the lien hereof or to the
Trust Estate shall be instituted, had and maintained in the
manner herein provided and for the equal benefit of all holders
of bonds Outstanding hereunder.

Nothing contained in this Article or elsewhere in this
Indenture shall affect or impair the right of any bondholder,
which is absolute and unconditional, to enforce the payment of
the principal of and premium, if any, and interest on his or her
bonds at and after the maturity thereof as therein expressed or
as accelerated by call for redemption thereof, or the obligation
of the Company, which is also absolute and unconditional, to pay
the principal of and premium, if any, and interest on each of the
bonds issued hereunder to the respective holders at the time and
place expressed in said bonds and in said notice of redemption,
if any.

ARTICLE X

EVIDENCE OF RIGHTS OF BONDHOLDERS

SECTION 10.01. Execution of Requests, etc. by
Bondholders. Any request, declaration, or other instrument,
which this Indenture may require or permit to be signed and
executed by the bondholders, may be in any number of concurrent
instruments of similar tenor and may be signed or executed by
such bondholders in person or by attorneys appointed in writing.
Proof of the execution of any such request or other instrument,
or of a writing appointing any such attorney, or of the holding
by any person of the bonds, shall be sufficient for any purpose
of this Indenture if made in the following manner:

(a) The fact and date of the execution by any person
of such request or other instrument or writing may be proved
by a witness or by a certificate acknowledged before a
notary public or other officer authorized to take
acknowledgments; and

(b) The ownership of registered bonds shall be proved
by the registry books as hereinbefore provided.

<PAGE> 93
Any request, consent or vote of the holder of any bond
shall bind all future holders and owners of said bond or of any
bond issued in exchange or substitution for said bond, in respect
of anything done or suffered by the Company or the Trustee in
pursuance thereof.

SECTION 10.02. Registered Holders Treated as Absolute
Owners. The Company and the Trustee may deem and treat the
person in whose name any bond is registered as the absolute owner
of such bond for the purpose of receiving payment of or on
account of the principal of and interest on such bond and for all
other purposes; and all such payments so made to any such
registered holder or upon his or her order shall be valid and
effectual to satisfy and discharge the liability upon such bond
to the extent of the sum or sums so paid, and neither the Company
nor the Trustee shall be affected by any notice to the contrary.

Neither the Company nor the Trustee shall be bound to
recognize any person as the holder of a bond Outstanding under
this Indenture unless and until his or her bond is submitted for
inspection, if required, and his or her title thereto
satisfactorily established, if disputed.

ARTICLE XI

DEFEASANCE

SECTION 11.01. Release and Discharge of Indenture. If
the Company, its successors or assigns, shall pay and discharge
or provide for the payment and discharge of the entire
indebtedness on all bonds at the time Outstanding hereunder in
any one or more of the following ways, namely:

(a) by paying or causing to be paid the principal of,
and the premium, if any, and interest on bonds, at the time
and in the manner therein and herein expressed; or

(b) by delivering all then Outstanding bonds to the
Trustee for cancellation and by delivering to the Trustee a
written order of the Company to cancel any bonds held by the
Trustee in uncancelled form under any of the terms hereof;
or

(c) by irrevocably depositing with the Trustee, in
trust for the pro rata benefit of the holders thereof, at or
prior to maturity, cash sufficient, or U.S. Government
Obligations the principal of and the interest on which will
provide cash sufficient without reinvestment (as established
by an Officers' Certificate delivered to the Trustee
accompanied by a report of an independent certified public
accountant setting forth the calculations upon which such

<PAGE> 94
Officers' Certificate is based), to pay the principal of,
and the premium, if any, on, bonds at maturity together with
interest thereon to maturity; provided that:

(i) the Company shall have instructed the Trustee
to make the Funds so deposited immediately available to
the holders of the bonds upon such maturity for the
payment of which at maturity the same shall have been
so deposited, and

(ii) either (aa) a notice of such availability
shall have been given by the Trustee to the holders of
all bonds in accordance with Article VII hereof, or
(bb) provision satisfactory to the Trustee shall have
been made for the giving of such notice, or

(d) by irrevocably depositing with the Trustee, in
trust, cash sufficient, or U.S. Government Obligations the
principal of and the interest on which will provide cash
sufficient without reinvestment (as established by an
Officers' Certificate delivered to the Trustee accompanied
by a report of an independent certified public accountant
setting forth the calculations upon which such Officers'
Certificate is based), to redeem the bonds Outstanding
hereunder, together with interest accrued on such bonds to
the date fixed for redemption, provided that:

(i) notice of the redemption of such bonds shall
have been duly given in accordance with Article VII
hereof and the date fixed for redemption shall have
passed, or

(ii) the Company shall have instructed the Trustee
to make such Funds immediately available to the holders
of such bonds upon such redemption and either (aa)
notice of the redemption of such bonds (stating that
such Funds are so available) shall have been duly given
in accordance with Article VII hereof, or (bb)
provision satisfactory to the Trustee shall have been
made for the giving of such notice;

and if the Company shall also

(1) pay or cause to be paid all other sums payable
hereunder by the Company or make provision satisfactory to
the Trustee for the payment thereof,

(2) duly perform and comply with all covenants,
agreements, terms and conditions on the part of the Company
contained in this Indenture until the date such defeasance
becomes effective,

<PAGE> 95
(3) in the case of paragraphs (c) or (d) above,
deliver to the Trustee an Opinion of Counsel stating that
the holders of the bonds will not recognize income, gain or
loss for federal income tax purposes as a result of the
deposit and defeasance referred to below and will be subject
to federal income tax on the same amount and in the manner
and at the same times as would have been the case if such
deposit and defeasance had not occurred, and in the case of
legal defeasance (as defined below) only, such Opinion of
Counsel shall be based on a ruling of the Internal Revenue
Service or other change in applicable federal income tax
law, and

(4) deliver to the Trustee an Officers' Certificate
and Opinion of Counsel stating that the foregoing conditions
have been complied with;

then and in that case the Company may at its election specified
in an Officers' Certificate delivered with the Opinions of
Counsel and Officers' Certificate delivered pursuant to clauses
(3) and (4) above (provided that if no such Officers' Certificate
is delivered, the Company shall be deemed to have elected a
covenant defeasance) to the Trustee either (a) be released from
its obligations to comply with any of the covenants contained in
this Indenture, other than the covenants contained in Sections
5.02, 5.07 and 14.10, (and any non-compliance shall not be a
default hereunder, and rights of the Trustee with respect to a
default under Sections 9.01(a), (b), (c), (d) or (e) shall
survive such covenant defeasance) ("covenant defeasance") or (b)
have this Indenture and all supplemental indentures cancelled and
surrendered by the Trustee ("legal defeasance") upon the request
and at the expense of the Company and shall in any event, cease
and become void (except that the Company's obligations under
Section 5.02(b) and 14.10 shall survive) and the Trustee shall
execute and deliver to the Company such deeds or releases as
shall be requisite to satisfy the lien hereof, and reconvey to
the Company the estate and title hereby conveyed and assigned,
and deliver to the Company any property subject to the lien of
this Indenture which may then be in the possession of the
Trustee.

SECTION 11.02. Defeasance of a Series of Bonds. If
the Company, its successors or assigns, shall pay and discharge
or provide for the payment and discharge of the entire
indebtedness on all bonds of a particular series at the time
Outstanding hereunder in either of the following ways, namely:

<PAGE> 96
sufficient without reinvestment (as established by an
Officers' Certificate delivered to the Trustee accompanied
by a report of an independent certified public accountant
setting forth the calculations upon which such Officers'
Certificate is based), to pay the principal of, and premium,
if any, on the bonds of such series Outstanding hereunder at
maturity together with interest thereon to maturity;
provided that:

(i) the Company shall have instructed the Trustee
to make the Funds so deposited immediately available to
the holders of the bonds of such series upon such
maturity for the payment of which at maturity the same
shall have been so deposited, and

(ii) either (aa) a notice of such availability
shall have been given by the Trustee to the holders of
all bonds of such series in accordance with Article
VII, or (bb) provision satisfactory to the Trustee
shall have been made for the giving of such notice, or

(b) by irrevocably depositing with the Trustee, in
trust, cash sufficient, or U.S. Government Obligations the
principal of and the interest on which will provide cash
sufficient without reinvestment (as established by an
Officers' Certificate delivered to the Trustee accompanied
by a report of an independent certified public accountant
setting forth the calculations upon which such Officers'
Certificate is based), to redeem the bonds of such series
Outstanding hereunder, together with interest accrued on
such bonds to the date fixed for redemption, provided that:

(i) notice of the redemption of the bonds of such
series shall have been duly given in accordance with
Article VII and the date fixed for redemption shall
have passed, or

(ii) the Company shall have instructed the Trustee
to make such Funds immediately available to the holders
of the bonds of such series upon such redemption and
either (aa) notice of the redemption of such bonds
(stating that such Funds are so available) shall have
been duly given in accordance with Article VII, or (bb)
provision satisfactory to the Trustee shall have been
made for the giving of such notice;

and if the Company shall also

(1) pay or cause to be paid all other sums
payable hereunder by the Company with respect to such
series or make provision satisfactory to the Trustee
for the payment thereof,

<PAGE> 97
(2) duly perform and comply with all covenants,
agreements, terms and conditions on the part of the
Company contained in this Indenture with respect to
such series until the date such defeasance becomes
effective,

(3) deliver to the Trustee an Opinion of Counsel
stating that the holders of the bonds will not
recognize income, gain or loss for federal income tax
purposes as a result of the deposit and defeasance
referred to below and will be subject to federal income
tax on the same amount and in the manner and at the
same times as would have been the case if such deposit
and defeasance had not occurred, and in the case of
legal defeasance for such series (as defined below)
only, such Opinion of Counsel shall be based on a
ruling of the Internal Revenue Service or other change
in applicable federal income tax law, and

(4) deliver to the Trustee an Officer's
Certificate and Opinion of Counsel stating that the
foregoing conditions have been complied with;

then and in that case the Company may at its election specified
in an Officers' Certificate delivered with the Opinions of
Counsel and Officers' Certificate delivered pursuant to clauses
(3) and (4) above (provided that if no such Officers' Certificate
is delivered, the Company shall be deemed to have elected a
covenant defeasance) to the Trustee either (a) be released from
its obligations to comply with any of the covenants contained in
this Indenture with respect to such series, other than the
covenants contained in Sections 5.02, 5.07 and 14.10, (and any
non-compliance shall not be a default hereunder with respect to
such series, and the rights of the Trustee with respect to a
default under Sections 9.01(a), (b), (c), (d) or (e) shall
survive such covenant defeasance) ("covenant defeasance") or
(b) be deemed to have been discharged from all obligations in
respect of the bonds of such series ("legal defeasance for such
series"), this Indenture shall cease to be of further effect with
respect to the bonds of such series and the Trustee, on demand of
the Company and at the cost and expense of the Company, shall
execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the bonds of such
series.

SECTION 11.03. Payment of Deposited Cash to Company.
The U.S. Government Obligations and cash deposited with the
Trustee pursuant to Sections 11.01 or 11.02 hereof and principal
or interest payments on any such U.S. Government Obligations
shall be held in trust, shall not be sold or reinvested, and
shall be applied by it in accordance with the provisions of the

<PAGE> 98
bonds and this Indenture, to the payment, either directly or
through any paying agent as the Trustee may determine, to the
persons entitled thereto, of the principal (and premium, if any)
and interest for whose payment such cash or U.S. Government
Obligations were deposited; provided that, upon delivery to the
Trustee of an Officers' Certificate (accompanied by the report of
an independent certified public accountant setting forth the
calculations upon which such Officers' Certificate is based)
establishing that the cash and U.S. Government Obligations on
deposit following the taking of the proposed action will be
sufficient for the purposes described in Sections 11.01 or 11.02
hereof, as the case may be, any cash received from principal or
interest payments on U.S. Government Obligations deposited with
the Trustee or the proceeds of any sale of such U.S. Government
Obligations, if not then needed for such purpose, shall, upon
receipt by the Trustee of an Officers' Certificate requesting
same, be reinvested in other U.S. Government Obligations or
disposed of as requested in such Officers' Certificate. In case
the owner of any bond entitled to payment hereunder at any time
Outstanding hereunder shall not, within two years after the
maturity date of such bond, or if such bond shall have been
called for redemption, then within two years after the date fixed
for redemption of such bond, claim the amount on deposit with the
Trustee or other depositary for the payment of such bond, the
Trustee or other depositary shall pay over to, or to the order
of, the Company the amount so deposited, upon receipt of a
request signed by the President or a Vice-President of the
Company, and thereupon the Trustee or other depositary shall be
released from any and all further liability with respect to the
payment of such bond and the holder of said bond shall be
entitled (subject to any applicable statute of limitations) to
look only to the Company as an unsecured creditor for the payment
thereof; provided, however, that the Trustee or other depositary
before being required to make any such payment may, at the
expense of the Company, cause notice that said cash has not been
so called for and that after a date named therein any unclaimed
balance then remaining will be returned to the Company, to be
published once a week for two consecutive weeks (not necessarily
on the same day in each week), in a Daily Newspaper of general
circulation in each of the cities wherein any of such bonds are
expressed to be payable.

ARTICLE XII

IMMUNITY OF INCORPORATORS, OFFICERS, SHAREHOLDERS AND
DIRECTORS

<PAGE> 99
judgment obtained against the Company, or by the enforcement of
any assessment or penalty, or by any legal or equitable
proceedings by virtue of any constitution or statute or rule of
law, or otherwise, or under any circumstances, under or
independent of this Indenture, or any supplemental indenture,
shall be had against any incorporator, shareholder, officer or
director of the Company or of any predecessor or successor
company, as such, either directly or through the Company or any
predecessor or successor company, under any rule of law, statute
or constitution or by the enforcement of any assessment or by any
legal or equitable proceeding or otherwise; it being expressly
agreed and understood that this Indenture and the obligations
hereby secured, are solely corporate obligations, and that no
such personal liability shall attach to, or be incurred by, such
incorporators, shareholders, officers or directors of the Company
or of any predecessor or successor company, or any of them, as
such, because of the incurring of the indebtedness hereby
authorized, or under or by reason of any of the obligations,
covenants or agreements contained in this Indenture or in any of
the bonds hereby secured, or implied therefrom, and that any and
all such personal liability of every name and nature, and any and
all such rights and claims against every such incorporator,
shareholder, officer or director, as such, whether arising at
common law or in equity, or created by rule of law, statute,
constitution or otherwise, are expressly released and waived as a
condition of, and as part of the consideration for, the execution
of this Indenture and the issue of the bonds and interest
obligations secured hereby.

ARTICLE XIII

CONSOLIDATIONS, MERGERS, TRANSFERS AND SALES

SECTION 13.01. Merger, Consolidation or Sale. Subject
to the provisions of this Article, nothing contained in this
Indenture shall prevent any lawful consolidation of the Company
with or merger with or into any other corporation, or any
conveyance, transfer or lease, subject to the lien of this
Indenture, of all or substantially all of the Trust Estate, as an
entirety, to any corporation lawfully entitled to acquire or
lease or operate the same. The Company covenants and agrees that
such consolidation, merger, conveyance, transfer or lease shall
be upon such terms as fully to preserve and in no respect to
impair the lien or priority of lien of this Indenture upon the
property then subject hereto, or the security afforded hereby, or
any of the rights or powers of the Trustee or the bondholders
hereunder, that any such lease shall be made expressly subject to
immediate termination by the Company or by the Trustee at any
time during the continuance of a default specified in Section
9.01 hereof, and also by a purchaser of the property so leased at
any sale thereof hereunder, whether such sale be made under the

<PAGE> 100
power of sale hereby conferred or under judicial proceedings, and
that the provisions and conditions of this Section and the
execution of the supplemental indenture provided for in this
Section shall be a condition to any such consolidation, merger,
conveyance, transfer or lease. The corporation formed by such
consolidation, or into which the Company shall have been merged,
or acquiring all or substantially all of the Trust Estate as an
entirety as aforesaid, shall execute and deliver to the Trustee
hereunder (and cause to be recorded) a supplemental indenture
satisfactory to the Trustee in and by which such corporation
shall assume the due and punctual payment of the principal of,
premium, if any, and interest on all the bonds issued hereunder
according to their tenor, and the due and punctual performance of
all the covenants and agreements of this Indenture to be kept or
performed by the Company (subject to the provisions of Section
13.03 hereof), and shall make appropriate covenants to protect
the lien and priority of lien of this Indenture, the security
afforded hereby, and the rights and powers of the Trustee and
bondholders hereunder. Any lessee under any such lease shall
expressly assume such obligations by instrument in writing
satisfactory to the Trustee. The property of the other
corporation with which the Company shall consolidate or merge or
to which all or substantially all the Trust Estate shall be
conveyed or transferred shall not be subject to any lien (other
than liens which, if they existed upon property of the Company,
would constitute Excepted Encumbrances) which after such
consolidation, merger, conveyance or transfer will be equal or
prior to the lien of this Indenture on the property owned by such
corporation, upon completion of such consolidation, merger,
conveyance or transfer, unless the amount of obligations
outstanding under and secured by such equal or prior lien or
liens shall not exceed sixty-six and two-thirds per centum (66-
2/3%) of the value of the property (which, if owned by the
Company, would constitute bondable property as defined in Section
4.03 hereof) of such other corporation and unless the net
earnings, determined as provided in Section 4.05 hereof, derived
from the operation of the property of such other corporation
during a period of twelve consecutive calendar months ending
within ninety days next preceding the date of such consolidation,
merger or conveyance shall have been a sum at least equal to
twice the interest for one year on all obligations outstanding
under and secured by such equal or prior lien or liens at the
time of such consolidation, merger or conveyance, except
obligations for the payment or redemption of which the necessary
funds shall have been deposited with the trustee under such equal
or prior lien or liens or with the Trustee hereunder, together
with instructions to apply such funds to the payment or
redemption of such obligations and, until so applied, to hold
such funds irrevocably in trust for such purposes (but subject to
any applicable provision in the instrument creating such lien or
liens for the return of any unclaimed cash to the Company).

<PAGE> 101
SECTION 13.02. Successor to Succeed to Rights of
Company. In case the Company shall be consolidated with or
merged into any other corporation, or shall convey or transfer,
subject to the lien of this Indenture, all, or substantially all,
the Trust Estate, as an entirety, the successor corporation
formed by such consolidation, or into which the Company shall
have been merged, or which shall have received a conveyance or
transfer, as aforesaid (such corporation being hereinafter called
the successor corporation), shall succeed to and be substituted
for the Company under this Indenture with the same effect as if
it had been named herein and may thereafter, subject to all the
terms, conditions and restrictions in this Indenture prescribed,
exercise all the powers and rights which the Company might or
could exercise prior to such consolidation, merger or sale,
either in the name of such successor corporation, or of the
Company, and may, without in any way limiting the generality of
the foregoing, issue bonds hereunder to the extent and for the
purposes herein provided with respect to the issuance of bonds by
the Company and may also issue any bonds which the Company was
entitled to issue but had not issued hereunder; and any act,
proceeding, resolution or certificate by any of the terms of this
Indenture required or provided to be done, taken or performed, or
made or executed, by any board, committee, officer or employee of
the Company may be done, taken and performed, or made and
executed, with like force and effect, by the corresponding board,
committee, officer or employee of such successor corporation.
All the bonds so issued shall in all respects have the same legal
rank and security as the bonds theretofore or thereafter issued
in accordance with the terms of this Indenture as though all of
said bonds had been issued at the date of the execution hereof.
As a condition precedent to the execution by such successor
corporation and the authentication and delivery by the Trustee of
any such additional bonds or the withdrawal, use or application
of cash or the release of property on the basis of bondable
property of such successor corporation, or the certification of
bondable property of such successor corporation under any of the
provisions of this Indenture, the supplemental indenture with the
Trustee to be executed and caused to be recorded by the successor
corporation as provided in this Article XIII, or a subsequent
supplemental indenture, shall contain a conveyance or transfer
and mortgage in terms sufficient to subject to the lien hereof
(a) all property owned or thereafter acquired by such successor
corporation (except property of a character similar to that
excluded from the lien of this Indenture) or (b) such property as
such successor corporation is making the basis for the issuance
of bonds or the withdrawal, use or application of cash or the
release of property hereunder or is certifying pursuant to any of
the provisions of this Indenture, and the lien created thereby
shall have similar force, effect and standing as the lien of this

<PAGE> 102
Indenture would have if the Company itself should acquire or
construct such property and request the authentication of bonds
or the withdrawal, use or application of cash or the release of
property or certify bondable property hereunder.

The Trustee may receive and rely upon an Officers'
Certificate and an Opinion of Counsel as conclusive evidence,
subject to the provisions of Article XIV hereof, that any
consolidation, merger, conveyance, transfer or lease and any
supplemental indenture or, in the case of certain leases, any
written instrument, executed in connection therewith, comply with
the foregoing conditions and provisions of Section 13.01 hereof
and of this Section.

SECTION 13.03. Limitation of After-Acquired Clauses.
In case the Company, pursuant to this Article, shall be
consolidated with or merged into any other corporation or shall
convey or transfer all or substantially all of the Trust Estate
as an entirety subject to the lien of this Indenture, this
Indenture (unless the supplemental indenture executed pursuant to
Section 13.01 or 13.02 hereof by the successor corporation, or a
subsequent indenture, conveys and mortgages upon the trusts
herein declared all its property then owned or thereafter
acquired, except property of a character similar to that excluded
from the lien of this Indenture) shall not become or be a lien
upon any of the properties or franchises of the successor
corporation except (a) those acquired by it from the Company and
property appurtenant thereto and property which the successor
corporation shall thereafter acquire or construct which shall
form an integral part or be essential to the use or operation of
any property then or thereafter subject to the lien hereof; and
(b) the property additions to or about the plants or properties
of the successor corporation made and used by it as the basis for
the authentication and delivery of additional bonds or the
withdrawal, use or application of cash or the release of property
under this Indenture or certified as property additions pursuant
to any of the provisions of this Indenture; and (c) such
franchises, repairs, renewals, replacements and additional
property as may be acquired, made or constructed by the successor
corporation (1) to maintain, renew and preserve the franchises
covered by this Indenture, or (2) to maintain the property
mortgaged and intended to be mortgaged hereunder as an operating
system or systems in good repair, working order and condition, or
(3) in a rebuilding or renewal of property subject to the lien
hereof damaged or destroyed, or (4) in replacement of or
substitution for machinery, apparatus, equipment, frames, towers,
poles, wire, pipe, tools, implements or furniture, or any other
fixtures or personalty, subject to the lien hereof, which shall
have become old, inadequate, obsolete, worn out, unfit,
unadapted, unserviceable, undesirable or unnecessary for use in
the operation of the property mortgaged and intended to be
mortgaged hereunder.

<PAGE> 103
ARTICLE XIV

CONCERNING THE TRUSTEE

SECTION 14.01. Capital and Surplus Requirement. There
shall at all times be a Trustee under this Indenture that shall
be a bank, trust company, corporation or other person eligible
pursuant to the TIA to act as such, having a combined capital and
surplus of at least Fifty Million Dollars ($50,000,000). If the
Trustee publishes reports of condition at least annually,
pursuant to law or to the requirements of its supervising or
examining authority, then for the purposes of this Section and
Section 5.12 hereof the combined capital and surplus of the
Trustee shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.

SECTION 14.02. Acceptance of Trust and Duties by
Trustee. Notwithstanding any provision contained in the
Indenture to the contrary, the Trustee hereby accepts the trust
created herein. The Trustee and, if a separate or co-trustee is
appointed pursuant to Section 14.18 hereof, such separate or
co-trustee, undertakes, prior to default and after the curing of
all defaults which may have occurred, to perform such duties and
only such duties as are specifically set forth in this Indenture,
and in case of default (which has not been cured) to exercise
such of the rights and powers vested in it by this Indenture, and
to use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs. For the purpose of this
Section 14.02 and of Section 14.03 hereof a default shall be
deemed cured when the act or omission or other event giving rise
to such default shall have been cured, remedied or terminated.

The Trustee, upon receipt of evidence furnished to it
by or on behalf of the Company pursuant to any provision of this
Indenture, will examine the same to determine whether or not such
evidence conforms to the requirements of this Indenture.

SECTION 14.03. Limitation on Liability of Trustee.
Notwithstanding any provision contained in the Indenture to the
contrary, no provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own willful misconduct,
except that

<PAGE> 104
obligations of the Trustee, prior to default and after the
curing of all defaults which may have occurred, shall be
determined solely by the express provisions of this
Indenture; and

(b) prior to default hereunder, and after the curing
of all such defaults which may have occurred, and in the
absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon
certificates or opinions conforming to the requirements of
this Indenture; and

(c) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Trustee unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and

(d) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith
in accordance with the direction of the holders of not less
than a majority in principal amount of the bonds at the time
Outstanding relating to the time, method and place of
conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture or with respect to any
directions or notice from the Agent (as defined in Section
4.01C hereof) in connection with redemption, rescission
thereof or any other action in respect of the bonds of
Series X.

No provision of this Indenture shall require the
Trustee to advance or expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers, if
there is reasonable ground for believing that the repayment of
such funds or liability is not reasonably assured to it.

Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be
subject to the provisions of this Article.

<PAGE> 105
thereby and hereby, or as to the validity of this Indenture or of
the bonds issued hereunder. The Trustee shall be under no
responsibility or duty with respect to the disposition of any
bonds authenticated and delivered hereunder or the application of
the proceeds thereof or the application of any cash paid to the
Company under any of the provisions hereof.

SECTION 14.05. Exemption of Trustee from Personal
Liability in Case of Entry. In case of entry upon the Trust
Estate, the Trustee, and any separate or co-trustee, shall not be
personally liable for debts contracted or liability or damages
incurred in the management or operation of said property.

SECTION 14.06. Trustee may Rely on Documents, etc. To
the extent permitted by Sections 14.02 and 14.03 hereof:

(1) the Trustee may rely and shall be protected in
acting upon, or in failing to take action as a result of,
any Resolution, Officers' Certificate, Engineer's
Certificate, Net Earnings Certificate, Opinion of Counsel,
resolution, certificate, opinion, statement, notice,
request, consent, order, appraisal, report, bond, or other
paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties; and

(2) the Trustee may consult with counsel (who may be
of counsel to the Company) and the opinion of such counsel
shall be full and complete authorization and protection in
respect of any action taken or suffered by it hereunder in
good faith and in accordance with the opinion of such
counsel; and

(3) the Trustee shall be under no obligation to
exercise any of the trusts or powers hereof at the request,
order or direction of any of the bondholders, pursuant to
the provisions of this Indenture, unless such bondholders
shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which
may be incurred by it in compliance with such request or
direction; and

(4) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, bond or other paper or document, but the Trustee, in
its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit;
and

<PAGE> 106
(5) the Trustee may perform any duties hereunder
either directly or through agents or attorneys and the
Trustee shall not be responsible for any misconduct or
negligence of any agent or attorney appointed with due care
by it hereunder; and

(6) the Trustee shall not be liable for any action
taken by it in good faith and believed by it to have been
authorized or within the discretion or powers conferred upon
it by this Indenture; and the Trustee shall not be charged
with knowledge of any default or any fact, the occurrence of
which would require the Trustee to take action unless a
Responsible Officer shall have actual knowledge thereof.

SECTION 14.07. Trustee's Responsibility for Selection
of Experts. The Trustee shall not be under any responsibility
for the selection or acceptance of any Engineer, Accountant or
other expert for any of the purposes expressed in this Indenture,
except that nothing in this Section contained shall relieve the
Trustee of its obligation to exercise reasonable care with
respect to the selection or acceptance of independent experts who
may furnish certificates to the Trustee pursuant to any provision
of this Indenture.

The Trustee may accept any Resolution as conclusive
evidence of the adoption of such Resolution.

SECTION 14.08. Trustee may be Bondholder, etc.
Subject to the provisions of Sections 14.13 and 14.14 hereof and
to the provisions of applicable law in the jurisdictions in which
the Trust Estate is situated, the Trustee, in its individual or
any other capacity, may become the holder, owner or pledgee of
bonds secured hereby, and may otherwise deal with the Company
with the same rights it would have if it were not Trustee.

SECTION 14.09. Cash to be Held in Trust. Subject to
the provisions of Section 11.03 hereof, all cash received by the
Trustee, whether as Trustee or paying agent, shall, until
withdrawn, used or applied as herein provided, be held in trust
for the purposes for which they were paid but need not be
segregated from other funds except to the extent required by law.
The Trustee may allow and credit to the Company, in the absence
of any default, interest on any cash received by it hereunder at
such rate, if any, as may be agreed upon with the Company from
time to time and as may be permitted by law.

<PAGE> 107
any of the powers and duties hereunder of the Trustee, which
compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust, and
the Company will reimburse the Trustee for all appropriate
advances made by the Trustee in connection with the performance
of its duties hereunder and administration of the Trusts created
hereby and will pay to the Trustee from time to time its expenses
and disbursements (including the reasonable compensation and the
expenses and disbursements of persons not regularly in its employ
and, to the extent not prohibited by law, of its counsel). The
Company also covenants to indemnify the Trustee for, and to hold
it harmless against, any loss, liability or expense incurred
without negligence or bad faith on the part of the Trustee,
arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of
defending against any claim of liability in the premises. The
obligations of the Company to the Trustee under this Section
shall survive discharge of this Indenture and resignation or
removal of the Trustee and shall constitute additional
indebtedness secured hereby. Such additional indebtedness shall
be secured by a lien prior to that of the bonds upon the Trust
Estate, including all property or funds held or collected by the
Trustee as such.

If, and to the extent that, the Trustee and its counsel
and other persons not regularly in its employ do not receive
compensation for services rendered, reimbursement of its or their
advances, expenses and disbursements, or indemnity, as herein
provided, as the result of allowances made in any reorganization,
bankruptcy, receivership, liquidation or other proceeding or by
any plan of reorganization or readjustment of obligations of the
Company, the Trustee shall be entitled, in priority to the
holders of the bonds, to receive any distributions of any
securities, dividends or other disbursements which would
otherwise be made to the holders of bonds in any such proceeding
or proceedings and the Trustee is hereby constituted and
appointed, irrevocably, the attorney-in-fact for the holders of
the bonds and each of them to collect and receive, in their name,
place and stead, such distributions, dividends or other
disbursements, to deduct therefrom the amounts due to the
Trustee, its counsel and other persons not regularly in its
employ on account of services rendered, advances, expenses and
disbursements made or incurred, or indemnity, and to pay and
distribute the balance, pro rata, in accordance with the
provisions of this Indenture, to the holders of the bonds. The
Trustee shall have a lien upon any securities or other
consideration to which the holders of bonds may become entitled
pursuant to any such plan of reorganization or readjustment of
obligations, or in any such proceeding or proceedings.

<PAGE> 108
SECTION 14.11. Certificate of Officers of Company to
Constitute Proof. Whenever in the administration of the trusts
of this Indenture, prior to a default hereunder and after the
curing of all defaults which may have occurred, the Trustee shall
deem it necessary or desirable that a matter be proved or
established prior to taking or suffering any action hereunder,
such matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved
and established by a certificate signed by the President or
Vice-President and the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Company and delivered
to the Trustee, and such certificate shall be full warrant to the
Trustee for any action taken or suffered by it under the
provisions of this Indenture upon the faith thereof.

SECTION 14.12. Trustee to Have Power to Give Notices.
Whenever it is provided in this Indenture that the Trustee shall
take any action upon the happening of a specified event or upon
the fulfillment of any condition or upon the request of the
Company or of bondholders, the Trustee taking such action shall
have full power to give any and all notices and to do any and all
acts and things incidental to such action.

SECTION 14.13. Trustee Acquiring Conflicting Interest.
If the Trustee has or shall acquire a conflicting interest within
the meaning of the TIA, the Trustee shall either eliminate such
interest or resign, and absent the elimination of such interest
or resignation may be removed, to the extent and in the manner
provided by, and subject to the provisions of, the TIA and this
Indenture.

SECTION 14.14. Preferential Collection of Claims
Against the Company if Trustee Becomes a Creditor. The Trustee
shall be subject to the provisions of Section 311 of the TIA.

SECTION 14.15. Trustee may Resign. The Trustee may at
any time resign and be discharged of the trusts hereby created by
giving at least thirty (30) days written notice to the Company
specifying the day upon which such resignation shall take effect
and thereafter publishing notice thereof in one Daily Newspaper
of general circulation in New York, New York and in each of the
cities in which the principal of any of the bonds then
Outstanding shall be payable, once in each of three consecutive
calendar weeks, not necessarily on the same day in each week, and
such resignation shall take effect upon the day specified in
Section 14.17 hereof. This Section shall not be applicable to
resignations pursuant to Section 14.13 hereof.

<PAGE> 109
the bonds then Outstanding hereunder or by their
attorneys-in-fact duly authorized and upon payment to such
Trustee of all amounts owing to it hereunder.

In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of Section 14.01
hereof, then the Trustee shall resign immediately in the manner
and with the effect specified in Section 14.15 hereof; and, in
the event that the Trustee does not resign immediately in such
case, then it may be removed forthwith by an instrument or
concurrent instruments in writing filed with the Trustee and
either (a) signed by the President or a Vice-President of the
Company with its corporate seal attested by its Secretary or an
Assistant Secretary or (b) signed and acknowledged by the holders
of a majority in principal amount of the bonds then Outstanding
hereunder or by their attorneys-in-fact duly authorized.

SECTION 14.17. Appointment of Successor Trustee. No
resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article shall become effective
until the acceptance of appointment by the successor trustee
under Section 14.22 hereof. In case at any time the Trustee
shall resign or shall be removed or shall become incapable of
acting, or shall be adjudged a bankrupt or insolvent, or if a
receiver of the Trustee or of its property shall be appointed, or
if any public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, a vacancy shall be deemed to exist
in the office of Trustee, and a successor or successors may be
appointed by the holders of a majority in principal amount of the
bonds then Outstanding hereunder, by an instrument or concurrent
instruments in writing signed and acknowledged by such
bondholders or by their attorneys-in-fact duly authorized, and
delivered to such new trustee, notification thereof being given
to the Company and the retiring trustee; provided, nevertheless,
that until a new trustee shall be appointed by the bondholders as
aforesaid, the Company, by instrument executed by order of its
Board of Directors, by its President or a Vice-President, may
appoint a trustee to fill such vacancy until a new trustee shall
be appointed by the bondholders as herein authorized. The
Company shall publish notice of any such appointment made by it
in the manner provided in Section 14.15 hereof. Any new trustee
appointed by the Company shall, immediately and without further
act, be superseded by a Trustee appointed by the bondholders, as
above provided.

<PAGE> 110
court of competent jurisdiction to appoint a successor trustee.
Said court may thereupon after such notice, if any, as such court
may deem proper and prescribe, appoint a successor trustee.

If the Trustee resigns and a successor has not been
appointed by the Company or the bondholders or, if appointed, has
not accepted the appointment within thirty (30) days after such
resignation, the resigning trustee may apply to any court of
competent jurisdiction for the appointment of a successor
trustee.

Any trustee appointed under the provisions of this
Section in succession to the Trustee shall be a bank, trust
company, corporation or other person eligible under Sections 5.12
and 14.01 hereof.

Any trustee which has resigned or been removed shall
nevertheless retain the lien upon the Trust Estate, including all
property or funds held or collected by the trustee as such, to
secure the amounts due to such trustee as compensation,
reimbursement, expenses, disbursements and indemnity and retain
the rights afforded to it by Section 14.10 hereof.

SECTION 14.18. Separate Trustee or Co-trustee may be
Appointed. At any time or times, for the purpose of conforming
to any legal requirements, restrictions or conditions in any
state or jurisdiction in which any part of the Trust Estate may
be located, the Company and the Trustee shall have power to
appoint, and, upon the request of the Trustee, the Company shall
for such purpose join with the Trustee in the execution, delivery
and performance of all instruments and agreements necessary or
proper to appoint, another corporation or one or more persons
approved by the Trustee, to act either as separate trustee or
trustees, or as co-trustee or co-trustees jointly with the
Trustee, of all or any of the property subject to the lien
hereof. In the event that the Company shall not have joined in
such appointment within fifteen (15) days after the receipt by it
of a request so to do, the Trustee alone shall have power to make
such appointment. Any separate or co-trustee appointed hereunder
need not satisfy the requirements under Sections 5.12 and 14.01.

SECTION 14.19. Conditions Upon Appointment of Separate
Trustee or Co-trustee or Successor Trustee. Every separate
trustee, every co-trustee and every successor trustee, other than
any trustee which may be appointed as successor to the Trustee
actually executing this Indenture, shall, to the extent permitted
by law, but to such extent only, be appointed subject to the
following provisions and conditions, namely:

<PAGE> 111
(1) The rights, powers, duties and obligations
conferred or imposed upon trustees hereunder or any of them
shall be conferred or imposed upon and exercised or
performed by the Trustee or by the Trustee and such separate
trustee or separate trustees or co-trustee or co-trustees
jointly, as shall be provided in the instruments and
agreements appointing such separate trustee or separate
trustees or co-trustee or co-trustees, except to the extent
that under any law of any jurisdiction in which any
particular act or acts are to be performed the Trustee shall
be incompetent or unqualified to perform such act or acts,
in which event such rights, powers, duties and obligations
shall be exercised and performed by such separate trustee or
separate trustees or co-trustee or co-trustees.

(2) The bonds secured hereby shall be authenticated
and delivered, and all powers, duties, obligations and
rights, conferred upon the Trustee in respect of the custody
of all bonds and of all cash and securities pledged or
deposited hereunder, shall be exercised solely by the
Trustee actually executing this Indenture, or its successor
in the trust hereunder.

(3) The Company and the Trustee, at any time by an
instrument in writing executed by them jointly, may accept
the resignation of or remove any separate trustee or
co-trustee appointed under Section 14.18 hereof or
otherwise, and, upon the request of the Trustee, the Company
shall, for such purpose, join with the Trustee in the
execution, delivery and performance of all instruments and
agreements necessary or proper to make effective such
resignation or removal. In the event that the Company shall
not have joined in such action within fifteen (15) days
after the receipt by it of a request so to do, the Trustee
alone shall have power to accept such resignation or to
remove any such separate trustee or co-trustee. A successor
to a separate trustee or co-trustee so resigned or removed
may be appointed in the manner provided in Section 14.18
hereof.

No trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder.

SECTION 14.20. Notices to Trustee. Any notice,
request or other writing, by or on behalf of the holders of the
bonds, delivered to the Trustee actually executing this
Indenture, or its successor in the trust hereunder, shall be
deemed to have been delivered to all of the then trustees or co-
trustees as effectually as if delivered to each of them. Every
instrument appointing any trustee or trustees, other than a
successor to the Trustee actually executing this Indenture, shall

<PAGE> 112
refer to this Indenture and the conditions in this Article
expressed, and upon the acceptance in writing by such trustee or
trustees or co-trustee or co-trustees, he, they or it shall be
vested with the estates or property specified in such instrument,
either jointly with the Trustee actually executing this
Indenture, or its successor, or separately, as may be provided
therein, subject to all the trusts, conditions and provisions of
this Indenture; and every such instrument shall be filed with the
Trustee actually executing this Indenture, or its successor in
the trust hereunder.

SECTION 14.21. Trustee as Agent. Any separate trustee
or trustees, or any co-trustee or co-trustees, may at any time by
an instrument in writing constitute the Trustee, or its successor
in the trust hereunder, his, her, their or its agent or
attorney-in-fact, with full power and authority, to the extent
which may be permitted by law, to do all acts and things and
exercise any and all discretion authorized or permitted by him,
her, them or it, for and in behalf of him, her, them or it, and
in his, her, their or its name. In case any separate trustee or
trustees or co-trustee or co-trustees, or a successor to any of
them, shall die, become incapable of acting, resign or be
removed, all the estates, property, rights, powers, trusts,
duties and obligations of said separate trustee or co-trustee, so
far as permitted by law, shall vest in and be exercised by the
Trustee, or its successor in the trust hereunder, without the
appointment of a new trustee or successor to such separate
trustee or co-trustee.

SECTION 14.22. Successor Trustee to Execute Acceptance
and Become Vested with Estate. Any successor trustee appointed
hereunder shall execute, acknowledge and deliver to his, her or
its predecessor trustee, and also to the Company, an instrument
accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act,
deed or conveyance, shall become fully vested with all the
estates, properties, rights, powers, trusts, duties and
obligations of his, her or its predecessor in trust hereunder,
with like effect as if originally named as trustee herein; but
the trustee ceasing to act shall nevertheless, on the written
request signed by the President or a Vice President of the
Company, or of the successor trustee, or of the holders of ten
per centum (10%) in principal amount of the bonds then
Outstanding hereunder, execute, acknowledge and deliver such
instruments of conveyance and further assurance and do such other
things as may reasonably be required for more fully and certainly
vesting and confirming in such successor trustee all the right,
title and interest of the Trustee to which he or she or it
succeeds, in and to the Trust Estate and such rights, powers,
trusts, duties and obligations, and the trustee ceasing to act

<PAGE> 113
shall also, upon like request, and subject to its rights under
the last paragraph of Section 14.17, pay over, assign and deliver
to the successor trustee any cash or other property subject to
the lien of this Indenture, including any pledged securities
which may then be in his, her or its possession. Should any
deed, conveyance or instrument in writing from the Company be
required by the new trustee for more fully and certainly vesting
in and confirming to such new trustee such estates, properties,
rights, powers, trusts and duties, any and all such deeds,
conveyances and instruments in writing shall, on request, be
executed, acknowledged and delivered by the Company.

SECTION 14.23. Consolidation or Merger of Trustee.
Any corporation into which the Trustee may be merged or with
which it may be consolidated or any corporation resulting from
any merger or consolidation to which the Trustee shall be a party
or any corporation to which substantially all the corporate trust
business of the Trustee may be transferred, provided such
corporation shall be eligible under the provisions of Sections
5.12 and 14.01 hereof and qualified under Section 14.13 hereof,
shall be the successor trustee under this Indenture, without the
execution or filing of any paper or the performance of any
further act on the part of any other parties hereto, anything
herein to the contrary notwithstanding. In case any of the bonds
contemplated to be issued hereunder shall have been authenticated
but not delivered, any successor to the Trustee may, subject to
the same terms and conditions as though such successor had itself
authenticated such bonds, adopt the certificate of authentication
of the original Trustee or of any successor to it as trustee
hereunder, and deliver the said bonds so authenticated and in
case any of said bonds shall not have been authenticated any
successor to the Trustee may authenticate such bonds either in
the name of any predecessor hereunder or in the name of the
successor trustee, and in all such cases such certificate shall
have the full force which is anywhere in said bonds or in this
Indenture provided that the certificate of the Trustee shall
have; provided, however, that the right to authenticate bonds in
the name of the original Trustee shall apply only to its
successor or successors by merger or consolidation as aforesaid.

ARTICLE XV

CONCERNING PLEDGED SECURITIES

SECTION 15.01. Pledged Securities Deposited with
Trustee. The Company may deliver to the Trustee and the Trustee
may receive from time to time bonds, certificates for shares of
stock, debentures, notes and/or other securities or obligations,
and all such bonds, certificates for shares of stock, debentures,
notes and/or securities or obligations so received shall be held
by the Trustee as a part of the Trust Estate. The Trustee shall

<PAGE> 114
be under no obligation to accept a certificate for any shares of
stock or any bonds, debentures, notes or other securities or
obligations, or to cause or permit a transfer thereof to be made
to it, if, in the opinion of the Trustee, such acceptance or
transfer would involve it in, or render it liable to be subjected
to, any liability or expense, unless the Trustee shall be
indemnified by the Company to its satisfaction for so doing.

All certificates for shares of stock shall at the time
of the delivery thereof be duly endorsed for transfer or
accompanied by appropriate instruments of assignment and transfer
duly executed in blank. The Trustee, from time to time, may, but
shall be under no obligation to, transfer into its name as
Trustee, or into the name or names of its nominee or nominees,
any or all such shares of stock pledged hereunder and may cause
all or any securities held by it hereunder to be registered in
its name or in the name of its nominee or nominees. The bonds or
obligations which may be pledged or deposited under any provision
of this Indenture may be in temporary or definitive form and may
be in such denomination or denominations as the Company may
elect, and if bonds, may be coupon bonds, registered or
unregistered as to principal, or registered bonds without
coupons. All coupon obligations which may be pledged or
deposited with the Trustee under any provision of this Indenture
shall, except as hereinafter provided, have attached thereto at
the time of such pledge or deposit all unmatured interest coupons
thereunto appertaining, and all registered obligations without
coupons and all coupon obligations registered as to principal
shall be duly endorsed by the registered owner thereof or by his
or her attorney thereunto duly authorized, or shall be
accompanied by duly executed assignment or transfer powers. If
any unmatured coupon or coupons appertaining to any such coupon
obligation shall be missing at the time of such pledge or
deposit, the Trustee may, nevertheless, accept such obligation
without such coupon or coupons in case a sum of cash equal to the
face amount of the missing coupon or coupons shall be deposited
with the Trustee hereunder.

SECTION 15.02. Voting. Prior to the occurrence of any
default, as defined in Section 9.01 hereof, and after default if
such default shall have been cured, or shall have been waived as
provided in Section 9.03 hereof, the Company shall have the
right, except as hereinafter limited, to vote any shares of stock
pledged hereunder with the same force and effect as though such
shares were not so pledged; and from time to time, in case said
shares of stock pledged hereunder shall have been transferred
into the name of the Trustee or its nominee or nominees, the
Trustee, upon the request signed by the President or a Vice
President of the Company, evidenced by a Resolution delivered to
the Trustee, shall execute and deliver, or cause to be executed
and delivered, to the Company proper proxies for voting said

<PAGE> 115
stock. During the continuance of a default, the Trustee shall
vote any shares of stock pledged hereunder in accordance with the
directions of the issuer thereof unless otherwise directed by
holders of at least a majority in principal amount of all bonds
Outstanding hereunder.

The Company shall not use or vote or permit to be used
or voted any stock pledged hereunder for any purpose contrary to
its covenants herein contained or otherwise inconsistent with the
provisions or purposes of this Indenture.

SECTION 15.03. Income Before Event of Default. Prior
to the occurrence of any default, and after default if such
default shall have been cured, or shall have been waived as
provided in Section 9.03 hereof, the Company shall be entitled to
receive, when and as paid, all interest paid on any obligations
pledged hereunder and all cash dividends paid or declared out of
earnings or surplus derived from operations in respect of any
stock pledge hereunder; and from time to time, upon a request
signed by the President or a Vice President of the Company, the
Trustee shall forthwith deliver to it as they mature the coupons
for such interest, in order that the Company may receive payment
thereof for its own use, and shall deliver to the Company, if
necessary, suitable orders in favor of the Company or its
designated nominee or nominees, for the payment of such interest
and such cash dividends, and the Company may collect such
interest and dividends, and the Trustee shall at once pay over to
the Company any such interest or dividends which may have been
collected or received by it; provided, however, that:

(1) The Company shall not sell, assign or transfer any
coupon or right to such interest or dividends delivered or
assigned to it;

(2) The Company shall not collect any such coupons or
interest by legal proceedings or by the enforcement of any
security thereof without the prior written consent of the
Trustee, nor in any manner which the Trustee shall deem
prejudicial to the bonds issued hereunder;

(3) Until actually paid or discharged, every such
coupon or right to interest or dividends shall in all
respects remain subject to the lien of this Indenture; and

(4) If any such coupons so delivered to the Company
shall not forthwith be paid or cancelled, the Company shall
return the same to the Trustee, subject to the right to have
the same redelivered to the Company for payment or
cancellation, and in case of payment or cancellation of any
such coupon or claim for interest, the Company shall, upon
demand, furnish to the Trustee satisfactory evidence
thereof.

<PAGE> 116
Prior to the occurrence of any default, and after
default if such default shall have been cured, or shall have been
waived as provided in Section 9.03 hereof, the Trustee may pay
over to the Company any interest received by it on any bond or
other security pledged hereunder, or any cash dividend received
on any share of stock pledged hereunder, if satisfied that such
interest or cash dividend was paid or declared out of earnings or
surplus derived from operations; and upon being furnished by the
Company with a certificate of an accountant or firm of
accountants (who or which may be in the employ of or under
retainer by the Company) selected by the Company and satisfactory
to the Trustee showing that such interest or cash dividend was
paid or declared out of earnings or surplus derived from
operations or that there were such earnings or surplus available
for the purpose, as shown by the books of the company paying or
declaring such interest or dividend, shall pay over such interest
or cash dividend to the Company. Such accountant's certificate
shall also contain the statements required by Section 1.03(a).
Prior to the occurrence of any default, and after default if such
default shall have been cured, or shall have been waived as
provided in Section 9.03, the Trustee shall be under no
obligation to make any investigation and shall incur no liability
to any bondholder or the Company on account of any action it may
take, or refrain from taking, in the premises.

SECTION 15.04. Payments Upon Dissolution, etc. of
Issuer of Pledged Securities. The Trustee shall be entitled to
receive all cash paid on account of the principal of any bonds or
other securities held in pledge by it, and all stock dividends on
any shares of stock so held in pledge, and all cash at any time
payable in respect of shares of stock, bonds or other securities
so held in pledge, on dissolution, liquidation, reorganization,
merger or consolidation of the issuer thereof, or derived from
any sale, condemnation or other disposition of the property of
such issuer, and all securities issued in respect of any
securities held in pledge upon any reorganization,
recapitalization, merger or consolidation of the issuer thereof
or otherwise issued in exchange for the pledged securities. The
shares of stock and all cash so received shall be held by the
Trustee, in trust, as additional security for the payment of the
principal of and interest on the bonds issued under this
Indenture, and such cash shall be disposed of by the Trustee
pursuant to the provisions of Section 8.06.

<PAGE> 117
then be held by the Trustee in pledge hereunder, and shall
consent to the extension or renewal of any mortgages or liens
securing such securities; but if the Company shall then be in
default hereunder, the Trustee may, subject to the provisions of
Article XIV hereof, give such consent without the request of the
Company; and, in any case, the Trustee shall, prior to the
occurrence of any default, and after default if such default
shall have been cured, or shall have been waived as provided in
Section 9.03 hereof, do and perform all acts and things which may
be requisite and necessary to give effect to any such renewal or
extension so consented to, including the delivery and exchange of
pledged securities or the presentation of the same for
appropriate endorsement; and the Trustee, upon the written
request signed by the President or a Vice President of the
Company, may, prior to the occurrence of any default, and after
default if such default shall have been cured, or shall have been
waived as provided in Section 9.03 hereof, consent to the
exercise by the Company of any other right, power or remedy, with
respect to such securities, to which the Company may be entitled
as owner thereof, including the consent to any plan of
reorganization or recapitalization and the acceptance of new or
different securities thereunder in exchange for the pledged
securities and including also the cancellation of any securities
or shares of the stock of a corporation which has conveyed its
property to the Company and subjected it to the lien hereof,
provided that the exercise of such right, power or remedy, as
requested by the Company, shall not, in the Opinion of Counsel,
be prejudicial to the bonds hereby secured; and the Company
covenants that in exercising any such right, power or remedy, if
permitted so to do by the Trustee, it will not in any way act
prejudicially to the interests or rights of the Trustee or the
holders or registered owners of the bonds.

SECTION 15.06. Pledged Securities Not Basis of
Issuance. Nothing in this Article contained shall authorize the
authentication of bonds or the withdrawal of cash in lieu thereof
under any provision of this Indenture on account of the pledge
hereunder of any securities whatsoever.

ARTICLE XVI

SUPPLEMENTAL INDENTURES

SECTION 16.01. Supplemental Indentures to be Executed
for Specified Purposes. The Company and the Trustee, from time
to time and at any time, may enter into one or more supplemental
indentures hereto, upon receipt by the Trustee of a Resolution
authorizing the execution thereof and requesting the Trustee to
execute the same, for any one or more of the following purposes:

<PAGE> 118
(a) To describe more fully or to amplify or correct
the description of any property hereby conveyed or pledged
or intended to be conveyed or pledged, or to assign, convey,
mortgage, pledge, transfer and set over unto the Trustee,
subject to such liens or other encumbrances, if any, as
shall be therein specifically described, additional property
of the Company, for the equal and proportionate benefit and
security, except as otherwise expressly provided herein, of
the holders and owners of all bonds at any time issued and
Outstanding under this Indenture;

(b) To specify definitive limitations on the total
authorized amount of any additional series of bonds issued
hereunder;

(c) To provide additional or other restrictions and
limitations upon the issue of any new series of bonds or
additional covenants and undertakings of the Company with
respect thereto;

(d) To set forth the form and substance of any
additional bonds, and the terms, provisions and conditions
thereof;

(e) To provide the terms and conditions of the
exchange of bonds of one series for bonds of another series,
or of the exchange of bonds of one denomination for bonds of
another denomination of the same series;

(f) To provide that the principal of the bonds may be
converted at the option of the holders into capital stock or
other securities of the Company, and to set forth the terms
and conditions of such conversion;

(g) To provide for a special sinking, purchase,
improvement or other analogous fund for the benefit or
retirement of the bonds of any or all series to be issued on
or subsequent to the date thereof;

(h) To evidence the succession of another corporation
to the Company, or successive successions, and the
assumption by such successor corporation of the covenants
and obligations of the Company under this Indenture, and to
evidence the appointment of a separate trustee or a
co-trustee or the succession of a new trustee to any trustee
hereunder;

(i) To provide the terms and conditions for the
issuance of the bonds of any series in book entry form;

<PAGE> 119
(j) To otherwise add to, change, alter, modify, vary
or eliminate any of the terms, provisions, restrictions or
conditions of this Indenture; provided, however, that any
such addition, changes, alterations, modifications,
variations or eliminations made in a supplemental indenture
pursuant to this clause which would adversely affect or
diminish the rights of the holders of any bonds then
Outstanding against the Company or its property shall be
expressly stated in such supplemental indenture to become
effective only with respect to bonds issued on or subsequent
to the date of such supplemental indenture; and

(k) For any other purpose not inconsistent with the
terms of this Indenture and which shall not impair the
security of the same, including the purpose of supplying any
omission, curing any ambiguity or curing, correcting or
supplementing any defective or inconsistent provision
contained herein or in any supplemental indenture.

Any supplemental indenture authorized by the provisions
of this Section may be executed by the Company and the Trustee
without the consent of the holders of any of the bonds at the
time Outstanding or the publication or mailing of notice,
notwithstanding any of the provisions of Section 16.02 hereof.

<PAGE> 120
to approve any such supplemental indenture, without the consent
of the holders of all the bonds then Outstanding, or (4) affect
or impair the rights of the holder of any bond contained in the
last paragraph of Section 9.12 hereof, without the consent of the
holders of all the bonds then Outstanding, or (5) alter or create
redemption and/or sinking fund requirements with respect to an
Outstanding series of bonds, without the consent of the holder of
each bond so affected, or (6) amend Section 4.01B(a) or (b) with
respect to Series A or Series B, without the consent of the
holders of 66-2/3% aggregate principal amount of bonds of Series
A or Series B, as the case may be, or (7) amend Section 4.01B(c)
with respect to Series A or Series B, without the unanimous
consent of the initial beneficial owners of the bonds of Series A
or Series B, as the case may be, who continue to hold such bonds,
or (8) permit the deprivation of any non-assenting holder of any
bond of a lien upon the Trust Estate for the security of such
holder's bond (subject only to Excepted Encumbrances and Prepaid
Liens). For the purposes of this Section, bonds shall be deemed
to be affected by a supplemental indenture if such supplemental
indenture adversely affects or diminishes the rights of holders
thereof against the Company or against its property.

Upon the written request signed by the President or a
Vice President of the Company, accompanied by a Resolution
authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of
bondholders as aforesaid (the instrument or instruments
evidencing such consent to be dated within one year of such
request), the Trustee shall join with the Company in the
execution of such supplemental indenture unless such supplemental
indenture affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may
in its discretion but shall not be obligated to enter into such
supplemental indenture.

It shall not be necessary for the consent of the
bondholders under this Section to approve the particular form of
any proposed supplemental indenture, but it shall be sufficient
if such consent shall approve the substance thereof.

Prior to the execution by the Company and the Trustee
of any supplemental indenture pursuant to the provisions of this
Section, the Company shall publish a notice, setting forth in
general terms the substance of such supplemental indenture, at
least once in one Daily Newspaper of general circulation in each
city in which the principal of any of the bonds shall be payable,
or shall mail such notice, first class, postage prepaid, and
registered if the Company so elects, to each holder of bonds at
the last address of such holder appearing on the registry books,
such publication or mailing, as the case may be, to be made not

<PAGE> 121
less than thirty (30) days prior to such execution. Any failure
of the Company to give such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any
such supplemental indenture.

SECTION 16.03. Effect of Supplemental Indenture. Upon
the execution of any supplemental indenture pursuant to the
provisions of this Article, this Indenture shall be and be deemed
to be modified and amended in accordance therewith and the
respective rights, duties and obligations under this Indenture of
the Company, the Trustee and all holders of bonds Outstanding
thereunder shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.

SECTION 16.04. Opinion of Counsel as Evidence of
Compliance. The Trustee may receive an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed
pursuant to the provisions of this Article complies with the
requirements of this Article.

SECTION 16.05. Notations on Bonds; Provision for New
Bonds. Bonds authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this
Article may bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If such
supplemental indenture shall so provide, new bonds, so modified
as to conform, in the opinion of the Trustee and the Board of
Directors, to any modification of this Indenture contained in any
such supplemental indenture, may be prepared by the Company,
authenticated by the Trustee and delivered without cost to the
holders of bonds then Outstanding, upon surrender of such bonds,
in equal aggregate principal amounts.

SECTION 16.06. Supplemental Indenture to Conform to
Trust Indenture Act of 1939. Any supplemental indenture executed
pursuant to the provisions of this Article shall conform with the
requirements of the TIA, as then in force.

ARTICLE XVII

BONDHOLDERS' MEETINGS

SECTION 17.01. Meeting Called for Specified Purposes.
A meeting of bondholders may be called at any time and from time
to time pursuant to the provisions of this Article XVII for any
of the following purposes:

<PAGE> 122
(1) to give any notice to the Company or to the
Trustee, or to give any directions to the Trustee, or to
consent to the waiving of any default hereunder and its
consequences, or to take any other action authorized to be
taken by bondholders pursuant to any of the provisions of
Article IX;

(2) to remove the Trustee and appoint a successor
trustee pursuant to the provisions of Article XIV;

(3) to consent to the execution of a supplemental
indenture pursuant to the provisions of Section 16.02
hereof; or

(4) to take any other action authorized to be taken by
or on behalf of the holders of any specified aggregate
principal amount of bonds under any other provision of this
Indenture or under applicable law.

SECTION 17.02. Meeting Called by Trustee. The Trustee
may at any time call a meeting of bondholders to take any action
specified in Section 17.01 hereof, to be held at such time and at
such place as the Trustee shall determine. Notice of every
meeting of the bondholders, setting forth the time and the place
thereof and, in general terms, the business to be submitted,
shall be mailed first class, postage prepaid, by the Trustee not
less than thirty (30) days before such meeting to each registered
holder of bonds at the last address of such holder appearing in
the registry books.

SECTION 17.03. Meeting Called by Company or
Bondholders. In case at any time the Company by written request
signed by the President or a Vice President of the Company, or
the holders of at least 20% in aggregate principal amount of the
bonds then Outstanding, shall have requested the Trustee to call
a meeting of bondholders setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall
not have mailed the notice of such meeting within 10 days after
receipt of such request, then the Company, or the holders of
bonds in the amount above specified, may determine the time and
the place for such meeting and may call such meeting to take any
action authorized in Section 17.01 hereof, by giving notice
thereof as provided in Section 17.02 hereof.

<PAGE> 123
counsel, and representatives of the Trustee and its counsel may
attend, and speak at, any meeting of bondholders but shall not be
entitled to vote thereat. Attendance by bondholders may be in
person or by proxy and, unless specifically prohibited by law,
any such proxy shall remain in effect unless specifically revoked
and shall be binding on any future holder of the bonds
represented by such proxy, unless specifically revoked by any
such future holder before being voted.

SECTION 17.05. Regulations for Meeting.
Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem
advisable for any meeting of bondholders, in regard to proof of
the holding of bonds and of the appointment of proxies, and in
regard to the submission and examination of proxies, certificates
and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.

The Trustee shall, by an instrument in writing, appoint
a temporary chairman of the meeting, unless the meeting shall
have been called by the Company or by bondholders as provided in
Section 17.03 hereof, in which case the Company or the
bondholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman
and a permanent secretary of the meeting shall be elected by vote
of the holders of a majority in principal amount of the bonds
represented at the meeting and entitled to vote.

Subject to the provisions of Section 17.04 hereof, at
any meeting each bondholder or proxy shall be entitled to one
vote for each $1,000 principal amount of bonds, provided,
however, that no vote shall be cast or counted at any meeting in
respect of any bonds challenged as not Outstanding and ruled by
the chairman of the meeting to be not Outstanding. The chairman
of the meeting shall have no right to vote other than by virtue
of bonds held by him or instruments in writing as aforesaid duly
designating him as the person to vote on behalf of other
bondholders.

At any meeting of bondholders, the presence of persons
holding or representing bonds in an aggregate principal amount
sufficient to take action upon the business for the transaction
of which such meeting was called shall constitute a quorum. Any
meeting of bondholders, duly called pursuant to the provisions of
Section 17.02 or 17.03 hereof, may be adjourned from time to time
by vote of persons representing a majority in aggregate principal
amount of the bonds represented at the meeting and entitled to
vote, whether or not a quorum shall be present, and the meeting
may be held as so adjourned without further notice.

<PAGE> 124
SECTION 17.06. Bondholders' Vote by Written Ballot.
The vote upon any resolution submitted to any meeting of
bondholders shall be by written ballots on which shall be
subscribed the signatures of the holders of bonds or of their
representatives by proxy and the series and identifying number or
numbers of the bonds held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes,
who shall count all votes cast at a meeting for or against any
resolution and who shall make and file with the secretary of the
meeting their verified written reports in duplicate of all votes
cast at the meeting. A record, at least in duplicate, of the
proceedings of each meeting of bondholders shall be prepared by
the secretary of the meeting and there shall be attached to said
record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more
persons having knowledge of the facts, setting forth a copy of
the notice of the meeting and showing that said notice was given
as provided in Section 17.02 hereof. Each copy of the record
shall be signed and verified by the affidavits of the permanent
chairman and secretary of the meeting and one such copy shall be
delivered to the Company and another to the Trustee, which latter
copy shall be preserved by the Trustee and shall have attached
thereto the ballots voted at the meeting.

Any copy of the record so signed and verified shall be
conclusive evidence of the matters therein stated.

SECTION 17.07. Nothing Authorizes Hindrance or Delay
of Rights of Trustee or Bondholders. Nothing contained in this
Article XVII shall be deemed or construed to authorize or permit,
by reason of any call of a meeting of bondholders or any rights
expressly or impliedly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights
conferred upon or reserved to the Trustee or to bondholders under
any of the provisions of this Indenture or of the bonds.

ARTICLE XVIII

MISCELLANEOUS PROVISIONS

SECTION 18.01. Covenants for Sole Benefit of Parties
and Bondholders; Severability. All the covenants, stipulations
and agreements contained in this Indenture are and shall be for
the sole and exclusive benefit of the parties hereto, their
successors and assigns, and of the holders of the bonds hereby
secured. If any provision of this Indenture, or the application
of any provision to any person or circumstance, shall be held
invalid or unenforceable, the remainder of this Indenture, or the
application of such provision to persons or circumstances other
than those as to which it is held invalid or unenforceable, shall
not be affected thereby.

<PAGE> 125
SECTION 18.02. Court may Require Bond for Costs, Under
Certain Conditions. All parties to this Indenture agree, and
each holder or owner of any bond by his or her acceptance thereof
shall be deemed to have agreed, that any court may in its
discretion require in any suit for the enforcement of any right
or remedy under this Indenture, or in any suit against the
Trustee for any action taken or omitted by it as such Trustee,
the filing by any party litigant in such suit of an undertaking
to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section
shall not apply to any suit instituted by the Trustee, to any
suit instituted by any bondholder, or group of bondholders,
holding in the aggregate more than ten per centum (10%) in
principal amount of the bonds Outstanding, or to any suit
instituted by any bondholder for the enforcement of the payment
of the principal of or interest on any bond, on or after the
respective due dates expressed in such bond.

SECTION 18.03. Provisions of Trust Indenture Act of
1939 to be Controlling. If and to the extent that any provision
of this Indenture limits, qualifies or conflicts with the duties
imposed upon any person by Sections 310 to 317, inclusive, of the
TIA, such imposed duties shall control.

SECTION 18.04. Notice to the Company. Any notice to
the Company under any provision of this Indenture shall be
sufficiently given if served personally upon any officer of the
Company or deposited in the mails addressed to the Company at its
office at 303 North Oregon Street, El Paso, Texas 79901, or at
such other address as may be designated for that purpose in a
writing delivered to the Trustee by the Company.

SECTION 18.05. Reference to Parties Includes
Successors. Subject to the provisions of Article XIII hereof,
whenever in this Indenture any of the parties hereto is referred
to, such reference shall be deemed to include the successors and
assigns of such party, and all of the covenants, promises and
agreements in this Indenture contained by or on behalf of the
Company, or by or on behalf of the Trustee, shall bind and inure
to the benefit of the respective successors and assigns of such
parties, whether so expressed or not; but the provisions of this
paragraph shall not be deemed to subject to the lien hereof,
except to the extent in Article XIII hereof provided, the
property of any successor corporation not acquired from the
Company and not then subject to the lien hereof, unless it shall
have expressly agreed that such shall be the case, in the manner
provided in Article XIII hereof.

<PAGE> 126
SECTION 18.06. Headings Inserted for Convenience Only.
The headings of the different Articles or Sections of this
Indenture are inserted for convenience of reference, and are not
to be taken to be any part of these provisions, or to control or
affect the meaning, construction or effect of the same.

SECTION 18.07. Cancellation and Cremation of Bonds.
Whenever in this Indenture it is provided that the Trustee shall
cancel any bonds, the Trustee may cancel and cremate such bonds
and deliver a certificate of cremation thereof to the Company.

SECTION 18.08. Execution in Counterparts. This
Indenture may be simultaneously executed in any number of
counterparts, and all said counterparts, executed and delivered
each as an original, shall constitute but one and the same
instrument.

SECTION 18.09. Deposit of Securities in Lieu of Cash.
Wherever in this Indenture the Company is permitted or required
to deposit cash hereunder with the Trustee, the Company may
deposit in lieu of cash an amount of U.S. Government Obligations
of at least an equal face amount and having a then market value
at least equal to the amount of cash in lieu of which such
obligations are deposited; provided, however, that the Company
shall not be entitled, less than ten days prior to or on any
interest payment date, redemption date or maturity date of any
bonds outstanding hereunder, to deposit any such obligations in
lieu of the cash due to be paid on such date to the holders of
bonds secured hereby and provided further that any deposit of
Funds pursuant to Article XI be subject solely to said Article.
The Company may at any time withdraw any cash on deposit
hereunder with the Trustee by depositing hereunder with the
Trustee in substitution therefor an amount of U.S. Government
Obligations of at least an equal face amount and having a then
market value at least equal to the amount of cash so withdrawn,
provided, however, that the Company shall not be entitled, less
than ten days prior to or on any interest payment date,
redemption date or maturity date of any bonds outstanding
hereunder or any time subsequent to such date, to withdraw any
cash deposited hereunder for payment on such date to the holders
of bonds secured hereby. Any obligations so deposited shall be
held by the Trustee in all respects as would be held the cash for
which such obligations are so substituted. Any obligations so
deposited shall be sold by the Trustee upon the written request
signed by the President or a Vice President of the Company, at
such prices as shall be fixed by the Company and approved by the
Trustee, provided, however, that the Trustee, without any such
request from the Company, shall be entitled, in its sole
discretion and at such prices as may be approved by it, to sell
at public or private sale any obligations so held by it in lieu
of any cash which shall be payable, not more than ten days after

<PAGE> 127
the date of such sale, on an interest payment date, redemption
date or maturity date of any bonds secured hereby. The Trustee
shall not be liable for any loss or other expense incurred in
connection with any such sale. If the proceeds from any such
sale shall be less than the amount of cash in lieu or for the
withdrawal of which the obligations sold were deposited, or if
the market value of any obligations so deposited hereunder shall,
in the judgment of the Trustee, at any time be less than the
amount of cash in lieu or for the withdrawal of which they were
deposited, in either event the Company shall deposit hereunder
with the Trustee cash sufficient to make up the deficiency; but
the cash deposited to make up the deficiency in the market value
of any obligations may at any time thereafter be withdrawn by the
Company if at the time of withdrawal the market value of such
obligations shall be not less than the amount of cash in lieu or
for the withdrawal of which they were deposited. Except as
otherwise provided in Article XI hereof, the Trustee shall
collect from time to time all interest upon the deposited
obligations as such interest matures and, so long as the Company
shall not be in default hereunder, all such interest shall be
paid by the Trustee to the Company as and when received. The
proceeds of the sale of deposited obligations shall be paid out
and applied by the Trustee in like manner and for like purposes
as is provided in this Indenture in respect of the cash in lieu
or for the withdrawal of which such obligations were deposited.
The deposited obligations while held by the Trustee, and the
proceeds of the sale thereof, until such proceeds are so paid out
and applied, shall be held in accordance with the terms and
provisions of this Indenture applicable to the cash in lieu of or
in substitution for which such obligations were deposited.
Notwithstanding the foregoing, the sufficiency of the amount of
U.S. Government Obligations deposited by the Company with the
Trustee pursuant to Article XI hereof shall be determined as set
forth in said Article.

SECTION 18.10. Termination. The Company or the
Trustee may terminate this Indenture at any time on or after the
date of maturity of that series of bonds issued or to be issued
hereunder and secured by this Indenture which, of all the series
of bonds issued hereunder, has the latest date of maturity;
provided, however, that nothing in this Section shall affect or
limit any of the rights or remedies of the Trustee or the
bondholders prescribed in Article IX hereof or the obligations of
the Company under Section 14.10.

<PAGE> 128
IN WITNESS WHEREOF, said EL PASO ELECTRIC COMPANY has
caused this Indenture to be executed in its corporate name by its
President or one of its Vice-Presidents and its corporate seal to
be hereunto affixed and to be attested by its Secretary or one of
its Assistant Secretaries, and said STATE STREET BANK AND TRUST
COMPANY, to evidence its acceptance of the trust hereby created,
has caused this Indenture to be executed in its corporate name by
one of its Vice-Presidents and its corporate seal to be hereunto
affixed and to be attested by one of its Assistant Secretaries,
in several counterparts, all as of the day and year first above
written.

EL PASO ELECTRIC COMPANY

By__________________________

(SEAL)

Attest:

__________________________
[Asst] Secretary

Signed, sealed, acknowledged
and delivered on behalf of
El Paso Electric
Company, in the presence of:

_________________________

<PAGE> 129
STATE STREET BANK AND
TRUST COMPANY,
as Trustee and on behalf
of the bondholders

By___________________________

(SEAL)

Attest:

___________________________
[Asst] Secretary

Signed, sealed, acknowledged
and delivered on behalf of
State Street Bank and Trust
Company, in the presence of:

_________________________

<PAGE> 130
[for Texas purposes]

THE STATE OF ________

COUNTY OF ______________

Before me personally appeared _____________________,
known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he executed said
instrument in the capacity herein stated for the purposes and
consideration therein expressed.

(SEAL) _________________________
Notary Public in and for
the State of ________

My commission expires:

_________________________

<PAGE> 131
[for Texas purposes]

THE STATE OF ________

COUNTY OF ______________

(SEAL) _________________________
Notary Public in and for
the State of ________

My commission expires:

_________________________

<PAGE> 132
[for Arizona purposes]

THE STATE OF ________

COUNTY OF ______________

Before me personally appeared ____________________
known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he executed said
instrument in the capacity therein stated for the purposes and
consideration therein expressed.

(SEAL) _________________________
Notary Public in and for
the State of ________

My commission expires:

_________________________

<PAGE> 133
[for Arizona purposes]

THE STATE OF ________

COUNTY OF ______________

(SEAL) _________________________
Notary Public in and for
the State of ________

My commission expires:

_________________________

<PAGE> 134
[for New Mexico purposes]

THE STATE OF ________

COUNTY OF ______________

This instrument was acknowledged before me on this __
day of _______, 199_, by ____________ as _____________ of El Paso
Electric Company, a Texas corporation, on behalf of the
corporation.

(SEAL) _________________________
Notary Public in and for
the State of ________

My commission expires:

_________________________

<PAGE> 135
[for New Mexico purposes]

THE STATE OF ________

COUNTY OF ______________

This instrument was acknowledged before me on this __
day of _______, 199_, by ____________ as _____________ of State
Street Bank and Trust Company, trustee under the foregoing
instrument.

(SEAL) _________________________
Notary Public in and for
the State of ________

My commission expires:

_________________________

<PAGE> 136
Appendix A-1

(Form of face of bond of Series A)

No. $

EL PASO ELECTRIC COMPANY
First Mortgage Bond, Series A
__% Due ______ __, ____

El Paso Electric Company, a Texas corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to _______________ or registered assigns, the
principal sum of $____ Dollars on _______, ____, and to pay to
the registered holder hereof interest on said sum from the date
hereof at the rate of ____ per centum per annum, payable half-
yearly on the ______ day of _______ and the _______ day of
_______ in each year, commencing __________, 1994, until said
principal sum is paid. Both the principal of and the interest on
this bond shall be payable at the principal office or agency of
the Company in New York, New York, in any coin or currency of the
United States of America which at the time of payment is legal
tender for public and private debts provided that, at the option
of the Company, payment of interest may be made by check mailed
to the address of the person entitled thereto as shown on the
registration books of the Trustee.

The provisions of this bond are continued on the
reverse side hereof and such continued provisions shall for all
purposes have the same effect as though fully set forth at this
place.

This bond shall not be valid or become obligatory for
any purpose unless and until it shall have been duly
authenticated by the execution by or on behalf of the Trustee or
its successor in trust under the Indenture of the certificate
hereon.

<PAGE> 137
IN WITNESS WHEREOF, El Paso Electric Company has caused
this bond to be executed in its name by the manual or facsimile
signature of its President or one of its Vice-Presidents, and its
corporate seal or a facsimile thereof to be affixed hereto or
imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.

Dated: ______________

EL PASO ELECTRIC COMPANY

By______________________________
[Title]

ATTEST:

________________________
[Asst.] Secretary

<PAGE> 138
(Form of reverse side of bond of Series A)

EL PASO ELECTRIC COMPANY

FIRST MORTGAGE BOND, SERIES A
___% DUE ______ __, ____

The interest payable on this bond on any interest
payment date will, subject to certain exceptions provided in the
Indenture hereinafter mentioned, be paid to the person in whose
name this bond is registered at the close of business on the
record date, which shall be the ___________ or __________, as the
case may be, next preceding such interest payment date, or, if
such date shall be a legal holiday or a day on which banking
institutions in New York, New York are authorized or required to
close, the next preceding day which shall not be a legal holiday
or a day on which such institutions are so authorized or required
to close.

The bonds of Series A, of which this bond is one, are
not redeemable prior to _______, 1999. On or after _________,
1999, at the option of the Company and upon the notice and in the
manner and with the effect provided in the Indenture, bonds of
Series A may be redeemed by or on behalf of the Company, as a
whole at any time, or in part from time to time, at the
applicable general redemption price, expressed as a percentage of
the principal amount of the bonds, stated in the following table
under "General Redemption Price," together with accrued interest
on such principal amount to the date fixed for redemption:

<PAGE> 139
If redeemed If redeemed
during the during the
12 months General 12 months General
beginning Redemption beginning Redemption
_______, 1999 Price* _______, 1999 Price*

(table to come based on Schedule B to Plan]

_________________
* Stated as a percentage of principal amount of the bonds.

In addition to the foregoing redemption provisions, in
certain circumstances specified in the Indenture, the Company may
offer the initial beneficial owner hereof (if such owner
continues to hold this bond) the election to have this bond
redeemed by the Company at a redemption price equal to the
principal amount of this bond, together with accrued interest to
the date of redemption.

In case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable in the manner and with the effect provided
in the Indenture.

<PAGE> 140
exchange herefor. The Company shall not register, exchange or
transfer any bonds of this series during the period of ten days
next preceding any designation of bonds of said Series to be
redeemed, if applicable, and, as to any bonds selected for
redemption, from and after the date of such selection. The
Company and the Trustee may deem and treat the person in whose
name this bond is registered as the absolute owner for the
purpose of receiving payment and for all other purposes.

The bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

Trustee's Certificate of Authentication

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

STATE STREET BANK AND
TRUST COMPANY,
as Trustee

By______________________________
Authorized Signature

<PAGE> 141
Appendix A-2

(Form of face of bond of Series B)

No. $

EL PASO ELECTRIC COMPANY
First Mortgage Bond, Series B
__% Due ______ __, ____

The provisions of this bond are continued on the
reverse side hereof and such continued provisions shall for all
purposes have the same effect as though fully set forth at this
place.

<PAGE> 142
IN WITNESS WHEREOF, El Paso Electric Company has caused
this bond to be executed in its name by the manual or facsimile
signature of its President or one of its Vice-Presidents, and its
corporate seal or a facsimile thereof to be affixed hereto or
imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.

Dated: ______________

EL PASO ELECTRIC COMPANY

By______________________________
[Title]

ATTEST:

________________________
[Asst.] Secretary

<PAGE> 143
(Form of reverse side of bond of Series B)

EL PASO ELECTRIC COMPANY

FIRST MORTGAGE BOND, SERIES B
___% DUE ______ __, ____

The interest payable on this bond on any interest
payment date will, subject to certain exceptions provided in the
Indenture hereinafter mentioned, be paid to the person in whose
name this bond is registered at the close of business on the
record date, which shall be the ___________ or __________, as the
case may be, next preceding such interest payment date, or, if
such date shall be a legal holiday or a day on which banking
institutions in New York, New York are authorized or required to
close, the next preceding day which shall not be a legal holiday
or a day on which such institutions are so authorized or required
to close.

The bonds of Series B, of which this bond is one, are
not redeemable prior to _______, 1999. On or after _________,
1999, at the option of the Company and upon the notice and in the
manner and with the effect provided in the Indenture, bonds of
Series B may be redeemed by or on behalf of the Company, as a
whole at any time, or in part from time to time, at the
applicable general redemption price, expressed as a percentage of
the principal amount of the bonds, stated in the following table
under "General Redemption Price," together with accrued interest
on such principal amount to the date fixed for redemption:

<PAGE> 144
If redeemed If redeemed
during the during the
12 months General 12 months General
beginning Redemption beginning Redemption
_______, 1999 Price* _______, 1999 Price*

(table to come based on Schedule B to Plan]

_________________
* Stated as a percentage of principal amount of the bonds.

In case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable in the manner and with the effect provided
in the Indenture.

<PAGE> 145
exchange herefor. The Company shall not register, exchange or
transfer any bonds of this series during the period of ten days
next preceding any designation of bonds of said Series to be
redeemed, if applicable, and, as to any bonds selected for
redemption, from and after the date of such selection. The
Company and the Trustee may deem and treat the person in whose
name this bond is registered as the absolute owner for the
purpose of receiving payment and for all other purposes.

The bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

Trustee's Certificate of Authentication

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

STATE STREET BANK AND
TRUST COMPANY,
as Trustee

By______________________________
Authorized Signature

<PAGE> 146
Appendix A-3

(Form of face of bond of Series C)

No. $

EL PASO ELECTRIC COMPANY
First Mortgage Bond, Series C
__% Due ______ __, ____

The provisions of this bond are continued on the
reverse side hereof and such continued provisions shall for all
purposes have the same effect as though fully set forth at this
place.

<PAGE> 147
IN WITNESS WHEREOF, El Paso Electric Company has caused
this bond to be executed in its name by the manual or facsimile
signature of its President or one of its Vice-Presidents, and its
corporate seal or a facsimile thereof to be affixed hereto or
imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.

Dated: ______________

EL PASO ELECTRIC COMPANY

By______________________________
[Title]

ATTEST:

________________________
[Asst.] Secretary

<PAGE> 148
(Form of reverse side of bond of Series C)

EL PASO ELECTRIC COMPANY

FIRST MORTGAGE BOND, SERIES C
___% DUE ______ __, ____

The interest payable on this bond on any interest
payment date will, subject to certain exceptions provided in the
Indenture hereinafter mentioned, be paid to the person in whose
name this bond is registered at the close of business on the
record date, which shall be the ___________ or __________, as the
case may be, next preceding such interest payment date, or, if
such date shall be a legal holiday or a day on which banking
institutions in New York, New York are authorized or required to
close, the next preceding day which shall not be a legal holiday
or a day on which such institutions are so authorized or required
to close.

On or after _________, 1994, at the option of the
Company and upon the notice and in the manner and with the effect
provided in the Indenture, bonds of Series C, of which this bond
is one, may be redeemed by or on behalf of the Company, as a
whole at any time, or in part from time to time, at the
applicable general redemption price, expressed as a percentage of
the principal amount of the bonds, stated in the following table
under "General Redemption Price," together with accrued interest
on such principal amount to the date fixed for redemption:

<PAGE> 149

If redeemed If redeemed
during the during the
12 months General 12 months General
beginning Redemption beginning Redemption
_______, 1994 Price* _______, 1994 Price*

(table to come based on page 36 and Schedule C to the Plan)
_________________
* Stated as a percentage of principal amount of the bonds.

In case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable in the manner and with the effect provided
in the Indenture.

This bond is transferable or exchangeable by the holder
hereof, in person or by attorney duly authorized, at the
corporate trust office of the Trustee, in Boston, Massachusetts,
but only in the manner and upon the conditions prescribed in the
Indenture, upon the surrender and cancellation of this bond and
the payment of any stamp tax or other governmental charge, and
upon any such transfer or exchange a new registered bond or bonds
of the same series and maturity date and for the same aggregate
principal amount, in authorized denominations, will be issued to
the transferee, or the registered holder, as the case may be, in
exchange herefor. The Company shall not register, exchange or
transfer any bonds of this series during the period of ten days
next preceding any designation of bonds of said Series to be
redeemed, if applicable, and, as to any bonds selected for
redemption, from and after the date of such selection. The
Company and the Trustee may deem and treat the person in whose
name this bond is registered as the absolute owner for the
purpose of receiving payment and for all other purposes.

<PAGE> 150
The bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

Trustee's Certificate of Authentication

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

STATE STREET BANK AND
TRUST COMPANY,
as Trustee

By______________________________
Authorized Signature

<PAGE> 151
Appendix A-4

(Form of face of bond of Series X)

No. $

EL PASO ELECTRIC COMPANY
First Mortgage Bond, Series X
Floating Rate Due ______ __, ____

El Paso Electric Company, a Texas corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to _________, as Agent under the Term Loan
Agreement hereinafter described, or registered assigns, the
principal sum of $____ Dollars on the dates set forth in the
Notes referred to below and to pay to the registered holder
hereof interest on said sum as described below. Both the
principal of and the interest on this bond shall be payable at
the principal office or agency of the Company in New York, New
York, in any coin or currency of the United States of America
which at the time of payment is legal tender for public and
private debts provided that, at the option of the Company,
payment of interest may be made by check mailed to the address of
the person entitled thereto as shown on the registration books of
the Trustee.

This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture dated as of _________, 1994, given by the Company to
State Street Bank and Trust Company (hereinafter sometimes
referred to as the "Trustee"), and indentures supplemental
thereto, heretofore or hereafter executed, to which indenture and
indentures supplemental thereto (hereinafter referred to
collectively as the "Indenture") reference is hereby made for a
description of the property mortgaged and pledged, the nature and
extent of the security and the rights, duties and immunities
thereunder of the Trustee and the rights of the holders of said
bonds and of the Trustee and of the Company in respect of such
security, and the limitations on such rights. By the terms of
the Indenture, the bonds to be secured thereby are issuable in
series which may vary as to date, amount, date of maturity, rate
of interest and in other respects as in the Indenture provided.

<PAGE> 152
"Notes"), executed by the Company and payable to the Creditors,
or order, in the aggregate principal amount of $_________ in
accordance with the terms set forth in the Term Loan Agreement.

Except as hereinafter provided, interest on this bond
accrues and is payable at the same rates (determined on a
weighted average basis if more than one rate is in effect with
respect to the Notes) and on the same dates as interest is
payable on the Notes under the terms of the Term Loan Agreement,
which provides for floating rate loans (all as provided for in
the Term Loan Agreement).

The obligation of the Company to make payments with
respect to the principal and interest on the bonds of this Series
shall be fully or partially, as the case may be, satisfied and
discharged to the extent that, at any time that any such payment
shall be due, the Company shall have paid fully or partially the
then due principal of and interest on the Notes which the bonds
of this Series secure; provided that any payments of principal of
or interest on any of the Notes will be deemed to have been
applied pro rata among all the Notes.

Upon surrender for cancellation, at any time or from
time to time, of bonds of this Series by the Agent to the
Trustee, the bonds surrendered shall be deemed fully paid and the
obligations of the Company thereunder shall be terminated, and
such bonds shall be cancelled.

In the manner provided in the Indenture, the bonds of
this Series shall be redeemed in whole by payment of the
principal amount thereof plus accrued interest thereon to the
redemption date, upon receipt by the Trustee and the Company of a
written demand from the Agent. Such demand shall also state that
the principal amount of the Notes which the bonds of this Series
secure then outstanding under the Term Loan Agreement has been
declared immediately due and payable pursuant to the provisions
of the Term Loan Agreement, specifying the date from which unpaid
interest on such Notes has then accrued, and stating that such
declaration of maturity has not been rescinded. The bonds of
this Series shall be redeemed on the fifth business day following
receipt of the written demand as aforesaid. Upon the occurrence
of certain Events of Default under the Term Loan Agreement, the
bonds of this Series shall be redeemed on the fifth business day
following receipt by the Trustee of notice from the Agent of such
Event of Default; the Agent shall give notice to the Trustee of
such Events of Default and of the declaration of maturity as a
consequence thereof but failure to give such notice shall not
affect the rights of the Agent. Such redemption shall be
rescinded and become null and void for all purposes of the
Indenture upon rescission in writing of the aforesaid declaration
of maturity under the Term Loan Agreement received by the Trustee

<PAGE> 153
no later than the Business Day prior to the date fixed for
redemption, and thereupon no redemption of the bonds of this
Series and no payments in respect thereof shall be effected or
required.

Notwithstanding the provisions of the previous
paragraph, in case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable in the manner and with the effect provided
in the Indenture.

This bond is nontransferable except to effect transfer
to any successor to the Agent under the Term Loan Agreement, but
is exchangeable by the registered holder hereof, in person or by
attorney duly authorized, at the corporate trust office of the
Trustee, in Boston, Massachusetts, any such permitted transfer or
exchange to be made in the manner and upon the conditions
prescribed in the Indenture, upon the surrender and cancellation
of this bond and the payment of any stamp tax or other
governmental charge, and upon any such transfer or exchange a new
registered bond or bonds of the same series and maturity date and
for the same aggregate principal amount, in authorized
denominations, will be issued to the transferee, or the
registered holder, as the case may be, in exchange herefor. The
Company and the Trustee may deem and treat the person in whose
name this bond is registered as the absolute owner for the
purpose of receiving payment and for all other purposes.

The bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

<PAGE> 154
IN WITNESS WHEREOF, El Paso Electric Company has caused
this bond to be executed in its name by the manual or facsimile
signature of its President or one of its Vice-Presidents, and its
corporate seal or a facsimile thereof to be affixed hereto or
imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.

Dated: ______________

EL PASO ELECTRIC COMPANY

By______________________________
[Title]

ATTEST:

________________________
[Asst.] Secretary

Trustee's Certificate of Authentication

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

STATE STREET BANK AND
TRUST COMPANY,
as Trustee

By______________________________
Authorized Signature

<PAGE> 1

EXHIBIT A-14

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

INDENTURE

_______________

EL PASO ELECTRIC COMPANY

IBJ SCHRODER BANK & TRUST COMPANY

AS TRUSTEE

_________________

Dated as of , 1994

_________________

(SECOND MORTGAGE BONDS)

THIS INSTRUMENT GRANTS A SECURITY INTEREST BY A UTILITY

THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS

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

<PAGE> 2
Explanations of Dates and Amounts
[Not Part of the Indenture]

* Initial issuance date of bonds

** Intentionally omitted

*** First April 1st after initial issuance of bonds

**** These schedules are included for purposes of complying
with state law requirements and will list the property of
the Company specified in the relevant definition as of the
initial issuance date of bonds. Schedule A will include
all the real property of the Company (other than as set
forth in Schedule B). Schedule B will only contain
certain property, if any, in an immaterial amount.

<PAGE> 3
EL PASO ELECTRIC COMPANY

INDENTURE DATED AS OF ___________, 1994

TABLE OF CONTENTS
Page

Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Preliminary Statement. . . . . . . . . . . . . . . . . . . . . 1
Property Conveyed. . . . . . . . . . . . . . . . . . . . . . . 2
After-acquired Property. . . . . . . . . . . . . . . . . . . . 3
Excepted Property. . . . . . . . . . . . . . . . . . . . . . . 4
Subject Clause . . . . . . . . . . . . . . . . . . . . . . . . .5
Habendum . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Grant in Trust . . . . . . . . . . . . . . . . . . . . . . . . 5
Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . .6

ARTICLE I

DEFINITIONS AND OTHER PROVISIONS . . . . . . . .6
OF GENERAL APPLICATION

SECTION 1.01. Construction of Document. . . . . . . . . . . . 6
SECTION 1.02. Certain Defined Terms . . . . . . . . . . . . . 6
affiliate . . . . . . . . . . . . . . . . . . . . . . . . 6
amount of depreciable property. . . . . . . . . . . . . . 7
application . . . . . . . . . . . . . . . . . . . . . . . 7
Board of Directors. . . . . . . . . . . . . . . . . . . . 7
bondable property . . . . . . . . . . . . . . . . . . . . 7
bonds . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Business Day. . . . . . . . . . . . . . . . . . . . . . . 7
Commission. . . . . . . . . . . . . . . . . . . . . . . . 7
Company . . . . . . . . . . . . . . . . . . . . . . . . . 7
control . . . . . . . . . . . . . . . . . . . . . . . . . 7
cost. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Current Fair Value. . . . . . . . . . . . . . . . . . . . 7
Daily Newspaper . . . . . . . . . . . . . . . . . . . . . 8
deposited cash. . . . . . . . . . . . . . . . . . . . . . 8
Effective Date. . . . . . . . . . . . . . . . . . . . . . 8
Engineer. . . . . . . . . . . . . . . . . . . . . . . . . 8
Engineer's Certificate. . . . . . . . . . . . . . . . . . 8
Excepted Encumbrances . . . . . . . . . . . . . . . . . . 8
Excepted Property . . . . . . . . . . . . . . . . . . . . 9
fair value to the Company . . . . . . . . . . . . . . . . .9
First Mortgage Indenture. . . . . . . . . . . . . . . . . 9
Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 10
gross expenditures. . . . . . . . . . . . . . . . . . . . 10
gross retirements of property . . . . . . . . . . . . . . 10
holder" or "bondholder. . . . . . . . . . . . . . . . . . 10
Independent Engineer. . . . . . . . . . . . . . . . . . . 10
lien hereof" and "lien of this Indenture. . . . . . . . . 10
net earnings. . . . . . . . . . . . . . . . . . . . . . . 10

<PAGE> 4
Net Earnings Certificate. . . . . . . . . . . . . . . . . 10
net expenditures. . . . . . . . . . . . . . . . . . . . . 10
Obligor . . . . . . . . . . . . . . . . . . . . . . . . . 10
Officers' Certificate . . . . . . . . . . . . . . . . . . 11
Opinion of Counsel. . . . . . . . . . . . . . . . . . . . 11
Original Fair Value . . . . . . . . . . . . . . . . . . . 11
Outstanding . . . . . . . . . . . . . . . . . . . . . . . 11
person. . . . . . . . . . . . . . . . . . . . . . . . . . 12
Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
plant or property operated by others. . . . . . . . . . . 12
Prepaid Liens . . . . . . . . . . . . . . . . . . . . . . 12
Prior Lien. . . . . . . . . . . . . . . . . . . . . . . . 12
purchased property. . . . . . . . . . . . . . . . . . . . 13
Required Percentage . . . . . . . . . . . . . . . . . . . 13
Resolution. . . . . . . . . . . . . . . . . . . . . . . . 13
Responsible Officers. . . . . . . . . . . . . . . . . . . 13
TIA . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
title . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 14
Trust Estate. . . . . . . . . . . . . . . . . . . . . . . 14
U.S. Government Obligations . . . . . . . . . . . . . . . 14
SECTION 1.03. Compliance Certificates and Opinions. . . . . . 14
SECTION 1.04. Amount to be Deposited to Pay or Redeem Bonds,
etc.. . . . . . . . . . . . . . . . . . . . . . 15
SECTION 1.05. Certificate of Resolutions. . . . . . . . . . . 15
SECTION 1.06. Incorporation by Reference of Trust
Indenture Act . . . . . . . . . . . . . . . . 16
SECTION 1.07. Indenture as Deed of Trust in New Mexico. . . . 16
SECTION 1.08. Indenture as Deed of Trust in Arizona . . . . . 16

ARTICLE II

THE BONDS. . . . . . . . . . . . . 17

SECTION 2.01. General Limitations; Bonds Issuable in Series . 17
SECTION 2.02. Date of and Interest on Bonds . . . . . . . . . 19
SECTION 2.03. Legends on Bonds. . . . . . . . . . . . . . . . 19
SECTION 2.04. Exchange of Bonds; Transfers. . . . . . . . . . 20
SECTION 2.05. Registration and Transfer of Bonds. . . . . . . 20
SECTION 2.06. Execution of Bonds. . . . . . . . . . . . . . . 21
SECTION 2.07. Temporary Bonds . . . . . . . . . . . . . . . . 21
/SECTION 2.08. Lost, Destroyed or Mutilated Bonds . . . . . . 22
SECTION 2.09. Certificate of the Trustee. . . . . . . . . . . 22
SECTION 2.10. Authorized Denominations. . . . . . . . . . . . 22

ARTICLE III

BOND FORMS. . . . . . . . . . . . . 23

SECTION 3.01. Forms Generally . . . . . . . . . . . . . . . . 23
SECTION 3.02. Trustee's Certificate of Authentication . . . . 23

<PAGE> 5
ARTICLE IV

ISSUANCE OF BONDS. . . . . . . . . . . 29

SECTION 4.01. Initial Issuance of Bonds . . . . . . . . . . . 29
SECTION 4.01A. Terms of Initial Issues of Bonds. . . . . . . . 29
SECTION 4.01B. Certain Covenants for Bonds of Series A . . . . 30
SECTION 4.01C. Certain Provisions for Bonds of Series D, E,
F, X, Y-1 through Y-8 and Z . . . . . . . . . 31
SECTION 4.02. Issuance of Bonds Upon Retirement of Bonds
Previously Outstanding Hereunder. . . . . . . 32
SECTION 4.03. Issuance of Bonds Upon the Basis of Property
and Property Additions. . . . . . . . . . . . 34
SECTION 4.04. Issuance of Bonds Upon Deposit of Cash With
Trustee; Withdrawal or Application of
Deposited Cash. . . . . . . . . . . . . . . . 40
SECTION 4.05. Net Earnings Certificate. . . . . . . . . . . . 41
SECTION 4.06. Documents to be Delivered . . . . . . . . . . . 43

ARTICLE V

PARTICULAR COVENANTS OF THE COMPANY . . . . . . 46

SECTION 5.01. Seizin and Warranty . . . . . . . . . . . . . . 46
SECTION 5.02. Payment of Principal, Premium and Interest;
Maintenance of Office . . . . . . . . . . . . 46
SECTION 5.03. Regarding Paying Agent; Funds in Trust. . . . . 47
SECTION 5.04. Limitations on Liens; Payment of Taxes. . . . . 48
SECTION 5.05. To Insure . . . . . . . . . . . . . . . . . . . 49
SECTION 5.06. To Maintain Property, etc.. . . . . . . . . . . 50
SECTION 5.07. To Maintain Corporate Existence and Franchises. 51
SECTION 5.08. Repayment of Advances made by a Receiver, etc.. 51
SECTION 5.09. To Record and File Indenture and Supplemental
Indenture . . . . . . . . . . . . . . . . . . 52
SECTION 5.10. To Furnish Opinions of Counsel as to
Recording . . . . . . . . . . . . . . . . . . 52
SECTION 5.11. Further Advances and After-acquired Property. . 53
SECTION 5.12. To Appoint a Trustee to Fill Vacancies. . . . . 53
SECTION 5.13. Periodic Examinations as to Maintenance . . . . 54
SECTION 5.14. Annual Statement by Officers as to Default. . . 56
SECTION 5.15. Maintenance and Renewal . . . . . . . . . . . . 56
SECTION 5.16. To Comply With Indenture. . . . . . . . . . . . 59

ARTICLE VI

BONDHOLDERS' LISTS AND REPORTS BY THE COMPANY
AND THE TRUSTEE . . . . . . . . . . . 59

SECTION 6.01. Company to Furnish Lists of Names and
Addresses of Bondholders. . . . . . . . . . . 59
SECTION 6.02. Current Lists of Bondholders. . . . . . . . . . 60
SECTION 6.03. Company's Covenants as to Filing Reports. . . . 60
SECTION 6.04. Trustee's Reports . . . . . . . . . . . . . . . 60

<PAGE> 6
ARTICLE VII

REDEMPTION AND PURCHASE OF BONDS . . . . . . . 61

SECTION 7.01. Exercise of Option to Redeem. . . . . . . . . . 61
SECTION 7.02. Notice of Redemption. . . . . . . . . . . . . . 61
SECTION 7.03. Deposit of Cash to Redeem . . . . . . . . . . . 62
SECTION 7.04. Payment of Bonds Called for Redemption and
Cessation of Lien . . . . . . . . . . . . . . 63
SECTION 7.05. Bonds to be Cancelled . . . . . . . . . . . . . 63

ARTICLE VIII

POSSESSION, USE AND RELEASE
OF MORTGAGED PROPERTY. . . . . . . . . . 63

SECTION 8.01. Company to Possess Property Until Default;
Disposal of Certain Property Without
Release . . . . . . . . . . . . . . . . . . . 63
SECTION 8.02. Trustee to Release Property Upon Certain
Conditions. . . . . . . . . . . . . . . . . . 65
SECTION 8.03. Eminent Domain. . . . . . . . . . . . . . . . . 67
SECTION 8.04. Rights of Purchaser of Released Property. . . . 68
SECTION 8.05. Receiver or Trustee May Exercise Company's
Rights. . . . . . . . . . . . . . . . . . . . 68
SECTION 8.06. Withdrawal, Use and Application of Cash
Deposited with Trustee. . . . . . . . . . . . 68

ARTICLE IX

REMEDIES IN EVENT OF DEFAULT . . . . . . . . 71

SECTION 9.01. Defaults. . . . . . . . . . . . . . . . . . . . 71
SECTION 9.02. Notice of Defaults. . . . . . . . . . . . . . . 72
SECTION 9.03. Acceleration of Maturity Date . . . . . . . . . 73
SECTION 9.04. Right of Entry and Application of Proceeds
Received by Trustee . . . . . . . . . . . . . 73
SECTION 9.05. Power of Sale Upon Default. . . . . . . . . . . 73
SECTION 9.06. Notice of Sale and Manner of Making Same. . . . 74
SECTION 9.06A. Operation of Power of Sale. . . . . . . . . . . 75
SECTION 9.07. Application of Proceeds of Sale . . . . . . . . 76
SECTION 9.08. Purchaser at Sale May Use Bonds as Payment. . . 77
SECTION 9.09. Principal and Interest Payable to Trustee
After Default; Proofs of Claim; Judgments . . 79
SECTION 9.10. Majority of Bondholders Entitled to Direct
Trustee . . . . . . . . . . . . . . . . . . . 81
SECTION 9.11. Remedies Cumulative and Not Waived by
Failure to Act. . . . . . . . . . . . . . . . 81
SECTION 9.12. Rights of Bondholders to Sue. . . . . . . . . . 82

<PAGE> 7
ARTICLE X

EVIDENCE OF RIGHTS OF BONDHOLDERS. . . . . . . 83

SECTION 10.01. Execution of Requests, etc. by Bondholders . . 83
SECTION 10.02. Registered Holders Treated as Absolute Owners. 83

ARTICLE XI

DEFEASANCE. . . . . . . . . . . . . 83

SECTION 11.01. Release and Discharge of Indenture . . . . . . 83
SECTION 11.02. Defeasance of a Series of Bonds. . . . . . . . 86
SECTION 11.03. Payment of Deposited Cash to Company . . . . . 86

ARTICLE XII

IMMUNITY OF INCORPORATORS, OFFICERS,
SHAREHOLDERS AND DIRECTORS. . . . . . . . . 88

SECTION 12.01. Exemption from Personal Liability. . . . . . . 88

ARTICLE XIII

CONSOLIDATIONS, MERGERS, TRANSFERS AND SALES . . . . 89

SECTION 13.01. Merger, Consolidation or Sale. . . . . . . . . 89
SECTION 13.02. Successor to Succeed to Rights of Company. . . 90
SECTION 13.03. Limitation of After-Acquired Clauses . . . . . 92

ARTICLE XIV

CONCERNING THE TRUSTEE. . . . . . . . . . 92

SECTION 14.01. Capital and Surplus Requirement. . . . . . . . 92
SECTION 14.02. Acceptance of Trust and Duties by Trustee. . . 93
SECTION 14.03. Limitation on Liability of Trustee . . . . . . 93
SECTION 14.04. Recitals are by Company Alone. . . . . . . . . 94
SECTION 14.05. Exemption of Trustee from Personal Liability
in Case of Entry . . . . . . . . . . . . . . 94
SECTION 14.06. Trustee may Rely on Documents, etc.. . . . . . 94
SECTION 14.07. Trustee's Responsibility for Selection of
Experts. . . . . . . . . . . . . . . . . . . 95
SECTION 14.08. Trustee may be Bondholder, etc.. . . . . . . . 96
SECTION 14.09. Cash to be Held in Trust . . . . . . . . . . . 96
SECTION 14.10. Trustee Compensation and Reimbursement . . . . 96
SECTION 14.11. Certificate of Officers of Company to
Constitute Proof . . . . . . . . . . . . . . 97

<PAGE> 8
SECTION 14.12. Trustee to Have Power to Give Notices. . . . . 97
SECTION 14.13. Trustee Acquiring Conflicting Interest . . . . 97
SECTION 14.14. Preferential Collection of Claims Against
the Company if Trustee Becomes a Creditor. . 98
SECTION 14.15. Trustee may Resign . . . . . . . . . . . . . . 98
SECTION 14.16. Trustee may be Removed . . . . . . . . . . . . 98
SECTION 14.17. Appointment of Successor Trustee . . . . . . . 98
SECTION 14.18. Separate Trustee or Co-trustee may be
Appointed. . . . . . . . . . . . . . . . . . 99
SECTION 14.19. Conditions Upon Appointment of Separate
Trustee or Co-trustee or Successor Trustee .100
SECTION 14.20. Notices to Trustee . . . . . . . . . . . . . .101
SECTION 14.21. Trustee as Agent . . . . . . . . . . . . . . .101
SECTION 14.22. Successor Trustee to Execute Acceptance and
Become Vested with Estate. . . . . . . . . .101
SECTION 14.23. Consolidation or Merger of Trustee . . . . . .102

ARTICLE XV

CONCERNING PLEDGED SECURITIES. . . . . . . .102

SECTION 15.01. Pledged Securities Deposited with Trustee. . .102
SECTION 15.02. Voting . . . . . . . . . . . . . . . . . . . .103
SECTION 15.03. Income Before Event of Default . . . . . . . .104
SECTION 15.04. Payments Upon Dissolution, etc. of Issuer of
Pledged Securities . . . . . . . . . . . . .105
SECTION 15.05. Renewal and Refunding. . . . . . . . . . . . .105
SECTION 15.06. Pledged Securities Not Basis of Issuance . . .106

ARTICLE XVI

SUPPLEMENTAL INDENTURES . . . . . . . . .106

SECTION 16.01. Supplemental Indentures to be Executed For
Specified Purposes . . . . . . . . . . . . .106
SECTION 16.02. Modification of Indenture with Consent of
Bondholders. . . . . . . . . . . . . . . . .108
SECTION 16.03. Effect of Supplemental Indenture . . . . . . .109
SECTION 16.04. Opinion of Counsel as Evidence of Compliance .109
SECTION 16.05. Notations on Bonds; Provision for New Bonds. .110
SECTION 16.06. Supplemental Indenture to Conform to Trust
Indenture Act of 1939. . . . . . . . . . . .110

ARTICLE XVII

BONDHOLDERS' MEETINGS. . . . . . . . . .110

SECTION 17.01. Meeting Called for Specified Purposes. . . . .110
SECTION 17.02. Meeting Called by Trustee. . . . . . . . . . .110
SECTION 17.03. Meeting Called by Company or Bondholders . . .111
SECTION 17.04. Bondholders Entitled to Vote . . . . . . . . .111

<PAGE> 9
SECTION 17.05. Regulations for Meeting. . . . . . . . . . . .111
SECTION 17.06. Bondholders' Vote by Written Ballot. . . . . .112
SECTION 17.07. Nothing Authorizes Hindrance or Delay of
Rights of Trustee or Bondholders . . . . . .112

ARTICLE XVIII

MISCELLANEOUS PROVISIONS . . . . . . . . .113

SECTION 18.01. Covenants for Sole Benefit of Parties and
Bondholders Severability . . . . . . . . . .113
SECTION 18.02. Court may Require Bond for Costs, Under
Certain Conditions . . . . . . . . . . . . .113
SECTION 18.03. Provisions of Trust Indenture Act of 1939
to be Controlling. . . . . . . . . . . . . .113
SECTION 18.04. Notice to the Company. . . . . . . . . . . . .113
SECTION 18.05. Reference to Parties Includes Successors . . .113
SECTION 18.06. Headings Inserted for Convenience Only . . . .114
SECTION 18.07. Cancellation and Cremation of Bonds. . . . . .114
SECTION 18.08. Execution in Counterparts. . . . . . . . . . .114
SECTION 18.09. Deposit of Securities in Lieu of Cash. . . . .114
SECTION 18.10. Termination. . . . . . . . . . . . . . . . . .115
Form of bond of Series A

APPENDIX A-2 Form of bond of Series B
APPENDIX A-3 Form of bond of Series D
APPENDIX A-4 Form of bond of Series E
APPENDIX A-5 Form of bond of Series F
APPENDIX A-6 Form of bond of Series X
APPENDIX A-7 Form of bond of Series Y-1
APPENDIX A-8 Form of bond of Series Y-2
APPENDIX A-9 Form of bond of Series Y-3
APPENDIX A-10 Form of bond of Series Y-4
APPENDIX A-11 Form of bond of Series Y-5
APPENDIX A-12 Form of bond of Series Y-6
APPENDIX A-13 Form of bond of Series Y-7
APPENDIX A-14 Form of bond of Series Y-8
APPENDIX A-15 Form of bond of Series Z

Schedule A Real Property of the Company [****]
Schedule B Certain Excepted Property [****]

<PAGE> 10
INDENTURE, dated as of ____________, 1994, between EL
PASO ELECTRIC COMPANY, a corporation organized and existing under
the laws of the State of Texas, with its principal office in El
Paso, Texas (hereinafter called the "Company") and IBJ SCHRODER
BANK & TRUST COMPANY, a New York banking corporation, with its
principal corporate trust office in New York, New York, as
Trustee (hereinafter called the "Trustee").

PRELIMINARY STATEMENT

All acts and things necessary to make the bonds, when
authenticated by the Trustee and issued as provided in this
Indenture, the valid, binding and legal obligations of the

<PAGE> 11
Company, and to constitute this Indenture a valid, binding and
legal instrument for the security thereof, have been done and
performed, and the creation, execution and delivery of this
Indenture have in all respects been duly authorized.

PROPERTY CONVEYED

NOW THEREFORE, in consideration of the premises, and of
the acceptance and purchase by the holders thereof of the bonds
to be issued under this Indenture, and of the sum of Ten Dollars
($10.00) duly paid by the Trustee to the Company at or before the
ensealing and delivery of these presents, the receipt whereof is
hereby acknowledged, and for the purpose of securing the due and
punctual payment of the principal of and premium, if any, and
interest on all bonds which shall from time to time be issued
hereunder according to their tenor and effect and the faithful
performance and observance of all covenants and conditions hereof
(including any supplemental indentures and any modification made
as provided herein), the Company has given, granted, bargained,
sold, released, transferred, assigned, hypothecated, pledged,
mortgaged, confirmed, set over, warranted, alienated, conveyed,
and created a security interest in, and by these presents does,
give, grant, bargain, sell, release, transfer, assign,
hypothecate, pledge, mortgage, confirm, set over, warrant, alien,
convey, and create a security interest, unto the Trustee as
herein provided, and to its successors or successors in the trust
hereby created, and to its or their assigns forever, subject,
however, to the lien of the First Mortgage Indenture (as
hereinafter defined), all right, title and interest of the
Company in and to (i) the real properties described on Schedule A
annexed hereto and hereby made a part hereof, and (ii) all other
properties of the Company, real, personal and mixed, of the kind
and nature specifically mentioned herein or of any other kind or
nature (except any hereinbefore or hereinafter expressly
excepted) now owned or subject to the provisions of Section 13.02
hereof hereafter acquired by the Company (by purchase,
consolidation, merger, donation, construction, erection or in any
other way), and wheresoever situated, including (without in
anywise limiting or impairing by the enumeration of the same, the
scope and intent of the foregoing or of any general description
contained in this Indenture) all real estate, lands, leaseholds,
easements, lands under water, water and riparian rights,
servitudes, licenses, permits, franchises, privileges, rights of
way and other rights in or relating to real estate or the
occupancy of the same; all rights of way and roads or tracks; all
plants for the generation of electricity by steam, water, and/or
other power; all power houses, gas plants, street lighting
systems, standards and other equipment incidental thereto; all
telephone, radio and television systems, air-conditioning systems
and equipment incidental thereto; all offices, buildings and
other structures and the equipment thereof; all machinery,
engines, boilers, turbines, electric, gas and other machines,
prime movers, regulators, meters, transformers, generators
(including, but not limited to, engine driven generators and

<PAGE> 12
turbogenerator units), motors, electrical, gas and mechanical
appliances, conduits, cables, gas or other pipes, gas mains and
pipes, service pipes, fittings, valves and connections, pole and
transmission lines, towers, overhead conductors and devices,
underground conduits, underground conductors and devices, wires,
cables, tools, implements, apparatus, storage battery equipment,
and all other fixtures and personalty; all municipal and other
franchises, consents or permits; all lines for the transmission
and distribution of electric current or gas for any purpose
including towers, poles, wires, cables, pipes, conduits, ducts
and all apparatus for use in connection therewith; and (except as
hereinbefore or hereinafter expressly excepted) all the right,
title and interest of the Company in and to all other property of
any kind or nature appertaining to and/or used and/or occupied
and/or enjoyed in connection with any property hereinbefore
described.

TOGETHER WITH all and singular the tenements,
hereditaments, prescriptions, servitudes and appurtenances
belonging or in anywise appertaining to the aforesaid property or
any part thereof, with the reversion and reversions, remainder
and remainders and (subject to the provisions of Section 8.01
hereof) the tolls, rents, revenues, issues, proceeds, earnings,
income, product and profits thereof, and all the estate, right,
title, and interest and claim whatsoever, at law as well as in
equity, which the Company now has or may hereafter acquire in and
to the aforesaid property and franchises and every part and
parcel thereof, with mortgage covenants and upon the statutory
mortgage condition for the breach of which such property is
subject to foreclosure as provided by law.

AFTER-ACQUIRED PROPERTY

<PAGE> 13
EXCEPTED PROPERTY

<PAGE> 14
SUBJECT CLAUSE

HABENDUM

GRANT IN TRUST

<PAGE> 15
CONDITION

And it is expressly declared that all bonds issued and
secured hereunder are to be issued, authenticated and delivered,
and all said property, rights and franchises hereby conveyed,
assigned, pledged or mortgaged, or intended so to be, are to be
dealt with and disposed of, under, upon and subject to the terms,
conditions, stipulations, covenants, agreements, trusts, uses and
purposes hereinafter expressed.

ARTICLE I

DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION

SECTION 1.02. Certain Defined Terms. As used herein,
the following terms shall have the following meanings:

<PAGE> 16
"amount of depreciable property" shall have the meaning
specified in Section 5.15 hereof.

"Board of Directors" shall mean the Board of Directors
of the Company and shall also include any executive committee or
other committee of said Board duly authorized to act on behalf of
said Board.

"bondable property" shall have the meaning specified in
Section 4.03 hereof.

"bonds" shall mean the bonds issued under and pursuant
to this Indenture.

"Commission" means the Securities and Exchange
Commission.

"Company" shall mean the person named as the "Company"
in the first paragraph of this Indenture, and shall also include
its successors and assigns as provided in Article XIII hereof.

"cost" shall have the meaning specified in Section 4.03
hereof.

<PAGE> 17
"Daily Newspaper" shall mean a newspaper of general
circulation, printed in the English language and customarily
published on each business day in any of the cities wherein any
of such bonds are expressed to be payable.

"deposited cash" shall have the meaning specified in
Section 4.04 hereof.

"Effective Date" shall have the meaning specified in
the Plan.

"Engineer" shall mean any engineer, firm of engineers
or engineering corporation selected by the Company and who or
which may be in the employ of or under retainer by the Company.

"Engineer's Certificate" shall mean a certificate
signed by the President or a Vice President of the Company, and
by an Engineer or, if required by this Indenture or the TIA, by
an Independent Engineer (as hereinafter defined). Any Engineer's
Certificate required to be signed by an Independent Engineer
shall contain a statement that the signer is an Independent
Engineer under this Indenture.

"Excepted Encumbrances" shall mean as of any particular
time any of the following:

(b) judgments in course of appeal or otherwise in
contest in good faith and, if required by law, secured by
sufficient bond;

<PAGE> 18
(e) rights reserved to or vested in others to take or
use any part of the power, gas, oil or other minerals or
timber generated, developed, manufactured or produced by, or
grown on, or acquired with, any property of the Company;

(g) rights reserved to or vested in any municipality
or public authority to control or regulate any property of
the Company, or to use such property in a manner which does
not materially impair the use of such property for the
purposes for which it is held by the Company;

(h) any obligations or duties, affecting the property
of the Company, to any municipality or public authority with
respect to any franchise, grant, license or permit;

(i) any controls, liens, restrictions, regulations,
easements, exceptions or reservations of any governmental
authority applying to the property or facilities of the
Company; or

(j) any lien reserved as security for rent or for
compliance with other provisions of the lease in the case of
any leasehold estate.

"Excepted Property" shall have the meaning specified in
the Preliminary Statement hereof.

"fair value to the Company" or "fair value" shall have
the meaning specified in Section 4.03 hereof.

"First Mortgage Indenture" shall mean the Indenture,
dated as of _________, 1994 by and between the Company and State
Street Bank and Trust Company, as trustee, and all indentures
supplemental thereto and in modification thereof, now in
existence or hereafter entered into pursuant to the provisions
thereof, which creates a first lien upon the Trust Estate as
security for the bonds heretofore and hereafter issued
thereunder, and any extension, renewal, replacement or refunding
thereof.

<PAGE> 19
"Funds" means the currency of the United States of
America which at the time is legal tender for public and private
debts and U.S. Government Obligations.

"gross expenditures" shall have the meaning specified
in Section 4.03 hereof.

"gross retirements of property" shall have the meaning
specified in Section 4.03 hereof.

"lien hereof" and "lien of this Indenture" shall mean
the lien created or intended to be created by these presents
(including the after-acquired property clauses hereof) and the
lien created or intended to be created by any subsequent
conveyance or delivery to or pledge with the Trustee hereunder
(whether made by the Company or any other person) constituting or
intended to constitute any property a part of the security held
by the Trustee upon the terms and trusts and subject to the
conditions specified in this Indenture.

"lien of the First Mortgage Indenture" shall mean the
lien created or intended to be created by the First Mortgage
Indenture (including the after-acquired property clauses thereof)
and the lien created or intended to be created by any subsequent
conveyance or delivery to or pledge with the trustee thereunder
(whether made by the Company or any other person) constituting or
intended to constitute any property a part of the security held
by such trustee upon the terms and trusts and subject to the
conditions specified in the First Mortgage Indenture.

"net earnings" shall have the meaning specified in
Section 4.05 hereof.

"Net Earnings Certificate" shall have the meaning
specified in Section 4.05 hereof.

"net expenditures" shall have the meaning specified in
Section 4.03 hereof.

"Obligor", when used with reference to bonds
authenticated and delivered hereunder, shall mean every person
who is liable thereon.

<PAGE> 20
"Officers' Certificate" shall mean a certificate signed
by the President or a Vice President and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company, provided, that in respect of Section 5.14, Officers'
Certificate shall mean a certificate signed by the principal
executive officer, principal financial officer or principal
accounting officer of the Company. Each such certificate shall
comply with the requirements of subsection (b) of Section 1.03
hereof and shall include, in addition to the statements, if any,
required by any other applicable provision of this Indenture, a
statement that the conditions precedent, if any, provided for in
this Indenture (including any covenants compliance with which
constitutes a condition precedent) which relate to any action to
be taken by the Trustee at the request or upon the application of
the Company, as the case may be, have been complied with.

"Outstanding" shall mean, as of any particular time,
with respect to bonds issued, authenticated and delivered under
this Indenture (except where the context otherwise specifically
provides), all bonds which theretofore shall have been issued,
authenticated and delivered under this Indenture by the Trustee,
except (a) bonds theretofore or then paid, retired, cancelled or
redeemed and not held for the benefit of any sinking fund and
bonds for the purchase, payment or redemption of which (for
cancellation and not for holding for the benefit of any sinking
fund) cash (or U.S. Government Obligations to the extent
permitted by Sections 11.01 and 11.02 hereof) in the necessary
amount shall have been or shall be then deposited with or held by
the Trustee in trust with irrevocable direction so to apply the
same, (b) bonds then held by the Trustee under any of the
provisions of this Indenture and (c) bonds in lieu of which bonds

<PAGE> 21
have been authenticated and delivered, as provided in Section
2.08 hereof; provided, however, that, in determining the
percentage of the principal amount of bonds Outstanding (or of
bonds of a particular series Outstanding) entitling the holders
thereof to take any action hereunder, or in determining whether
the holders of the required percentage of the principal amount of
bonds Outstanding (or of bonds of a particular series
Outstanding) have concurred in any direction to the Trustee or in
any consent, bonds owned by the Company or by any other Obligor
upon the bonds or by any affiliate of the Company or any other
Obligor upon the bonds, shall be disregarded, except that for the
purpose of determining whether the Trustee shall be protected in
relying on any such direction or consent, only bonds which the
Trustee knows are so owned shall be disregarded. Bonds so owned
which have been pledged in good faith may be regarded as
Outstanding if the pledgee shall establish to the satisfaction of
the Trustee the pledgee's right to vote such bonds and that the
pledgee is not an affiliate of the Company or any other Obligor
upon the bonds. In case of a dispute as to such right, any
decision by the Trustee taken upon the advice of counsel shall be
full protection to the Trustee.

"Plan" shall have the meaning specified in the
Preliminary Statements hereof.

"Prepaid Liens" shall mean and include any mortgage or
other lien, equal or prior to the lien of this Indenture,
securing obligations or indebtedness for the payment, purchase or
redemption of which the necessary Funds shall have been deposited
with the trustee under such mortgage or lien or with the Trustee
hereunder, together with instructions in either case to apply
such funds to the payment, purchase or redemption of such
obligations or indebtedness and, until so applied, to hold such
deposited funds irrevocably in trust for the purpose for which
they shall have been deposited, but subject, if so instructed, to
any applicable provision in such mortgage or lien for the return
of any unclaimed portion of such deposited funds to the Company.

<PAGE> 22
"Prior Lien" shall mean any mortgage or other lien,
including the lien of the First Mortgage Indenture, other than
Excepted Encumbrances, which secures obligations (except
obligations for the purchase, payment or redemption of which cash
(or U.S. Government Obligations to the extent permitted by
Sections 11.01 and 11.02 hereof) in the necessary amount shall
have been or shall be then deposited with and held in trust by,
with irrevocable direction so to apply the same, the Trustee
hereunder or the trustee or other holder of the mortgage or other
lien securing such obligations) of any nature, which is prior to
the lien of this Indenture and which, as of any particular time,
exists upon any of the Trust Estate or upon any property which is
about to become part of the Trust Estate.

"purchased property" shall have the meaning specified
in Section 4.03 hereof.

"Required Percentage" shall have the meaning specified
in Section 5.15 hereof.

"title" shall mean such title, whether fairly deducible
of record or based on prescriptive right, as, in the Opinion of
Counsel, is satisfactory for the needs and operations of the
Company in its business, and counsel in giving such opinion may
disregard irregularities or deficiencies in the record evidence
of title which, in the Opinion of such Counsel, can be cured by
proceedings within the power of the Company or which, in the
Opinion of Counsel, do not materially impair the use of such
property in the operation of the business of the Company, and
such counsel may base such opinion on such counsel's own
investigation and/or upon abstracts, affidavits, certificates,

<PAGE> 23
statements and/or investigations made by persons in whom such
counsel has confidence and/or upon examination of a certificate
or guarantee of title or a policy of title insurance in which
such counsel has confidence. For such purpose a perfected or a
valid and legally protected security interest created pursuant to
the Uniform Commercial Code in effect or other provision of law
in favor of the Company encumbering property consisting of
components of, or partially completed, products, not yet
delivered to the Company, being constructed, manufactured or
otherwise prepared pursuant to a contract between the Company and
another person providing for partial or progress payments by the
Company during the course of such construction, manufacturing or
preparation shall be deemed title to such property to the extent
of the partial or progress payments made by the Company.

"Trustee" shall mean the person named as the "Trustee"
in the first paragraph of this Indenture, or its successor from
time to time as trustee hereunder as provided in Article XIV
hereof.

SECTION 1.03. Compliance Certificates and Opinions.
(a) Each certificate or opinion with respect to compliance with
a condition or covenant contained in this Indenture shall include
(1) a statement that the person making such certificate or
opinion has read such covenant or condition and the definitions,
if any, relevant to such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in
such certificate or opinion are based; (3) a statement that, in
the opinion of such person, he or she has made such examination
or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition
has been complied with; and (4) a statement as to whether or not,
in the opinion of such person, such condition or covenant has
been complied with.

<PAGE> 24
representations with respect to the matters upon which such
officer's certificate or opinion may be based as aforesaid are
erroneous or, in the exercise of reasonable care, should have
known that the same were erroneous. Any such certificate or
opinion may be based, in so far as it relates to factual matters
and information which is in the possession of the Company, upon a
certificate or opinion of, or representations by, an officer or
officers of the Company, unless such officer knows that the
certificate or opinion or representations with respect to the
matters upon which his or her certificate or opinion may be based
as aforesaid are erroneous or, in the exercise of reasonable
care, should have known that the same were erroneous. Any
officer or counsel shall, in the performance of his or her
duties, be fully protected in relying in good faith upon the
books of account or reports made to the Company by any of its
officers, or by an independent public accountant, or by an
appraiser or Engineer selected with reasonable care by the
Company, or in relying in good faith upon other records of the
Company.

SECTION 1.04. Amount to be Deposited to Pay or Redeem
Bonds, etc. Wherever in this Indenture it is provided or
permitted that there be deposited with or held in trust by the
Trustee or any other person cash, money or Funds sufficient or in
the necessary amount (or other words of similar import) to pay or
redeem any bonds, obligations or other indebtedness, the amount
so to be deposited or held shall be the principal amount of such
bonds, obligations or other indebtedness and all unpaid interest
thereon to maturity, unless said bonds, obligations or other
indebtedness are redeemable and are to be redeemed prior to
maturity and there shall be furnished to the Trustee proof
satisfactory to the Trustee that notice of such redemption on the
specified redemption date has been duly given or provision
satisfactory to the Trustee shall be made for the giving of such
notice, in which case the amount of cash, money or Funds so to be
deposited or held shall be the principal amount of such bonds,
obligations or indebtedness and all unpaid interest thereon to
the redemption date, together with the redemption premium, if
any. Notwithstanding the foregoing, for the purpose of
determining the sufficiency of the amount of any U.S. Government
Obligations deposited by the Company under Sections 11.01 or
11.02 hereof, the amount of interest scheduled to be received
with respect to those U.S. Government Obligations, shall be taken
into account in calculating the amount thereof as provided in
said Sections.

SECTION 1.05. Certificate of Resolutions. Any
resolution of the Board of Directors or shareholders of the
Company required or permitted under any provision of this

<PAGE> 25
Indenture to be delivered to the Trustee hereunder shall have
attached thereto a certificate of the Secretary or an Assistant
Secretary of the Company certifying the adoption and the then
effectiveness of such resolution.

SECTION 1.08. Indenture as Deed of Trust in Arizona.
The Company, trustor under this Indenture, expressly agrees
pursuant to the provisions of Arizona Revised Statutes Sections
33-801 to 33-821 as may be in effect from time to time (the,
"Arizona Deed of Trust Law" or the "Law"), that all the real and
personal property comprising the Trust Estate which is located
entirely within the State of Arizona (the "Arizona Trust
Estate"), as more specifically described herein, shall be and
hereby is subject to the Arizona Deed of Trust Law, thereby
conferring upon the Trustee the power of sale as provided therein
with respect to the Arizona Trust Estate. This Indenture, as
filed in Arizona, shall encumber only the Arizona Trust Estate
and shall not purport to encumber any real estate located in one
or more other states. The Company agrees to execute and file in
each county in Arizona in which Arizona Trust Estate is situated,
additional instruments or deeds of trust encumbering the Arizona
Trust Estate necessary to secure performance of this Indenture as
a Deed of Trust under the Deed of Trust Law.

<PAGE> 26
ARTICLE II

THE BONDS

At the option of the Company, bonds may be issued in
one or more series, the bonds of each series maturing on such
dates and bearing interest at such rates as the Board of
Directors prior to the authentication thereof may determine. The
form and terms of each series of bonds authenticated and
delivered hereunder shall be as established by Resolution of the
Board of Directors and the text thereof shall be as set forth in
the Appendices hereto or in the supplemental indenture creating
the series. The bonds of any one or more series may be expressed
in one or more foreign languages, if also expressed in the
English language. The English text shall govern the construction
thereof and both or all texts shall constitute but a single
obligation. The English text of the registered bonds and the
Trustee's certificate of authentication shall be substantially of
the tenor and purport hereinafter recited; provided, however,
that the form and terms of each series, as established by the
Board of Directors, shall specify the descriptive title of the
bonds (which shall contain the words "Second Mortgage Bond"), the
designation of the series, the rate or rates of interest to be
borne by the bonds of that series, the coin or currency,
including composite currencies such as the european currency
unit, in which payable (which need not be coin or currency of the
United States), the date or dates of maturity, the dates for the
payment of interest, record dates for the payment of interest, a
place or places for the payment of principal and interest and a
place or places for the registration and transfer of bonds. Any
series of bonds may also have such omissions or modifications or
contain such other provisions as the Board of Directors may, in
its discretion, cause to be inserted therein including, but not
limited to, the following:

(a) specifying any additional place or places, either
in the United States of America or elsewhere, for the
payment of principal or interest or a place or places for
the registration of bonds or transfer of bonds (provided
that, at the option of the Company, payment of interest may
be made by check mailed to the address of the person
entitled thereto as shown on the registration books of the
Trustee);

<PAGE> 27
(b) expressing any obligation of the Company for the
payment of the principal of the bonds of that series or the
interest thereon, or both, without deduction for taxes or
for the reimbursement of taxes in case of payment by the
bondholders, it being agreed that such obligation may be
limited to taxes imposed by taxing authorities of a
specified class and may exclude from its operation or be
limited to any specified tax or taxes or any portion
thereof;

(g) specifying, if the principal of (and premium, if
any) or interest, if any, on the bonds of the series are to
be payable, at the election of the Company or a holder
thereof, in a coin or currency, including a composite
currency such as the european currency unit, other than that
in which the bonds are stated to be payable, the period or
periods within which, and the terms and conditions upon
which, such election may be made;

<PAGE> 28
(h) specifying, if the amount of payments of principal
of (and premium, if any) or interest, if any, on the bonds
of the series may be determined with reference to an index
based on a coin, currency, including a composite currency
such as the european currency unit, other than that in which
the bonds are stated to be payable, the manner in which such
amounts shall be determined;

(i) reserving to the Company the right to create fully
registered bonds that may be registered as to the payment of
principal to one holder and to the payment of interest to
another holder;

(j) complying with any law or with any rules or
regulations of any stock exchange or conforming to usage;

(k) providing for book entry certificate bonds; and

(l) expressing any other terms and conditions, not
inconsistent with the provisions hereof, upon which such
bonds are to be issued and secured by this Indenture.

SECTION 2.03. Legends on Bonds. Any bond may have
imprinted thereon or included therein any legend or legends
required in order to comply with any law or with any rules or
regulations or with the rules or regulations of any stock
exchange or to conform to general usage, and the Board of
Directors by resolution may at any time amend the form of any

<PAGE> 29
legend to be used on bonds then Outstanding so as to comply with
any such law, rule or regulation or so as to conform to such
usage.

<PAGE> 30
such office. Upon the surrender for transfer of any fully
registered bond, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the transferee or
transferees a new registered bond or new registered bonds of the
same series and of authorized denominations for a like principal
amount. All registered bonds so surrendered for transfer shall
be cancelled by the Trustee and upon a request signed by the
President or a Vice President of the Company a certificate
evidencing the cancellation thereof shall be delivered to the
Company.

<PAGE> 31
SECTION 2.08. Lost, Destroyed or Mutilated Bonds.
Upon receipt by the Company and the Trustee of evidence
satisfactory to them of the theft, loss, destruction, defacement
or mutilation of any bond Outstanding hereunder not then matured
or subject to payment, and of indemnity satisfactory to them, and
upon payment, if the Company or the Trustee shall require it, of
an amount sufficient to reimburse it for stamp tax or other
governmental charge or expense connected therewith, and upon
surrender and cancellation of such bond, if defaced or mutilated,
the Company shall execute, and upon a request signed by the
President or a Vice President of the Company the Trustee shall
authenticate and deliver, a new bond of like tenor and of the
same series in lieu of such stolen, lost, destroyed, defaced or
mutilated bond. In case of the theft, loss, destruction,
defacement or mutilation of any bond Outstanding hereunder which
has matured or is then subject to payment by redemption, purchase
or otherwise, the Trustee and the Company, upon receipt from the
owner of such bond or of evidence satisfactory to them of such
theft, loss, destruction, defacement or mutilation and upon
surrender and cancellation of such bond if defaced or mutilated
and upon receipt of indemnity satisfactory to them, may pay to
the owner of such bond the amount payable thereon without the
execution, authentication and delivery of a substitute bond.

<PAGE> 32
ARTICLE III

BOND FORMS

SECTION 3.01. Forms Generally. The bonds of each
series (other than book entry bonds contemplated by Section 16.01
hereof and other than bonds of Series A, B, D, E, F, X, Y-1
through Y-8 and Z for which forms of bonds are set forth in
Appendices A-1 through A-15) are to be substantially in the forms
set forth in this Article, with such modifications thereof and
additions thereto or eliminations therefrom, authorized or
permitted by this Indenture as to any particular series, as in
the opinion of the Board of Directors at the time may be
necessary or proper.

<PAGE> 33

[GENERAL FORM OF REGISTERED BOND]

[FACE]

EL PASO ELECTRIC COMPANY

SECOND MORTGAGE BOND, SERIES ___
__% DUE _______, ____

No.

The provisions of this bond are continued on the
reverse hereof and such continued provisions shall for all
purposes have the same effect as though fully set forth at this
place.

<PAGE> 34
IN WITNESS WHEREOF, El Paso Electric Company has caused
this bond to be executed in its name by the manual or facsimile
signature of its President or one of its Vice Presidents, and its
corporate seal or a facsimile thereof to be affixed hereto or
imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.

Dated: ______________
EL PASO ELECTRIC
COMPANY

By ___________________________
[Title]

Attest:

_____________________________
Secretary

<PAGE> 35
[REVERSE]

EL PASO ELECTRIC COMPANY

SECOND MORTGAGE BOND, SERIES ___
___% DUE ________, ___

The interest payable on this bond on any interest
payment date will, subject to certain exceptions provided in the
Indenture hereinafter mentioned, be paid to the person in whose
name this bond is registered at the close of business on the
record date, which shall be the ___________ or __________, as the
case may be, next preceding such interest payment date, or, if
such date shall be a legal holiday or a day on which banking
institutions in New York, New York are authorized or required to
close, the next preceding day which shall not be a legal holiday
or a day on which such institutions are so authorized or required
to close.

This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture dated as of _________, 1994, given by the Company to
IBJ Schroder Bank & Trust Company (herein sometimes referred to
as the "Trustee"), and indentures supplemental thereto,
heretofore or hereafter executed, to which indenture and
indentures supplemental thereto (herein referred to collectively
as the "Indenture") reference is hereby made for a description of
the property mortgaged and pledged, the nature and extent of the
security and the rights, duties and immunities thereunder of the
Trustee and the rights of the holders of said bonds and of the
Trustee and of the Company in respect of such security, and the
limitations on such rights. By the terms of the Indenture, the
bonds to be secured thereby are issuable in series which may vary
as to date, amount, date of maturity, rate of interest and in
other respects as in the Indenture provided.

[The bonds of Series __, of which this bond is one, are
not redeemable prior to maturity.]

<PAGE> 36
If redeemed If redeemed
during the during the
12 months General 12 months General
beginning Redemption beginning Redemption
_______, ___ Price* _______, ___ Price*

__________________
* Stated as a percentage of principal amount of the bonds.]

In case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable in the manner and with the effect provided
in the Indenture.

This bond is transferable or exchangeable by the holder
hereof, in person or by attorney duly authorized, at the
corporate trust office of the Trustee, in New York, New York, but
only in the manner and upon the conditions prescribed in the
Indenture, upon the surrender and cancellation of this bond and
the payment of any stamp tax or other governmental charge, and
upon any such transfer or exchange a new registered bond or bonds
of the same series and maturity date and for the same aggregate
principal amount, in authorized denominations, will be issued to
the transferee, or the registered holder, as the case may be, in
exchange herefor. The Company shall not register, exchange or
transfer any bonds of this series during the period of ten days
next preceding any designation of bonds of said series to be
redeemed, if applicable, and, as to any bonds selected for
redemption, from and after the date of such selection. The
Company and the Trustee may deem and treat the person in whose
name this bond is registered as the absolute owner for the
purpose of receiving payment and for all other purposes.

This bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

<PAGE> 37
SECTION 3.02. Trustee's Certificate of Authentication.
Each of the registered bonds (other than book entry bonds
contemplated by Section 16.01 hereof) of each and every series
issued under and secured by this Indenture (whether in temporary
or definitive form) is to bear a certificate of the Trustee
substantially in the following form:

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

IBJ SCHRODER BANK & TRUST
COMPANY,
as Trustee

By __________________________
Authorized Signature

<PAGE> 38
ARTICLE IV

ISSUANCE OF BONDS

SECTION 4.01. Initial Issuance of Bonds. There shall
be, and are hereby created, fourteen initial series of bonds,
each known as and titled as, and subject to the maximum aggregate
principal amount, set forth in the table below.

Maximum Principal
Series Designation Amount

Series A, ___% due ____ $
Series B, ___% due ____ $
Series D, Floating Rate due 2014 $
Series E, Floating Rate due 2014 $
Series F, Floating Rate due 2015 $
Series X, Floating Rate due ____ $
Series Y-1, Floating Rate due ____ $
Series Y-2, Floating Rate due ____ $
Series Y-3, Floating Rate due ____ $
Series Y-4, Floating Rate due ____ $
Series Y-5, Floating Rate due ____ $
Series Y-6, Floating Rate due ____ $
Series Y-7, Floating Rate due ____ $
Series Y-8, Floating Rate due ____ $
Series Z, Floating Rate due ____ $

The Trustee shall authenticate the bonds of Series A,
B, D, E, F, X, Y-1 through Y-8 and Z (up to the maximum aggregate
principal amount set forth above) and deliver the same to or upon
the written order of the President or a Vice-President of the
Company, upon receipt by the Trustee of the Opinions of Counsel,
orders and certificates referred to in Section 4.06 hereof.

SECTION 4.01A. Terms of Initial Issues of Bonds. The
bonds of Series A, B, D, E, F, X, Y-1 through Y-8 and Z shall be
issued in fully registered form without coupons, substantially in
the forms thereof attached as Appendices A-1 through A-15,
respectively. All bonds of said Series shall be due and payable
as set forth in the respective form of bond, shall bear interest
from the date set forth in the respective form of bond, at the
rate as set forth in the respective form of bond, payable at
times set forth in the respective form of bond, and shall be pay-
able, both as to principal and interest, at the office or agency
of the Company in the City of New York, State of New York, in any
coin or currency of the United States of America which at the
time of payment is legal tender for public and private debts,
provided that, at the option of the Company, payment of interest
may be made by check mailed to the address of the person entitled
thereto as shown on the registration books of the Trustee.

<PAGE> 39
The bonds of Series A, B, D, E, F, X, Y-1 through Y-8
and Z are not redeemable except as set forth in the respective
form of bond.

SECTION 4.01B. Certain Covenants for Bonds of
Series A.

(a) Limitation on Redemption to Satisfy Maintenance
Fund. The Company covenants and agrees that, so long as any of
the bonds of Series A are outstanding, and notwithstanding clause
(c) of Section 5.15 hereof, any retirement or redemption of bonds
of said Series shall not be used to satisfy the maintenance and
renewal obligations set forth in said Section.

(b) Dividend Limitation. The Company covenants and
agrees that, so long as any of the bonds of Series A are
outstanding, it will not declare or pay any dividends on its com-
mon stock (except (i) dividends payable in shares of its common
stock, and (ii) dividends payable in cash where concurrently with
the payment thereof an amount in cash equal to the amount of the
cash dividends paid is received by the Company as a capital
contribution or as the proceeds of the issue and sale of shares
of its common stock), or make any other distributions on shares
of its common stock, or purchase or otherwise acquire for value
or retire, or permit any subsidiary to purchase or otherwise
acquire for value, any shares of the Company's common stock
(except in exchange for, or out of the proceeds from the sale of,
other shares of the Company's common stock) if, after giving
effect thereto, the aggregate amount of all such dividends,
distributions, purchases or acquisitions (other than those
excepted above) paid or made subsequent to ___________, 1994 [*]
would exceed the sum of (x) $300 million, and (y) the net income
of the Company for the period from ____________, 1994 [*] to the
date of such dividend, distribution, purchase or acquisition as
determined in accordance with generally accepted accounting
principles.

(c) Special Limitation on Dividends. Notwithstanding
paragraph 4.01B(b) above, the Company covenants and agrees that,
so long as any of the bonds of Series A have been owned
continuously by the initial beneficial owners thereof since the
date of their initial issuance (as evidenced by the registration
books of the Trustee, the records of any applicable depository
company and other information reasonably satisfactory to the
Company which may include certifications from the holders of the
relevant bonds), the Company will not declare any dividends on
its common stock or make any distributions, purchases or
acquisitions described (and not excepted) in paragraph 4.01B(b)
above if the bonds of said Series do not, at such time, have an
Investment Grade Rating (as defined below). If at any time the
bonds of said Series do not have an Investment Grade Rating, the
Company may, with the unanimous consent of the initial beneficial
owners of such bonds who continue to hold such bonds, amend,
modify or waive the covenant contained in the first sentence of

<PAGE> 40
this paragraph. The consent of the Trustee shall not be required
for any such amendment, modification or waiver. The Company will
be deemed to have received such unanimous consent if (i) the
Company offers to redeem the bonds of said Series held by any
dissenting initial beneficial owners thereof at a redemption
price equal to the principal amount of such bonds, together with
accrued interest on such principal amount to the date fixed for
redemption, and (ii) the Company redeems, in accordance with the
provisions of this Indenture, all bonds of said Series which such
dissenting initial beneficial owners thereof have elected to have
so redeemed. "Investment Grade Rating" means a rating of BBB- or
better (or equivalent rating) by at least two (2) of Moody's
Investors Service, Inc., Standard & Poor's Ratings Group and Duff
& Phelps, Inc.

SECTION 4.01C. Certain Provisions for Bonds of Series
D, E, F, X, Y-1 through Y-8 and Z. The bonds of Series D, E, F,
X, Y-1 through Y-8 and Z are issued to secure or partially secure
the payment of the principal and interest due on certain secured
notes or pollution control bonds or the payment of certain
reimbursement and other obligations described therein (in each
case, the "Obligations"). The bonds of said Series will be
registered in the name of the institution, the agent, the letter
of credit provider or the Pollution Control Trustee named therein
(the "Secured Obligation Holder") and will be transferable solely
as provided in the relevant Resolution, Trust Indenture,
Reimbursement Agreement or Term Loan Agreement referred to
therein. The Trustee shall be fully protected in registering the
transfer of the bonds of Series D, E, F, X, Y-1 through Y-8 and Z
in accordance with written directions from the Secured Obligation
Holder. The bonds of Series D, E, F, X, Y-1 through Y-8 and Z
will mature as provided therein and will bear interest at the
same rates as the Obligations which such bonds secure, which
provide for floating interest rates.

The obligation of the Company to make payments with
respect to principal and interest on the bonds of each of said
Series shall be satisfied and discharged to the extent the
Company shall have satisfied and discharged its obligation to pay
principal and interest on the related Obligations which the bonds
of said Series secure. The Trustee may conclusively presume that
the obligations of the Company to make principal, interest and
other payments on the related Obligations which the bonds of said
Series secure have been satisfied and discharged unless and until
the Trustee shall have received a notice of the occurrence of an
event of default with respect to the Obligations or a written
demand from the Secured Obligation Holder (which notice or demand
has not been subsequently rescinded by the Secured Obligation
Holder) as described in the form of bond. The Trustee shall be
fully protected in relying upon any notice or demand from the
Secured Obligation Holder or the absence of such notice or demand
and shall have no duty to inquire into the rights, obligations or
performance of any party with respect to the Obligations. When
such Obligations have been fully satisfied and discharged in

<PAGE> 41
accordance with the terms of the relevant Resolution, Trust
Indenture, Reimbursement Agreement or Term Loan Agreement, the
Secured Obligation Holder will surrender to the Trustee the bonds
of the relevant Series, and upon such release the bonds of said
Series will be deemed to have been paid in full and shall cease
to be entitled to the lien of this Indenture.

The bonds of Series D, E, F, X, Y-1 through Y-8 and Z
will not be redeemable prior to maturity except as set forth in
the forms of bond of such Series set forth in Appendix A-3
through A-15.

So long as any bonds of Series A, B, D, E, F, X, Y-1
through Y-8 or Z are Outstanding, the Company hereby covenants
that it will not amend the First Mortgage Indenture to increase
the percentage test used in Section 4.03 thereof to greater than
sixty-six and two-thirds per centum (66-2/3%).

SECTION 4.02. Issuance of Bonds Upon Retirement of
Bonds Previously Outstanding Hereunder. Bonds of any series
(other than bonds of Series A, B, D, E, F, X, Y-1 through Y-8 and
Z) may be executed by the Company and authenticated and delivered
hereunder by the Trustee from time to time in the manner and
subject to the limitations provided in this Section and in
Articles II and III hereof, for or on account of the payment,
cancellation, redemption or other discharge at, before or after
maturity, of bonds of one or more other series theretofore
authenticated under any provision of this Indenture, in a
principal amount not exceeding the aggregate principal amount of
the bonds of such other series so retired, or for the retirement
of which the necessary Funds have been deposited with the
Trustee, provided, however, (1) that such bonds of such other
series have not been previously used as a basis for the
authentication of any bonds issued under any provision of this
Indenture or for the withdrawal of deposited cash or any other
moneys under any provision of this Indenture, have not been
certified to the Trustee to comply with any maintenance or
renewal requirement contained herein or in any supplemental
indenture, and have not been acquired, redeemed or discharged
with cash applied to any such purpose pursuant to Section 4.04
hereof, Section 8.06 hereof or any maintenance or renewal
provisions contained herein or in any supplemental indenture, and
that no part of the expenditures for the redemption, the payment
or the purchase and cancellation of such bonds has been made out
of any insurance moneys or moneys received from the condemnation,
sale or other disposition of any of the Company's property
subject to the lien of this Indenture or has been used or applied
or certified to the Trustee to comply with any maintenance or
renewal requirement contained herein or in any supplemental
indenture, and (2) that such bonds have not been acquired,
redeemed or discharged through the operation of, or certified to
comply with, any sinking fund or analogous fund created hereafter
pursuant to the terms of this Indenture in respect of any bonds
authenticated and delivered hereunder; but the limitation of this

<PAGE> 42
clause (2) of this proviso shall apply only to the extent to
which the provisions relating to any such fund preclude the
authentication of bonds under this Section on account of bonds so
retired through the operation of, or certified to comply with,
any such fund.

(a) A copy of a Resolution authorizing the execution
and authentication of the bonds proposed to be
authenticated, and stating the principal amount thereof and
the designation of the series in which to be authenticated
and setting forth, either expressly or by reference to a
Resolution theretofore adopted, the terms, provisions and
characteristics of such bonds, all in accordance with and
subject to the restrictions of Articles II and III hereof,
and specifying the principal amount and series designation
of the bonds of such other series for or on account of the
payment, cancellation, redemption or discharge of which such
bonds are authorized to be authenticated; and

(b) One of the following:

<PAGE> 43
provision of this Indenture, have not been certified to the
Trustee to comply with any maintenance or renewal
requirement contained herein or in any supplemental
indenture and have not been acquired, redeemed or discharged
with cash applied to any such purpose pursuant to Section
4.04 hereof, Section 8.06 hereof or any maintenance or
renewal provision contained herein or in any supplemental
indenture; that no part of the expenditures for the
redemption, the payment or the purchase and cancellation of
such bonds has been made out of any insurance moneys or
moneys received from the condemnation, sale or other
disposition of any of the Company's property subject to the
lien of this Indenture or has been used or applied or
certified to the Trustee to comply with any maintenance or
renewal requirement contained herein or in any supplemental
indenture; and that such bonds have not been acquired,
redeemed or discharged through the operation of, or
certified to comply with, any sinking fund or analogous fund
created hereafter pursuant to the terms of this Indenture in
respect of any bonds authenticated and delivered under this
Indenture, or, in the alternative, that the provisions
relating to any such fund do not preclude the use of such
bonds retired through the operation of, or certified to
comply with, any such fund as the basis for the
authentication of bonds under this Section; and

(d) The certificates, orders, opinions, supplemental
indentures and/or other instruments, if any, required by
Sections 4.05 and 4.06 hereof.

SECTION 4.03. Issuance of Bonds Upon the Basis of
Property and Property Additions. Bonds of any series (other than
bonds of Series A, B, D, E, F, X, Y-1 through Y-8 and Z) may be
executed by the Company and authenticated and delivered hereunder
by the Trustee from time to time, in the manner and subject to

<PAGE> 44
the limitations provided in this Section and in Articles II and
III hereof, up to a principal amount equal to thirty-three and
one-third per centum (33-1/3%) of all net expenditures made by
the Company for bondable property acquired by the Company through
construction, purchase, consolidation, or otherwise, at any time
on or after __________, 1994[*]; provided (1) that all bondable
property on account of which bonds are at any time authenticated
under the provisions of this Section shall be subject to the lien
of this Indenture and shall not be subject to any liens or
encumbrances equal or prior in lien to the lien of this
Indenture, except the lien of the First Mortgage Indenture,
Excepted Encumbrances and Prepaid Liens, and (2) that no bonds
shall be authenticated and delivered under the provisions of this
Section for or on account of any expenditures for property which
shall previously have been used as a basis for the authentication
of bonds under any provision of this Indenture or as a basis for
the withdrawal of deposited cash or any other moneys or the
release of any property under any provision of this Indenture, or
which shall have been made out of any insurance moneys or moneys
received from the condemnation, sale or other disposition of any
of the Company's property subject to the lien of this Indenture
or which shall have been certified or used to comply with any
maintenance or renewal requirement contained herein or in any
supplemental indenture, or which shall have been certified or
used to comply with the provisions respecting any sinking fund or
analogous fund created hereafter under the terms of this
Indenture in respect of any bonds authenticated and delivered
hereunder, if and to the extent that the provisions relating to
any such fund preclude the use of such expenditures as a basis
for the authentication and delivery of bonds hereunder.

The term "bondable property" shall mean and include any
property, plant or equipment owned by the Company on
______________, 1994 [*], or constructed or otherwise acquired by
it on or after said date, in either case that constitutes a part
of its permanent and fixed investment in the conduct by it of the
business of generating, manufacturing, purchasing, transmitting,
distributing, supplying and/or selling electricity, for light,
heat, power or other purposes.

<PAGE> 45
titles and interests used primarily and principally in the
exploration, production, storage and transportation of oil or
natural gas and liquid hydocarbons produced in association
therewith (but shall include gas distribution systems and gas
transmission lines interconnecting gas distribution systems, and
gas transmission lines constructed for the purpose of supplying
an electric generating plant or plants of the Company with gas
for fuel supply); and (f) any leasehold interest in property or
permanent improvements constructed on property held by the
Company under lease, but shall include rights-of-way and
easements and any electric or gas transmission or distribution
lines and equipment or appurtenances (other than gas gathering or
transmission lines and equipment and appurtenances of the
character excluded by clause (e) above) thereto located on any
such right-of-way or easement or located upon any street, alley
or public place of any municipality or upon any public highway.

<PAGE> 46
acquisition by the Company, whichever shall be less; provided
that in cases where purchased property is acquired by the Company
without consideration or for a consideration not consisting
wholly of cash payments made or agreed to be made, the fair value
to the Company of such purchased property at the time of its
acquisition by the Company, shall, within the meaning of this
Indenture, be deemed to be a gross expenditure for such property.
The "cost" of any bondable property shall mean the aggregate of
the gross expenditures therefor.

"Net expenditures" for bondable property shall be
determined as of any date as follows: From the total gross
expenditures for bondable property made by the Company during the
period beginning _____________, 1994 [*], and ending on the date
as of which the net expenditures are to be determined, there
shall be deducted (a) the aggregate amount of such gross
expenditures, if any, certified for or during such period to
comply with the requirements of sub-paragraph (b) of Section 5.15
hereof, and (b) the aggregate amount of gross retirements of
property, as hereinafter defined, made during such period after
deducting therefrom the sum of (1) the aggregate amount certified
by the Company to the Trustee as expended during such period for
the purposes specified in sub-paragraphs (b) and (c) of Section
5.15 hereof (excluding the aggregate amount certified under
Section 5.15 as a basis for the withdrawal of cash under said
Section), (2) the aggregate amount paid to the Trustee for or
during said period to comply with the requirements of Section
5.15 and (3) the aggregate amount of all net considerations
received by the Company during said period in connection with the
release of property from the lien of this Indenture under the
provisions of Article VIII hereof.

<PAGE> 47
account on the books and records of the Company, if owned by the
Company at said date, or at the cost thereof if constructed or
acquired by the Company after said date, and (b) all other
reductions made during such period in the amount at which
bondable property owned by the Company on _______________, 1994
[*], or constructed or otherwise acquired by it after said date,
was included as tangible property in utility plant account on the
books and records of the Company at the beginning of such period,
except any reduction resulting from the transfer of any portion
of such amount to some other property account, tangible or
intangible, of the Company. "Gross retirements of property"
shall not include any reductions in the amounts included in
utility plant account as "intangible property" or as
"intangibles" on the books and records of the Company.

(b) An Officers' Certificate setting forth (1) the
gross expenditures for bondable property (other than
purchased property) made by the Company in the period
covered by the certificate (which shall begin on
______________, 1994 [*]), briefly describing such bondable
property and identifying it as such within the definition
thereof contained in this Section, and stating that said
expenditures have been actually made, or a liability
therefor incurred, by the Company, and (2) the gross
expenditures for, and the fair value to the Company at the
time of acquisition (as determined by an Engineer's
Certificate signed by an Engineer or an Independent Engineer
in accordance with the provisions of this Section) of, any
purchased property acquired by the Company during the period
covered by the certificate, a brief description of such
purchased property (identifying the same as purchased
property as defined above), the date of its acquisition, and
the amount and character of the consideration paid therefor,
and (3) the aggregate amount of such gross expenditures, if
any, certified for or during the period covered by the
certificate, to comply with the requirements of sub-
paragraph (b) of Section 5.15 hereof, and (4) (a) the
aggregate amount of gross retirements of property, as
defined above, made during said period, and (b) the sum of

<PAGE> 48
all amounts certified by the Company to the Trustee as
expended during such period for the purposes specified in
sub-paragraphs (b) and (c) of Section 5.15 hereof (excluding
all amounts certified under said Section as a basis for the
withdrawal of cash under said Section), and (c) the
aggregate amount paid to the Trustee for or during said
period to comply with the requirements of Section 5.15
hereof, and (d) the aggregate amount of all net
considerations received by the Company during said period in
connection with the release of property from the lien of
this Indenture under the provisions of Article VIII hereof,
and (5) a computation showing the net expenditures for
bondable property, as defined above, made by the Company
during such period which may be used as the basis for the
authentication of additional bonds, and (6) that all such
bondable property, including such purchased property, if
any, has become subject to the lien of this Indenture and is
not subject to any liens or encumbrances equal or prior in
lien to this Indenture, except the lien of the First
Mortgage Indenture, Excepted Encumbrances and Prepaid Liens,
and (7) that no part of said net expenditures for bondable
property has been previously used as a basis for the
authentication of any bonds under this Indenture or as a
basis for the withdrawal of deposited cash or any other
moneys or the release of any property under any provision of
this Indenture or has been made out of any insurance moneys
or moneys received from the condemnation, sale or other
disposition of any property of the Company subject to the
lien of this Indenture or has been certified or used to
comply with any maintenance or renewal requirement contained
herein or in a supplemental indenture or has been certified
or used to comply with the provisions respecting any sinking
fund or analogous fund created hereafter pursuant to the
terms of this Indenture or, in the alternative, that the
provisions relating to any such fund then existing do not
preclude the use of any such expenditures as a basis for the
authentication of bonds hereunder, and (8) any other facts
and data (not specifically required to be shown in some
other manner) showing that the Company is entitled under the
foregoing provisions of this Section to have authenticated
the bonds requested to be authenticated;

(d) An Engineer's Certificate signed by an Engineer or
an Independent Engineer (conforming to and as may be
required by the provisions of this Section) certifying to

<PAGE> 49
the fair value to the Company, at a date within ninety days
prior to the date of delivery to the Trustee of the
application of the Company for the authentication of bonds,
of any purchased property described in the certificate
required by subparagraph (b) of this Section and also its
fair value to the Company at the time of its acquisition;
and

(e) The certificates, orders, opinions, supplemental
indentures and/or other instruments, if any, required by
Sections 4.05 and 4.06 hereof.

SECTION 4.04. Issuance of Bonds Upon Deposit of Cash
With Trustee; Withdrawal or Application of Deposited Cash. Bonds
of any series (other than bonds of Series A, B, D, E, F, X, Y-1
through Y-8 and Z) may be executed by the Company and be
delivered to the Trustee for authentication, from time to time,
in the manner and subject to the limitations provided in this
Section and in Articles II and III hereof, and shall be
authenticated by the Trustee and delivered by it to or upon the
written order of the President or a Vice-President of the
Company, upon receipt by the Trustee of the following:

(b) An amount of cash equal to the principal amount of
the bonds requested to be authenticated; and

(c) The certificate, orders, opinions, supplemental
indentures and/or other instruments, if any, required by
Sections 4.05 and 4.06 hereof.

<PAGE> 50
principal amount of such bonds, the Trustee shall, on the request
signed by the President or a Vice President of the Company
evidenced by a Resolution and in lieu of the authentication and
delivery of such bonds, pay over to the Company, on the written
order of its President or a Vice-President, an amount of
deposited cash equal to the principal amount of such bonds, but
only upon receipt by the Trustee of an Officers' Certificate
stating that the Company is not then in default under any
provision of this Indenture and of the certificate or
certificates, order or orders, opinion or opinions and other
instruments (if any) of the character required to be given for
the authentication and delivery of such bonds (excepting only the
certificates, orders, opinions, supplemental indentures and/or
other instruments, if any, required by Section 4.05 and by sub-
divisions (a) to (e), inclusive, of Section 4.06) but with such
changes or differences as may be appropriate or required by
reason of the fact that the Company's application is for the
withdrawal of deposited cash instead of for the authentication of
bonds. All cash received by the Trustee under the provisions of
this Section shall, until paid out as aforesaid, be held by it as
part of the Trust Estate, except that all or any part of such
cash may, upon the written direction of the Company, be applied
by the Trustee to the purchase or redemption of bonds, upon the
terms and conditions set forth in Section 8.06 hereof, and all
such cash remaining on deposit with the Trustee at the end of
three years from the date of deposit of the same shall be so
applied by the Trustee.

<PAGE> 51
by the Trustee hereunder or by the trustee under any mortgage
constituting a lien equal or prior to the lien of this Indenture
on any part of the Company's property, and excepting Prepaid
Liens).

The accountant signing such Net Earnings Certificate
shall be an independent public accountant, selected by the
Company and approved by the Trustee in the exercise of reasonable
care, if (a) the aggregate principal amount of the bonds then
proposed to be authenticated hereunder and of other bonds
authenticated and delivered hereunder since the commencement of
the then current calendar year (other than bonds with respect to
which a Net Earnings Certificate is not required by this
Indenture or with respect to which a certificate of an
independent public accountant has previously been furnished) is
ten per centum (10%) or more of the aggregate principal amount of
all bonds at the time outstanding hereunder and (b) the twelve
consecutive calendar months for which the net earnings of the
Company shall be stated in such Net Earnings Certificate are the
period covered by an annual report required to be filed by the
Company. In every other case, the accountant signing such Net
Earnings Certificate may be an accountant who is the chief
accounting officer or other accounting officer or employee of the
Company.

The "net earnings" of the Company shall for any period
mean the earnings of the Company, computed in accordance with
generally accepted accounting principles, determined by deducting
from the total gross earnings and income of the Company derived
from all sources for such period, all operating expenses of the
Company for such period including current maintenance and
repairs, rentals, insurance, taxes other than taxes on income,
and all charges or provisions for depreciation, retirements,
renewals, replacements and/or amortization; and by making such
adjustments, if any, of the resulting amount as may be necessary
to comply with the provisions as to net earnings hereinafter
contained in this Section. Not more than ten per centum (10%) of
the net earnings as finally determined shall consist of the
aggregate of (a) net non-operating income, (b) net operating
revenues derived from the operation by the Company of any
properties other than electric utility properties and (c) net
revenues from any properties not owned by the Company. No
dividends or interest received by the Company from any subsidiary
or affiliated company shall be included in the net earnings of
the Company except to the extent that such dividends or interest
were earned by the paying company in the current or the next
preceding fiscal year of such company. No profits or losses
resulting from the sale or other disposition of capital assets
shall be included in computing the net earnings of the Company.
In case any property owned by the Company at the time of the
authentication of bonds under this Indenture shall not have been
owned by it during any part of any such period or shall have been
owned by it only during a part of such period, then and in every
such case the net earnings or net loss of such property during

<PAGE> 52
said period (including net earnings or net loss during such part
thereof as shall have preceded the acquisition of said property
by the Company) shall be included in computing the net earnings
or net loss of the Company for such period. In case any property
owned by the Company during any part of any such period shall not
be owned by the Company at the time of the authentication of
bonds hereunder, the net earnings or the net loss of the Company
from such property during such period shall be excluded in
computing the net earnings or net loss of the Company. In
computing the net earnings of the Company for any period pursuant
to the provisions of this Section, the amounts to be deducted
from the total gross earnings and income as charges or provisions
for depreciation, retirements, renewals and replacements and/or
amortization, shall be not less in the aggregate than an amount
equal to the Required Percentage of the arithmetical average of
the amount of depreciable property of the Company at the
beginning, and the amount thereof at the end, of such period.

<PAGE> 53
which any bonds then requested to be authenticated are a
part, which will be outstanding under this Indenture upon
the authentication and issue of the bonds then requested to
be authenticated;

(d) An Opinion of Counsel that, upon the
authentication and issue of the bonds then requested to be
authenticated, the aggregate principal amount of all bonds
of all series that will be outstanding under this Indenture,
as shown by the certificate provided for in subdivision (c)
of this Section 4.06, will not exceed the amount which at
that time may be lawfully outstanding hereunder nor exceed
any limitation then existing upon the indebtedness of the
Company under its Amended and Restated Certificate of
Incorporation and amendments thereto or, to the best of such
counsel's knowledge, under any contract, indenture or other
instrument to which the Company is a party or under any
applicable law, and that the aggregate principal amount of
all bonds of any particular series, of which any bonds then
requested to be authenticated are a part, will not exceed
the maximum principal amount, if any, fixed with respect to
the bonds of such series;

<PAGE> 54
Indenture, Excepted Encumbrances and Prepaid Liens, and (2)
all such deeds, conveyances, transfers or instruments of
further assurance as may be necessary for the purpose of
effectually subjecting such bondable property to the direct
lien and operation of this Indenture, together with an
Opinion of Counsel that the same are sufficient for the
purpose, or an Opinion of Counsel that no such deeds,
conveyances, transfers or instruments are necessary for such
purpose;

(g) An Officers' Certificate stating that in the
opinion of the officers signing the certificate all
conditions and requirements of this Indenture relating to
the authentication and delivery of the bonds requested to be
authenticated and delivered have been complied with; or, in
the case of an application for the withdrawal of deposited
cash under the provisions of Section 4.04 hereof, that all
conditions and requirements of this Indenture relating to
the withdrawal of cash requested to be withdrawn have been
complied with; and

To the extent any of the foregoing opinions relate to
enforceability, counsel may express that such opinion is limited
by the following: (i) the rights of any governmental entity
under any statutory lien provisions; (ii) principles of equity
which may limit the availability of certain equitable remedies;
and (iii) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium, and other laws applicable to creditors'
rights or the collection of debtors' obligations generally. Such
opinions may also be expressed to be further subject to the
qualification that the enforceability of certain of the remedial,
waiver and other provisions of this Indenture is limited by all
applicable constitutional, legislative, judicial and
administrative provisions, statutes, regulations, decisions,
rulings and other laws in addition to those described in the
immediately preceding sentence; provided, however, that such laws
do not, in such counsel's opinion, substantially interfere with
the practical realization of the benefits expressed in this
Indenture except for the economic consequences of any procedural
delay which may result from such laws.

<PAGE> 55
ARTICLE V

PARTICULAR COVENANTS OF THE COMPANY

SECTION 5.01. Seizin and Warranty. The Company hereby
covenants that it is lawfully seized and possessed of all the
Trust Estate except any portions of the Trust Estate constituting
a leasehold estate and as to these the Company has a valid and
subsisting leasehold interest; that it will warrant and defend
unto the Trustee, its successors and assigns, for the benefit of
the holders of the bonds, the Trust Estate and the lien and
interest of the Trustee thereon and therein under this Indenture
against all claims and demands of any person whomsoever; that it
will maintain and preserve the lien of this Indenture so long as
any of the bonds authenticated hereunder are Outstanding; that it
has good right and lawful authority to mortgage and pledge the
Trust Estate, as provided in and by this Indenture; and that said
Trust Estate is not subject to any Prior Lien except Excepted
Encumbrances and Prepaid Liens or the lien of the First Mortgage
Indenture.

<PAGE> 57
Company shall fail to maintain such office or offices or agency
or agencies or to give the Trustee written notice of the location
thereof, then in addition to any other remedy or right arising as
a result of the violation of the covenants contained in this
Section, the Company agrees that any such notice, presentation or
demand in respect of said bonds or of this Indenture may be given
or made, unless other provision is expressly made herein, to or
upon the Trustee at its principal corporate trust office, and the
Company hereby authorizes such presentation and demand to be made
to and such notice to be served on the Trustee in either of such
events and the principal of and interest and premium, if any, on
said bonds shall in such event be payable at said office of the
Trustee. Unless otherwise provided in a supplemental indenture
or in any notice of redemption pursuant to Section 7.02 hereof,
the principal of or interest on and premium, if any, on any bonds
issued hereunder shall be payable at the principal corporate
trust office of the Trustee.

(d) Anything in this Section to the contrary
notwithstanding, the agreement to hold sums in trust as provided
in this Section is subject to the provisions of Section 11.03
hereof.

<PAGE> 57
SECTION 5.04. Limitations on Liens; Payment of Taxes.

(b) The Company hereby covenants that it will not
suffer any lien to be hereafter created upon the Trust Estate, or
any part thereof, or the income therefrom, prior or equal to the
lien hereof other than the Excepted Encumbrances, Prepaid Liens
and the lien of the First Mortgage Indenture, and other than, in
the case of property hereafter acquired by the Company, vendors'
liens, purchase money mortgages or trust deeds incurred or
executed in connection with such acquisition and any lien thereon
at the time of acquisition.

<PAGE> 58
such books, records and accounts to be kept, unless in the course
of contest in good faith, in accordance with the valid orders,
rules and regulations of each regulatory body that may from time
to time have jurisdiction in respect thereof and with which the
Company is compelled to comply by any valid provision of law, and
such books, records and accounts shall at all reasonable times be
open to the inspection of such reputable accountants or other
agent of recognized standing as the Trustee may from time to time
designate.

Nothing in this Section contained, however, shall
require the Company to observe or conform to any requirement of
governmental authority or to cause to be paid or discharged, or
to make provision for, any such lien or charge, or any claim or
demand, or to pay any such tax, assessment or governmental
charge, so long as the validity thereof shall be contested by it
in good faith and by appropriate legal proceedings, and nothing
in this Section shall require the Company to pay, discharge or
make provision for any tax, assessment or other governmental
charge, or any claim or demand, the validity of which shall not
be so contested if adequate security for the payment of such tax,
assessment or other governmental charge, or any claim or demand,
and for any damages which may reasonably be anticipated from
failure to pay the same shall be given to the Trustee; and that,
save as aforesaid, it will not suffer any matter or thing whereby
the lien hereof might or could be impaired in contravention of
the provisions hereof.

SECTION 5.05. To Insure. The Company hereby covenants
that it will keep the Trust Estate insured against loss or
damage, to the extent that property of similar character is
usually so insured by companies similarly situated and operating
like properties, to a reasonable amount by insurance companies
believed by the Company to be responsible; any loss (except as to
materials and supplies and except any particular loss of less
than the lesser of Four Million Dollars ($4,000,000) and two per
centum (2%) of the bonds Outstanding hereunder on the date of
such particular loss) to be made payable to the Trustee as its
interest may appear, or to the trustee or other holder of a Prior
Lien, if required by the terms thereof; or that it will, in lieu
of or supplementing such insurance, in whole or in part, adopt
and comply with some other method or plan of protection against
loss or damage, to provide for the payment, consistent with
industry practice, to the Trustee, or to the trustee or other
holder of a Prior Lien, if required by the terms thereof; to the
extent provided in such method or plan, in cash, of the amount
made available under such method or plan by reason of loss or
damage to property (except as to materials and supplies and
except any particular loss less than the lesser of Four Million
Dollars ($4,000,000) and two per centum (2%) of the bonds
Outstanding hereunder on the date of such particular loss).

The Company further covenants that it will, in each
year on or before April 1, deliver to the Trustee a statement of
all such policies of insurance or other methods or plans of

<PAGE> 59
insurance and will promptly advise the Trustee of any
cancellation or other change affecting such policies or methods
or plans of insurance. Such statement shall be signed by the
President or a Vice-President or the Treasurer of the Company and
shall certify that all property of the Company required by this
Section to be insured is insured in the manner and to the extent
herein provided and that loss under such insurance is made
payable as hereinabove provided.

All cash received by the Trustee pursuant to the
provisions of this Section, except payments received on account
of any loss of materials or supplies or on account of any
particular loss of less than the lesser of Four Million Dollars
($4,000,000) and two per centum (2%) of the bonds Outstanding
hereunder on the date of such particular loss, shall, subject to
the requirements of any Prior Lien, be held by the Trustee as a
part of the Trust Estate, and, subject as aforesaid, shall be
disposed of as provided in Section 8.06 hereof.

<PAGE> 60
from time to time will make all needful and proper repairs,
retirements, renewals and replacements of the Trust Estate;
(c) it will not charge to its property, plant and equipment
accounts any expenditures which are properly chargeable to
maintenance or repairs or to any other expense account in
accordance with generally accepted accounting principles; and (d)
it will promptly classify as retired all property that has
permanently ceased to be used or useful in the Company's
business. Nothing in this Section or elsewhere in this Indenture
contained shall be construed to prevent the Company from ceasing
to operate or maintain any of its plants or any other property,
if, in the judgment of the Company, it is advisable not to
operate or maintain the same or if the Company intends to sell or
otherwise dispose of the same and within a reasonable time
endeavors to effectuate such a sale or other disposition;
provided, however, that the operation or maintenance of such
plant or plants or any other property shall not be essential to
the maintenance and continued operation of the rest of the Trust
Estate and the security afforded by this Indenture will not be
substantially impaired by the termination of such operation.

<PAGE> 61
commercial loan rate charged by the Company's primary bank to
large corporate borrowers on the date such advance is made until
paid, and shall be secured hereby, having the benefit of the lien
hereby created in priority to the indebtedness evidenced by the
bonds issued hereunder, but no such advance shall be deemed to
relieve the Company from, or constitute a waiver of any default
hereunder.

SECTION 5.09. To Record and File Indenture and
Supplemental Indenture. The Company hereby covenants that it
will cause this Indenture and all indentures and instruments
supplemental hereto or notices in respect thereof to be promptly
recorded and filed and re-recorded and re-filed in such manner
and in such places as may be provided by law in order to make
effective the lien intended to be created hereby or thereby and
in order fully to preserve and protect the security of the
bondholders and all rights of the Trustee, and that it will pay
or cause to be paid any mortgage recording tax and filing fees in
connection with such recording and filing, and that it will do
and perform all matters or things necessary or expedient to be
done or observed by reason of any law of the United States of
America, or of any state or states thereof, or any other
competent authority, for the purpose of creating, performing and
maintaining the trust hereby created for the security of the
payment of the bonds, and to perform all the obligations hereby
imposed upon the Company.

SECTION 5.10. To Furnish Opinions of Counsel as to
Recording. The Company hereby covenants that it will furnish to
the Trustee (a copy of which will be available to any holder of
bonds upon request):

<PAGE> 62
aforesaid, and (2) such opinion is delivered to the Trustee,
notwithstanding the ten (10) Business Day period mentioned
above, within such time, following the date of the execution
and delivery of this Indenture or such supplemental
indenture, as shall be practicable having due regard to the
number and distance of the jurisdictions in which this
Indenture or such supplemental indenture is required to be
recorded or filed; and

(ii) On or before April 1 of each year, beginning
April 1, ____ [***], an Opinion of Counsel either stating
that, in the opinion of such counsel, such action has been
taken, since the date of the most recent Opinion of Counsel
furnished pursuant to this subsection (ii) or of the initial
Opinion of Counsel furnished pursuant to subsection (i) of
this Section, whichever is later, with respect to the
recording, filing, re-recording and re-filing of this
Indenture and each notice with respect thereto and of each
supplemental indenture and of any appropriate Uniform
Commercial Code financing statements, as is necessary to
maintain the lien thereof and so to preserve and protect
such security and rights, and reciting the details of such
action, or stating that, in the opinion of such counsel, no
such action is necessary to maintain such lien and so to
preserve and protect such security and rights.

<PAGE> 63
there shall be at all times a Trustee hereunder eligible pursuant
to the TIA to act as such, with a combined capital and surplus of
at least Fifty Million Dollars ($50,000,000).

SECTION 5.13. Periodic Examinations as to Maintenance.
The Trustee may, and, if so requested in writing by the holders
of not less than a majority in principal amount of the bonds then
Outstanding and upon being furnished by the Company with the
necessary funds therefor, shall, cause an inspection of the Trust
Estate to be made by an Independent Engineer, for the purpose of
determining the matters hereinafter provided to be set forth in
the report of such Independent Engineer, and that the Company
will grant such Independent Engineer access to the properties,
books and records of the Company for the purpose of such
inspection; but no such inspection shall be made within five
years from the date of filing with the Trustee of the report of
any such inspection previously made hereunder. Such Independent
Engineer, within a reasonable time from the date of its
appointment, shall file with the Trustee and the Company an
Engineer's Certificate signed by such Independent Engineer
stating whether or not the Trust Estate (other than property
which has been retired) is in general being maintained in good
physical condition and in a state of good operating efficiency
for the purposes of the Company and whether or not all of the
Trust Estate that is no longer used or useful in the Company's
business has been duly recorded as retired on the books of the
Company. If such certificate shall state that the Trust Estate
(other than property which has been retired) in general is not
being so maintained, it shall state clearly the character and
extent and the estimated cost of making good such deficiency and
the estimated time reasonably necessary to make good such
deficiency, and, if it shall state that there is a portion of the
Trust Estate that is no longer used or useful in the Company's
business and has not been recorded as retired on the books of the
Company, it shall briefly describe such property and shall state
the aggregate retirement which should be recorded on the books in
respect of such property. Said certificate shall be open to
inspection by any bondholder at any reasonable time. Such
certificate may be modified by a supplemental certificate signed
and filed by the Independent Engineer with the Trustee and with
the Company.

<PAGE> 64
such selection to the Company. Within ten (10) days after
receipt of such notice, the Company shall name one arbitrator and
give notice of such selection to the Trustee, and failure so to
do shall entitle the Trustee to name an arbitrator on behalf of
the Company. The two thus selected shall, within ten (10) days
after the appointment of the arbitrator representing the Company,
select a third arbitrator, but if said arbitrators are unable,
within said ten (10) days, to agree upon such third arbitrator,
then, upon the election of either the Company or the Trustee, any
District Judge of the United States of America for the District
in which the Trustee has its principal corporate trust office may
appoint such third arbitrator, upon application to said District
Judge by either party after five days' notice thereof to the
other party. The board of arbitrators so chosen shall
immediately proceed to hear and determine all matters stated in
the certificate which are in dispute, after giving to the Trustee
and the Company not less than five days' notice in writing of the
time and place of such hearing; and at the time and place
appointed they shall proceed summarily to hear and dispose of the
matters in dispute unless in their judgment the hearing should be
postponed to a later day or days, of which postponement like
notice shall be given, unless such notice is waived by both
parties, in which case the hearing may proceed at an earlier
agreed date. The written decision of a majority of such
arbitrators shall be filed as soon as practicable with the
Trustee and a copy thereof delivered to the Company, and shall be
binding upon the Trustee, the Company and the bondholders.

<PAGE> 65
In the event that any regulatory authority having
jurisdiction over the Company shall determine that the
expenditures for repairs and maintenance necessary to make good
any such maintenance deficiency as shall have been so determined
would be excessive or shall, by order or regulation, prohibit, in
whole or in part, such expenditures for repairs and maintenance,
then, upon filing with the Trustee a certified copy of such
determination, order or regulation, as the case may be, the
Company shall, so long as such determination, order or regulation
remains in effect, be relieved from compliance with the covenants
contained in this Section, in regard to the maintenance of the
Trust Estate, to the extent such expenditures for repairs and
maintenance shall have been held excessive or shall be
prohibited.

SECTION 5.14. Annual Statement by Officers as to
Default. The Company will deliver to the Trustee not less often
than annually, commencing on April 1, 199_ [***], during which
any bonds are Outstanding, a written statement signed by the
principal executive officer, principal financial officer or
principal accounting officer of the Company stating that

(1) a review of the activities of the Company during
such year and of performance under this Indenture and under
the terms of the bonds has been made under his or her
supervision; and

(2) to the best of his or her knowledge, based on such
review, the Company has fulfilled all its obligations under
this Indenture and has complied with all conditions and
covenants on its part contained in this Indenture through
such year, or, if there has been a default in the
fulfillment of any such obligation, covenant or condition,
specifying each such default known to him or her and the
nature and status thereof.

For the purpose of this Section 5.14, default and compliance
shall be determined without regard to any grace period or
requirement of notice provided pursuant to the terms of this
Indenture.

(a) The maintenance and repair of the electric utility
properties of the Company upon which this Indenture is or
shall be a lien;

(b) The construction or acquisition of bondable
property upon which this Indenture is a second lien, subject
only to the lien of the First Mortgage Indenture, Excepted
Encumbrances and Prepaid Liens; or

<PAGE> 66
(c) The retirement, through purchase or payment, of
bonds issued under and secured by this Indenture, or
redemption of any bonds issued under and secured by this
Indenture that are subject to redemption;

amounts which shall not be less in the aggregate than (i) during
each whole calendar year, the Required Percentage of the arithme-
tical average of the amount of depreciable property of the
Company at the beginning, and the amount thereof at the end, of
such calendar year, and (ii) during each portion, less than the
whole, of a calendar year, one-twelfth, multiplied by the number
of whole months included in such portion of a calendar year, of
the Required Percentage of the arithmetical average of the amount
of depreciable property of the Company at the beginning, and the
amount thereof at the end, of such portion of a calendar year.
The term "Required Percentage" shall mean two and one-half per
centum (2.50%) per annum, or such other percentage as at any time
or from time to time hereafter, upon application of the Company,
is authorized or approved by the Securities and Exchange
Commission, or any successor commission thereto, under the Public
Utility Holding Company Act of 1935, as amended. The term
"amount of depreciable property" shall mean as of any date the
amount of bondable property included at such date in plant
accounts on the books of the Company and which is depreciable.
Amounts included in plant acquisition adjustment accounts, or
accounts of similar purpose, shall not be included in the amount
of depreciable property if adequate provision for their
amortization is made by current charges to income or surplus.
The amount of any bonds purchased, paid or redeemed shall be
deemed to be the principal amount thereof for purposes of
Sections 4.02, 5.15(c) and 8.06 hereof.

If in any calendar year the total expenditures for one
or more of the foregoing purposes shall be in excess of the
amount required by this Section to be expended in such year, the
Company shall be entitled to be credited to the extent of such
excess on account of amounts required under the provisions of
this Section to be expended in any subsequent calendar year or
years. For the purposes of this Section the __________ months'
period beginning _____________, 1994 [*] and ending December 31,
1995 shall be deemed to be a calendar year. Gross expenditures
made by the Company on or after ___________, 1994 [*] for
bondable property may be certified to comply with the provisions
of subparagraph (b) of this Section.

<PAGE> 67
withdrawn under any provision of this Indenture, and no expen-
ditures which shall have been previously used or certified or
applied to comply with any requirement of this Section or with
any other provision of this Indenture, shall be certified or be
applied for the purpose of complying with this Section.

On or before the first day of April in each year,
beginning with April 1, 199_ [***], the Company shall deliver to
the Trustee an Officers' Certificate setting forth in reasonable
detail (1) the amount of depreciable property of the Company at
the beginning, and the amount thereof at the end, of the calendar
year next preceding, the arithmetical average of those amounts,
and the amount which is equal to the Required Percentage of such
arithmetical average; (2) the amounts expended during such
preceding calendar year for any one or more of the purposes
specified in subparagraphs (a), (b) and (c) of this Section which
the Company desires and is entitled to have applied to the
requirements of this Section for such year; and (3) such excess
amounts, if any, as may have been expended for any one or more of
such purposes in any preceding calendar year or years (not prior
to __________, 1994 [*]), which the Company desires, and is
entitled, to have applied to the requirements of this Section for
the calendar year next preceding the date of such certificate;
and stating that no part of the amounts expended which the
Company desires to have applied to the requirements of this
Section for such year has been made the basis for the
authentication of bonds or the withdrawal of deposited cash or
any other moneys or the release of property, under any provision
of this Indenture, or has been made with cash applied pursuant to
any provision of this Section or of Section 4.04 or Section 8.06
hereof or has been made out of any insurance moneys or moneys
received from the condemnation, sale or other disposition of any
of the Company's property subject to the lien of this Indenture
or out of cash withdrawn under any provision of this Indenture or
has been previously used or certified or applied to comply with
any requirement of this Section or with any other provision of
this Indenture.

<PAGE> 68
this Section for such year, any cash theretofore paid to the
Trustee under the provisions of this Section and not withdrawn or
applied under the provisions of Section 8.06 hereof, may be
withdrawn by the Company upon delivery to the Trustee of an
Officers' Certificate certifying the expenditures made for said
purpose during such calendar year and showing that they were in
excess of the expenditures required by this Section to be made in
such calendar year and requesting the payment to or on the order
of the Company of an amount of cash equal to the excess of said
expenditures. Any sums received by the Trustee under this
Section and not withdrawn under the provisions of this paragraph
may be withdrawn or applied in accordance with the provisions of
Section 8.06 hereof.

No expenditures certified or applied to the require-
ments of this Section, and no bonds retired (by purchase, payment
or redemption) through expenditures certified or applied to the
requirements of this Section, shall be available as a basis for
the authentication of bonds or the withdrawal of deposited cash
or any other moneys or the release of property under, or to
comply with, any provision of this Indenture.

ARTICLE VI

BONDHOLDERS' LISTS AND REPORTS BY THE COMPANY
AND THE TRUSTEE

SECTION 6.01. Company to Furnish Lists of Names and
Addresses of Bondholders. The Company covenants and agrees that
it will furnish or cause to be furnished to the Trustee between
March 15 and April 1 and between September 15 and October 1 in
each year beginning with the first such period after the date of
this Indenture, and at such other times as the Trustee may request
in writing, a list in such form as the Trustee may reasonably
require containing all the information in the possession or
control of the Company or of its paying agents, as to the names
and addresses of the holders of bonds obtained since the date as
of which the next previous list, if any, was furnished. Any such
list may be dated as of a date not more than fifteen (15) days
prior to the time such information is furnished or caused to be
furnished, and need not include information received after such
date; and, provided, that the Company need not furnish or cause to
be furnished any such list with respect to bonds with respect to
which the Trustee maintains the books for the registration and
transfer of bonds as provided for in Section 2.05 hereof.

<PAGE> 69
SECTION 6.02. Current Lists of Bondholders. (a) The
Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the
holders of bonds (1) contained in the most recent list furnished
to it as provided in Section 6.01 hereof, (2) received by it in
the capacity of paying agent hereunder, or (3) filed with it
within two preceding years pursuant to Section 313(c)(2) of the
TIA. The Trustee may (1) destroy any list furnished to it as
provided in Section 6.01 hereof upon receipt of a new list so
furnished; (2) destroy any information received by it as paying
agent upon delivering to itself as Trustee, not earlier than
forty-five (45) days after an interest payment date of the bonds,
a list containing the names and addresses of the holders of bonds
obtained from such information since the delivery of the next
previous list, if any; (3) destroy any list delivered to itself as
Trustee which was compiled from information received by it as
paying agent upon the receipt of a new list so delivered; and (4)
destroy any information received by it pursuant to the provisions
of paragraph (2) of subsection (c) of Section 313 of the TIA, but
not until two years after such information has been filed with it.

(b) The Company, the Trustee and any paying agent shall
not be held accountable by reason of any disclosure of information
or the mailing of any material required to be disclosed or mailed
by the TIA.

SECTION 6.03. Company's Covenants as to Filing Reports.
The Company shall file with the Trustee and the Securities and
Exchange Commission, and shall cause to be transmitted to the
holders of bonds, such information, documents and other reports,
and such summaries thereof, as may be required pursuant to Section
314 of the TIA at the times and in the manner provided pursuant
thereto; provided that any such information, documents or reports
required to be filed with the Securities and Exchange Commission
pursuant to Section 13 or 15(d) of the Securities and Exchange Act
of 1934, as amended, shall be filed with the Trustee within 15
days after the same is so required to be filed with said
Commission.

SECTION 6.04. Trustee's Reports. (a) The Trustee
shall transmit, on or before April 1 in each year beginning with
the year 199_ [***], so long as any bonds of any series are
Outstanding to the bondholders and to the Company, such reports as
may be required pursuant to, and in the manner required by,
Section 313 of the TIA.

(c) The provisions of this Section which have been made
specifically applicable to the Trustee shall apply to the Trustee
and, if a separate or co-trustee is appointed pursuant to

<PAGE> 70
Section 14.18 hereof, to any separate or co-trustee to the extent
consistent with the rights, powers, duties and obligations
conferred or imposed upon such separate or co-trustee by the
supplemental indenture appointing such separate or co-trustee.
Notwithstanding any of the provisions of this Section which
require any separate or co-trustee appointed pursuant to Section
14.18 hereof to transmit reports to the bondholders and to file
such reports with each stock exchange upon which the bonds are
listed and also with the Securities and Exchange Commission, such
separate or co-trustee may, if it or he or she so elects, furnish
to the Trustee all information concerning such separate or
co-trustee which such separate or co-trustee is required to
report, and the Trustee shall transmit and file such information,
in accordance with the provisions of this Section, on behalf and
at the expense of such separate or co-trustee; provided, however,
that, subject to the provisions of Article XIV hereof, the Trustee
shall not be responsible for the accuracy or completeness of any
such information or for the failure of any such separate or
co-trustee to report or to furnish any such information. In the
event that any such separate or co-trustee shall elect to furnish
information to the Trustee in accordance with the provisions of
this subsection (c), the information required pursuant to this
Section shall be furnished to the Trustee in writing not less than
fifteen (15) days before the report is required to be made by the
Trustee or within sixty (60) days after the taking by any such
separate or co-trustee of any action required to be reported, as
the case may be.

(d) For the purpose of this Section, all bonds which
have been authenticated and delivered and not returned to the
Trustee and cancelled shall be deemed to be Outstanding.

ARTICLE VII

REDEMPTION AND PURCHASE OF BONDS

SECTION 7.01. Exercise of Option to Redeem. Such of
the bonds of any series issued and authenticated hereunder as are,
by their terms, redeemable before maturity may, at the option of
the Company or pursuant to the requirements of this Indenture
(including any supplemental indentures), be redeemed at such
times, in such amounts and at such prices as may be specified
herein or therein and in accordance with the provisions of the
succeeding Sections of this Article.

<PAGE> 71
Unless otherwise provided as to a particular series of
bonds, notice of intention to redeem to the holder of any bond
which is to be redeemed in whole or part shall be mailed by or on
behalf of the Company not less than thirty (30) days before the
date fixed for redemption to such holder at his or her last
address appearing upon the registry books.

Failure to duly give such notice to the holder of any
bond designated for redemption in whole or part shall not affect
the validity of the proceedings for the redemption of any other
bond.

The Trustee, upon a request signed by the President or a
Vice President of the Company evidenced by a Resolution delivered
to the Trustee at least five business days prior to the date on
which notice of redemption must first be published or mailed
(unless a shorter notice shall be accepted by the Trustee as
sufficient) shall, for and on behalf and at the expense of and in
the name of the Company, call for redemption bonds secured hereby
(whether or not the Trustee shall hold at the time of such call
cash sufficient for such redemption).

<PAGE> 72
deposit or direct the application of the cash for the redemption
of said bonds, such failure shall constitute a default under this
Indenture and the said bonds so called for redemption shall
immediately become due and payable, and the holders of said bonds
shall be entitled to receive and the Company shall be obligated to
pay the redemption price of said bonds, including accrued
interest, and thereupon and without the lapse of any period of
time all the remedies provided for in Article IX hereof with
respect to a default in the payment of principal of bonds
Outstanding hereunder shall be available to and enforceable by the
Trustee.

SECTION 7.04. Payment of Bonds Called for Redemption
and Cessation of Lien. All cash deposited by the Company with the
Trustee for the redemption of bonds or which the Company directs
shall be applied by the Trustee to the redemption of bonds shall,
subject to the provisions of Section 11.03 hereof, no longer be a
part of the Trust Estate, but shall be held in trust solely for
account of the holders of the bonds so to be redeemed, and shall
be paid to them, upon presentation and surrender of said bonds
properly endorsed for transfer. On or after the date fixed for
redemption, if the cash necessary for the redemption of the bonds
to be redeemed shall be held by the Trustee for such purpose, such
bonds shall cease to bear interest and shall cease to be entitled
to the lien of this Indenture, and, as respects the Company's
liability thereon, such bonds shall be deemed to have been paid.
If any bond shall be called for redemption in part only, the
notice of redemption shall specify the principal amount thereof to
be redeemed, and such bond shall be presented for cancellation
properly endorsed for transfer at or after the date fixed for the
redemption of said bond so called for redemption, and thereupon
the payment with respect to said bond shall be made upon surrender
of said bond so endorsed, and bonds for the unpaid balance of the
principal amount of the bond so presented and surrendered shall be
executed by the Company and authenticated and delivered by the
Trustee without charge therefor to the holder thereof.

SECTION 7.05. Bonds to be Cancelled. All bonds issued
hereunder paid, retired or redeemed under any of the provisions of
this Indenture or purchased by the Trustee as provided in Section
8.06 hereof shall forthwith be cancelled by the Trustee.

ARTICLE VIII

POSSESSION, USE AND RELEASE
OF MORTGAGED PROPERTY

<PAGE> 73
possession, enjoyment and control of all the properties, rights,
privileges and franchises hereby mortgaged (other than any cash
and securities deposited or pledged hereunder) and shall be
permitted to manage and operate the same, and subject always to
the observance of the covenants in this Indenture with respect
thereto, to receive, receipt for, take, use, enjoy and dispose of
all rents, tolls, earnings, surplus, profits, revenues and income
thereof, to modify and/or terminate its contracts, rights,
permits, privileges and/or franchises and to make changes in the
location of its lines, structures and equipment in the same manner
and with the same effect as if this Indenture had not been made.

The Company may at all times and from time to time so
long as it shall remain in possession of the Trust Estate, without
any release by the Trustee:

(i) demolish, dismantle, tear down or use for scrap any
property in the Trust Estate, or abandon any thereof other
than land and interests in land, provided that such action
is, in the opinion of the President or a Vice President of
the Company (or of the Board of Directors where such action
is material to the Company), in the best interests of the
Company and the value and utility of the Trust Estate as an
entirety and the security for the bonds will not thereby be
impaired;

(ii) sell or otherwise dispose of, free from the lien of
this Indenture, any part of the Trust Estate which, in the
opinion of the President or a Vice President of the Company
(or of the Board of Directors where such action is material
to the Company), shall have become old, worn out, obsolete,
inadequate, unfit, unnecessary or unadapted for use in the
operation of the Company;

<PAGE> 74
impair the usefulness of such property in the conduct of the
Company's business and will not be unduly prejudicial to the
interests of the holders of the bonds.

1. A copy of a Resolution reasonably identifying, and
requesting the release of, the property to be released;

2. An Engineer's Certificate, which shall be made and
signed by an Independent Engineer if required by the
provisions of Section 314(d) of the TIA, which certificate:

(a) shall state that the Company has sold or
otherwise disposed of, or has contracted to sell or
otherwise dispose of, the property to be released,
describing the same in reasonable detail and stating the
fair value thereof, as of a date within ninety days
prior to the delivery of such certificate to the
Trustee, as determined by such Engineer or Independent
Engineer, as the case may be;

(b) shall show, in reasonable detail, the amount
and character of the consideration to be received by the
Company for the property to be released, which
consideration (subject to the provisions of this
Section) may be cash, purchase money obligations secured
by first lien upon the property to be released, or other
property constituting bondable property as defined in
Section 4.03 hereof;

(c) if all or any part of such consideration shall
consist of purchase money obligations secured by first
lien upon the property to be released, shall state that
such purchase money obligations are subject to no liens
of record for the payment of cash except the lien of the
First Mortgage Indenture, Excepted Encumbrances and
Prepaid Liens and, if the property to be released is
electric utility property, that the principal amount of
such purchase money obligations does not exceed sixty-
six and two-thirds per centum (66-2/3%) of the fair
value of such property (as stated in such certificate)
and that such purchase money obligations constitute the
entire amount of the purchase money obligations secured

<PAGE> 75
by lien upon such property and that the principal amount
of all such purchase money obligations, together with
the principal amount of all other purchase money
obligations, if any, then held by the Trustee and
secured by lien upon electric utility property
previously released, does not exceed in the aggregate
fifteen per centum (15%) of the principal amount of the
bonds then outstanding under this Indenture;

(d) if all or any part of the consideration to be
received by the Company for the property to be released
shall consist of other property, shall reasonably
identify such property and shall state the fair value to
the Company of such property as of a date within ninety
days prior to the delivery of such certificate to the
Trustee, as determined by the Engineer or Independent
Engineer, as the case may be, signing the certificate,
and that such property constitutes bondable property as
defined in Section 4.03 hereof;

(e) shall show the consideration to be received by
the Company for the property to be released, taking any
purchase money obligations included in such
consideration at their face value and any property
included in such consideration at the fair value thereof
to the Company as shown by said certificate, is not less
than the fair value (as shown by said certificate) of
the property to be released; and

(f) shall state that the retention of the property
to be released is no longer desirable in the conduct of
the business of the Company or that other property to be
acquired, in the case of exchange, is not less suited to
the needs of the business of the Company than the
property to be released, and in each case, that the
security afforded by this Indenture as to the remaining
Trust Estate will not be impaired by such release.

3. Any cash or purchase money obligations stated in
said certificate to have been or to be received in
consideration for the property requested to be released, or
the certificate of the trustee under any mortgage
constituting a prior lien upon the property to be released
stating that it has received such cash or purchase money
obligations; and, if real estate or other property is
included in the consideration for the property to be
released, such deeds or other instruments of conveyance,
assignment, transfer or release as are sufficient, in the
Opinion of Counsel, to subject the same to the lien of this
Indenture with at least the same degree of priority which it
possessed as a lien on the property to be released, or an
Opinion of Counsel to the effect that no deeds or other
instruments of conveyance, assignment or transfer are
necessary to subject the same to the lien of this Indenture
in the manner stated;

<PAGE> 76
4. An Opinion of Counsel stating in effect that in his
or her opinion any purchase money obligations included in
such consideration and the mortgage or other instrument
securing the same are valid instruments and that such
mortgage or other instrument constitutes a first lien upon
the property released subject to no liens or encumbrances
prior in lien thereto except Excepted Encumbrances and
Prepaid Liens, and that all conditions and requirements of
this Indenture relating to the release of the property
requested to be released have been complied with; and

5. A certified copy of a certificate or order of each
public service commission or other governmental agency of the
United States of America, or of any state or states thereof,
if any, then having jurisdiction over the Trust Estate,
together with an Opinion of Counsel to the effect that such
certificates or orders are such as are required to be
obtained in connection with the sale, exchange or other
disposition of the property to be released and that no
certificate, consent or authorization of any other commission
or agency is required therefor or for the release of said
property, or, in the alternative, an Opinion of Counsel to
the effect that no certificate, consent or authorization of
any such commission or agency is required in the premises.

Any new property acquired by the Company by exchange,
purchase, or otherwise, to take the place of any property released
from the lien of this Indenture, shall forthwith and without
further conveyance be and become subject to the lien and be
covered by this Indenture, but if requested by the Trustee the
Company shall convey the same to the Trustee by proper deeds upon
the trusts and for the purposes of this Indenture.

SECTION 8.03. Eminent Domain. If any property is taken
by condemnation proceedings, the Trustee may accept any award made
therein, if approved by the Company as representing its full
value, and, if such award is accepted by the Trustee, it shall, if
requested by the President or a Vice President of the Company
evidenced by a Resolution, execute and deliver a release of the
property so taken upon receipt by the Trustee of the consideration
therefor, after deducting from the amount thereof the amount of
any assessments levied on property of the Company in connection
with such condemnation proceedings unless some other disposition
thereof is required under the First Mortgage Indenture or in
connection with a Prior Lien. In any such proceedings the Trustee

<PAGE> 77
may be represented by counsel, who may be counsel for the Company,
and either the Company or the Trustee may appeal from any
judgment, order or decree in such proceedings.

SECTION 8.04. Rights of Purchaser of Released Property.
No purchaser in good faith of property purporting to be released
hereunder shall be bound to ascertain the authority of the Trustee
to execute the release or to inquire as to any facts required by
the provisions hereof for the exercise of such authority; nor
shall any purchaser of machinery or equipment be under obligation
to ascertain or inquire into the existence of any fact on which
any such sale is hereby authorized.

SECTION 8.05. Receiver or Trustee May Exercise
Company's Rights. In case any of the Trust Estate shall be in the
possession of a receiver or trustee appointed in judicial
proceedings, the powers hereinbefore conferred upon the Company
with respect to the sale or other disposition of property covered
by this Indenture may be exercised by such receiver or trustee
and, in any such event, the certificates provided by this Article
to be executed by officers of the Company shall be executed by
such receiver or trustee; and if the Trustee shall be in
possession of any of the Trust Estate under any provision of this
Indenture, then such powers may be exercised by the Trustee in its
discretion.

SECTION 8.06. Withdrawal, Use and Application of Cash
Deposited with Trustee. All cash received by the Trustee as
proceeds of released property or of property taken by the power of
eminent domain or as insurance money, and all other cash received
by the Trustee which, under any other provisions of this
Indenture, are required to be paid out or disposed of under the
provisions of this Article, shall be paid over from time to time
by the Trustee to the Company, at its request, to reimburse the
Company to the extent of one hundred per centum of net
expenditures for bondable property (as defined in Section 4.03
hereof) upon which this Indenture is a second lien subject only to
the lien of the First Mortgage Indenture, Excepted Encumbrances
and Prepaid Liens made by it at any time on or subsequent to
__________, 1994 [*], which have not been used as the basis for
the authentication of bonds or the withdrawal of deposited cash
hereunder, and whether prior or subsequent to the receipt of such
cash by the Trustee, or (b) expenditures for repairs or
replacements of or substitutions for property damaged or destroyed
as a result of hazards or risks insured against (to the extent
that insurance moneys arising from such loss are then held by the
Trustee).

Such payments shall be made by the Trustee upon receipt
by it of:

(1) A request in writing signed by the President or a
Vice-President and by the Treasurer or an Assistant Treasurer of
the Company for the payment of the amount of cash stated therein;

<PAGE> 78
(2) An Officers' Certificate setting forth:

(a) that on or subsequent to __________, 1994, the
Company has acquired bondable property (as defined in Section
4.03 hereof), briefly describing the same and separately
describing any purchased property, and showing the gross and
the net expenditures (as defined in Section 4.03 hereof)
therefor, and that such net expenditures were usable, but
have not been used, as a basis for the authentication of
bonds under this Indenture, or has made certain repairs or
replacements of or substitutions for property damaged or
destroyed as a result of hazards or risks insured against
(describing the same with reasonable detail), and that such
bondable property or such repairs, replacements or
substitutions, as the case may be, are subject to the lien of
this Indenture and are not subject to any liens or
encumbrances equal or prior in lien to this Indenture except
the lien of the First Mortgage Indenture, Excepted
Encumbrances and Prepaid Liens;

(b) that the Company has made net expenditures for such
bondable property, or has made expenditures for repairs or
replacements of or substitutions for property damaged or
destroyed as a result of hazards or risks insured against, in
the amount specified in the certificate;

(c) that no part of any such net expenditures for such
bondable property or of any such expenditures for repairs or
replacements of or substitutions for property damaged or
destroyed as a result of hazards or risks insured against, as
the case may be, has been previously used as a basis for the
authentication of any bonds or for the withdrawal of
deposited cash or any other moneys or for the release of any
property under any provision of this Indenture or has been
made out of insurance moneys or out of the proceeds of the
sale, condemnation or other disposition of any property of
the Company subject to the lien of this Indenture, or has
been used or applied or certified to the Trustee to comply
with any maintenance or renewal requirements contained in
this Indenture or to comply with the provisions respecting
any sinking fund or analogous fund created hereafter pursuant
to the terms of this Indenture, or, in the alternative, that
the provisions relating to any such fund do not preclude the
use of any such expenditures as a basis for the withdrawal of
cash under this Section;

(d) that the Company is not, to the knowledge of the
officers signing the certificate, in default in any of the
terms, covenants or conditions of this Indenture; and

<PAGE> 79
(3) (a) An Engineer's Certificate signed by an
Engineer (conforming to the requirements of Section 4.03 hereof)
certifying to the fair value to the Company, at a date within
ninety days prior to the date of the delivery of such certificate
to the Trustee, of the bondable property (except purchased
property if any be included in such bondable property and except
repairs or replacements of or substitutions for property damaged
or destroyed as a result of hazards or risks insured against)
described in the certificate required by subparagraph (2) above
and on account of which cash is requested to be withdrawn; and

(b) An Engineer's Certificate signed by an Engineer or
an Independent Engineer (conforming to and as may be required by
the provisions of Section 4.03 hereof) certifying to the fair
value to the Company, at a date within ninety days prior to the
date of the delivery of such certificate to the Trustee, of any
purchased property (on account of which cash is requested to be
withdrawn) described in the certificate required by subparagraph
(2) above and also the fair value to the Company of such purchased
property at the time of its acquisition;

(4) An Opinion of Counsel (a) stating that in his or
her opinion the Company has acquired substantially good title to,
and has lawful power to own, any bondable property described in
the certificate required by subparagraph (2) above (unless the
bondable property described in such certificate shall have been
covered by an Opinion of Counsel theretofore filed with the
Trustee) and that such bondable property is subject to the lien of
this Indenture and is not subject to any liens or encumbrances
equal or prior in lien to this Indenture, except the lien of the
First Mortgage Indenture, Excepted Encumbrances and Prepaid Liens,
and (b) stating that in his or her opinion all conditions and
requirements of this Indenture relating to the withdrawal of the
cash requested to be withdrawn have been complied with; and

<PAGE> 80
applied by the Trustee (i) to the redemption of bonds of any
series specified in such request (if they are then redeemable)
issued hereunder and Outstanding or (ii) to the purchase of such
bonds at not exceeding their current redemption price if they are
then redeemable, or, if they are not then redeemable, at not
exceeding the price at which they are next thereafter redeemable,
or, if they are never redeemable, at not exceeding 110% of the
principal amount thereof and accrued interest. Any bonds redeemed
or purchased pursuant to the foregoing provisions hereof shall be
cancelled and destroyed by the Trustee and a certificate of such
destruction shall be delivered to the Company and no other bonds
shall be issued, nor shall any deposited cash or any other moneys
be withdrawn, under any provision of this Indenture by reason of
the redemption or purchase and cancellation of such bonds, nor
shall such bonds be applied or certified for the purpose of
complying with any maintenance or renewal requirements or any
other provisions of this Indenture. The Company covenants and
agrees that it will from time to time upon request of the Trustee
immediately pay to the Trustee, to be held and disposed of
pursuant to the provisions of this Section and Article VII hereof,
an amount in cash equal to the accrued interest and the premium,
if any, paid or required to be paid by the Trustee in purchasing
or redeeming bonds of the Company pursuant to the provisions of
this Section.

The provisions of this Section shall not apply to any
cash at any time deposited with the Trustee hereunder for the
purpose of purchasing, redeeming and/or discharging any
obligations secured by any mortgage equal or prior in lien to this
Indenture upon any property now or hereafter owned by the Company,
but all such cash shall be held and applied by the Trustee to the
purposes for which the same were deposited and in accordance with
the terms and provisions under which the same were deposited.

ARTICLE IX

REMEDIES IN EVENT OF DEFAULT

SECTION 9.01. Defaults. The following events are
hereby defined for all purposes of this Indenture (except where
the term is otherwise defined for specific purposes) as
"defaults":

(a) Failure to pay the principal or premium, if any, of
any bond hereby secured when the same shall become due and
payable, whether at maturity, as therein expressed, upon
redemption, or by declaration or otherwise;

(b) Failure to pay interest upon any bond hereby
secured for a period of sixty (60) days after such interest
shall have become due and payable;

<PAGE> 81
(c) Failure to pay interest upon or principal or
premium, if any, whether at maturity, as therein expressed,
or by declaration, or otherwise, of any bonds issued under
the First Mortgage Indenture continued beyond the period of
grace, if any, specified in the First Mortgage Indenture;

(d) Failure to pay any installment of any sinking fund
for a period of sixty (60) days after the same shall have
become due and payable;

(e) The entry by a court of competent jurisdiction of
an order or decree under the Federal Bankruptcy Code or any
other applicable federal or state law of a similar nature
that (i) is an order for relief against the Company in an
involuntary case or proceeding, (ii) appoints a custodian,
receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of or for the Company or any
substantial part of its property or (iii) orders the
liquidation of the Company or winding up of its affairs; and
in the case of (i), (ii) or (iii) the order or decree remains
unstayed and in effect for ninety (90) days; or

(f) The commencement by the Company of a voluntary
case, or the institution by it of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it to
the institution of bankruptcy or insolvency proceedings
against it, or the filing by it of a petition or answer or
consent seeking reorganization, arrangement or relief under
the Federal Bankruptcy Code or any other applicable Federal
or State law of a similar nature, or the consent or
acquiescence by it to the filing of any such petition or the
appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or any substantial part of its
property, or the making by it of an assignment for the
benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due,
or the taking of corporate action by the Company in
furtherance of any such action; or

(g) Failure to perform any other covenant, condition or
agreement contained herein or in any supplemental indenture
or in any bond issued hereunder for a period of ninety (90)
days following the mailing by the Trustee to the Company of a
written demand that such failure be cured, such failure not
having been cured in the meantime. The Trustee may, and if
requested in writing so to do by the holders of a majority in
principal amount of the bonds then Outstanding as provided in
Article X, shall, make such demand.

<PAGE> 82
manner and to the extent provided in Section 6.04(a) hereof,
notice of all defaults known to the Trustee or to such separate or
co-trustee, as the case may be, unless such defaults shall have
been cured before the giving of such notice (the term "defaults"
for the purposes of this Section being hereby defined to be the
events specified in subsections (a), (b), (c), (d), (e), (f) and
(g) of Section 9.01 hereof, provided that, except in the case of
default in the payment of the principal of, premium, if any, or
interest on any of the bonds hereby secured, or in the payment of
any sinking or purchase fund installment, the Trustee shall be
protected in withholding such notice if and so long as the board
of directors, the executive committee, or a trustee committee of
directors and/or Responsible Officers, of the Trustee in good
faith determine that the withholding of such notice is in the
interests of the bondholders and any separate or co-trustee shall
be protected in withholding such notice if and so long as such
separate or co-trustee in good faith determines that the
withholding of such notice is in the interests of the bondholders.

SECTION 9.03. Acceleration of Maturity Date. Upon the
occurrence of a default, the Trustee may, and upon the written
request of the holders of a majority in principal amount of the
bonds then Outstanding shall, by notice in writing mailed or
delivered to the Company, declare the principal of all the bonds
then Outstanding and the interest accrued thereon to be due and
payable immediately; and upon any such declaration the same shall
become and be immediately due and payable, anything contained in
this Indenture or in said bonds to the contrary notwithstanding.
This provision is, however, subject to the condition that if at
any time after the principal of the bonds shall have been declared
due and payable, the holders of a majority in aggregate principal
amount of all bonds then Outstanding, by written notice to the
Company and to the Trustee, may rescind such declaration and annul
such default and its consequences (except defaults under
subparagraphs (a) and (b) of Section 9.01 hereof), but no such
waiver or rescission and annulment shall extend to or shall affect
any subsequent default, or shall impair any right consequent
thereon.

<PAGE> 83
equipment, plants or other properties, buildings and structures of
which possession shall be taken as aforesaid; and likewise may,
from time to time, at the expense of the Trust Estate and of the
Company, make all necessary or proper repairs, renewals,
replacements, alterations, additions, betterments and improvements
thereto and thereon, as to the Trustee may seem judicious. The
Trustee, in case of such entry, shall have the right to manage the
Trust Estate and to carry on the business and to exercise all the
rights, privileges and franchises of the Company, either in the
name of the Company or otherwise as the Trustee shall deem best.
In such case the Trustee shall be entitled to collect and receive
all tolls, rents, revenues, issues, earnings, income, products and
profits of the Trust Estate and of every part thereof whether
accrued at or before the time of such entry or accruing
thereafter, and out of the same pay all proper costs and expenses
of operating the Trust Estate and of conducting the business
thereof, and of all repairs, maintenance, renewals, replacements,
alterations, additions, betterments and improvements and all
payments which may be made for taxes, assessments, insurance and
other proper charges upon the Trust Estate, or any part thereof,
as well as reasonable compensation for its own services and for
the services of all counsel, agents and attorneys properly engaged
and employed by it, and all other expenses and liabilities
incurred without negligence or bad faith on the part of the
Trustee and disbursements made by the Trustee hereunder. The
Trustee shall apply the remainder of the cash arising as aforesaid
after payment of the costs and expenses provided for in the
preceding sentence, subject to the provisions of Section 5.02
hereof, first to the payment of the installments of interest which
are due and unpaid (and accrued interest thereon pursuant to
Section 9.09 hereof), in the order of their maturity, and next, if
the principal of any of said bonds is due, to the payment of the
principal (and accrued interest thereon pursuant to Section 9.09
hereof) pro rata without any preference or priority whatever,
except as aforesaid.

<PAGE> 84
under this Indenture by a suit or suits in equity or at law, for
the specific performance of any covenant or agreement contained
herein, or in aid of the execution of any power herein granted, or
for the foreclosure of this Indenture by nonjudicial exercise of
the Trustee's power of sale in the manner provided in Section 9.06
hereof and as otherwise provided herein, for interest, principal
or premium, or for the enforcement of any other appropriate legal
or equitable remedy, as the Trustee, being advised by counsel,
shall deem most effectual in support of any of its rights or
duties hereunder. The court may appoint a special master to make
any sale under or by virtue of the power of sale herein contained,
or by virtue of judicial proceedings, or of any judgment or decree
of foreclosure.

SECTION 9.06. Notice of Sale and Manner of Making Same.
In the event of any sale under or by virtue of the power of sale
herein contained, or by virtue of judicial proceedings, or by
virtue of any judgment or decree of foreclosure and sale
thereunder, the whole of the Trust Estate, excluding all stocks,
bonds and other securities which may be pledged under this
Indenture, shall be sold in one parcel, as an entirety, unless
such sale as an entirety be impracticable by reason of some
statute or other cause, or unless the holders of a majority in
aggregate principal amount of all the bonds then Outstanding shall
in writing direct the Trustee to cause said Trust Estate, or any
part thereof, to be sold in parcels; in which case, so far as
lawfully may be, the sales shall be made in such parcels as may be
specified in such direction.

Notice of any sale or sales made under the power of sale
herein conferred shall state the time and place when and where the
same is to made, and shall contain a brief description of the
properties to be sold, and shall be published once in each week
(in each case upon any day of the week) for four consecutive weeks
prior to such sale in at least one Daily Newspaper of general
circulation in each of the cities in which the principal of any of
the bonds is payable; and in such other manner as may be required
by law in the jurisdictions in which the Trust Estate is situated,
and such other notice shall also be given as may be required to
comply with any applicable statute, rule of law or order or rule
of any court. The Trustee may adjourn any sale under the power of
sale herein contained, or cause the same to be adjourned, from
time to time, by announcement at the time and place fixed for such
sale or sales; and, without further notice or publication, such
sale may be made at the time and place to which the same shall be
so adjourned, unless otherwise provided by law. In case of any
sale of the Trust Estate, or any part thereof, under the
provisions of this Indenture, the whole of the principal of the
bonds, together with accrued interest thereon, if not previously
due, shall become immediately due and payable, anything contained
in the bonds or in this Indenture to the contrary notwithstanding.

Upon the completion of any sale or sales, the Trustee
shall execute and deliver to the accepted purchaser or purchasers
a deed or deeds of the properties sold, or shall execute and

<PAGE> 85
deliver, in conjunction with the deed or deeds of the court
officer conducting such sale, a conveyance of the interests of the
Trustee in such properties. The Trustee and its successors and
assigns are hereby appointed the true and lawful attorney or
attorneys irrevocably by the Company in its name and stead to
make, execute and deliver all necessary deeds and acts of
conveyance, sale, assignment and transfer of such properties, and
to substitute one or more persons or corporations with like power,
the Company hereby ratifying and confirming all that its said
attorney, attorneys or substitutes shall lawfully do or cause to
be done by virtue hereof. Nevertheless, the Company shall, if so
requested by the Trustee, ratify and confirm such sale by
executing and delivering to the Trustee, or to such purchaser or
purchasers, all such proper assignments, deeds, conveyances and
releases as may be designated in such request. In any deeds or
instruments of conveyance, sale or transfer executed by the
Trustee under this Article, the recitals therein of default,
demand that sale be made, notice of sale, postponement of sale,
terms of sale, sale, purchaser, payment of purchase money and any
other fact or facts affecting the legality or validity of such
sale, shall be effectual and conclusive proof of the facts related
therein as against the Company, its successors and assigns and all
other persons. Any such sale made under or by virtue of this
Indenture, either under the power of sale hereby granted and
conferred or under or by virtue of judicial proceedings, shall
divest all right, title, interest, estate, claim and demand
whatsoever, either at law or in equity, of the Company in, of or
to the properties sold and every part thereof and shall be a
perpetual bar, both at law and in equity, against the Company, its
successors and assigns, and against any and all persons claiming
or who may claim the properties sold, or any part thereof, from,
through or under the Company, its successors or assigns,
respectively.

SECTION 9.06A. Operation of Power of Sale. Upon the
occurrence of a default, should the Trustee determine in its
discretion or be directed pursuant to the terms hereof to
foreclose by exercise of the nonjudicial power of sale herein
contained,

(a) The Trustee shall cause to be recorded, published
and delivered to the Company such notice of default and
notice of Trustee's intention to sell the Trust Estate, as
may be required under the provisions of applicable law in the
jurisdiction(s) in which the Trust Estate is situated
("Notice of Trustee's Sale"). The Trustee shall, without
demand on the Company, after lapse of such time as may then
be required by applicable law and after recordation of such
Notice of Trustee's Sale having been given as and if required
by applicable law, sell the Trust Estate at the time and
place of sale fixed by it in said Notice of Trustee's Sale,
either as a whole, or in separate lots or parcels or items as
the Trustee shall deem expedient pursuant to the terms
hereof, and in such order as it may determine, at public

<PAGE> 86
auction to the highest bidder for cash in lawful money of the
United States payable at the time of sale. The Trustee shall
deliver to such purchaser or purchasers thereof its good and
sufficient deed or deeds conveying the property so sold, but
without any covenant or warranty, express or implied. The
recitals in such deed of any matters or facts shall be
conclusive proof of the truthfulness thereof. Any person,
including, without limitation, the Company, the Trustee or
the bondholders, may purchase at such sale and, if permitted
by applicable law, may credit the amount of the bid against
the amount of any indebtedness secured hereby and held by
such purchaser.

(b) Subject to the provisions hereof and that of
applicable law, the Trustee may postpone the sale of all or
any portion of the Trust Estate by public announcement at
such time and place of sale, and from time to time thereafter
may postpone such sale by public announcement or subsequently
noticed sale, and without further notice make such sale at
the time fixed by the last postponement, or may, in its
discretion, give a new notice of sale.

(c) It is the express understanding and intent of the
parties that as to any personal property interests conveyed
to the Trustee as security under this Indenture, the Trustee
may, consistent with its rights and obligations hereunder and
under applicable law, proceed as to both real and personal
property interests within the Trust Estate in accordance with
the provisions of this Indenture and its rights and remedies
under applicable law in respect to real property, and treat
both real and personal property interests of the Trust Estate
as one parcel or package or security.

SECTION 9.07. Application of Proceeds of Sale. In case
of any sale of the Trust Estate, or any part thereof, whether
under the power of sale hereby granted or pursuant to judicial
proceedings, the purchase money, proceeds or avails, together with
any other sums which may then be held by or be payable to the
Trustee under any of the provisions of this Indenture as part of
the security hereunder, other than sums held in trust for the
payment or redemption of bonds or for the payment of interest
thereon, shall be applied, subject to the provisions of applicable
law in the jurisdiction in which the Trust Estate is situated,
subject to the provisions of Section 5.02 hereof, as follows:

FIRST. To the payment of all taxes, assessments,
governmental charges, Excepted Encumbrances and Prior Liens
permitted under the Indenture, and of all the costs,
expenses, fees, and other charges of such sale, and a
reasonable compensation to the Trustee, its agents and
attorneys, and to the payment of all expenses and liabilities
incurred without negligence or bad faith on the part of the
Trustee and advances or disbursements made by the Trustee in
connection with the management or administration of the
trusts hereby created;

<PAGE> 87
SECOND. To the payment in full of the amount then due
and unpaid either for principal or interest, or for both
principal and interest (and accrued interest thereon pursuant
to Section 9.09 hereof) upon the bonds issued hereunder then
Outstanding, and in case such proceeds shall be insufficient
to pay in full the whole amount so due and unpaid, then to
the payment thereof ratably, according to the aggregate of
such principal and the accrued and unpaid interest, without
preference or priority of any one series over any other
series of bonds, or of principal over interest, or of
interest over principal, or of any installment of interest
over any other installment of interest, except as to the
difference, if any, in the respective rates of such interest;

THIRD. To the payment of any premium (and accrued
interest thereon pursuant to Section 9.09 hereof) on any
bonds called for redemption and with respect to which default
was made in the payment of the redemption price, ratably and
without preference or priority of any one series over any
other, except as to the rates of premium; and

SECTION 9.08. Purchaser at Sale May Use Bonds as
Payment. In case of any sale of the Trust Estate or any part
thereof, subject to the applicable law in the jurisdictions in
which the Trust Estate or such part thereof is situated, the
purchaser, for the purpose of making settlement or payment for the
property purchased, shall be entitled to apply towards the payment
of the purchase price plus the portion of the principal of any
bonds issued under this Indenture plus the portion of any matured
claims for interest to which such bonds and claims for interest
would be entitled upon a distribution among the bondholders of the
proceeds of such sale, after making deductions allowable under the
terms hereof for the costs and expenses of the sale, or otherwise;
but such bonds and claims for interest so applied in payment by
the purchaser shall be deemed to be paid only to the extent so
applied. At any such sale, the Trustee or any holder of any bond
may bid for and purchase such Trust Estate or any part thereof,
and may make payment therefor, as aforesaid, and, upon compliance
with the terms of sale, may hold, retain and dispose of such
properties without further accountability. The receipt of the
Trustee, or of the court officer conducting such sale, shall be
sufficient discharge for the purchase money to any purchaser of
the Trust Estate, or any part thereof, sold as aforesaid; and no
such purchaser, or its representatives, grantees or assigns, upon

<PAGE> 88
becoming entitled to and receiving such receipt, shall be bound to
see to the application of such purchase money upon or for any
trust or purpose of this Indenture or be answerable in any manner
whatsoever for any loss, misapplication or non-application of any
such purchase money, or any part thereof.

SECTION 9.09. Principal and Interest Payable to Trustee
After Default; Proofs of Claim; Judgments. In case default shall
be made in the payment of any installment of interest on any bond
issued hereunder when and as such interest shall become due and
payable, and any such default shall continue for a period of sixty
(60) days, or in case default shall be made in the payment of the
principal of or premium, if any, on any such bond when and as the
same shall become due and payable, whether at the maturity of said
bond or pursuant to notice of redemption or by declaration, as
authorized by this Indenture, or by a sale of the Trust Estate, as
hereinbefore provided, or otherwise, then, upon demand of the
Trustee, the Company will pay to the Trustee, for the benefit of
the holders of the bonds and claims for interest hereby secured
then Outstanding, the principal of all such bonds then due and
payable, together with any premium due thereon, and the whole
amount then due and payable for interest on such bonds, with
interest upon the overdue principal and premium, if any, and
installments of interest at the same rates borne by the respective
bonds which are overdue and in addition thereto such further
amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel,
and, in case the Company shall fail to pay the same forthwith upon
such demand, the Trustee, in its own name and as trustee of an
express trust, shall be entitled to recover judgment against the
Company or any other obligor on the bonds (and in the case of the
pendency of any receivership, insolvency, bankruptcy,
reorganization or other similar proceedings affecting the Company
or any other obligor on the bonds, its creditors or its property)
for the whole amount of such principal, premium and interest
remaining unpaid, as well as judgment for any sums that may be
payable hereunder for fees, charges, expenses and liabilities
(incurred without negligence or bad faith on the part of the
Trustee) of the Trustee hereunder and of the holders of the bonds.

<PAGE> 89
for the whole amount of principal and interest (with interest upon
such overdue principal and installments of interest at the same
rates borne by the bonds which are overdue) which may be or become
owing and unpaid in respect of the bonds and for any additional
amount (including the reasonable compensation, expenses,
disbursements and advances of the Trustee) which may be or become
payable by the Company hereunder, without regard to or deduction
for any amount which may have been or which may thereafter be
received, collected or realized by the Trustee from or out of the
Trust Estate any part thereof or from or out of the proceeds
thereof or any part thereof and to take such other action
including participating as a member in any official creditors
committee appointed in the matter to have the claims of the
Trustee and the holders allowed in such judicial proceedings; but
nothing in this Indenture contained shall authorize the Trustee to
accept or consent to any composition of plan of reorganization on
behalf of any bondholder.

The Trustee, to the extent permitted by law, shall be
entitled to sue and recover judgment or to file and prove such
claim as aforesaid either before or after or during the pendency
of any proceedings for the enforcement of the lien of this
Indenture upon the Trust Estate, and its right to recover such
judgment or to file and prove such claim or claims shall not be
affected by nor be prejudicial to any entry or sale hereunder, or
by or to the exercise of any powers conferred by any of the
provisions of this Indenture, or by or to the foreclosure of the
lien hereof; and in case of a sale of any of the Trust Estate and
of the application of the proceeds of sale to the payment of the
debt hereby secured, the Trustee in its own name and as trustee of
an express trust shall be entitled to enforce payment of and to
receive all amounts then remaining due and unpaid (whether at
stated maturity or otherwise) upon any and all the bonds then
Outstanding hereunder, for the benefit of the holders thereof, and
the Trustee shall be entitled to recover judgment for any portion
of the debt remaining unpaid, with interest. No recovery of any
such judgment by the Trustee and no levy of any execution upon any
such judgment upon any of the Trust Estate or upon any other
property shall in any manner or to any extent affect the lien of
this Indenture upon the Trust Estate or any part thereof, or any
rights, powers or remedies of the Trustee hereunder, or any lien,
rights, powers or remedies of the holders of the said bonds, but
such lien, rights, powers and remedies of the Trustee and of the
bondholders shall continue unimpaired as before.

<PAGE> 90
issued hereunder then Outstanding and claims for interest,
respectively, without any preference or priority of any kind
(except as to the difference, if any, in the respective rates of
such interest and premium, if any), but ratably according to the
amounts due and payable upon such bonds and claims for interest,
respectively, at the date fixed by the Trustee for the
distribution of such cash, on presentation of the several bonds
and their surrender if fully paid or for proper notation if only
partly paid.

All rights of action vested in the Trustee pursuant to
the provisions of this Indenture may be enforced by the Trustee
without the possession of any of the bonds or the production
thereof at any trial or other proceedings relating thereto; and
any suit or proceedings instituted by the Trustee shall be brought
in its name, as Trustee, and any recovery of judgment shall be for
the equal benefit, in accordance with the provisions of this
Indenture, of the holders of the Outstanding bonds entitled
thereto.

SECTION 9.10. Majority of Bondholders Entitled to
Direct Trustee. Anything contained in this Indenture to the
contrary notwithstanding, the holders of not less than a majority
in aggregate principal amount of the bonds Outstanding hereunder,
from time to time, shall have the right, by an instrument or
concurrent instruments in writing, executed as provided in Article
X hereof and delivered to the Trustee, to direct the time, method
and place of conducting any proceeding for any remedy available to
the Trustee, or of exercising any trust or power conferred upon
the Trustee under this Indenture; provided, however, that such
directions shall not be inconsistent with the terms of this
Indenture and that the Trustee shall have the right to decline to
follow any such direction if the Trustee shall be advised by
counsel that the action or proceeding so directed may not lawfully
be taken or if the Trustee in good faith shall by Responsible
Officers determine that the action or proceeding so directed would
involve the Trustee in personal liability or be unjustly
prejudicial to the non-assenting bondholders; and provided further
that the Trustee shall not be required to exercise the power of
entry into or upon all or any part of the Trust Estate conferred
by Section 9.04 hereof or the power of sale conferred by Section
9.05 hereunder.

<PAGE> 91
Trustee or by any holder of any bond to exercise any right or
power arising from any default shall impair any such right or
power or shall be construed to be a waiver of any default or an
acquiescence therein. In case the Trustee shall have proceeded to
enforce any right under this Indenture by foreclosure, entry or
otherwise, and such proceedings shall have been discontinued or
abandoned because of waiver, or for any other reason, or shall
have been determined adversely, then, and in each and every such
case, the Company and the Trustee shall severally and respectively
be restored to their former positions and rights hereunder in
respect of the Trust Estate, and all rights, remedies and powers
of the Trustee shall continue as though no such proceedings had
been taken.

SECTION 9.12. Rights of Bondholders to Sue. No holder
of any bond shall have the right to institute any suit, action or
proceeding at law or in equity upon, or in respect of, this
Indenture, or for the execution of any trust or power hereof, or
for any other remedy under or upon this Indenture, unless (a) the
holders of not less than twenty per centum (20%) in aggregate
principal amount of all the bonds Outstanding hereunder shall
previously have given to the Trustee written notice of the
occurrence of a default and (b) the holders of not less than
twenty per centum (20%) in aggregate principal amount of all the
bonds then Outstanding hereunder shall have tendered to the
Trustee reasonable indemnity against all costs, expenses and
liabilities which might be incurred in or by reason of such
action, suit or proceeding and shall have requested the Trustee in
writing to take action in respect of such default, and the Trustee
shall have declined to take such action or shall have failed so to
do within thirty (30) days thereafter, and (c) no directions
inconsistent with such written request shall have been given
pursuant to Section 9.10 hereof, it being understood and intended
that no holder of any bond shall have any right in any manner
whatever to affect, disturb or prejudice the lien of this
Indenture by his or her action, or to enforce any right hereunder,
except in the manner herein provided, and that all proceedings
hereunder with respect to the lien hereof or to the Trust Estate
shall be instituted, had and maintained in the manner herein
provided and for the equal benefit of all holders of bonds
Outstanding hereunder.

Nothing contained in this Article or elsewhere in this
Indenture shall affect or impair the right of any bondholder,
which is absolute and unconditional, to enforce the payment of the
principal of and premium, if any, and interest on his or her bonds
at and after the maturity thereof as therein expressed or as
accelerated by call for redemption thereof, or the obligation of
the Company, which is also absolute and unconditional, to pay the
principal of and premium, if any, and interest on each of the
bonds issued hereunder to the respective holders at the time and
place expressed in said bonds and in said notice of redemption, if
any.

<PAGE> 92
ARTICLE X

EVIDENCE OF RIGHTS OF BONDHOLDERS

SECTION 10.01. Execution of Requests, etc. by
Bondholders. Any request, declaration, or other instrument, which
this Indenture may require or permit to be signed and executed by
the bondholders, may be in any number of concurrent instruments of
similar tenor and may be signed or executed by such bondholders in
person or by attorneys appointed in writing. Proof of the
execution of any such request or other instrument, or of a writing
appointing any such attorney, or of the holding by any person of
the bonds, shall be sufficient for any purpose of this Indenture
if made in the following manner:

(a) The fact and date of the execution by any person of
such request or other instrument or writing may be proved by
a witness or by a certificate acknowledged before a notary
public or other officer authorized to take acknowledgments;
and

(b) The ownership of registered bonds shall be proved
by the registry books as hereinbefore provided.

Any request, consent or vote of the holder of any bond
shall bind all future holders and owners of said bond or of any
bond issued in exchange or substitution for said bond, in respect
of anything done or suffered by the Company or the Trustee in
pursuance thereof.

SECTION 10.02. Registered Holders Treated as Absolute
Owners. The Company and the Trustee may deem and treat the person
in whose name any bond is registered as the absolute owner of such
bond for the purpose of receiving payment of or on account of the
principal of and interest on such bond and for all other purposes;
and all such payments so made to any such registered holder or
upon his or her order shall be valid and effectual to satisfy and
discharge the liability upon such bond to the extent of the sum or
sums so paid, and neither the Company nor the Trustee shall be
affected by any notice to the contrary.

ARTICLE XI

DEFEASANCE

SECTION 11.01. Release and Discharge of Indenture. If
the Company, its successors or assigns, shall pay and discharge or
provide for the payment and discharge of the entire indebtedness

<PAGE> 93
on all bonds at the time Outstanding hereunder in any one or more
of the following ways, namely:

(a) by paying or causing to be paid the principal of,
and the premium, if any, and interest on bonds, at the time
and in the manner therein and herein expressed; or

(ii) either (aa) a notice of such availability
shall have been given by the Trustee to the holders of
all bonds in accordance with Article VII hereof, or (bb)
provision satisfactory to the Trustee shall have been
made for the giving of such notice, or

(d) by irrevocably depositing with the Trustee, in
trust, cash sufficient, or U.S. Government Obligations the
principal of and the interest on which will provide cash
sufficient without reinvestment (as established by an
Officers' Certificate delivered to the Trustee accompanied by
a report of an independent certified public accountant
setting forth the calculations upon which such Officers'
Certificate is based), to redeem the bonds Outstanding
hereunder, together with interest accrued on such bonds to
the date fixed for redemption, provided that:

(i) notice of the redemption of such bonds shall
have been duly given in accordance with Article VII
hereof and the date fixed for redemption shall have
passed, or

(ii) the Company shall have instructed the Trustee
to make such Funds immediately available to the holders
of such bonds upon such redemption and either (aa)

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notice of the redemption of such bonds (stating that
such Funds are so available) shall have been duly given
in accordance with Article VII hereof, or (bb) provision
satisfactory to the Trustee shall have been made for the
giving of such notice;

and if the Company shall also

(1) pay or cause to be paid all other sums payable
hereunder by the Company or make provision satisfactory to
the Trustee for the payment thereof,

(2) duly perform and comply with all covenants,
agreements, terms and conditions on the part of the Company
contained in this Indenture until the date such defeasance
becomes effective,

(3) in the case of paragraphs (c) or (d) above, deliver
to the Trustee an Opinion of Counsel stating that the holders
of the bonds will not recognize income, gain or loss for
federal income tax purposes as a result of the deposit and
defeasance referred to below and will be subject to federal
income tax on the same amount and in the same manner and at
the same times as would have been the case if such deposit
and defeasance had not occurred, and in the case of legal
defeasance (as defined below) only, such Opinion of Counsel
shall be based on a ruling of the Internal Revenue Service or
other change in applicable federal income tax law, and

(4) deliver to the Trustee an Officers' Certificate and
Opinion of Counsel stating that the foregoing conditions have
been complied with;

then and in that case the Company may at its election specified in
an Officers' Certificate delivered with the Opinions of Counsel
and Officers' Certificate delivered pursuant to clauses (3) and
(4) above (provided that if no such Officers' Certificate is
delivered, the Company shall be deemed to have elected a covenant
defeasance, to the Trustee either (a) be released from its
obligations to comply with any of the covenants contained in this
Indenture, other than the covenants contained in Sections 5.02,
5.07 and 14.10 (and any non-compliance shall not be a default
hereunder, and the rights of the Trustee with respect to a default
under Sections 9.01(a), (b), (c), (d) or (e) shall survive such
covenant defeasance) ("covenant defeasance") or (b) have this
Indenture and all supplemental indentures cancelled and
surrendered by the Trustee ("legal defeasance") upon the request
and at the expense of the Company and shall in any event, cease
and become void (except that the Company's obligations under
Section 5.02(b) and 14.10 shall survive) and the Trustee shall
execute and deliver to the Company such deeds or releases as shall
be requisite to satisfy the lien hereof, and reconvey to the
Company the estate and title hereby conveyed and assigned, and
deliver to the Company any property subject to the lien of this
Indenture which may then be in the possession of the Trustee.

<PAGE> 95
SECTION 11.02. Defeasance of a Series of Bonds. If the
Company, its successors or assigns, shall pay and discharge or
provide for the payment and discharge of the entire indebtedness
on all bonds of a particular series at the time Outstanding
hereunder in either of the following ways, namely:

(a) by irrevocably depositing with the Trustee, in
trust for the pro rata benefit of the holders thereof, prior
to maturity, cash sufficient, or U.S. Government Obligations
the principal of and the interest on which will provide cash
sufficient without reinvestment (as established by an
Officers' Certificate delivered to the Trustee accompanied by
a report of an independent certified public accountant
setting forth the calculations upon which such Officers'
Certificate is based), to pay the principal of, and premium,
if any, on the bonds of such series Outstanding hereunder at
maturity together with interest thereon to maturity; provided
that:

(ii) either (aa) a notice of such availability
shall have been given by the Trustee to the holders of
all bonds of such series in accordance with Article VII,
or (bb) provision satisfactory to the Trustee shall have
been made for the giving of such notice, or

(b) by irrevocably depositing with the Trustee, in
trust, cash sufficient, or U.S. Government Obligations the
principal of and the interest on which will provide cash
sufficient without reinvestment (as established by an
Officers' Certificate delivered to the Trustee accompanied by
a report of an independent certified public accountant
setting forth the calculations upon which such Officers'
Certificate is based), to redeem the bonds of such series
Outstanding hereunder, together with interest accrued on such
bonds to the date fixed for redemption, provided that:

(i) notice of the redemption of the bonds of such
series shall have been duly given in accordance with
Article VII and the date fixed for redemption shall have
passed, or

<PAGE> 96
and if the Company shall also

(1) pay or cause to be paid all other sums payable
hereunder by the Company with respect to such series or
make provisions satisfactory to the Trustee for the
payment thereof,

(2) duly perform and comply with all covenants,
agreements, terms and conditions on the part of the
Company contained in this Indenture with respect to such
series until the date such defeasance becomes effective,

(3) deliver to the Trustee an Opinion of Counsel
stating that the holders of the bonds will not recognize
income, gain or loss for federal income tax purposes as
a result of the deposit and defeasance referred to below
and will be subject to federal income tax on the same
amount and in the manner and at the same times as would
have been the case if such deposit and defeasance had
not occurred, and in the case of legal defeasance for
such series (as defined below) only, such Opinion of
Counsel shall be based on a ruling of the Internal
Revenue Service or other change in applicable federal
income tax law, and

(4) deliver to the Trustee an Officer's
Certificate and Opinion of Counsel stating that the
foregoing conditions have been complied with;

then and in that case the Company may at its election specified in
an Officers' Certificate delivered with the Opinions of Counsel
and Officers' Certificate delivered pursuant to clauses (3) and
(4) above (provided that if no such Officers' Certificate is
delivered, the Company shall be deemed to have elected a covenant
defeasance) to the Trustee either (a) be released from its
obligations to comply with any of the covenants contained in this
Indenture with respect to such series, other than the covenants
contained in Sections 5.02, 5.07 and 14.10 (and any non-compliance
shall not be a default hereunder with respect to such series, and
the rights of the Trustee with respect to a default under Sections
9.01(a), (b), (c), (d) or (e) shall survive such covenant
defeasance) ("covenant defeasance") or (b) be deemed to have been
discharged from all obligations in respect of the bonds of such
series ("legal defeasance for such series"), this Indenture shall
cease to be of further effect with respect to the bonds of such
series and the Trustee, on demand of the Company and at the cost
and expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with
respect to the bonds of such series.

SECTION 11.03. Payment of Deposited Cash to Company.
The U.S. Government Obligations and cash deposited with the
Trustee pursuant to Sections 11.01 or 11.02 hereof and principal
or interest payments on any such U.S. Government Obligations shall
be held in trust, shall not be sold or reinvested, and shall be

<PAGE> 97
applied by it in accordance with the provisions of the bonds and
this Indenture, to the payment, either directly or through any
paying agent as the Trustee may determine, to the persons entitled
thereto, of the principal (and premium, if any) and interest for
whose payment such cash or U.S. Government Obligations were
deposited; provided that, upon delivery to the Trustee of an
Officers' Certificate (accompanied by the report of an independent
certified public accountant setting forth the calculations upon
which such Officers' Certificate is based) establishing that the
cash and U.S. Government Obligations on deposit following the
taking of the proposed action will be sufficient for the purposes
described in Sections 11.01 or 11.02 hereof, as the case may be,
any cash received from principal or interest payments on U.S.
Government Obligations deposited with the Trustee or the proceeds
of any sale of such U.S. Government Obligations, if not then
needed for such purpose, shall, upon receipt by the Trustee of an
Officers' Certificate requesting same, be reinvested in other U.S.
Government Obligations or disposed of as requested in such
Officers' Certificate. In case the owner of any bond entitled to
payment hereunder at any time Outstanding hereunder shall not,
within two years after the maturity date of such bond, or if such
bond shall have been called for redemption, then within two years
after the date fixed for redemption of such bond, claim the amount
on deposit with the Trustee or other depositary for the payment of
such bond, the Trustee or other depositary shall pay over to, or
to the order of, the Company the amount so deposited, upon receipt
of a request signed by the President or a Vice-President of the
Company, and thereupon the Trustee or other depositary shall be
released from any and all further liability with respect to the
payment of such bond and the holder of said bond shall be entitled
(subject to any applicable statute of limitations) to look only to
the Company as an unsecured creditor for the payment thereof;
provided, however, that the Trustee or other depositary before
being required to make any such payment may, at the expense of the
Company, cause notice that said cash has not been so called for
and that after a date named therein any unclaimed balance then
remaining will be returned to the Company, to be published once a
week for two consecutive weeks (not necessarily on the same day in
each week), in a Daily Newspaper of general circulation in each of
the cities wherein any of such bonds are expressed to be payable.

ARTICLE XII

IMMUNITY OF INCORPORATORS, OFFICERS,
SHAREHOLDERS AND DIRECTORS

SECTION 12.01. Exemption from Personal Liability. No
recourse under or upon any obligation, covenant or agreement
contained in this Indenture (including any supplemental indenture)
or in any bond hereby secured, or because of the creation of any
indebtedness hereby secured, or under any judgment obtained
against the Company, or by the enforcement of any assessment or
penalty, or by any legal or equitable proceedings by virtue of any

<PAGE> 98
constitution or statute or rule of law, or otherwise, or under any
circumstances, under or independent of this Indenture, or any
supplemental indenture, shall be had against any incorporator,
shareholder, officer or director of the Company or of any
predecessor or successor company, as such, either directly or
through the Company or any predecessor or successor company, under
any rule of law, statute or constitution or by the enforcement of
any assessment or by any legal or equitable proceeding or
otherwise; it being expressly agreed and understood that this
Indenture and the obligations hereby secured, are solely corporate
obligations, and that no such personal liability shall attach to,
or be incurred by, such incorporators, shareholders, officers or
directors of the Company or of any predecessor or successor
company, or any of them, as such, because of the incurring of the
indebtedness hereby authorized, or under or by reason of any of
the obligations, covenants or agreements contained in this
Indenture or in any of the bonds hereby secured, or implied
therefrom, and that any and all such personal liability of every
name and nature, and any and all such rights and claims against
every such incorporator, shareholder, officer or director, as
such, whether arising at common law or in equity, or created by
rule of law, statute, constitution or otherwise, are expressly
released and waived as a condition of, and as part of the
consideration for, the execution of this Indenture and the issue
of the bonds and interest obligations secured hereby.

ARTICLE XIII

CONSOLIDATIONS, MERGERS, TRANSFERS AND SALES

SECTION 13.01. Merger, Consolidation or Sale. Subject
to the provisions of this Article, nothing contained in this
Indenture shall prevent any lawful consolidation of the Company
with or merger with or into any other corporation, or any
conveyance, transfer or lease, subject to the lien of this
Indenture, of all or substantially all of the Trust Estate, as an
entirety, to any corporation lawfully entitled to acquire or lease
or operate the same. The Company covenants and agrees that such
consolidation, merger, conveyance, transfer or lease shall be upon
such terms as fully to preserve and in no respect to impair the
lien or priority of lien of this Indenture upon the property then
subject hereto, or the security afforded hereby, or any of the
rights or powers of the Trustee or the bondholders hereunder, that
any such lease shall be made expressly subject to immediate
termination by the Company or by the Trustee at any time during
the continuance of a default specified in Section 9.01 hereof, and
also by a purchaser of the property so leased at any sale thereof
hereunder, whether such sale be made under the power of sale
hereby conferred or under judicial proceedings, and that the
provisions and conditions of this Section and the execution of the
supplemental indenture provided for in this Section shall be a
condition to any such consolidation, merger, conveyance, transfer
or lease. The corporation formed by such consolidation, or into

<PAGE> 99
which the Company shall have been merged, or acquiring all or
substantially all of the Trust Estate as an entirety as aforesaid,
shall execute and deliver to the Trustee hereunder (and cause to
be recorded) a supplemental indenture satisfactory to the Trustee
in and by which such corporation shall assume the due and punctual
payment of the principal of, premium, if any, and interest on all
the bonds issued hereunder according to their tenor, and the due
and punctual performance of all the covenants and agreements of
this Indenture to be kept or performed by the Company (subject to
the provisions of Section 13.03 hereof), and shall make
appropriate covenants to protect the lien and priority of lien of
this Indenture, the security afforded hereby, and the rights and
powers of the Trustee and bondholders hereunder. Any lessee under
any such lease shall expressly assume such obligations by
instrument in writing satisfactory to the Trustee. The property
of the other corporation with which the Company shall consolidate
or merge or to which all or substantially all the Trust Estate
shall be conveyed or transferred shall not be subject to any lien
(other than the lien of the First Mortgage Indenture and liens
which, if they existed upon property of the Company, would
constitute Excepted Encumbrances) which after such consolidation,
merger, conveyance or transfer will be equal or prior to the lien
of this Indenture on the property owned by such corporation, upon
completion of such consolidation, merger, conveyance or transfer,
unless (i) the amount of obligations outstanding under and secured
by any such lien or liens prior to the lien hereof shall not
exceed sixty-six and two-thirds per centum (66-2/3%), and (ii) the
amount of obligations outstanding under and secured by any such
lien or liens equal or prior to the lien hereof shall not exceed
one-hundred per centum (100%), of the value of the property
(which, if owned by the Company, would constitute bondable
property as defined in Section 4.03 hereof) of such other
corporation and unless the net earnings, determined as provided in
Section 4.05 hereof, derived from the operation of the property of
such other corporation during a period of twelve consecutive
calendar months ending within ninety days next preceding the date
of such consolidation, merger or conveyance shall have been a sum
at least equal to twice the interest for one year on all
obligations outstanding under and secured by such equal or prior
lien or liens at the time of such consolidation, merger or
conveyance, except obligations for the payment or redemption of
which the necessary funds shall have been deposited with the
trustee under such equal or prior lien or liens or with the
Trustee hereunder, together with instructions to apply such funds
to the payment or redemption of such obligations and, until so
applied, to hold such funds irrevocably in trust for such purposes
(but subject to any applicable provision in the instrument
creating such lien or liens for the return of any unclaimed cash
to the Company).

SECTION 13.02. Successor to Succeed to Rights of
Company. In case the Company shall be consolidated with or merged
into any other corporation, or shall convey or transfer, subject
to the lien of this Indenture, all, or substantially all, the

<PAGE> 100
Trust Estate, as an entirety, the successor corporation formed by
such consolidation, or into which the Company shall have been
merged, or which shall have received a conveyance or transfer, as
aforesaid (such corporation being hereinafter called the successor
corporation), shall succeed to and be substituted for the Company
under this Indenture with the same effect as if it had been named
herein and may thereafter, subject to all the terms, conditions
and restrictions in this Indenture prescribed, exercise all the
powers and rights which the Company might or could exercise prior
to such consolidation, merger or sale, either in the name of such
successor corporation, or of the Company, and may, without in any
way limiting the generality of the foregoing, issue bonds
hereunder to the extent and for the purposes herein provided with
respect to the issuance of bonds by the Company and may also issue
any bonds which the Company was entitled to issue but had not
issued hereunder; and any act, proceeding, resolution or
certificate by any of the terms of this Indenture required or
provided to be done, taken or performed, or made or executed, by
any board, committee, officer or employee of the Company may be
done, taken and performed, or made and executed, with like force
and effect, by the corresponding board, committee, officer or
employee of such successor corporation. All the bonds so issued
shall in all respects have the same legal rank and security as the
bonds theretofore or thereafter issued in accordance with the
terms of this Indenture as though all of said bonds had been
issued at the date of the execution hereof. As a condition
precedent to the execution by such successor corporation and the
authentication and delivery by the Trustee of any such additional
bonds or the withdrawal, use or application of cash or the release
of property on the basis of bondable property of such successor
corporation, or the certification of bondable property of such
successor corporation under any of the provisions of this
Indenture, the supplemental indenture with the Trustee to be
executed and caused to be recorded by the successor corporation as
provided in this Article XIII, or a subsequent supplemental
indenture, shall contain a conveyance or transfer and mortgage in
terms sufficient to subject to the lien hereof (a) all property
owned or thereafter acquired by such successor corporation (except
property of a character similar to that excluded from the lien of
this Indenture) or (b) such property as such successor corporation
is making the basis for the issuance of bonds or the withdrawal,
use or application of cash or the release of property hereunder or
is certifying pursuant to any of the provisions of this Indenture,
and the lien created thereby shall have similar force, effect and
standing as the lien of this Indenture would have if the Company
itself should acquire or construct such property and request the
authentication of bonds or the withdrawal, use or application of
cash or the release of property or certify bondable property
hereunder.

<PAGE> 101
supplemental indenture or, in the case of certain leases, any
written instrument, executed in connection therewith, comply with
the foregoing conditions and provisions of Section 13.01 hereof
and of this Section.

SECTION 13.03. Limitation of After-Acquired Clauses.
In case the Company, pursuant to this Article, shall be
consolidated with or merged into any other corporation or shall
convey or transfer all or substantially all of the Trust Estate as
an entirety subject to the lien of this Indenture, this Indenture
(unless the supplemental indenture executed pursuant to Section
13.01 or 13.02 hereof by the successor corporation, or a
subsequent indenture, conveys and mortgages upon the trusts herein
declared all its property then owned or thereafter acquired,
except property of a character similar to that excluded from the
lien of this Indenture) shall not become or be a lien upon any of
the properties or franchises of the successor corporation except
(a) those acquired by it from the Company and property appurtenant
thereto and property which the successor corporation shall
thereafter acquire or construct which shall form an integral part
or be essential to the use or operation of any property then or
thereafter subject to the lien hereof; and (b) the property
additions to or about the plants or properties of the successor
corporation made and used by it as the basis for the
authentication and delivery of additional bonds or the withdrawal,
use or application of cash or the release of property under this
Indenture or certified as property additions pursuant to any of
the provisions of this Indenture; and (c) such franchises,
repairs, renewals, replacements and additional property as may be
acquired, made or constructed by the successor corporation (1) to
maintain, renew and preserve the franchises covered by this
Indenture, or (2) to maintain the property mortgaged and intended
to be mortgaged hereunder as an operating system or systems in
good repair, working order and condition, or (3) in a rebuilding
or renewal of property subject to the lien hereof damaged or
destroyed, or (4) in replacement of or substitution for machinery,
apparatus, equipment, frames, towers, poles, wire, pipe, tools,
implements or furniture, or any other fixtures or personalty,
subject to the lien hereof, which shall have become old,
inadequate, obsolete, worn out, unfit, unadapted, unserviceable,
undesirable or unnecessary for use in the operation of the
property mortgaged and intended to be mortgaged hereunder.

ARTICLE XIV

CONCERNING THE TRUSTEE

<PAGE> 102
to law or to the requirements of its supervising or examining
authority, then for the purposes of this Section and Section 5.12
hereof the combined capital and surplus of the Trustee shall be
deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.

SECTION 14.02. Acceptance of Trust and Duties by
Trustee. Notwithstanding any provisions contained in the
Indenture to the contrary, the Trustee hereby accepts the trust
created herein. The Trustee and, if a separate or co-trustee is
appointed pursuant to Section 14.18 hereof, such separate or
co-trustee, undertakes, prior to default and after the curing of
all defaults which may have occurred, to perform such duties and
only such duties as are specifically set forth in this Indenture,
and in case of default (which has not been cured) to exercise such
of the rights and powers vested in it by this Indenture, and to
use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs. For the purpose of this
Section 14.02 and of Section 14.03 hereof a default shall be
deemed cured when the act or omission or other event giving rise
to such default shall have been cured, remedied or terminated.

The Trustee, upon receipt of evidence furnished to it by
or on behalf of the Company pursuant to any provision of this
Indenture, will examine the same to determine whether or not such
evidence conforms to the requirements of this Indenture.

SECTION 14.03. Limitation on Liability of Trustee.
Notwithstanding any provisions contained in the Indenture to the
contrary, no provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own willful misconduct,
except that

(a) prior to default hereunder, and after the curing of
all such defaults which may have occurred, the Trustee shall
not be liable except for the performance of such duties as
are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture
against the Trustee, but the duties and obligations of the
Trustee, prior to default and after the curing of all
defaults which may have occurred, shall be determined solely
by the express provisions of this Indenture; and

(b) prior to default hereunder, and after the curing of
all such defaults which may have occurred, and in the absence
of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
certificates or opinions conforming to the requirements of
this Indenture; and

<PAGE> 103
(c) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Trustee unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and

(d) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the holders of not less than
a majority in principal amount of the bonds at the time
Outstanding relating to the time, method and place of
conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture or with respect to any
directions or notice from the Secured Obligation Holder (as
defined in section 4.01C hereof) in connection with
redemption, rescission thereof or any other action in respect
of the bonds of Series X.

No provision of this Indenture shall require the Trustee
to advance or expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if there
is reasonable ground for believing that the repayment of such
funds or liability is not reasonably assured to it.

SECTION 14.04. Recitals are by Company Alone. The
recitals contained herein and in the bonds (except the Trustee's
authentication certificate) shall be taken as the statements of
the Company and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as
to the condition, genuineness, validity or value of the Trust
Estate or any part thereof, or as to the title of the Company
thereto, or to the validity or adequacy of the security afforded
thereby and hereby, or as to the validity of this Indenture or of
the bonds issued hereunder. The Trustee shall be under no
responsibility or duty with respect to the disposition of any
bonds authenticated and delivered hereunder or the application of
the proceeds thereof or the application of any cash paid to the
Company under any of the provisions hereof.

SECTION 14.06. Trustee may Rely on Documents, etc. To
the extent permitted by Sections 14.02 and 14.03 hereof:

<PAGE> 104
(1) the Trustee may rely and shall be protected in
acting upon, or in failing to take action as a result of, any
Resolution, Officers' Certificate, Engineer's Certificate,
Net Earnings Certificate, Opinion of Counsel, resolution,
certificate, opinion, statement, notice, request, consent,
order, appraisal, report, bond, or other paper or document
believed by it to be genuine and to have been signed or
presented by the proper party or parties; and

(2) the Trustee may consult with counsel (who may be of
counsel to the Company) and the opinion of such counsel shall
be full and complete authorization and protection in respect
of any action taken or suffered by it hereunder in good faith
and in accordance with the opinion of such counsel; and

(3) the Trustee shall be under no obligation to
exercise any of the trusts or powers hereof at the request,
order or direction of any of the bondholders, pursuant to the
provisions of this Indenture, unless such bondholders shall
have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be
incurred by it in compliance with such request or direction;
and

(5) the Trustee may perform any duties hereunder either
directly or through agents or attorneys and the Trustee shall
not be responsible for any misconduct or negligence of any
agent or attorney appointed with due care by it hereunder;
and

SECTION 14.07. Trustee's Responsibility for Selection
of Experts. The Trustee shall not be under any responsibility for
the selection or acceptance of any Engineer, Accountant or other
expert for any of the purposes expressed in this Indenture, except
that nothing in this Section contained shall relieve the Trustee
of its obligation to exercise reasonable care with respect to the
selection or acceptance of independent experts who may furnish
certificates to the Trustee pursuant to any provision of this
Indenture.

<PAGE> 105
The Trustee may accept any Resolution as conclusive
evidence of the adoption of such Resolution.

SECTION 14.08. Trustee may be Bondholder, etc. Subject
to the provisions of Sections 14.13 and 14.14 hereof and to the
provisions of applicable law in the jurisdictions in which the
Trust Estate is situated, the Trustee, in its individual or any
other capacity, may become the holder, owner or pledgee of bonds
secured hereby, and may otherwise deal with the Company with the
same rights it would have if it were not Trustee.

SECTION 14.09. Cash to be Held in Trust. Subject to
the provisions of Section 11.03 hereof, all cash received by the
Trustee, whether as Trustee or paying agent, shall, until
withdrawn, used or applied as herein provided, be held in trust
for the purposes for which they were paid but need not be
segregated from other funds except to the extent required by law.
The Trustee may allow and credit to the Company, in the absence of
any default, interest on any cash received by it hereunder at such
rate, if any, as may be agreed upon with the Company from time to
time and as may be permitted by law.

SECTION 14.10. Trustee Compensation and Reimbursement.
The Company covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to, reasonable
compensation for all services rendered by it in the execution of
the trusts hereby created and in the exercise and performance of
any of the powers and duties hereunder of the Trustee, which
compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust, and
the Company will reimburse the Trustee for all appropriate
advances made by the Trustee in connection with the performance of
its duties hereunder and administration of the Trusts created
hereby and will pay to the Trustee from time to time its expenses
and disbursements (including the reasonable compensation and the
expenses and disbursements of persons not regularly in its employ
and, to the extent not prohibited by law, of its counsel). The
Company also covenants to indemnify the Trustee for, and to hold
it harmless against, any loss, liability or expense incurred
without negligence or bad faith on the part of the Trustee,
arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of
defending against any claim of liability in the premises. The
obligations of the Company to the Trustee under this Section shall
survive discharge of this Indenture and resignation or removal of
the Trustee and shall constitute additional indebtedness secured
hereby. Such additional indebtedness shall be secured by a lien
prior to that of the bonds upon the Trust Estate, including all
property or funds held or collected by the Trustee as such.

<PAGE> 106
provided, as the result of allowances made in any reorganization,
bankruptcy, receivership, liquidation or other proceeding or by
any plan of reorganization or readjustment of obligations of the
Company, the Trustee shall be entitled, in priority to the holders
of the bonds, to receive any distributions of any securities,
dividends or other disbursements which would otherwise be made to
the holders of bonds in any such proceeding or proceedings and the
Trustee is hereby constituted and appointed, irrevocably, the
attorney-in-fact for the holders of the bonds and each of them to
collect and receive, in their name, place and stead, such
distributions, dividends or other disbursements, to deduct
therefrom the amounts due to the Trustee, its counsel and other
persons not regularly in its employ on account of services
rendered, advances, expenses and disbursements made or incurred,
or indemnity, and to pay and distribute the balance, pro rata, in
accordance with the provisions of this Indenture, to the holders
of the bonds. The Trustee shall have a lien upon any securities
or other consideration to which the holders of bonds may become
entitled pursuant to any such plan of reorganization or
readjustment of obligations, or in any such proceeding or
proceedings.

SECTION 14.11. Certificate of Officers of Company to
Constitute Proof. Whenever in the administration of the trusts of
this Indenture, prior to a default hereunder and after the curing
of all defaults which may have occurred, the Trustee shall deem it
necessary or desirable that a matter be proved or established
prior to taking or suffering any action hereunder, such matter
(unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the President or
Vice-President and the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Company and delivered
to the Trustee, and such certificate shall be full warrant to the
Trustee for any action taken or suffered by it under the
provisions of this Indenture upon the faith thereof.

SECTION 14.13. Trustee Acquiring Conflicting Interest.
If the Trustee has or shall acquire a conflicting interest within
the meaning of the TIA, the Trustee shall either eliminate such
interest or resign, and absent the elimination of such interest or
resignation may be removed, to the extent and in the manner
provided by, and subject to the provisions of, the TIA and this
Indenture.

<PAGE> 107
SECTION 14.14. Preferential Collection of Claims
Against the Company if Trustee Becomes a Creditor. The Trustee
shall be subject to the provisions of Section 311 of the TIA.

SECTION 14.15. Trustee may Resign. The Trustee may at
any time resign and be discharged of the trusts hereby created by
giving at least thirty (30) days written notice to the Company
specifying the day upon which such resignation shall take effect
and thereafter publishing notice thereof in one Daily Newspaper of
general circulation in New York, New York and in each of the
cities in which the principal of any of the bonds then Outstanding
shall be payable, once in each of three consecutive calendar
weeks, not necessarily on the same day in each week, and such
resignation shall take effect upon the day specified in Section
14.17 hereof. This Section shall not be applicable to
resignations pursuant to Section 14.13 hereof.

SECTION 14.16. Trustee may be Removed. The Trustee may
be removed at any time by an instrument or concurrent instruments
in writing filed with the Trustee and signed and acknowledged by
the holders of a majority in principal amount of the bonds then
Outstanding hereunder or by their attorneys-in-fact duly
authorized and upon payment to such Trustee of all amounts owing
to it hereunder.

In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of Section 14.01
hereof, then the Trustee shall resign immediately in the manner
and with the effect specified in Section 14.15 hereof; and, in the
event that the Trustee does not resign immediately in such case,
then it may be removed forthwith by an instrument or concurrent
instruments in writing filed with the Trustee and either (a)
signed by the President or a Vice-President of the Company with
its corporate seal attested by its Secretary or an Assistant
Secretary or (b) signed and acknowledged by the holders of a
majority in principal amount of the bonds then Outstanding
hereunder or by their attorneys-in-fact duly authorized.

<PAGE> 108
such new trustee, notification thereof being given to the Company
and the retiring trustee; provided, nevertheless, that until a new
trustee shall be appointed by the bondholders as aforesaid, the
Company, by instrument executed by order of its Board of
Directors, by its President or a Vice-President, may appoint a
trustee to fill such vacancy until a new trustee shall be
appointed by the bondholders as herein authorized. The Company
shall publish notice of any such appointment made by it in the
manner provided in Section 14.15 hereof. Any new trustee
appointed by the Company shall, immediately and without further
act, be superseded by a Trustee appointed by the bondholders, as
above provided.

If in a proper case no appointment of a successor
Trustee shall be made pursuant to the foregoing provisions of this
Section within six months after a vacancy shall have occurred in
the office of Trustee, the holder of any bond Outstanding
hereunder or any retiring trustee may apply to any court of
competent jurisdiction to appoint a successor trustee. Said court
may thereupon after such notice, if any, as such court may deem
proper and prescribe, appoint a successor trustee.

Any trustee appointed under the provisions of this
Section in succession to the Trustee shall be a bank, trust
company, corporation or other person eligible under Sections 5.12
and 14.01 hereof.

SECTION 14.18. Separate Trustee or Co-trustee may be
Appointed. At any time or times, for the purpose of conforming to
any legal requirements, restrictions or conditions in any state or
jurisdiction in which any part of the Trust Estate may be located,
the Company and the Trustee shall have power to appoint, and, upon
the request of the Trustee, the Company shall for such purpose
join with the Trustee in the execution, delivery and performance
of all instruments and agreements necessary or proper to appoint,
another corporation or one or more persons approved by the
Trustee, to act either as separate trustee or trustees, or as
co-trustee or co-trustees jointly with the Trustee, of all or any
of the property subject to the lien hereof. In the event that the
Company shall not have joined in such appointment within fifteen
(15) days after the receipt by it of a request so to do, the

<PAGE> 109
Trustee alone shall have power to make such appointment. Any
separate or co-trustee appointed hereunder need not satisfy the
requirements under Sections 5.12 and 14.01.

(1) The rights, powers, duties and obligations
conferred or imposed upon trustees hereunder or any of them
shall be conferred or imposed upon and exercised or performed
by the Trustee or by the Trustee and such separate trustee or
separate trustees or co-trustee or co-trustees jointly, as
shall be provided in the instruments and agreements
appointing such separate trustee or separate trustees or
co-trustee or co-trustees, except to the extent that under
any law of any jurisdiction in which any particular act or
acts are to be performed the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations shall be exercised and
performed by such separate trustee or separate trustees or
co-trustee or co-trustees.

(2) The bonds secured hereby shall be authenticated and
delivered, and all powers, duties, obligations and rights,
conferred upon the Trustee in respect of the custody of all
bonds and of all cash and securities pledged or deposited
hereunder, shall be exercised solely by the Trustee actually
executing this Indenture, or its successor in the trust
hereunder.

(3) The Company and the Trustee, at any time by an
instrument in writing executed by them jointly, may accept
the resignation of or remove any separate trustee or
co-trustee appointed under Section 14.18 hereof or otherwise,
and, upon the request of the Trustee, the Company shall, for
such purpose, join with the Trustee in the execution,
delivery and performance of all instruments and agreements
necessary or proper to make effective such resignation or
removal. In the event that the Company shall not have joined
in such action within fifteen (15) days after the receipt by
it of a request so to do, the Trustee alone shall have power
to accept such resignation or to remove any such separate
trustee or co-trustee. A successor to a separate trustee or
co-trustee so resigned or removed may be appointed in the
manner provided in Section 14.18 hereof.

No trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder.

<PAGE> 110
SECTION 14.20. Notices to Trustee. Any notice, request
or other writing, by or on behalf of the holders of the bonds,
delivered to the Trustee actually executing this Indenture, or its
successor in the trust hereunder, shall be deemed to have been
delivered to all of the then trustees or co-trustees as
effectually as if delivered to each of them. Every instrument
appointing any trustee or trustees, other than a successor to the
Trustee actually executing this Indenture, shall refer to this
Indenture and the conditions in this Article expressed, and upon
the acceptance in writing by such trustee or trustees or
co-trustee or co-trustees, he, they or it shall be vested with the
estates or property specified in such instrument, either jointly
with the Trustee actually executing this Indenture, or its
successor, or separately, as may be provided therein, subject to
all the trusts, conditions and provisions of this Indenture; and
every such instrument shall be filed with the Trustee actually
executing this Indenture, or its successor in the trust hereunder.

SECTION 14.21. Trustee as Agent. Any separate trustee
or trustees, or any co-trustee or co-trustees, may at any time by
an instrument in writing constitute the Trustee, or its successor
in the trust hereunder, his, her, their or its agent or
attorney-in-fact, with full power and authority, to the extent
which may be permitted by law, to do all acts and things and
exercise any and all discretion authorized or permitted by him,
her, them or it, for and in behalf of him, her, them or it, and in
his, her, their or its name. In case any separate trustee or
trustees or co-trustee or co-trustees, or a successor to any of
them, shall die, become incapable of acting, resign or be removed,
all the estates, property, rights, powers, trusts, duties and
obligations of said separate trustee or co-trustee, so far as
permitted by law, shall vest in and be exercised by the Trustee,
or its successor in the trust hereunder, without the appointment
of a new trustee or successor to such separate trustee or co-
trustee.

SECTION 14.22. Successor Trustee to Execute Acceptance
and Become Vested with Estate. Any successor trustee appointed
hereunder shall execute, acknowledge and deliver to his, her or
its predecessor trustee, and also to the Company, an instrument
accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act,
deed or conveyance, shall become fully vested with all the
estates, properties, rights, powers, trusts, duties and
obligations of his, her or its predecessor in trust hereunder,
with like effect as if originally named as trustee herein; but the
trustee ceasing to act shall nevertheless, on the written request
signed by the President or a Vice President of the Company, or of
the successor trustee, or of the holders of ten per centum (10%)
in principal amount of the bonds then Outstanding hereunder,
execute, acknowledge and deliver such instruments of conveyance
and further assurance and do such other things as may reasonably
be required for more fully and certainly vesting and confirming in

<PAGE> 111
such successor trustee all the right, title and interest of the
Trustee to which he or she or it succeeds, in and to the Trust
Estate and such rights, powers, trusts, duties and obligations,
and the trustee ceasing to act shall also, upon like request, and
subject to its rights under the last paragraph of Section 14.17,
pay over, assign and deliver to the successor trustee any cash or
other property subject to the lien of this Indenture, including
any pledged securities which may then be in his, her or its
possession. Should any deed, conveyance or instrument in writing
from the Company be required by the new trustee for more fully and
certainly vesting in and confirming to such new trustee such
estates, properties, rights, powers, trusts and duties, any and
all such deeds, conveyances and instruments in writing shall, on
request, be executed, acknowledged and delivered by the Company.

SECTION 14.23. Consolidation or Merger of Trustee. Any
corporation into which the Trustee may be merged or with which it
may be consolidated or any corporation resulting from any merger
or consolidation to which the Trustee shall be a party or any
corporation to which substantially all the corporate trust
business of the Trustee may be transferred, provided such
corporation shall be eligible under the provisions of Sections
5.12 and 14.01 hereof and qualified under Section 14.13 hereof,
shall be the successor trustee under this Indenture, without the
execution or filing of any paper or the performance of any further
act on the part of any other parties hereto, anything herein to
the contrary notwithstanding. In case any of the bonds
contemplated to be issued hereunder shall have been authenticated
but not delivered, any successor to the Trustee may, subject to
the same terms and conditions as though such successor had itself
authenticated such bonds, adopt the certificate of authentication
of the original Trustee or of any successor to it as trustee
hereunder, and deliver the said bonds so authenticated and in case
any of said bonds shall not have been authenticated any successor
to the Trustee may authenticate such bonds either in the name of
any predecessor hereunder or in the name of the successor trustee,
and in all such cases such certificate shall have the full force
which is anywhere in said bonds or in this Indenture provided that
the certificate of the Trustee shall have; provided, however, that
the right to authenticate bonds in the name of the original
Trustee shall apply only to its successor or successors by merger
or consolidation as aforesaid.

ARTICLE XV

CONCERNING PLEDGED SECURITIES

<PAGE> 112
be under no obligation to accept a certificate for any shares of
stock or any bonds, debentures, notes or other securities or
obligations, or to cause or permit a transfer thereof to be made
to it, if, in the opinion of the Trustee, such acceptance or
transfer would involve it in, or render it liable to be subjected
to, any liability or expense, unless the Trustee shall be
indemnified by the Company to its satisfaction for so doing.

All certificates for shares of stock shall at the time
of the delivery thereof be duly endorsed for transfer or
accompanied by appropriate instruments of assignment and transfer
duly executed in blank. The Trustee, from time to time, may, but
shall be under no obligation to, transfer into its name as
Trustee, or into the name or names of its nominee or nominees, any
or all such shares of stock pledged hereunder and may cause all or
any securities held by it hereunder to be registered in its name
or in the name of its nominee or nominees. The bonds or
obligations which may be pledged or deposited under any provision
of this Indenture may be in temporary or definitive form and may
be in such denomination or denominations as the Company may elect,
and if bonds, may be coupon bonds, registered or unregistered as
to principal, or registered bonds without coupons. All coupon
obligations which may be pledged or deposited with the Trustee
under any provision of this Indenture shall, except as hereinafter
provided, have attached thereto at the time of such pledge or
deposit all unmatured interest coupons thereunto appertaining, and
all registered obligations without coupons and all coupon
obligations registered as to principal shall be duly endorsed by
the registered owner thereof or by his or her attorney thereunto
duly authorized, or shall be accompanied by duly executed
assignment or transfer powers. If any unmatured coupon or coupons
appertaining to any such coupon obligation shall be missing at the
time of such pledge or deposit, the Trustee may, nevertheless,
accept such obligation without such coupon or coupons in case a
sum of cash equal to the face amount of the missing coupon or
coupons shall be deposited with the Trustee hereunder.

SECTION 15.02. Voting. Prior to the occurrence of any
default, as defined in Section 9.01 hereof, and after default if
such default shall have been cured, or shall have been waived as
provided in Section 9.03 hereof, the Company shall have the right,
except as hereinafter limited, to vote any shares of stock pledged
hereunder with the same force and effect as though such shares
were not so pledged; and from time to time, in case said shares of
stock pledged hereunder shall have been transferred into the name
of the Trustee or its nominee or nominees, the Trustee, upon a
request signed by the President or a Vice President of the
Company, evidenced by a Resolution delivered to the Trustee, shall
execute and deliver, or cause to be executed and delivered, to the
Company proper proxies for voting said stock. During the
continuance of a default, the Trustee shall vote any shares of
stock pledged hereunder in accordance with the directions of the
issuer thereof unless otherwise directed by holders of at least a
majority in principal amount of all bonds Outstanding hereunder.

<PAGE> 113
The Company shall not use or vote or permit to be used
or voted any stock pledged hereunder for any purpose contrary to
its covenants herein contained or otherwise inconsistent with the
provisions or purposes of this Indenture.

SECTION 15.03. Income Before Event of Default. Prior
to the occurrence of any default, and after default if such
default shall have been cured, or shall have been waived as
provided in Section 9.03 hereof, the Company shall be entitled to
receive, when and as paid, all interest paid on any obligations
pledged hereunder and all cash dividends paid or declared out of
earnings or surplus derived from operations in respect of any
stock pledge hereunder; and from time to time, upon a request
signed by the President or a Vice President of the Company, the
Trustee shall forthwith deliver to it as they mature the coupons
for such interest, in order that the Company may receive payment
thereof for its own use, and shall deliver to the Company, if
necessary, suitable orders in favor of the Company or its
designated nominee or nominees, for the payment of such interest
and such cash dividends, and the Company may collect such interest
and dividends, and the Trustee shall at once pay over to the
Company any such interest or dividends which may have been
collected or received by it; provided, however, that:

(1) The Company shall not sell, assign or transfer any
coupon or right to such interest or dividends delivered or
assigned to it;

(3) Until actually paid or discharged, every such
coupon or right to interest or dividends shall in all
respects remain subject to the lien of this Indenture; and

Prior to the occurrence of any default, and after
default if such default shall have been cured, or shall have been
waived as provided in Section 9.03 hereof, the Trustee may pay
over to the Company any interest received by it on any bond or
other security pledged hereunder, or any cash dividend received on
any share of stock pledged hereunder, if satisfied that such
interest or cash dividend was paid or declared out of earnings or
surplus derived from operations; and upon being furnished by the

<PAGE> 114
Company with a certificate of an accountant or firm of accountants
(who or which may be in the employ of or under retainer by the
Company) selected by the Company and satisfactory to the Trustee
showing that such interest or cash dividend was paid or declared
out of earnings or surplus derived from operations or that there
were such earnings or surplus available for the purpose, as shown
by the books of the company paying or declaring such interest or
dividend, shall pay over such interest or cash dividend to the
Company. Such accountant's certificate shall also contain the
statements required by Section 1.03(a). Prior to the occurrence
of any default, and after default if such default shall have been
cured, or shall have been waived as provided in Section 9.03, the
Trustee shall be under no obligation to make any investigation and
shall incur no liability to any bondholder or the Company on
account of any action it may take, or refrain from taking, in the
premises.

SECTION 15.04. Payments Upon Dissolution, etc. of
Issuer of Pledged Securities. The Trustee shall be entitled to
receive all cash paid on account of the principal of any bonds or
other securities held in pledge by it, and all stock dividends on
any shares of stock so held in pledge, and all cash at any time
payable in respect of shares of stock, bonds or other securities
so held in pledge, on dissolution, liquidation, reorganization,
merger or consolidation of the issuer thereof, or derived from any
sale, condemnation or other disposition of the property of such
issuer, and all securities issued in respect of any securities
held in pledge upon any reorganization, recapitalization, merger
or consolidation of the issuer thereof or otherwise issued in
exchange for the pledged securities. The shares of stock and all
cash so received shall be held by the Trustee, in trust, as
additional security for the payment of the principal of and
interest on the bonds issued under this Indenture, and such cash
shall be disposed of by the Trustee pursuant to the provisions of
Section 8.06.

SECTION 15.05. Renewal and Refunding. Prior to the
occurrence of any default, and after default if such default shall
have been cured, or shall have been waived as provided in Section
9.03 hereof, the Trustee, upon the written request signed by the
President or a Vice President of the Company, shall consent to the
extension or renewal at the same or a lower or a higher rate of
interest or dividend of any securities which may then be held by
the Trustee in pledge hereunder, and shall consent to the
extension or renewal of any mortgages or liens securing such
securities; but if the Company shall then be in default hereunder,
the Trustee may, subject to the provisions of Article XIV hereof,
give such consent without the request of the Company; and, in any
case, the Trustee shall, prior to the occurrence of any default,
and after default if such default shall have been cured, or shall
have been waived as provided in Section 9.03 hereof, do and
perform all acts and things which may be requisite and necessary
to give effect to any such renewal or extension so consented to,
including the delivery and exchange of pledged securities or the

<PAGE> 115
presentation of the same for appropriate endorsement; and the
Trustee, upon the written request signed by the President or a
Vice President of the Company, may, prior to the occurrence of any
default, and after default if such default shall have been cured,
or shall have been waived as provided in Section 9.03 hereof,
consent to the exercise by the Company of any other right, power
or remedy, with respect to such securities, to which the Company
may be entitled as owner thereof, including the consent to any
plan of reorganization or recapitalization and the acceptance of
new or different securities thereunder in exchange for the pledged
securities and including also the cancellation of any securities
or shares of the stock of a corporation which has conveyed its
property to the Company and subjected it to the lien hereof,
provided that the exercise of such right, power or remedy, as
requested by the Company, shall not, in the Opinion of Counsel, be
prejudicial to the bonds hereby secured; and the Company covenants
that in exercising any such right, power or remedy, if permitted
so to do by the Trustee, it will not in any way act prejudicially
to the interests or rights of the Trustee or the holders or
registered owners of the bonds.

ARTICLE XVI

SUPPLEMENTAL INDENTURES

SECTION 16.01. Supplemental Indentures to be Executed
for Specified Purposes. The Company and the Trustee, from time to
time and at any time, may enter into one or more supplemental
indentures hereto, upon receipt by the Trustee of a Resolution
authorizing the execution thereof and requesting the Trustee to
execute the same, for any one or more of the following purposes:

(a) To describe more fully or to amplify or correct the
description of any property hereby conveyed or pledged or
intended to be conveyed or pledged, or to assign, convey,
mortgage, pledge, transfer and set over unto the Trustee,
subject to such liens or other encumbrances, if any, as shall
be therein specifically described, additional property of the
Company, for the equal and proportionate benefit and
security, except as otherwise expressly provided herein, of
the holders and owners of all bonds at any time issued and
Outstanding under this Indenture;

(b) To specify definitive limitations on the total
authorized amount of any additional series of bonds issued
hereunder;

<PAGE> 116
(c) To provide additional or other restrictions and
limitations upon the issue of any new series of bonds or
additional covenants and undertakings of the Company with
respect thereto;

(d) To set forth the form and substance of any
additional bonds, and the terms, provisions and conditions
thereof;

(e) To provide the terms and conditions of the exchange
of bonds of one series for bonds of another series, or of the
exchange of bonds of one denomination for bonds of another
denomination of the same series;

(g) To provide for a special sinking, purchase,
improvement or other analogous fund for the benefit or
retirement of the bonds of any or all series to be issued on
or subsequent to the date thereof;

(h) To evidence the succession of another corporation
to the Company, or successive successions, and the assumption
by such successor corporation of the covenants and
obligations of the Company under this Indenture, and to
evidence the appointment of a separate trustee or a
co-trustee or the succession of a new trustee to any trustee
hereunder;

(i) To provide the terms and conditions for the
issuance of the bonds of any series in book entry form;

(j) To otherwise add to, change, alter, modify, vary or
eliminate any of the terms, provisions, restrictions or
conditions of this Indenture; provided, however, that any
such addition, changes, alterations, modifications,
variations or eliminations made in a supplemental indenture
pursuant to this clause which would adversely affect or
diminish the rights of the holders of any bonds then
Outstanding against the Company or its property shall be
expressly stated in such supplemental indenture to become
effective only with respect to bonds issued on or subsequent
to the date of such supplemental indenture; and

<PAGE> 117
Any supplemental indenture authorized by the provisions
of this Section may be executed by the Company and the Trustee
without the consent of the holders of any of the bonds at the time
Outstanding or the publication or mailing of notice,
notwithstanding any of the provisions of Section 16.02 hereof.

SECTION 16.02. Modification of Indenture with Consent
of Bondholders. With the consent of the holders of not less than
sixty-six and two-thirds per centum (66-2/3%) in principal amount
of the bonds at the time Outstanding or their attorneys-in-fact
duly authorized, and, if the rights of the holders of one or more
but less than all series of bonds at the time Outstanding are to
be adversely affected, then by the affirmative vote of the holders
of not less than sixty-six and two-thirds per centum (66-2/3%) in
principal amount of the bonds the rights of the holders of which
are adversely affected, the Company, when authorized by a
Resolution, and the Trustee may from time to time and at any time
enter into a supplemental indenture for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or
modifying the rights and obligations of the Company and the rights
of the holders of any of the bonds; provided, however, that no
such supplemental indenture shall (1) extend the maturity of any
of the bonds or reduce the rate or extend the time of payment of
interest thereon, or reduce the amount of the principal thereof,
or reduce any premium payable on the redemption thereof, without
the consent of the holder of each bond so affected, or (2) permit
the creation of any lien, not otherwise permitted, prior to or on
a parity with the lien of this Indenture, without the consent of
the holders of all the bonds then Outstanding, or (3) reduce the
aforesaid percentage of the principal amount of bonds the holders
of which are required to approve any such supplemental indenture,
without the consent of the holders of all the bonds then
Outstanding, or (4) affect or impair the rights of the holder of
any bond contained in the last paragraph of Section 9.12 hereof,
without the consent of the holders of all the bonds then
Outstanding, or (5) alter or create redemption and/or sinking fund
requirements with respect to an Outstanding series of bonds,
without the consent of the holder of each bond so affected, or
(6) amend Section 4.01B(a) or (b) with respect to Series A without
the consent of the holders of 66-2/3% aggregate principal amount
of bonds of Series A, or (7) amend Section 4.01B(c) with respect
to Series A, without the unanimous consent of the initial
beneficial owners of the bonds of Series A who continue to hold
such bonds, or (8) permit the deprivation of any non-assenting
holder of any bond of a lien upon the Trust Estate for the
security of such holder's bond (subject only to Excepted
Encumbrances and Prepaid Liens and the liens of the First Mortgage
Indenture). For the purposes of this Section, bonds shall be
deemed to be affected by a supplemental indenture if such
supplemental indenture adversely affects or diminishes the rights
of holders thereof against the Company or against its property.

<PAGE> 118
Upon the written request signed by the President or a
Vice President of the Company, accompanied by a Resolution
authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of
bondholders as aforesaid (the instrument or instruments evidencing
such consent to be dated within one year of such request), the
Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects
the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its
discretion but shall not be obligated to enter into such
supplemental indenture.

It shall not be necessary for the consent of the
bondholders under this Section to approve the particular form of
any proposed supplemental indenture, but it shall be sufficient if
such consent shall approve the substance thereof.

Prior to the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of this
Section, the Company shall publish a notice, setting forth in
general terms the substance of such supplemental indenture, at
least once in one Daily Newspaper of general circulation in each
city in which the principal of any of the bonds shall be payable,
or shall mail such notice, first class, postage prepaid, and
registered if the Company so elects, to each holder of bonds at
the last address of such holder appearing on the registry books,
such publication or mailing, as the case may be, to be made not
less than thirty (30) days prior to such execution. Any failure
of the Company to give such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any such
supplemental indenture.

SECTION 16.05. Notations on Bonds; Provision for New
Bonds. Bonds authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this

<PAGE> 119
Article may bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If such
supplemental indenture shall so provide, new bonds, so modified as
to conform, in the opinion of the Trustee and the Board of
Directors, to any modification of this Indenture contained in any
such supplemental indenture, may be prepared by the Company,
authenticated by the Trustee and delivered without cost to the
holders of bonds then Outstanding, upon surrender of such bonds,
in equal aggregate principal amounts.

ARTICLE XVII

BONDHOLDERS' MEETINGS

(1) to give any notice to the Company or to the
Trustee, or to give any directions to the Trustee, or to
consent to the waiving of any default hereunder and its
consequences, or to take any other action authorized to be
taken by bondholders pursuant to any of the provisions of
Article IX;

(2) to remove the Trustee and appoint a successor
trustee pursuant to the provisions of Article XIV;

(3) to consent to the execution of a supplemental
indenture pursuant to the provisions of Section 16.02 hereof;
or

SECTION 17.02. Meeting Called by Trustee. The Trustee
may at any time call a meeting of bondholders to take any action
specified in Section 17.01 hereof, to be held at such time and at
such place as the Trustee shall determine. Notice of every
meeting of the bondholders, setting forth the time and the place
thereof and, in general terms, the business to be submitted, shall
be mailed first class, postage prepaid, by the Trustee not less
than thirty (30) days before such meeting to each registered
holder of bonds at the last address of such holder appearing in
the registry books.

<PAGE> 120
SECTION 17.03. Meeting Called by Company or
Bondholders. In case at any time the Company by written request
signed by the President or a Vice President of the Company, or
the holders of at least 20% in aggregate principal amount of the
bonds then Outstanding, shall have requested the Trustee to call a
meeting of bondholders setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall
not have mailed the notice of such meeting within 10 days after
receipt of such request, then the Company, or the holders of bonds
in the amount above specified, may determine the time and the
place for such meeting and may call such meeting to take any
action authorized in Section 17.01 hereof, by giving notice
thereof as provided in Section 17.02 hereof.

SECTION 17.04. Bondholders Entitled to Vote. To be
entitled to vote at any meeting of bondholders a person shall (a)
be a holder of one or more Outstanding bonds; or (b) be a person
duly appointed by an instrument in writing as proxy for a holder
of an Outstanding bond; and (c) be the holder of a bond which is
one of a series directly affected by the business submitted to the
meeting. Officers and representatives of the Company and its
counsel, and representatives of the Trustee and its counsel may
attend, and speak at, any meeting of bondholders but shall not be
entitled to vote thereat. Attendance by bondholders may be in
person or by proxy and, unless specifically prohibited by law, any
such proxy shall remain in effect unless specifically revoked and
shall be binding on any future holder of the bonds represented by
such proxy, unless specifically revoked by any such future holder
before being voted.

The Trustee shall, by an instrument in writing, appoint
a temporary chairman of the meeting, unless the meeting shall have
been called by the Company or by bondholders as provided in
Section 17.03 hereof, in which case the Company or the bondholders
calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the holders
of a majority in principal amount of the bonds represented at the
meeting and entitled to vote.

<PAGE> 121
the meeting to be not Outstanding. The chairman of the meeting
shall have no right to vote other than by virtue of bonds held by
him or instruments in writing as aforesaid duly designating him as
the person to vote on behalf of other bondholders.

At any meeting of bondholders, the presence of persons
holding or representing bonds in an aggregate principal amount
sufficient to take action upon the business for the transaction of
which such meeting was called shall constitute a quorum. Any
meeting of bondholders, duly called pursuant to the provisions of
Section 17.02 or 17.03 hereof, may be adjourned from time to time
by vote of persons representing a majority in aggregate principal
amount of the bonds represented at the meeting and entitled to
vote, whether or not a quorum shall be present, and the meeting
may be held as so adjourned without further notice.

SECTION 17.06. Bondholders' Vote by Written Ballot.
The vote upon any resolution submitted to any meeting of
bondholders shall be by written ballots on which shall be
subscribed the signatures of the holders of bonds or of their
representatives by proxy and the series and identifying number or
numbers of the bonds held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes, who
shall count all votes cast at a meeting for or against any
resolution and who shall make and file with the secretary of the
meeting their verified written reports in duplicate of all votes
cast at the meeting. A record, at least in duplicate, of the
proceedings of each meeting of bondholders shall be prepared by
the secretary of the meeting and there shall be attached to said
record the original reports of the inspectors of votes on any vote
by ballot taken thereat and affidavits by one or more persons
having knowledge of the facts, setting forth a copy of the notice
of the meeting and showing that said notice was given as provided
in Section 17.02 hereof. Each copy of the record shall be signed
and verified by the affidavits of the permanent chairman and
secretary of the meeting and one such copy shall be delivered to
the Company and another to the Trustee, which latter copy shall be
preserved by the Trustee and shall have attached thereto the
ballots voted at the meeting.

Any copy of the record so signed and verified shall be
conclusive evidence of the matters therein stated.

SECTION 17.07. Nothing Authorizes Hindrance or Delay of
Rights of Trustee or Bondholders. Nothing contained in this
Article XVII shall be deemed or construed to authorize or permit,
by reason of any call of a meeting of bondholders or any rights
expressly or impliedly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights
conferred upon or reserved to the Trustee or to bondholders under
any of the provisions of this Indenture or of the bonds.

<PAGE> 122
ARTICLE XVIII

MISCELLANEOUS PROVISIONS

SECTION 18.02. Court may Require Bond for Costs, Under
Certain Conditions. All parties to this Indenture agree, and each
holder or owner of any bond by his or her acceptance thereof shall
be deemed to have agreed, that any court may in its discretion
require in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any
action taken or omitted by it as such Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against
any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to
any suit instituted by the Trustee, to any suit instituted by any
bondholder, or group of bondholders, holding in the aggregate more
than ten per centum (10%) in principal amount of the bonds
Outstanding, or to any suit instituted by any bondholder for the
enforcement of the payment of the principal of or interest on any
bond, on or after the respective due dates expressed in such bond.

<PAGE> 123
assigns of such party, and all of the covenants, promises and
agreements in this Indenture contained by or on behalf of the
Company, or by or on behalf of the Trustee, shall bind and inure
to the benefit of the respective successors and assigns of such
parties, whether so expressed or not; but the provisions of this
paragraph shall not be deemed to subject to the lien hereof,
except to the extent in Article XIII hereof provided, the property
of any successor corporation not acquired from the Company and not
then subject to the lien hereof, unless it shall have expressly
agreed that such shall be the case, in the manner provided in
Article XIII hereof.

SECTION 18.06. Headings Inserted for Convenience Only.
The headings of the different Articles or Sections of this
Indenture are inserted for convenience of reference, and are not
to be taken to be any part of these provisions, or to control or
affect the meaning, construction or effect of the same.

SECTION 18.09. Deposit of Securities in Lieu of Cash.
Wherever in this Indenture the Company is permitted or required to
deposit cash hereunder with the Trustee, the Company may deposit
in lieu of cash an amount of U.S. Government Obligations of at
least an equal face amount and having a then market value at least
equal to the amount of cash in lieu of which such obligations are
deposited; provided, however, that the Company shall not be
entitled, less than ten days prior to or on any interest payment
date, redemption date or maturity date of any bonds outstanding
hereunder, to deposit any such obligations in lieu of the cash due
to be paid on such date to the holders of bonds secured hereby and
provided further that any deposit of Funds pursuant to Article XI
be subject solely to said Article. The Company may at any time
withdraw any cash on deposit hereunder with the Trustee by
depositing hereunder with the Trustee in substitution therefor an
amount of U.S. Government Obligations of at least an equal face
amount and having a then market value at least equal to the amount
of cash so withdrawn, provided, however, that the Company shall
not be entitled, less than ten days prior to or on any interest
payment date, redemption date or maturity date of any bonds
outstanding hereunder or any time subsequent to such date, to
withdraw any cash deposited hereunder for payment on such date to
the holders of bonds secured hereby. Any obligations so deposited
shall be held by the Trustee in all respects as would be held the
cash for which such obligations are so substituted. Any

<PAGE> 124
obligations so deposited shall be sold by the Trustee upon the
written request signed by the President or a Vice President of the
Company, at such prices as shall be fixed by the Company and
approved by the Trustee, provided, however, that the Trustee,
without any such request from the Company, shall be entitled, in
its sole discretion and at such prices as may be approved by it,
to sell at public or private sale any obligations so held by it in
lieu of any cash which shall be payable, not more than ten days
after the date of such sale, on an interest payment date,
redemption date or maturity date of any bonds secured hereby. The
Trustee shall not be liable for any loss or other expense incurred
in connection with such sale. If the proceeds from any such sale
shall be less than the amount of cash in lieu or for the
withdrawal of which the obligations sold were deposited, or if the
market value of any obligations so deposited hereunder shall, in
the judgment of the Trustee, at any time be less than the amount
of cash in lieu or for the withdrawal of which they were
deposited, in either event the Company shall deposit hereunder
with the Trustee cash sufficient to make up the deficiency; but
the cash deposited to make up the deficiency in the market value
of any obligations may at any time thereafter be withdrawn by the
Company if at the time of withdrawal the market value of such
obligations shall be not less than the amount of cash in lieu or
for the withdrawal of which they were deposited. Except as
otherwise provided in Article XI hereof, the Trustee shall collect
from time to time all interest upon the deposited obligations as
such interest matures and, so long as the Company shall not be in
default hereunder, all such interest shall be paid by the Trustee
to the Company as and when received. The proceeds of the sale of
deposited obligations shall be paid out and applied by the Trustee
in like manner and for like purposes as is provided in this
Indenture in respect of the cash in lieu or for the withdrawal of
which such obligations were deposited. The deposited obligations
while held by the Trustee, and the proceeds of the sale thereof,
until such proceeds are so paid out and applied, shall be held in
accordance with the terms and provisions of this Indenture
applicable to the cash in lieu of or in substitution for which
such obligations were deposited. Notwithstanding the foregoing,
the sufficiency of the amount of U.S. Government Obligations
deposited by the Company with the Trustee pursuant to Article XI
ereof shall be determined as set forth in said Article.

SECTION 18.10. Termination. The Company or the Trustee
may terminate this Indenture at any time on or after the date of
maturity of that series of bonds issued or to be issued hereunder
and secured by this Indenture which, of all the series of bonds
issued hereunder, has the latest date of maturity; provided,
however, that nothing in this Section shall affect or limit any of
the rights or remedies of the Trustee or the bondholders
prescribed in Article IX hereof or the obligations of the Company
under Section 14.10.

<PAGE> 125
IN WITNESS WHEREOF, said EL PASO ELECTRIC COMPANY has
caused this Indenture to be executed in its corporate name by its
President or one of its Vice-Presidents and its corporate seal to
be hereunto affixed and to be attested by its Secretary or one of
its Assistant Secretaries, and said IBJ SCHRODER BANK & TRUST
COMPANY, to evidence its acceptance of the trust hereby created,
has caused this Indenture to be executed in its corporate name by
one of its Vice-Presidents and its corporate seal to be hereunto
affixed and to be attested by one of its Assistant Secretaries, in
several counterparts, all as of the day and year first above
written.

EL PASO ELECTRIC
COMPANY

By__________________________

(SEAL)

Attest:

__________________________
[Asst] Secretary

Signed, sealed, acknowledged
and delivered on behalf of
El Paso Electric
Company, in the presence of:

_________________________

<PAGE> 126

IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee and on behalf of
the bondholders

By___________________________

(SEAL)

Attest:

___________________________
[Asst] Secretary

Signed, sealed, acknowledged
and delivered on behalf of
IBJ Schroder Bank & Trust
Company, in the presence of:

_________________________

<PAGE> 127

[for Texas purposes]

THE STATE OF ________

COUNTY OF ______________

(SEAL) _________________________
Notary Public in and for
the State of ________

My commission expires:

_________________________

<PAGE> 128

[for Texas purposes]

THE STATE OF ________

COUNTY OF ______________

(SEAL) _________________________
Notary Public in and for
the State of ________

My commission expires:

_________________________

<PAGE> 129

[for Arizona purposes]

THE STATE OF ________

COUNTY OF ______________

Before me personally appeared ____________________ known
to me to be the person whose name is subscribed to the foregoing
instrument and acknowledged to me that he executed said instrument
in the capacity therein stated for the purposes and consideration
therein expressed.

(SEAL) _________________________
Notary Public in and for
the State of ________

My commission expires:

_________________________

<PAGE> 130

[for Arizona purposes]

THE STATE OF ________

COUNTY OF ______________

Before me personally appeared ____________________ known
to me to be the person whose name is subscribed to the foregoing
instrument and acknowledged to me that he executed said instrument
in the capacity therein stated for the purposes and consideration
therein expressed.

(SEAL) _________________________
Notary Public in and for
the State of ________

My commission expires:

_________________________

<PAGE> 131

[For New Mexico purposes]

THE STATE OF __________

COUNTY OF ____________

This instrument was acknowledged before me on this ___
day of ________, 199_, by _________________, as _____________ of
El Paso Electric Company, a Texas corporation, on behalf of the
corporation.

(SEAL) ______________________________
Notary Public in and for the
State of _________________

My commission expires:

_______________________________

<PAGE> 132

[For New Mexico purposes]

THE STATE OF __________

COUNTY OF ____________

This instrument was acknowledged before me on this ___
day of ________, 199_, by _________________, as _____________ of
IBJ Schroder Bank & Trust Company, trustee under the foregoing
instrument.

(SEAL) ______________________________
Notary Public in and for the
State of _________________

My commission expires:

_______________________________

<PAGE> 133
Appendix A-1

(Form of face of bond of Series A)

No. $

EL PASO ELECTRIC COMPANY
Second Mortgage Bond, Series A
__% Due ______ __, ____

The provisions of this bond are continued on the
reverse side hereof and such continued provisions shall for all
purposes have the same effect as though fully set forth at this
place.

<PAGE> 134
IN WITNESS WHEREOF, El Paso Electric Company has caused
this bond to be executed in its name by the manual or facsimile
signature of its President or one of its Vice-Presidents, and its
corporate seal or a facsimile thereof to be affixed hereto or
imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.

Dated: ______________

EL PASO ELECTRIC COMPANY

By______________________________
[Title]

ATTEST:

________________________
[Asst.] Secretary

<PAGE> 135
(Form of reverse side of bond of Series A)

EL PASO ELECTRIC COMPANY

SECOND MORTGAGE BOND, SERIES A
___% DUE ______ __, ____

The interest payable on this bond on any interest
payment date will, subject to certain exceptions provided in the
Indenture hereinafter mentioned, be paid to the person in whose
name this bond is registered at the close of business on the
record date, which shall be the ___________ or __________, as the
case may be, next preceding such interest payment date, or, if
such date shall be a legal holiday or a day on which banking
institutions in New York, New York are authorized or required to
close, the next preceding day which shall not be a legal holiday
or a day on which such institutions are so authorized or required
to close.

The bonds of Series A, of which this bond is one, are
not redeemable prior to __________, 1999. On or after that date,
at the option of the Company and upon the notice and in the
manner and with the effect provided in the Indenture, bonds of
Series A may be redeemed by or on behalf of the Company, as a
whole at any time, or in part from time to time, at the
applicable general redemption price, expressed as a percentage of
the principal amount of the bonds, stated in the following table
under "General Redemption Price," together with accrued interest
on such principal amount to the date fixed for redemption:

<PAGE> 136
If redeemed If redeemed
during the during the
12 months General 12 months General
beginning Redemption beginning Redemption
_______, 1999 Price* _______, 1999 Price*

[Table to come based on Schedule B to the Plan]

__________________
* Stated as a percentage of principal amount of the bonds.

In case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable in the manner and with the effect provided
in the Indenture.

<PAGE> 137
the transferee, or the registered holder, as the case may be, in
exchange herefor. The Company shall not register, exchange or
transfer any bonds of this series during the period of ten days
next preceding any designation of bonds of said Series to be
redeemed, if applicable, and, as to any bonds selected for
redemption, from and after the date of such selection. The
Company and the Trustee may deem and treat the person in whose
name this bond is registered as the absolute owner for the
purpose of receiving payment and for all other purposes.

The bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

Trustee's Certificate of Authentication

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee

By______________________________
Authorized Signature

<PAGE> 138
Appendix A-2

(Form of face of bond of Series B)

No. $

EL PASO ELECTRIC COMPANY
Second Mortgage Bond, Series B
__% Due ______ __, ____

Reorganized El Paso Electric Company, a Texas
corporation (hereinafter called the "Company"), for value
received, hereby promises to pay to _______________ or registered
assigns, the principal sum of $____ Dollars on _______, ____,
and to pay to the registered holder hereof interest on said sum
from the date hereof at the rate of ____ per centum per annum,
payable half-yearly on the ______ day of _______ and the _______
day of _______ in each year, commencing __________, 1994, until
said principal sum is paid. Both the principal of and the
interest on this bond shall be payable at the principal office or
agency of the Company in New York, New York, in any coin or
currency of the United States of America which at the time of
payment is legal tender for public and private debts provided
that, at the option of the Company, payment of interest may be
made by check mailed to the address of the person entitled
thereto as shown on the registration books of the Trustee.

The provisions of this bond are continued on the
reverse side hereof and such continued provisions shall for all
purposes have the same effect as though fully set forth at this
place.

<PAGE> 139
IN WITNESS WHEREOF, El Paso Electric Company has caused
this bond to be executed in its name by the manual or facsimile
signature of its President or one of its Vice-Presidents, and its
corporate seal or a facsimile thereof to be affixed hereto or
imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.

Dated: ______________

EL PASO ELECTRIC COMPANY

By______________________________
[Title]

ATTEST:

________________________
[Asst.] Secretary

<PAGE> 140
(Form of reverse side of bond of Series B)

EL PASO ELECTRIC COMPANY

SECOND MORTGAGE BOND, SERIES B
___% DUE ______ __, ____

The interest payable on this bond on any interest
payment date will, subject to certain exceptions provided in the
Indenture hereinafter mentioned, be paid to the person in whose
name this bond is registered at the close of business on the
record date, which shall be the ___________ or __________, as the
case may be, next preceding such interest payment date, or, if
such date shall be a legal holiday or a day on which banking
institutions in New York, New York are authorized or required to
close, the next preceding day which shall not be a legal holiday
or a day on which such institutions are so authorized or required
to close.

On or after ________, 1994, at the option of the
Company and upon the notice and in the manner and with the effect
provided in the Indenture, bonds of Series B, of which this bond
is one, may be redeemed by or on behalf of the Company, as a
whole at any time, or in part from time to time, at the
applicable general redemption price, expressed as a percentage of
the principal amount of the bonds, stated in the following table
under "General Redemption Price," together with accrued interest
on such principal amount to the date fixed for redemption:

<PAGE> 141

If redeemed If redeemed
during the during the
12 months General 12 months General
beginning Redemption beginning Redemption
_______, 1994 Price* _______, 1994 Price*

[table to come based on page 36 and Schedule C to the Plan]

__________________
* Stated as a percentage of principal amount of the bonds.

In case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable in the manner and with the effect provided
in the Indenture.

This bond is transferable or exchangeable by the holder
hereof, in person or by attorney duly authorized, at the
corporate trust office of the Trustee, in New York, New York, but
only in the manner and upon the conditions prescribed in the
Indenture, upon the surrender and cancellation of this bond and
the payment of any stamp tax or other governmental charge, and
upon any such transfer or exchange a new registered bond or bonds
of the same series and maturity date and for the same aggregate
principal amount, in authorized denominations, will be issued to
the transferee, or the registered holder, as the case may be, in
exchange herefor. The Company shall not register, exchange or
transfer any bonds of this series during the period of ten days
next preceding any designation of bonds of said Series to be
redeemed, if applicable, and, as to any bonds selected for
redemption, from and after the date of such selection. The

<PAGE> 142
Company and the Trustee may deem and treat the person in whose
name this bond is registered as the absolute owner for the
purpose of receiving payment and for all other purposes.

The bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

Trustee's Certificate of Authentication

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee

By______________________________
Authorized Signature

<PAGE> 143
Appendix A-3

(Form of face of bond of Series D)

No. $

EL PASO ELECTRIC COMPANY
Second Mortgage Bond, Series D
Floating Rate Due July 1, 2014

El Paso Electric Company, a Texas corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to _______________________________, as trustee
under the hereinafter mentioned Resolution (said trustee and any
successor trustee under the Resolution being hereinafter called
the "Pollution Control Trustee") or registered assigns, the
principal sum of $____ Dollars on July 1, 2014, and to pay to the
registered holder hereof interest on said sum as described below.
Both the principal of and the interest on this bond shall be
payable at the principal office or agency of the Company in New
York, New York, in any coin or currency of the United States of
America which at the time of payment is legal tender for public
and private debts provided that, at the option of the Company,
payment of interest may be made by check mailed to the address of
the person entitled thereto as shown on the registration books of
the Trustee.

This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture dated as of _________, 1994, given by the Company to
IBJ Schroder Bank & Trust Company (hereinafter sometimes referred
to as the "Trustee"), and indentures supplemental thereto,
heretofore or hereafter executed, to which indenture and
indentures supplemental thereto (hereinafter referred to
collectively as the "Indenture") reference is hereby made for a
description of the property mortgaged and pledged, the nature and
extent of the security and the rights, duties and immunities
thereunder of the Trustee and the rights of the holders of said
bonds and of the Trustee and of the Company in respect of such
security, and the limitations on such rights. By the terms of
the Indenture, the bonds to be secured thereby are issuable in
series which may vary as to date, amount, date of maturity, rate
of interest and in other respects as in the Indenture provided.

The bonds of this Series have been issued to the
Pollution Control Trustee to secure the obligations of the
Company under a Loan Agreement (the "Loan Agreement"), dated as
of December 1, 1983, between the Company and Maricopa County,
Arizona Pollution Control Corporation (the "Issuer"), pursuant to

<PAGE> 144
which the Company is obligated for the payment of the principal
of, premium, if any, and interest due on the Annual Tender
Pollution Control Revenue Bonds, 1983 Series A (El Paso Electric
Company Palo Verde Project) (the "Pollution Control Bonds")
issued by the Issuer pursuant to a Resolution adopted by the
Issuer on December 16, 1983 (hereinafter called the
"Resolution").

Except as hereinafter provided, interest on this bond
is payable at the same rates and on the same dates as interest is
payable on the Pollution Control Bonds pursuant to the terms
thereof.

The obligation of the Company to make payments with
respect to the principal and interest on the bonds of this Series
shall be fully or partially, as the case may be, satisfied and
discharged to the extent that, at any time that any such payment
shall be due, the Company shall have paid fully or partially the
then due principal of and interest on the Pollution Control Bonds
in accordance with the Resolution.

Upon surrender for cancellation, at any time or from
time to time, of bonds of this Series by the Pollution Control
Trustee to the Trustee, the bonds surrendered shall be deemed
fully paid and the obligations of the Company thereunder shall be
terminated, and such bonds shall be cancelled.

In the manner provided in the Indenture, the bonds of
this Series shall be redeemed in whole by payment of the
principal amount thereof plus accrued interest thereon to the
redemption date, and plus the amount of any premiums due in
respect of any of the Pollution Control Bonds, upon receipt by
the Trustee and the Company of a written demand from the
Pollution Control Trustee. Such demand shall also state that the
principal amount of the Pollution Control Bonds then outstanding
under the Resolution has been declared immediately due and
payable pursuant to the provisions of the Loan Agreement,
specifying the date from which unpaid interest on such Pollution
Control Bonds has then accrued, and stating that such declaration
of maturity has not been rescinded. The bonds of this Series
shall be redeemed on or before the 180th day following receipt of
the written demand as aforesaid as specified in a notice of
redemption given pursuant to the Indenture, all other notice
being waived by the Pollution Control Trustee. Such redemption
shall be rescinded and become null and void for all purposes of
the Indenture upon rescission of the aforesaid declaration of
maturity under the Loan Agreement no later than the Business Day
prior to the date fixed for redemption, and thereupon no
redemption of the bonds of this Series and no payments in respect
thereof shall be effected or required.

<PAGE> 145
Notwithstanding the provisions of the previous
paragraph, in case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable in the manner and with the effect provided
in the Indenture.

This bond is nontransferable except to effect transfer
to any successor to the Pollution Control Trustee, but is
exchangeable by the registered holder hereof, in person or by
attorney duly authorized, at the corporate trust office of the
Trustee, in New York, New York, any such permitted transfer or
exchange to be made in the manner and upon the conditions
prescribed in the Indenture, upon the surrender and cancellation
of this bond and the payment of any stamp tax or other
governmental charge, and upon any such transfer or exchange a new
registered bond or bonds of the same series and maturity date and
for the same aggregate principal amount, in authorized
denominations, will be issued to the transferee, or the
registered holder, as the case may be, in exchange herefor. The
Company and the Trustee may deem and treat the person in whose
name this bond is registered as the absolute owner for the
purpose of receiving payment and for all other purposes.

The bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

<PAGE> 146
IN WITNESS WHEREOF, El Paso Electric Company has caused
this bond to be executed in its name by the manual or facsimile
signature of its President or one of its Vice-Presidents, and its
corporate seal or a facsimile thereof to be affixed hereto or
imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.

Dated: ______________

EL PASO ELECTRIC COMPANY

By______________________________
[Title]

ATTEST:

________________________
[Asst.] Secretary

Trustee's Certificate of Authentication

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee

By______________________________
Authorized Signature

<PAGE> 147
Appendix A-4

(Form of face of bond of Series E)

No. $

EL PASO ELECTRIC COMPANY
Second Mortgage Bond, Series E
Floating Rate Due December 1, 2014

El Paso Electric Company, a Texas corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to MBank El Paso, National Association, as
trustee under the hereinafter mentioned Trust Indenture (said
trustee and any successor trustee under the Trust Indenture being
hereinafter called the "Pollution Control Trustee") or registered
assigns, the principal sum of $____ Dollars on December 1, 2014,
and to pay to the registered holder hereof interest on said sum
as described below. Both the principal of and the interest on
this bond shall be payable at the principal office or agency of
the Company in New York, New York, in any coin or currency of the
United States of America which at the time of payment is legal
tender for public and private debts provided that, at the option
of the Company, payment of interest may be made by check mailed
to the address of the person entitled thereto as shown on the
registration books of the Trustee.

This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture dated as of _________, 1994, given by the Company to
IBJ Schroder Bank & Trust Company (hereinafter sometimes referred
to as the "Trustee"), and indentures supplemental thereto,
heretofore or hereafter executed, to which indenture and
indentures supplemental thereto (hereinafter referred to
collectively as the "Indenture") reference is hereby made for a
description of the property mortgaged and pledged, the nature and
extent of the security and the rights, duties and immunities
thereunder of the Trustee and the rights of the holders of said
bonds and of the Trustee and of the Company in respect of such
security, and the limitations on such rights. By the terms of
the Indenture, the bonds to be secured thereby are issuable in
series which may vary as to date, amount, date of maturity, rate
of interest and in other respects as in the Indenture provided.

The bonds of this Series have been issued to the
Pollution Control Trustee to secure the obligations of the
Company under a Loan Agreement (the "Loan Agreement"), dated as
of December 1, 1984, between the Company and Maricopa County,
Arizona Pollution Control Corporation (the "Issuer"), pursuant to
which the Company is obligated for the payment of the principal
of, premium, if any, and interest due on the Adjustable Tender

<PAGE> 148
Pollution Control Revenue Bonds, 1984 Series A (El Paso Electric
Company Palo Verde Project) (the "Pollution Control Bonds")
issued by the Issuer pursuant to a Trust Indenture dated as of
December 1, 1984 (hereinafter called the "Trust Indenture")
between the Issuer and the Pollution Control Trustee.

Except as hereinafter provided, interest on this bond
is payable at the same rates and on the same dates as interest is
payable on the Pollution Control Bonds pursuant to the terms of
the Trust Indenture.

The obligation of the Company to make payments with
respect to the principal and interest on the bonds of this Series
shall be fully or partially, as the case may be, satisfied and
discharged to the extent that, at any time that any such payment
shall be due, the Company shall have paid fully or partially the
then due principal of and interest on the Pollution Control Bonds
in accordance with the Trust Indenture.

In the manner provided in the Indenture, the bonds of
this Series shall be redeemed in whole by payment of the
principal amount thereof plus accrued interest thereon to the
redemption date, upon receipt by the Trustee and the Company of a
written demand from the Pollution Control Trustee. Such demand
shall also state that the principal amount of the Pollution
Control Bonds then outstanding under the Trust Indenture has been
declared immediately due and payable pursuant to the provisions
of the Loan Agreement, specifying the date from which unpaid
interest on such Pollution Control Bonds has then accrued, and
stating that such declaration of maturity has not been rescinded.
The bonds of this Series shall be redeemed on or before the 180th
day following receipt of the written demand as aforesaid as
specified in a notice of redemption given pursuant to the
Indenture, all other notice being waived by the Pollution Control
Trustee. Such redemption shall be rescinded and become null and
void for all purposes of the Indenture upon rescission of the
aforesaid declaration of maturity under the Loan Agreement no
later than the Business Day prior to the date fixed for
redemption, and thereupon no redemption of the bonds of this
Series and no payments in respect thereof shall be effected or
required.

<PAGE> 149
Notwithstanding the provisions of the previous
paragraph, in case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable in the manner and with the effect provided
in the Indenture.

The bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

<PAGE> 150
IN WITNESS WHEREOF, El Paso Electric Company has caused
this bond to be executed in its name by the manual or facsimile
signature of its President or one of its Vice-Presidents, and its
corporate seal or a facsimile thereof to be affixed hereto or
imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.

Dated: ______________

EL PASO ELECTRIC COMPANY

By______________________________
[Title]

ATTEST:

________________________
[Asst.] Secretary

Trustee's Certificate of Authentication

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee

By______________________________
Authorized Signature

<PAGE> 151
Appendix A-5

(Form of face of bond of Series F)

No. $

EL PASO ELECTRIC COMPANY
Second Mortgage Bond, Series F
Floating Rate Due August 1, 2015

El Paso Electric Company, a Texas corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to Continental Bank, National Association, as
trustee under the hereinafter mentioned Trust Indenture (said
trustee and any successor trustee under the Trust Indenture being
hereinafter called the "Pollution Control Trustee") or registered
assigns, the principal sum of $____ Dollars on August 1, 2015,
and to pay to the registered holder hereof interest on said sum
as described below. Both the principal of and the interest on
this bond shall be payable at the principal office or agency of
the Company in New York, New York, in any coin or currency of the
United States of America which at the time of payment is legal
tender for public and private debts provided that, at the option
of the Company, payment of interest may be made by check mailed
to the address of the person entitled thereto as shown on the
registration books of the Trustee.

This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture dated as of _________, 1994, given by the Company to
IBJ Schroder Bank & Trust Company (hereinafter sometimes referred
to as the "Trustee"), and indentures supplemental thereto,
heretofore or hereafter executed, to which indenture and
indentures supplemental thereto (hereinafter referred to
collectively as the "Indenture") reference is hereby made for a
description of the property mortgaged and pledged, the nature and
extent of the security and the rights, duties and immunities
thereunder of the Trustee and the rights of the holders of said
bonds and of the Trustee and of the Company in respect of such
security, and the limitations on such rights. By the terms of
the Indenture, the bonds to be secured thereby are issuable in
series which may vary as to date, amount, date of maturity, rate
of interest and in other respects as in the Indenture provided.

The bonds of this Series have been issued to the
Pollution Control Trustee to secure the obligations of the
Company under a Loan Agreement (the "Loan Agreement"), dated as
of August 1, 1985, between the Company and Maricopa County,
Arizona Pollution Control Corporation (the "Issuer"), pursuant to
which the Company is obligated for the payment of the principal
of, premium, if any, and interest due on the Pollution Control

<PAGE> 152
Refunding Revenue Bonds, 1985 Series A (El Paso Electric Company
Palo Verde Project) (the "Pollution Control Bonds") issued by the
Issuer pursuant to a Trust Indenture dated as of August 1, 1985
(hereinafter called the "Trust Indenture") between the Issuer and
the predecessor to the Pollution Control Trustee.

The obligation of the Company to make payments with
respect to the principal and interest on the bonds of this Series
shall be fully or partially, as the case may be, satisfied and
discharged to the extent that, at any time that any such payment
shall be due, the Company shall have paid fully or partially the
then due principal of and interest on the Pollution Control Bonds
in accordance with the Trust Indenture.

In the manner provided in the Indenture, the bonds of
this Series shall be redeemed in whole by payment of the
principal amount thereof plus accrued interest thereon to the
redemption date, upon receipt by the Trustee and the Company of a
written demand from the Pollution Control Trustee. Such demand
shall also state that the principal amount of the Pollution
Control Bonds then outstanding under the Trust Indenture has been
declared immediately due and payable pursuant to the provisions
of the Loan Agreement, specifying the date from which unpaid
interest on such Pollution Control Bonds has then accrued, and
stating that such declaration of maturity has not been rescinded.
The bonds of this Series shall be redeemed on or before the 180th
day following receipt of the written demand as aforesaid as
specified in a notice of redemption given pursuant to the
Indenture, all other notice being waived by the Pollution Control
Trustee. Such redemption shall be rescinded and become null and
void for all purposes of the Indenture upon rescission of the
aforesaid declaration of maturity under the Loan Agreement no
later than the Business Day prior to the date fixed for
redemption, and thereupon no redemption of the bonds of this
Series and no payments in respect thereof shall be effected or
required.

<PAGE> 153
Notwithstanding the provisions of the previous
paragraph, in case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable in the manner and with the effect provided
in the Indenture.

The bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

Dated: ______________

EL PASO ELECTRIC COMPANY

By______________________________
[Title]

ATTEST:

________________________
[Asst.] Secretary

Trustee's Certificate of Authentication

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee

By______________________________
Authorized Signature

<PAGE> 155
Appendix A-6

(Form of face of bond of Series X)

No. $

EL PASO ELECTRIC COMPANY
Second Mortgage Bond, Series X
Floating Rate Due ______ __, _____

El Paso Electric Company, a Texas corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to New York, New York, as Agent under the Term
Loan Agreement hereinafter described, or registered assigns, the
principal sum of $____ Dollars on the date set forth on the Notes
referred to below and to pay to the registered holder hereof
interest on said sum as described below. Both the principal of
and the interest on this bond shall be payable at the principal
office or agency of the Company in New York, New York, in any
coin or currency of the United States of America which at the
time of payment is legal tender for public and private debts
provided that, at the option of the Company, payment of interest
may be made by check mailed to the address of the person entitled
thereto as shown on the registration books of the Trustee.

This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture dated as of _________, 1994, given by the Company to
IBJ Schroder Bank & Trust Company (hereinafter sometimes referred
to as the "Trustee"), and indentures supplemental thereto,
heretofore or hereafter executed, to which indenture and
indentures supplemental thereto (hereinafter referred to
collectively as the "Indenture") reference is hereby made for a
description of the property mortgaged and pledged, the nature and
extent of the security and the rights, duties and immunities
thereunder of the Trustee and the rights of the holders of said
bonds and of the Trustee and of the Company in respect of such
security, and the limitations on such rights. By the terms of
the Indenture, the bonds to be secured thereby are issuable in
series which may vary as to date, amount, date of maturity, rate
of interest and in other respects as in the Indenture provided.

The bonds of this Series have been issued to
____________, as Agent for the creditors (the "Creditors") named
in the Term Loan Agreement dated as of ____________, 1994 (the
"Term Loan Agreement"), to partially secure the payment of the
principal of and interest due on the Class 3A Secured Notes (the
"Notes") executed by the Company and payable to the Creditors, or
order, in the aggregate principal amount of $________ in
accordance with the terms set forth in the Term Loan Agreement.

<PAGE> 156
Except as hereinafter provided, interest on this bond
accrues and is payable at the same rates (determined on a
weighted average basis if more than one rate is in effect with
respect to the Notes) and on the same dates as interest is
payable on the Notes under the terms of the Term Loan Agreement,
which provides for floating rate loans (all as provided for in
the Term Loan Agreement).

In the manner provided in the Indenture, the bonds of
this Series shall be redeemed in whole by payment of the
principal amount thereof plus accrued interest thereon to the
redemption date, upon receipt by the Trustee and the Company of a
written demand from the Agent. Such demand shall also state that
the principal amount of the Notes which the bonds of this Series
secure then outstanding under the Term Loan Agreement has been
declared immediately due and payable pursuant to the provisions
of the Term Loan Agreement, specifying the date from which unpaid
interest on such Notes has then accrued, and stating that such
declaration of maturity has not been rescinded. The bonds of
this Series shall be redeemed on the fifth business day following
receipt of the written demand as aforesaid. Upon the occurrence
of certain Events of Default under the Term Loan Agreement, the
bonds of this Series shall be redeemed on the business day
following receipt by the Trustee of notice from the Agent of such
Event of Default; the Agent shall give notice to the Trustee of
such Events of Default and of the declaration of maturity as a
consequence thereof but failure to give such notice shall not
affect the rights of the Agent. Such redemption shall be
rescinded and become null and void for all purposes of the
Indenture upon rescission in writing of the aforesaid declaration
of maturity under the Term Loan Agreement received by the Trustee
no later than the Business Day prior to the date fixed for

<PAGE> 157
redemption, and thereupon no redemption of the bonds of this
Series and no payments in respect thereof shall be effected or
required.

This bond is nontransferable except to effect transfer
to any successor to the Agent under the Term Loan Agreement, but
is exchangeable by the registered holder hereof, in person or by
attorney duly authorized, at the corporate trust office of the
Trustee, in New York, New York, any such permitted transfer or
exchange to be made in the manner and upon the conditions
prescribed in the Indenture, upon the surrender and cancellation
of this bond and the payment of any stamp tax or other
governmental charge, and upon any such transfer or exchange a new
registered bond or bonds of the same series and maturity date and
for the same aggregate principal amount, in authorized
denominations, will be issued to the transferee, or the
registered holder, as the case may be, in exchange herefor. The
Company and the Trustee may deem and treat the person in whose
name this bond is registered as the absolute owner for the
purpose of receiving payment and for all other purposes.

The bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

<PAGE> 158
IN WITNESS WHEREOF, El Paso Electric Company has caused
this bond to be executed in its name by the manual or facsimile
signature of its President or one of its Vice-Presidents, and its
corporate seal or a facsimile thereof to be affixed hereto or
imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.

Dated: ______________

EL PASO ELECTRIC COMPANY

By______________________________
[Title]

ATTEST:

________________________
[Asst.] Secretary

Trustee's Certificate of Authentication

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee

By______________________________
Authorized Signature

<PAGE> 159
Appendix A-7

(Form of face of bond of Series Y-1)

No. $

EL PASO ELECTRIC COMPANY
Second Mortgage Bond, Series Y-1
Floating Rate Due ______ __, ____

El Paso Electric Company, a Texas corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to Citibank, N.A., or registered assigns, the
principal sum of $____ Dollars on the dates set forth in the
Notes referred to below and to pay to the registered holder
hereof interest on said sum as described below. Both the
principal of and the interest on this bond shall be payable at
the principal office or agency of the Company in New York, New
York, in any coin or currency of the United States of America
which at the time of payment is legal tender for public and
private debts provided that, at the option of the Company,
payment of interest may be made by check mailed to the address of
the person entitled thereto as shown on the registration books of
the Trustee.

This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture dated as of _________, 1994, given by the Company to
IBJ Schroder Bank & Trust Company (hereinafter sometimes referred
to as the "Trustee"), and indentures supplemental thereto,
heretofore or hereafter executed, to which indenture and
indentures supplemental thereto (hereinafter referred to
collectively as the "Indenture") reference is hereby made for a
description of the property mortgaged and pledged, the nature and
extent of the security and the rights, duties and immunities
thereunder of the Trustee and the rights of the holders of said
bonds and of the Trustee and of the Company in respect of such
security, and the limitations on such rights. By the terms of
the Indenture, the bonds to be secured thereby are issuable in
series which may vary as to date, amount, date of maturity, rate
of interest and in other respects as in the Indenture provided.

The bonds of this Series have been issued to Citibank,
N.A., as the institution named in the Term Loan Agreement dated
as of __________________, 1994 (the "Term Loan Agreement"), to
secure the payment of the principal of and interest due on
$___________ of Class 5A Secured Notes due _________, ____ (the
"Note"), executed by the Company and payable to such institution,
or order, in the principal amount set forth in the Term Loan
Agreement.

<PAGE> 160
Except as hereinafter provided, interest on this bond
accrues and is payable at the same rates (determined on a
weighted average basis if more than one rate is in effect with
respect to the Note) and on the same dates as interest is payable
on the Note under the terms of the Term Loan Agreement, which
provides for floating rate loans (all as provided for in the Term
Loan Agreement).

Upon surrender for cancellation, at any time or from
time to time, of bonds of this Series by the holder hereof to the
Trustee, the bonds surrendered shall be deemed fully paid and the
obligations of the Company thereunder shall be terminated, and
such bonds shall be cancelled.

In the manner provided in the Indenture, the bonds of
this Series shall be redeemed in whole by payment of the
principal amount thereof plus accrued interest thereon to the
redemption date, upon receipt by the Trustee and the Company of a
written demand from the holder hereof. Such demand shall also
state that the principal amount of the Note which the bonds of
this Series secure then outstanding under the Term Loan Agreement
has been declared immediately due and payable pursuant to the
provisions of the Term Loan Agreement, specifying the date from
which unpaid interest on such Note has then accrued, and stating
that such declaration of maturity has not been rescinded. The
bonds of this Series shall be redeemed on the fifth business day
following receipt of the written demand as aforesaid. Upon the
occurrence of certain Events of Default under the Term Loan
Agreement, the bonds of this Series shall be redeemed on the
business day following receipt by the Trustee of notice from the
holder hereof of such Event of Default; the holder hereof shall
give notice to the Trustee of such Events of Default and of the
declaration of maturity as a consequence thereof but failure to
give such notice shall not affect the rights of the holder
hereof. Such redemption shall be rescinded and become null and
void for all purposes of the Indenture upon rescission in writing
of the aforesaid declaration of maturity under the Term Loan
Agreement received by the Trustee no later than the Business Day
prior to the date fixed for redemption, and thereupon no
redemption of the bonds of this Series and no payments in respect
thereof shall be effected or required.

<PAGE> 161
Notwithstanding the provisions of the previous
paragraph, in case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable in the manner and with the effect provided
in the Indenture.

This bond is nontransferable except to effect transfer
to any successors or assigns of the holder hereof under the Term
Loan Agreement, but is exchangeable by the registered holder
hereof, in person or by attorney duly authorized, at the
corporate trust office of the Trustee, in New York, New York, any
such permitted transfer or exchange to be made in the manner and
upon the conditions prescribed in the Indenture, upon the
surrender and cancellation of this bond and the payment of any
stamp tax or other governmental charge, and upon any such
transfer or exchange a new registered bond or bonds of the same
series and maturity date and for the same aggregate principal
amount, in authorized denominations, will be issued to the
transferee, or the registered holder, as the case may be, in
exchange herefor. The Company and the Trustee may deem and treat
the person in whose name this bond is registered as the absolute
owner for the purpose of receiving payment and for all other
purposes.

The bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

<PAGE> 162
IN WITNESS WHEREOF, El Paso Electric Company has caused
this bond to be executed in its name by the manual or facsimile
signature of its President or one of its Vice-Presidents, and its
corporate seal or a facsimile thereof to be affixed hereto or
imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.

Dated: ______________

EL PASO ELECTRIC COMPANY

By______________________________
[Title]

ATTEST:

________________________
[Asst.] Secretary

Trustee's Certificate of Authentication

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee

By______________________________
Authorized Signature

<PAGE> 163
Appendix A-8

(Form of face of bond of Series Y-2)

No. $

EL PASO ELECTRIC COMPANY
Second Mortgage Bond, Series Y-2
Floating Rate Due ______ __, ____

El Paso Electric Company, a Texas corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to Credit Suisse, or registered assigns, the
principal sum of $____ Dollars on the dates set forth in the
Notes referred to below and to pay to the registered holder
hereof interest on said sum as described below. Both the
principal of and the interest on this bond shall be payable at
the principal office or agency of the Company in New York, New
York, in any coin or currency of the United States of America
which at the time of payment is legal tender for public and
private debts provided that, at the option of the Company,
payment of interest may be made by check mailed to the address of
the person entitled thereto as shown on the registration books of
the Trustee.

This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture dated as of _________, 1994, given by the Company to
IBJ Schroder Bank & Trust Company (hereinafter sometimes referred
to as the "Trustee"), and indentures supplemental thereto,
heretofore or hereafter executed, to which indenture and
indentures supplemental thereto (hereinafter referred to
collectively as the "Indenture") reference is hereby made for a
description of the property mortgaged and pledged, the nature and
extent of the security and the rights, duties and immunities
thereunder of the Trustee and the rights of the holders of said
bonds and of the Trustee and of the Company in respect of such
security, and the limitations on such rights. By the terms of
the Indenture, the bonds to be secured thereby are issuable in
series which may vary as to date, amount, date of maturity, rate
of interest and in other respects as in the Indenture provided.

The bonds of this Series have been issued to Credit
Suisse, as the institution named in the Term Loan Agreement dated
as of __________________, 1994 (the "Term Loan Agreement"), to
secure the payment of the principal of and interest due on
$___________ of Class 5B Secured Notes due _________, ____ (the
"Note"), executed by the Company and payable to such institution,
or order, in the principal amount set forth in the Term Loan
Agreement.

<PAGE> 164
Except as hereinafter provided, interest on this bond
accrues and is payable at the same rates (determined on a
weighted average basis if more than one rate is in effect with
respect to the Note) and on the same dates as interest is payable
on the Note under the terms of the Term Loan Agreement, which
provides for floating rate loans (all as provided for in the Term
Loan Agreement).

In the manner provided in the Indenture, the bonds of
this Series shall be redeemed in whole by payment of the
principal amount thereof plus accrued interest thereon to the
redemption date, upon receipt by the Trustee and the Company of a
written demand from the holder hereof. Such demand shall also
state that the principal amount of the Note which the bonds of
this Series secure then outstanding under the Term Loan Agreement
has been declared immediately due and payable pursuant to the
provisions of the Term Loan Agreement, specifying the date from
which unpaid interest on such Note has then accrued, and stating
that such declaration of maturity has not been rescinded. The
bonds of this Series shall be redeemed on the fifth business day
following receipt of the written demand as aforesaid. Upon the
occurrence of certain Events of Default under the Term Loan
Agreement, the bonds of this Series shall be redeemed on the
business day following receipt by the Trustee of notice from the
holder hereof of such Event of Default; the holder hereof shall
give notice to the Trustee of such Events of Default and of the
declaration of maturity as a consequence thereof but failure to
give such notice shall not affect the rights of the holder
hereof. Such redemption shall be rescinded and become null and
void for all purposes of the Indenture upon rescission in writing
of the aforesaid declaration of maturity under the Term Loan
Agreement received by the Trustee no later than the Business Day
prior to the date fixed for redemption, and thereupon no
redemption of the bonds of this Series and no payments in respect
thereof shall be effected or required.

<PAGE> 165
Notwithstanding the provisions of the previous
paragraph, in case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable in the manner and with the effect provided
in the Indenture.

The bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

<PAGE> 166
IN WITNESS WHEREOF, El Paso Electric Company has caused
this bond to be executed in its name by the manual or facsimile
signature of its President or one of its Vice-Presidents, and its
corporate seal or a facsimile thereof to be affixed hereto or
imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.

Dated: ______________

EL PASO ELECTRIC COMPANY

By______________________________
[Title]

ATTEST:

________________________
[Asst.] Secretary

Trustee's Certificate of Authentication

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee

By______________________________
Authorized Signature

<PAGE> 167
Appendix A-9

(Form of face of bond of Series Y-3)

No. $

EL PASO ELECTRIC COMPANY
Second Mortgage Bond, Series Y-3
Floating Rate Due ______ __, ____

El Paso Electric Company, a Texas corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to Westpac Banking Corporation, or registered
assigns, the principal sum of $____ Dollars on the dates set
forth in the Notes referred to below and to pay to the registered
holder hereof interest on said sum as described below. Both the
principal of and the interest on this bond shall be payable at
the principal office or agency of the Company in New York, New
York, in any coin or currency of the United States of America
which at the time of payment is legal tender for public and
private debts provided that, at the option of the Company,
payment of interest may be made by check mailed to the address of
the person entitled thereto as shown on the registration books of
the Trustee.

This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture dated as of _________, 1994, given by the Company to
IBJ Schroder Bank & Trust Company (hereinafter sometimes referred
to as the "Trustee"), and indentures supplemental thereto,
heretofore or hereafter executed, to which indenture and
indentures supplemental thereto (hereinafter referred to
collectively as the "Indenture") reference is hereby made for a
description of the property mortgaged and pledged, the nature and
extent of the security and the rights, duties and immunities
thereunder of the Trustee and the rights of the holders of said
bonds and of the Trustee and of the Company in respect of such
security, and the limitations on such rights. By the terms of
the Indenture, the bonds to be secured thereby are issuable in
series which may vary as to date, amount, date of maturity, rate
of interest and in other respects as in the Indenture provided.

The bonds of this Series have been issued to Westpac
Banking Corporation, as the institution named in the Term Loan
Agreement dated as of __________________, 1994 (the "Term Loan
Agreement"), to secure the payment of the principal of and
interest due on $___________ of Class 5C Secured Notes due
_________, ____ (the "Note"), executed by the Company and payable
to such institution, or order, in the principal amount set forth
in the Term Loan Agreement.

<PAGE> 168
Except as hereinafter provided, interest on this bond
accrues and is payable at the same rates (determined on a
weighted average basis if more than one rate is in effect with
respect to the Note) and on the same dates as interest is payable
on the Note under the terms of the Term Loan Agreement, which
provides for floating rate loans (all as provided for in the Term
Loan Agreement).

In the manner provided in the Indenture, the bonds of
this Series shall be redeemed in whole by payment of the
principal amount thereof plus accrued interest thereon to the
redemption date, upon receipt by the Trustee and the Company of a
written demand from the holder hereof. Such demand shall also
state that the principal amount of the Note which the bonds of
this Series secure then outstanding under the Term Loan Agreement
has been declared immediately due and payable pursuant to the
provisions of the Term Loan Agreement, specifying the date from
which unpaid interest on such Note has then accrued, and stating
that such declaration of maturity has not been rescinded. The
bonds of this Series shall be redeemed on the fifth business day
following receipt of the written demand as aforesaid. Upon the
occurrence of certain Events of Default under the Term Loan
Agreement, the bonds of this Series shall be redeemed on the
business day following receipt by the Trustee of notice from the
holder hereof of such Event of Default; the holder hereof shall
give notice to the Trustee of such Events of Default and of the
declaration of maturity as a consequence thereof but failure to
give such notice shall not affect the rights of the holder
hereof. Such redemption shall be rescinded and become null and
void for all purposes of the Indenture upon rescission in writing
of the aforesaid declaration of maturity under the Term Loan
Agreement received by the Trustee no later than the Business Day
prior to the date fixed for redemption, and thereupon no
redemption of the bonds of this Series and no payments in respect
thereof shall be effected or required.

<PAGE> 169
Notwithstanding the provisions of the previous
paragraph, in case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable in the manner and with the effect provided
in the Indenture.

The bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

<PAGE> 170
IN WITNESS WHEREOF, El Paso Electric Company has caused
this bond to be executed in its name by the manual or facsimile
signature of its President or one of its Vice-Presidents, and its
corporate seal or a facsimile thereof to be affixed hereto or
imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.

Dated: ______________

EL PASO ELECTRIC COMPANY

By______________________________
[Title]

ATTEST:

________________________
[Asst.] Secretary

Trustee's Certificate of Authentication

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee

By______________________________
Authorized Signature

<PAGE> 171
Appendix A-10

(Form of face of bond of Series Y-4)

No. $

EL PASO ELECTRIC COMPANY
Second Mortgage Bond, Series Y-4
Floating Rate Due ______ __, ____

El Paso Electric Company, a Texas corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to Canadian Imperial Bank of Commerce, or
registered assigns, the principal sum of $____ Dollars on the
dates set forth in the Notes referred to below and to pay to the
registered holder hereof interest on said sum as described below.
Both the principal of and the interest on this bond shall be
payable at the principal office or agency of the Company in New
York, New York, in any coin or currency of the United States of
America which at the time of payment is legal tender for public
and private debts provided that, at the option of the Company,
payment of interest may be made by check mailed to the address of
the person entitled thereto as shown on the registration books of
the Trustee.

This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture dated as of _________, 1994, given by the Company to
IBJ Schroder Bank & Trust Company (hereinafter sometimes referred
to as the "Trustee"), and indentures supplemental thereto,
heretofore or hereafter executed, to which indenture and
indentures supplemental thereto (hereinafter referred to
collectively as the "Indenture") reference is hereby made for a
description of the property mortgaged and pledged, the nature and
extent of the security and the rights, duties and immunities
thereunder of the Trustee and the rights of the holders of said
bonds and of the Trustee and of the Company in respect of such
security, and the limitations on such rights. By the terms of
the Indenture, the bonds to be secured thereby are issuable in
series which may vary as to date, amount, date of maturity, rate
of interest and in other respects as in the Indenture provided.

The bonds of this Series have been issued to Canadian
Imperial Bank of Commerce, as the institution named in the Term
Loan Agreement dated as of __________________, 1994 (the "Term
Loan Agreement"), to secure the payment of the principal of and
interest due on $___________ of Secured Notes due _________, ____
(the "Note"), executed by the Company and payable to such
institution, or order, in the principal amount set forth in the
Term Loan Agreement.

<PAGE> 172
Except as hereinafter provided, interest on this bond
accrues and is payable at the same rates (determined on a
weighted average basis if more than one rate is in effect with
respect to the Note) and on the same dates as interest is payable
on the Note under the terms of the Term Loan Agreement, which
provides for floating rate loans (all as provided for in the Term
Loan Agreement).

In the manner provided in the Indenture, the bonds of
this Series shall be redeemed in whole by payment of the
principal amount thereof plus accrued interest thereon to the
redemption date, upon receipt by the Trustee and the Company of a
written demand from the holder hereof. Such demand shall also
state that the principal amount of the Note which the bonds of
this Series secure then outstanding under the Term Loan Agreement
has been declared immediately due and payable pursuant to the
provisions of the Term Loan Agreement, specifying the date from
which unpaid interest on such Note has then accrued, and stating
that such declaration of maturity has not been rescinded. The
bonds of this Series shall be redeemed on the fifth business day
following receipt of the written demand as aforesaid. Upon the
occurrence of certain Events of Default under the Term Loan
Agreement, the bonds of this Series shall be redeemed on the
business day following receipt by the Trustee of notice from the
holder hereof of such Event of Default; the holder hereof shall
give notice to the Trustee of such Events of Default and of the
declaration of maturity as a consequence thereof but failure to
give such notice shall not affect the rights of the holder
hereof. Such redemption shall be rescinded and become null and
void for all purposes of the Indenture upon rescission in writing
of the aforesaid declaration of maturity under the Term Loan
Agreement received by the Trustee no later than the Business Day
prior to the date fixed for redemption, and thereupon no
redemption of the bonds of this Series and no payments in respect
thereof shall be effected or required.

<PAGE> 173
Notwithstanding the provisions of the previous
paragraph, in case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable in the manner and with the effect provided
in the Indenture.

The bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

<PAGE> 174
IN WITNESS WHEREOF, El Paso Electric Company has caused
this bond to be executed in its name by the manual or facsimile
signature of its President or one of its Vice-Presidents, and its
corporate seal or a facsimile thereof to be affixed hereto or
imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.

Dated: ______________

EL PASO ELECTRIC COMPANY

By______________________________
[Title]

ATTEST:

________________________
[Asst.] Secretary

Trustee's Certificate of Authentication

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee

By______________________________
Authorized Signature

<PAGE> 175
Appendix A-11

(Form of face of bond of Series Y-5)

No. $

EL PASO ELECTRIC COMPANY
Second Mortgage Bond, Series Y-5
Floating Rate Due ______ __, ____

El Paso Electric Company, a Texas corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to _________, as Agent under the Reimbursement
Agreement hereinafter described, or registered assigns, the
principal sum of up to $____ Dollars on the dates set forth in
the Reimbursement Agreement and to pay to the registered holder
hereof interest on said sum as described below. Both the
principal of and the interest on this bond shall be payable at
the principal office or agency of the Company in New York, New
York, in any coin or currency of the United States of America
which at the time of payment is legal tender for public and
private debts provided that, at the option of the Company,
payment of interest may be made by check mailed to the address of
the person entitled thereto as shown on the registration books of
the Trustee.

This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture dated as of _________, 1994, given by the Company to
IBJ Schroder Bank & Trust Company (hereinafter sometimes referred
to as the "Trustee"), and indentures supplemental thereto,
heretofore or hereafter executed, to which indenture and
indentures supplemental thereto (hereinafter referred to
collectively as the "Indenture") reference is hereby made for a
description of the property mortgaged and pledged, the nature and
extent of the security and the rights, duties and immunities
thereunder of the Trustee and the rights of the holders of said
bonds and of the Trustee and of the Company in respect of such
security, and the limitations on such rights. By the terms of
the Indenture, the bonds to be secured thereby are issuable in
series which may vary as to date, amount, date of maturity, rate
of interest and in other respects as in the Indenture provided.

The bonds of this Series have been issued to
____________, as Agent for the provider of a letter of credit to
the Company and certain creditors pursuant to a Class 5(a)
Reimbursement Agreement dated as of ____________, 1994 between
the Company and such institutions, as amended from time to time
(the "Reimbursement Agreement"), to secure the payment of
principal and interest due (which shall also, for purposes
hereof, include letter of credit commissions) thereunder (the

<PAGE> 176
"Obligations") of the Company that may be outstanding from time
to time under the Reimbursement Agreement. The principal amount
of this bond shall be deemed to equal the Commitment under the
Reimbursement Agreement.

Except as hereinafter provided, interest on this bond
accrues and is payable at the same rates (determined on a
weighted average basis if more than one rate or letter of credit
commission is in effect with respect to the Obligations) and on
the same dates as interest and letter of credit commissions are
payable under the terms of the Reimbursement Agreement, which
provides for floating rate loans (all as provided for in the
Reimbursement Agreement).

In the manner provided in the Indenture, the bonds of
this Series shall be redeemed in whole by payment of the
principal amount thereof plus accrued interest thereon to the
redemption date, upon receipt by the Trustee and the Company of a
written demand from the Agent. Such demand shall also state that
the principal amount of the Obligations which the bonds of this
Series secure then outstanding under the Reimbursement Agreement
has been declared immediately due and payable pursuant to the
provisions of the Reimbursement Agreement, specifying the date
from which unpaid interest on such Obligations has then accrued,
and stating that such declaration of maturity has not been
rescinded. The bonds of this Series shall be redeemed on the
fifth business day following receipt of the written demand as
aforesaid. Upon the occurrence of certain Events of Default
under the Reimbursement Agreement, the bonds of this Series shall
be redeemed on the fifth business day following receipt by the
Trustee of notice from the Agent of such Event of Default; the
Agent shall give notice to the Trustee of such Events of Default
and of the declaration of maturity as a consequence thereof but
failure to give such notice shall not affect the rights of the
Agent. Such redemption shall be rescinded and become null and

<PAGE> 177
void for all purposes of the Indenture upon rescission in writing
of the aforesaid declaration of maturity under the Reimbursement
Agreement received by the Trustee no later than the Business Day
prior to the date fixed for redemption, and thereupon no
redemption of the bonds of this Series and no payments in respect
thereof shall be effected or required.

This bond is nontransferable except to effect transfer
to any successor to the Agent under the Reimbursement Agreement,
but is exchangeable by the registered holder hereof, in person or
by attorney duly authorized, at the corporate trust office of the
Trustee, in New York, New York, any such permitted transfer or
exchange to be made in the manner and upon the conditions
prescribed in the Indenture, upon the surrender and cancellation
of this bond and the payment of any stamp tax or other
governmental charge, and upon any such transfer or exchange a new
registered bond or bonds of the same series and maturity date and
for the same aggregate principal amount, in authorized
denominations, will be issued to the transferee, or the
registered holder, as the case may be, in exchange herefor. The
Company and the Trustee may deem and treat the person in whose
name this bond is registered as the absolute owner for the
purpose of receiving payment and for all other purposes.

The bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

<PAGE> 178
This bond shall not be valid or become obligatory for
any purpose unless and until it shall have been duly
authenticated by the execution by or on behalf of the Trustee or
its successor in trust under the Indenture of the certificate
hereon.

IN WITNESS WHEREOF, El Paso Electric Company has caused
this bond to be executed in its name by the manual or facsimile
signature of its President or one of its Vice-Presidents, and its
corporate seal or a facsimile thereof to be affixed hereto or
imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.

Dated: ______________

EL PASO ELECTRIC COMPANY

By______________________________
[Title]

ATTEST:

________________________
[Asst.] Secretary

Trustee's Certificate of Authentication

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee

By______________________________
Authorized Signature

<PAGE> 179
Appendix A-12

(Form of face of bond of Series Y-6)

No. $

EL PASO ELECTRIC COMPANY
Second Mortgage Bond, Series Y-6
Floating Rate Due ______ __, ____

El Paso Electric Company, a Texas corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to Credit Suisse, as Agent under the
Reimbursement Agreement hereinafter described, or registered
assigns, the principal sum of up to $____ Dollars on the dates
set forth in the Reimbursement Agreement and to pay to the
registered holder hereof interest on said sum as described below.
Both the principal of and the interest on this bond shall be
payable at the principal office or agency of the Company in New
York, New York, in any coin or currency of the United States of
America which at the time of payment is legal tender for public
and private debts provided that, at the option of the Company,
payment of interest may be made by check mailed to the address of
the person entitled thereto as shown on the registration books of
the Trustee.

This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture dated as of _________, 1994, given by the Company to
IBJ Schroder Bank & Trust Company (hereinafter sometimes referred
to as the "Trustee"), and indentures supplemental thereto,
heretofore or hereafter executed, to which indenture and
indentures supplemental thereto (hereinafter referred to
collectively as the "Indenture") reference is hereby made for a
description of the property mortgaged and pledged, the nature and
extent of the security and the rights, duties and immunities
thereunder of the Trustee and the rights of the holders of said
bonds and of the Trustee and of the Company in respect of such
security, and the limitations on such rights. By the terms of
the Indenture, the bonds to be secured thereby are issuable in
series which may vary as to date, amount, date of maturity, rate
of interest and in other respects as in the Indenture provided.

The bonds of this Series have been issued to Credit
Suisse, as Agent for the provider of a letter of credit to the
Company and certain creditors pursuant to a Class 5(b)
Reimbursement Agreement dated as of ____________, 1994 between
the Company and such institutions, as amended from time to time
(the "Reimbursement Agreement"), to secure the payment of
principal and interest due (which shall also, for purposes
hereof, include letter of credit commissions) thereunder (the

<PAGE> 180
"Obligations") of the Company that may be outstanding from time
to time under the Reimbursement Agreement. The principal amount
of this bond shall be deemed to equal the Commitments under the
Reimbursement Agreement.

In the manner provided in the Indenture, the bonds of
this Series shall be redeemed in whole by payment of the
principal amount thereof plus accrued interest thereon to the
redemption date, upon receipt by the Trustee and the Company of a
written demand from the Agent. Such demand shall also state that
the principal amount of the Obligations which the bonds of this
Series secure then outstanding under the Reimbursement Agreement
has been declared immediately due and payable pursuant to the
provisions of the Reimbursement Agreement, specifying the date
from which unpaid interest on such Obligations has then accrued,
and stating that such declaration of maturity has not been
rescinded. The bonds of this Series shall be redeemed on the
fifth business day following receipt of the written demand as
aforesaid. Upon the occurrence of certain Events of Default
under the Reimbursement Agreement, the bonds of this Series shall
be redeemed on the fifth business day following receipt by the
Trustee of notice from the Agent of such Event of Default; the
Agent shall give notice to the Trustee of such Events of Default
and of the declaration of maturity as a consequence thereof but
failure to give such notice shall not affect the rights of the
Agent. Such redemption shall be rescinded and become null and

<PAGE> 181
void for all purposes of the Indenture upon rescission in writing
of the aforesaid declaration of maturity under the Reimbursement
Agreement received by the Trustee no later than the Business Day
prior to the date fixed for redemption, and thereupon no
redemption of the bonds of this Series and no payments in respect
thereof shall be effected or required.

The bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

<PAGE> 182
This bond shall not be valid or become obligatory for
any purpose unless and until it shall have been duly
authenticated by the execution by or on behalf of the Trustee or
its successor in trust under the Indenture of the certificate
hereon.

Dated: ______________

EL PASO ELECTRIC COMPANY

By______________________________
[Title]

ATTEST:

________________________
[Asst.] Secretary

Trustee's Certificate of Authentication

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee

By______________________________
Authorized Signature

<PAGE> 183
Appendix A-13

(Form of face of bond of Series Y-7)

No. $

EL PASO ELECTRIC COMPANY
Second Mortgage Bond, Series Y-7
Floating Rate Due ______ __, ____

This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture dated as of _________, 1994, given by the Company to
IBJ Schroder Bank & Trust Company (hereinafter sometimes referred
to as the "Trustee"), and indentures supplemental thereto,
heretofore or hereafter executed, to which indenture and
indentures supplemental thereto (hereinafter referred to
collectively as the "Indenture") reference is hereby made for a
description of the property mortgaged and pledged, the nature and
extent of the security and the rights, duties and immunities
thereunder of the Trustee and the rights of the holders of said
bonds and of the Trustee and of the Company in respect of such
security, and the limitations on such rights. By the terms of
the Indenture, the bonds to be secured thereby are issuable in
series which may vary as to date, amount, date of maturity, rate
of interest and in other respects as in the Indenture provided.

The bonds of this Series have been issued to
____________, as Agent for the provider of a letter of credit to
the Company and certain creditors pursuant to a Class 5(c)
Reimbursement Agreement dated as of ____________, 1994 between
the Company and such institutions, as amended from time to time
(the "Reimbursement Agreement"), to secure the payment of
principal and interest due (which shall also, for purposes
hereof, include letter of credit commissions) thereunder (the

<PAGE> 184
"Obligations") of the Company that may be outstanding from time
to time under the Reimbursement Agreement. The principal amount
of this bond shall be deemed to equal the Commitments under the
Reimbursement Agreement.

Except as hereinafter provided, interest on this bond
accrues and is payable at the same rates (determined on a
weighted average basis if more than one rate or letter of credit
commission is in effect with respect to the Obligations) and on
the same dates as interest and letter of credit commissions
payable under the terms of the Reimbursement Agreement, which
provides for floating rate loans (all as provided for in the
Reimbursement Agreement).

In the manner provided in the Indenture, the bonds of
this Series shall be redeemed in whole by payment of the
principal amount thereof plus accrued interest thereon to the
redemption date, upon receipt by the Trustee and the Company of a
written demand from the Agent. Such demand shall also state that
the principal amount of the Obligations which the bonds of this
Series secure then outstanding under the Reimbursement Agreement
has been declared immediately due and payable pursuant to the
provisions of the Reimbursement Agreement, specifying the date
from which unpaid interest on such Obligations has then accrued,
and stating that such declaration of maturity has not been
rescinded. The bonds of this Series shall be redeemed on the
fifth business day following receipt of the written demand as
aforesaid. Upon the occurrence of certain Events of Default
under the Reimbursement Agreement, the bonds of this Series shall
be redeemed on the fifth business day following receipt by the
Trustee of notice from the Agent of such Event of Default; the
Agent shall give notice to the Trustee of such Events of Default
and of the declaration of maturity as a consequence thereof but
failure to give such notice shall not affect the rights of the
Agent. Such redemption shall be rescinded and become null and

<PAGE> 185
void for all purposes of the Indenture upon rescission in writing
of the aforesaid declaration of maturity under the Reimbursement
Agreement received by the Trustee no later than the Business Day
prior to the date fixed for redemption, and thereupon no
redemption of the bonds of this Series and no payments in respect
thereof shall be effected or required.

The bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

<PAGE> 186
This bond shall not be valid or become obligatory for
any purpose unless and until it shall have been duly
authenticated by the execution by or on behalf of the Trustee or
its successor in trust under the Indenture of the certificate
hereon.

Dated: ______________

EL PASO ELECTRIC COMPANY

By______________________________
[Title]

ATTEST:

________________________
[Asst.] Secretary

Trustee's Certificate of Authentication

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee

By______________________________
Authorized Signature

<PAGE> 187
Appendix A-14

(Form of face of bond of Series Y-8)

No. $

EL PASO ELECTRIC COMPANY
Second Mortgage Bond, Series Y-8
Floating Rate Due ______ __, ____

El Paso Electric Company, a Texas corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to _________, as Agent under the Reimbursement
Agreement hereinafter described, or registered assigns, the
principal sum of up to $____ Dollars on _______, ____, and to
pay to the registered holder hereof interest on said sum as
described below. Both the principal of and the interest on this
bond shall be payable at the principal office or agency of the
Company in New York, New York, in any coin or currency of the
United States of America which at the time of payment is legal
tender for public and private debts provided that, at the option
of the Company, payment of interest may be made by check mailed
to the address of the person entitled thereto as shown on the
registration books of the Trustee.

This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture dated as of _________, 1994, given by the Company to
IBJ Schroder Bank & Trust Company (hereinafter sometimes referred
to as the "Trustee"), and indentures supplemental thereto,
heretofore or hereafter executed, to which indenture and
indentures supplemental thereto (hereinafter referred to
collectively as the "Indenture") reference is hereby made for a
description of the property mortgaged and pledged, the nature and
extent of the security and the rights, duties and immunities
thereunder of the Trustee and the rights of the holders of said
bonds and of the Trustee and of the Company in respect of such
security, and the limitations on such rights. By the terms of
the Indenture, the bonds to be secured thereby are issuable in
series which may vary as to date, amount, date of maturity, rate
of interest and in other respects as in the Indenture provided.

The bonds of this Series have been issued to
____________, as Agent for the provider of a letter of credit to
the Company and certain creditors pursuant to a Class 11
Reimbursement Agreement dated as of ____________, 1994 between
the Company and such institution, as amended from time to time
(the "Reimbursement Agreement"), to secure the payment of
principal and interest due (which shall also, for purposes
hereof, include letter of credit commissions) thereunder (the

<PAGE> 188
"Obligations") of the Company that may be outstanding from time
to time under the Reimbursement Agreement. The principal amount
of this bond shall be deemed to equal the Commitment under the
Reimbursement Agreement.

In the manner provided in the Indenture, the bonds of
this Series shall be redeemed in whole by payment of the
principal amount thereof plus accrued interest thereon to the
redemption date, upon receipt by the Trustee and the Company of a
written demand from the Agent. Such demand shall also state that
the principal amount of the Obligations which the bonds of this
Series secure then outstanding under the Reimbursement Agreement
has been declared immediately due and payable pursuant to the
provisions of the Reimbursement Agreement, specifying the date
from which unpaid interest on such Obligations has then accrued,
and stating that such declaration of maturity has not been
rescinded. The bonds of this Series shall be redeemed on the
fifth business day following receipt of the written demand as
aforesaid. Upon the occurrence of certain Events of Default
under the Reimbursement Agreement, the bonds of this Series shall
be redeemed on the fifth business day following receipt by the
Trustee of notice from the Agent of such Event of Default; the
Agent shall give notice to the Trustee of such Events of Default
and of the declaration of maturity as a consequence thereof but
failure to give such notice shall not affect the rights of the
Agent. Such redemption shall be rescinded and become null and

<PAGE> 189
void for all purposes of the Indenture upon rescission in writing
of the aforesaid declaration of maturity under the Reimbursement
Agreement received by the Trustee no later than the Business Day
prior to the date fixed for redemption, and thereupon no
redemption of the bonds of this Series and no payments in respect
thereof shall be effected or required.

The bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

<PAGE> 190
This bond shall not be valid or become obligatory for
any purpose unless and until it shall have been duly
authenticated by the execution by or on behalf of the Trustee or
its successor in trust under the Indenture of the certificate
hereon.

Dated: ______________

EL PASO ELECTRIC COMPANY

By______________________________
[Title]

ATTEST:

________________________
[Asst.] Secretary

Trustee's Certificate of Authentication

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee

By______________________________
Authorized Signature

<PAGE> 191
Appendix A-15

(Form of face of bond of Series Z)

No. $

EL PASO ELECTRIC COMPANY
Second Mortgage Bond, Series Z
Floating Rate Due ______ __, ____

This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture dated as of _________, 1994, given by the Company to
IBJ Schroder Bank & Trust Company (hereinafter sometimes referred
to as the "Trustee"), and indentures supplemental thereto,
heretofore or hereafter executed, to which indenture and
indentures supplemental thereto (hereinafter referred to
collectively as the "Indenture") reference is hereby made for a
description of the property mortgaged and pledged, the nature and
extent of the security and the rights, duties and immunities
thereunder of the Trustee and the rights of the holders of said
bonds and of the Trustee and of the Company in respect of such
security, and the limitations on such rights. By the terms of
the Indenture, the bonds to be secured thereby are issuable in
series which may vary as to date, amount, date of maturity, rate
of interest and in other respects as in the Indenture provided.

The bonds of this Series have been issued to
____________, as Agent for the institutions named in the Term
Loan Agreement dated as of ____________, 1994 (the "Term Loan
Agreement"), to secure the payment of the principal of and
interest due on $_________ of Class 6A Secured Notes due
__________, ____ (the "Notes"), executed by the Company and
payable to such institutions, or order, in the principal amounts
set opposite their respective names in the Term Loan Agreement.

<PAGE> 192
Except as hereinafter provided, interest on this bond
accrues and is payable at the same rates (determined on a
weighted average basis if more than one rate is in effect with
respect to the Notes) and on the same dates as interest is
payable on the Notes under the terms of the Credit Agreement,
which provides for floating rate loans (all as provided for in
the Term Loan Agreement).

<PAGE> 193
Notwithstanding the provisions of the previous
paragraph, in case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable in the manner and with the effect provided
in the Indenture.

This bond is nontransferable except to effect transfer
to any successor to the Agent under the Term Loan Agreement, but
is exchangeable by the registered holder hereof, in person or by
attorney duly authorized, at the corporate trust office of the
Trustee, in New York, New York, any such permitted transfer or
exchange to be made in the manner and upon the conditions
prescribed in the Indenture, upon the surrender and cancellation
of this bond and the payment of any stamp tax or other
governmental charge, and upon any such transfer or exchange a new
registered bond or bonds of the same series and maturity date and
for the same aggregate principal amount, in authorized
denominations, will be issued to the transferee, or the
registered holder, as the case may be, in exchange herefor. The
Company and the Trustee may deem and treat the person in whose
name this bond is registered as the absolute owner for the
purpose of receiving payment and for all other purposes.

The bond shall be deemed to be governed by and
construed in accordance with the laws of the State of New York.

<PAGE> 194
IN WITNESS WHEREOF, El Paso Electric Company has caused
this bond to be executed in its name by the manual or facsimile
signature of its President or one of its Vice-Presidents, and its
corporate seal or a facsimile thereof to be affixed hereto or
imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.

Dated: ______________

EL PASO ELECTRIC COMPANY

By______________________________
[Title]

ATTEST:

________________________
[Asst.] Secretary

Trustee's Certificate of Authentication

This is one of the bonds of the series designated
therein, described in the within-mentioned Indenture.

IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee

By______________________________
Authorized Signature

<PAGE> 1

EXHIBIT A-15

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

EL PASO ELECTRIC COMPANY

and

UNITED STATES TRUST COMPANY OF NEW YORK,

Trustee

___________________

INDENTURE

Dated as of ____________, 1994

___________________

Senior Debt Securities

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

<PAGE> 2
TABLE OF CONTENTS*

__________

Page

RECITALS OF THE COMPANY. . . . . . . . . . . . . . . . . . . . 1

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION. . . . . . . . . . 1

SECTION 101. Definitions. . . . . . . . . . . . . . . . . . . 1
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent. . . . . . . . . . . . . . . . . . . 2
Board of Directors. . . . . . . . . . . . . . . . . . . . 2
Board Resolution. . . . . . . . . . . . . . . . . . . . . 2
Business Day. . . . . . . . . . . . . . . . . . . . . . . 2
Change in Control . . . . . . . . . . . . . . . . . . . . 2
Commission. . . . . . . . . . . . . . . . . . . . . . . . 3
Company . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Request" or "Company Order. . . . . . . . . . . . 3
Corporate Trust Office. . . . . . . . . . . . . . . . . . 3
Corporation . . . . . . . . . . . . . . . . . . . . . . . 3
Defaulted Interest. . . . . . . . . . . . . . . . . . . . 3
Depositary. . . . . . . . . . . . . . . . . . . . . . . . 3
Discharged. . . . . . . . . . . . . . . . . . . . . . . . 4
Event of Default. . . . . . . . . . . . . . . . . . . . . 4
Exchange Act. . . . . . . . . . . . . . . . . . . . . . . 4
Global Security . . . . . . . . . . . . . . . . . . . . . 4
Holder. . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture . . . . . . . . . . . . . . . . . . . . . . . . 4
interest. . . . . . . . . . . . . . . . . . . . . . . . . 4
Interest Payment Date . . . . . . . . . . . . . . . . . . 4
Maturity. . . . . . . . . . . . . . . . . . . . . . . . . 4
Mortgage. . . . . . . . . . . . . . . . . . . . . . . . . 4
Mortgage Inentures. . . . . . . . . . . . . . . . . . . . 5
Officers' Certificate . . . . . . . . . . . . . . . . . . 5
Opinion of Counsel. . . . . . . . . . . . . . . . . . . . 5
Original Issue Discount Security. . . . . . . . . . . . . 5
Outstanding . . . . . . . . . . . . . . . . . . . . . . . 5
Paying Agent. . . . . . . . . . . . . . . . . . . . . . . 6
Person. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Place of Payment. . . . . . . . . . . . . . . . . . . . . 6
Predecessor Security. . . . . . . . . . . . . . . . . . . 6
Redemption Date . . . . . . . . . . . . . . . . . . . . . 7
Redemption Price. . . . . . . . . . . . . . . . . . . . . 7
Regular Record Date . . . . . . . . . . . . . . . . . . . 7
Responsible Officer . . . . . . . . . . . . . . . . . . . 7
________________
* Note: This table of contents shall not, for any purpose, be
deemed to be a part of the Indenture.

<PAGE> 3
Securities. . . . . . . . . . . . . . . . . . . . . . . . 7
Security Register" and "Security Registrar. . . . . . . . 7
Significant Subsidiary. . . . . . . . . . . . . . . . . . 7
Special Record Date . . . . . . . . . . . . . . . . . . . 7
Stated Maturity . . . . . . . . . . . . . . . . . . . . . 7
Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . 7
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 8
Total Capital . . . . . . . . . . . . . . . . . . . . . . 8
Trust Indenture Act . . . . . . . . . . . . . . . . . . . 8
U.S. Government Obligations . . . . . . . . . . . . . . . 8
Vice President. . . . . . . . . . . . . . . . . . . . . . 9

SECTION 102. Compliance Certificates and Opinions . . . . . . 9

SECTION 103. Form of Documents Delivered to Trustee . . . . . 9

SECTION 104. Acts of Holders. . . . . . . . . . . . . . . . . 10

SECTION 105. Notices, Etc., to Trustee and Company. . . . . . 12

SECTION 106. Notice to Holders; Waiver. . . . . . . . . . . . 12

SECTION 107. Conflict with Trust Indenture Act. . . . . . . . 12

SECTION 108. Effect of Headings and Table of Contents . . . . 13

SECTION 109. Successors and Assigns . . . . . . . . . . . . . 13

SECTION 110. Separability Clause. . . . . . . . . . . . . . . 13

SECTION 111. Benefits of Indenture. . . . . . . . . . . . . . 13

SECTION 112. Governing Law. . . . . . . . . . . . . . . . . . 13

SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . 13

SECTION 114. Incorporators, Stockholders, Officers and
Directors of the Company Exempt from
Individual Liability . . . . . . . . . . . . . . 13

SECTION 115. Counterparts . . . . . . . . . . . . . . . . . . 14

SECTION 116. Currency Exchange. . . . . . . . . . . . . . . . 14

<PAGE> 4
ARTICLE TWO

SECURITY FORMS. . . . . . . . . . . . 14

SECTION 201. Forms Generally. . . . . . . . . . . . . . . . . 14

SECTION 202. Form of Face of Security . . . . . . . . . . . . 15

SECTION 203. Form of Reverse of Security. . . . . . . . . . . 17

SECTION 204. Form of Trustee's Certificate of
Authentication . . . . . . . . . . . . . . . . . 22

ARTICLE THREE

THE SECURITIES. . . . . . . . . . . . 22

SECTION 301. Amount Unlimited; Issuable in Series . . . . . . 22

SECTION 301A. Initial Issuance of Securities . . . . . . . . . 25

SECTION 302. Denominations. . . . . . . . . . . . . . . . . . 26

SECTION 303. Execution, Authentication, Delivery and
Dating . . . . . . . . . . . . . . . . . . . . . 26

SECTION 304. Temporary Securities . . . . . . . . . . . . . . 28

SECTION 305. Registration, Registration of Transfer and
Exchange . . . . . . . . . . . . . . . . . . . . 28

SECTION 306. Mutilated, Destroyed, Lost and Stolen
Securities . . . . . . . . . . . . . . . . . . . 30

SECTION 307. Payment of Interest; Interest Rights
Preserved. . . . . . . . . . . . . . . . . . . . 31

SECTION 308. Persons Deemed Owners. . . . . . . . . . . . . . 32

SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . 33

SECTION 310. Computation of Interest. . . . . . . . . . . . . 33

<PAGE> 5
ARTICLE FOUR

SATISFACTION AND DISCHARGE. . . . . . . . . 33

SECTION 401. Satisfaction and Discharge of Indenture. . . . . 33

SECTION 402. Application of Trust Money . . . . . . . . . . . 35

SECTION 403. Satisfaction, Discharge and Defeasance of
Securities of any Series . . . . . . . . . . . . 36

ARTICLE FIVE

REMEDIES . . . . . . . . . . . . . 39

SECTION 501. Events of Default. . . . . . . . . . . . . . . . 39

SECTION 502. Acceleration of Maturity; Rescission and
Annulment. . . . . . . . . . . . . . . . . . . . 41

SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee . . . . . . . . . . . . . 43

SECTION 504. Trustee May File Proofs of Claim . . . . . . . . 44

SECTION 505. Trustee May Enforce Claims Without Possession
of Securities. . . . . . . . . . . . . . . . . . 45

SECTION 506. Application of Money Collected . . . . . . . . . 45

SECTION 507. Limitation on Suits. . . . . . . . . . . . . . . 46

SECTION 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest. . . . . . . . . 47

SECTION 509. Restoration of Rights and Remedies . . . . . . . 47

SECTION 510. Rights and Remedies Cumulative . . . . . . . . . 47

SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . 48

SECTION 512. Control by Holders . . . . . . . . . . . . . . . 48

SECTION 513. Waiver of Past Defaults. . . . . . . . . . . . . 49

SECTION 514. Undertaking for Costs. . . . . . . . . . . . . . 49

SECTION 515. Waiver of Stay or Extension Laws . . . . . . . . 50

<PAGE> 6
ARTICLE SIX

THE TRUSTEE . . . . . . . . . . . . 50

SECTION 601. Certain Duties and Responsibilities. . . . . . . 50

SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . 51

SECTION 603. Certain Rights of Trustee. . . . . . . . . . . . 52

SECTION 604. Not Responsible for Recitals or Issuance of
Securities . . . . . . . . . . . . . . . . . . . 53

SECTION 605. May Hold Securities. . . . . . . . . . . . . . . 53

SECTION 606. Money Held in Trust. . . . . . . . . . . . . . . 53

SECTION 607. Compensation and Reimbursement . . . . . . . . . 54

SECTION 608. Disqualification; Conflicting Interests. . . . . 54

SECTION 609. Corporate Trustee Required; Eligibility. . . . . 55

SECTION 610. Resignation and Removal; Appointment of
Successor. . . . . . . . . . . . . . . . . . . . 55

SECTION 611. Acceptance of Appointment by Successor . . . . . 57

SECTION 612. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . . . . 58

SECTION 613. Preferential Collection of Claims Against
Company. . . . . . . . . . . . . . . . . . . . . 58

SECTION 614. Authenticating Agents. . . . . . . . . . . . . . 58

SECTION 615. Appointment of Separate or Co-Trustee. . . . . . 60

ARTICLE SEVEN

HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY. . . 61

SECTION 701. Company to Furnish Trustee Names and Addresses
of Holders . . . . . . . . . . . . . . . . . . . 61

SECTION 702. Preservation of Information; Communications to
Holders. . . . . . . . . . . . . . . . . . . . . 61

<PAGE> 7
SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . 61

SECTION 704. Reports by Company . . . . . . . . . . . . . . . 62

ARTICLE EIGHT

CONSOLIDATION, MERGER, CONVEYANCE, SALE OR LEASE . . . 62

SECTION 801. Company May Consolidate, Etc., Only on
Certain Terms. . . . . . . . . . . . . . . . . . 62

SECTION 802. Successor Corporation to be Substituted. . . . . 63

ARTICLE NINE

SUPPLEMENTAL INDENTURES . . . . . . . . . 64

SECTION 901. Supplemental Indentures without Consent of
Holders. . . . . . . . . . . . . . . . . . . . . 64

SECTION 902. Supplemental Indentures with Consent of
Holders. . . . . . . . . . . . . . . . . . . . . 65

SECTION 903. Execution of Supplemental Indentures . . . . . . 66

SECTION 904. Effect of Supplemental Indentures. . . . . . . . 67

SECTION 905. Conformity with Trust Indenture Act. . . . . . . 67

SECTION 906. Reference in Securities to Supplemental
Indentures . . . . . . . . . . . . . . . . . . . 67

ARTICLE TEN

COVENANTS. . . . . . . . . . . . . 67

SECTION 1001. Payment of Principal, Premium and Interest. . . 67

SECTION 1002. Maintenance of Office or Agency . . . . . . . . 67

SECTION 1003. Money for Securities Payments to Be Held
in Trust. . . . . . . . . . . . . . . . . . . . 68

SECTION 1004. Corporate Existence . . . . . . . . . . . . . . 69

SECTION 1005. Maintenance of Properties . . . . . . . . . . . 70

<PAGE> 8
SECTION 1006. Payment of Taxes and Other Claims . . . . . . . 70

SECTION 1007. Statement by Officers as to Default . . . . . . 70

SECTION 1008. Defeasance of Certain Obligations . . . . . . . 70

SECTION 1009. Waiver of Certain Covenants . . . . . . . . . . 72

SECTION 1010. Notice to Trustee.. . . . . . . . . . . . . . . 72

SECTION 1011. To Insure.. . . . . . . . . . . . . . . . . . . 73

SECTION 1012. Limitations on Liens. . . . . . . . . . . . . . 73

SECTION 1013. Purchase of Securities Upon Change in
Control.. . . . . . . . . . . . . . . . . . . . 75

ARTICLE ELEVEN

REDEMPTION OF SECURITIES . . . . . . . . . 77

SECTION 1101. Applicability of Article. . . . . . . . . . . . 77

SECTION 1102. Election to Redeem; Notice to Trustee . . . . . 78

SECTION 1103. Selection by Trustee of Securities to
Be Redeemed . . . . . . . . . . . . . . . . . . 78

SECTION 1104. Notice of Redemption. . . . . . . . . . . . . . 79

SECTION 1105. Deposit of Redemption Price . . . . . . . . . . 79

SECTION 1106. Securities Payable on Redemption Date . . . . . 80

SECTION 1107. Securities Redeemed in Part . . . . . . . . . . 80

ARTICLE TWELVE

SINKING FUNDS. . . . . . . . . . . . 80

SECTION 1201. Applicability of Article. . . . . . . . . . . . 80

SECTION 1202. Satisfaction of Sinking Fund Payments with
Securities. . . . . . . . . . . . . . . . . . . 81

SECTION 1203. Redemption of Securities for Sinking Fund . . . 81

<PAGE> 9
APPENDIX A-1 Form of Series A Senior Notes

APPENDIX A-2 Form of Class 13 Senior Notes

<PAGE> 10
INDENTURE, dated as of ____________, 1994, between
EL PASO ELECTRIC COMPANY, a corporation duly organized and
existing under the laws of the State of Texas (herein called the
"Company"), having its principal office in El Paso, Texas and
UNITED STATES TRUST COMPANY OF NEW YORK, a corporation duly
organized and existing under the laws of New York, as Trustee
(herein called the "Trustee").

RECITALS OF THE COMPANY

The Company has duly authorized the execution and
delivery of this Indenture to provide for the issuance from time
to time of certain of its senior unsecured debentures, notes or
other evidences of indebtedness (herein called the "Securities"),
to be issued in one or more series as in this Indenture provided.

The Company is entering into this Indenture pursuant to
the terms of that Modified Third Amended Plan of Reorganization
(the "Plan"), dated August 27, 1993 and corrected on
September 15, 1993, of the Company filed in the United States
Bankruptcy Court, Western District of Texas, Chapter 11 Case No.
92-10148-FM.

All things necessary to make this Indenture a valid and
binding agreement of the Company, enforceable in accordance with
its terms, have been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the
purchase of the Securities by the Holders thereof (or the
issuance thereof under Section 301A hereof), it is mutually
covenanted and agreed, for the equal and proportionate benefit of
all Holders of the Securities or of series thereof, as follows:

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION

SECTION 101. Definitions.

For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:

(1) the terms defined in this Article have the
meanings assigned to them in this Article and include the
plural as well as the singular;

(2) all other terms used herein which are defined in
the Trust Indenture Act, or by Commission rule or regulation
under the Trust Indenture Act, either directly or by
reference therein, have the meanings assigned to them
therein;

<PAGE> 11
(3) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with
generally accepted accounting principles as applied in the
United States, and, except as otherwise herein expressly
provided, the term "generally accepted accounting
principles" with respect to any computation required or
permitted hereunder shall mean such accounting principles as
are generally accepted at the date of such computation;

(4) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other
subdivision; and

(5) references to "Sections" herein, unless otherwise
denominated, are references to specified sections of this
Indenture.

"Act", when used with respect to any Holder, has the
meaning specified in Section 104.

"Affiliate" of any specified Person means any other
Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified
Person. For the purposes of this definition, "control" when used
with respect to any specified Person means the power to direct
the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

"Authenticating Agent" means any Person authorized to
authenticate and deliver Securities on behalf of the Trustee
pursuant to Section 614.

"Board of Directors" means either the board of
directors of the Company or any duly authorized committee of that
Board.

"Board Resolution" means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the
Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification,
and delivered to the Trustee.

"Business Day", when used with respect to any Place of
Payment, means each day which is not a Saturday, a Sunday or a
day on which banking institutions or trust companies in that
Place of Payment are authorized or obligated by law or executive
order to remain closed.

"Change in Control" with respect to the Company shall
mean such time as (i) any "person" or "group" (each as defined in
Section 13(d) and Section 14(d) of the Exchange Act), excluding

<PAGE> 12
the Company and its affiliates, becomes the "beneficial owner"
(as defined in Rule 13d-3 and 13d-5 of the Exchange Act) or
thirty-five percent (35%) or more of the common stock of the
Company or (ii) any such "person" or "group" other than the
Company and its affiliates acquires, or obtains the right to
acquire, the right to elect two-thirds of the members of the
Board of Directors of the Company.

"Commission" means the Securities and Exchange
Commission, as from time to time constituted, created under the
Securities Exchange Act of 1934, as amended, or, if at any time
after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the
Trust Indenture Act, then the body performing such duties at such
time.

"Company" means the Person named as the "Company" in
the first paragraph of this instrument until a successor
corporation shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation.

"Company Request" or "Company Order" means a written
request or order signed in the name of the Company by its
President or a Vice President, or, if authorized by a power of
attorney executed by any of such officers, by such other person
as may be authorized in such power of attorney and delivered to
the Trustee.

"Corporate Trust Office" means the principal corporate
trust office of the Trustee at which at any particular time its
corporate trust business shall be principally administered, which
at the date hereof is 114 West 47th Street, New York, New York
10036; Attention: Corporate Trust and Agency Division.

"Corporation" includes corporations, associations,
companies and business trusts.

"Defaulted Interest" has the meaning specified in
Section 307.

"Depositary" means, with respect to the Securities of
any series issuable or issued in whole or in part in the form of
one or more Global Securities, the Person designated as
Depositary by the Company pursuant to Section 301, which must be
a clearing agency registered under the Securities Exchange Act of
1934, as amended, and, if so provided pursuant to Section 301
with respect to the Securities of a series, any successor to such
Person. If at any time there is more than one such Person,
"Depositary" shall mean, with respect to any series of
Securities, the qualifying entity which has been appointed with
respect to the Securities of that series.

<PAGE> 13
"Discharged" means, with respect to the Securities of
any series, the discharge of the entire indebtedness represented
by, and obligations of the Company under, the Securities of such
series and the satisfaction of all the obligations of the Company
under this Indenture relating to the Securities of such series,
except (A) the rights of Holders of the Securities of such series
to receive, from the trust fund described in Section 403 hereof,
payment of the principal of and interest and premium, if any, on
the Securities of such series when such payments are due, (B) the
Company's obligations with respect to the Securities of such
series with respect to registration, transfer, exchange and
maintenance of a Place of Payment and (C) the rights, powers,
trusts, duties, protections and immunities of the Trustee under
this Indenture.

"Event of Default" has the meaning specified in
Section 501.

"Exchange Act" means the Securities Exchange Act of
1934, as amended.

"Global Security" means a Security evidencing all or
part of a series of Securities, issued to the Depositary for such
series or its nominee and registered in the name of such
Depositary or nominee.

"Holder" means a Person in whose name a Security is
registered in the Security Register.

"Indenture" means this instrument as originally
executed or as it may from time to time be supplemented or
amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof and shall
include the terms of particular series of Securities established
as contemplated by Section 301.

"interest", when used with respect to an Original Issue
Discount Security which by its terms bears interest only after
Maturity, means interest payable after Maturity.

"Interest Payment Date", when used with respect to any
Security, means the Stated Maturity of an instalment of interest
on such Security.

"Maturity", when used with respect to any Security,
means the date on which the principal of such Security or an
instalment of principal becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration
of acceleration, call for redemption or otherwise.

"Mortgage" means any mortgage, deed of trust, pledge,
lien, security interest or other encumbrance.

<PAGE> 14
"Mortgage Indentures" means the two indentures to be
entered into by the Company pursuant to the Plan referred to in
the Recitals hereto relating to the First Mortgage Bonds and
Second Mortgage Bonds of the Company, and any extension, renewal,
replacement or refunding thereof.

"Officers' Certificate" means a certificate signed by
the President or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, of
the Company, and delivered to the Trustee, provided, that in
respect of Section 1007, Officers' Certificate means a
certificate signed by the principal executive officer, principal
financial officer or principal accounting officer of the Company,
and delivered to the Trustee.

"Opinion of Counsel" means a written opinion of
counsel, who may be an employee of or counsel to the Company,
acceptable to the Trustee.

"Original Issue Discount Security" means any Security
which provides for an amount less than the principal amount
thereof to be due and payable upon a declaration of acceleration
of the Maturity thereof pursuant to Section 502.

"Outstanding", when used with respect to Securities,
means, as of the date of determination, all Securities
theretofore authenticated and delivered under this Indenture,
except:

(i) Securities theretofore cancelled by the
Trustee or delivered to the Trustee for cancellation;

(ii) Securities, or portions thereof, for whose
payment or redemption money in the necessary amount has
been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set
aside and segregated in trust by the Company (if the
Company shall act as its own Paying Agent) for the
Holders of such Securities; provided that, if such
Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the
Trustee has been made; and

(iii) Securities which have been paid pursuant to
Section 306 or in exchange for or in lieu of which
other Securities have been authenticated and delivered
pursuant to this Indenture, other than any such
Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that
such Securities are held by a bona fide purchaser in
whose hands such Securities are valid obligations of
the Company;

<PAGE> 15
provided, however, that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have
given any request, demand, authorization, direction, notice,
consent or waiver hereunder, (a) the principal amount of an
Original Issue Discount Security that shall be deemed to be
Outstanding for such purposes shall be the amount of the
principal thereof that would be due and payable as of the date of
such determination upon a declaration of acceleration of the
Maturity thereof pursuant to Section 502, and (b) Securities
owned by the Company or any other obligor upon the Securities or
any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that in
determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be
so owned shall be so disregarded. Securities so owned as
described in (b) above which have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with
respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate
of the Company or of such other obligor. In case of a dispute as
to such right, the advice of counsel shall be full protection in
respect of any decision made by the Trustee in accordance with
such advice. Upon request of the Trustee, the Company shall
furnish to the Trustee promptly an Officers' Certificate listing
and identifying all Securities, if any, known by the Company to
be owned or held by or for the account of any of the above-
described persons; and, subject to Section 601, the Trustee shall
be entitled to accept such Officers' Certificate as conclusive
evidence of the facts therein set forth and of the fact that all
Securities not listed therein are Outstanding for the purpose of
any such determination.

"Paying Agent" means any Person (other than the Company
or any Subsidiary or Affiliate of the Company with respect to the
Securities issued pursuant to Section 301A) authorized by the
Company to pay the principal of (and premium, if any) or interest
on any Securities on behalf of the Company, which initially shall
be the Trustee.

"Person" means and includes any individual,
corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any
agency or political subdivision thereof.

"Place of Payment", when used with respect to the
Securities of any series, means the place or places where the
principal of (and premium, if any) and interest, if any, on the
Securities of that series are payable as specified in or as
contemplated by Section 301.

"Predecessor Security" of any particular Security means
every previous Security evidencing all or a portion of the same
debt as that evidenced by such particular Security; and, for the

<PAGE> 16
purposes of this definition, any Security authenticated and
delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or
stolen Security.

"Redemption Date", when used with respect to any
Security to be redeemed, means the date fixed for such redemption
by or pursuant to this Indenture.

"Redemption Price", when used with respect to any
Security to be redeemed, means the price at which it is to be
redeemed pursuant to this Indenture, exclusive of accrued and
unpaid interest.

"Regular Record Date" for the interest payable on any
Interest Payment Date on the Securities of any series means the
date specified for that purpose as contemplated by Section 301.

"Responsible Officer", when used with respect to the
Trustee, means any vice president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, the cashier,
any assistant cashier, any trust officer or assistant trust
officer, the controller or any assistant controller or any other
officer of the Trustee, which in each case is assigned to its
Corporate Trust Department, and also means, with respect to a
particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity
with the particular subject.

"Securities" has the meaning stated in the first
recital of this Indenture and more particularly means any
Securities authenticated and delivered under this Indenture.

"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.

"Significant Subsidiary" means any Subsidiary of the
Company that would be considered a "significant subsidiary" under
Rule 1-02 of Regulation S-X under the Securities Exchange Act of
1934, as amended.

"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to
Section 307.

"Stated Maturity", when used with respect to any
Security or any instalment of principal thereof or interest
thereon, means the date specified in such Security as the fixed
date on which the principal of such Security or such instalment
of principal or interest is due and payable.

"Subsidiary" of the Company means a corporation or
other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of

<PAGE> 17
directors or other persons performing similar functions are at
the time directly or indirectly owned or controlled by the
Company, one or more of the other subsidiaries of the Company or
any combination thereof.

"Trustee" means the Person named as the "Trustee" in
the first paragraph of this instrument until a successor Trustee
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Trustee" shall mean or include
each Person who is then a Trustee hereunder, and if at any time
there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee
with respect to Securities of that series.

"Total Capital" means, as at any date, the sum for the
Company and its Subsidiaries (determined on a consolidated basis
without duplication in accordance with GAAP), of the following:

(a) the amount of capital stock (excluding treasury
stock and capital stock subscribed for and unissued and
preferred stock mandatorily redeemable in cash or redeemable
in cash at the option of the holder thereof), plus

(b) the amount of surplus and retained earnings (or,
in the case of a surplus or retained earnings deficit, minus
the amount of such deficit).

"Trust Indenture Act" means the Trust Indenture Act of
1939, as amended and in force on the date of this Indenture,
provided, however, that, in the event the Trust Indenture Act is
amended after such date, "Trust Indenture Act" shall mean, to the
extent required by such amendment, the Trust Indenture Act of
1939, as so amended.

"U.S. Government Obligations" means direct obligations
of the United States for the payment of which its full faith and
credit is pledged, or obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the
United States and the payment of which is unconditionally
guaranteed by the United States, which are not callable or
redeemable by the issuer thereof, and shall also include a
depository receipt issued by a bank or trust company as custodian
with respect to any such U.S. Government Obligation or a specific
payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of a holder of
a depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any
amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of interest on or
principal of the U.S. Government Obligation evidenced by such
depository receipt.

<PAGE> 18
"Vice President", when used with respect to the Company
or the Trustee, means any vice president or assistant vice
president, whether or not designated by a number or a word or
words added before or after the title "vice president" or
"assistant vice president".

SECTION 102. Compliance Certificates and Opinions.

Upon any application or request by the Company to the
Trustee to take any action under any provision of this Indenture,
the Company shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent, if any, provided for in
this Indenture relating to the proposed action have been complied
with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or
request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating
to such particular application or request, no additional
certificate or opinion need be furnished.

Every certificate or opinion with respect to compliance
with a condition or covenant provided for in this Indenture
(other than the Officers' Certificate delivered pursuant to
Section 1007) shall include:

(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition
and the definitions herein relating thereto;

(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;

(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation as
is necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been
complied with; and

(4) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been
complied with.

SECTION 103. Form of Documents Delivered to Trustee.

In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person

<PAGE> 19
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one
or several documents.

Any certificate or opinion of an officer of the Company
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless
such officer knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with
respect to the matters upon which his certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect
to such factual matters is in the possession of the Company,
unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations
with respect to such matters are erroneous.

Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated and form one instrument.

SECTION 104. Acts of Holders.

(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this
Indenture to be given or taken by Holders may be embodied in and
evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument
or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 601) conclusive in favor of the Trustee
and the Company, if made in the manner provided in this Section.

Without limiting the generality of the foregoing,
unless otherwise established in or pursuant to a Board Resolution
or set forth or determined in an Officers' Certificate, or
established in one or more indentures supplemental hereto,
pursuant to Section 301, a Holder, including a Depositary that is
a Holder of a Global Security, may make, give or take, by a
proxy, or proxies, duly appointed in writing, any request,
demand, authorization, direction, notice, consent, waiver or
other action provided in this Indenture to be made, given or
taken by Holders, and a Depositary that is a Holder of a Global

<PAGE> 20
Security may provide its proxy or proxies to the beneficial
owners of interests in any such Global Security through such
Depositary's standing instructions and customary practices.

(b) The fact and date of the execution by any Person
of any such instrument, writing or proxy may be proved by the
affidavit of a witness of such execution or by a certificate of a
notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing
such instrument, writing or proxy acknowledged to him the
execution thereof. Where such execution is by a signer acting in
a capacity other than his individual capacity, such certificate
or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such
instrument, writing or proxy, or the authority of the Person
executing the same, may also be proved in any other manner which
the Trustee deems sufficient, and the Trustee may in any instance
require further proof with respect to any of the matters referred
to in this Section.

(d) Any request, demand, authorization, direction,
notice, consent, waiver or other Act of the Holder of any
Security shall bind every future Holder of the same Security and
the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not
notation of such action is made upon such Security.

(e) The Company may, but shall not be obligated to,
fix a record date for the purpose of determining the Holders
entitled to take any action under this Indenture by vote or
consent. Such record date shall be the later of 30 days prior to
the first solicitation of such consent or vote or the date of the
most recent list of Holders furnished to the Trustee pursuant to
Section 701 prior to such solicitation. If a record date is
fixed, those Persons who were Holders of Securities at such
record date (or their duly designated proxies), and only those
Persons, shall be entitled to take such action by vote or consent
or to revoke any vote or consent previously given, whether or not
such Persons continue to be Holders after such record date;
provided, however, that unless such vote or consent is obtained
from the Holders (or their duly designated proxies) of the
requisite principal amount of Outstanding Securities prior to the
date which is the 90th day after such record date, any such vote
or consent previously given shall automatically and without
further action by any Holder be cancelled and of no further
effect.

<PAGE> 21
SECTION 105. Notices, Etc., to Trustee and Company.

Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or
permitted by this Indenture to be delivered to, made upon, given
or furnished to, or filed with,

(1) the Trustee by any Holder or by the Company shall
be sufficient for every purpose hereunder if delivered,
made, given, furnished or filed in writing to or with the
Trustee at its Corporate Trust Office, or

(2) the Company by the Trustee or by any Holder shall
be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing and mailed,
first-class postage prepaid, to the Company addressed to it
at 303 North Oregon Street, El Paso, Texas 79901, or at any
other address previously furnished in writing to the Trustee
by the Company.

SECTION 106. Notice to Holders; Waiver.

Where this Indenture provides for notice to Holders of
any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such
event, at his or her address as it appears in the Security
Register, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice. In
any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of
such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be
filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon
such waiver.

In case by reason of the suspension of regular mail
service or by reason of any other cause it shall be impracticable
to give such notice by mail, then such notification as shall be
made with the approval of the Trustee shall constitute a
sufficient notification for every purpose hereunder.

SECTION 107. Conflict with Trust Indenture Act.

If any provision hereof limits, qualifies or conflicts
with the duties imposed by Sections 310 to 317, inclusive, of the
Trust Indenture Act, such imposed duties shall control.

<PAGE> 22
SECTION 108. Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table
of Contents are for convenience only and shall not affect the
construction hereof.

SECTION 109. Successors and Assigns.

All covenants and agreements in this Indenture by the
Company shall bind its successors and assigns, whether so
expressed or not.

SECTION 110. Separability Clause.

In case any provision in this Indenture or in the
Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.

SECTION 111. Benefits of Indenture.

Nothing in this Indenture or in the Securities, express
or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, any Paying Agent or
Authenticating Agent hereunder and the Holders, any benefit or
any legal or equitable right, remedy or claim under this
Indenture.

SECTION 112. Governing Law.

This Indenture and the Securities shall be governed by
and construed in accordance with the laws of the State of New
York.

SECTION 113. Legal Holidays.

In any case where any Interest Payment Date, Redemption
Date or Maturity of any Security shall not be a Business Day at
any Place of Payment, then (notwithstanding any other provision
of this Indenture or of the Securities) payment of interest, if
any, or principal (and premium, if any) need not be made at such
Place of Payment on such date, but such payment may be made on
the next succeeding Business Day at such Place of Payment with
the same force and effect as if made on the Interest Payment Date
or Redemption Date, or at Maturity.

SECTION 114. Incorporators, Stockholders, Officers and
Directors of the Company Exempt from Individual
Liability.

No recourse for the payment of the principal of (and
premium, if any) or interest, if any, on any Security and no
recourse under or upon any obligation, covenant or agreement of
the Company in this Indenture or in any supplemental indenture,

<PAGE> 23
or in any Security, or because of the creation of any
indebtedness represented thereby, shall be had against any
incorporator, stockholder, officer or director, as such, past,
present or future, of the Company or of any successor
corporation, either directly or through the Company or any
successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment
or penalty or otherwise; it being expressly understood that all
such liability is hereby waived and released as a condition of
and as a consideration for, the execution of this Indenture and
the issuance of the Securities.

SECTION 115. Counterparts.

This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but
one and the same instrument.

SECTION 116. Currency Exchange.

If, in determining whether the Holders of the requisite
principal amount of Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, it
becomes necessary to determine the principal amount of Securities
of any series denominated in any coin or currency other than that
of the United States of America, such principal amount shall be
computed by converting such coin or currency into coin or
currency of the United States of America based upon the rate of
exchange in effect at the office of (i) a major financial
institution chosen by the Trustee or (ii) the Trustee in New
York, New York on the date of initial issuance of such series of
Securities.

ARTICLE TWO

SECURITY FORMS

SECTION 201. Forms Generally.

The Securities of each series (other than Securities of
Series A and Class 13 for which forms of Securities are set forth
in Appendices A-1 and A-2) shall be in substantially the form set
forth in this Article, or in such other form as shall be
established by or pursuant to a Board Resolution or in one or
more indentures supplemental hereto, in each case with such
appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and
may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or
as may, consistently herewith, be determined by the officer or
officers executing such Securities, as evidenced by the officer's

<PAGE> 24
or officers' execution of the Securities. If the form of
Securities of any series is established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such
action shall be certified by an authorized officer of the
Company, and delivered to the Trustee at or prior to the delivery
of the Company Order contemplated by Section 303 for the
authentication and delivery of such Securities.

The Trustee's certificates of authentication shall be
in substantially the form set forth in this Article.

The definitive Securities shall be printed,
lithographed or engraved on steel engraved borders or may be
produced in any other manner, all as determined by the officer or
officers executing such Securities, as evidenced by the officer's
or officers' execution of such Securities.

SECTION 202. Form of Face of Security.

[Insert any legend required by the United States
Internal Revenue Code and the regulations thereunder]

[If this Security is a Global Security, insert - THIS
SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS GLOBAL SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON
OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES HEREINAFTER DESCRIBED AND MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
NOMINEE TO A SUCCESSOR OF THE DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR.] [INSERT LEGENDS REQUIRED BY THE DEPOSITARY]

EL PASO ELECTRIC COMPANY
[Title of the Security]

No. __________ $__________

<PAGE> 25
the Indenture, at the rate per annum provided in the title hereof
on any overdue principal and premium and (to the extent that the
payment of such interest shall be legally enforceable) on any
overdue instalment of interest]. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment
Date will, as provided in such Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the _______ or
________ (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date. Any such interest not
so punctually paid or duly provided for will forthwith cease to
be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one
or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof
shall be given to Holders of Securities of this series not less
than 10 days prior to such Special Record Date, or be paid at any
time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities
of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said
Indenture].

[If the Security is not to bear interest prior to Maturity,
insert -- The principal of this Security shall not bear interest
except in the case of a default in payment of principal upon
acceleration, upon redemption or at Stated Maturity and in such
case the overdue principal of this Security shall bear interest
at the rate of [yield to maturity]% per annum (to the extent that
the payment of such interest shall be legally enforceable), which
shall accrue from the date of such default in payment to the date
payment of such principal has been made or duly provided for.
Interest on any overdue principal shall be payable on demand.
Any such interest on any overdue principal that is not so paid on
demand shall bear interest at the rate of [yield to maturity]%
per annum (to the extent that the payment of such interest shall
be legally enforceable), which shall accrue from the date of such
demand for payment to the date payment of such interest has been
made or duly provided for, and such interest shall also be
payable on demand.]

Payment of the principal of (and premium, if any) and
interest[, if any,] on this Security will be made at the office
or agency of the Company maintained for that purpose in ________,
in [such coin or currency of the United States of America as at
the time of payment is legal tender for the payment of public and
private debts--or state other currency]; [If this Security is not
a Global Security, insert -- provided, however, that at the
option of the Company payment of interest may be made by check
mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register] [If this Security
is a Global Security, insert applicable manner of payment].

<PAGE> 26
Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.

Unless the certificate of authentication hereon has
been executed by the Trustee referred to on the reverse hereof by
manual signature, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any
purpose.

IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.

Dated:

[Seal] EL PASO ELECTRIC COMPANY

By______________________________________
[Title]

[If more than one officer is to sign --

By_____________________________________]
[Title]

SECTION 203. Form of Reverse of Security.

EL PASO ELECTRIC COMPANY
[Title of the Security]

This Security is one of a duly authorized issue of
securities of the Company (herein called the "Securities"),
issued and to be issued in one or more series under an Indenture,
dated as of _________, 1994 (herein called the "Indenture"),
between the Company and United States Trust Company of New York,
as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for
a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and
the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof
[, limited in aggregate principal amount to $________].

[If applicable, insert -- This security is not subject
to redemption prior to maturity.] [If applicable, insert -- The
Securities of this series are subject to redemption upon not less
than 30 or more than 60 days' notice by mail to the Holders of
such Securities at their addresses in the Security Register for
such series, [if applicable, insert -- (1) on __________ in any

<PAGE> 27
year commencing with the year ____ and ending with the year ____
through operation of the sinking fund for this series at a
Redemption Price equal to 100% of the principal amount, and (2)]
at any time [on or after ___________, 19__], as a whole or in
part, at the election of the Company, at the following Redemption
Prices (expressed as percentages of the principal amount):

If redeemed [on or before _____________, ___%, and if
redeemed] during the 12-month period beginning ___________, of
the years indicated:

Redemption Redemption
Year Price Year Price

and thereafter at a Redemption Price equal to ___% of the
principal amount, together in the case of any such redemption [if
applicable, insert -- (whether through operation of the sinking
fund or otherwise)] with accrued and unpaid interest to the
Redemption Date, but interest instalments whose Stated Maturity
is on or prior to such Redemption Date will be payable to the
Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in
the Indenture.]

[If applicable, insert -- The Securities of this series
are subject to redemption upon not less than 30 or more than 60
days' notice by mail to the Holders of such Securities at their
addresses in the Security Register for such series, (1) on
____________ in any year commencing with the year ____ and ending
with the year ____ through operation of the sinking fund for this
series at the Redemption Prices for redemption through operation
of the sinking fund (expressed as percentages of the principal
amount) set forth in the table below, and (2) at any time [on or
after ____________], as a whole or in part, at the election of
the Company, at the Redemption Prices for redemption otherwise
than through operation of the sinking fund (expressed as
percentages of the principal amount) set forth in the table
below:

If redeemed during the 12-month period beginning
______________ of the years indicated:

Redemption Price
For Redemption Redemption Price For
Through Operation Redemption Otherwise
of the Than Through Operation
Year Sinking Fund of the Sinking Fund

<PAGE> 28
and thereafter at a Redemption Price equal to ___% of the
principal amount, together in the case of any such redemption
(whether through operation of the sinking fund or otherwise) with
accrued and unpaid interest to the Redemption Date, but interest
instalments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Dates referred to on
the face hereof, all as provided in the Indenture.]

[If applicable, insert -- Notwithstanding the
foregoing, the Company may not, prior to _________, redeem any
Securities of this series as contemplated by [Clause (2) of] the
preceding paragraph as a part of, or in anticipation of, any
refunding operation by the application, directly or indirectly,
of moneys borrowed having an interest cost to the Company
(calculated in accordance with generally accepted financial
practice) of less than ___% per annum.]

[The sinking fund for this series provides for the
redemption on _________ in each year beginning with the year ____
and ending with the year ____ of [not less than] __________
[("mandatory sinking fund") and, at the option of the Company,
not more than __________] aggregate principal amount of
Securities of this series. [Securities of this series acquired
or redeemed by the Company otherwise than through [mandatory]
sinking fund payments may be credited against subsequent
[mandatory] sinking fund payments otherwise required to be made
in the order in which they become due.]]

[In the event of redemption of this Security in part
only, a new Security or Securities of this series and of like
tenor for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.]

The Indenture contains provisions for defeasance of (a)
the entire indebtedness of this Security and (b) certain
restrictive covenants upon compliance by the Company with certain
conditions set forth therein.

[If the Security is not an Original Issue Discount
Security, insert -- If an Event of Default with respect to
Securities of this series shall occur and be continuing, the
principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the
Indenture.]

[If the Security is an Original Issue Discount
Security, insert -- If an Event of Default with respect to
Securities of this series shall occur and be continuing, an
amount of principal of the Securities of this series (the
"Acceleration Amount") may be declared due and payable in the
manner and with the effect provided in the Indenture. In case of

<PAGE> 29
a declaration of acceleration on or before ________, __ or on
_____________ in any year, the Acceleration Amount per ______
principal amount at Stated Maturity of the Securities shall be
equal to the amount set forth in respect of such date below:

Acceleration
Amount
per _______
principal
amount
at Stated
Date of declaration Maturity

and in case of a declaration of acceleration on any other date,
the Acceleration Amount shall be equal to the Acceleration Amount
as of the next preceding date set forth in the table above, plus
accrued original issue discount (computed in accordance with the
method used for calculating the amount of original issue discount
that accrues for Federal income tax purposes) from such next
preceding date to the date of declaration at the yield to
maturity. For the purpose of this computation the yield to
maturity is ___%. Upon payment (i) of the Acceleration Amount so
declared due and payable and (ii) of interest on any overdue
principal and overdue interest (in each case to the extent that
the payment of such interest shall be legally enforceable), all
of the Company's obligations in respect of the payment of the
principal of and interest, if any, on the Securities of this
series shall terminate.]

The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the
Holders of the Securities of each series to be affected under the
Indenture at any time by the Company and the Trustee with the
consent of the Holders of not less than 50% in principal amount
of the Securities at the time Outstanding of all series to be
affected (voting as a class). The Indenture also contains
provisions permitting the Holders of specified percentages in
principal amount of the securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by
the Holder of this Security shall be conclusive and binding upon
such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Security.

<PAGE> 30
No reference herein to the Indenture and no provision
of this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the principal of (and premium, if any) and interest, if
any, on this Security at the times, place and rate, and in the
coin or currency, herein prescribed.

[If this Security is a Global Security, insert -- This
Security shall be exchangeable for Securities registered in the
names of Persons other than the Depositary with respect to such
series or its nominee only as provided in this paragraph. This
Security shall be so exchangeable if (x) the Depositary notifies
the Company that it is unwilling or unable to continue as
Depositary for such series or at any time ceases to be a clearing
agency registered as such under the Securities Exchange Act of
1934, as amended, and the Company is unable to obtain the
services of a successor depositary, (y) the Company executes and
delivers to the Trustee an Officers' Certificate providing that
this Security shall be so exchangeable or (z) there shall have
occurred and be continuing an Event of Default with respect to
the Securities of such series. Securities so issued in exchange
for this Security shall be of the same series, having the same
interest rate, if any, and maturity and having the same terms as
this Security, in authorized denominations and in the aggregate
having the same principal amount as this Security and registered
in such names as the Depositary for such Global Security shall
direct.]

As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of [If this Security
is a Global Security, insert -- a Security of the series of which
this Security is a part] [If this Security is not a Global
Security, insert -- this Security] is registrable in the Security
Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place
where the principal of (and premium, if any) and interest, if
any, on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Securities of this series
and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated
transferee or transferees.

The Securities of [If this Security is a Global
Security insert -- the series of which this Security is a part]
[If this Security is not a Global Security, insert -- this
series] are issuable only in registered form without coupons in
denominations of $__________ and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations
therein set forth, Securities of this series are exchangeable for
a like aggregate principal amount of Securities of this series
and of like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.

<PAGE> 31
No service charge shall be made for any such
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.

Prior to due presentment of this Security for
registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name
this Security is registered as the owner hereof for all purposes,
whether or not this Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the
contrary.

This Security shall be governed by and construed in
accordance with the laws of the State of New York.

All terms used in this Security which are defined in
the Indenture shall have the meanings assigned to them in the
Indenture.

SECTION 204. Form of Trustee's Certificate of
Authentication.

The Trustee's certificate of authentication on all
Securities shall be in substantially the following form:

This is one of the Securities of the series designated
herein and referred to in the within-mentioned Indenture.

UNITED STATES TRUST
COMPANY OF NEW YORK,
as Trustee

By____________________________
Authorized Officer

ARTICLE THREE

THE SECURITIES

SECTION 301. Amount Unlimited; Issuable in Series.

The aggregate principal amount of Securities which may
be authenticated and delivered under this Indenture is unlimited.

The Securities may be issued in one or more series and
shall be (except as may be provided in any applicable
supplemental indenture) direct, unsecured obligations of the
Company and rank without preference or priority among themselves
and pari passu with all other unsecured indebtedness of the
Company except that the Securities will rank prior to any

<PAGE> 32
indebtedness of the Company expressly made subordinate hereto.
Except with respect to the series of Securities created in
Section 301A, there shall be established in or pursuant to a
Board Resolution, and, subject to Section 303, set forth or
determined in the manner provided, in an Officers' Certificate,
or established in one or more indentures supplemental hereto,
prior to the issuance of Securities of any series:

(1) the title of the Securities of the series (which
shall distinguish the Securities of the series from all
other Securities);

(2) any limit upon the aggregate principal amount of
the Securities of the series which may be authenticated and
delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities of
the series pursuant to Sections 304, 305, 306, 906, or 1107
and except for any Securities which, pursuant to Section
303, are deemed never to have been authenticated and
delivered hereunder);

(3) the Person to whom any interest on a Security of
the series shall be payable, if other than the Person in
whose name the Security (or one or more Predecessor
Securities) is registered at the close of business on the
Regular Record Date for such interest;

(4) the date or dates on which the principal of the
Securities of the series is payable;

(5) the rate or rates at which the Securities of the
series shall bear interest, if any, the date or dates from
which such interest shall accrue, the Interest Payment Dates
on which such interest shall be payable and the Regular
Record Date for the interest payable on any Interest Payment
Date;

(6) the place or places, if any, in addition to or in
the place of the Trustee's Corporate Trust Office where the
principal of (and premium, if any) and interest, if any, on
Securities of the series shall be payable and where such
Securities may be registered or transferred;

(7) the period or periods within which, the price or
prices at which and the terms and conditions upon which
Securities of the series may be redeemed, in whole or in
part, at the option of the Company;

(8) the obligation, if any, of the Company to redeem
or purchase Securities of the series pursuant to any sinking
fund or analogous provisions or at the option of a Holder
thereof, and the period or periods within which, the price

<PAGE> 33
or prices at which and the terms and conditions upon which
Securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;

(9) if other than denominations of $1,000 and any
integral multiple thereof, the denominations in which
Securities of the series shall be issuable;

(10) if other than the principal amount thereof, the
portion of the principal amount of Securities of the series
which shall be payable upon declaration of acceleration of
the Maturity thereof pursuant to Section 502;

(11) if other than such coin or currency of the United
States of America as at the time of payment is legal tender
for payment of public or private debts, the coin or
currency, including composite currencies such as the
European Currency Unit, in which payment of the principal of
(and premium, if any) and interest, if any, on the
Securities of the series shall be payable;

(12) if the principal of (and premium, if any) or
interest, if any, on the Securities of the series are to be
payable, at the election of the Company or a Holder thereof,
in a coin or currency other than that in which the
Securities are stated to be payable, the period or periods
within which, and the terms and conditions upon which, such
election may be made;

(13) if the amount of payments of principal of (and
premium, if any) or interest, if any, on the Securities of
the series may be determined with reference to an index
based on a coin or currency other than that in which the
Securities are stated to be payable, the manner in which
such amounts shall be determined;

(14) any provisions permitted by this Indenture
relating to Events of Default or covenants of the Company
with respect to such series of Securities;

(15) if the Securities of the series shall be issued in
whole or in part in the form of one or more Global
Securities, (i) whether beneficial owners of interests in
any such Global Security may exchange such interests for
Securities of such series of like tenor and of authorized
form and denomination and the circumstances under which any
such changes may occur, if other than in the manner provided
in Section 305 and (ii) the Depositary for such Global
Security or Securities;

(16) if any security is provided for the securities,
the terms pertaining to such security; and

<PAGE> 34
(17) any other terms of the series, including the
covenants to be applicable to Securities of such series
(which terms shall not be inconsistent with the provisions
of this Indenture).

All Securities of any one series shall be substantially
identical except as to denomination and except as may otherwise
be provided in or pursuant to Section 301A, the Board Resolution
referred to above and (subject to Section 303) set forth in the
Officers' Certificate referred to above or in any such indenture
supplemental hereto. All Securities of any one series need not
be issued at one time, and unless otherwise provided, a series
may be reopened for issuances of additional Securities of such
series or to establish additional terms of such series of
Securities.

If any of the terms of the series, including the form
of Security of such series, are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record
of such action shall be certified by the Secretary or an
Assistant Secretary or other authorized officer of the Company,
and delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 303 for the authentication
and delivery of such series of Securities.

SECTION 301A. Initial Issuance of Securities.

There shall be, and are hereby created, two new series
of Securities, each known as and titled as, and subject to the
maximum aggregate principal amount, set forth in the table below.

Maximum Principal
Series Designation Amount

Series A __% Senior Notes due ____ $________
Class 13 __% Senior Notes due 2003 $________

The Securities of the two series set forth above shall
be issued in substantially the forms thereof attached as
Appendices A-1 and A-2, respectively. All Securities of said
series shall be due and payable as set forth in the respective
form of Security, shall bear interest from the date thereof, at
the rate set forth in the respective form of Security, payable
semiannually on the ___ day of ______ and the ___ day of ______
in each year, and shall be payable, both as to principal and
interest, at the office or agency of the Paying Agent in New
York, New York, in any coin or currency of the United States of
America as at the time of payment is legal tender for public and
private debt, provided, however, that at the option of the
Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall
appear in the Security Register.

<PAGE> 35
The Securities of Series A and Class 13 are redeemable,
at the option of the Company and upon the notice and in the
manner and with the effect provided in this Indenture, at the
times and at the Redemption Prices set forth in the respective
forms of Securities.

SECTION 302. Denominations.

The Securities of each series shall be issuable in
registered form without coupons, except as otherwise expressly
provided in a Board Resolution or a supplemental indenture
hereto, in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such
provisions with respect to the Securities of any series, the
Securities of such series shall be issuable in denominations of
$1,000 and any integral multiple thereof.

SECTION 303. Execution, Authentication, Delivery and Dating.

The Securities shall be executed on behalf of the
Company by its President or one of its Vice Presidents, under its
corporate seal reproduced thereon, and which need not be
attested. The Securities of any series shall be executed by such
additional officer, if any, as shall be specified pursuant to
Section 301. The signature of any of these officers on the
Securities may be manual or facsimile.

Securities bearing the manual or facsimile signature of
any individual who was at any time the proper officer of the
Company shall bind the Company, notwithstanding that such
individual has ceased to hold such office prior to the
authentication and delivery of such Securities or did not hold
such office at the date of authentication of such Securities.

At any time and from time to time on and after the
execution and delivery of this Indenture, the Company may deliver
Securities of any series (including those Securities created by
Section 301A) executed by the Company to the Trustee for
authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee
in accordance with the Company Order, but subject to the
provisions hereof, shall authenticate and deliver such
Securities. If the form or terms of the Securities of the series
have been established in or pursuant to one or more Board
Resolutions as permitted by Sections 201 and 301, in
authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such
Securities, the Trustee shall be entitled to receive, and
(subject to Section 601) shall be fully protected in relying
upon, an Opinion of Counsel stating,

(a) if the form of such Securities has been
established by or pursuant to Board Resolution as permitted
by Section 201, that such form has been established in
conformity with the provisions of this Indenture;

<PAGE> 36
(b) if the terms of such Securities have been
established by or pursuant to Board Resolution as permitted
by Section 301, that such terms have been established in
conformity with the provisions of this Indenture; and

(c) that all conditions precedent to the
authentication and delivery of such Securities have been
complied with and that such Securities, when authenticated
and delivered by the Trustee and issued by the Company in
the manner and subject to any conditions specified in such
Opinion of Counsel, will constitute valid and legally
binding obligations of the Company, enforceable in
accordance with their terms, subject to bankruptcy,
insolvency, reorganization and other laws of general
applicability relating to or affecting the enforcement of
creditors' rights and to general equity principles.

If such form or terms have been so established, the Trustee shall
not be required to authenticate such Securities if the issue of
such Securities pursuant to this Indenture will affect the
Trustee's own rights, duties, protections or immunities under the
Securities and this Indenture or otherwise in a manner which is
not reasonably acceptable to the Trustee, or if the Trustee
determines that such authentication may not be lawfully made or
if the Trustee reasonably determines that such authentication
would be prejudicial to the Holders of the Outstanding
Securities.

With respect to the series of Securities created by
Section 301A, the Trustee shall be entitled to receive, and
(subject to Section 601) shall be fully protected in relying
upon, an Opinion of Counsel to the effect of clause (c) above.

Notwithstanding the provisions of Section 301 and of
the preceding paragraph, if all Securities of a series are not to
be originally issued at one time, it shall not be necessary to
deliver the Officers' Certificate otherwise required pursuant to
Section 301 or the Company Order and Opinion of Counsel otherwise
required pursuant to such preceding paragraph at or prior to the
time of authentication of each Security of such series if such
documents are delivered at or prior to the time of authentication
upon original issuance of the first Security of such series to be
issued.

Each Security shall be dated the date of its
authentication.

No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there
appears on such Security a certificate of authentication
substantially in the form provided for herein executed by the
Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence,

<PAGE> 37
that such Security has been duly authenticated and delivered
hereunder and is entitled to the benefits of this Indenture.
Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold
by the Company, and the Company shall deliver such Security to
the Trustee for cancellation as provided in Section 309 together
with an Officers' Certificate (which need not comply with Section
102 and need not be accompanied by an Opinion of Counsel) stating
that such Security has never been issued and sold by the Company,
for all purposes of this Indenture such Security shall be deemed
never to have been authenticated and delivered hereunder and
shall never be entitled to the benefits of this Indenture.

SECTION 304. Temporary Securities.

Pending the preparation of definitive Securities of any
series, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Securities
which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially
of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officer or officers
executing such Securities may determine, as evidenced by their
execution of such Securities.

If temporary Securities of any series are issued, the
Company will cause definitive Securities of that series to be
prepared without unreasonable delay. After the preparation of
definitive Securities of such series, the temporary Securities of
such series shall be exchangeable for definitive Securities of
such series upon surrender of the temporary Securities of such
series at the office or agency of the Company in a Place of
Payment for that series, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary
Securities of any series the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a
like principal amount of definitive Securities of the same series
and of like tenor of authorized denominations. Until so
exchanged the temporary Securities of any series shall in all
respects be entitled to the same benefits under this Indenture as
definitive Securities of such series.

SECTION 305. Registration, Registration of Transfer and
Exchange.

The Company shall cause to be kept at the Corporate
Trust Office a register (the register maintained in such office
and in any other office or agency of the Company in a Place of
Payment being herein sometimes collectively referred to as the
"Security Register") in which, subject to such reasonable
regulations as it or the Trustee may prescribe, the Company shall
provide for the registration of Securities and of transfers of
Securities. The Trustee is hereby initially appointed "Security

<PAGE> 38
Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided. In the event that
the Trustee shall cease to be the Security Registrar with respect
to the Securities, it shall have the right to examine the
Security Register at all reasonable times.

Upon surrender for registration of transfer of any
Security of any series at the office or agency in a Place of
Payment for that series, the Company shall execute, and the
Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities
of the same series, of any authorized denominations and of a like
aggregate principal amount and tenor.

At the option of the Holder, any Security or Securities
of any series, other than a Global Security, may be exchanged for
other Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor,
upon surrender of the Securities to be exchanged at such office
or agency. Whenever any Securities are so surrendered for
exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making
the exchange is entitled to receive.

All Securities issued upon any registration of transfer
or exchange of Securities shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Securities surrendered upon
such registration of transfer or exchange.

Notwithstanding the foregoing, except as otherwise
specified as contemplated by Section 301, a Global Security of
any series shall be exchangeable pursuant to this Section for
Securities registered in the names of Persons other than the
Depositary with respect to such series or its nominee only as
provided in this paragraph. A Global Security shall be
exchangeable pursuant to this Section if (x) such Depositary
notifies the Company that it is unwilling or unable to continue
as Depositary for such series or at any time ceases to be a
clearing agency registered as such under the Exchange Act, and
the Company is unable to obtain the services of a successor
depositary (y) the Company executes and delivers to the Trustee
an Officers' Certificate providing that such Global Security
shall be so exchangeable or (z) there shall have occurred and be
continuing an Event of Default with respect to the Securities of
such series. Securities so issued in exchange for a Global
Security shall be of the same series, of like tenor, in
authorized denominations and in the aggregate having the same
principal amount as the Global Security to be exchanged, and
shall be registered in such names as the Depositary for such
Global Security shall direct.

<PAGE> 39
Except as otherwise provided herein, a Global Security
may not be transferred except as a whole by the Depositary to a
nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by such
Depositary or any nominee to a successor of such Depositary or a
nominee of such successor.

Every Security presented or surrendered for
registration of transfer or for exchange shall (if so required by
the Company or the Trustee) be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed, by the Holder
thereof or his attorney duly authorized in writing.

No service charge shall be made to the Holder for any
registration of transfer or exchange of Securities, but the
Company may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities,
other than exchanges pursuant to Sections 304, 906 or 1107 not
involving any transfer.

The Company shall not be required (i) to issue,
register the transfer of or exchange Securities of any series
during a period beginning at the opening of business 15 days
before the day of the mailing of a notice of redemption of
Securities of that series selected for redemption under Section
1103 and ending at the close of business on the day of such
mailing, (ii) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part or
(iii) to register the transfer or exchange of any Security which,
in accordance with its terms, has been surrendered for repayment
at the option of the Holder, except the portion, if any, of such
Security not to be so repaid.

SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.

If any mutilated Security is surrendered to the
Trustee, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of
the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.

If there shall be delivered to the Company and the
Trustee (i) evidence to their satisfaction of the destruction,
loss or theft of any Security and (ii) such security or indemnity
as may be required by them to save each of them and any agent of
either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company shall execute and upon its
request the Trustee shall authenticate and deliver, in lieu of
any such destroyed, lost or stolen Security, a new Security of
the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.

<PAGE> 40
In case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, the
Company in its discretion may, instead of issuing a new Security,
pay such Security.

Upon the issuance of any new Security under this
Section, the Company may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith.

Every new Security of any series issued pursuant to
this Section in lieu of any destroyed, lost or stolen Security
shall constitute an original additional contractual obligation of
the Company, whether or not the destroyed, lost or stolen
Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of that series
duly issued hereunder.

The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities.

SECTION 307. Payment of Interest; Interest Rights Preserved.

Interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or
one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest.

Any interest on any Security of any series which is
payable, but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called "Defaulted Interest") shall
forthwith cease to be payable to the Holder on the relevant
Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:

(1) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the
Securities of such series (or their respective Predecessor
Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security of
such series and the date of the proposed payment, and at the
same time the Company shall deposit with the Trustee an
amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make

<PAGE> 41
arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this Clause
provided. Thereupon the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to
the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at
the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage
prepaid, to each Holder of Securities of such series at his
address as it appears in the Security Register, not less
than 10 days prior to such Special Record Date. Notice of
the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such
Defaulted Interest shall be paid to the Persons in whose
names the Securities of such series (or their respective
Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be
payable pursuant to the following Clause (2).

(2) The Company may make payment of any Defaulted
Interest on the Securities of any series in any other lawful
manner not inconsistent with the requirements of any
securities exchange on which such Securities may be listed,
and upon such notice as may be required by such exchange,
if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this Clause, such manner of
payment shall be deemed practicable by the Trustee.

Subject to the foregoing provisions of this Section,
each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security
shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.

SECTION 308. Persons Deemed Owners.

The Company and the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name a
Security is registered as the owner of such Security for the
purpose of receiving payment of principal of (and premium, if
any) and (subject to Section 307) interest, if any, on such
Security and for all other purposes whatsoever, whether or not
such Security be overdue, and neither the Company, the Trustee
nor any agent of the Company or the Trustee shall be affected by
notice to the contrary. All such payments so made to any such
person, or upon such person's order, shall be valid, and, to the
extent of the sums so paid, effectual to satisfy and discharge
the liability for moneys payable upon any such Security.

<PAGE> 42
No holder of any beneficial interest in any Global
Security held on its behalf by a Depositary shall have any rights
under this Indenture with respect to such Global Security, and
such Depositary may be treated by the Company, the Trustee, and
any agent of the Corporation or the Trustee as the owner of such
Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall impair, as between a Depositary
and such holders of beneficial interests, the operation of
customary practices governing the exercise of the rights of the
Depositary as holder of any Security.

SECTION 309. Cancellation.

All Securities surrendered for payment, redemption,
registration of transfer or exchange or for credit against any
sinking fund payment shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be
promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever and may deliver to the Trustee
(or to any Person for delivery to the Trustee) for cancellation
any Securities previously authenticated hereunder which the
Company has not issued and sold, and all Securities so delivered
shall be promptly cancelled by the Trustee. No Securities shall
be authenticated in lieu of or in exchange for any Securities
cancelled as provided in this Section, except as expressly
permitted by this Indenture. All cancelled Securities held by
the Trustee shall be disposed of as directed by a Company Order
or, in the absence of such Company Order, shall be destroyed and
the Trustee shall provide to the Company, if requested by the
Company, a certificate of destruction.

SECTION 310. Computation of Interest.

Except as otherwise specified as contemplated by
Section 301 for Securities of any series, interest, if any, on
the Securities of each series shall be computed on the basis of a
360-day year of twelve 30-day months.

ARTICLE FOUR

SATISFACTION AND DISCHARGE

SECTION 401. Satisfaction and Discharge of Indenture.

This Indenture shall upon Company Request cease to be
of further effect (except as to any surviving rights of
registration of transfer or exchange of Securities herein
expressly provided for), and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, on the 91st day
after the date when

<PAGE> 43
(1) either (A) all Securities theretofore
authenticated and delivered (other than (i) Securities which
have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306 and (ii)
Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or

(B) all such Securities not theretofore delivered to
the Trustee for cancellation

(i) have become due and payable, or

(ii) will become due and payable at their Stated
Maturity within one year, or

(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in
the name, and at the expense, of the Company, or

(iv) are deemed paid and discharged pursuant to
Section 403, as applicable,

and the Company, in the case of (i), (ii), (iii) or (iv)
above, has irrevocably deposited or caused to be irrevocably
deposited with the Trustee as trust funds in trust for the
purpose of discharging the Securities as described herein an
amount of (a) money in the currency or units of currency in
which such Securities are payable, or (b) in the case of
(ii) or (iii) above and (except as provided in an indenture
supplemental hereto) if no Securities of any series
Outstanding are subject to repurchase at the option of
Holders (I) U.S. Government Obligations (denominated in the
same currency or units of currency in which such Securities
are payable) which through the payment of interest and
principal in respect thereof in accordance with their terms
and without consideration of the proceeds of any reinvest-
ment thereof will provide not later than one day before the
Stated Maturity or Redemption Date, as the case may be,
money in an amount, or (II) a combination of money and U.S.
Government Obligations as provided in (I) above, in each
case, sufficient to pay and discharge (as verified by a
nationally recognized firm of independent certified public
accountants) the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest, if any, to the
date of such deposit (in the case of Securities which have
become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;

(2) the Company has paid or caused to be paid all
other sums payable hereunder by the Company;

<PAGE> 44
(3) such defeasance shall not result in a breach or
violation of, or constitute a default under, this Indenture
or any other material agreement or instrument to which the
Company is a party or by which it is bound;

(4) the Company has delivered to the Trustee an
Officers' Certificate stating that the deposit made by the
Company, pursuant to its election hereunder, was not made by
the Company with the intent of defeating, hindering,
delaying or defrauding creditors of the Company or others;
and

(5) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each
stating that (a) all conditions precedent herein provided
for relating to the satisfaction and discharge of this
Indenture have been complied with, and (b) such satisfaction
and discharge through any method provided herein will not
result in a breach or violation of, or constitute a default
under this Indenture or any other material agreement or
instrument to which the Company is a party or by which it is
bound.

Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under
Section 607, the obligations of the Trustee to any Authenticating
Agent under Section 614 and, if money shall have been deposited
with the Trustee pursuant to subclause (B) of clause (1) of this
Section or if money or U.S. Government Obligations shall have
been deposited with or received by the Trustee pursuant to
Section 403, the obligations of the Trustee under Section 402 and
the last paragraph of Section 1003 shall survive.

SECTION 402. Application of Trust Money.

(a) Subject to the provisions of the last paragraph of
Section 1003, all money or U.S. Government Obligations deposited
with the Trustee pursuant to Section 401, 403 or 1008 and all
money received by the Trustee in respect of U.S. Government
Obligations deposited with the Trustee pursuant to Section 401,
403 or 1008, shall be held in trust and applied by it, in
accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying
Agent (including the Company acting as its own Paying Agent), to
the persons entitled thereto, of the principal (and premium, if
any) and interest, if any, for whose payment such money has been
deposited with or received by the Trustee or to make mandatory
sinking fund payments or analogous payments as contemplated by
Section 401, 403 or 1008.

(b) The Company shall pay and shall indemnify the
Trustee against any tax, fee or other charge imposed on or
assessed against U.S. Government Obligations deposited pursuant

<PAGE> 45
to Section 401, 403 or 1008 or the interest and principal
received in respect of such obligations other than any payable by
or on behalf of Holders.

(c) The Trustee shall deliver or pay to the Company
from time to time upon Company Request any U.S. Government
Obligations or money held by it as provided in Section 401, 403
or 1008 which, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written
certification thereof delivered to the Trustee, are then in
excess of the amount thereof which then would have been required
to be deposited for the purpose for which such U.S. Government
Obligations or money was deposited or received. This provision
shall not authorize the sale by the Trustee of any U.S.
Government Obligations held under this Indenture.

SECTION 403. Satisfaction, Discharge and Defeasance of
Securities of any Series.

The Company shall be deemed to have Discharged the
entire indebtedness on all the Outstanding Securities of any
series on the 91st day after the date of the deposit referred to
in subparagraph (e) hereof, and the provisions of this Indenture,
as it relates to such Outstanding Securities of such series,
shall no longer be in effect (and the Trustee, at the expense of
the Company, shall at Company Request execute proper instruments
acknowledging the same), except as to:

(a) the rights of Holders of Securities of such series
to receive, from the trust funds described in subparagraph
(e) hereof, (i) payment of the principal of (and premium, if
any) and each instalment of principal of (and premium, if
any) or interest, if any, on the Outstanding Securities of
such series on the Stated Maturity of such principal or
instalment of principal or interest or to and including the
Redemption Date irrevocably designated by the Company
pursuant to subparagraph (i) hereof and (ii) the benefit of
any mandatory sinking fund payments applicable to the
Securities of such series on the day of which such payments
are due and payable in accordance with the terms of this
Indenture and the Securities of such series;

(b) the Company's obligations with respect to such
Securities of such series under Sections 305, 306, 1002 and
1003 and, if the Company shall have irrevocably designated a
Redemption Date pursuant to subparagraph (i) hereof,
Sections 1101, 1104 and 1106 as they apply to such
Redemption Date;

(d) the rights, powers, privileges and immunities of
the Trustee hereunder and the duties of the Trustee under

<PAGE> 46
Section 402 and, if the Company shall have irrevocably
designated a Redemption Date pursuant to subparagraph (i)
hereof, Article Eleven and the duty of the Trustee to
authenticate Securities of such series on registration of
transfer or exchange;

provided that, the following conditions shall have been
satisfied:

(e) the Company has irrevocably deposited or caused to
be irrevocably deposited (except as provided in Section
402(c) and the last paragraph of Section 1003) with the
Trustee as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the
Holders of the Securities of such series, (i) money, in the
currency or units of currency in which such Securities are
payable, in an amount, or (ii) (except as provided in a
supplemental indenture or Board Resolution with respect to
such series) if Securities of such series are not subject to
repurchase at the option of Holders, (A) U.S. Government
Obligations (denominated in the same currency or units of
currency in which such Securities are payable) which through
the payment of interest and principal in respect thereof in
accordance with their terms and without consideration of the
proceeds of any reinvestment thereof will provide not later
than one day before the due date of any payment referred to
in clause (x) or (y) of this subparagraph (e) cash in an
amount or (B) a combination of cash and U.S. Government
Obligations as provided in (A) above, sufficient, in the
opinion of a nationally recognized firm of independent
certified public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and
discharge (x) the principal of (and premium, if any) and
each instalment of principal (and premium, if any) and
interest, if any, on the Outstanding Securities of such
series on the Stated Maturity of such principal or
instalment of principal or interest or to and including the
Redemption Date irrevocably designated by the Company
pursuant to subparagraph (i) hereof and (y) any mandatory
sinking fund payments applicable to the Securities of such
series on the day on which such payments are due and payable
in accordance with the terms of this Indenture and of the
Securities of such series;

(f) the Company has delivered to the Trustee an
Opinion of Counsel to the effect that such provision would
not cause any Outstanding Securities of such series then
listed on any national securities exchange to be delisted as
a result thereof;

(g) no Event of Default or event which with notice or
lapse of time would become an Event of Default (including by
reason of such deposit) with respect to the Securities of

<PAGE> 47
such series shall have occurred and be continuing on the
date of such deposit or during the period ending on the 91st
day after such date;

(h) the Company has delivered to the Trustee
unqualified opinions, in form and substance satisfactory to
the Trustee, of independent counsel selected by the Company,
of nationally recognized standing in the field of federal
tax law, as to (i) below, and in the field of federal
securities law, as to (ii) below, to the effect that (i)
Holders of the Securities will not recognize income, gain or
loss for Federal income tax purposes as a result of the
deposit, defeasance and discharge and will be subject to
Federal income tax on the same amounts and in the same
manner and at the same times as would have been the case if
that deposit, defeasance and discharge had not occurred and
(ii) the defeasance trust is not, or is registered as, an
investment company under the Investment Company Act of 1940;

(i) if the Company has deposited or caused to be
deposited money or U.S. Government Obligations to pay or
discharge the principal of (and premium, if any) and
interest, if any, on the Outstanding Securities of a series
to and including a Redemption Date on which all of the
Outstanding Securities of such series are to be redeemed,
such Redemption Date shall be irrevocably designated by a
Board Resolution delivered to the Trustee on or prior to the
date of deposit of such money or U.S. Government
Obligations, and such Board Resolution shall be accompanied
by an irrevocable Company Request that the Trustee give
notice of such redemption in the name and at the expense of
the Company not less than 30 nor more than 60 days prior to
such Redemption Date in accordance with Section 1104;

(j) such defeasance shall not result in a breach or
violation, or constitute a default under, this Indenture or
any other material agreement or instrument to which the
Company is a party or by which it is bound;

(k) the Company has delivered to the Trustee an
Officers' Certificate stating that the deposit made by the
Company, pursuant to its election hereunder, was not made by
the Company with the intent of defeating, hindering,
delaying or defrauding creditors of the Company or others;
and

(l) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each
stating that (a) all conditions precedent herein provided
for relating to the satisfaction and discharge of the
Securities have been complied with, and (b) such
satisfaction and discharge through any method provided
herein will not result in a breach or violation of, or

<PAGE> 48
constitute a default under this Indenture or any other
material agreement or instrument to which the Company is a
party or by which it is bound.

ARTICLE FIVE

REMEDIES

SECTION 501. Events of Default.

"Event of Default", wherever used herein with respect
to Securities of any series, means any one of the following
events (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be affected by operation
of law or pursuant to any judgment, decree or order of any court
or any order, rule or regulation of any administrative or
governmental body), unless such event is expressly made
inapplicable with respect to such series in or pursuant to a
Board Resolution or supplemental indenture under which Securities
of such series are issued, as the case may be, as contemplated by
Section 301:

(1) default in the payment of any interest upon any
Security of that series when it becomes due and payable, and
continuance of such default for a period of 30 days; or

(2) default in the payment of the principal of (or
premium, if any, on) any Security of that series at its
Maturity; or

(3) default in the payment of any sinking fund
instalment with respect to that series required pursuant to
Article Twelve hereof or such series of Securities, and
continuance of such default for a period of 60 days; or

(4) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture (other
than a covenant or warranty a default in whose performance
or whose breach is elsewhere in this Section specifically
dealt with or which has expressly been included in this
Indenture solely for the benefit of series of Securities
other than that series), and continuance of such default or
breach for a period of 90 days after there has been given,
by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the Holders of
at least 25% in principal amount of the Outstanding
Securities of that series a written notice specifying such
default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder;
or

<PAGE> 49
(5) a default under any bond, debenture, note or other
evidence of indebtedness for money borrowed by the Company
or by any Subsidiary (including a default with respect to
Securities of any series other than that series), any
guarantee by the Company or by any Subsidiary of
indebtedness for money borrowed, or any mortgage, indenture
or instrument under which there may be issued or by which
there may be secured or evidenced any indebtedness for money
borrowed by the Company (including this Indenture) or by any
Subsidiary, which default shall have resulted in (i) a
failure by the Company or any Subsidiary to make any payment
of principal of $5,000,000 or more under any instrument
evidencing such indebtedness in excess of $40,000,000 at the
later of stated maturity or upon the expiration of any
applicable period of grace, which amount remains unpaid for
20 Business Days thereafter, or (ii) such indebtedness in an
aggregate principal amount exceeding $10,000,000 becoming or
being declared due and payable prior to the date on which it
would otherwise have become due and payable, without such
acceleration having been rescinded or annulled within a
period of 20 Business Days after there shall have been
given, by registered or certified mail, to the Company by
the Trustee or to the Company and the Trustee by the Holders
of at least 25% in principal amount of the Outstanding
Securities of that series a written notice specifying such
default and requiring the Company to cause such acceleration
to be rescinded or annulled and stating that such notice is
a "Notice of Default" hereunder; provided, however, that,
subject to the provisions of Sections 601 and 602, the
Trustee shall not be deemed to have knowledge of such
default unless either (A) a Responsible Officer of the
Trustee shall have actual knowledge of such default or (B)
the Trustee shall have received written notice thereof from
the Company, from any Holder, from the holder of any such
indebtedness or from the trustee under any such mortgage,
indenture or other instrument; and provided, further, that
if such default under such indenture or instrument shall be
remedied or cured by the Company or waived by the holders of
such indebtedness, then the Event of Default hereunder by
reason thereof shall be deemed likewise to have been
remedied, cured or waived without further action upon the
part of the Trustee or any of the Holders; or

(6) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of
the Company or any Significant Subsidiary in an involuntary
case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law
or (B) a decree or order adjudging the Company or any
Significant Subsidiary a bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of
the Company or any Significant Subsidiary under applicable
Federal or State law, appointing a custodian, receiver,

<PAGE> 50
liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Significant Subsidiary or of
any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a
period of 90 consecutive days; or

(7) the commencement by the Company or any Significant
Subsidiary of a voluntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency or other
similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to
the entry of a decree or order for relief in respect of the
Company or any Significant Subsidiary in an involuntary case
or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law
or to the commencement of any bankruptcy or insolvency case
or proceeding against it, or the filing by it of a petition
or answer or consent seeking reorganization or relief under
any applicable Federal or State law, or the consent by it to
the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of the
Company or any Significant Subsidiary or of any substantial
part of its property, or the making by it of an assignment
for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they
become due, or the taking of corporate action by the Company
or any Significant Subsidiary in furtherance of any such
action; or

(8) any other Event of Default provided in the
supplemental indenture or provided in or pursuant to the
Board Resolution under which such series of Securities is
issued or in the form of Security for such series.

SECTION 502. Acceleration of Maturity; Rescission and Annulment.

If an Event of Default with respect to Securities of
any series at the time Outstanding occurs and is continuing, then
in every such case the Trustee may or upon the request of the
Holders of not less than 25% in aggregate principal amount of the
Outstanding Securities of that series shall declare the principal
amount (or, if any of the Securities of that series are Original
Issue Discount Securities, such portion of the principal amount
of such Securities as may be specified in the terms thereof) of
all of the Securities of that series to be due and payable
immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such
principal amount (or specified amount) shall become immediately
due and payable.

<PAGE> 51
At any time after such a declaration of acceleration
with respect to Securities of any series has been made and before
a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided,
the Holders of a majority in principal amount of the Outstanding
Securities of that series, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its
consequences if

(1) the Company has paid or deposited with the Trustee
a sum sufficient to pay

(A) all overdue interest, if any, on all
Securities of that series,

(B) the principal of (and premium, if any, on)
any Securities of that series which have become due
otherwise than by such declaration of acceleration and
interest thereon at the rate or rates prescribed
therefor in such Securities,

(C) to the extent that payment of such interest
is lawful, interest upon any overdue interest at the
rate or rates prescribed therefor in such Securities,
and

(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents
and counsel; and

(2) all Events of Default with respect to Securities
of that series, other than the non-payment of the principal
of and accrued interest on Securities of that series which
have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 513.

No such rescission shall affect any subsequent default or impair
any right consequent thereon.

In case the Trustee shall have proceeded to enforce any
right under this Indenture and such proceedings shall have been
discontinued or abandoned because of such rescission or annulment
or of any other reason or shall have been determined adversely to
the Trustee, then and in every such case the Company and the
Trustee shall be restored respectively to their former rights and
positions thereunder.

For all purposes under this Indenture, if a portion of
the principal of any Original Issue Discount Securities shall
have been accelerated and declared due and payable pursuant to
the provisions hereof, then, from and after such declaration,
unless such declaration has been rescinded and annulled, the
principal amount of such Original Issue Discount Securities shall

<PAGE> 52
be deemed, for all purposes hereunder, to be such portion of the
principal thereof as shall be due and payable as a result of such
acceleration, and payment of such portion of the principal
thereof as shall be due and payable as a result of such
acceleration, together with interest, if any, thereon and all
other amounts owing thereunder, shall constitute payment in full
of such Original Issue Discount Securities.

Upon receipt by the Trustee of any written notice
declaring such an acceleration, or rescission and annulment
thereof, with respect to Securities of a series all or part of
which is represented by a Global Security, a record date shall be
established for determining Holders of Outstanding Securities of
such series entitled to join in such notice, which record date
shall be at the close of business on the day the Trustee receives
such notice. The Holders on such record date, or their duly
designated proxies, and only such Persons, shall be entitled to
join in such notice, whether or not such Holders remain Holders
after such record date; provided, that unless such declaration of
acceleration, or rescission and annulment, as the case may be,
shall have become effective by virtue of the requisite percentage
having joined in such notice prior to the day which is 90 days
after such record date, such declaration of acceleration, or
rescission and annulment, as the case may be, shall automatically
and without further action by a Holder be canceled and of no
further effect. Nothing in this paragraph shall prevent a
Holder, or a proxy of a Holder, from giving, after expiration of
such 90-day period, a new written notice of declaration of
acceleration, or rescission or annulment thereof, as the case may
be, which has been canceled pursuant to the proviso to the
preceding sentence, in which event a new record date shall be
established pursuant to the provisions of this Section 502.

SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.

The Company covenants that if

(1) default is made in the payment of any interest on
any Security when such interest becomes due and payable and
such default continues for a period of 30 days, or

(2) default is made in the payment of the principal of
(or premium, if any, on) any Security at the Maturity
thereof,

the Company will, upon written demand of the Trustee, pay to the
Trustee, for the benefit of the Holders of such Securities, the
whole amount then due and payable on such Securities for
principal (and premium, if any) and interest, if any, and, to the
extent that payment of such interest shall be legally
enforceable, interest on any overdue principal (and premium, if
any) and on any overdue interest, at the rate or rates prescribed
therefor in such Securities, and, in addition thereto, such

<PAGE> 53
further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel.

If the Company fails to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an
express trust, may institute a judicial proceeding for the
collection of the sums so due and unpaid, may prosecute such
proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and
collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any
other obligor upon such Securities, wherever situated.

If any Event of Default with respect to Securities of
any series occurs and is continuing, the Trustee may proceed to
protect and enforce its rights and the rights of the Holders of
Securities of such series by such appropriate judicial
proceedings as the Holders of not less than 25% in aggregate
principal amount of the Outstanding Securities of that series
shall deem most effectual to protect and enforce any such rights
whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.

SECTION 504. Trustee May File Proofs of Claim.

In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Securities or the
property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of
the Securities shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company for the payment
of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,

(i) to file and prove a claim for the whole
amount of principal (and premium, if any) and interest
owing and unpaid in respect of the Securities and to
file such other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee,
its agents and counsel) and of the Holders allowed in
such judicial proceeding, and

(ii) to collect and receive any moneys or other
property payable or deliverable on any such claims and
to distribute the same;

<PAGE> 54
and any custodian, receiver, assignee, trustee, liquidator,
conservator, sequestrator or other similar official in any such
judicial proceeding is hereby authorized by each Holder to make
such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 607.

Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights
of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

SECTION 505. Trustee May Enforce Claims Without Possession of
Securities.

All rights of action and claims under this Indenture or
the Securities may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or the production
thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment
shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment
has been recovered.

SECTION 506. Application of Money Collected.

Any money collected by the Trustee pursuant to this
Article shall be applied in the following order with respect to
the Securities of any series, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account
of principal (or premium, if any) or interest, upon presentation
of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:

FIRST: To the payment of all amounts due the Trustee
under Section 607;

SECOND: In case the principal and premium, if any, of
the Securities of such series in respect of which moneys
have been collected shall not have become and be then due
and payable, to the payment of interest, if any, on the
Securities of such series in default in the order of the
maturity of the instalments of such interest, with interest
(to the extent that such interest has been collected by the
Trustee and to the extent permitted by law) upon the overdue

<PAGE> 55
instalments of interest at the rate prescribed therefor in
such Securities, such payments to be made ratably to the
Persons entitled thereto, without discrimination or
preference;

THIRD: In case the principal or premium, if any, of
the Securities of such series in respect of which moneys
have been collected shall have become and shall be then due
and payable, to the payment of the whole amount then owing
and unpaid upon all the Securities of such series for
principal and premium, if any, and interest, if any, with
interest upon the overdue principal and premium, if any, and
(to the extent that such interest has been collected by the
Trustee and to the extent permitted by law) upon overdue
instalments of interest at the rate prescribed therefor in
the Securities of such series; and in case such moneys shall
be insufficient to pay in full the whole amount so due and
unpaid upon the Securities of such series, then to the
payment of such principal and any premium and interest,
without preference or priority of principal over interest,
or of interest over principal or premium, or of any
instalment of interest over any other instalment of
interest, or of any Security of such series over any other
Security of such series, ratably to the aggregate of such
principal and any premium and accrued and unpaid interest;
and

FOURTH: To the payment of the remainder, if any, to
the Company or any other Person lawfully entitled thereto.

SECTION 507. Limitation on Suits.

No Holder of any Security of any series shall have any
right to institute any proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless:

(1) such Holder has previously given written notice to
the Trustee of a continuing Event of Default with respect to
the Securities of that series;

(2) the Holders of not less than 25% in principal
amount of the Outstanding Securities of that series shall
have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own
name as Trustee hereunder;

(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;

(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to
institute any such proceeding; and

<PAGE> 56
(5) no direction inconsistent with such written
request has been given to the Trustee during such 60-day
period by the Holders of a majority in principal amount of
the Outstanding Securities of that series;

it being understood and intended that no one or more of such
Holders shall have any right in any manner whatever by virtue of,
or by availing of, any provision of this Indenture to affect,
disturb or prejudice the rights of any other of such Holders, or
to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal
and ratable benefit of all such Holders.

SECTION 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest.

Notwithstanding any other provision in this Indenture,
the Holder of any Security shall have the right, which is
absolute and unconditional, to receive payment of the principal
of (and premium, if any) and (subject to Section 307) interest,
if any, on such Security on the Stated Maturity or Maturities
expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any
such payment, and such rights shall not be impaired without the
consent of such Holder.

SECTION 509. Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and
the Holders shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies
of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.

SECTION 510. Rights and Remedies Cumulative.

Except as otherwise provided with respect to the
replacement or payment of mutilated, destroyed, lost or stolen
Securities in the last paragraph of Section 306, no right or
remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law,
be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity
or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

<PAGE> 57
SECTION 511. Delay or Omission Not Waiver.

No delay or omission of the Trustee or of any Holder of
any Securities to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.

SECTION 512. Control by Holders.

The Holders of a majority in principal amount of the
Outstanding Securities of any series shall have the right to
direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, with respect to the Securities
of such series, provided that

(1) such direction shall not be in conflict with any
rule of law or with this Indenture, and

(2) subject to the provisions of Section 315 of the
Trust Indenture Act, the Trustee need not take the actions
or forbearances specified in or pursuant to such direction
if the Trustee, being advised by counsel, shall determine
that the action or proceeding so directed may not lawfully
be taken or if the Trustee in good faith by its board of
directors, the executive committee, or a trust committee of
directors or Responsible Officers of the Trustee shall
determine that the action or proceeding so directed may not
lawfully be taken, would involve the Trustee in personal
liability or would be unduly prejudicial to the interests of
Holders of the Securities so affected not joining in the
giving of said direction, it being understood that the
Trustee shall have no duty to ascertain whether or not such
actions or forbearance are duly prejudical to such Holders,
and

(3) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction.

Prior to taking any action hereunder, the Trustee shall
be entitled to indemnification satisfactory to it in its sole
discretion against all losses and expenses caused by taking or
not taking such action.

Upon receipt by the Trustee of any written notice
directing the time, method or place of conducting any such
proceeding or exercising any such trust or power, with respect to
Securities of a series all or part of which is represented by a
Global Security, a record date shall be established for

<PAGE> 58
determining Holders of Outstanding Securities of such series
entitled to join in such notice, which record date shall be at
the close of business on the day the Trustee receives such
notice. The Holders on such record date, or their duly
designated proxies, and only such Persons, shall be entitled to
join in such notice, whether or not such Holders remain Holders
after such record date; provided, that unless Holders of a
majority in principal amount of the Outstanding Securities of
such series shall have joined in such notice prior to the day
which is 90 days after such record date, such notice shall
automatically and without further action by any Holder be
canceled and of no further effect. Nothing in this paragraph
shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such 90-day period, a new notice identical to
a notice which has been canceled pursuant to the proviso to the
preceding sentence, in which event a new record date shall be
established pursuant to the provisions of this Section 512.

SECTION 513. Waiver of Past Defaults.

The Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities of any series may
on behalf of the Holders of all the Securities of such series
waive any past default hereunder with respect to such series and
its consequences, except a default

(1) in the payment of the principal of (or premium, if
any) or interest, if any, on any Security of such series, or

(2) in respect of a covenant or provision hereof which
under Article Nine cannot be modified or amended without the
consent of the Holder of each Outstanding Security of such
series affected.

Upon any such waiver, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed
to have been cured, for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereon. In the
case of any such waiver, the Company, the Trustee and the Holders
of the Outstanding Securities shall be restored to their former
positions and rights hereunder, respectively.

SECTION 514. Undertaking for Costs.

All parties to this Indenture agree, and each Holder of
any Security by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture,
or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant

<PAGE> 59
in such suit, having due regard to the merits and good faith of
the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted
by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Securities of any series, or to any
suit instituted by any Holder for the enforcement of the payment
of the principal of (or premium, if any) or interest, if any, on
any Security on or after the Stated Maturity or Maturities
expressed in such Security (or, in the case of redemption, on or
after the Redemption Date).

SECTION 515. Waiver of Stay or Extension Laws.

The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or
at any time hereafter in force, which may affect the covenants or
the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law and covenants that it will not
hinder, delay or impede the exercise of any power herein granted
to the Trustee, but will suffer and permit the exercise of every
such power as though no such law had been enacted.

ARTICLE SIX

THE TRUSTEE

SECTION 601. Certain Duties and Responsibilities.

(a) Except during the continuance of an Event of
Default with respect to the Securities of any series,

(1) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and

(2) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or
opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.

<PAGE> 60
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent man would exercise
or use under the circumstances in the conduct of his own affairs.

(c) No provision of this Indenture shall be construed
to relieve the Trustee from liability for its own negligent
action, its own negligent failure to act, or its own wilful
misconduct, except that

(1) this Subsection shall not be construed to limit
the effect of Subsection (a) of this Section;

(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless
it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;

(3) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of a
majority in principal amount of the Outstanding Securities
of any series, determined as provided in Section 512,
relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee,
under this Indenture with respect to the Securities of such
series; and

(4) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it
(including without limitation any such indemnity with
respect to environmental liabilities).

(d) Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section.

SECTION 602. Notice of Defaults.

Within 90 days after the date upon which the Trustee
has actual knowledge or is informed by the Company in writing of
any default hereunder with respect to the Securities of any
series, the Trustee shall transmit by mail to all Holders of
Securities of each series, as their names and addresses appear in
the Security Register, notice of such default hereunder known to
the Trustee, unless such default shall have been cured or waived;

<PAGE> 61
provided, however, that, except in the case of a default in the
payment of the principal of (or premium, if any) or interest, if
any, on any Security of such series or in the payment of any
sinking fund instalment with respect to Securities, the Trustee
shall be protected in withholding such notice if and so long as
the board of directors, the executive committee or a trust
committee of directors or Responsible Officers of the Trustee in
good faith determine that the withholding of such notice is in
the best interest of the Holders of Securities; and provided,
further, that in the case of any default of the character
specified in Section 501(4) with respect to Securities, no such
notice to Holders shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section, the term
"default" means any event which is, or after notice or lapse of
time or both would become, an Event of Default with respect to
Securities of such series.

SECTION 603. Certain Rights of Trustee.

Subject to the provisions of Section 601:

(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, Officers'
Certificate or any other certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;

(b) any request, direction, order or demand of the
Company mentioned herein shall be sufficiently evidenced by a
Company Request or Company Order or as otherwise expressly
provided herein and any resolution of the Board of Directors may
be sufficiently evidenced by a Board Resolution;

(c) whenever in the administration of this Indenture
the Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate;

(d) the Trustee may consult with counsel and the
advice of such counsel or any Opinion of Counsel shall be full
and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon;

(e) the Trustee shall be under no obligation to expend
or risk its own funds or to exercise, at the request, direction,
order or demand of any of the Holders, any of the rights or
powers vested in it by this Indenture pursuant to this Indenture,
unless such Holders shall have offered to the Trustee reasonable

<PAGE> 62
security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or
direction (including without limitation any such indemnity with
respect to environmental liabilities);

(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and,
if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled upon reasonable request to
examine the books, records and premises of the Company,
personally or by agent or attorney; and

(g) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly
or by or through agents, consultants or attorneys and the Trustee
shall not be responsible for any misconduct or negligence on the
part of any agent, consultant or attorney appointed with due care
by it hereunder.

SECTION 604. Not Responsible for Recitals or Issuance of
Securities.

The recitals contained herein and in the Securities,
except the Trustee's certificates of authentication, shall be
taken as the statements of the Company, and neither the Trustee
nor any Authenticating Agent assumes any responsibility for their
correctness. The Trustee makes no representations as to the
validity or sufficiency of this Indenture or of the Securities.
Neither the Trustee nor any Authenticating Agent shall be
accountable for the use or application by the Company of
Securities or the proceeds thereof.

SECTION 605. May Hold Securities.

The Trustee, any Authenticating Agent, any Paying
Agent, any Security Registrar or any other agent of the Company,
in its individual or any other capacity, may become the owner or
pledgee of Securities and, subject to Sections 608 and 613, may
otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.

SECTION 606. Money Held in Trust.

Money held by the Trustee in trust hereunder need not
be segregated from other funds except to the extent required by
law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with
the Company.

<PAGE> 63
SECTION 607. Compensation and Reimbursement.

The Company agrees

(1) to pay to the Trustee from time to time such
compensation as is agreed upon in writing, or, if no such
agreement exists, reasonable compensation for all services
rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the
compensation of a trustee of an express trust);

(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to
its negligence or bad faith; and

(3) to indemnify the Trustee, its officers, directors,
agents and employees for, and to hold them harmless against,
any loss, liability or expense incurred without negligence
or bad faith on their part, arising out of or in connection
with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending
themselves against any claim or liability in connection with
the exercise or performance of any of its powers or duties
hereunder.

As security for the performance of the obligations of
the Company under this Section the Trustee shall have a lien
prior to the Securities upon all property and funds held or
collected by the Trustee as such, except funds held in trust for
the payment of principal of (and premium, if any) or interest, if
any, on particular Securities.

The obligation of the Company under this Section to
compensate and indemnify the Trustee and to pay or reimburse the
Trustee for expenses, disbursements and advances shall constitute
additional indebtedness hereunder and shall survive the
satisfaction and discharge of this Indenture.

SECTION 608. Disqualification; Conflicting Interests.

If the Trustee has or shall acquire a conflicting
interest within the meaning of the Trust Indenture Act, the
Trustee shall either eliminate such interest or resign, and
absent the elimination of such interest or resignation may be
removed, to the extent and in the manner provided by, and subject
to the provisions of, the Trust Indenture Act and this Indenture.

<PAGE> 64
SECTION 609. Corporate Trustee Required; Eligibility.

There shall at all times be a Trustee hereunder which
shall be a bank, trust company, corporation or other Person
eligible pursuant to the Trust Indenture Act to act as such,
having a combined capital and surplus of at least $50,000,000.
If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of its
supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately
in the manner and with the effect hereinafter specified in this
Article. The Company may not, nor may any Affiliate of the
Company, serve as Trustee.

SECTION 610. Resignation and Removal; Appointment of Successor.

(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee in accordance with the applicable requirements
of Section 611.

(b) The Trustee may resign at any time with respect to
the Securities of one or more series by giving written notice
thereof to the Company. If the instrument of acceptance by a
successor Trustee required by Section 611 shall not have been
delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such series.

(c) The Trustee may be removed at any time (including
without limitation a time when any of the events set forth in
subclause (d) below shall have occurred) with respect to the
Securities of any series by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series,
delivered to the Trustee and to the Company.

(d) If at any time:

(1) the Trustee shall fail to comply with Section 608
after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at
least six months, or

(2) the Trustee shall cease to be eligible under
Section 609 and shall fail to resign after written request
therefor by the Company or by any such Holder, or

<PAGE> 65
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of
the Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,

then, in any such case, (i) the Company by a Board Resolution may
remove the Trustee with respect to all Securities, (ii) the
Company shall remove the Trustee with respect to all Securities
if requested by Act of the Holders of a majority in principal
amount of all Outstanding Securities, or (iii) subject to Section
514, any Holder who has been a bona fide Holder of a Security for
at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee with respect to all Securities and
the appointment of a successor Trustee or Trustees.

(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, with respect to the Securities of one or
more series, the Company, by a Board Resolution, shall promptly
appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any
such successor Trustee may be appointed with respect to the
Securities of one or more or all of such series and that at any
time there shall be only one Trustee with respect to the
Securities of any particular series) and shall comply with the
applicable requirements of Section 611. If, within one year
after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to
the Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding
Securities of such series delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 611, become the
successor Trustee with respect to the Securities of such series
and to that extent supersede the successor Trustee appointed by
the Company. If no successor Trustee with respect to the
Securities of any series shall have been so appointed by the
Company or the Holders and accepted appointment in the manner
required by Section 611, any Holder who has been a bona fide
Holder of a Security of such series for at least six months may,
on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such series.

(f) The Company shall give notice of each resignation
and each removal of the Trustee with respect to the Securities of
any series and each appointment of a successor Trustee with
respect to the Securities of any series by mailing written notice
of such event by first-class mail, postage prepaid, to all
Holders of Securities of such series as their names and addresses

<PAGE> 66
appear in the Security Register. Each notice shall include the
name of the successor Trustee with respect to the Securities of
such series and the address of its Corporate Trust Office. If
the Company fails to mail such notice within 10 days after
acceptance of appointment by the successor Trustee, the successor
Trustee shall cause such notice to be mailed at the expense of
the Company.

SECTION 611. Acceptance of Appointment by Successor.

(a) In case of the appointment hereunder of a
successor Trustee with respect to all Securities, every such
successor Trustee so appointed shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the
Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer
and deliver to such successor Trustee all property and money held
by such retiring Trustee hereunder subject nevertheless to its
lien, if any, provided for in Section 607.

(b) In case of the appointment hereunder of a
successor Trustee with respect to the Securities of one or more
(but not all) series, the Company, the retiring Trustee and each
successor Trustee with respect to the Securities of one or more
series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and
which (1) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of
the retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee
relates, (2) if the retiring Trustee is not retiring with respect
to all Securities, shall contain such provisions as shall be
deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for
or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in
such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be
trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such
Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee

<PAGE> 67
shall become effective to the extent provided therein and each
such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of
such successor Trustee relates; but, on request of the Company or
any successor trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the
Securities of that or those series to which the appointment of
such successor Trustee relates.

(c) Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts referred to in paragraph (a) or
(b) of this Section, as the case may be.

(d) No successor Trustee shall accept its appointment
unless at the time of such acceptance such successor Trustee
shall be qualified and eligible under this Article.

SECTION 612. Merger, Conversion, Consolidation or Succession to
Business.

Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be otherwise
qualified and eligible under this Article, without the execution
or filing of any paper or any further act on the part of any of
the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office,
any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver
the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.

SECTION 613. Preferential Collection of Claims Against Company.

The Trustee shall be subject to the provisions of
Section 311 of the Trust Indenture Act.

SECTION 614. Authenticating Agents.

From time to time the Trustee, in its sole discretion,
may appoint one or more Authenticating Agents with respect to one
or more series of Securities with power to act on the Trustee's
behalf and subject to its direction in the authentication and
delivery of Securities of such series or in connection with
transfers and exchanges under Sections 304, 305, 306, and 1107 as

<PAGE> 68
fully to all intents and purposes as though the Authenticating
Agent had been expressly authorized by those Sections of this
Indenture to authenticate and deliver Securities of such series.
For all purposes of this Indenture, the authentication and
delivery of Securities by an Authenticating Agent pursuant to
this Section shall be deemed to be authentication and delivery of
such Securities "by the Trustee". Each such Authenticating Agent
shall be acceptable to the Company and shall at all times be a
corporation organized and doing business under the laws of the
United States, any State thereof or the District of Columbia,
authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by Federal, State or
District of Columbia authority. If such corporation publishes
reports of condition at least annually pursuant to law or the
requirements of such authority, then for the purposes of this
Section the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at
any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and
with the effect specified in this Section.

Any corporation into which any Authenticating Agent may
be merged or with which it may be consolidated, or any corpora-
tion resulting from any merger or consolidation or to which any
Authenticating Agent shall be a party, or any corporation
succeeding to the corporate trust business of any Authenticating
Agent, shall be the successor of the Authenticating Agent
hereunder, if such successor corporation is otherwise eligible
under this Section, without the execution or filing of any paper
or any further act on the part of the parties hereto or the
Authenticating Agent or such successor corporation.

An Authenticating Agent may resign at any time by
giving written notice of resignation to the Trustee and to the
Company. The Trustee may at any time terminate the agency of any
Authenticating Agent by giving written notice of termination to
such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in
case at any time any Authenticating Agent shall cease to be
eligible under this Section, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and
shall mail notice of such appointment to all Holders of
Securities of the series with respect to which such Authenti-
cating Agent will serve, as the names and addresses of such
Holders appear on the Security Register. Any successor
Authenticating Agent, upon acceptance of its appointment
hereunder, shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if
originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.

<PAGE> 69
The Trustee agrees to pay to each Authenticating Agent
from time to time reasonable compensation for its services under
this Section, and the Trustee shall be entitled to be reimbursed
for such payments pursuant to Section 607.

If an appointment with respect to one or more series of
Securities is made pursuant to this Section, the Securities of
such series may have endorsed thereon, in addition to the
Trustee's certificate of authentication, an alternate certificate
of authentication in the following form:

This is one of the Securities of the series designated
herein referred to in the within-mentioned Indenture.

UNITED STATES TRUST
COMPANY OF NEW YORK,

__________________________________
As Trustee

__________________________________
As Authenticating Agent

__________________________________
Authorized Officer

SECTION 615. Appointment of Separate or Co-Trustee.

The Trustee may and, upon the request of the Holders of
more than 66-2/3% in aggregate principal amount of all
Outstanding Securities, shall by an instrument in writing
delivered to the Company and to each Holder of Outstanding
Securities, appoint a bank, trust company, corporation or other
Person (which meets the eligibility criteria of the Trustee of
Section 609) to act as separate trustee or co-trustee with
respect to the Securities in a jurisdiction where the Trustee is
disqualified from acting or for any other purpose deemed by the
Trustee or by such Holders to be advantageous to their respective
interests, such separate trustee or co-trustee to exercise only
such rights and to have only such duties as shall be specified in
the instrument of appointment. The Company will pay the
reasonable compensation and expenses of such separate trustee or
co-trustee and, if requested by the Trustee, such separate
trustee or co-trustee or the Holders of more than 66-2/3% in
aggregate principal amount of all Outstanding Securities, the
Company will enter into a supplemental indenture, satisfactory in
substance and form to the Trustee, such separate trustee or co-
trustee and each such Holder, confirming the rights and duties of
such separate trustee or co-trustee.

<PAGE> 70
ARTICLE SEVEN

HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders.

The Company will furnish or cause to be furnished to
the Trustee with respect to the Securities of each series

(a) semi-annually, not later than 15 days after each
Regular Record Date, or, in the case of any series of
Securities on which semi-annual interest is not payable, not
more than 15 days after such semi-annual dates as may be
specified by the Trustee, a list, in such form as the
Trustee may reasonably require, of the names and addresses
of the Holders as of such Regular Record Date or semi-annual
date, as the case may be, to the extent such information is
in the possession or control of the Company or any Paying
Agent, and

(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of
any such request, a list of similar form and content as of a
date not more than 15 days prior to the time such list is
furnished;

provided, however, that so long as the Trustee is Security
Registrar for any series of Securities, no such list shall be
required to be furnished with respect to any such series.

SECTION 702. Preservation of Information; Communications to
Holders.

(a) The Trustee shall preserve, in as current a form
as is reasonably practicable, the names and addresses of Holders
contained in the most recent list furnished to the Trustee as
provided in Section 701 and the names and addresses of Holders
received by the Trustee in its capacity as Security Registrar.
The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.

(b) Every Holder of Securities agrees with the Company
and the Trustee that neither the Company nor the Trustee nor any
agent of either of them shall be held accountable by reason of
any disclosure of information as to the names and addresses of
Holders made pursuant to the Trust Indenture Act.

SECTION 703. Reports by Trustee.

(a) Within 60 days after the first May 15 which occurs
not less than 60 days following the first date of issuance of
Securities of any series under this Indenture and within 60 days
after May 15 in every year thereafter, the Trustee shall transmit

<PAGE> 71
by mail to all Holders, as their names and addresses appear in
the Security Register, such reports as may be required pursuant
to Section 313(a) of the Trust Indenture Act.

(b) A copy of each such report shall, at the time of
such transmission to Holders, be filed by the Trustee with each
stock exchange upon which any Securities are listed, with the
Commission and with the Company. The Company will notify the
Trustee when any Securities are listed on any stock exchange.

SECTION 704. Reports by Company.

The Company shall file with the Trustee and the
Commission, and transmit to Holders, such information, documents
and other reports, and such summaries thereof, as may be required
pursuant to Section 314 of the Trust Indenture Act at the times
and in the manner provided pursuant thereto; provided that any
such information, documents or reports required to be filed with
the Commission pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, shall be filed with the Trustee
within 15 days after the same is so required to be filed with the
Commission. If the Company is not subject to the requirements of
such Section 13 or 15(d), the Company will file with the Trustee,
within 15 days after it would have been required to file with the
Commission, financial statements, including any notes thereto
(and with respect to annual reports, an auditors' report by a
firm of established national reputation), comparable to that
which the Company would have been required to include in such
annual or other reports if the Company were subject to the
requirements of such Section 13 or 15(d).

ARTICLE EIGHT

CONSOLIDATION, MERGER, CONVEYANCE, SALE OR LEASE

SECTION 801. Company May Consolidate, Etc., Only on Certain
Terms.

The Company shall not consolidate with or merge into
any other corporation or convey, sell, assign, transfer or lease
its properties and assets substantially as an entirety to any
Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or
lease its properties and assets substantially as an entirety to
the Company, unless:

(1) in case the Company shall consolidate with or
merge into another corporation or convey, transfer or lease
its properties and assets substantially as an entirety to
any Person, the corporation formed by such consolidation or
into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, the
properties and assets of the Company substantially as an

<PAGE> 72
entirety shall be a corporation organized and existing under
the laws of the United States of America, any State thereof
or the District of Columbia, and shall expressly assume, by
an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due
and punctual payment of the principal of (and premium, if
any) and interest, if any, on all the Securities and the
performance of every covenant or other agreement of this
Indenture on the part of the Company to be performed or
observed;

(2) immediately after giving effect to such
transaction and treating any indebtedness which becomes an
obligation of the Company or a Subsidiary as a result of
such transaction as having been incurred by the Company or
such Subsidiary at the time of such transaction, no Event of
Default, and no event which, after notice or lapse of time
or both, would become an Event of Default, shall have
happened and be continuing;

(3) if, as a result of any such consolidation or
merger or such conveyance, transfer or lease, properties or
assets of the Company would become subject to a mortgage,
pledge, lien, security interest or other encumbrance which
would not be permitted by this Indenture, the Company or
such successor corporation or Person, as the case may be,
shall take such steps as shall be necessary effectively to
secure the Securities equally and ratably with (or prior to)
all indebtedness secured thereby; and

(4) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, conveyance,
transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such
supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such
transaction have been complied with.

SECTION 802. Successor Corporation to be Substituted.

Upon any consolidation by the Company with or merger by
the Company into any other corporation or any conveyance,
transfer or lease of the properties and assets of the Company
substantially as an entirety in accordance with Section 801, the
successor corporation formed by such consolidation or into which
the Company is merged or to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this
Indenture with the same effect as if such successor corporation
had been named as the Company herein, and thereafter, except in
the case of a lease, the predecessor corporation shall be
relieved of all obligations and covenants under this Indenture
and the Securities.

<PAGE> 73
ARTICLE NINE

SUPPLEMENTAL INDENTURES

SECTION 901. Supplemental Indentures without Consent of Holders.

Without the consent of any Holders, the Company and the
Trustee, at any time and from time to time, may enter into one or
more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:

(1) to evidence the succession of another corporation
to the Company and the assumption by any such successor of
the covenants or other agreements of the Company herein and
in the Securities;

(2) to add to the covenants of the Company for the
benefit of the Holders of all or any series of Securities
(and if such covenants are to be for the benefit of less
than all series of Securities, stating that such covenants
are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred
upon the Company;

(3) to add any additional Events of Default;

(4) to add to or change any of the provisions of this
Indenture to such extent as shall be necessary to permit or
facilitate the issuance of Securities in bearer form,
registrable or not registrable as to principal, and with or
without interest coupons, or to permit or facilitate the
issuance of Securities in uncertificated form, or to permit
or facilitate the issuance of extendible Securities;

(5) to add to, change or eliminate any of the
provisions of this Indenture, provided that any such
addition, change or elimination shall become effective only
as to the Securities of any series created by such
supplemental indenture and Securities of any series
subsequently created to which such addition, change or
elimination is made applicable by the subsequent
supplemental indenture creating such series;

(6) to secure the Securities;

(7) to establish the form or terms of Securities of
any series as permitted by Sections 201 and 301;

(8) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to
the Securities of one or more series and to add to or change
any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to
the requirements of Section 611(b);

<PAGE> 74
(9) to provide for any rights of the Holders of
Securities of any series to require the repurchase of
Securities of such series by the Company;

(10) to cure any ambiguity, to correct or supplement
any provision herein which may be inconsistent with any
other provision herein, or to make any other provisions with
respect to matters or questions arising under this
Indenture, provided such action shall not adversely affect
the interests of the Holders of Securities of any series in
any material respect; or

(11) to modify, alter, amend or supplement this
Indenture in any other respect which is not materially
adverse to Holders, which does not involve a change
described in clause (1), (2) or (3) of Section 902 hereof
and which, in the judgment of the Trustee, is not to the
prejudice of the Trustee, including, without limitation, to
provide for the duties, responsibilities and compensation of
the Trustee as a transfer agent in the event one registered
Security of any series is issued in the aggregate principal
amount of all Outstanding Securities of such series in which
Holders will hold an interest.

SECTION 902. Supplemental Indentures with Consent of Holders.

With the consent of the Holders of not less than 50% in
principal amount of the Outstanding Securities of all series
affected by such supplemental indenture (voting as one class), by
Act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by or pursuant to a Board Resolution,
and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture;
provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Security
affected thereby,

(1) change the Stated Maturity of the principal of, or
any instalment of principal of or interest, if any, on, any
Security, or reduce the principal amount thereof or the rate
of interest thereon or any premium payable upon the
redemption thereof, or reduce the amount of the principal of
an Original Issue Discount Security that would be due and
payable upon a declaration of acceleration of the Maturity
thereof pursuant to Section 502, or change any Place of
Payment where, or the coin or currency in which, any
Security or any premium or the interest thereon is payable,
or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof
(or, in the case of redemption, on or after the Redemption
Date), or

<PAGE> 75
(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose
Holders is required for any such supplemental indenture, or
the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided
for in this Indenture, or

(3) modify any of the provisions of this Section or
Section 513 or Section 1009, except to increase any such
percentage or to provide that certain other provisions of
this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected
thereby, provided, however, that this clause shall not be
deemed to require the consent of any Holder with respect to
changes in the references to "the Trustee" and concomitant
changes in this Section, or the deletion of this proviso, in
accordance with the requirements of Sections 611(b) and
901(8).

A supplemental indenture which changes or eliminates any covenant
or other provision of this Indenture which has expressly been
included solely for the benefit of one or more particular series
of Securities, or which modifies the rights of the Holders of
Securities of such series with respect to such covenant or other
provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.

It shall not be necessary for any Act of Holders under
this Section to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such Act
shall approve the substance thereof.

SECTION 903. Execution of Supplemental Indentures.

In executing, or accepting the additional trusts
created by, any supplemental indenture permitted by this Article
or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and shall be
fully protected in relying upon, an Opinion of Counsel stating
that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.

SECTION 904. Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture under
this Article, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.

<PAGE> 76
SECTION 905. Conformity with Trust Indenture Act.

Every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture
Act as then in effect.

SECTION 906. Reference in Securities to Supplemental Indentures.

Securities of any series authenticated and delivered
after the execution of any supplemental indenture pursuant to
this Article may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company
shall so determine, new Securities of any series so modified as
to conform, in the opinion of the Trustee and the Company, to any
such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.

ARTICLE TEN

COVENANTS

SECTION 1001. Payment of Principal, Premium and Interest.

The Company covenants and agrees for the benefit of
each series of Securities that it will duly and punctually pay
the principal of (and premium, if any) and interest, if any, on
the Securities of that series in accordance with the terms of the
Securities and this Indenture. An installment of principal and
premium, if any, and interest shall be considered paid on the due
date if the Trustee or Paying Agent holds on that date money, as
provided below, designated for and sufficient to pay the
installment and is not prohibited from paying such money to the
Holders of the Securities pursuant to the terms of this
Indenture.

SECTION 1002. Maintenance of Office or Agency.

The Company will maintain in each Place of Payment for
any series of Securities an office or agency where Securities of
that series may be presented or surrendered for payment, where
Securities of that series may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the
Company in respect of the Securities of that series and this
Indenture may be served. The Company will give prompt written
notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and, in such
event, the Trustee shall act as the Company's agent to receive
all such presentations, surrenders, notices and demands.

<PAGE> 77
The Company may also from time to time designate one or
more other offices or agencies where the Securities of one or
more series may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain
an office or agency in each Place of Payment for Securities of
any series for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other
office or agency.

SECTION 1003. Money for Securities Payments to Be Held in Trust.

If the Company shall at any time act as its own Paying
Agent with respect to any series of Securities, it will, on, in
case the payment referred to below is made in same day funds, or
in all other cases, prior to, each due date of the principal of
(and premium, if any) or interest, if any, on any of the
Securities of that series, irrevocably segregate and hold in
trust for the benefit of the Persons entitled thereto a sum
sufficient to pay the principal (and premium, if any) or
interest, if any, so becoming due until such sums shall be paid
to such Persons or otherwise disposed of as herein provided and
will promptly notify the Trustee of its action or failure so to
act.

Whenever the Company shall have one or more Paying
Agents for any series of Securities, it will, on, in case the
payment referred to below is made in same day funds, or in all
other cases, prior to, each due date of the principal of (and
premium, if any) or interest, if any, on any Securities of that
series, irrevocably deposit with a Paying Agent a sum sufficient
to pay the principal (and premium, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or interest, and
(unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its failure so to act.

The Company will cause each Paying Agent for any series
of Securities other than the Trustee to execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:

(1) hold all sums held by it for the payment of
the principal of (and premium, if any) or interest, if any,
on Securities of that series in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;

<PAGE> 78
(2) give the Trustee notice of any default by the
Company (or any other obligor upon the Securities of that
series) in the making of any payment of principal (and
premium, if any) or interest, if any, on the Securities of
that series; and

(3) at any time during the continuance of any
such default, upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held in trust by
such Paying Agent.

The Company may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or for
any other purpose, pay, or by Company Order direct any Paying
Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by
the Company or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.

Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of
the principal of (and premium, if any) or interest, if any, on
any Security of any series and remaining unclaimed for three
years after such principal (and premium, if any) or interest has
become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the
expense of the Company cause to be published twice, in a
newspaper published in the English language, customarily
published on each Business Day and of general circulation in each
Place of Payment, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less
than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the
Company.

SECTION 1004. Corporate Existence.

Subject to Article Eight, the Company will do or cause
to be done all things necessary to preserve and keep in full
force and effect its corporate existence and will use its best
efforts to do or cause to be done all things necessary to
preserve and keep in full force and effect its rights (charter
and statutory), licenses, permits, approvals and franchises;
provided, however, that the Company shall not be required to
preserve any such right or franchise if the Board of Directors

<PAGE> 79
shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that
the loss thereof is not disadvantageous in any material respect
to the Holders.

SECTION 1005. Maintenance of Properties.

The Company will cause all properties used or useful in
the conduct of its business or the business of any Subsidiary to
be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to
be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this Section
shall prevent the Company from discontinuing the operation or
maintenance of any of such properties if such discontinuance is,
in the judgment of the Company, desirable in the conduct of its
business or the business of any Subsidiary and not
disadvantageous in any material respect to the Holders.

SECTION 1006. Payment of Taxes and Other Claims.

The Company will pay or discharge or cause to be paid
or discharged, before the same shall become delinquent, (1) all
taxes, assessments and governmental charges levied or imposed
upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary, and (2) all lawful
claims for labor, materials and supplies which, if unpaid, might
by law become a lien upon the property of the Company or any
Subsidiary; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged
any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by
appropriate proceedings.

SECTION 1007. Statement by Officers as to Default.

The Company will deliver to the Trustee on or before
May 15 in each year, an Officers' Certificate stating that in the
course of the performance by each signer of his duties as an
officer of the Company he would normally have knowledge of any
default by the Company in the performance and observance of any
of the covenants contained in Sections 1001 to 1006 (without
regard to any period of grace or requirement of notice provided
hereunder), stating whether or not he has knowledge of any such
default and, if so, specifying each such default of which such
signer has knowledge and the nature thereof.

SECTION 1008. Defeasance of Certain Obligations.

<PAGE> 80
The Company may omit to comply with any term, provision
or condition set forth in Sections 801, 1005 and 1006 with
respect to the Securities of any series, provided that the
following conditions shall have been satisfied:

(1) The Company has deposited or caused to be
irrevocably deposited (except as provided in Section 402(c)
and the last paragraph of Section 1003) with the Trustee
(specifying that each deposit is pursuant to this Section
1008) as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the
Holders of the Securities of such series, (i) money in the
currency or units of currency in which such Securities are
payable in an amount, or (ii) (except as provided in a
supplemental indenture with respect to such series) if
Securities of such series are not subject to repurchase at
the option of Holders, (A) U.S. Government Obligations
(denominated in the same currency or units of currency in
which such Securities are payable) which through the payment
of interest and principal in respect thereof in accordance
with their terms and without consideration of the proceeds
of any reinvestment thereof will provide not later than one
day before the due date of any payment referred to in clause
(x) or (y) of this subparagraph (1) money in an amount, or
(B) a combination of money and U.S. Government Obligations
as provided in (A) above sufficient (as verified by a
nationally recognized firm of independent certified public
accountants) to pay and discharge (x) the principal of (and
premium, if any) and each instalment of principal (and
premium, if any) and interest, if any, on the Outstanding
Securities of such series on the Stated Maturity of such
principal or instalment of principal or interest or to and
including the Redemption Date irrevocably designated by the
Company pursuant to subparagraph (4) of this Section and (y)
any mandatory sinking fund payments applicable to the
Securities of such series on the day on which payments are
due and payable in accordance with the terms of the
Indenture and of the Securities of such series;

(2) No Event of Default or event which with notice or
lapse of time would become an Event of Default (including by
reason of such deposit) with respect to the Securities of
such series shall have occurred and be continuing on the
date of such deposit;

(3) The Company shall have delivered to the Trustee
unqualified opinions, in form and substance satisfactory to
the Trustee, of independent counsel, selected by the Company
and satisfactory to the Trustee, of nationally recognized
standing in the field of federal tax law, as to (i) below
and in the field of federal securities law, as to (iii)
below, to the effect (i) that Holders of the Securities of
such series will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit and

<PAGE> 81
defeasance of certain obligations; (ii) that such provision
would not cause any outstanding Securities of such series
then listed on any national securities exchange to be
delisted as a result thereof; and (iii) that the defeasance
trust is not, or is registered as, an investment company
under the Investment Company Act of 1940;

(4) Such defeasance shall not result in a breach or
violation, or constitute a default under, this Indenture or
any other material agreement or instrument to which the
Company is a party or by which it is bound;

(5) The Company has delivered to the Trustee an
Officers' Certificate stating that the deposit made by the
Company, pursuant to its election hereunder, was not made by
the Company with the intent of defeating, hindering,
delaying or defrauding creditors of the Company or others;
and

(6) If the Company has deposited or caused to be
deposited money or U.S. Government Obligations to pay or
discharge the principal of (and premium, if any) and
interest, if any, on the Outstanding Securities of a series
to and including a Redemption Date on which all of the
Outstanding Securities of such series are to be redeemed,
such Redemption Date shall be irrevocably designated by a
Board Resolution delivered to the Trustee on or prior to the
date of deposit of such money or U.S. Government
Obligations, and such Board Resolution shall be accompanied
by an irrevocable Company Request that the Trustee give
notice of such redemption in the name and at the expense of
the Company not less than 30 nor more than 60 days prior to
such Redemption Date in accordance with Section 1104.

SECTION 1009. Waiver of Certain Covenants.

The Company may omit in any particular instance to
comply with any term, provision or condition set forth in
Sections 1004 and 1005, inclusive, with respect to the Securities
of any series if before the time for such compliance the Holders
of at least 50% in principal amount of the Outstanding Securities
of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with
such term, provision or condition, but no such waiver shall
extend to or affect such term, provision or condition except to
the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties
of the Trustee in respect of any such term, provision or
condition shall remain in full force and effect.

SECTION 1010. Notice to Trustee.

The Company will promptly give notice to the Trustee of
(1) an Event of Default under any of Sections 501(5), (6) or (7),
or (2) a default specified in clause (i) of Section 501(5)

<PAGE> 82
without regard to the 20 Business Day period of grace specified
therein, or (3) a default specified in clause (ii) of Section
501(5) for which all applicable grace periods and notice under
the underlying documentation have passed or been given, as the
case may be, but which the indebtedness in respect thereof has
not been declared due and payable prior to the date on which it
would otherwise have become due and payable.

SECTION 1011. To Insure.

The Company will keep its electric utility properties
insured against loss or damage, to the extent that property of
similar character is usually so insured by companies similarly
situated and operating like properties, to a reasonable amount by
insurance companies believed by the Company to be responsible; or
that it will, in lieu of or supplementing such insurance, in
whole or in part, adopt and comply with some other method or plan
of protection against loss or damage consistent with industry
practice.

SECTION 1012. Limitations on Liens.

Except as provided in this Section, neither the Company
nor any Significant Subsidiary will, so long as any Securities
created under Section 301A remain outstanding, create, assume,
incur or suffer to be created or to exist any Mortgage upon its
property or assets of any character now owned or hereafter
acquired for the benefit of any indebtedness for money borrowed
without effective provision being made, in each such instance, in
and by the instrument creating such Mortgage, whereby all of the
Securities created under Section 301A and then outstanding and
any other indebtedness for money borrowed ranking equally with
the Securities and similarly entitled by any pre-existing
agreement to be secured shall (so long as any such Mortgage shall
exist) be directly secured by such instrument at least equally
and ratably with the other indebtedness to be issued thereunder;
provided, however, that this restriction shall not apply as
follows:

(1) to any Mortgage created by or arising out of or
under the Mortgage Indentures;

(2) to Prepaid Liens and Excepted Encumbrances (as
such terms are defined in Section 1.02 of each of the
Mortgage Indentures) and to easements and similar
encumbrances (including minor title defects) which easements
and similar encumbrances, in the opinion of management of
the Company, do not materially impair the use of the
Company's property or assets;

(3) to (a) any Mortgage existing on property at the
time of its acquisition, whether by purchase, consolidation,
merger or in any other manner whatever or the assumption of
any such Mortgage as part of the purchase price of such

<PAGE> 83
property, to purchase money Mortgages, (b) to purchase money
liens or the entering into of conditional sale or other
title retention agreements in connection with the
acquisition of additional property, or (c) any Mortgage to
secure indebtedness for money borrowed issued in exchange
for or to renew or refund any indebtedness for money
borrowed secured by any purchase money or other Mortgage or
lien described in clauses (a) or (b) above or to renew or
refund any such renewal or refunding obligations, provided
that such Mortgage or agreement does not extend to any
property of the Company except the property originally
acquired, replacements thereof and fixed improvements
erected thereon; provided, further, that the amount of the
indebtedness secured by a purchase money Mortgage or other
purchase money liens, as permitted by clauses (a), (b) or
(c) above, may not exceed the cost of the property acquired,
as determined under the Federal Energy Regulatory Commission
Uniform System of Accounts;

(4) to (i) liens and charges incidental to construc-
tion or current operations which have not been filed or
asserted or the payment of which has been adequately secured
or which, in the reasonable opinion of management of the
Company, are not significant in amount; (ii) pledges or
deposits to secure performance in connection with bids,
tenders, contracts (other than contracts for the payment or
guarantee of money); (iii) the pledge or deposit of any
assets as security for any purpose at any time required by
law or governmental regulation as a condition to the
transaction of any business or the exercise of any
privilege, license or right, or for the purpose of securing
a stay or discharge or bond or for any other purpose in the
course of legal proceedings in which the Company is a party
or other deposits to secure public or statutory obligations
of the Company; (iv) pledges or deposits to secure
obligations under workmen's compensation laws or similar
legislation, including liens or judgments thereunder which
are not currently dischargeable; (v) farm-out or carried
working interest agreements for development by the Company
or others of non-producing leases or non-producing portions
of oil or gas producing property; (vi) participations in
joint operating agreements and unitization agreements and
operations covering oil and gas producing properties; and
(vii) an oil or gas royalty, overriding royalty or
production payment (to the extent not constituting the
economic equivalent of secured indebtedness);

(5) to any Mortgage as security for (i) the Securities
or (ii) the Securities of Series A-I, the terms of which are
specified in the Plan;

(6) to the granting, creating, assuming, incurring or
suffering to be created or to exist any Mortgage upon any of
the Company's property or assets of any character now owned
or hereafter acquired as additional security by operation of

<PAGE> 84
after-acquired property provisions for the benefit of any
indebtedness for money borrowed or other indebtedness which
is then already secured by a Mortgage upon any property or
assets of the Company;

(7) to Mortgages on any property of the Company which
Mortgages exist on the date of the original issuance by the
Company of the applicable series of Securities issued
pursuant to this Indenture;

(8) to Mortgages on property of a Subsidiary which
secure indebtedness owing by such Subsidiary to the Company
or a Subsidiary;

(9) to Mortgages on the property of the Company in
favor of the United States of America or any State thereof,
or any department, agency, instrumentality or political
subdivision of the United States of America or any State
thereof, to secure partial, progress, advance or other
payments pursuant to any contract or statute;

(10) to any Mortgage created, assumed, incurred, or
suffered to be created or exist for the sole purpose of
extending, renewing, replacing or refunding, in whole or in
part, any Mortgage permitted by this Section, or any
extension, renewal, replacement or refunding of any Mortgage
securing indebtedness of the Company on the date of this
Indenture; provided, however, that the principal amount of
indebtedness secured thereby shall not exceed the principal
amount of indebtedness so secured at the time of such
extension, renewal, replacement or refunding or, in the case
of a credit facility, the amount of the loan commitment
existing under the credit facility to be extended, renewed,
replaced or refunded;

(11) to any sale or financing of accounts receivable by
the Company and its Subsidiaries; and

(12) to Mortgages not otherwise permitted, if, at the
time of, and after giving effect to, the creation or
assumption of any such Mortgage, the aggregate of all
obligations of the Company secured by any Mortgage not
otherwise permitted hereby does not exceed 5% of Total
Capital at such time.

SECTION 1013. Purchase of Securities Upon Change in Control.

(a) Upon the occurrence of a Change in Control, the
Securities created under Section 301A shall be purchased by the
Company, at the option of the Holder thereof, in whole or in part
in integral multiples of aggregate principal amount of $1,000, on
a date that is not earlier than 45 days nor later than 90 days
from the date the Change in Control Notice referred to below is
given to the Holders or such later date as may be necessary for

<PAGE> 85
the Company to comply with requirements under the Exchange Act or
the Public Utility Holding Company Act of 1935, as amended, (such
date, or such later date, being the "Change in Control Purchase
Date"), at a purchase price in cash (the "Change in Control
Purchase Price") equal to 100% of the sum of the principal amount
of such Securities, plus accrued and unpaid interest to the
Change in Control Purchase Date, subject to satisfaction by or on
behalf of the Holder of the requirements set forth in paragraph
(b) below.

(b) Within 30 days after the occurrence of a Change in
Control, the Company shall give written notice of such Change in
Control (a "Change in Control Notice") and of its offer (the
"Change in Control Offer") to purchase Securities created under
Section 301A as specified herein to the Trustee and to each
Holder of such Securities at his address appearing on the
Security Register, by first-class mail, postage prepaid. The
Change in Control Notice shall contain all instructions and
materials determined by the Company to be necessary to enable
such Holders to have their Securities repurchased, shall include
a form of Change in Control Purchase Notice to be completed by
the Holder and shall state or include:

(i) that a Change in Control has occurred and the
circumstances and events causing the Change in Control and
the date such Change in Control is deemed to have occurred
for purposes of this Section;

(ii) the date by which a Holder must give a Change in
Control Purchase Notice;

(iii) the Change in Control Purchase Price;

(iv) the Change in Control Purchase Date, or if such
date is not known due to regulatory or other legal
requirements, an undertaking to notify the Holder of such
date when it is known;

(v) that Securities to be repurchased shall, on the
Change in Control Purchase Date, become due and payable at
the Change in Control Purchase Price and from and after such
date (unless the Company shall default in the payment of the
Change in Control Purchase Price) such Securities shall
cease to accrue interest; and

(vi) the procedures a Holder must follow to exercise
rights under this Section and a brief description of those
rights and the procedures for withdrawing a Change in
Control Purchase Notice.

(c) Holders electing to have Securities repurchased under
paragraph (a) above will be required to surrender such Securities
to the Trustee at the address specified in the notice by the
close of business at least five Business Days prior to the Change
in Control Purchase Date.

<PAGE> 86
(d) Upon receipt by any Paying Agent of a Change in Control
Purchase Notice, the Holder of the Security in respect of which
such Change in Control Purchase Notice was given shall thereafter
be entitled to receive solely the Change in Control Purchase
Price with respect to such Security. Such Change in Control
Purchase Price shall be paid to such Holder promptly following
the later of the Business Day following the Change in Control
Purchase Date (provided the conditions in (b) above have been
satisfied) and the time of delivery of such Security to the
relevant Paying Agent at the office of such Paying Agent by the
Holder thereof in the manner required by (b) above.

(e) On or prior to the Change in Control Purchase Date, the
Company shall deposit with the Trustee or with a Paying Agent (or
if the Company is acting as its own Paying Agent, segregate and
hold in trust as provided in Section 1003) an amount of money
sufficient to pay the Change in Control Purchase Price of all the
Securities or portions thereof which are to be purchased on that
date.

(f) Any Security that is to be purchased only in part shall
be surrendered to a Paying Agent at the office of such Paying
Agent (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in
writing), and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security, without
service charge, one or more new Securities of any authorized
denomination as requested by such Holder in the aggregate
principal amount of the Security so surrendered that is not
purchased.

(g) The Company shall comply with any applicable tender
offer rules, including Rule 14e-1 under the Exchange Act, in
connection with a Change in Control Offer.

(h) No Securities may be purchased hereunder if there has
occurred and is continuing an Event of Default.

ARTICLE ELEVEN

REDEMPTION OF SECURITIES

SECTION 1101. Applicability of Article.

Securities of any series which are redeemable before
their Stated Maturity shall be redeemable in accordance with
their terms and (except as otherwise specified as contemplated by
Section 301 for Securities of any series) in accordance with this
Article.

<PAGE> 87
SECTION 1102. Election to Redeem; Notice to Trustee.

The election of the Company to redeem any Securities
shall be evidenced by an Officers' Certificate. In case of any
redemption at the election of the Company of less than all the
Securities of any series, the Company shall, at least 60 days
prior to the Redemption Date fixed by the Company (unless a
shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date and of the principal amount of
Securities of such series to be redeemed. In the case of any
redemption of Securities prior to the expiration of any
restriction on such redemption provided in the terms of such
Securities or elsewhere in this Indenture, the Company shall
furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction.

SECTION 1103. Selection by Trustee of Securities to
Be Redeemed.

If less than all the Securities of any series are to be
redeemed, the particular Securities to be redeemed shall be
selected not more than 60 days prior to the Redemption Date by
the Trustee, from the Outstanding Securities of such series not
previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to the minimum
authorized denomination for Securities of that series or any
integral multiple thereof) of the principal amount of Securities
of such series of a denomination larger than the minimum
authorized denomination for Securities of that series.

Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration
and certificate number in a written statement signed by an
authorized officer of the Company and delivered to the Security
Registrar at least 60 days prior to the Redemption Date as being
owned of record and beneficially by, and not pledged or
hypothecated by either (a) the Company or (b) an entity
specifically identified in such written statement which is an
Affiliate of the Company.

The Trustee shall promptly notify the Company in
writing of the Securities selected for redemption and, in the
case of any Securities selected for partial redemption, the
principal amount thereof to be redeemed.

For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of
Securities shall relate, in the case of any Securities redeemed
or to be redeemed only in part, to the portion of the principal
amount of such Securities which has been or is to be redeemed.

<PAGE> 88
SECTION 1104. Notice of Redemption.

Notice of redemption shall be given by first-class
mail, postage prepaid, mailed not less than 30 nor more than 60
days prior to the Redemption Date, to each Holder of Securities
to be redeemed, at his address appearing in the Security
Register.

All notices of redemption shall state:

(1) the Redemption Date,

(2) the Redemption Price,

(3) the identification, including complete original
name and series designation of the series of Securities to
be redeemed and CUSIP number,

(4) in the case of partial redemption, the principal
amounts of the particular Securities to be redeemed,

(5) that on the Redemption Date the Redemption Price
will become due and payable upon each such Security to be
redeemed and that, unless the Company shall default in
payment of the Redemption Price, interest thereon will cease
to accrue on and after said date,

(6) the place or places where such Securities are to
be surrendered for payment of the Redemption Price,
including the name and telephone number of a contact person,
and

(7) that the redemption is for a sinking fund, if such
is the case.

Notice of redemption of Securities to be redeemed at
the election of the Company shall be given by the Company or, at
the Company's request, by the Trustee in the name of and at the
expense of the Company.

SECTION 1105. Deposit of Redemption Price.

On, in the case of same day funds, or, in all other
cases at least one Business Day prior to any Redemption Date, the
Company shall deposit with the Trustee or with a Paying Agent
(or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 1003) an amount of money
sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued
interest on, all the Securities which are to be redeemed on that
date (to the extent that such amounts are not already on deposit
at such time in accordance with the provisions of Section 401,
403 or 1008).

<PAGE> 89
SECTION 1106. Securities Payable on Redemption Date.

Notice of redemption having been given as aforesaid,
the Securities so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein specified,
and from and after such date (unless the Company shall default in
the payment of the Redemption Price and accrued and unpaid
interest) such Securities shall cease to bear interest. Upon
surrender of any such Security for redemption in accordance with
said notice, such Security shall be paid by the Company at the
Redemption Price, together with accrued and unpaid interest to
the Redemption Date; provided, however, that instalments of
interest whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Securities, or one
or more Predecessor Securities, registered as such at the close
of business on the relevant Record Dates according to their terms
and the provisions of Section 307.

If any Security called for redemption shall not be so
paid upon surrender thereof for redemption, the principal (and
premium, if any) shall, until paid, bear interest from the
Redemption Date at the rate prescribed therefor in the Security.

SECTION 1107. Securities Redeemed in Part.

Any Security (including any Global Security) which is
to be redeemed only in part shall be surrendered at a Place of
Payment therefor (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of the same series,
of any authorized denomination as requested by such Holder, in
aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so
surrendered; provided, that if a Global Security is so
surrendered, the new Global Security shall be in a denomination
equal to the unredeemed portion of the principal of the Global
Security so surrendered.

ARTICLE TWELVE

SINKING FUNDS

SECTION 1201. Applicability of Article.

The provisions of this Article shall be applicable to
any sinking fund for the retirement of Securities of a series
except as otherwise specified as contemplated by Section 301 for
Securities of such series.

<PAGE> 90
The minimum amount of any sinking fund payment provided
for by the terms of Securities of any series is herein referred
to as a "mandatory sinking fund payment", and any payment in
excess of such minimum amount provided for by the terms of
Securities of any series is herein referred to as an "optional
sinking fund payment". If provided for by the terms of
Securities of any series, the cash amount of any sinking fund
payment may be subject to reduction as provided in Section 1202.
Each sinking fund payment shall be applied to the redemption of
Securities of any series as provided for by the terms of
Securities of such series.

SECTION 1202. Satisfaction of Sinking Fund Payments with
Securities.

In lieu of making all or any part of any mandatory
sinking fund payment with respect to any series of Securities in
cash, the Company may at its option (a) deliver to the Trustee
Securities of such series theretofore purchased or otherwise
acquired (except upon redemption pursuant to the mandatory
sinking fund) by the Company or receive credit for Securities of
such series (not previously so credited) theretofore purchased or
otherwise acquired (except as aforesaid) by the Company and
delivered to the Trustee for cancellation pursuant to Section
309, (b) receive credit for optional sinking fund payments (not
previously so credited) made pursuant to this Section, or (c)
receive credit for Securities of such series (not previously so
credited) redeemed by the Company through any optional redemption
provision contained in the terms of such series. Securities so
delivered or credited shall be received or credited by the
Trustee at the sinking fund Redemption Price specified in such
Securities.

SECTION 1203. Redemption of Securities for Sinking Fund.

Not less than 60 or more than 90 days prior to each
sinking fund payment date for any series of Securities, the
Company will deliver to the Trustee an Officers' Certificate
specifying (a) the amount of the next ensuing sinking fund
payment for that series pursuant to the terms of that series, (b)
whether or not the Company intends to exercise its right, if any,
to make an optional sinking fund payment with respect to such
series on the next ensuing sinking fund payment date and, if so,
the amount of such optional sinking fund payment, and (c) the
portion thereof, if any, which is to be satisfied by payment of
cash and the portion thereof, if any, which is to be satisfied by
delivering and crediting Securities of that series pursuant to
Section 1202, and will also deliver to the Trustee any Securities
to be so delivered. Such written statement shall be irrevocable
and upon its receipt by the Trustee the Company shall become
unconditionally obligated to make all the cash payments or
payments therein referred to, if any, on or before the next
succeeding sinking fund payment date. Failure of the Company, on
or before any such 60th day, to deliver such written statement

<PAGE> 91
and Securities specified in this paragraph, if any, shall not
constitute a default but shall constitute, on and as of such
date, the irrevocable election of the Company (i) that the
mandatory sinking fund payment for such series due on the next
succeeding sinking fund payment date shall be paid entirely in
cash without the option to deliver or credit Securities of such
series in respect therefor and (ii) that the Company will make no
optional sinking fund payment with respect to such series as
provided in this Section.

Not less than 30 days before each such sinking fund
payment date the Trustee shall select the Securities to be
redeemed upon such sinking fund payment date in the manner
specified in Section 1103 and cause notice of the redemption
thereof to be given in the name of and at the expense of the
Company in the manner provided in Section 1104. Such notice
having been duly given, the redemption of such Securities shall
be made upon the terms and in the manner stated in Sections 1105,
1106 and 1107.

The Trustee shall not redeem or cause to be redeemed
any Security of a series with sinking fund moneys or mail any
notice of redemption of Securities of such series by operation of
the sinking fund during the continuance of a default in payment
of interest with respect to Securities of that series or an Event
of Default with respect to the Securities of that series except
that, where the mailing of notice of redemption of any Securities
shall theretofore have been made, the Trustee shall redeem or
cause to be redeemed such Securities, provided that it shall have
received from the Company a sum sufficient for such redemption.
Except as aforesaid, any moneys in the sinking fund for such
series at the time when any such default or Event of Default,
shall occur, and any moneys thereafter paid into the sinking
fund, shall, during the continuance of such default or Event of
Default, be deemed to have been collected under Article Five and
held for the payment of all such Securities. In case such Event
of Default shall have been waived as provided in Section 513 or
the default or Event of Default cured on or before the 60th day
preceding the sinking fund payment date, such moneys shall
thereafter be applied on the next succeeding sinking fund payment
date in accordance with this Section to the redemption of such
Securities.

<PAGE> 92

* * * *

IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.

[Seal] EL PASO ELECTRIC COMPANY

By_____________________________________

Attest:

_________________________

[Seal] UNITED STATES TRUST COMPANY
OF NEW YORK,
as Trustee

By_____________________________________

Attest:

_________________________

<PAGE> 93

STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )

On the ____ day of _________, 1994, before me
personally came _________________, to me known, who, being by me
duly sworn, did depose and say that he is a ______________ of El
Paso Electric Company, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation, and that he signed his
name thereto by like authority.

_____________________________

STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )

On the ____ day of _________, 1994, before me
personally came ____________, to me known, who, being by me duly
sworn, did depose and say that he is a ______________ of United
States Trust Company of New York, the Trustee described in and
which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation, and that he signed his
name thereto by like authority.

_____________________________

<PAGE> 94
Appendix A-1

EL PASO ELECTRIC COMPANY
Series A ___% Senior Notes due ______

No. __________ $__________

EL PASO ELECTRIC COMPANY, a corporation duly organized
and existing under the laws of the State of Texas (herein called
the "Company", which term includes any successor corporation
under the Indenture hereinafter referred to), for value received,
hereby promises to pay to ___________________________________, or
registered assigns, the principal sum of ________________________
Dollars on _________________________________, and to pay interest
thereon from ________, 1994, or from the most recent Interest
Payment Date to which interest has been paid or duly provided
for, semiannually on ____________ and ___________ in each year,
commencing ________, at the rate per annum provided in the title
hereof, until the principal hereof is paid or made available for
payment, and, subject to the terms of the Indenture, at the rate
per annum equal to __% [2.0% above stated rate] on any overdue
principal and premium and (to the extent that the payment of such
interest shall be legally enforceable) on any overdue instalment
of interest. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided
in such Indenture, be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at
the close of business on the Regular Record Date for such
interest, which shall be the _______ or ________ (whether or not
a Business Day), as the case may be, next preceding such Interest
Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities)
is registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities
of this series not less than 10 days prior to such Special Record
Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on
which the Securities of this series may be listed, and upon such
notice as may be required by such exchange, all as more fully
provided in said Indenture.

Payment of the principal of (and premium, if any) and
interest on this Security will be made at the office or agency of
the Company maintained for that purpose in New York, New York in
such coin or currency of the United States of America as at the
time of payment is legal tender for the payment of public and
private debts; provided, however, that at the option of the
Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall
appear in the Security Register.

<PAGE> 95
Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.

IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.

Dated:

[Seal] EL PASO ELECTRIC COMPANY

By______________________________________
[Title]

<PAGE> 96
EL PASO ELECTRIC COMPANY
Series A ___% Senior Notes due _____

This Security is one of a duly authorized issue of
securities of the Company (herein called the "Securities"),
issued and to be issued in one or more series under an Indenture,
dated as of _________, 1994 (herein called the "Indenture"),
between the Company and United States Trust Company of New York
(herein called the "Trustee", which term includes any successor
trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face
hereof, limited in aggregate principal amount to $________.

The Securities of this series are subject to redemption
upon not less than 30 or more than 60 days' notice by mail to the
Holders of such Securities at their addresses in the Security
Register for such series, at any time, as a whole or in part, at
the election of the Company, at the following Redemption Prices
(expressed as percentages of the principal amount):

If redeemed during the 12-month period beginning
___________, of the years indicated:

Redemption Redemption
Year Price Year Price

[table to come based upon Schedule C to the Plan with
adjustments prior to Year 4 as detailed in the Plan]

, together in the case of any such redemption with accrued and
unpaid interest to the Redemption Date, but interest installments
whose Stated Maturity is on or prior to such Redemption Date will
be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as
provided in the Indenture.

In the event of redemption of this Security in part
only, a new Security or Securities of this series and of like
tenor for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.

<PAGE> 97
The Indenture provides that, subject to certain
conditions, if a Change in Control (as such term is defined in
the Indenture) occurs, the Company shall be required to make an
offer to purchase this Security. In the event of the repurchase,
pursuant to an offer to purchase, of this Security in part only,
a new Security for the unrepurchased portion hereof will be
issued in the name of the Holder hereof upon the cancellation
hereof.

If an Event of Default with respect to Securities of
this series shall occur and be continuing, the principal of the
Securities of this series may be declared due and payable in the
manner and with the effect provided in the Indenture.

No reference herein to the Indenture and no provision
of this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the principal of (and premium, if any) and interest, if
any, on this Security at the times, place and rate, and in the
coin or currency, herein prescribed.

As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is
registrable in the Security Register, upon surrender of this
Security for registration of transfer at the office or agency of
the Company in any place where the principal of (and premium, if
any) and interest, if any, on this Security are payable, duly
endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company and the Security Registrar

<PAGE> 98
duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities
of this series and of like tenor, of authorized denominations and
for the same aggregate principal amount, will be issued to the
designated transferee or transferees.

The Securities of this series are issuable only in
registered form without coupons in denominations of $1,000 and
any integral multiple thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Securities of
this series are exchangeable for a like aggregate principal
amount of Securities of this series and of like tenor of a
different authorized denomination, as requested by the Holder
surrendering the same.

No service charge shall be made for any such
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.

This Security shall be governed by and construed in
accordance with the laws of the State of New York.

All terms used in this Security which are defined in
the Indenture shall have the meanings assigned to them in the
Indenture.

CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated
herein and referred to in the within-mentioned Indenture.

UNITED STATES TRUST
COMPANY OF NEW YORK,
as Trustee

By____________________________
Authorized Officer

<PAGE> 99
Appendix A-2

EL PASO ELECTRIC COMPANY
Class 13 ___% Senior Notes due 2003

No. __________ $__________

Payment of the principal of (and premium, if any) and
interest on this Security will be made at the office or agency of
the Company maintained for that purpose in New York, New York, in
such coin or currency of the United States of America as at the
time of payment is legal tender for the payment of public and
private debts; provided, however, that at the option of the
Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall
appear in the Security Register.

<PAGE> 100
Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.

IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.

Dated:

[Seal] EL PASO ELECTRIC COMPANY

By______________________________________
[Title]

<PAGE> 101
EL PASO ELECTRIC COMPANY
Class 13 ___% Senior Notes due 2003

This Security is one of a duly authorized issue of
securities of the Company (herein called the "Securities"),
issued and to be issued in one or more series under an Indenture,
dated as of _________, 1994 (herein called the "Indenture"),
between the Company and United States Trust Company of New York
(herein called the "Trustee", which term includes any successor
trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face
hereof, limited in aggregate principal amount to $________.

If redeemed during the 12-month period beginning
___________, of the years indicated:

Redemption Redemption
Year Price Year Price

[table to come based upon Schedule C to the Plan with
adjustments prior to Year 4 as detailed in the Plan]

<PAGE> 102
The Indenture provides that, subject to certain
conditions, if a Change in Control (as such term is defined in
the Indenture) occurs, the Company shall be required to make an
offer to purchase this Security. In the event of the repurchase,
pursuant to an offer to purchase, of this Security in part only,
a new Security for the unrepurchased portion hereof will be
issued in the name of the Holder hereof upon the cancellation
hereof.

<PAGE> 103
duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities
of this series and of like tenor, of authorized denominations and
for the same aggregate principal amount, will be issued to the
designated transferee or transferees.

This Security shall be governed by and construed in
accordance with the laws of the State of New York.

All terms used in this Security which are defined in
the Indenture shall have the meanings assigned to them in the
Indenture.

CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated
herein and referred to in the within-mentioned Indenture.

UNITED STATES TRUST
COMPANY OF NEW YORK,
as Trustee

By____________________________
Authorized Officer

<PAGE> 1

EXHIBIT A-20

LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT

Dated as of , 199[ ]

among

EL PASO ELECTRIC COMPANY,

CITIBANK, N.A.,
as Issuing Bank,

THE CREDITORS
Specified Herein

and

CITIBANK, N.A.,
as Agent
for such Creditors

<PAGE> 2
TABLE OF CONTENTS

Section Page

Preliminary Statements............................ 1

ARTICLE I
DEFINITIONS

1.01 Certain Defined Terms....................... 3
1.02 Computation of Time Periods................. 15
1.03 Accounting Terms............................ 15
1.04 Interpretation.............................. 15

ARTICLE II
AMOUNT AND TERMS OF THE LETTER OF CREDIT

2.01 The Letter of Credit........................ 15
2.02 Issuing the Letter of Credit................ 16
2.03 Drawing Fee................................. 16
2.04 Commissions................................. 16
2.05 Reimbursement on the Date of the Draw....... 16
2.06 Tender Advances............................. 17
2.07 Interest on Advances........................ 18
2.08 Reimbursement of Issuing Bank, Etc.......... 21
2.09 Prepayments; Reinstatement of Letter of
Credit Amounts............................ 22
2.10 Additional Interest......................... 24
2.11 Increased Costs............................. 24
2.12 Payments and Computations................... 26
2.13 Payments on Non-Business Days............... 27
2.14 Extension of the Stated Termination
Date...................................... 28
2.15 Evidence of Debt............................ 28
2.16 Obligations Absolute........................ 28
2.17 U.S. Taxes.................................. 30
2.18 Applicable Lending Office................... 32
2.19 Net Payments................................ 32
2.20 Reinstatement of the Letter of Credit....... 32

ARTICLE III
CONDITIONS OF ISSUANCE

3.01 Conditions Precedent to Issuance of the
Letter of Credit.......................... 32
3.02 Additional Conditions Precedent to
Issuance of the Letter of Credit.......... 36
3.03 Conditions Precedent to Each
Tender Advance............................ 36

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

4.01 Representations and Warranties
of the Company........................... 37

<PAGE> 3
Section Page

ARTICLE V
COVENANTS OF THE COMPANY

5.01 Affirmative Covenants...................... 40
5.02 Negative Covenants......................... 45

ARTICLE VI
EVENTS OF DEFAULT

6.01 Events of Default.......................... 49
6.02 Upon an Event of Default................... 51

ARTICLE VII
SECURITY

7.01 Issuance and Pledge of Bonds............... 52
7.02 Application of Moneys...................... 53
7.03 Rights of Bondholders...................... 53
7.04 The Agent's Duties......................... 53

ARTICLE VIII
THE AGENT, THE CREDITORS AND
THE ISSUING BANK

8.01 Authorization and Action................... 54
8.02 Reliance, Etc. ............................ 54
8.03 The Agent, the Issuing Bank and
Affiliates............................... 55
8.04 Bank Credit Decision....................... 55
8.05 Indemnification............................ 55
8.06 Successor Agent............................ 56
8.07 Issuing Bank............................... 56

ARTICLE IX
MISCELLANEOUS

9.01 Amendments, Etc. .......................... 57
9.02 Notices, Etc. ............................. 58
9.03 No Waiver; Remedies........................ 58
9.04 Rights of Setoff and Subrogation........... 58
9.05 Indemnification............................ 60
9.06 Issuing Bank and Creditors................. 61
9.07 Costs, Expenses and Taxes.................. 62
9.08 Purchase Option............................ 63
9.09 Binding Effect; Assignments and
Participations........................... 63
9.10 Further Assurances......................... 65
9.11 Severability............................... 65
9.12 Headings................................... 65
9.13 Governing Law.............................. 65
9.14 Submission to Jurisdiction................. 66

<PAGE> 4
9.15 Waiver of Trial by Jury.................... 66
9.16 Counterparts............................... 66
9.17 Integration................................ 66
9.18 Survival................................... 67

SCHEDULE I - Liens

EXHIBIT A - Form of Letter of Credit with Annexes A
through I thereto attached

iii

<PAGE> 5
LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT

LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT, dated as
of [ ], 199[ ], among EL PASO ELECTRIC COMPANY, a Texas
corporation (the "Company"), CITIBANK, N.A., ("Citibank") as
issuing bank (the "Issuing Bank"), the Creditors (as hereinafter
defined) and Citibank, as agent for the Creditors (the "Agent").

PRELIMINARY STATEMENTS:

(1) The Company requested the City of Farmington, New
Mexico (the "Issuer") to refund the Issuer's $35,440,000
Pollution Control Revenue Bonds, 1981 Series A (El Paso Electric
Company Four Corners Project) by the issuance, pursuant to
Ordinance No. 83-807 and Resolution No. 83-403, both adopted
November 22, 1983 (collectively, the "Original Ordinance"),
naming The State National Bank of El Paso as trustee (the
"Original Trustee"), of $35,805,000 aggregate principal amount of
the Issuer's Annual Tender Pollution Control Refunding Revenue
Bonds, 1983 Series A (El Paso Electric Company Four Corners
Project) (the "Original Bonds"), to various purchasers.

(2) The Issuer and the Company entered into an
Installment Sale Agreement, dated as of November 1, 1983 (the
"Original Installment Sale Agreement"), which the Issuer assigned
to the Original Trustee to secure the payment of the Original
Bonds, and pursuant to which, among other things, the Company was
required to furnish a letter of credit in connection with its
payment obligations under the Original Installment Sale
Agreement.

(3) The Original Trustee and the Company entered into a
Tender Agreement dated as of November 1, 1983 pursuant to which,
among other things, the Company was required to furnish a letter
of credit in connection with its obligation to purchase Original
Bonds pursuant to subsection 3 of Section 2.08 of the Original
Ordinance.

(4) The Company and Citibank entered into a Letter of
Credit and Reimbursement Agreement dated as of November 1, 1983,
as amended by the Amendment, dated as of May 30, 1991, the
Deferral Agreement, dated as of December 30, 1991, the Second
Amendment, dated as of September 28, 1993, and ,
dated as of , in each case between the Company and
Citibank (such agreement as so amended, the "Original
Reimbursement Agreement"), pursuant to which Citibank issued its
Irrevocable Letter of Credit dated December 6, 1983 (the
"Original Letter of Credit") in respect of certain of the
Company's payment obligations relating to the Original Bonds.

(5) On January 8, 1992, the Company commenced a
voluntary case (the "Bankruptcy Case") under chapter 11 of the
Bankruptcy Code (as hereinafter defined) (Case No. 92-10148-FM)
in the Bankruptcy Court (as hereinafter defined), and thereafter
has continued to operate its business and manage its assets as a
debtor-in-possession.

<PAGE> 6
(6) The Company desires to restructure its outstanding
indebtedness and, in connection therewith, the Company has
requested the Issuer to, and the Issuer has agreed to, refund
(the "Refunding") the Original Bonds by issuing Pollution Control
Refunding Revenue Bonds (El Paso Electric Company Four Corners
Project), 199 Series (the "Bonds") pursuant to the Indenture
of Trust dated as of , 199 , a form of which has been filed
with the Bankruptcy Court in accordance with Section 7.6 of the
Plan of Reorganization (as hereinafter defined) (as such
Indenture may be amended, supplemented and modified from time to
time, the "Indenture"), naming [ ] as trustee (the
"Trustee").

(7) In connection with the Refunding, the Issuer and
the Company have entered into a Loan Agreement, dated as of ,
199 (as the same may be amended, supplemented and modified from
time to time, the "Loan Agreement"), which the Issuer has
assigned to the Trustee to secure payment of the Bonds, and
pursuant to which, among other things, in connection with the
initial delivery of the Bonds, the Company is required to furnish
a letter of credit in connection with its payment obligations
under the Loan Agreement.

[(8) In connection with the Refunding, the Trustee and
the Company have entered into a Tender Agreement, dated as of
, 199 , pursuant to which, among other things, the Company is
required to furnish a letter of credit in connection with its
obligation to purchase Bonds pursuant to Section 2.02 of the
Indenture and redeem Bonds pursuant to Section 3.01 of the
Indenture.]

(9) In connection with the Refunding and in
consideration therefor and as set forth in the Plan of
Reorganization, the Company and Citibank have agreed to enter
into this Letter of Credit and Reimbursement Agreement (as
amended, modified and supplemented from time to time, this
"Agreement") and the Related Documents (as defined herein)
pursuant to which Citibank will issue, in substantially the form
of Exhibit A, a letter of credit (such letter of credit and any
successor letter of credit as provided for in such letter of
credit being the "Letter of Credit"), in the amount of $[
]* (the "Commitment") of which [$35,805,000]** shall support the
payment of principal of the Bonds and $[ ] shall support
the payment of interest on the Bonds for up to [ ] days computed
at [14%]*** per annum on the principal thereof.

_________________
* Not to exceed face amount of Original Letter of Credit.

** Not to exceed the portion of the Original Letter of Credit
available to pay principal on the Original Bonds.

*** To be set at a market rate as determined by the Remarketing
Agent, but not to exceed 14% per annum.

<PAGE> 7
(10) On [ , ], an order was entered by the
court having jurisdiction over the Bankruptcy Case (the
"Bankruptcy Court") confirming the Plan of Reorganization, which
Plan of Reorganization provided, among other things, for the
Company to enter into this Agreement.

NOW, THEREFORE, in consideration of the premises and of
the mutual covenants and agreements contained in the Plan of
Reorganization and herein and in order to induce the Issuing Bank
to issue the Letter of Credit, the parties hereto agree as
follows:

ARTICLE I

DEFINITIONS

SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and
plural forms of the terms defined):

"Affiliate" means, as to any Person, any other Person
that, directly or indirectly, controls, is controlled by or
is under common control with such Person or is a director or
officer of such Person. For purposes of this definition, the
term "control" (including the terms "controlling,"
"controlled by" and "under common control with") of a Person
means the possession, direct or indirect, of the power to
vote 5% or more of the Voting Stock of such Person or to
direct or cause the direction of the management and policies
of such Person, whether through the ownership of Voting
Stock, by contract or otherwise.

"Agent Payment Notice" has the meaning assigned to that
term in Section 2.08(a)(ii).

"Agreement" has the meaning assigned to that term in
Preliminary Statement (9).

"Alternate Base Rate" means a fluctuating interest rate
per annum as shall be in effect from time to time which rate
per annum shall at all times be equal to the higher of:

(i) the rate of interest announced publicly by
Citibank in New York, New York, from time to time as
Citibank's base rate, each change in such rate to be
effective as of Citibank's opening of business on the
date such change occurs (extensions of credit made by
Citibank may bear interest at rates below, equal to or
above such rate); or

(ii) 1/2 of one percent above the latest three-week
moving average of secondary market morning offering
rates in the United States for three-month certificates

<PAGE> 8
of deposit of major United States money market banks,
such three-week moving average being determined weekly
on each Monday (or, if any such day is not a Business
Day, on the next succeeding Business Day) for the
three-week period ending on the previous Friday by the
Agent on the basis of such rates reported by certificate
of deposit dealers to and published by the Federal
Reserve Bank of New York or, if such publication shall
be suspended or terminated, on the basis of quotations
for such rates received by the Agent from three New York
certificate of deposit dealers of recognized standing,
in either case adjusted to the nearest 1/4 of one
percent or, if there is no nearest 1/4 of one percent,
to the next higher 1/4 of one percent.

"Alternate Base Rate Advance" means a Tender Advance
bearing interest as provided in Section 2.07(a).

"Available Amount" in effect at any time means the
maximum amount available to be drawn at such time under the
Letter of Credit, the determination of such maximum amount to
assume compliance with all conditions for drawing and no
reduction for (i) any amount drawn by an Interest Draft
(unless such amount is not reinstated under the Letter of
Credit) or (ii) any amount drawn by a Tender Draft or (iii)
any amount not available to be drawn because Bonds are held
by or for the account of the Company.

"Banking Institution" means any financial institution
subject to regulation under Regulation D of the Board of
Governors of the Federal Reserve System and any other banking
institution or trust company or similar organization
incorporated or organized under the laws of a country other
than the United States, or a political subdivision of a
country other than the United States.

"Bankruptcy Case" has the meaning assigned to that term
in Preliminary Statement (5).

"Bankruptcy Code" means the Bankruptcy Reform Act of
1978, as heretofore and hereafter amended, and codified as
title 11 of the United States Code.

"Bankruptcy Court" has the meaning assigned to that term
in Preliminary Statement (10).

"Bond Interest Amount" for any Payment Date with respect
to each Bond, means an amount equal to the accrued interest
on the principal amount of such Bond in accordance with its
terms from and including the first day of the Quarterly
Period for such Bond ending on such Payment Date to but
excluding the earlier of (i) the Payment Date and (ii) the
date such Bond ceases to be held by or for the account of the
Issuing Bank or the Agent or any other nominee of the Issuing
Bank.

<PAGE> 9
"Bonds" has the meaning assigned to that term in
Preliminary Statement (6).

"Business Day" means any day of the year on which banks
are not required or authorized to close in New York City and,
if the applicable Business Day relates to any Eurodollar
Advances, on which dealings are carried on the London
interbank market.

"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, from time
to time.

"Capitalized Lease Obligation" means, with respect to
any lease of property which, in accordance with GAAP, appears
on the lessee's balance sheet as a capital lease, the amount
of the liability which should appear on such balance sheet.

"Code" means the Internal Revenue Code of 1986, as
amended from time to time.

"Commencement Date" means the earlier of (i) the
Effective Date and (ii) December 31, 1994.

"Commitment" has the meaning assigned to that term in
Preliminary Statement (9).

"Confirmation Order" means the order of the Bankruptcy
Court confirming the Plan of Reorganization.

"Consolidated Subsidiary" means, for any Person, each
Subsidiary of such Person (whether now existing or hereafter
created or acquired) the financial statements of which shall
be (or should have been) consolidated with the financial
statements of such Person in accordance with GAAP.

"Contract Interest Amount" for any Payment Date means an
amount equal to the interest that would have accrued on an
amount equal to the purchase price paid for each Bond
purchased by the Trustee or the Tender Agent on behalf of or
for the account of the Issuing Bank, the Agent or any other
nominee of the Issuing Bank, from and including the first day
of the Quarterly Period for each such Bond ending on such
Payment Date to but excluding the earlier of (i) the Payment
Date and (ii) the date such Bond ceases to be held by or for
the account of the Issuing Bank, the Agent or any other
nominee of the Issuing Bank, at an interest rate per annum
equal at all times to the sum of (x) the Alternate Base Rate
in effect from time to time plus (y) .50% per annum.

"Creditors" means the banks listed on the signature
pages hereof under the caption "Creditors" and any other
Person which becomes a party hereto pursuant to Section
9.09(a).

<PAGE> 10
"Credit Termination Date" means the earlier of (i) the
day on which the Letter of Credit is surrendered by the
Trustee to the Issuing Bank for cancellation and (ii) the
Stated Termination Date.

"Debt" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services (including,
without limitation, all obligations, contingent or otherwise,
of such Person in connection with acceptance facilities
(other than acceptance facilities entered into in connection
with normal course commercial trade transactions) and letter
of credit facilities to the extent such letter of credit
facilities support Debt), (b) all obligations of such Person
evidenced by notes, bonds, debentures or other similar
instruments, (c) all obligations of such Person created or
arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person,
(d) all Capitalized Lease Obligations of such Person, (e) all
obligations of such Person to purchase, redeem, retire,
defense or otherwise make any payment in respect of any
capital stock of or other ownership or profit interest in
such Person or any other Person or any warrants, rights or
options to acquire such capital stock, valued, in the case of
preferred stock, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid
dividends, (f) all Debt of others referred to in clauses (a)
through (e) above guaranteed directly or indirectly in any
manner by such Person, or in effect guaranteed directly or
indirectly by such Person through an agreement (i) to pay or
purchase such Debt or to advance or supply funds for the
payment or purchase of such Debt, (ii) to purchase, sell or
lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to
make payment of such Debt or to assure the holder of such
Debt against loss, (iii) to supply funds to or in any other
manner invest in the debtor (including any agreement to pay
for property or services irrespective of whether such
property is received or such services are rendered) or
(iv) otherwise to assure a creditor against loss, and (g) all
Debt referred to in clauses (a) through (e) above secured by
(or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) any Lien on
property (including, without limitation, accounts and
contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of
such Debt. In cases where recourse to any Person or any of
its properties in respect of Debt is limited, the amount of
such Debt of such Person for purposes hereof shall be so
limited.

"Default Rate" means a fluctuating interest rate equal
to 2% per annum above the Alternate Base Rate in effect from
time to time.

<PAGE> 11
"EBITA" means, for any period, the sum, for the Company
and its Consolidated Subsidiaries (determined on a
consolidated basis without duplication in accordance with
GAAP), of the following: (a) net operating income
(calculated before taxes, Interest Expense, extraordinary
items and unusual non-cash, non-recurring items and income or
loss attributable to equity in Affiliates) for such period
plus (b) amortization (to the extent deducted in determining
net operating income) for such period.

"Effective Date" means the Effective Date (as defined
therein) of the Plan of Reorganization.

"Eligible Institution" means (i) a bank or trust company
organized under the laws of the United States of America, of
any state therein, of the District of Columbia, of any member
country of the Organization for Economic Cooperation and
Development or of any political subdivision of any such
country, in each case, having assets in excess of
$500,000,000, (ii) an insurance company organized under the
laws of any state in the United States of America or of the
District of Columbia having assets in excess of $500,000,000
or (iii) any other Person consented to by the Company, which
consent shall not be unreasonably withheld.

"Eligible Participant" has the meaning assigned to that
term in Section 9.09(b).

"Environmental Action" means any administrative,
regulatory or judicial action, suit, demand, demand letter,
claim, notice of non-compliance or violation, investigation,
proceeding, consent order or consent agreement relating in
any way to any Environmental Law or any Environmental Permit
including, without limitation, (a) any claim by any
governmental or regulatory authority for enforcement,
investigation, cleanup, removal, response, remedial or other
actions or damages pursuant to any Environmental Law and (b)
any claim by any Person seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive
relief resulting from Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the
environment.

"Environmental Law" means any federal, state or local
law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award relating to the environment,
health, safety or Hazardous Materials.

"Environmental Permit" means any permit, approval,
identification number, license or other authorization
required under any Environmental Law.

"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the
regulations promulgated and rulings issued thereunder.

<PAGE> 12
"ERISA Affiliate" means any Person who for purposes of
Title IV of ERISA is a member of the Company's controlled
group, or under common control with the Company, within the
meaning of Section 414 of the Internal Revenue Code of 1986,
as amended.

"Eurodollar Advance" means any Tender Advance bearing
interest at the Eurodollar Rate.

"Eurodollar Rate" for any Interest Period for any Tender
Advance means an interest rate per annum equal at all times
during such Interest Period to the sum of (x) the LIBO Rate
for such Interest Period plus (y) 1.50% per annum.

"Event of Default" has the meaning assigned to that term
in Section 6.01.

"Federal Funds Rate" means, for any period, a
fluctuating interest rate per annum equal for each day during
such period to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of
the quotations for such day on such transactions received by
the Agent from three Federal funds brokers of recognized
standing selected by it.

"Final Approval" means any authorizations, consents,
approvals, waivers, exceptions, variances, orders, licenses,
exemptions, publications, filings, notices to and
declarations of or with any governmental authority (other
than routine reporting requirements the failure to comply
with which will not affect the validity or enforceability of
any of the Related Documents or have a Material Adverse
Effect) or any other action in respect of any governmental
authority that is in full force and effect and is not the
subject of a pending appeal or reconsideration or other
review, and the time in which to make an appeal or request
the review or reconsideration of which has expired without
any appeal or request for review or reconsideration having
been taken or made.

"Final Draft" has the meaning assigned to that term in
the Letter of Credit.

<PAGE> 13
to appeal from such affirmance or to seek review or rehearing
thereof, shall have expired or no further hearing, appeal or
petition for certiorari can be taken or granted.

"First Mortgage Bond Indenture" means the Indenture
dated as of between the Company and
, as trustee, providing for the issuance by the
Company of its first mortgage bonds.

"First Mortgage Bonds" means bonds issued by the Company
under the First Mortgage Bond Indenture.

"First Mortgage Bonds, Series A/B" means collectively
the First Mortgage Bonds, Series A and the First Mortgage
Bonds, Series B, in each case, issued under the First
Mortgage Bond Indenture.

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

"Governmental Person" means any national, state or local
government, any political subdivision or any government
instrumentality, authority, body or entity, including the
Federal Deposit Insurance Corporation, the Board of Governors
of the Federal Reserve System, any central bank or any
comparable authority.

"Hazardous Materials" means (a) petroleum or petroleum
products, asbestos in any form, radioactive or source
material, (b) any substances defined as or included in the
definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "extremely hazardous wastes",
"restricted hazardous wastes", "toxic substances", "toxic
pollutants", "contaminants" or "pollutants", or words of
similar import, under any Environmental Law and (c) any other
substance exposure to which is regulated under any
Environmental Law.

"Indemnified Party" has the meaning assigned to that
term in Section 9.05.

"Indenture" has the meaning assigned to that term in
Preliminary Statement (6).

"Interest Coverage Ratio" means, as at any date, the
ratio of (a) EBITA for the period of four consecutive fiscal
quarters ending on or most recently ended prior to such date
to (b) Interest Expense for such period.

"Interest Draft" has the meaning assigned to that term
in the Letter of Credit.

"Interest Expense" means, for any period, the sum, for
the Company and its Consolidated Subsidiaries (determined on
a consolidated basis without duplication in accordance with

<PAGE> 14
GAAP), of the following: (a) all interest in respect of Debt
including, without limitation, interest capitalized during
such period (whether or not actually paid during such
period), including, without limitation, all commissions and
fees (other than up-front fees), plus (b) the net amounts
payable (or minus the net amounts receivable) under Interest
Rate Protection Agreements accrued during such period
(whether or not actually paid or received during such
period).

"Interest Period" has the meaning assigned to that term
in Section 2.07(b).

"Interest Rate Protection Agreement" means, for any
Person, an interest rate swap, cap or collar agreement,
interest rate future or option contracts or similar
arrangement providing for the transfer or mitigation of
interest risks either generally or under specific
contingencies.

"Investment Grade Rating" means a rating of BBB- or
better (or equivalent rating) by any two of Moody's Investors
Service, Inc., Standard & Poor's Corporation and Duff &
Phelps, Inc.

"Issuer" has the meaning assigned to that term in
Preliminary Statement (1).

"LC Payment Notice" has the meaning assigned to that
term in Section 2.08(a)(ii).

"Letter of Credit" has the meaning assigned to that term
in Preliminary Statement (9).

"Leverage Ratio" means, at any time, the ratio of Total
Debt at such time to the sum of (a) Total Capital at such
time plus (b) Total Debt at such time.

"LIBO Rate" for any Interest Period means an interest
rate per annum equal to the rate of interest per annum at
which deposits in United States dollars are offered by the
principal office of Citibank in London, England to prime
banks in the London interbank market at 11:00 A.M. (London
time) two Business Days before the first day of such Interest
Period for a period equal to such Interest Period.

"Lien" means any lien, security interest or other charge
or encumbrance of any kind, or any other type of preferential
arrangement, including, without limitation, the lien or
retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real
property.

"Loan Agreement" has the meaning assigned to that term
in Preliminary Statement (7).

<PAGE> 15
"Majority Creditors" means Creditors which have an
aggregate Participation Percentage of more than 50%.

"Material Adverse Effect" means a material adverse
effect on (i) the property, business, operations, financial
condition, liabilities or capitalization of the Company and
its Subsidiaries taken as a whole, (ii) the ability of the
Company to perform its obligations under any of the Related
Documents, (iii) the validity or enforceability of any of the
Related Documents, (iv) the rights and remedies of the
Issuing Bank, the Creditors and the Agent or (v) the timely
payment of the principal of or interest hereunder or other
amounts payable in connection herewith.

"Material Subsidiary" means, at any time, a Subsidiary
of the Company (a) whose assets at such time exceed 10% of
the assets of the Company and its Subsidiaries (on a
consolidated basis) or (b) whose earnings at such time exceed
10% of the earnings of the Company and its Subsidiaries (on a
consolidated basis).

"Multiemployer Plan" means a multiemployer plan, as
defined in Section 4001(a)(3) of ERISA, to which the Company
or any ERISA Affiliate is making or accruing an obligation to
make contributions, or has within any of the preceding five
plan years made or accrued an obligation to make
contributions, such plan being maintained pursuant to one or
more collective bargaining agreements.

"Multiple Employer Plan" means a single employer plan,
as defined in Section 4001(a)(15) of ERISA, that (i) is
maintained for employees of the Company or an ERISA Affiliate
and at least one Person other than the Company and its ERISA
Affiliates or (ii) was so maintained and in respect of which
the Company or an ERISA Affiliate could have liability under
Section 4064 or 4069 of ERISA in the event such plan has been
or were to be terminated.

"Official Statement" means the Official Statement dated
[ , 199 ] of the Issuer relating to the Bonds,
together with the documents incorporated therein by
reference.

"Original Bonds" has the meaning assigned to that term
in Preliminary Statement (1).

"Original Installment Sale Agreement" has the meaning
assigned to that term in Preliminary Statement (2).

"Original Letter of Credit" has the meaning assigned to
that term in Preliminary Statement (4).

"Original Ordinance" has the meaning assigned to that
term in Preliminary Statement (1).

<PAGE> 16
"Original Reimbursement Agreement" has the meaning
assigned to that term in Preliminary Statement (4).

"Original Trustee" has the meaning assigned to that term
in Preliminary Statement (1).

"Partial Redemption Draft" has the meaning assigned to
that term in the Letter of Credit.

"Participant" has the meaning assigned to that term in
Section 9.09(b).

"Participation Percentage" means, as of any date of
determination (i) with respect to a Creditor initially a
party hereto, the percentage set forth opposite such
Creditor's name on the signature pages hereof, except as
provided in clause (iii) below, (ii) with respect to a
Creditor that became a party hereto by operation of Section
9.09(a), the percentage participation interest assumed by
such assignee Creditor as set forth in the instrument of
assignment referred to in Section 9.09(a), except as provided
in clause (iii) below, and (iii) with respect to any Creditor
described in clause (i) or (ii) above that assigns a
percentage of its interests in accordance with Section
9.09(a), its participation percentage as reduced by the
percentage so assigned.

"Payment Amount" has the meaning set forth in Section
2.05(c).

"Payment Date" means the last day of each Quarterly
Period.

"Payment Period" has the meaning assigned to that term
in Section 2.06.

"PBGC" means the Pension Benefit Guaranty Corporation or
any successor thereto.

"Person" means an individual, a corporation, a
partnership, an association, a business trust or any other
entity or organization, including a Governmental Person.

"Plan" means a Single Employer Plan or a Multiple
Employer Plan.

"Plan of Reorganization" means the Modified Third
Amended Plan of Reorganization of the Debtor Providing for
the Acquisition of El Paso Electric Company by Central and
South West Corporation filed on August 27, 1993 (as corrected
as of September 15, 1993).

"Preliminary Official Statement" means the Preliminary
Official Statement dated [ , 199 ] of the

<PAGE> 17
Issuer relating to the Bonds, together with the documents
incorporated therein by reference.

"Quarterly Period" with respect to each Bond means the
period commencing on the date such Bond is purchased by the
Trustee or the Tender Agent on behalf of or for the account
of the Issuing Bank, the Agent or any other nominee of the
Issuing Bank and ending on the first to occur of March 31,
June 30, September 30 or December 31 thereafter, and,
thereafter, each subsequent period commencing on the last day
of the immediately preceding Quarterly Period and ending on
the first to occur of March 31, June 30, September 30 or
December 31 thereafter.

"Refunding" has the meaning assigned to that term in
Preliminary Statement (6).

"Related Documents" has the meaning assigned to that
term in Section 2.16.

"Remarketing Agent's Agreement" means the remarketing
agreement dated as of , 199[ ] between the
Company and [ ].

"Second Mortgage Bond Indenture" means the Indenture
dated as of between the Company and
, as trustee, providing for the issuance by the
Company of its second mortgage bonds.

"Second Mortgage Bonds" means bonds issued by the
Company under the Second Mortgage Bond Indenture.

"Second Mortgage Bonds, Series [ ]" means the mortgage
bonds at any time issued by the Company and outstanding
pursuant to the Second Mortgage Bond Indenture. [To provide
collateral security for the obligations of the Company
related to this Agreement]

"Second Mortgage Bonds, Series A" means the Second
Mortgage Bonds, Series A issued under the Second Mortgage
Bond Indenture.

"Single Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (i) is
maintained for employees of the Company or an ERISA Affiliate
and no Person other than the Company and its ERISA Affiliates
or (ii) was so maintained and in respect of which the Company
or an ERISA Affiliate could have liability under Section 4069
of ERISA in the event such plan has been or were to be
terminated.

"Stated Termination Date" means [the earlier of (i) June
30, 2002 and (ii) the last day of the sixth month following

<PAGE> 18
the seventh anniversary of the Effective Date, unless
extended as provided in Section 2.14].*

"Submission Date" means the date the form of this
Agreement was filed with the Bankruptcy Court prior to the
date creditors must have voted on the Plan of Reorganization
in accordance with Section 7.6 of the Plan of Reorganization.

"Subsidiary" means, with respect to any Person, any
corporation, partnership or other entity of which at least a
majority of the Voting Stock is at the time directly or
indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more
Subsidiaries of such Person.

"Tender Advance" has the meaning assigned to that term
in Section 2.06.

"Tender Agent" has the meaning assigned to that term in
the Indenture.

"Tender Draft" has the meaning assigned to that term in
the Letter of Credit.

"Total Capital" means, as at any date, the sum for the
Company and its Consolidated Subsidiaries (determined on a
consolidated basis without duplication in accordance with
GAAP), of the following:

(a) the amount of capital stock (excluding
treasury stock and capital stock subscribed for and
unissued and preferred stock mandatorily redeemable in
cash or redeemable in cash at the option of the holder
thereof), plus

(b) the amount of surplus and retained earnings
(or, in the case of a surplus or retained earnings
deficit, minus the amount of such deficit).

"Total Debt" means, as at any date, the aggregate amount
of all Debt of the Company and its Consolidated Subsidiaries
(determined on a consolidated basis without duplication in
accordance with GAAP) (other than contingent obligations in
connection with acceptance facilities and letters of credit).

"Trustee" means [ ] and its
successors and permitted assigns under the Indenture, as
trustee and paying agent.

"Voting Stock" means capital stock issued by a
corporation, or equivalent interests in any other Person, the

___________________
* As adjusted in accordance with Sections 3.13 E and 3.15 of
the Plan of Reorganization.

<PAGE> 19
holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors
(or Persons performing similar functions) of such Person,
even though the right so to vote has been suspended by the
happening of such a contingency.

"Withdrawal Liability" has the meaning given such term
under Part I of Subtitle E of Title IV of ERISA.

SECTION 1.02. Computation of Time Periods. In this
Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means
"from and including" and the words "to" and "until" each means
"to but excluding".

SECTION 1.03. Accounting Terms. All accounting terms
not specifically defined herein shall be construed in accordance
with GAAP consistently applied, except as otherwise stated
herein.

SECTION 1.04. Interpretation. In this Agreement the
singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to
statutes are to be construed as including all statutory
provisions consolidating, amending or replacing the statute
referred to; references to "writing" include printing, typing,
lithography and other means of reproducing words in a tangible
visible form; references to sections (or any subdivision of a
section), articles, schedules, annexes and exhibits are to those
of this Agreement unless otherwise indicated; the words
"including", "includes" and "include" shall be deemed to be
followed by the words "without limitation"; references to
agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications to such
instruments but only to the extent such amendments and other
modifications are not prohibited by the terms of this Agreement
or any other Related Document; and references to Persons include
their respective permitted successors and assigns and, in the
case of Governmental Persons, Persons succeeding to their
respective functions and capacities.

ARTICLE II

AMOUNT AND TERMS OF THE LETTER OF CREDIT

SECTION 2.01. The Letter of Credit. The Issuing Bank
agrees, on the terms and conditions hereinafter set forth, to
issue the Letter of Credit to the Trustee on any Business Day
during the period from the date hereof to and including
[ , 199 ] in the amount of the Commitment to
support the payment of principal of and interest on the Bonds as
set forth in Preliminary Statement (9) and expiring on the Stated
Termination Date, unless earlier terminated in accordance with
the terms thereof.

<PAGE> 20
SECTION 2.02. Issuing the Letter of Credit. The Letter
of Credit shall be issued on at least two Business Days' notice
from the Company to the Issuing Bank (which notice may be
furnished prior to the execution and delivery hereof) specifying
the Business Day of issuance thereof. On such Business Day
specified by the Company in such notice and upon fulfillment of
the applicable conditions set forth in Article III, the Issuing
Bank will issue the Letter of Credit to the Trustee.

SECTION 2.03. Drawing Fee. The Company hereby agrees
to pay to the Agent, for the account of the Issuing Bank a
drawing fee of $100 per draw, payable at the time of each draw
under the Letter of Credit.

SECTION 2.04. Commissions. (a) The Company hereby
agrees to pay to the Agent, for the account of the Issuing Bank
and the Creditors, a letter of credit commission on the Available
Amount in effect from time to time (i) from the date of issuance
of the Letter of Credit to but excluding the first anniversary of
the Commencement Date, at the rate of 0.625% per annum, (ii) from
the first anniversary of the Commencement Date to but excluding
the second anniversary of the Commencement Date, at the rate of
0.75% per annum, (iii) from the second anniversary of the
Commencement Date to but excluding the third anniversary of the
Commencement Date, at the rate of 0.875% per annum, (iv) from the
third anniversary of the Commencement Date to but excluding the
fourth anniversary of the Commencement Date, at the rate of 1.00%
per annum, (v) from the fourth anniversary of the Commencement
Date to but excluding the fifth anniversary of the Commencement
Date, at the rate of 1.125% per annum, (vi) from the fifth
anniversary of the Commencement Date to but excluding the sixth
anniversary of the Commencement Date, at the rate of 1.25% per
annum, (vii) from the sixth anniversary of the Commencement Date
to but excluding the seventh anniversary of the Commencement
Date, at the rate of 1.625% per annum, and (viii) from the
seventh anniversary of the Commencement Date to but excluding the
eighth anniversary of the Commencement Date, at the rate of 2.00%
per annum. The Letter of Credit commission shall be payable
quarterly in arrears on the last Business Day of each March,
June, September and December, commencing on the last day of the
quarter in which the Letter of Credit is issued, until the Credit
Termination Date, and on the Credit Termination Date. Such
letter of credit commission shall be paid by the Agent to the
Issuing Bank and the Creditors as the Issuing Bank and the
Creditors shall agree.

(b) The Company hereby agrees to pay to the Agent, for
the account of the Issuing Bank, upon each transfer by the
Trustee of the Letter of Credit in accordance with its terms, a
transfer commission equal to 1/4 of 1% of the Available Amount
then in effect.

SECTION 2.05. Reimbursement on the Date of the Draw.
(a) Except as otherwise provided in subsections (b) and (c) of
this Section 2.05 and subject to the provisions of Sections 2.06

<PAGE> 21
and 2.07, the Company hereby agrees to pay to the Agent (i) on
each date on which the Issuing Bank shall pay any amount under
the Letter of Credit pursuant to any draft (including, without
limitation, amounts in respect of any reinstatement of the
interest component at the election of the Issuing Bank in its
sole discretion notwithstanding any failure by the Company to
reimburse the Issuing Bank or the Creditors for any previous
drawing to pay interest on the Bonds), a sum equal to such amount
so paid, plus (ii) on each day thereafter interest on any amount
remaining unpaid by the Company to the Agent under clause (i)
above, from the date of such draw until payment in full, at the
Default Rate.

(b) The Company shall have no obligation under
Section 2.05(a) or Section 2.06 in the case of a Tender Draft to
pay to the Agent, the Issuing Bank or any Creditor pursuant to
this Agreement the amount paid by the Issuing Bank under the
Letter of Credit if and to the extent the amount so paid under
the Letter of Credit shall have been used to purchase Bonds to be
held by or on behalf of and for the account of the Issuing Bank,
the Agent or any other nominee of the Issuing Bank pursuant to
subsection (e) of Section 3.01 of the Indenture, subsection (e)
of Section 9.01 of the Indenture or subsection (d) of
Section 13.03 of the Indenture. Notwithstanding the foregoing,
the obligations of the Company under this Agreement to pay to the
Agent on behalf of the Issuing Bank and the Creditors any amounts
in respect of the amounts paid by the Issuing Bank under the
Letter of Credit referred to in the immediately preceding
sentence shall continue to be effective or shall be reinstated,
as the case may be, if at any time the purchase of the Bonds by
or on behalf of or for the account of the Issuing Bank, the Agent
or any other nominee of the Issuing Bank with the proceeds of
such amounts paid under the Letter of Credit is rescinded in
whole or in part or some or all of the Bonds so purchased must
otherwise be returned by the Issuing Bank, the Agent or any other
nominee of the Issuing Bank.

(c) The Company shall pay to the Agent, on each Payment
Date the amount (the "Payment Amount") by which (i) the aggregate
Contract Interest Amount for the Quarterly Period ending on such
Payment Date exceeds (ii) the aggregate Bond Interest Amount for
such Quarterly Period with respect to all Bonds held by or on
behalf of or for the account of the Issuing Bank, the Agent or
any other nominee of the Issuing Bank during such Quarterly
Period. Any amounts due pursuant to this Section 2.05(c) that
are not paid when due shall bear interest from the date the same
become due until such amounts are paid, payable on demand, at an
interest rate equal to the Default Rate.

<PAGE> 22
Issuing Bank to the Company on the date and in the amount of such
payment, each such advance being a "Tender Advance" and
collectively the "Tender Advances".

Except as otherwise provided in Section 2.09 or Section
6.02, each Tender Advance shall be payable in substantially equal
quarterly installments on the last day of each calendar quarter,
commencing on the last day of the calendar quarter in which the
90th day following the date of such Tender Advance occurs and
continuing until the Stated Termination Date in effect on the
date of such Tender Advance (each such approximately 90-day
period being a "Payment Period").

SECTION 2.07. Interest on Advances. The Company shall
pay interest on the unpaid principal amount of each Tender
Advance from the date of such Tender Advance until such principal
amount is paid in full at the applicable rate set forth below:

(a) Alternate Base Rate. Except to the extent that the
Company shall elect to pay interest on the unpaid principal
of any Tender Advance for any Interest Period pursuant to
subsection (c) of this Section 2.07, the Company shall pay
interest on the unpaid principal of each Tender Advance from
the date of such Tender Advance until the principal amount of
such Tender Advance is paid in full, payable quarterly in
arrears on the last day of each calendar quarter and on the
date such Tender Advance is paid in full, at a fluctuating
interest rate per annum in effect from time to time equal to
.50% per annum above the Alternate Base Rate in effect from
time to time.

(b) Interest Periods. The Company may from time to
time elect to have the interest on any Tender Advance
determined and payable for a specified period (an "Interest
Period" for such Tender Advance) in accordance with
subsection (c) of this Section 2.07. The first day of an
Interest Period for any Tender Advance shall be either the
date such Tender Advance is made, the date the Company
specifies as the first day of the Eurodollar Advance, or the
last day of the then current Interest Period for a Eurodollar
Advance. No Interest Period shall end after the Stated
Termination Date.

<PAGE> 23
Period shall be of 1, 3 or 6 months' duration, at the
Company's election; provided, however, that the Company may
not select any Interest Period which ends after any principal
repayment installment date unless, after giving effect to
such selection, the aggregate unpaid principal amount of
Eurodollar Advances having Interest Periods which end on or
prior to such principal repayment installment date and
Alternate Base Rate Advances shall be at least equal to the
principal amount of the Tender Advances due and payable on
and prior to such date.

If the Company shall have made such election for any
Tender Advance for any such Interest Period, the Company
shall pay interest on such Tender Advance during such
Interest Period, payable on the last day of such Interest
Period and, if such Interest Period has a duration of more
than three months, on each day which occurs during such
Interest Period every three months from the first day of such
Interest Period, at the Eurodollar Rate for such Interest
Period for such Tender Advance.

(d) Default Interest. The Company shall pay interest
on the unpaid principal amount of any Tender Advance that is
not paid when due and on the unpaid amount of all interest,
and other amounts payable hereunder, that is not paid when
due, payable on demand, at a rate per annum equal at all
times to 2% per annum above the Alternate Base Rate in effect
from time to time. Notwithstanding anything in this
Agreement to the contrary, upon the occurrence and during the
continuance of an Event of Default, the right of the Company
to make an election in respect of the Eurodollar Rate
pursuant to Section 2.07(c) shall terminate (i)
automatically, in the case of an Event of Default under
Section 6.01(a) or (ii) upon notice to the Company by the
Bank, in all other cases; provided that no termination
referred to in either of the preceding clauses (i) or (ii)
shall affect any Eurodollar Advance during an Interest Period
in effect for such Eurodollar Advance at the time such notice
is received by the Company.

(e) Illegality, Etc. Notwithstanding any other
provision of this Agreement, if the Issuing Bank or any
Creditor (which shall at the time be a Banking Institution)
notifies the Company that the introduction of or any change
in or in the interpretation of any law or regulation that
occurs after the Submission Date makes it unlawful, or any
central bank or other governmental authority asserts after
the Submission Date that it is unlawful, for the Issuing Bank
or any Creditor to perform its obligations to make, fund or
maintain Eurodollar Advances hereunder (or participation
interests therein), (i) the right of the Company to select
the Eurodollar Rate for Tender Advances held by the Issuing
Bank or such Creditor, as the case may be, and the obligation
of the Issuing Bank and such Creditor, as the case may be, to

<PAGE> 24
make or maintain Eurodollar Advances shall be suspended until
the Issuing Bank or such Creditor, as the case may be, shall
notify the Company that the circumstances causing such
suspension no longer exist and (ii) the rate of interest on
all such Tender Advances held by the Issuing Bank or such
Creditor, as the case may be, shall thereupon be .50% per
annum above the Alternate Base Rate in effect from time to
time.

(f) Interest Rate Protection. (i) If the Company
shall fail to select the duration of any Interest Period for
any Eurodollar Advance in accordance with the provisions
contained in Section 2.07(c), the Agent will forthwith so
notify the Company and the Creditors and such Eurodollar
Advance will automatically, on the last day of the then
existing Interest Period therefor, convert into an Alternate
Base Rate Advance.

(ii) On and after the date on which the unpaid principal
amount of any Tender Advance shall be reduced, by payment or
prepayment or otherwise, to less than $1,000,000, the rate of
interest on the unpaid principal amount of such Tender
Advance shall be .50% per annum above the Alternate Base Rate
in effect from time to time and the right of the Company to
select a different rate for such Tender Advance shall
terminate; provided, however, that if and so long as the
Company shall select for such Tender Advance the same
Eurodollar Rate for and the same Interest Period as another
Tender Advance or other Tender Advances and the aggregate
unpaid principal amount of all such Tender Advances shall
equal or exceed $1,000,000, the Company shall have the right
to select such rate for such Interest Period for such Tender
Advance.

(g) Alternate Rate of Interest. In the event, and on
each occasion, that, on the day two Business Days prior to
the commencement of any Interest Period for a Eurodollar
Advance, the Agent shall have determined (which determination
shall be conclusive and binding upon the Company absent
manifest error) that reasonable means do not exist for
ascertaining the applicable Eurodollar Rate, the Agent shall,
as soon as practicable thereafter, give written, facsimile or
telegraphic notice of such determination to the Company, and
any request by the Company for a Eurodollar Advance pursuant
to subsection (c) of this Section 2.07 shall be deemed a
request for an Alternate Base Rate Advance. After such
notice shall have been given and until the circumstances
giving rise to such notice no longer exist, each request for
an Eurodollar Advance shall be deemed to be a request for an
Alternate Base Rate Advance.

<PAGE> 25
adequately reflect the cost to such Majority Creditors of
making, funding or maintaining their respective Eurodollar
Advances for such Interest Period, the Agent shall forthwith
so notify the Company and the Creditors, whereupon

(i) each Eurodollar Advance will automatically, on
the last day of the then existing Interest Period
therefor, convert into an Alternate Base Rate Advance,
and

(ii) the obligation of the Creditors to make, or to
convert Alternate Base Rate Advances into, Eurodollar
Advances shall be suspended until the Agent shall notify
the Company and the Creditors that the circumstances
causing such suspension no longer exist.

(i) Notice. Promptly after the determination of any
interest rate provided for herein or any change therein, the
Agent shall give notice thereof to the Company.

SECTION 2.08. Reimbursement of Issuing Bank, Etc. (a)
(i) The Issuing Bank hereby sells and transfers to each
Creditor, and each Creditor hereby acquires from the Issuing
Bank, an undivided interest and participation to the extent of
such Creditor's Participation Percentage in and to (A) the Letter
of Credit, including the obligations of the Issuing Bank under
and in respect thereof and the Company's reimbursement and other
obligations in respect thereof and (B) any Tender Advance made by
the Issuing Bank hereunder, whether now existing or hereafter
arising.

(ii) If the Issuing Bank (A) shall not have been
reimbursed in full for any payment made by the Issuing Bank under
the Letter of Credit on the date of such payment or (B) shall
make any Tender Advance to the Company, the Issuing Bank shall
give the Agent prompt notice thereof (an "LC Payment Notice") no
later than 12:00 noon (New York City time) on the next Business
Day immediately succeeding the date of such payment by the
Issuing Bank and the Agent shall give each Creditor prompt notice
thereof (an "Agent Payment Notice") no later than two hours
following the Agent's receipt of the LC Payment Notice at such
Creditor's address referred to in Section 9.02.

(iii) Upon receipt of an Agent Payment Notice, each
Creditor severally agrees to pay to the Issuing Bank in
accordance with clause (iv) below an amount equal to such
Creditor's ratable portion (according to such Creditor's
Participation Percentage as of the date of such Agent Payment
Notice) of such unreimbursed amount or Tender Advance paid or
made by the Issuing Bank, plus interest (if payment is not made
in accordance with clause (iv)) on such amount at a rate per
annum equal to the Federal Funds Rate from the date of payment by
the Issuing Bank to the date of payment to the Issuing Bank by
such Creditor. The failure of the Issuing Bank or the Agent to

<PAGE> 26
give such LC Payment Notice or the Agent Payment Notice, as the
case may be, shall not affect any Creditor's obligations pursuant
to this subsection (a).

(iv) Each such payment by a Creditor shall be made to
the Agent for the account of the Issuing Bank at its address
referred to in Section 9.02 in lawful money of the United States
of America, in same day funds (1) not later than 2:30 p.m. (New
York City time) on the day any such Agent Payment Notice is
received by such Creditor, if such notice is received at or prior
to 12:00 noon (New York City time) on a Business Day; (2) not
later than 4:30 p.m. (New York City time) on the day any such
Agent Payment Notice is received by such Creditor, if such notice
is received after 12:00 noon (New York City time) but at or prior
to 2:30 p.m. (New York City time) on a Business Day; or (3) not
later than 12:00 noon (New York City time) on the Business Day
next succeeding the day any such Agent Payment Notice is received
by such Creditor, if such notice is received after 2:30 p.m. (New
York City time) on a Business Day. Each Creditor's obligation to
make each such payment to the Issuing Bank, and the Issuing
Bank's right to receive the same, shall be absolute and
unconditional and shall not be affected by any circumstance
whatsoever, including, without limiting the foregoing or
Section 2.16, the occurrence or continuance of an Event of
Default or the failure of any other Creditor to make any payment
under this Section 2.08. Each Creditor further agrees that each
such payment shall be made without any offset, abatement,
withholding or reduction whatsoever.

(b) The failure of any Creditor to make any payment to
the Issuing Bank in accordance with subsection (a), above, shall
not relieve any other Creditor of its obligation to make payment,
but neither the Issuing Bank nor any Creditor shall be
responsible for the failure of any other Creditor to make such
payment. If any Creditor shall fail to make any payment to the
Issuing Bank in accordance with subsection (a)(iv), above, then
such Creditor agrees to pay to the Issuing Bank forthwith on
demand such corresponding amount together with interest thereon
for the first two days following the day upon which any such
payment shall have been due and payable at the Federal Funds
Rate and thereafter until the date such amount is repaid to the
Issuing Bank at the Alternate Base Rate plus 1% per annum.

(c) If any Creditor shall fail to make any payment to
the Issuing Bank in accordance with subsection (a), above, then,
in addition to other rights and remedies which the Issuing Bank
may have, the Agent is hereby authorized, at the request of the
Issuing Bank, to withhold and to apply to the payment of such
amounts owing by such Creditor to the Issuing Bank and any
related interest, that portion of any payments received by the
Agent that would otherwise be payable to such Creditor.

SECTION 2.09. Prepayments; Reinstatement of Letter of
Credit Amounts. (a) The Company may, upon at least two Business
Days' notice to the Agent stating the proposed date and principal

<PAGE> 27
amount of the prepayment, and if such notice is given to the
Agent the Company shall, prepay the amount outstanding under any
Tender Advance in whole or in part (each such partial prepayment
shall be in the minimum amount of $[ ]) with accrued
interest to the date of such prepayment on the amount prepaid
(any such prepayment shall be applied to outstanding Tender
Advances in the inverse order of maturity); provided, however,
that with respect to any prepayment of any Eurodollar Advance
made on a day other than the last day of an Interest Period for
such Eurodollar Advance, the Company shall pay to the Agent, in
accordance with Section 2.11(b), an amount sufficient to
compensate the Issuing Bank and any Creditor for any loss, cost,
or expense incurred by it by reason of such prepayment on a day
other than the last day of an Interest Period.

(b) Prior to or simultaneously with the resale of Bonds
acquired by the Trustee or the Tender Agent for the account of
the Company with the proceeds of one or more draws under the
Letter of Credit by one or more Tender Drafts, the Company shall
or shall cause the Trustee on behalf of the Company to prepay the
then outstanding Tender Advances (any such prepayment shall be
applied to outstanding Tender Advances in the inverse order of
maturity) by paying to the Agent an amount equal to the sum of
(i) the aggregate principal amount of the Bonds being resold or
to be resold plus (ii) the aggregate amount of accrued and unpaid
interest on such Bonds which was paid by a drawing or drawings
under such Tender Draft or Drafts. Such payments when
accompanied by a certificate completed and signed by the Trustee
in substantially the form of Annex F to the Letter of Credit
shall be applied by the Agent in reimbursement of such drawings
(and as prepayment of Tender Advances resulting from such
drawings in the manner described above); provided, however, that
if any prepayment of any Tender Advance that is a Eurodollar
Advance is made on a day other than the last day of the Interest
Period for such Eurodollar Advance, the Company shall pay to the
Issuing Bank and any Creditor, in accordance with Section
2.11(b), an amount sufficient to compensate the Issuing Bank and
any Creditor for any loss, cost, or expense incurred by it by
reason of such prepayment on a day other than the last day of an
Interest Period; provided further that, in the case of a
prepayment certified to the Issuing Bank by the Trustee as a
prepayment of a Tender Advance pursuant to this Section 2.09(b)
and made on a date other than a date on which interest on such
Tender Advance is scheduled to be paid hereunder, the Company may
pay interest accrued on such Tender Advance to the date of
prepayment on the next scheduled date for the payment of interest
on such Tender Advance, or if such Tender Advance shall have been
prepaid in whole, on the date which would have been the next such
scheduled date in the absence of such prepayment. The Company
irrevocably authorizes the Issuing Bank to rely on such
certificate and to reinstate the Letter of Credit in accordance
therewith.

<PAGE> 28
(c) Upon the substitution of a letter of credit or
other credit facility for the Letter of Credit as provided in
Section 2.02(6) of the Indenture, all Tender Advances and accrued
and unpaid interest thereon and all other outstanding amounts
payable by the Company to the Issuing Bank, the Creditors and the
Agent under this Agreement shall be paid in full on the date the
Letter of Credit shall terminate as a result of such
substitution.

SECTION 2.10. Additional Interest. Subject to Section
2.11(e)(ii), the Company shall pay to the Issuing Bank and each
Creditor additional interest on the unpaid principal amount of
any Eurodollar Advance by the Issuing Bank or such Creditor, from
the date of such Eurodollar Advance until such principal amount
is paid in full, at an interest rate per annum equal at all times
during each Interest Period for such Eurodollar Advance to the
remainder obtained by subtracting (i) the LIBO Rate for the
Interest Period for such Eurodollar Advance from (ii) the rate
obtained by dividing such LIBO Rate by a percentage equal to 100%
minus the reserve percentage applicable during such Interest
Period (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those days
in such Interest Period during which any such percentage shall be
so applicable) under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or
other marginal reserve requirement) for the Issuing Bank or such
Creditor, as the case may be, with respect to liabilities or
assets consisting of or including Eurocurrency liabilities having
a term equal to such Interest Period, payable on each date on
which interest is payable on such Eurodollar Advance. Such
additional interest shall be determined by the Issuing Bank or
such Creditor, as the case may be, and notified to the Company
(with a copy to the Agent).

SECTION 2.11. Increased Costs. (a) If due either to
(i) the introduction after the Submission Date of, or any change
(other than any change by way of imposition or increase of
reserve requirements in the case of Eurodollar Advances referred
to in Section 2.10), after the Submission Date, in or in the
interpretation of, any law or regulation or (ii) the compliance
by the Issuing Bank or any Creditor with any guideline or request
issued or made after the Submission Date by any central bank or
other governmental authority (whether or not having the force of
law), there shall be any increase in the cost to the Issuing Bank
or any Creditor as a result of agreeing to make or making,
funding or maintaining Eurodollar Advances, or reduction in the
amount of any sum received in respect thereof, then the Company
shall from time to time, promptly after demand by the Issuing
Bank or such Creditor, as the case may be, pay to the Agent for
the account of the Issuing Bank or such Creditor, as the case may
be, additional amounts sufficient to reimburse the Issuing Bank
or such Creditor, as the case may be, for such increased cost or

<PAGE> 29
reduced amount. A certificate as to the amount of such increased
cost or reduced amount, submitted to the Company (with a copy to
the Agent) by the Issuing Bank or such Creditor, as the case may
be, shall be conclusive and binding for all purposes, absent
manifest error.

(b) If, due to any change of interest rate on any
Eurodollar Advance pursuant to Section 2.07(e) or 2.07(f), any
prepayment pursuant to Section 2.09 of any Eurodollar Advance,
any acceleration of maturity of the Tender Advances pursuant to
Section 6.02, or for any other reason, a Eurodollar Advance is
subject to a change of interest rate, or any payment of principal
of any Eurodollar Advance is received, in each case other than on
the last day of an Interest Period relating to such Eurodollar
Advance, the Company shall, promptly upon demand by Issuing Bank
or any Creditor (with a copy of such demand to the Agent), pay
to the Agent for the account of the Issuing Bank or such
Creditor, as the case may be, any amounts required to compensate
the Issuing Bank or such Creditor, as the case may be, for any
additional losses, costs or expenses which it may reasonably
incur as a result of such change or payment, including, without
limitation, any loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired
by the Issuing Bank or such Creditor, as the case may be, to fund
or maintain such Eurodollar Advance but excluding loss of
anticipated profit. A certificate setting forth the amount of
such additional losses, costs or expenses, submitted by the
Issuing Bank or such Creditor, as the case may be, to the Company
(with a copy to the Agent), shall be conclusive and binding for
all purposes, absent manifest error.

(c) If after the Submission Date any change in any law
or regulation or in the interpretation thereof by any court or
administrative or governmental authority charged with the
administration thereof shall either (i) impose, modify or deem
applicable any reserve, special deposit or similar requirement
against letters of credit or guarantees issued by, or assets held
by, or deposits in or for the account of, the Issuing Bank or any
Creditor or (ii) impose on the Issuing Bank or any Creditor any
other condition regarding this Agreement or the Letter of Credit,
and the result of any event referred to in clause (i) or (ii)
above shall be to increase the cost to the Issuing Bank or such
Creditor of issuing or maintaining the Letter of Credit, then,
upon demand by the Issuing Bank or such Creditor, the Company
shall pay to the Agent for the account of the Issuing Bank and
such Creditor, from time to time as specified by the Issuing Bank
and such Creditor, additional amounts sufficient to compensate
the Issuing Bank and such Creditor for such increased cost. A
certificate as to the amount of such increased cost, submitted to
the Company (with a copy to the Agent) by the Issuing Bank and
such Creditor, shall be conclusive and binding for all purposes,
absent manifest error.

<PAGE> 30
(d) If the Issuing Bank or any Creditor determines that
compliance with any law or regulation or any guideline or request
from any central bank or other governmental authority (whether or
not having the force of law), issued or made after the Submission
Date, affects the amount of capital required to be maintained by
the Issuing Bank or any Creditor or any corporation controlling
the Issuing Bank or such Creditor, as the case may be, and that
the amount of such capital is increased by or based upon the
existence of the Issuing Bank's or such Creditor's, as the case
may be, commitment hereunder and other commitments of this type
or the issuance of the Letter of Credit (or similar contingent
obligations), then, upon demand by the Issuing Bank or such
Creditor, as the case may be, the Company shall pay to the Agent
for the account of the Issuing Bank or such Creditor, as the case
may be, from time to time as specified by the Issuing Bank or
such Creditor, as the case may be, additional amounts sufficient
to compensate the Issuing Bank or such Creditor, as the case may
be, or such corporation in the light of such circumstances, to
the extent that the Issuing Bank or such Creditor, as the case
may be, reasonably determines such increase in capital to be
allocable to the existence of the Issuing Bank's or such
Creditor's, as the case may be, commitment hereunder. A
certificate as to such amounts submitted to the Company (with a
copy to the Agent) by the Issuing Bank or such Creditor, as the
case may be, shall be conclusive and binding for all purposes,
absent manifest error.

(e) Notwithstanding any other provision in this Section
2.11 to the contrary, (i) the Company is not responsible for, and
is not required to reimburse the Issuing Bank or any Creditor
for, any amounts that would otherwise be payable by the Company
pursuant to subsection (a), (b), (c) or (d) of this Section 2.11
to the extent such amounts accrued 90 days or more prior to the
date the Issuing Bank or any Creditor provides to the Company a
certificate which sets forth such amounts owed to the Issuing
Bank or such Creditor, as the case may be, by the Company
pursuant to such subsections and (ii) the Company is responsible
for, and is required to reimburse the Issuing Bank and any
Creditor for, any amounts payable by the Company pursuant to
Section 2.10 and this Section 2.11, only so long as the Issuing
Bank or such Creditor is a Banking Institution.

(f) In calculating any amounts required to be paid by
the Company pursuant to this Section 2.11, the Issuing Bank or
such Creditor, as the case may be, shall make all determinations
and allocations on a reasonable basis.

<PAGE> 31
day funds. The Agent will promptly thereafter cause to be
distributed like funds relating to the payment of principal,
interest, fees or other amounts payable to the Issuing Bank and
the Creditors to whom the same are payable at their respective
addresses referred to in Section 9.02.

(b) If, after the Agent has paid to the Issuing Bank or
any Creditor any amount pursuant to subsection (a) above, such
payment is rescinded or must otherwise be returned or must be
paid over by the Agent or the Issuing Bank to any Person, whether
pursuant to any bankruptcy or insolvency law, Section 9.04(c) or
otherwise, the Issuing Bank or such Creditor, as the case may be,
shall, at the request of the Agent or the Issuing Bank, promptly
repay to the Agent or the Issuing Bank, as the case may be, an
amount equal to such payment, together with any interest required
to be paid by the Agent or the Issuing Bank with respect to such
payment.

(c) The Company hereby authorizes the Issuing Bank and
each Creditor, if and to the extent payment is not made when due
hereunder, to charge from time to time against any or all of the
Company's accounts with the Issuing Bank and each Creditor any
amount so due.

(d) All computations of interest based on the Alternate
Base Rate shall be made by the Agent on the basis of a year of
365 or 366 days, as the case may be, and computations of the
commissions hereunder and of interest based on the LIBO Rate
shall be made by the Agent on the basis of a year of 360 days, in
each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which
such interest or commitment fees are payable. Each determination
by the Agent of an interest rate hereunder shall be conclusive
and binding for all purposes, absent manifest error.

SECTION 2.13. Payments on Non-Business Days. (a)
Whenever any payment hereunder shall be stated to be due, or
whenever the last day of any Interest Period, Payment Period or
Quarterly Period would otherwise occur, on a day which is not a
Business Day, such payment shall be made, and the last day of
such Interest Period, Payment Period or Quarterly Period shall
occur, on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of payment
of interest or commission, as the case may be; provided, however,
if such extension would cause such payment of interest on or
principal of a Eurodollar Advance to be made, or the last day of
an Interest Period for a Eurodollar Advance to occur, in the next
following calendar month, such payment shall be made, and the
last day of such Interest Period shall occur, on the next
preceding Business Day.

<PAGE> 32
equal to the number of months in such Interest Period, such
Interest Period shall end on the last Business Day of such
succeeding calendar month. Notwithstanding anything to the
contrary contained herein, each Interest Period that commences on
the last Business Day of a calendar month (or on any day for
which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last
Business Day of the appropriate subsequent calendar month.

SECTION 2.14. Extension of the Stated Termination Date.
The Company may request, at least 60 days but not more that 120
days before the Stated Termination Date, in a writing delivered
to the Agent (such request shall be accompanied by a certificate
from a duly authorized officer of the Company that the
representations and warranties in Section 4.01 are true and
correct as of the date of such request, before and after giving
effect to such request, as though made on and as of the date of
such request, and such request shall be irrevocable) that the
Issuing Bank, each Creditor and the Agent extend for one year the
then Stated Termination Date for purposes of this Agreement and
the Letter of Credit. If the Company shall make such a request,
the Agent shall, on or before 40 days before the then Stated
Termination Date, notify the Company in writing whether or not
the Issuing Bank, each Creditor and the Agent consent to such
request and, if the Issuing Bank, each Creditor and the Agent do
so consent, the conditions for such extension. If the Agent
shall not so notify the Company, the Issuing Bank, each Creditor
and the Agent shall be deemed not to have consented to such
request. The Company acknowledges that none of the Issuing Bank,
any Creditor or the Agent has any obligation to, and none of such
entities has given any assurance, undertaking or commitment that
it will, extend (or consider extending) the Letter of Credit as
set forth in this Section 2.14.

SECTION 2.15. Evidence of Debt. The Agent shall
maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Company resulting
from each drawing under the Letter of Credit and from each Tender
Advance made from time to time hereunder and the amounts of
principal and interest payable and paid from time to time
hereunder. In any legal action or proceeding in respect of this
Agreement, the entries made in such account or accounts shall, in
the absence of manifest error, be conclusive evidence of the
existence and amounts of the obligations of the Company therein
recorded.

SECTION 2.16. Obligations Absolute. (a) The
obligations of the Company under this Agreement and any other
agreement or instrument relating to the Letter of Credit shall be
unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement and such other
agreement or instrument under all circumstances, including,
without limitation, the following circumstances, and regardless
of the use of proceeds of any drawing under the Letter of Credit
or any defense to payment related thereto:

<PAGE> 33
(i) any lack of validity or enforceability of this
Agreement, the Letter of Credit, the Bonds, the Indenture,
the Loan Agreement, the Second Mortgage Bonds, Series , the
Second Mortgage Bond Indenture, the Remarketing Agent's
Agreement, or any other agreement or instrument relating
thereto (collectively, the "Related Documents");

(ii) any change in the time, manner or place of payment
of, or in any other term of, all or any of the obligations of
the Company in respect of the Letter of Credit or any other
amendment or waiver of or any consent to departure from all
or any of the Related Documents;

(iii) the existence of any claim, set-off, defense or
other right that the Company may have at any time against the
Trustee or any other beneficiary or any transferee of the
Letter of Credit (or any Persons or entities for whom the
Trustee, any such beneficiary or any such transferee may be
acting), the Issuing Bank, any Creditor, the Agent or any
other Person or entity, whether in connection with this
Agreement, the transactions contemplated hereby or by the
other Related Documents or any unrelated transaction;

(iv) any draft, statement or any other document
presented under the Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;

(v) payment by the Issuing Bank under the Letter of
Credit against presentation of a draft or certificate which
does not comply with the terms of the Letter of Credit;

(vi) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or
consent to departure from any guarantee, for all or any of
the obligations of the Company in respect of the Letter of
Credit or any other Related Document; or

(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing, including,
without limitation, any other circumstance that might
otherwise constitute a defense available to, or a discharge
of, the Company or a guarantor.

(b) The obligations of each Creditor under Section 2.08
shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement (as the
same may be amended from time to time) under all circumstances,
including, without limitation, the following circumstances:

(i) any lack of validity or enforceability of the
Related Documents;

(ii) any change in the time, manner or place of payment
of, or in any other term of, all or any of the obligations of

<PAGE> 34
the Company in respect of the Letter of Credit or any other
amendment or waiver of or any consent to departure from all
or any of the Related Documents entered into in accordance
with this Agreement;

(iii) the existence of any claim, set-off, defense or
other right that the Company may have at any time against the
Trustee or any other beneficiary or any transferee of the
Letter of Credit (or any Persons or entities for whom the
Trustee, any such beneficiary or any such transferee may be
acting), the Issuing Bank, or any other Person or entity,
whether in connection with this Agreement, the transactions
contemplated hereby or by the other Related Documents or any
unrelated transaction;

(v) payment by the Issuing Bank under the Letter of
Credit against presentation of a draft or certificate which
does not comply with the terms of the Letter of Credit;

(c) Without limiting the effect of subsections (a) or
(b) above, or any other provision hereof, the Company and each
Creditor agree with the Issuing Bank that the Issuing Bank is
authorized to make payments under the Letter of Credit upon the
presentation of the documents provided for therein and without
regard to whether the Company has failed to fulfill any of its
obligations with respect to any Related Document or any Event of
Default or event which with the giving of notice or lapse of time
or both would constitute an Event of Default or other default has
occurred thereunder or hereunder.

<PAGE> 35
such non-U.S. Person), will not be less than the amount stated
herein to be then due and payable, provided that the foregoing
obligation to pay such additional amounts shall not apply:

(i) to any payment to the Issuing Bank or any such
Creditor hereunder unless the Issuing Bank or any such
Creditor is, on the Submission Date (or on the date such
Person becomes the successor to, or the assignee of, the
Issuing Bank or any such Creditor as provided in Section
9.09) and on the date of any change in the applicable lending
office of the Issuing Bank or any such Creditor after the
date hereof, either entitled to submit a Form 1001 (relating
to the Issuing Bank or any such Creditor and entitling it to
a complete exemption from withholding on all interest to be
received by it hereunder in respect of any Tender Advance or
any other amount hereunder payable) or Form 4224 (relating to
all interest to be received by the Issuing Bank or any such
Creditor hereunder in respect of any Tender Advance or any
other amount hereunder payable), or

(ii) to any U.S. Tax imposed solely by reason of the
failure by such non-U.S. Person to comply with applicable
certification, information, documentation or other reporting
requirements concerning the nationality, residence, identity
or connections with the United States of America of such
non-U.S. Person if such compliance is required by statute or
regulation of the United States of America as a precondition
to relief or exemption from such U.S. Tax.

For the purposes of this Section 2.17(a), (w) "Form 1001" shall
mean Form 1001 (Ownership, Exemption, or Reduced Rate
Certificate) of the Department of the Treasury of the United
States of America, (x) "Form 4224" shall mean Form 4224
(Exemption from Withholding of Tax on Income Effectively
Connected with the Conduct of a Trade or Business in the United
States) of the Department of the Treasury of the United States of
America (or in relation to either such Form such successor and
related forms as may from time to time be adopted by the relevant
taxing authorities of the United States of America to document a
claim to which such Form relates), (y) "U.S. Person" shall mean a
citizen, national or resident of the United States of America, a
corporation, partnership or other entity created or organized in
or under any laws of the United States of America, or any estate
or trust that is subject to Federal income taxation regardless of
the source of its income and (z) "U.S. Taxes" shall mean any
present or future tax, assessment or other charge or levy imposed
by or on behalf of the United States of America or any taxing
authority thereof or therein.

<PAGE> 36
Company shall deliver to the Issuing Bank or such Creditor, as
the case may be, evidence satisfactory to the Issuing Bank or
such Creditor, as the case may be, of such deduction, withholding
or payment (as the case may be).

SECTION 2.18. Applicable Lending Office. If the
Issuing Bank or any Creditor requests compensation from the
Company under any of Section 2.11(a), 2.11(c), 2.11(d) or 2.17,
the Issuing Bank or such Creditor, as the case may be, will
designate a different applicable lending office for the portions
of any Tender Advance or other amount due hereunder affected by
the events giving rise to such request for compensation if such
designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the reasonable opinion of the
Issuing Bank or such Creditor, as the case may be, be
disadvantageous to the Issuing Bank or such Creditor, as the case
may be, except that the Issuing Bank or such Creditor, as the
case may be, shall have no obligation to designate an applicable
lending office located in the United States of America.

SECTION 2.19. Net Payments. All payments under this
Agreement to the Agent, the Issuing Bank, or any Creditor shall
be made without set-off or counterclaim.

SECTION 2.20. Reinstatement of the Letter of Credit.
Upon delivery to the Agent of any Bonds purchased by the Trustee
on behalf of or for the account of the Issuing Bank, the Agent or
any other nominee of the Issuing Bank accompanied by a
certificate completed and signed by the Trustee in substantially
the form of Annex G to the Letter of Credit pursuant to
subsection (e) of Section 3.01 of the Indenture, subsection (e)
of Section 9.01 of the Indenture, or subsection (d) of Section
13.03 of the Indenture with moneys drawn under the Letter of
Credit, the amounts available to be drawn under the Letter of
Credit shall be reinstated, without any further action by the
Company or any party other than the Issuing Bank, in an amount
equal to the amount of the moneys drawn under the Letter of
Credit to purchase such Bonds; provided, however, if at any time
any such purchase shall be rescinded, in whole or in part, or
some or all of the Bonds so purchased must otherwise be returned
by the Issuing Bank, the Agent or any other nominee of the
Issuing Bank, in each case, for any reason, the amounts so
reinstated shall not be available to be drawn until and unless
the Company reimburses the Issuing Bank or the Creditors, as the
case may be, for such amounts.

ARTICLE III

CONDITIONS OF ISSUANCE

<PAGE> 37
(i) the Agent shall have received on or before the date of the
issuance of the Letter of Credit the following, each dated such
day (unless otherwise indicated), in form and substance
satisfactory to and in sufficient copies for each Creditor:

(a) certified copies of the restated articles of
incorporation and bylaws of the Company, a certified copy of
the resolutions of the Board of Directors of the Company
approving this Agreement, the form and content of the Letter
of Credit, the other Related Documents and the other matters
contemplated hereby and thereby, and of all other documents
evidencing any other necessary corporate action;

(b) a copy of a certificate of the Secretary of State
of Texas dated a date reasonably close to the date of
issuance of the Letter of Credit listing the articles of
incorporation of the Company and each amendment thereto on
file in his office and certifying that (A) such amendments
are the only amendments to the Company's articles of
incorporation on file in his office and (B) the Company is
duly incorporated, validly existing and in good standing
under the laws of such State;

(c) a telegram from such Secretary of State or such
other evidence satisfactory to the Agent certifying that the
Company is duly incorporated, validly existing and in good
standing under the laws of such State on the date of issuance
of the Letter of Credit;

(d) originals (or copies certified to be true copies by
an appropriate officer of the Company or, in the case of the
Issuer, by the county clerk of the Issuer) of all
governmental and regulatory approvals (including, without
limitation, approvals or orders of the Issuer and the Federal
Energy Regulatory Commission and the New Mexico Public
Service Commission approvals) legally required to be obtained
on the Effective Date and on the date of issuance of the
Letter of Credit for the Company to enter into this Agreement
and the other Related Documents and to carry out the
transactions contemplated hereby and thereby;

(e) a certified transcript relating to the issuance of
the Bonds;

(f) a certificate of the Secretary of the Company
certifying the incumbency and the names and true signatures
of the officers of the Company authorized to sign this
Agreement and the other documents to be delivered by it
hereunder, together with a certificate of another officer of
the Company as to the incumbency and specimen signature of
the Secretary of the Company;

(g) a certified copy of the Indenture and evidence
satisfactory to the Agent that the Indenture has been duly
adopted by the Issuer and accepted by the Trustee;

<PAGE> 38
(h) the Second Mortgage Bonds, Series [ ], such series
having been duly completed, executed and pledged to the Agent
for its benefit and the benefit of the Issuing Bank and the
Creditors by the Company;

(i) evidence of the completion of all recordings and
filings of or with respect to the Second Mortgage Bond
Indenture that the Agent may deem necessary or desirable in
order to perfect the security interest created thereby;

(j) a certified copy of the Second Mortgage Bond
Indenture;

(k) a favorable opinion of Milbank, Tweed, Hadley &
McCloy, New York counsel for the Company (or other New York
counsel for the Company that is reasonably satisfactory to
the Agent), in form and substance reasonably satisfactory to
the Agent;

(l) a favorable opinion of Vinson & Elkins, Texas
counsel for the Company (or other Texas counsel for the
Company that is reasonably satisfactory to the Agent), in
form and substance reasonably satisfactory to the Agent;

(m) a favorable opinion of Stoops & Burns, Arizona
counsel for the Company (or other Arizona counsel for the
Company that is reasonably satisfactory to the Agent), in
form and substance reasonably satisfactory to the Agent;

(n) a favorable opinion of Taichert, Wiggins, Virtue,
Wilson & Najjar, New Mexico regulatory counsel for the
Company (or other New Mexico regulatory counsel for the
Company that is reasonably satisfactory to the Agent), in
form and substance reasonably satisfactory to the Agent;

(o) a favorable opinion of [Milbank, Tweed, Hadley &
McCloy], federal regulatory counsel for the Company (or other
federal regulatory counsel for the Company that is reasonably
satisfactory to the Agent), in form and substance reasonably
satisfactory to the Agent;

(p) a favorable opinion of Mudge Rose Guthrie Alexander
& Ferdon, bond counsel, in form and substance reasonably
satisfactory to the Agent;

(q) a favorable opinion of , counsel to the
Issuer, or other counsel reasonably satisfactory to the
Agent, in form and substance reasonably satisfactory to the
Agent;

(r) a favorable opinion of Shearman & Sterling, special
counsel for the Issuing Bank, [to the extent required by the
agencies rating the Bonds];

<PAGE> 39
(s) a certificate from the Issuer certifying that the
resolutions approving the issuance of the Bonds, the
execution and delivery of the Indenture and all documents
delivered by the Issuer in connection with the issuance of
the Bonds are in full force and effect;

(t) a certificate of the Issuer, dated the date of
issuance of the Letter of Credit, as to the incumbency of
each of the persons executing and delivering the Indenture
and any document to be delivered by the Issuer in connection
therewith;

(u) the Official Statement certified by the Secretary
of the Company to be a true and correct copy thereof;

(v) a certificate of the Trustee certifying the
incumbency and signature specimens of officials of the
Trustee authorized to make drawings, to execute and present
certificates and drafts under the Letter of Credit and
otherwise to communicate with the Issuing Bank regarding the
Letter of Credit, upon which the Issuing Bank may rely until
it receives a new such certificate;

(w) written acknowledgment from the Trustee that it has
received the Letter of Credit;

(x) receipt from the Original Trustee under the
Original Ordinance of the Original Letter of Credit and
written acknowledgment from the Original Trustee that the
Original Letter of Credit is of no further force and effect;

(y) written evidence, satisfactory to the Agent, that
the First Mortgage Bonds, Series A/B, and the Second Mortgage
Bonds, Series A, have an Investment Grade Rating; and

(z) a certificate of the chairman, president or chief
financial officer of the Company, certifying (A) that the
Effective Date has occurred as of the time of delivery
thereof or will occur concurrently with the delivery thereof
and (B) that, after giving effect to the transactions
contemplated under the Plan of Reorganization: (x) no event
has occurred and is continuing which constitutes an Event of
Default or would constitute an Event of Default but for the
requirement that notice be given or the lapse of time or
both; and (y) the representations and warranties made by the
Company in Article IV hereof, and in each of the other
Related Documents, shall be true on and as of the Effective
Date with the same force and effect as if made on and as of
such date (or, if such representation or warranty is
expressly stated to have been made as of a specific date, as
of such specific date); and

(ii) the following has occurred on or before the date of
the issuance of the Letter of Credit:

<PAGE> 40
(a) the Confirmation Order shall have been entered at
least 10 days prior to the date hereof, no stay of such order
shall be in effect and the Agent shall have received a
certified copy of such order;

(b) the Plan of Reorganization shall have been
substantially consummated without waiver of any condition or
other modification (other than waivers or modifications made
in accordance with Section 6.6 of the Plan of
Reorganization);

(c) the Effective Date shall have occurred or shall
occur substantially simultaneously with the delivery of this
Agreement and of the other Related Documents; and

(d) the Refunding shall have occurred or shall occur
substantially simultaneously with the issuance of the Letter
of Credit [and the delivery of the other Related Documents].

SECTION 3.02. Additional Conditions Precedent to
Issuance of the Letter of Credit. The obligation of the Issuing
Bank to issue the Letter of Credit shall be subject to the
further conditions precedent that on the date of the issuance of
the Letter of Credit (a) the following statements shall be true
in all material respects and the Agent shall have received a
certificate signed by a duly authorized officer of the Company,
dated the date of such issuance, stating that:

(i) The representations and warranties contained in
Section 4.01 of this Agreement are correct on and as of the
date of issuance of the Letter of Credit, before and after
giving effect to such issuance, as though made on and as of
such date; and

(ii) No event has occurred and is continuing, or would
result from such issuance of the Letter of Credit, which
constitutes an Event of Default or would constitute an Event
of Default but for the requirement that notice be given or
time elapse or both;

and (b) the Agent shall have received such other approvals,
opinions or documents as the Issuing Bank or any Creditor
(through the Agent) may reasonably request.

SECTION 3.03. Conditions Precedent to Each Tender
Advance. (a) Each payment made by the Issuing Bank under the
Letter of Credit pursuant to a Tender Draft shall constitute a
Tender Advance hereunder only if on the date of such payment by
the Issuing Bank the following statements shall be true in all
material respects:

(i) The representations and warranties contained in
Section 4.01 of this Agreement are correct on and as of the
date of such Tender Advance, before and after giving effect

<PAGE> 41
to such Tender Advance and to the application of the proceeds
therefrom, as though made on and as of such date; and

(ii) No event has occurred and is continuing, or would
result from such Tender Advance or from the application of
the proceeds therefrom, which constitutes an Event of Default
or would constitute an Event of Default but for the
requirement that notice be given or time elapse or both.

(b) Unless the Company shall have previously advised
the Issuing Bank in writing that one or more of the above
statements in subsection (a) above is no longer true, the Company
shall be deemed to have represented and warranted, on the date of
each payment by the Issuing Bank under the Letter of Credit
pursuant to a Tender Draft, that on the date of such payment the
above statements are true.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the
Company. The Company represents and warrants as follows:

(a) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of Texas and is duly qualified to do business in, and
is in good standing under the laws of the States of Texas,
Arizona and New Mexico and has requisite corporate power and
authority, and all governmental licenses, authorizations and
approvals necessary, to conduct its business and to own its
properties, except where the failure to have the same would
not result in a Material Adverse Effect.

(b) The execution, delivery and performance by the
Company of this Agreement and the other Related Documents to
which it is a party are within the Company's corporate
powers, have been duly authorized by all necessary corporate
action, and do not contravene (i) the Company's articles of
incorporation or by-laws, which the Company has adopted
pursuant to the Plan of Reorganization or (ii) any law,
order, rule, regulation (including, without limitation, any
order, rule or regulation of the Federal Energy Regulatory
Commission, the New Mexico Public Service Commission or the
Public Utility Commission of Texas, or Regulation G, T, U or
X of the Board of Governors of the Federal Reserve System),
writ, judgment, injunction or decree applicable to the
Company or any contractual restriction binding on or
affecting the Company or any Subsidiary, and do not result in
or require the creation of any Lien of the Company or any
Subsidiary (except as provided in or contemplated by this
Agreement or the other Related Documents or the Plan of
Reorganization) upon or with respect to any properties of the
Company or any Subsidiary.

<PAGE> 42
(c) No authorization or approval or other action by,
and no notice to or filing with, any governmental authority
or regulatory body is required for the due execution,
delivery and performance by the Company of this Agreement or
any other Related Document (including the issuance and pledge
of the Second Mortgage Bonds, Series [ ] and the creation
and perfection of the Liens on the property securing such
Bonds) except for (i) those that have been duly obtained or
made and are in full force and effect and are Final Approvals
and (ii) the Confirmation Order.

(d) This Agreement has been duly and validly executed
by the Company and constitutes, and the other Related
Documents when delivered hereunder will be, the legal, valid
and binding obligations of the Company enforceable against
the Company in accordance with their respective terms.

(e) There is no pending or overtly threatened action,
investigation, proceeding or notification which has been
instituted after the Effective Date affecting the Company or
any of its Subsidiaries before any court, governmental agency
or arbitrator which is reasonably likely to have a Material
Adverse Effect.

(f) Except for information contained in Annex B to the
Official Statement describing the Issuing Bank, as to which
no representation is made, the Official Statement was, the
Preliminary Official Statement was, and any supplement or
amendment to any thereof shall be, accurate in all material
respects for the purposes for which its use is, was, or shall
be, authorized; and the Official Statement did not as of its
date of issue contain any untrue statement of a material fact
or omit to state any material fact necessary to make the
statements made therein, in the light of the circumstances
under which they are or were made, not misleading.

(g) The Company and the ERISA Affiliates have fulfilled
their respective obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and
are in compliance with the presently applicable provisions of
ERISA and the Code except where non-compliance would not have
a Material Adverse Effect, and have not incurred any
liability to the PBGC (other than to pay premiums under
Section 4007 of ERISA) or any Plan or any Multiemployer Plan
(other than to make contributions in the ordinary course of
business). No reportable event, within the meaning of
Section 4043 of ERISA, has occurred with respect to any Plan,
except for any such event as to which the 30-day notice
requirement has been waived by the PBGC. Schedule B
(Actuarial Information) to the most recently filed annual
report (Form 5500 Series) for each Plan is complete and
accurate and fairly presents the funding status of such Plan,
and since the date of such Schedule B there has been no
change in such funding status that can reasonably be expected
to have a Material Adverse Effect.

<PAGE> 43
(h) The Second Mortgage Bonds, Series , (i) have been
duly authorized, executed, authenticated, issued, pledged and
delivered in the manner provided for in the Second Mortgage
Bond Indenture and in compliance with all applicable law;
(ii) constitute the legal, valid and binding obligations of
the Company enforceable against the Company in accordance
with their terms and the terms of the Second Mortgage Bond
Indenture except insofar as enforceability may be limited or
otherwise affected by (a) bankruptcy, insolvency, moratorium,
reorganization or other similar laws of general application
relating to or affecting the rights and remedies of creditors
from time to time in effect and (b) general principles of
equity (regardless of whether enforceability is considered in
a proceeding in equity or at law); (iii) are entitled to the
security and benefits of the Second Mortgage Bond Indenture;
(iv) are secured equally and ratably with and only with all
other bonds issued and outstanding and which may hereafter
and thereafter be issued and outstanding under the Second
Mortgage Bond Indenture; (v) are secured by duly perfected
Liens on and security interests in the collateral purported
to secure such bonds in the Second Mortgage Bond Indenture
which Liens are subordinated in priority only to the Liens
and security interests granted under the First Mortgage Bond
Indenture and securing outstanding First Mortgage Bonds; and
(vi) constitute collateral security encumbered by valid, duly
perfected Liens thereon and security interests therein
securing the obligations of the Company under this Agreement
as purported to be provided in such indenture and herein.
The Company has executed, issued and delivered all Second
Mortgage Bonds, Series to the Agent for its benefit and
the ratable benefit of the Issuing Bank and the Creditors and
has made all such duly perfected pledges thereof to the Agent
for its benefit and the ratable benefit of the Issuing Bank
and the Creditors as are required to be executed, issued,
delivered and made under this Agreement and there are no
other Liens on such Second Mortgage Bonds.

(i) The Second Mortgage Bond Indenture creates a valid
and perfected second Lien on the Company's property as
described in the Second Mortgage Bond Indenture as collateral
security for the Company's obligations under the Second
Mortgage Bond Indenture and the Second Mortgage Bonds, Series
[ ].

(j) No Material Adverse Effect has occurred since the
Effective Date.

<PAGE> 44
Subsidiaries or any of their properties or (ii) cause any
such property to be subject to any restrictions on ownership,
occupancy, use or transferability under any Environmental
Law, except as would not be likely to have a Material Adverse
Effect, and none of the properties of the Company or any of
its Subsidiaries is listed or proposed for listing on the
National Priorities or CERCLA List under CERCLA or any
analogous state list.

(l) The Indenture creates a valid, enforceable and
perfected first priority security interest in the Trust
Estate (as defined in the Indenture) for the benefit of the
holders of the Bonds, as security for the Issuer's
obligations of the holders of the Bonds under the Indenture
and pursuant to the terms of the Bonds.

(m) The Company is not a "holding company" as such term
is defined in the Public Utility Holding Company Act of 1935,
as amended, nor an "investment company", or a company
"controlled" by an "investment company", within the meaning
of the Investment Company Act of 1940, as amended.

(n) The Company and its Subsidiaries have filed all
United States Federal and state income tax returns and all
other material tax returns which are required to be filed by
them, and have paid all taxes due pursuant to such returns
or, to the extent deemed necessary or appropriate by the
Company and such Subsidiary, provided reserves for the
payment thereof, other than such taxes that the Company or
any Subsidiary is contesting in good faith by appropriate
legal proceedings.

(o) Prior to the issuance of the Letter of Credit, the
Confirmation Order has been entered and has not been
reversed, amended (except as consented to by the Issuing Bank
in its sole discretion), stayed, vacated or rescinded. The
Agent, the Issuing Bank and each Creditor shall be entitled
to enforce the remedies under this Agreement without further
application to or order by the Bankruptcy Court.

(p) The Company is in material compliance with all
Environmental Laws and is not exposed to any costs or
liabilities under any Environmental Laws except as would not
be reasonably likely to result in a Material Adverse Effect
on the Company.

ARTICLE V

COVENANTS OF THE COMPANY

<PAGE> 45
Company hereunder to the Agent, the Issuing Bank, or any
Creditor, the Company agrees that, unless the Majority Creditors
shall otherwise consent in writing:

(a) Reporting Requirements. The Company shall deliver
to the Agent and each Creditor:

(i) as soon as available and in any event within
45 days after the end of each of the first three
quarterly fiscal periods of each fiscal year of the
Company, consolidated and consolidating statements of
income, retained earnings and cash flow of the Company
and its Consolidated Subsidiaries for such period and
for the period from the beginning of the respective
fiscal year to the end of such period, and the related
consolidated and consolidating balance sheets of the
Company and its Consolidated Subsidiaries at the end of
such period, setting forth in each case in comparative
form the corresponding consolidated and consolidating
figures for the corresponding period in the preceding
fiscal year, accompanied by a certificate of a senior
financial officer of the Company, which certificate
shall state that said consolidated financial statements
fairly present the consolidated financial condition and
results of operations of the Company and its
Consolidated Subsidiaries, and said consolidating
financial statements fairly present the respective
individual unconsolidated financial condition and
results of operations of the Company and of each of its
Consolidated Subsidiaries, in each case in accordance
with GAAP, consistently applied, as at the end of, and
for, such period (subject to normal year-end audit
adjustments);

(ii) as soon as available and in any event within
90 days after the end of each fiscal year of the
Company, consolidated and consolidating statements of
income, retained earnings and cash flow of the Company
and its Consolidated Subsidiaries for such fiscal year
and the related consolidated and consolidating balance
sheets of the Company and its Consolidated Subsidiaries
as at the end of such fiscal year, setting forth in each
case in comparative form the corresponding consolidated
and consolidating figures for the preceding fiscal year,
and accompanied (i) in the case of said consolidated
statements and balance sheet of the Company, by an
opinion thereon of independent certified public
accountants of recognized national standing, which
opinion shall state that said consolidated financial
statements fairly present the consolidated financial
condition and results of operations of the Company and
its Consolidated Subsidiaries as at the end of, and for,
such fiscal year in accordance with GAAP, consistently
applied, and a certificate of such accountants stating

<PAGE> 46
that, in making the examination necessary for their
opinion, they obtained no knowledge, except as
specifically stated, of any failure by the Company to
comply with Section 5.02(a), (b) or (e)(xi), and (ii) in
the case of said consolidating statements and balance
sheets, by a certificate of a senior financial officer
of the Company, which certificate shall state that said
consolidating financial statements fairly present the
respective individual unconsolidated financial condition
and results of operations of the Company and of each of
its Consolidated Subsidiaries, in each case in
accordance with GAAP, consistently applied, as at the
end of, and for, such fiscal year;

(iii) as soon as available copies of all proxy
statements, material reports and registration statements
which the Company or any of its Subsidiaries files with
the Securities and Exchange Commission or any national
securities exchange (other than filings made pursuant to
the Public Utility Holding Company Act of 1935, as
amended, public offerings of securities under employee
benefit plans, customer stock purchase plans or dividend
reinvestment plans);

(iv) as soon as possible and in any event within
two days after the Company has knowledge of the
occurrence of each Event of Default continuing on the
date of such statement, a statement from the chief
financial officer of the Company setting forth details
of such Event of Default and the action that the Company
has taken and proposes to take with respect thereto;

(v) at the time the Company furnishes each set of
financial statements pursuant to paragraph (i) or (ii)
above, a certificate of a senior financial officer of
the Company setting forth in reasonable detail the
computations necessary to determine whether the Company
is in compliance with subsections (a), (b) and (e)(xi)
of Section 5.02 as of the end of the respective
quarterly fiscal period or fiscal year and stating that
no event has occurred or is continuing which constitutes
an Event of Default or would constitute an Event of
Default but for the requirement that notice be given or
the lapse of time or both or, if any such event has
occurred and is continuing, a statement as to the nature
thereof and the action that the Company has taken or
proposes to take with respect thereto; and

(vi) such other financial data and information of
the Company or any of its Subsidiaries as the Agent, the
Issuing Bank or any Creditor may from time to time
reasonably request.

<PAGE> 47
(b) Litigation. The Company will promptly give to the
Agent notice of all actions, suits, investigations,
litigation or legal or arbitral proceedings, and of all
proceedings by or before any governmental or regulatory
authority or agency (and any material development in respect
of such legal or other proceedings), in each case, known to
the Company, which is reasonably likely to have a Material
Adverse Effect.

(c) Preservation of Corporate Existence, Etc. The
Company shall (i) preserve and maintain its corporate
existence in the state of its incorporation and qualify and
remain qualified as a foreign corporation in each
jurisdiction in which such qualification is reasonably
necessary in view of its business, and (ii) pay and
discharge, and cause its Subsidiaries to pay and discharge,
all taxes, assessments and governmental charges upon its
income and its properties prior to the date on which
penalties are attached thereto, unless (A) such taxes,
assessments and governmental charges shall be contested in
good faith and by appropriate proceedings by the Company or
its Subsidiaries and (B) the Company or any such Subsidiary
shall set aside on its books adequate reserves therefor to
the extent required by GAAP. Nothing contained in this
clause (c) of Section 5.01 shall be deemed to prohibit any
transaction permitted by clause (c) of Section 5.02.

(d) Maintenance of Insurance, Etc. The Company shall,
and shall cause its Subsidiaries to, maintain insurance with
responsible insurance companies or associations or through
its own program of self-insurance in such amounts, with such
deductibles, and covering such risks as is usually carried by
companies engaged in similar business.

(e) Compliance with Laws, Etc. The Company shall
comply, and cause each of its Subsidiaries to comply, in all
material respects, with all applicable laws, rules,
regulations and orders, such compliance to include, without
limitation, compliance with ERISA, except where the failure
to so comply would not have a Material Adverse Effect.

(f) Compliance with Environmental Laws. The Company
shall comply, and cause each of its Subsidiaries and all
lessees and other Persons occupying or operating on its
properties to comply, in all material respects, with all
Environmental Laws and Environmental Permits applicable to
its operations and properties; obtain and renew all
Environmental Permits necessary for its operations and
properties; and conduct, and cause each of its Subsidiaries
to conduct, any investigation, study, sampling and testing,
and undertake any cleanup, removal, remedial or other action
required under any Environmental Law to remove and clean up
all Hazardous Materials from any of its properties, in
accordance with the requirements of all Environmental Laws;

<PAGE> 48
provided, however, that neither the Company nor any of its
Subsidiaries shall be required to undertake any such cleanup,
removal, remedial or other action to the extent that its
obligation to do so is being contested in good faith and by
proper proceedings and reserves, where required by GAAP, are
being maintained with respect to such circumstances.

(g) Visitation Rights. The Company shall, at any
reasonable time and from time to time, permit the Agent, the
Issuing Bank, any Creditor or any agents or representatives
of any thereof, to examine and make copies of and abstracts
from the records and books of account of, and examine the
properties of, the Company and any of its Subsidiaries, and
to discuss the affairs, finances and accounts of the Company
and any of its Subsidiaries with any of their officers or
directors and with their independent certified public
accountants.

(h) Maintenance of Properties, Etc. The Company shall
maintain and preserve, and cause each of its Subsidiaries to
maintain and preserve, all of its properties that are used or
useful in the conduct of its business in good working order
and condition, ordinary wear and tear excepted; provided that
this subsection (h) shall not prevent the sale of any
properties permitted by subsection (c) of Section 5.02.

(i) Lien. The Company shall maintain the Lien created
or purported to be created by the Second Mortgage Bond
Indenture for the benefit of the Agent and the ratable
benefit of the Issuing Bank and the Creditors and defend,
preserve and protect such Lien against all claims of all
Persons.

(j) Redemption or Defeasance of Bonds or Substitution
of Credit Facility. The Company shall use its best efforts
to cause the Trustee, upon redemption or defeasance of less
than all of the Bonds pursuant to the Indenture, to furnish
to the Issuing Bank notice in the form of Annex A to the
Letter of Credit, and, upon a redemption or defeasance of all
the Bonds pursuant to the Indenture or upon substitution of a
Credit Facility (as defined in the Indenture) for the Letter
of Credit, to surrender the Letter of Credit to the Issuing
Bank for cancellation.

(k) Bond Rating. The Company shall exercise its best
efforts to cause the Bonds to have a rating by Moody's
Investors Service, Inc. or by Standard & Poor's Corporation.

<PAGE> 49
Agent or any other nominee of the Issuing Bank, to the extent
the Issuing Bank requests that such Bonds be remarketed),
including (without limitation) preparing such disclosure and
other documents as are required to remarket the Bonds.

(m) Registration of Bonds. The Company shall cause all
Bonds which it (or any of its Affiliates) acquires, or which
are acquired for its (or any of its Affiliates) account, to
be registered forthwith in accordance with the Indenture in
the name of the Company (or such Affiliate).

(n) Maintain Books and Records. The Company shall keep
adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently
applied.

(o) Additional Documents. As promptly as practicable
(but in any event not later than 30 days) after the Effective
Date, the Company will furnish to the Agent, (i) certified
copies of recorded counterparts of the First Mortgage Bond
Indenture and evidencing the filing thereof and (ii)
certified copies of all notices filed with respect to the
First Mortgage Bond Indenture.

(p) Creation of Subsidiaries. The Company shall not,
and shall not permit any of its Subsidiaries to, create any
Subsidiaries of the Company or make any investment in any
Person except in compliance with the Public Utility Holding
Company Act of 1935, as amended, and the regulations and
orders of the Securities and Exchange Commission thereunder.

SECTION 5.02. Negative Covenants. So long as a drawing
is available under the Letter of Credit or the Issuing Bank shall
have any commitment hereunder or the Company shall have not paid
in full all amounts payable by the Company hereunder to the
Agent, the Issuing Bank, or any Creditor, the Company agrees
that, without the written consent of the Majority Creditors:

(a) Total EBITA to Interest Coverage Ratio. The
Company shall not permit the Interest Coverage Ratio to be
less than 1.40 to 1 at any time on or after the last day of
the first full fiscal quarter of the Company commencing after
the Effective Date.

(b) Leverage Ratio. The Company shall not permit the
Leverage Ratio to exceed 0.68 to 1 at any time on or after
the last day of the first full fiscal quarter of the Company
commencing after the Effective Date.

<PAGE> 50
with any other Person if (i) in any such transaction in which
the Company is a party, the Company is the surviving
corporation, (ii) in any such transaction in which the
Company is not a party, the surviving corporation shall be a
Subsidiary of the Company and (iii) after giving effect
thereto no Event of Default would exist hereunder. The
Company will not, and will not permit any of its Subsidiaries
to, convey, sell, lease, transfer or otherwise dispose of, in
one transaction or a series of transactions, all or
substantially all of its business or assets or assets
(excluding (i) accounts receivable, (ii) obsolete or worn-out
tools, equipment or other property no longer used or useful
in its business and (iii) inventory or other property sold or
disposed of in the ordinary course of business and on
ordinary business terms) which in the aggregate have a net
book value in excess of $50,000,000, whether now owned or
hereafter acquired, to any other Person. Notwithstanding the
foregoing provisions of this subsection (c):

(1) any Subsidiary of the Company may be merged or
consolidated with or into: (A) the Company if the
Company shall be the continuing or surviving corporation
or (B) any other Subsidiary of the Company; and

(2) any Subsidiary of the Company may sell, lease,
transfer or otherwise dispose of any or all of its
property (upon voluntary liquidation or otherwise) to
the Company or a Subsidiary of the Company.

(d) Compliance with ERISA. The Company shall not
(i) enter into any non-exempt prohibited transaction (as
defined in Section 4975 of the Code and in Section 406 of
ERISA) involving any Plan which may result in any liability
of the Company to any Person which (in the reasonable opinion
of the Agent) will have a Material Adverse Effect or
(ii) allow or suffer to exist any other event or condition
known to the Company which results in any liability of the
Company or any of its Subsidiaries to the PBGC, or in any
Withdrawal Liability to any Multiemployer Plan, which (in the
reasonable opinion of the Agent) will have a Material Adverse
Effect. For purposes of this Section 5.02(d), "liability"
shall not include termination insurance premiums payable
under Section 4007 of ERISA. Upon request of the Agent, the
Company shall promptly furnish to the Agent a copy of
Schedule B (Actuarial Information) to the most recently filed
annual report (Form 5500 Series) of any Plan.

(e) Limitation on Liens. The Company shall not, nor
will it permit any of its Subsidiaries to, create, incur,
assume or suffer to exist any Lien upon or with respect to
any of its property, whether now owned or hereafter acquired,
except:

<PAGE> 51
(i) Liens created pursuant to the Related
Documents or pursuant to the First Mortgage Bond
Indenture or the Second Mortgage Bond Indenture;

(ii) Liens created or otherwise in existence on the
Effective Date or contemplated by the Plan of
Reorganization;

(iii) Liens imposed by any governmental authority
for taxes, assessments or charges not yet due or which
are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto
are maintained on the books of the Company or the
affected Subsidiaries, as the case may be, in accordance
with GAAP;

(iv) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising
in the ordinary course of business which are not overdue
for a period of more than 60 days or which are being
contested in good faith and by appropriate proceedings;

(v) pledges or deposits under worker's
compensation, unemployment insurance and other social
security legislation;

(vi) deposits to secure the performance of bids,
trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature
incurred in the ordinary course of business;

(vii) easements, rights-of-way, restrictions and
other similar encumbrances incurred in the ordinary
course of business and encumbrances consisting of zoning
restrictions, easements, licenses, restrictions on the
use of property or minor imperfections in title thereto
which, in the aggregate, are not material in amount, and
which do not in any case materially detract from the
value of the property subject thereto, render title to
the property encumbered thereby unmarketable, materially
adversely affect the use of such property for its
present purposes or interfere with the ordinary conduct
of the business of the Company or any of its
Subsidiaries;

(viii) Liens on property of any corporation which
becomes a Subsidiary of the Company after the date of
this Agreement, provided that such Liens are in
existence at the time such corporation becomes a
Subsidiary of the Company and were not created in
anticipation thereof, provided further that such Liens
shall not extend to cover any property of the Company or
any of its other Subsidiaries and such Liens shall not

<PAGE> 52
cover property of such Subsidiary other than property of
the types covered by the terms of such Liens at the time
such Subsidiary is acquired;

(ix) Liens upon real and/or tangible personal
property acquired after the Effective Date (by purchase,
construction or otherwise) by the Company or any of its
Subsidiaries, each of which Liens either (A) existed on
such property before the time of its acquisition and was
not created in anticipation thereof, or (B) was created
solely for the purpose of securing Debt representing, or
incurred to finance, refinance or refund, the cost
(including the cost of construction) of such property;
provided that no such Lien shall extend to or cover any
property of the Company or such Subsidiary other than
the property so acquired and improvements thereon;

(x) banker's liens, rights of set-off and Liens on
documents presented under commercial letters of credit,
in each case granted to banks in accordance with
customary banking practices or arising by operation of
law;

(xi) additional Liens upon real and/or personal
property created after the date hereof, provided that,
on the date each such Lien is incurred, the lower of (1)
the fair market value of all property subject to Liens
permitted by this paragraph (xi) and not otherwise
permitted by this subsection (i) or (2) the aggregate
amount of all obligations secured by Liens permitted by
this paragraph (xi) and not otherwise permitted by this
subsection (i) shall not exceed 5% of Total Capital on
such date; and

(xii) any extension, renewal or replacement of the
foregoing, provided, however, that the Liens permitted
hereunder shall not be spread to cover any additional
Debt or property (other than a substitution of like
property).

(f) Change in Nature of Business. The Company shall
not make, or permit any of its Subsidiaries to make, any
material change in the nature of its business as carried on
at the date hereof.

(g) Optional Redemptions. The Company shall not
initiate an optional redemption of any Bonds unless the First
Mortgage Bonds, Series [ ], and the Second Mortgage Bonds,
Series [ ], shall each have an Investment Grade Rating and
such bonds have not been placed, with possible negative
consequences, on any watch list.

(h) Related Documents. The Company shall not, subject
to specific rights contained in such agreements, amend, or
consent to the amendment of, any of the Related Documents,

<PAGE> 53
which amendment would adversely affect the Agent, the Issuing
Bank or any Creditor; provided that the Second Mortgage Bond
Indenture may be amended in accordance with its terms; and
provided further that the consent of the Agent, the Issuing
Bank or such Creditor, as the case may be, may not be
unreasonably withheld.

(i) Appointment. The Company shall not appoint any
successor to the Trustee or any Remarketing Agent (as defined
in the Indenture) or other agent appointed pursuant to the
Indenture or any additional Remarketing Agents or other such
agents with respect to the Bonds without the consent of the
Majority Creditors; provided that the consent of the Majority
Creditors may not be unreasonably withheld.

(j) Bond Interest Term. The Company shall not cause
the Trustee to select a Bond Interest Term Rate (as defined
in the Indenture) for any Bond.

ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.01. Events of Default. The occurrence of any
of the following events shall be an "Event of Default" hereunder:

(a) The Company shall fail to pay any amount payable
under any provision of Article II or any other provision of
this Agreement within two days after the same becomes due and
payable; or

(b) Any representation, warranty or certification made,
or deemed made, by the Company in any Related Document by the
Company (or any of its officers), or any certificate
furnished to the Agent, the Issuing Bank or any Creditor
pursuant to the provisions thereof, shall prove to have been
false or misleading as of the time made or furnished in any
material respect; or

(c) The Company shall default in the performance of any
of its obligations under clause (a)(iv) of Section 5.01 or
clauses (a), (b), (c) or (f) of Section 5.02; or a consensual
Lien shall be created by the Company or any of its
Subsidiaries in violation of Section 5.02(e); or the Company
shall default in its performance of any of its other
obligations under this Agreement or in any other Related
Document and such default in the performance of any such
other obligation shall continue unremedied for a period of 15
days after notice thereof to the Company by the Agent; or

(d) The Company or any of its Subsidiaries shall
default in the payment when due of any principal of or any
interest on any Debt aggregating $10,000,000 or more, or fail

<PAGE> 54
to observe or perform any material term, covenant or
agreement contained in any agreement by which it is bound,
evidencing or securing Debt, in an aggregate amount of
$10,000,000 or more, or any other event shall occur or
condition shall exist under any agreement or instrument
relating to any such Debt, after the giving of any required
notice and for such period of time as would permit the holder
or holders thereof or of any obligations issued thereunder to
accelerate the maturity thereof, unless such failure or event
or condition shall have been cured by the Company or such
Subsidiary, as the case may be, or effectively waived by such
holder or holders; or

(e) There shall remain in force, undischarged,
unsatisfied and unstayed, for more than 30 days, whether or
not consecutive, any final judgment against the Company or
any of its Material Subsidiaries that, together with other
outstanding final judgments, undischarged, against the
Company and all of its Material Subsidiaries exceeds in the
aggregate $10,000,000 (for the purposes hereof, the term
"final judgment" shall mean a judgment which is not subject
to appeal); or

(f) The Company or any of its Material Subsidiaries
shall make a general assignment for the benefit of creditors,
or admit in writing its inability to pay or generally fail to
pay its debts as they mature or become due, or shall petition
or apply for the appointment of a trustee or other custodian,
liquidator or receiver of the Company or any of its Material
Subsidiaries, as the case may be, or any substantial part of
its respective assets; or the Company or any of its Material
Subsidiaries shall commence any case or other proceeding
relating to the Company or any of its Material Subsidiaries
under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation
or similar law of any jurisdiction, now or hereafter in
effect, or the Company or any of its Material Subsidiaries
shall take any action to authorize or in furtherance of any
of the foregoing; or if any such petition or application
shall be filed or any such case or other proceeding shall be
commenced against the Company or any of its Material
Subsidiaries and the Company or any of its Material
Subsidiaries shall indicate its approval thereof, consent
thereto or acquiescence therein or such petition or
application shall not be dismissed on or before the 60th day
after the filing thereof; or

(g) A decree or order is entered appointing any
trustee, custodian, liquidator or receiver or adjudicating
the Company or any of its Material Subsidiaries bankrupt or
insolvent, or approving a petition in any such case or other
proceeding, or a decree or order for relief is entered in
respect of the Company or any of its Material Subsidiaries in
an involuntary case under federal bankruptcy laws as now or
hereafter reconstituted; or

<PAGE> 55
(h) There shall have been asserted against the Company
by a Governmental Person or other Person, a written
complaint, claim or demand asserting any claims or
liabilities, whether accrued, absolute or contingent, based
on or arising from the presence, release or disposal of
Hazardous Materials by the Company or any of its Subsidiaries
that is reasonably likely to be determined adversely to the
Company or any of its Subsidiaries, and the amount thereof
(either individually or in the aggregate) would, in such
event, have a Material Adverse Effect (after deducting any
portion thereof that is reasonably expected to be paid by
other creditworthy Persons); or

(i) The Confirmation Order shall be (i) reversed,
revoked or vacated in whole or in part by any Final Order of
a court of competent jurisdiction, or (ii) modified in a
manner or subjected to a stay that adversely affects the
Company's ability to perform any of its obligations
hereunder, as determined by the Agent in its sole discretion;
or

(j) Central and South West Corporation shall cease
directly or indirectly, to own (or otherwise shall cease,
directly or indirectly, to control the voting rights of) at
least 51% of the Voting Stock of the Company; or

(k) Any "Event of Default" under and as defined in the
Related Documents shall have occurred and be continuing; or

(l) Any regulatory approval as set forth in
Section 3.01(d) or required to consummate the Plan of
Reorganization shall be rescinded if such rescission can not
be appealed by the Company and has a Material Adverse Effect
on the Company; or

(m) Any material provision of this Agreement or any
other Related Document shall at any time cease to be a valid,
binding obligation of the Company enforceable against the
Company, or any such agreement shall be declared to be null
and void, or the validity or enforceability thereof shall be
contested by the Company, or a proceeding shall be commenced
by any Governmental Person having jurisdiction over the
Company seeking to establish the invalidity or
unenforceability thereof, or the Company shall deny that it
has any further liability or obligation under this Agreement
or any other Related Document after delivery thereof or the
Second Mortgage Bond Indenture shall for any reason (other
than pursuant to the terms thereof) cease to create a valid
and perfected second priority Lien on the Company's property
purported to be secured thereby.

<PAGE> 56
been issued, by notice to the Company, declare the obligation of
the Issuing Bank to issue the Letter of Credit to be terminated,
whereupon the same shall forthwith terminate, or, (ii) if the
Letter of Credit shall have been issued, give notice to the
Trustee pursuant to Section 9.01 of the Indenture that an Event
of Default hereunder has occurred and is continuing and, if a
drawing to pay interest on the Bonds shall have been made under
the Letter of Credit (other than such a drawing in respect of the
payment of interest upon scheduled or accelerated maturity, or
redemption, of the Bonds), and not reimbursed, notify the Trustee
prior to the fifteenth day following such drawing that the
Issuing Bank has not been reimbursed for such drawing and that
interest in the amount of such drawing will not be reinstated,
and (B) the Agent shall at the request, or may with the consent,
of the Majority Creditors (i) declare the Tender Advances, all
interest thereon and all other amounts payable hereunder or in
respect thereof, to be forthwith due and payable, whereupon the
Tender Advances, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment,
demand, protest, or further notice of any kind, all of which are
hereby expressly waived by the Company and (ii) exercise all
rights and remedies in respect of the Second Mortgage Bonds,
Series [ ] pledged as security hereunder; provided, however,
that in the event of the occurrence of an Event of Default
pursuant to subsections (f) or (g) of Section 6.01, (A) the
obligation of the Issuing Bank to issue the Letter of Credit
shall automatically be terminated and (B) the Tender Advances,
all interest thereon and all other amounts payable hereunder or
in respect thereof shall automatically become and be due and
payable, without presentment, demand, protest or any notice of
any kind, all of which are hereby expressly waived by the
Company.

ARTICLE VII

SECURITY

SECTION 7.01. Issuance and Pledge of Bonds.
Concurrently with the execution of this Agreement, the Company
shall execute, issue and deliver to the Agent for its benefit and
the ratable benefit of the Issuing Bank and each Creditor the
Second Mortgage Bonds, Series [ ] as security for the payment of
all obligations of the Company now or hereafter existing under
this Agreement in respect of principal, interest and Letter of
Credit commissions payable pursuant to Section 2.04(a), pursuant
to and on the terms of this Agreement and of the Second Mortgage
Bond Indenture. The Company hereby pledges to the Agent and
grants to the Agent, in each case, for its benefit and the
ratable benefit of the Issuing Bank and each Creditor a security
interest in the Second Mortgage Bonds Series [ ] and all
interest, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in

<PAGE> 57
exchange for any or all of such Bonds and proceeds of any and all
of the foregoing. The Second Mortgage Bond, Series [ ] shall be
registered in the name of the Agent or such nominee or nominees
as the Agent shall direct.

SECTION 7.02. Application of Moneys. Any moneys
received by the Agent, the Issuing Bank or any Creditor on
account of the Second Mortgage Bonds, Series [ ] shall be
applied as follows: (a) moneys received on account of principal
of the Second Mortgage Bonds, Series [ ] shall be applied to the
payment of any unpaid principal of the Tender Advances or
drawings under the Letter of Credit then due and owing hereunder
and (b) moneys received on account of interest on the Second
Mortgage Bonds, Series [ ] shall be applied to the payment of
any accrued and unpaid interest then due and owing hereunder and
Letter of Credit commissions then due and owing under Section
2.04(a).

SECTION 7.03. Rights of Bondholders. The Agent, as
holder of the Second Mortgage Bonds, Series [ ] for its benefit
and the ratable benefit of the Issuing Bank and the Creditors,
shall have all the rights (including, without limitation, voting
rights) provided to holders of bonds in the Second Mortgage Bond
Indenture and shall have only such rights. Without limiting the
generality of the foregoing, (a) the Second Mortgage Bonds,
Series [ ] may not be sold, assigned, pledged or otherwise
transferred by the Bank, whether pursuant to the Uniform
Commercial Code after an Event of Default or otherwise except in
connection with any assignment of the Agent's rights and
obligations under this Agreement as provided for herein and
(b) no payment of principal of or interest on the Second Mortgage
Bonds, Series [ ], or any other amount payable thereunder, shall
be demanded or received except if, and to the extent that, the
corresponding payment remains unpaid hereunder. To the extent
that moneys recovered from the Second Mortgage Bonds, Series [ ]
are insufficient to pay in full the amount of principal and
interest and other amounts due hereunder, the Company shall
remain liable for any such deficiency under the terms of this
Agreement.

SECTION 7.04. The Agent's Duties. The powers conferred
on the Agent hereunder are solely to protect its interest in the
collateral, including, without limitation, the Second Mortgage
Bonds, Series [ ], and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any
collateral in its possession and the accounting for moneys
actually received by it hereunder, the Agent shall have no duty
as to any collateral, as toascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any collateral, whether or not the
Agent, the Issuing Bank or any Creditor has or is deemed to have
knowledge of such matters, or as to the taking of any necessary
steps to preserve rights against any parties or any other rights

<PAGE> 58
pertaining to any collateral. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any
collateral in its possession if such collateral is accorded
treatment substantially equal to that which the Agent accords its
own property.

ARTICLE VIII

THE AGENT, THE CREDITORS AND
THE ISSUING BANK

SECTION 8.01. Authorization and Action. The Issuing
Bank and each Creditor hereby appoint and authorize the Agent to
take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided for
by this Agreement (including, without limitation, enforcement or
collection of amounts due under this Agreement), neither the
Issuing Bank nor the Agent shall be required to exercise any
discretion or take any action, but the Agent shall be required to
act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the
Majority Creditors, and such instructions shall be binding upon
all Creditors; provided, however, that neither the Issuing Bank
nor the Agent shall be required to take any action which exposes
the Issuing Bank or the Agent to personal liability or which is
contrary to this Agreement or applicable law. The Agent agrees
to give to the Issuing Bank and each Creditor prompt notice of
each notice given to it by the Company and to give to each
Creditor notice of each notice delivered to it by the Issuing
Bank, in each case pursuant to the terms of this Agreement.

SECTION 8.02. Reliance, Etc. Neither the Agent, the
Issuing Bank nor any of their directors, officers, agents or
employees shall be liable for any action taken or omitted to be
taken by it or them under or in connection with this Agreement or
any other Related Document, except for its or their own gross
negligence or willful misconduct. Without limitation of the
generality of the foregoing, the Agent and the Issuing Bank:
(i) may treat each Creditor as a Creditor hereunder until the
Agent receives written notice of the assignment or transfer of
the rights and obligations of any Creditor hereunder signed by
such Creditor and including the agreement of the assignee or
transferee to be bound hereby as it would have been if it had
been an original Creditor party hereto, in form satisfactory to
the Agent; (ii) may consult with legal counsel (including counsel
for the Company), independent public accountants and other
experts selected by it and shall not be liable for any action
taken or omitted to be taken in good faith by it in accordance
with the advice of such counsel, accountants or experts;
(iii) makes no warranty or representation to any Creditor and

<PAGE> 59
shall not be responsible to any Creditor for any statements,
warranties or representations (whether written or oral) made in
or in connection with this Agreement or any other Related
Document; (iv) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms,
covenants or conditions of this Agreement or any other Related
Document on the part of the Company or any other party or to
inspect the property (including the books and records) of the
Company; (v) shall not be responsible to any Creditor for the due
execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Related
Document or any other instrument or document furnished pursuant
hereto or thereto; and (vi) shall incur no liability under or in
respect of this Agreement or any other Related Document by acting
upon any notice, consent, certificate or other instrument or
writing (which may be by telecopier, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper
party or parties.

SECTION 8.03. The Agent, the Issuing Bank and
Affiliates. The Agent and the Issuing Bank shall have the same
rights and powers under this Agreement as any other Creditor and
may exercise the same as though they were not the Issuing Bank
and the Agent, respectively; and the term "Creditor" or
"Creditors" shall, unless otherwise expressly indicated, include
Citibank in its individual capacity. The Agent, the Issuing Bank
and their respective Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, and generally
engage in any kind of business with, the Company, any of its
Subsidiaries and any Person who may do business with or own
securities of the Company or any such Subsidiary, all as if
Citibank was not the Agent or the Issuing Bank and without any
duty to account therefor to the Creditors.

SECTION 8.04. Bank Credit Decision. Each Creditor
acknowledges that it has, independently and without reliance upon
the Agent, the Issuing Bank or any other Creditor and based on
the financial statements referred to in Section 4.01 and such
other documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this
Agreement. Each Creditor also acknowledges that it will,
independently and without reliance upon the Agent, the Issuing
Bank or any other Creditor and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action
under this Agreement.

<PAGE> 60
asserted against the Agent or the Issuing Bank in any way
relating to or arising out of this Agreement or any action taken
or omitted by the Agent or the Issuing Bank under this Agreement,
provided that no Creditor shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from
the Agent's or the Issuing Bank's gross negligence or willful
misconduct. Without limitation of the foregoing, each Creditor
agrees to reimburse the Agent and the Issuing Bank promptly upon
demand for its ratable share of any out-of-pocket expenses
(including counsel fees) incurred by the Agent or the Issuing
Bank, as the case may be, in connection with the preparation,
execution, delivery, administration (except normal administrative
costs and fees and expenses of counsel related thereto prior to
an Event of Default), modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of rights or responsibilities
under, this Agreement or any other Related Document, to the
extent that the Agent or the Issuing Bank is not reimbursed for
such expenses by the Company.

SECTION 8.06. Successor Agent. Subject to the
appointment and acceptance of a successor Agent as provided
below, the Agent may resign at any time by giving written notice
thereof to the Issuing Bank, the Creditors and the Company and
may be removed at any time with or without cause by the Issuing
Bank. Upon any such resignation or removal, the Issuing Bank
shall have the right to appoint a successor Agent which shall be
reasonably acceptable to the Majority Creditors. If no successor
Agent shall have been so appointed by the Issuing Bank, and shall
have accepted such appointment, within 30 days after the retiring
Agent's giving of notice of resignation or the Majority
Creditors' removal of the retiring Agent, then the retiring Agent
may, on behalf of the Issuing Bank and the Creditors, appoint a
successor Agent, which shall be a commercial bank organized under
the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least
$250,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this
Article VII shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this
Agreement.

SECTION 8.07. Issuing Bank. (a) All notices received
by the Issuing Bank pursuant to this Agreement or any other
Related Document (other than the Letter of Credit) shall be
promptly delivered to the Agent for distribution to the
Creditors.

<PAGE> 61
(b) The Issuing Bank shall not amend or waive any
provision or consent to the amendment or waiver of any Related
Document without the consent of the Majority Creditors, provided,
however, that any waiver or amendment of any provision of the
Letter of Credit or consent to the amendment or waiver of the
Letter of Credit shall require the written consent of all of the
Creditors.

(c) Upon receipt by the Issuing Bank from time to time
of any amount pursuant to the terms of any Related Document
(other than pursuant to the terms of this Agreement), the Issuing
Bank shall promptly deliver to the Agent such amount.

ARTICLE IX

MISCELLANEOUS

SECTION 9.01. Amendments, Etc. No amendment or waiver
of any provision of this Agreement nor consent to any departure
by the Company therefrom shall in any event be effective unless
the same shall be in writing and signed by the Majority
Creditors, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for
which given; provided, however, that no amendment, waiver or
consent shall, unless in writing and signed by the Issuing Bank
and all the Creditors, do any of the following: (a) waive any of
the conditions specified in Article III, (b) increase the
Participation Percentage of any Creditor or subject the Creditors
to any additional obligations, (c) reduce the principal of, or
interest on, any Tender Advance or any fees (other than fees
payable solely to the Issuing Bank) or other amounts payable
hereunder, (d) postpone any date fixed for any payment of
principal of, or interest on, any Tender Advance or any fees
(other than fees payable solely to the Issuing Bank) or other
amounts payable hereunder, (e) change the aggregate unpaid
principal amount of any Tender Advance or any other amount
payable hereunder as a result of a draw on the Letter of Credit,
or the number of Creditors, which shall be required for the
Creditors or any of them to take any action hereunder, (f) amend
this Section 9.01, (g) amend this Agreement in a manner intended
to prefer one or more Creditors over any other Creditors, (h)
amend the definition of "Majority Creditors", or (i) release any
collateral, including, without limitation, the Second Mortgage
Bonds, Series [ ]; provided further that no amendment, waiver or
consent shall, unless in writing and signed by the Agent in
addition to the Creditors required above to take such action,
affect the rights or duties of the Agent under this Agreement;
provided further that no amendment, waiver or consent shall,
unless in writing and signed by the Issuing Bank in addition to
the Creditors required above to take such action, affect the
rights and duties of the Issuing Bank under this Agreement.

<PAGE> 62
SECTION 9.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing
(including telecopier, telegraphic, telex or cable communication)
and mailed, telecopied, telegraphed, telexed, cabled or
delivered, if to the Company, at its address at, in the case of
deliveries, at its street address at [303 North Oregon Street, El
Paso, Texas 79901], in the case of mailings, to its mailing
address at [P.O. Box 982, El Paso, Texas 79960], in the case of
telex, to telex no. [5435710 (callback 915-543-5707)] and in the
case of telecopier to [915-521-4754], in each case to the
attention of the Secretary; if to the Issuing Bank, at its
address at [399 Park Avenue, New York, New York 10043],
Attention: [Energy West Department], telex no. [TLX 12-7773
NYWCGCB] and in the case of telecopier to [212-793-0642]; if to
the Agent, at its address at [399 Park Avenue, New York,
New York 10043], Attention: [Energy West Department], telex no.
[TLX 12-7773 NYWCGCB] and in the case of telecopier to
[212-793-0642]; if to any Creditor, at its address specified on
the signature pages hereof; and if to the Trustee, in the case of
deliveries, at its street address at [
,
], in the case of mailings, to its mailing
address at P.O. Box , , , and in the case
of telex, to telex no. , in each case to the attention of
[Corporate Trust Department] or, as to each such entity, at such
other place and/or address or number as shall be designated by
such entity in a written notice to the other such entities. All
such notices and communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in
the mails, telecopied, delivered to the telegraph company,
confirmed by telex answerback or delivered to the cable company,
respectively, addressed as aforesaid, except that notices to the
Agent or Issuing Bank pursuant to the provisions of Article II
shall not be effective until received by the Agent or Issuing
Bank, as the case may be.

SECTION 9.03. No Waiver; Remedies. No failure on the
part of the Issuing Bank, the Agent or any Creditor to exercise,
and no delay in exercising, any right hereunder or under any
Related Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other
or further exercise thereof or the exercise of any other right.
The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.

<PAGE> 63
of the obligations of the Company now or hereafter existing under
this Agreement, the Second Mortgage Bond Indenture or the Second
Mortgage Bonds, Series [ ], whether or not the Issuing Bank
or such Creditor, as the case may be, shall have made any demand
hereunder or under such other documents and although such
obligations may be contingent or unmatured.

The Issuing Bank and each Creditor, as the case may be,
agree promptly to notify the Company after any such set-off and
application made by it, provided that the failure to give such
notice shall not affect the validity of such set-off and
application. The rights of the Issuing Bank and each Creditor
under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which
the Issuing Bank and each Creditor may have.

(b) If any Creditor shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of
setoff, or otherwise, but excluding all proceeds received by
assignments or sales of participations in accordance with
Section 9.04) on account of its participatory interests in any
Tender Advances or other amounts payable by the Company due to a
draw under the Letter of Credit (other than pursuant to Section
2.11 or 2.17) in excess of its ratable share of payments on
account of such Tender Advances or such other amounts obtained by
all the Creditors and the Issuing Bank, such Creditor shall
forthwith purchase from the other Creditors and the Issuing Bank
a participation in the portions of such Tender Advances or such
other amounts, as the case may be, owing to them as shall be
necessary to cause such purchasing Creditor to share the excess
payment ratably with each of them; provided, however, that if all
or any portion of such excess payment is thereafter recovered
from such purchasing Creditor, such purchase from the Issuing
Bank or such Creditor shall be rescinded and the Issuing Bank or
such Creditor shall repay to the purchasing Creditor the purchase
price to the extent of such recovery together with an amount
equal to the Issuing Bank's or such Creditor's ratable share
(according to the proportion of (i) the amount of the Issuing
Bank's or such Creditor's required repayment to (ii) the total
amount so recovered from the purchasing Creditor) of any interest
or other amount paid or payable by the purchasing Creditor in
respect of the total amount so recovered.

(c) Notwithstanding the foregoing, if any Creditor
shall obtain any such excess payment involuntarily, such Creditor
may, in lieu of purchasing participations from the Issuing Bank
and other Creditors in accordance with subsection (b) above, on
the date of receipt of such excess payment, return such excess
payment to the Agent for distribution in accordance with
Section 2.12.

<PAGE> 64
Letter of Credit, provided that so long as the Bonds remain
unpaid and held by Persons other than the Company or any
Affiliate thereof, such right of subrogation shall in all
respects be subordinate to the rights of the Trustee and the
holders of the Bonds.

SECTION 9.05. Indemnification. The Company hereby
indemnifies and holds the Agent, the Issuing Bank, each Creditor
and each Participant and each of their Affiliates and their
officers, directors, employers, agents and advisors (each, an
"Indemnified Party") harmless from and against any and all
claims, damages, losses, liabilities, costs or expenses
(including, without limitation, reasonable fees and expenses of
counsel) that may be incurred by or asserted or awarded against
any Indemnified Party (except to the extent any claim, damage,
loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful
misconduct), in each case relating to or arising out of or in
connection with or by reason of:

(a) any inaccuracy or alleged inaccuracy in any
material respect, or any untrue statement or alleged untrue
statement of any material fact, contained in the Preliminary
Official Statement, the Official Statement or any amendment
or supplement to the Official Statement, or by reason of the
omission or alleged omission to state therein a material fact
necessary to make such statements, in the light of the
circumstances under which they were made, not misleading;
provided, however, that, in the case of any action or
proceeding alleging an inaccuracy in a material respect, or
an untrue statement, with respect to information supplied by
and describing the Issuing Bank in the Preliminary Official
Statement or the Official Statement (the "Bank Information"),
(i) indemnification by the Company pursuant to this Section
9.05(a) shall be limited to the costs and expenses of the
Issuing Bank (including reasonable fees and expenses of the
Issuing Bank's counsel) of defending itself against such
allegation, (ii) if in any such action or proceeding it is
finally determined that the Issuing Bank Information
contained an inaccuracy in a material respect or an untrue
statement, then the Company shall not be required to
indemnify the Issuing Bank pursuant to this Section 9.05(a)
for any claims, damages, losses, liabilities, costs or
expenses to the extent caused by such inaccuracy or untrue
statement, and (iii) if any such action or proceeding shall
be settled by the Issuing Bank without there being a final
determination to the effect described in the preceding clause
(ii), unless the Letter of Credit is wrongfully dishonored
and such action or proceeding relates to such wrongful
dishonor, then the Company shall be required to indemnify the
Issuing Bank pursuant to this Section 9.05(a) for the

<PAGE> 65
reasonable costs or expenses incurred in connection with such
action or proceeding prior to such settlement and, if such
action or proceeding is settled with the Company's consent,
for the costs and expenses of such settlement; or

(b) any representation, warranty or certification made
or deemed made in this Agreement by the Company (or any of
its officers), or any certificate furnished to the Agent, the
Issuing Bank or any Creditor pursuant to the provisions
hereof, proving to have been false or misleading as of the
time made or furnished in any material respect; or

(c) any case or proceeding pursuant to any bankruptcy,
insolvency, reorganization, moratorium or similar law or any
restructuring of the Company; or

(d) any cost or liability under any Environmental Law
arising out of the operation or assets of the Company; or

(e) any event or occurrence set forth in Section 5.04
of the Loan Agreement; or

(f) the execution and delivery or transfer of, or
wrongful payment or wrongful failure to make payment under,
the Letter of Credit; provided, however, that the Company
shall not be required to indemnify any Indemnified Party
pursuant to this Section 9.05 for any claims, damages,
losses, liabilities, costs or expenses to the extent caused
by (i) any Indemnified Party's willful misconduct or gross
negligence in determining whether a draft or certificate
presented under the Letter of Credit complied with the terms
of the Letter of Credit or (ii) any Indemnified Party's
wrongful failure to make lawful payment under the Letter of
Credit after the presentation to it by the Trustee or a
successor trustee under the Indenture of a draft and
certificate strictly complying with the terms and conditions
of the Letter of Credit.

Nothing in this Section 9.05 is intended to limit the Company's
obligations contained in Article II. Without prejudice to the
survival of any other obligation of the Company hereunder, the
indemnities and obligations of the Company contained in this
Section 9.05 shall survive the payment in full of amounts payable
by the Company pursuant to Article II and the termination of the
Letter of Credit.

<PAGE> 66
be liable or responsible for: (a) the use which may be made of
the Letter of Credit or any acts or omissions of the Trustee and
any other beneficiary or transferee in connection therewith;
(b) the validity, sufficiency or genuineness of documents, or of
any endorsement thereon, even if such documents should prove to
be in any or all respects invalid, insufficient, fraudulent or
forged; (c) payment by the Issuing Bank against presentation of
documents that do not comply with the terms of the Letter of
Credit, including failure of any documents to bear any reference
or adequate reference to the Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment
under the Letter of Credit, except that the Company shall have a
claim against the Issuing Bank, and the Issuing Bank shall be
liable to the Company, to the extent of any direct, but not
consequential, damages suffered by the Company which the Company
proves were caused by (i) the Issuing Bank's willful misconduct
or gross negligence in determining whether a draft or certificate
presented under the Letter of Credit complies with the terms of
the Letter of Credit or (ii) the Issuing Bank's willful failure
to make lawful payment under the Letter of Credit after the
presentation to it by the Trustee or a successor trustee under
the Indenture of a draft and certificate strictly complying with
the terms and conditions of the Letter of Credit. In furtherance
and not in limitation of the foregoing, the Issuing Bank may
accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of
any notice or information to the contrary.

<PAGE> 67
and any proceeding ancillary thereto or in connection with the
negotiation of any restructuring or "work-out" (whether or not
consummated). The Company further agrees to pay on demand all
costs and expenses (including reasonable counsel fees and
expenses) of the Agent, the Issuing Bank and each Creditor in
connection with (i) the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement,
any other Related Document and any other documents which may be
delivered in connection with this Agreement, including, without
limitation, reasonable counsel fees and expenses in connection
with the enforcement of rights under this Section 9.07, or (ii)
any action or proceeding relating to a court order, injunction,
or other process or decree restraining or seeking to restrain the
Issuing Bank from paying any amount under the Letter of Credit.
In addition, the Company shall pay any and all stamp and other
administrative taxes and fees payable or determined to be payable
in connection with the execution, delivery, filing and recording
of this Agreement, the Letter of Credit, any other Related
Document or any such other documents, and agrees to save the
Agent, the Issuing Bank and each Creditor harmless from and
against any and all liabilities with respect to or resulting from
any delay in paying or omission to pay such taxes and fees.

SECTION 9.08. Purchase Option. (a) The Company
acknowledges and consents to the effectiveness of the Indenture
and the Letter of Credit, and agrees to take any and all actions
as are necessary to ensure that the Issuing Bank shall have the
benefit of the option to purchase Bonds contemplated therein.

(b) The Issuing Bank may with the consent, or shall at
the request, of the Majority Creditors exercise its right as set
forth in Sections 3.01(e), 9.01(e) or 13.03(d) of the Indenture
to purchase the Bonds. Upon any such purchase, the Agent shall
notify all Creditors of their pro rata share (based on their
Participation Percentage) of the purchase price of the Bonds so
purchased and upon receipt of such notice each Creditor will pay
to the Agent, for the benefit of the Issuing Bank, such
Creditor's pro rata share of the purchase price. Any Bonds so
purchased shall be held by the Issuing Bank or the Agent or any
other nominee of the Issuing Bank, on behalf of all Creditors
(the "Holder"). The Holder may with the consent, or shall at the
request, of the Majority Creditors exercise its rights in respect
of the Bonds. Upon the sale, remarketing or refunding of any
Bonds so purchased, the Holder shall pay to the Agent for the
ratable benefit of the Creditors the proceeds of such sale,
remarketing or refunding. Upon receipt of such proceeds by the
Agent, the Agent shall ratably reimburse the Creditors their
share of such proceeds.

<PAGE> 68
Issuing Bank and each Creditor and their respective successors
and assigns, except that the Company shall not have the right to
assign its rights hereunder or any interest herein without the
prior written consent of the Agent, the Issuing Bank and each
Creditor. The Issuing Bank and each Creditor, with the consent
of the Issuing Bank, which consent shall not be unreasonably
withheld, may assign to any Eligible Institution all or any part
of, or any interest (undivided or divided) in, its rights,
benefits and obligations (other than the Issuing Bank's
obligation to issue the Letter of Credit) under this Agreement,
and to the extent of that assignment such assignee shall have the
same rights, benefits and obligations (other than the Issuing
Bank's obligation to issue the Letter of Credit) against and to
the Company hereunder as it would have had if such assignee were
the Issuing Bank or such Creditor hereunder; provided that any
such assignment shall not be in an amount less than $5,000,000.

(b) The Issuing Bank and each Creditor may sell or
agree to sell, to (i) any Eligible Institution (each such
Eligible Institution being an "Eligible Participant") or (ii) one
or more other Persons (each a "Restricted Participant"; and
together with any Eligible Participants being referred to herein
as a "Participant"), a participation in all or any part of the
Letter of Credit, any Tender Advance or other amounts payable
under this Agreement. Each Participant shall be entitled to the
rights and benefits of the provisions of Section 5.01(a)(vi)
with respect to its participation in the Letter of Credit or such
Tender Advance or such other amounts as if (and the Company shall
be directly obligated to such Participant under such provisions
as if) such Participant were the "Creditor" for purposes of said
Section, but, except as set forth below, shall not have any other
rights or benefits under this Agreement or any other Related
Document (the Participant's rights against the Creditor in
respect of such participation to be those set forth in the
agreements executed by the Creditor in favor of the Participant).
All amounts payable by the Company to the Issuing Bank or any
Creditor under Section 2.11 and 2.17 in respect of the Letter of
Credit or any Tender Advance or other amounts payable under this
Agreement shall be determined as if the Issuing Bank or any
Creditor had not sold or agreed to sell any participations in the
Letter of Credit or any Tender Advance or such other amounts, and
as if the Issuing Bank or any Creditor were maintaining the
Letter of Credit or any Tender Advance or such other amounts in
the same way that it is maintaining the portion of the Letter of
Credit or any Tender Advance or such other amounts in which no
participations have been sold. In the case of an Eligible
Participant, the Bank may agree with such Participant to take or
refrain from taking action hereunder or under any Related
Document as the Issuing Bank or any Creditor, as set forth in the
agreement executed by the Bank and such Participant shall
determine in favor of such Participant, with respect to taking or
refraining from taking action hereunder or under any other
Related Document. In no event shall the Issuing Bank or any
Creditor agree with any Restricted Participant to take or refrain

<PAGE> 69
from taking any action hereunder or under any other Related
Document except that the Issuing Bank or any Creditor may agree
with a Restricted Participant that it will not, without the
consent of such Restricted Participant, agree to (i) extend the
date fixed for the payment of principal of or interest on any
Tender Advance or other amounts payable to such Restricted
Participant, (ii) reduce the amount of any such payment of
principal, (iii) reduce the rate at which interest is payable
thereon to a level below the rate at which such Restricted
Participant is entitled to receive such interest, (iv) alter the
rights or obligations of the Company to prepay any Tender Advance
or other amounts payable to such Restricted Participant or
(v) release any collateral, including, without limitation, the
Second Mortgage Bonds, Series [ ].

(c) Notwithstanding any other provision set forth in
this Agreement, the Issuing Bank or any Creditor may at any time
create a security interest in all or any portion of its rights
under this Agreement (including, without limitation, the Advances
owing to it) in favor of any Federal Reserve Bank in accordance
with Regulation A of the Board of Governors of the Federal
Reserve System.

SECTION 9.10. Further Assurances. The Company agrees
promptly to do such further acts and things, and to execute and
deliver such additional instruments (including, without
limitation, notices), at its own expense, as the Agent, the
Issuing Bank or any Creditor may at any time reasonably request
in order better to insure and confirm the Agent's, the Issuing
Bank's or any Creditor's, as the case may be, rights, powers and
remedies hereunder and under the other Related Documents
(including in order to perfect or protect any pledge or security
interest granted or purported to be granted hereby or to enable
the Agent, the Issuing Bank or any Creditor, as the case may be,
to exercise or enforce its rights and remedies in respect
hereof).

SECTION 9.11. Severability. Any provision of this
Agreement which is prohibited, unenforceable or not authorized in
any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition, unenforceability or
non-authorization without invalidating the remaining provisions
hereof or affecting the validity, enforceability or legality of
such provision in any other jurisdiction.

SECTION 9.12. Headings. Section headings in this
Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other
purpose.

SECTION 9.13. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICT OF LAW
PRINCIPLES.

<PAGE> 70
SECTION 9.14. Submission to Jurisdiction. THE COMPANY
HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR THE
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT, ANY RELATED DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OR OMISSIONS OF THE
AGENT, THE ISSUING BANK OR ANY CREDITOR IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR
ANY RELATED DOCUMENT. THE COMPANY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.

TO THE EXTENT THAT THE COMPANY HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE)
WITH RESPECT TO ITSELF OR ITS PROPERTY, THE COMPANY HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT AND THE OTHER RELATED DOCUMENTS. THE
COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN
OR WITHOUT THE STATE OF TEXAS.

SECTION 9.15. Waiver of Trial by Jury. EACH OF THE
COMPANY AND THE AGENT, THE ISSUING BANK AND EACH CREDITOR HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER RELATED DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE COMPANY
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF
EACH OTHER RELATED DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK ENTERING INTO
THIS AGREEMENT AND EACH SUCH OTHER RELATED DOCUMENT.

SECTION 9.16. Counterparts. This Agreement may be
executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.

SECTION 9.17. Integration. THIS AGREEMENT REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AS TO THE SUBJECT
MATTER OF THIS AGREEMENT AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES HERETO.

<PAGE> 71
SECTION 9.18. Survival. The obligations of the Company
under Sections 2.11, 2.17, 9.05, 9.14 and 9.15 shall survive the
repayment of the Loans and the payment in full of all amounts
payable by the Company under Section 9.07.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date first above
written.

EL PASO ELECTRIC COMPANY

By
[Title]

Issuing Bank

CITIBANK, N.A.

By
Vice President

Agent

CITIBANK, N.A., as Agent

By
Vice President

<PAGE> 72

Participation
Percentage Creditors

100% CITIBANK, N.A.

By
Vice President

[399 Park Avenue
New York, New York 10043
Attention: Energy West
Department
Telex No. TLX 12-7773 NYWCGCB
Telecopier (212) 793-0642]

<PAGE> 73

EXHIBIT A

FORM OF LETTER OF CREDIT

IRREVOCABLE LETTER OF CREDIT

No. [ ]

, 199[ ]*

[Name and Address of Trustee]

Attention: Corporate Trust Department

Dear Sirs:

We hereby establish, at the request and for the account
of El Paso Electric Company, a Texas corporation (the "Company"),
in your favor, as Trustee under the Indenture of Trust, dated as
of , 199 (the "Indenture") between the City of
Farmington, New Mexico (the "Issuer") and you, pursuant to which
[$35,805,000]* in aggregate principal amount of the Issuer's
Pollution Control Refunding Revenue Bonds (El Paso Electric
Company Four Corners Project), 19 Series (the "Bonds"), were
issued, our Irrevocable Letter of Credit No. [ ], in
the amount of $[ ]*** (as more fully described below),
effective immediately and expiring at the close of banking
business at our 111 Wall Street, New York, New York 10043 office
on or such later date as we shall have agreed in
writing (the "Stated Termination Date"), unless earlier
terminated in accordance with the terms hereof.

________________
* To be dated the date of issuance of the Letter of Credit.

** In no event shall the principal amount of the Bonds exceed
$35,805,000.

*** In no event shall the face amount of this Letter of Credit
exceed $39,176,637.50.

<PAGE> 74
We hereby irrevocably authorize you to draw on us, in an
aggregate amount not to exceed the amount of this Letter of
Credit set forth above and in accordance with the terms and
conditions and subject to the reductions in amount as hereinafter
set forth, (1) in one or more drawings by one or more of your
drafts, drawn on our 111 Wall Street, New York, New York 10043
office, payable at sight on a banking day (which shall be any day
other than a Saturday, Sunday or public or bank holiday or the
equivalent for banks generally under the laws of the State of New
York (a "Banking Day")), accompanied by a completed certificate
in substantially the form of Annex B attached hereto, which
drafts and certificates shall be in writing and signed by you
(any such draft accompanied by such certificate being your
"Interest Draft"), an amount not exceeding $[ ]; (2) in
one or more drawings by one or more of your drafts, drawn on our
111 Wall Street, New York, New York 10043 office, payable at
sight on a Banking Day, accompanied by a completed certificate in
substantially the form of Annex C attached hereto, which drafts
and certificates shall be in writing and signed by you (any such
draft accompanied by such certificate being your "Tender Draft"),
an aggregate amount not exceeding $[ ]; (3) in one or more
drawings by one or more of your drafts, drawn on our 111 Wall
Street, New York, New York 10043 office, payable at sight on a
Banking Day, accompanied by a completed certificate in
substantially the form of Annex D attached hereto, which drafts
and certificates shall be in writing and signed by you (any such
draft accompanied by such certificate being your "Partial
Redemption Draft"), an aggregate amount not exceeding $[
]; and (4) in a single drawing by your draft, drawn on our 111
Wall Street, New York, New York 10043 office, payable at sight on
a Banking Day, accompanied by a completed certificate in
substantially the form of Annex E attached hereto, which draft
and certificate shall be in writing and signed by you (such draft
accompanied by such certificate being your "Final Draft"), an
amount not exceeding $[ ]; provided that in no event
will you have a right to make drawings under this Letter of
Credit for the payment of the principal of, or interest on, Bonds
held of record by the Company (or any Affiliate thereof) or held
by the Trustee or the Tender Agent for the account of the
Company; provided further with respect to any such Bonds that
were not so held by or for the account of the Company (or any
Affiliate thereof) on the immediately preceding Record Date (as
defined in the Indenture), you may, in accordance with the
Indenture, draw on us by your Interest Draft under clause (1).
Notwithstanding any other provision in this Letter of Credit, in
no event will you have a right to make a drawing under this
Letter of Credit for the payment of principal of or interest on
Bonds in a "Bond Interest Term" (as defined in the Indenture).
This Letter of Credit may not be drawn upon for the payment of
any premium which may be payable in respect of the Bonds.

<PAGE> 75
Upon our honoring any Interest Draft presented by you
hereunder, the amount of this Letter of Credit and the amounts
available to be drawn by you by any subsequent Interest Draft,
Tender Draft, Partial Redemption Draft or Final Draft shall be
automatically decreased by an amount equal to the amount of such
Interest Draft. If you shall not have received from us within 15
calendar days from the date of such drawing a notice from us to
the effect that we have not been reimbursed for such drawing in
the form of Annex H attached hereto appropriately completed, the
amount of this Letter of Credit and the amounts from time to time
available to be drawn by you by any Interest Draft, Tender Draft,
Partial Redemption Draft or Final Draft shall be automatically
and irrevocably reinstated in the amount of such drawing,
effective the 16th calendar day from the date of such drawing.

The amount of this Letter of Credit shall be decreased
upon our receipt of notice from you, in the form of Annex A
hereto, of a redemption or defeasance of less than all the Bonds
outstanding, by an amount equal to the amount stated in said
notice and the amounts available to be drawn by you by any
subsequent Interest Draft, Tender Draft, Partial Redemption Draft
or Final Draft shall be automatically decreased to the amounts
stated in such notice.

Upon our honoring any Tender Draft or Partial Redemption
Draft, (i) the amount of this Letter of Credit and the amount
available to be drawn by you by any subsequent Tender Draft,
Partial Redemption Draft or Final Draft shall be automatically
decreased by an amount equal to the amount of such Tender Draft
or such Partial Redemption Draft and (ii) the amount available to
be drawn by you by any Interest Draft shall be automatically
decreased by an amount equal to the amount drawn under such draft
in respect of accrued and unpaid interest. In the case of any
Tender Draft, the amount from time to time available to be drawn
by you by any Interest Draft, Tender Draft or Partial Redemption
Draft and Final Draft shall be reinstated to the extent, but only
to the extent, we received reimbursement from the Company for
amounts drawn hereunder by such Tender Draft and we so notify you
in writing.

In addition, the amount available from time to time to
be drawn by you by any Interest Draft, Tender Draft, Partial
Redemption Draft and Final Draft shall be automatically
reinstated, upon our receipt from you of the proceeds of the
resale of any Bonds purchased and held on behalf of the Company
with amounts drawn hereunder accompanied by a completed and
signed certificate substantially in the form of Annex F, by an
amount equal to the amount of the drawings made to purchase the
Bonds so resold. Amounts received from you on behalf of the
Company shall, if accompanied by a completed and signed
certificate substantially in the form of Annex F from you, shall
be applied to the extent of the amounts indicated therein in

<PAGE> 76
reimbursement of unreimbursed drawings under your Tender Drafts.
Amounts otherwise received from you on behalf of the Company
shall first be applied in reimbursement of unreimbursed drawings
made by your Interest Draft.

Upon delivery to us (i) of all Bonds purchased by you on
behalf of or for the account of the Bank pursuant to Section
3.01(e) of the Indenture, Section 9.01(e) of the Indenture, or
Section 13.03(d) of the Indenture with moneys drawn by a Tender
Draft and (ii) a completed and signed certificate substantially
in the form of Annex G, the Letter of Credit shall be reinstated
in an amount equal to the amount of such Tender Draft used to
purchase such Bonds so delivered; provided, however, if at any
time any such purchase shall be rescinded, in whole or in part,
or some or all of the Bonds so purchased must otherwise be
returned by the Bank, in each case, for any reason, the amounts
so reinstated shall not be available to be drawn until and unless
the Company reimburses us for such amounts.

Funds under this Letter of Credit are available to you
against (1) your Interest Draft referring thereon to the number
of this Letter of Credit accompanied by your written and
completed certificate signed by you in substantially the form of
Annex B thereto, (2) your Tender Draft referring thereon to the
number of this Letter of Credit accompanied by your written and
completed certificate signed by you in substantially the form of
Annex C thereto, (3) your Partial Redemption Draft referring
thereon to the number of this Letter of Credit accompanied by
your written and completed certificate signed by you in
substantially the form of Annex D thereto and (4) your Final
Draft referring thereon to the number of this Letter of Credit
accompanied by your written and completed certificate signed by
you in substantially the form of Annex E thereto. Each such
draft and certificate shall be dated the date of its
presentation, and shall be presented at our office located at 111
Wall Street, New York, New York 10043, telex no.: 127001
CITIBANK NYK, Attention: NATS Letter of Credit Operations (or at
any other office or number in the City and State of New York
which may be designated by us by written notice delivered to you)
on or before 12:00 Noon (New York City time), or by tested telex
(or telecopier) on or before 10:00 A.M. (New York City time), on
the day (which shall be a Banking Day) of our making funds
available to you hereunder. If we receive any of your drafts and
certificates at such office, all in strict conformity with the
terms and conditions of this Letter of Credit, on or prior to the
termination hereof and in any event not later than 12:00 Noon
(New York City time), or if such drafts and certificates are
presented by tested telex (or telecopier) not later than 10:00
A.M. (New York City time) on the Stated Termination Date, we will
honor the same after presentation thereof on the same day in
accordance with your payment instructions. If we receive any of
your drafts and certificates at such office after 12:00 Noon (New
York City time), or if such drafts and certificates are presented
by tested telex (or telecopier) after 10:00 A.M. (New York City

<PAGE> 77
time), on a Banking Day, we will honor the same after
presentation thereof on the next succeeding Banking Day provided
that such drafts and certificates conform with the terms and
conditions of this Letter of Credit. If requested by you,
payment under this Letter of Credit may be made by wire transfer
of Federal Reserve Bank of New York funds to your account in a
bank on the Federal Reserve wire system or by deposit of same day
funds into a designated account that you maintain with us.

This Letter of Credit shall automatically terminate upon
the earliest of (i) our honoring your Final Draft presented
hereunder, (ii) the date stated in any written notice we receive
from you as the effective date of termination of this Letter of
Credit, (iii) the date that you surrender the Letter of Credit to
us, (iv) the provision of any substitution letter of credit or
credit facility as provided in the Indenture, (v) the date on
which we receive written notice from you that there is no longer
any "Bond Outstanding" within the meaning of the Indenture, and
(vi) the Stated Termination Date.

This Letter of Credit is transferable in its entirety
(but not in part) to any transferee who has succeeded you as
Trustee under the Indenture and may be successively transferred.
Transfer of the available balance under this Letter of Credit to
such transferee shall be effected by the presentation to us of
this Letter of Credit accompanied by a certificate in
substantially the form of Annex I attached hereto, together with
a fee equal to 1/4 of 1% of the "Available Amount". "Available
Amount" means the maximum amount available to be drawn at such
time under the Letter of Credit, the determination of such
maximum amount to assume compliance with all conditions for
drawing and no reduction for (i) any amount drawn by an Interest
Draft (unless such amount is not reinstated under the Letter of
Credit) or (ii) any amount drawn by a Tender Draft or (iii) any
amount not available to be drawn because Bonds are held by or for
the account of the Company (or any Affiliate thereof). Upon such
presentation and payment we shall forthwith transfer the same to
your transferee or, if so requested by your transferee, issue an
irrevocable letter of credit to your transferee with provisions
therein consistent with this Letter of Credit.

This Letter of Credit sets forth in full our
undertaking, and such undertaking shall not in any way be
modified, amended, amplified or limited by reference to any
document, instrument or agreement referred to herein (including,
without limitation, the Bonds), except only the certificates and
the drafts referred to herein; and any such reference shall not
be deemed to incorporate herein by reference any document,
instrument or agreement except for such certificates and such
drafts.

<PAGE> 78
This Letter of Credit shall be governed by the laws of
the State of New York, including the Uniform Commercial Code as
in effect in the State of New York. Communications with respect
to this Letter of Credit shall be in writing and shall be
addressed to us at 11l Wall Street, New York, New York 10043,
Attention: NATS Letter of Credit Operations, specifically
referring to the number of this Letter of Credit.

Very truly yours,

CITIBANK, N.A.

By
Vice President

<PAGE> 79
Annex A

CERTIFICATE FOR THE REDUCTION OF AMOUNTS AVAILABLE UNDER
IRREVOCABLE LETTER OF CREDIT NO. DATED
, 199

The undersigned, a duly authorized officer of the
undersigned Trustee (the "Trustee"), hereby certifies to
Citibank, N.A. (the "Bank"), with reference to Irrevocable Letter
of Credit No. (the "Letter of Credit", the terms
defined therein and not otherwise defined herein being used
herein as therein defined) issued by the Bank in favor of the
Trustee, that:

(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.

(2) The Trustee hereby notifies you that on or prior to
the date hereof $ principal amount of the Bonds
have been redeemed and paid or have been defeased pursuant to
the Indenture.

(3) Following the redemption and payment or the
defeasance referred to in paragraph (2) above, the aggregate
principal amount of all of the Bonds Outstanding (as defined
in the Indenture) is $ .

(4) The maximum amount of interest, computed in
accordance with the terms and conditions of the Bonds and the
Indenture, which would accrue on the Bonds referred to in
paragraph (3) above in any period of [ days] is
$ . None of the Bonds referred to in paragraph (2)
above were in a Bond Interest Term as of the date such Bonds
were redeemed, paid or defeased pursuant to the Indenture.

(5) The maximum amount available to be drawn by the
Trustee under the Letter of Credit by any Interest Draft is
reduced to $ (such amount being equal to the amount
specified in paragraph (4) above) upon receipt by the Bank of
this Certificate.

(6) The maximum amount available to be drawn by the
Trustee under the Letter of Credit by any Tender Draft is
reduced to $ (such amount being equal to the sum of
the amounts specified in paragraphs (3) and (4) above) upon
receipt by the Bank of this Certificate.

(7) The maximum amount available to be drawn by the
Trustee under the Letter of Credit by any Partial Redemption
Draft is reduced to $ (such amount being equal to
the sum of the amounts specified in paragraphs (3) and (4)
above) upon receipt by the Bank of this Certificate.

<PAGE> 80
(8) The amount available to be drawn by the Trustee
under the Letter of Credit by its Final Draft is reduced to
$ (such amount being equal to the sum of the
amounts specified in paragraphs (3) and (4) above) upon
receipt by the Bank of this Certificate.

(9) The amount of the Letter of Credit is reduced to
$ (such amount being equal to the sum of the
amounts specified in paragraph 8 above) upon receipt by the
Bank of this Certificate.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate this day of , 19 .

,
as Trustee

By
[Name and Title]

<PAGE> 81
Annex B

CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF UP
TO [ DAYS'] INTEREST ON THE CITY OF FARMINGTON, NEW
MEXICO'S POLLUTION CONTROL REFUNDING REVENUE BONDS (EL PASO
ELECTRIC COMPANY FOUR CORNERS PROJECT), 199 SERIES (THE
"BONDS")

Irrevocable Letter of Credit No.

(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.

(2) The Trustee is making a drawing under the Letter of
Credit with respect to a payment of days' interest
on the Bonds, which payment is due on the date on which this
Certificate and the Interest Draft it accompanies are being
presented to the Bank. None of the Bonds in respect of which
the drawing is being made (i) were, on the Record Date (as
defined in the Indenture) held of record by the Company (or
any Affiliate thereof) or held by the Trustee or the Tender
Agent for the account of the Company or (ii) were on such
date in a Bond Interest Term.

(3) The amount of the Interest Draft accompanying this
Certificate is equal to $ . It was computed in
compliance with the terms and conditions of the Bonds and the
Indenture and does not include any amount of interest on the
Bonds which is included in any Interest Draft, Tender Draft,
Partial Redemption Draft or Final Draft presented on or prior
to the date of this Certificate and does not exceed the
amount available to be drawn by the Trustee under the Letter
of Credit.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the day of ,
19 .

,
as Trustee

By
[Name and Title]

<PAGE> 82
Annex C

CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF
PRINCIPAL OF AND UP TO [ DAYS'] INTEREST ON THE CITY OF
FARMINGTON, NEW MEXICO'S POLLUTION CONTROL REFUNDING REVENUE
BONDS (EL PASO ELECTRIC COMPANY FOUR CORNERS PROJECT), 199
SERIES (THE "BONDS"), IN SUPPORT OF A TENDER (OTHER THAN A
MANDATORY TENDER UPON TERMINATION OR EXPIRATION OF THE LETTER
OF CREDIT)

Irrevocable Letter of Credit No.

(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.

(2) The Trustee is making a drawing under the Letter of
Credit with respect to the payment, upon a tender of all or
less than all of the Bonds which are Outstanding (as defined
in the Indenture), of (i) the unpaid principal amount of the
Bonds to be purchased either (a) as a result of a tender
pursuant to the terms of Section 2.02 of the Indenture (other
than Section 2.02(6) of the Indenture) or (b) as a result of
a purchase of Bonds by the Bank pursuant to Section 3.01(e)
of the Indenture, Section 9.01(e) of the Indenture or Section
13.03(d) of the Indenture (in each case, other than Bonds
held of record by the Company (or any Affiliate thereof) or
held by the Trustee or the Tender Agent for the account of
the Company in each case, and (ii) the amount of interest
(not exceeding [ days'] interest) accrued and unpaid
thereon from the Interest Accrual Date (as defined in the
Indenture) immediately preceding the date of purchase through
the day immediately preceding the date of purchase thereof,
which payment is due on the date on which this Certificate
and the Tender Draft it accompanies are being presented to
the Bank.

(3) The amount of the Tender Draft accompanying this
Certificate is equal to the sum of (i) $ being
drawn in respect of the payment of unpaid principal of Bonds
(other than Bonds held of record by the Company (or any
Affiliate thereof) or held by the Trustee or the Tender Agent
for the account of the Company) to be purchased as
a result of a tender of the type described above and

<PAGE> 83
(ii) $ being drawn in respect of the payment of
accrued and unpaid interest on such Bonds and does not
include any amount of interest which is included in any
Interest Draft, Tender Draft other than the Tender Draft
accompanying this certificate, Partial Redemption Draft or
Final Draft presented on or prior to the date of this
Certificate.

(4) The amount of the Tender Draft accompanying this
Certificate was computed in compliance with the terms and
conditions of the Bonds and the Indenture and does not exceed
the amount available to be drawn by the Trustee under the
Letter of credit.

(5) None of the Bonds in respect of which a drawing is
being made are in a Bond Interest Term.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the day of , 19 .

,
as Trustee

By
[Name and Title]

<PAGE> 84

Annex D

Irrevocable Letter of Credit No.

(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.

(2) The Trustee is making a drawing under the Letter of
Credit with respect to the payment, upon redemption of less
than all of the Bonds which are Outstanding (as defined in
the Indenture), of the unpaid principal amount of and up to [
days'] accrued and unpaid interest to the redemption date
on, Bonds to be redeemed pursuant to the terms of Section
3.01 of the Indenture (other than Bonds purchased by the
Tender Agent or the Trustee on behalf of or for the account
of the Bank, pursuant to Section 3.01(e) of the Indenture,
Section 9.01(e) of the Indenture or Section 13.03(d) of the
Indenture and held by or on behalf of or for the account of
the Bank or its nominee and Bonds held of record by the
Company (or any Affiliate thereof) or held by the Trustee or
Tender Agent for the account of the Company). [The direction
from the Company with respect to redemption was received by
us no more than 60 days prior to the date of this
certificate. We have evidence, as of the date of this
certificate, from two of Moody's Investors Services, Inc.,
Standard & Poor's Corporation and Duff & Phelps, Inc. that
the Company's First Mortgage Bonds, Series [ ], and Second
Mortgage Bonds, Series [ ], each have a rating of BBB- or
better (or equivalent) and such Bonds have not, as of the
date of this certificate, been placed on any watch list.]*

________________
* To be used in case of an optional redemption.

<PAGE> 85
(3) The amount of the Partial Redemption Draft
accompanying this Certificate is equal to the sum of (i)
$_________ being drawn in respect of the payment of unpaid
principal of Bonds (other than Bonds purchased by the Trustee
on behalf of or for the account of the Bank, pursuant to
Section 3.01(e) of the Indenture, Section 9.01(e) of the
Indenture or Section 13.03(d) of the Indenture and then held
by or on behalf of or for the account of the Bank or its
nominee and Bonds held of record by the Company (or any
Affiliate thereof) or held by the Trustee or Tender Agent for
the account of the Company to be redeemed, and (ii)
$_________ being drawn in respect of the payment of accrued
and unpaid interest on such Bonds and does not include any
amount of interest which is included in any Interest Draft,
Tender Draft, Partial Redemption Draft or Final Draft
presented on or prior to the date of this Certificate.

(4) The amount of the Partial Redemption Draft
accompanying this Certificate was computed in accordance with
the terms and conditions of the Bonds and the Indenture and
does not exceed the amount available to be drawn under the
Letter of Credit.

(5) This Certificate and the Partial Redemption Draft
it accompanies are dated, and are being presented to the Bank
on, the date on which the unpaid principal amount of and
accrued and unpaid interest on, Bonds to be redeemed are due
and payable under the Indenture upon redemption of less than
all of the Bonds which are Outstanding (as defined in the
Indenture).

(6) None of the Bonds in respect of which a drawing is
being made are in a Bond Interest Term.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the day of , 19 .

,
as Trustee

By
[Name and Title]

<PAGE> 86
Annex E

CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF
PRINCIPAL OF AND UP TO DAYS' INTEREST ON THE CITY OF
FARMINGTON, NEW MEXICO'S POLLUTION CONTROL REFUNDING REVENUE
BONDS (EL PASO ELECTRIC COMPANY FOUR CORNERS PROJECT), 199
SERIES (THE "BONDS"), UPON STATED OR ACCELERATED MATURITY
OR OPTIONAL OR MANDATORY REDEMPTION AS A WHOLE OR MANDATORY
TENDER UPON TERMINATION OR EXPIRATION OF THE LETTER OF CREDIT

Irrevocable Letter of Credit No.

The undersigned, a duly authorized officer of the
undersigned Trustee (the "Trustee"), hereby certifies to
Citibank, N.A. (the "Bank"), with reference to Irrevocable Letter
of Credit No. (the "Letter of Credit", the terms defined
therein and not otherwise defined herein being used herein as
therein defined) issued by the Bank in favor of the Trustee,
that:

(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.

(2) The Trustee is making a drawing under the Letter of
Credit (a) with respect to the payment, either at stated
maturity, upon acceleration, as a result of a redemption in
full pursuant to Section 3.01 of the Indenture [(the
direction from the Company and notice to the Bondholders with
respect to redemption was received and given by us no more
than 60 days prior to the date of this Certificate and we had
evidence, as of the date such notice was given by us to the
Bondholders, from two of Moody's Investors Services, Inc.,
Standard & Poor's Corporation and Duff & Phelps, Inc. that
the Company's First Mortgage Bonds, Series [ ], and Second
Mortgage Bonds, Series [ ], each had a rating of BBB- or
better (or equivalent) and such Bonds had not, as of such
date, been placed on any watch list)]* or (b) as a result of
a mandatory tender upon termination or expiration of the
Letter of Credit or substitution of another credit facility
for the Letter of Credit as contemplated by Section 2.02(6)
of the Indenture, of the unpaid principal amount of and up to
days' accrued and unpaid interest on, all of the Bonds
which are Outstanding (as defined in the Indenture) (other
than Bonds held of record by the Company (or any Affiliate
thereof) or held by the Trustee or the Tender Agent for the
account of the Company), which payment is due on the date on
which this Certificate and the Final Draft it accompanies are
being presented to the Bank.

________________
* To be used in the case of an optional redemption.

<PAGE> 87
(3) The amount of the Final Draft accompanying this
Certificate is equal to the sum of (i) $ being drawn
in respect of the payment of unpaid principal of Bonds (other
than Bonds held of record by the Company (or any Affiliate
thereof) or held by the Trustee or the Tender Agent for the
account of the Company) and (ii) $ being drawn in
respect of the payment of accrued and unpaid interest on such
Bonds and does not include any amount of interest on the
Bonds which is included in any Interest Draft, Tender Draft
or Partial Redemption Draft presented on or prior to the date
of this Certificate.

(4) The amount of the Final Draft accompanying this
Certificate was computed in compliance with the terms and
conditions of the Bonds and the Indenture and does not exceed
the amount available to be drawn by the Trustee under the
Letter of Credit.

(5) None of the Bonds in respect of which the drawing
is being made are in a Bond Interest Term.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the day of ,
19 .

,
as Trustee

By
[Name and Title]

<PAGE> 88
Annex F

CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS
AVAILABLE UNDER IRREVOCABLE LETTER OF CREDIT
NO. , DATED , 199

(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.

(2) The amount of $ paid to you today by the
Trustee on behalf of the Company is a payment made pursuant
to Section 2.09(b) of the Letter of Credit and Reimbursement
Agreement dated as of , 19 (the "Reimbursement
Agreement") between the Company and the Bank for amounts
drawn under the Letter of Credit and represents unreimbursed
drawings under Tender Draft[s] dated [ ].

(3) The amount referred to in paragraph (2) represents
the amount of Bonds which were purchased with proceeds of a
draw on the Letter of Credit by a Tender Draft dated ,
19 . $ represents amounts paid in respect of
accrued interest on Bonds and $ represents amounts
paid in respect of unpaid principal on Bonds.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate this day of , 19 .

,
as Trustee

By
[Name and Title]

<PAGE> 89
Annex G

CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS
AVAILABLE UNDER IRREVOCABLE LETTER OF CREDIT
NO. , DATED , 199

(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.

(2) The Tender Agent has delivered to the Bank all
Bonds purchased pursuant to Section 3.01(e) of the Indenture,
Section 9.01(e) of the Indenture, or Section 13.03(d) of the
Indenture, as the case may be, with proceeds of a draw on the
Letter of Credit by Tender Draft dated , 19 .

(3) The amount of such Tender Draft used to purchase
such Bonds which were not remarketed is $ .

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate this day of , 19 .

,
as Trustee

By
[Name and Title]

<PAGE> 90
Annex H

NOTICE THAT TRUSTEE'S RIGHT TO DRAW UNDER THE LETTER OF
CREDIT BY AN INTEREST DRAFT HAS NOT BEEN REINSTATED

[Name and Address of Trustee]

Attention: Corporate Trust Department

Irrevocable Letter of Credit No.

Dear Sirs:

You are hereby advised that El Paso Electric Company has
not reimbursed us in an amount equal to the amount drawn by you
under the Interest Draft dated , 19 . Therefore, the
amount of our Irrevocable Letter of Credit No. and the
amounts available to be drawn by you by an Interest Draft, Tender
Draft, Partial Redemption Draft or Final Draft (which available
amounts have been decreased by an amount equal to the amount of
such Interest Draft) shall not be reinstated in the amount of
such Interest Draft.

CITIBANK, N.A.

<PAGE> 91
Annex I

INSTRUCTION TO TRANSFER

, 19

Citibank, N.A.
111 Wall Street
New York, New York 10043

Attention: NATS Letter of Credit Operations

Re: Irrevocable Letter of Credit No.

Gentlemen:

For value received, the undersigned beneficiary hereby
irrevocably transfers to:

[Name of Transferee]

[Address]

all rights of the undersigned beneficiary to draw under the
above-captioned Letter of Credit (the "Letter of Credit"). The
transferee has succeeded the undersigned as Trustee under the
Indenture (as defined in the Letter of Credit).

By this transfer, all rights of the undersigned
beneficiary in the Letter of Credit are transferred to the
transferee and the transferee shall hereafter have the sole
rights as beneficiary thereof; provided, however, that no rights
shall be deemed to have been transferred to the transferee until
such transfer complies with the requirements of the Letter of
Credit pertaining to transfers.

<PAGE> 92
The Letter of Credit is returned herewith and in
accordance therewith we ask that this transfer be effective and
that you transfer the Letter of Credit to our transferee
or that, if so requested by the transferee, you issue a new
irrevocable letter of credit in favor of the transferee with
provisions consistent with the Letter of Credit.

Very truly yours,

,
as predecessor Trustee

By
[Name and Title]

<PAGE> 1

LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT

Dated as of , 199[ ]

among

EL PASO ELECTRIC COMPANY,

CITIBANK, N.A.,
as Issuing Bank,

THE CREDITORS
Specified Herein

and

CITIBANK, N.A.,
as Agent
for such Creditors

<PAGE> 2
TABLE OF CONTENTS

Section Page

Preliminary Statements............................ 1

ARTICLE I
DEFINITIONS

ARTICLE II
AMOUNT AND TERMS OF THE LETTER OF CREDIT

2.01 The Letter of Credit........................ 16
2.02 Issuing the Letter of Credit................ 16
2.03 Drawing Fee................................. 16
2.04 Commissions................................. 16
2.05 Reimbursement on the Date of the Draw....... 17
2.06 Tender Advances............................. 18
2.07 Interest on Advances........................ 18
2.08 Reimbursement of Issuing Bank, Etc.......... 21
2.09 Prepayments; Reinstatement of Letter of
Credit Amounts............................ 23
2.10 Additional Interest......................... 24
2.11 Increased Costs............................. 24
2.12 Payments and Computations................... 27
2.13 Payments on Non-Business Days............... 27
2.14 Extension of the Stated Termination
Date...................................... 28
2.15 Evidence of Debt............................ 29
2.16 Obligations Absolute........................ 29
2.17 U.S. Taxes.................................. 31
2.18 Applicable Lending Office................... 32
2.19 Net Payments................................ 33
2.20 Reinstatement of the Letter of Credit....... 33

ARTICLE III
CONDITIONS OF ISSUANCE

3.01 Conditions Precedent to Issuance of the
Letter of Credit.......................... 33
3.02 Additional Conditions Precedent to
Issuance of the Letter of Credit.......... 37
3.03 Conditions Precedent to Each
Tender Advance............................ 38

(i)

<PAGE> 3
Section Page

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

4.01 Representations and Warranties
of the Company........................... 38

ARTICLE V
COVENANTS OF THE COMPANY

5.01 Affirmative Covenants...................... 42
5.02 Negative Covenants......................... 46

ARTICLE VI
EVENTS OF DEFAULT

6.01 Events of Default.......................... 50
6.02 Upon an Event of Default................... 53

ARTICLE VII
SECURITY

7.01 Issuance and Pledge of Bonds............... 54
7.02 Application of Moneys...................... 54
7.03 Rights of Bondholders...................... 54
7.04 The Agent's Duties......................... 55

ARTICLE VIII
THE AGENT, THE CREDITORS AND
THE ISSUING BANK

8.01 Authorization and Action................... 55
8.02 Reliance, Etc. ............................ 55
8.03 The Agent, the Issuing Bank and
Affiliates............................... 56
8.04 Bank Credit Decision....................... 57
8.05 Indemnification............................ 57
8.06 Successor Agent............................ 57
8.07 Issuing Bank............................... 58

ARTICLE IX
MISCELLANEOUS

9.01 Amendments, Etc. .......................... 58
9.02 Notices, Etc. ............................. 59
9.03 No Waiver; Remedies........................ 60
9.04 Rights of Setoff and Subrogation........... 60
9.05 Indemnification............................ 61

(ii)

<PAGE> 4
Section Page

9.06 Issuing Bank and Creditors................. 63
9.07 Costs, Expenses and Taxes.................. 63
9.08 Purchase Option............................ 64
9.09 Binding Effect; Assignments and
Participations........................... 65
9.10 Further Assurances......................... 66
9.11 Severability............................... 67
9.12 Headings................................... 67
9.13 Governing Law.............................. 67
9.14 Submission to Jurisdiction................. 67
9.15 Waiver of Trial by Jury.................... 67
9.16 Counterparts............................... 68
9.17 Integration................................ 68
9.18 Survival................................... 68

SCHEDULE I - Liens

EXHIBIT A - Form of Letter of Credit with Annexes A
through I thereto attached

(iii)

<PAGE> 5
LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT

PRELIMINARY STATEMENTS:

(1) The Company requested the Maricopa County, Arizona
Pollution Control Corporation (the "Issuer") to issue, pursuant
to the Resolution Authorizing Annual Tender Pollution Control
Revenue Bonds adopted December 16, 1983 (such resolution as
amended by Supplemental Resolution No. 1 adopted November 26,
1991 and , adopted , the "Original
Resolution"), naming The State National Bank of El Paso as
trustee (the "Original Trustee"), $63,500,000 aggregate principal
amount of the Issuer's Annual Tender Pollution Control Revenue
Bonds, 1983 Series A (El Paso Electric Company Palo Verde
Project) (the "Original Bonds"), to various purchasers.

(2) The Issuer and the Company entered into a Loan
Agreement, dated as of December 1, 1983 (the "Original Loan
Agreement"), which the Issuer assigned to the Original Trustee to
secure the payment of the Original Bonds, and pursuant to which,
among other things, the Company was required to furnish a letter
of credit in connection with its payment obligations under the
Original Loan Agreement.

(3) The Original Trustee and the Company entered into a
Tender Agreement dated as of December 1, 1983 pursuant to which,
among other things, the Company was required to furnish a letter
of credit in connection with its obligation to purchase Original
Bonds pursuant to subsection 3 of Section 2.08 of the Original
Resolution.

(4) The Company and Citibank entered into a Letter of
Credit and Reimbursement Agreement dated as of December 1, 1983,
as amended by the Amendment, dated as of May 30, 1991, the
Deferral Agreement, dated as of December 30, 1991, the Second
Amendment, dated as of June 14, 1993, and , dated
as of , in each case between the Company and Citibank
(such agreement as so amended, the "Original Reimbursement
Agreement"), pursuant to which Citibank issued its Irrevocable
Letter of Credit dated December 29, 1983 (the "Original Letter of
Credit") in respect of certain of the Company's payment
obligations relating to the Original Bonds.

<PAGE> 6
(6) The Company desires to restructure its outstanding
indebtedness and, in connection therewith, the Company has
requested the Issuer to, and the Issuer has agreed to, refund
(the "Refunding") the Original Bonds by issuing Pollution Control
Refunding Revenue Bonds (El Paso Electric Company Palo Verde
Project), 199 Series (the "Bonds") pursuant to the Indenture
of Trust dated as of __________, 199__ a form of which has been
filed with the Bankruptcy Court in accordance with Section 7.6 of
the Plan of Reorganization (as hereinafter defined) (as such
Indenture may be amended, supplemented and modified from time to
time, the "Indenture"), naming [ ] as trustee (the
"Trustee").

(7) In connection with the Refunding, the Issuer and
the Company have entered into a Loan Agreement, dated as of
_________, 199__ (as the same may be amended, supplemented and
modified from time to time, the "Loan Agreement"), which the
Issuer has assigned to the Trustee to secure payment of the
Bonds, and pursuant to which, among other things, in connection
with the initial delivery of the Bonds, the Company is required
to furnish a letter of credit in connection with its payment
obligations under the Loan Agreement.

(9) In connection with the Refunding and in
consideration therefor and as set forth in the Plan of
Reorganization, the Company and Citibank have agreed to enter
into this Letter of Credit and Reimbursement Agreement (as
amended, modified and supplemented from time to time, this
"Agreement") and the Related Documents (as defined herein)
pursuant to which Citibank will issue, in substantially the form
of Exhibit A, a letter of credit (such letter of credit and any
successor letter of credit as provided for in such letter of
credit being the "Letter of Credit"), in the amount of
$[________]* (the "Commitment") of which [$63,500,000]** shall
support the payment of principal of the Bonds and $[ ]
shall support the payment of interest on the Bonds for up to [ ]
days computed at [14%]*** per annum on the principal thereof.

_________________
* Not to exceed face amount of Original Letter of Credit.

** Not to exceed the portion of the Original Letter of Credit
available to pay principal on the Original Bonds.

*** To be set at a market rate as determined by the Remarketing
Agent, but not to exceed 14% per annum.

ARTICLE I

DEFINITIONS

"Agent Payment Notice" has the meaning assigned to that
term in Section 2.08(a)(ii).

"Agreement" has the meaning assigned to that term in
Preliminary Statement (9).

"Alternate Base Rate" means a fluctuating interest rate
per annum as shall be in effect from time to time which rate
per annum shall at all times be equal to the higher of:

<PAGE> 8
(ii) 1/2 of one percent above the latest three-week
moving average of secondary market morning offering
rates in the United States for three-month certificates
of deposit of major United States money market banks,
such three-week moving average being determined weekly
on each Monday (or, if any such day is not a Business
Day, on the next succeeding Business Day) for the
three-week period ending on the previous Friday by the
Agent on the basis of such rates reported by certificate
of deposit dealers to and published by the Federal
Reserve Bank of New York or, if such publication shall
be suspended or terminated, on the basis of quotations
for such rates received by the Agent from three New York
certificate of deposit dealers of recognized standing,
in either case adjusted to the nearest 1/4 of one
percent or, if there is no nearest 1/4 of one percent,
to the next higher 1/4 of one percent.

"Alternate Base Rate Advance" means a Tender Advance
bearing interest as provided in Section 2.07(a).

"Bankruptcy Case" has the meaning assigned to that term
in Preliminary Statement (5).

"Bankruptcy Code" means the Bankruptcy Reform Act of
1978, as heretofore and hereafter amended, and codified as
title 11 of the United States Code.

"Bankruptcy Court" has the meaning assigned to that term
in Preliminary Statement (10).

<PAGE> 9
"Bond Interest Amount" for any Payment Date with respect
to each Bond, means an amount equal to the accrued interest
on the principal amount of such Bond in accordance with its
terms from and including the first day of the Quarterly
Period for such Bond ending on such Payment Date to but
excluding the earlier of (i) the Payment Date and (ii) the
date such Bond ceases to be held by or for the account of the
Issuing Bank or the Agent or any other nominee of the Issuing
Bank.

"Bonds" has the meaning assigned to that term in
Preliminary Statement (6).

"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, from time
to time.

"Code" means the Internal Revenue Code of 1986, as
amended from time to time.

"Commencement Date" means the earlier of (i) the
Effective Date and (ii) December 31, 1994.

"Commitment" has the meaning assigned to that term in
Preliminary Statement (9).

"Confirmation Order" means the order of the Bankruptcy
Court confirming the Plan of Reorganization.

<PAGE> 10
Date and (ii) the date such Bond ceases to be held by or for
the account of the Issuing Bank, the Agent or any other
nominee of the Issuing Bank, at an interest rate per annum
equal at all times to the sum of (x) the Alternate Base Rate
in effect from time to time plus (y) .50% per annum.

"Creditors" means the banks listed on the signature
pages hereof under the caption "Creditors" and any other
Person which becomes a party hereto pursuant to Section
9.09(a).

"Credit Termination Date" means the earlier of (i) the
day on which the Letter of Credit is surrendered by the
Trustee to the Issuing Bank for cancellation and (ii) the
Stated Termination Date.

<PAGE> 11
property (including, without limitation, accounts and
contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of
such Debt. In cases where recourse to any Person or any of
its properties in respect of Debt is limited, the amount of
such Debt of such Person for purposes hereof shall be so
limited.

"Default Rate" means a fluctuating interest rate equal
to 2% per annum above the Alternate Base Rate in effect from
time to time.

"EBITA" means, for any period, the sum, for the Company
and its Consolidated Subsidiaries (determined on a
consolidated basis without duplication in accordance with
GAAP), of the following: (a) net operating income
(calculated before taxes, Interest Expense, extraordinary
items and unusual non-cash, non-recurring items and income or
loss attributable to equity in Affiliates) for such period
plus (b) amortization (to the extent deducted in determining
net operating income) for such period.

"Effective Date" means the Effective Date (as defined
therein) of the Plan of Reorganization.

"Eligible Participant" has the meaning assigned to that
term in Section 9.09(b).

<PAGE> 12
"Environmental Law" means any federal, state or local
law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award relating to the environment,
health, safety or Hazardous Materials.

"Environmental Permit" means any permit, approval,
identification number, license or other authorization
required under any Environmental Law.

"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the
regulations promulgated and rulings issued thereunder.

"ERISA Affiliate" means any Person who for purposes of
Title IV of ERISA is a member of the Company's controlled
group, or under common control with the Company, within the
meaning of Section 414 of the Internal Revenue Code of 1986,
as amended.

"Eurodollar Advance" means any Tender Advance bearing
interest at the Eurodollar Rate.

"Event of Default" has the meaning assigned to that term
in Section 6.01.

<PAGE> 13
the review or reconsideration of which has expired without
any appeal or request for review or reconsideration having
been taken or made.

"Final Draft" has the meaning assigned to that term in
the Letter of Credit.

"Final Order" means an order of the Bankruptcy Court
which (a) shall not have been reversed, stayed, modified or
amended and the time to appeal from, or to seek review or
rehearing of, shall have expired and as to which no appeal or
petition for review, rehearing or certiorari is pending, or
(b) if appealed from, shall have been affirmed and the time
to appeal from such affirmance or to seek review or rehearing
thereof, shall have expired or no further hearing, appeal or
petition for certiorari can be taken or granted.

"First Mortgage Bond Indenture" means the Indenture
dated as of between the Company and
, as trustee, providing for the issuance by the
Company of its first mortgage bonds.

"First Mortgage Bonds" means bonds issued by the Company
under the First Mortgage Bond Indenture.

"First Mortgage Bonds, Series A/B" means collectively
the First Mortgage Bonds, Series A and the First Mortgage
Bonds, Series B, in each case, issued under the First
Mortgage Bond Indenture.

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

"Indemnified Party" has the meaning assigned to that
term in Section 9.05.

<PAGE> 14
"Indenture" has the meaning assigned to that term in
Preliminary Statement (6).

"Interest Draft" has the meaning assigned to that term
in the Letter of Credit.

"Interest Expense" means, for any period, the sum, for
the Company and its Consolidated Subsidiaries (determined on
a consolidated basis without duplication in accordance with
GAAP), of the following: (a) all interest in respect of Debt
including, without limitation, interest capitalized during
such period (whether or not actually paid during such
period), including, without limitation, all commissions and
fees (other than up-front fees), plus (b) the net amounts
payable (or minus the net amounts receivable) under Interest
Rate Protection Agreements accrued during such period
(whether or not actually paid or received during such
period).

"Interest Period" has the meaning assigned to that term
in Section 2.07(b).

"Investment Grade Rating" means a rating of BBB- or
better (or equivalent rating) by any two of Moody's Investors
Service, Inc., Standard & Poor's Corporation and Duff &
Phelps, Inc.

"Issuer" has the meaning assigned to that term in
Preliminary Statement (1).

"LC Payment Notice" has the meaning assigned to that
term in Section 2.08(a)(ii).

"Letter of Credit" has the meaning assigned to that term
in Preliminary Statement (9).

"Leverage Ratio" means, at any time, the ratio of Total
Debt at such time to the sum of (a) Total Capital at such
time plus (b) Total Debt at such time.

"LIBO Rate" for any Interest Period means an interest
rate per annum equal to the rate of interest per annum at
which deposits in United States dollars are offered by the

<PAGE> 15
principal office of Citibank in London, England to prime
banks in the London interbank market at 11:00 A.M. (London
time) two Business Days before the first day of such Interest
Period for a period equal to such Interest Period.

"Loan Agreement" has the meaning assigned to that term
in Preliminary Statement (7).

"Majority Creditors" means Creditors which have an
aggregate Participation Percentage of more than 50%.

<PAGE> 16
"Official Statement" means the Official Statement dated
[ , 199 ] of the Issuer relating to the Bonds,
together with the documents incorporated therein by
reference.

"Original Bonds" has the meaning assigned to that term
in Preliminary Statement (1).

"Original Letter of Credit" has the meaning assigned to
that term in Preliminary Statement (4).

"Original Loan Agreement" has the meaning assigned to
that term in Preliminary Statement (2).

"Original Reimbursement Agreement" has the meaning
assigned to that term in Preliminary Statement (4).

"Original Resolution" has the meaning assigned to that
term in Preliminary Statement (1).

"Original Trustee" has the meaning assigned to that term
in Preliminary Statement (1).

"Partial Redemption Draft" has the meaning assigned to
that term in the Letter of Credit.

"Participant" has the meaning assigned to that term in
Section 9.09(b).

"Payment Amount" has the meaning set forth in Section
2.05(c).

"Payment Date" means the last day of each Quarterly
Period.

"Payment Period" has the meaning assigned to that term
in Section 2.06.

"PBGC" means the Pension Benefit Guaranty Corporation or
any successor thereto.

<PAGE> 17
"Person" means an individual, a corporation, a
partnership, an association, a business trust or any other
entity or organization, including a Governmental Person.

"Plan" means a Single Employer Plan or a Multiple
Employer Plan.

"Preliminary Official Statement" means the Preliminary
Official Statement dated [ , 199 ] of the
Issuer relating to the Bonds, together with the documents
incorporated therein by reference.

"Refunding" has the meaning assigned to that term in
Preliminary Statement (6).

"Related Documents" has the meaning assigned to that
term in Section 2.16.

"Remarketing Agent's Agreement" means the remarketing
agreement dated as of , 199[ ] between the
Company and [ ].

"Second Mortgage Bond Indenture" means the Indenture
dated as of between the Company and
, as trustee, providing for the issuance by the
Company of its second mortgage bonds.

"Second Mortgage Bonds" means bonds issued by the
Company under the Second Mortgage Bond Indenture.

<PAGE> 18
"Second Mortgage Bonds, Series A" means the Second
Mortgage Bonds, Series A issued under the Second Mortgage
Bond Indenture.

"Stated Termination Date" means the earlier of (i)
December 31, 1997 and (ii) the third anniversary of the
Effective Date, unless extended as provided in Section 2.14.

"Tender Advance" has the meaning assigned to that term
in Section 2.06.

"Tender Agent" has the meaning assigned to that term in
the Indenture.

"Tender Draft" has the meaning assigned to that term in
the Letter of Credit.

"Total Capital" means, as at any date, the sum for the
Company and its Consolidated Subsidiaries (determined on a
consolidated basis without duplication in accordance with
GAAP), of the following:

(a) the amount of capital stock (excluding
treasury stock and capital stock subscribed for and
unissued and preferred stock mandatorily redeemable in
cash or redeemable in cash at the option of the holder
thereof), plus

(b) the amount of surplus and retained earnings
(or, in the case of a surplus or retained earnings
deficit, minus the amount of such deficit).

<PAGE> 19
"Total Debt" means, as at any date, the aggregate amount
of all Debt of the Company and its Consolidated Subsidiaries
(determined on a consolidated basis without duplication in
accordance with GAAP) (other than contingent obligations in
connection with acceptance facilities and letters of credit).

"Trustee" means [ ] and its
successors and permitted assigns under the Indenture, as
trustee and paying agent.

"Voting Stock" means capital stock issued by a
corporation, or equivalent interests in any other Person, the
holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors
(or Persons performing similar functions) of such Person,
even though the right so to vote has been suspended by the
happening of such a contingency.

"Withdrawal Liability" has the meaning given such term
under Part I of Subtitle E of Title IV of ERISA.

SECTION 1.03. Accounting Terms. All accounting terms
not specifically defined herein shall be construed in accordance
with GAAP consistently applied, except as otherwise stated
herein.

<PAGE> 20
ARTICLE II

AMOUNT AND TERMS OF THE LETTER OF CREDIT

SECTION 2.02. Issuing the Letter of Credit. The Letter
of Credit shall be issued on at least two Business Days' notice
from the Company to the Issuing Bank (which notice may be
furnished prior to the execution and delivery hereof) specifying
the Business Day of issuance thereof. On such Business Day
specified by the Company in such notice and upon fulfillment of
the applicable conditions set forth in Article III, the Issuing
Bank will issue the Letter of Credit to the Trustee.

<PAGE> 21
(b) The Company hereby agrees to pay to the Agent, for
the account of the Issuing Bank, upon each transfer by the
Trustee of the Letter of Credit in accordance with its terms, a
transfer commission equal to 1/4 of 1% of the Available Amount
then in effect.

SECTION 2.05. Reimbursement on the Date of the Draw.
(a) Except as otherwise provided in subsections (b) and (c) of
this Section 2.05 and subject to the provisions of Sections 2.06
and 2.07, the Company hereby agrees to pay to the Agent (i) on
each date on which the Issuing Bank shall pay any amount under
the Letter of Credit pursuant to any draft (including, without
limitation, amounts in respect of any reinstatement of the
interest component at the election of the Issuing Bank in its
sole discretion notwithstanding any failure by the Company to
reimburse the Issuing Bank or the Creditors for any previous
drawing to pay interest on the Bonds), a sum equal to such amount
so paid, plus (ii) on each day thereafter interest on any amount
remaining unpaid by the Company to the Agent under clause (i)
above, from the date of such draw until payment in full, at the
Default Rate.

<PAGE> 22
are not paid when due shall bear interest from the date the same
become due until such amounts are paid, payable on demand, at an
interest rate equal to the Default Rate.

SECTION 2.06. Tender Advances. Except as provided in
Section 2.05(b), if the Issuing Bank shall make any payment under
the Letter of Credit pursuant to a Tender Draft and the
conditions set forth in Section 3.03(a) shall have been
fulfilled, such payment shall constitute an advance made by the
Issuing Bank to the Company on the date and in the amount of such
payment, each such advance being a "Tender Advance" and
collectively the "Tender Advances".

<PAGE> 23
(c) Eurodollar Rate. The Company may from time to time
elect to pay interest on any Tender Advance at the Eurodollar
Rate for an Interest Period for such Tender Advance by notice
delivered to the Agent, specifying the Tender Advance (which
shall not be less than $1,000,000 unpaid principal amount
during such Interest Period) and the first day and duration
of such Interest Period, received by the Agent before 11:00
A.M. (New York City time) three Business Days prior to the
first day of such Interest Period; provided that no more than
four separate Interest Periods in respect of Eurodollar
Advances may be outstanding at any one time. Such Interest
Period shall be of 1, 3 or 6 months' duration, at the
Company's election; provided, however, that the Company may
not select any Interest Period which ends after any principal
repayment installment date unless, after giving effect to
such selection, the aggregate unpaid principal amount of
Eurodollar Advances having Interest Periods which end on or
prior to such principal repayment installment date and
Alternate Base Rate Advances shall be at least equal to the
principal amount of the Tender Advances due and payable on
and prior to such date.

<PAGE> 24
in or in the interpretation of any law or regulation that
occurs after the Submission Date makes it unlawful, or any
central bank or other governmental authority asserts after
the Submission Date that it is unlawful, for the Issuing Bank
or any Creditor to perform its obligations to make, fund or
maintain Eurodollar Advances hereunder (or participation
interests therein), (i) the right of the Company to select
the Eurodollar Rate for Tender Advances held by the Issuing
Bank or such Creditor, as the case may be, and the obligation
of the Issuing Bank and such Creditor, as the case may be, to
make or maintain Eurodollar Advances shall be suspended until
the Issuing Bank or such Creditor, as the case may be, shall
notify the Company that the circumstances causing such
suspension no longer exist and (ii) the rate of interest on
all such Tender Advances held by the Issuing Bank or such
Creditor, as the case may be, shall thereupon be .50% per
annum above the Alternate Base Rate in effect from time to
time.

<PAGE> 25
to subsection (c) of this Section 2.07 shall be deemed a
request for an Alternate Base Rate Advance. After such
notice shall have been given and until the circumstances
giving rise to such notice no longer exist, each request for
an Eurodollar Advance shall be deemed to be a request for an
Alternate Base Rate Advance.

(h) Majority Creditors' Costs for Eurodollar Advances.
If, with respect to any Eurodollar Advances, the Majority
Creditors notify the Agent that the Eurodollar Rate for any
Interest Period for such Eurodollar Advances will not
adequately reflect the cost to such Majority Creditors of
making, funding or maintaining their respective Eurodollar
Advances for such Interest Period, the Agent shall forthwith
so notify the Company and the Creditors, whereupon

(i) each Eurodollar Advance will automatically, on
the last day of the then existing Interest Period
therefor, convert into an Alternate Base Rate Advance,
and

(i) Notice. Promptly after the determination of any
interest rate provided for herein or any change therein, the
Agent shall give notice thereof to the Company.

<PAGE> 26
(iii) Upon receipt of an Agent Payment Notice, each
Creditor severally agrees to pay to the Issuing Bank in
accordance with clause (iv) below an amount equal to such
Creditor's ratable portion (according to such Creditor's
Participation Percentage as of the date of such Agent Payment
Notice) of such unreimbursed amount or Tender Advance paid or
made by the Issuing Bank, plus interest (if payment is not made
in accordance with clause (iv)) on such amount at a rate per
annum equal to the Federal Funds Rate from the date of payment by
the Issuing Bank to the date of payment to the Issuing Bank by
such Creditor. The failure of the Issuing Bank or the Agent to
give such LC Payment Notice or the Agent Payment Notice, as the
case may be, shall not affect any Creditor's obligations pursuant
to this subsection (a).

(b) The failure of any Creditor to make any payment to
the Issuing Bank in accordance with subsection (a), above, shall
not relieve any other Creditor of its obligation to make payment,
but neither the Issuing Bank nor any Creditor shall be
responsible for the failure of any other Creditor to make such
payment. If any Creditor shall fail to make any payment to the
Issuing Bank in accordance with subsection (a)(iv), above, then
such Creditor agrees to pay to the Issuing Bank forthwith on
demand such corresponding amount together with interest thereon
for the first two days following the day upon which any such
payment shall have been due and payable at the Federal Funds Rate
and thereafter until the date such amount is repaid to the
Issuing Bank at the Alternate Base Rate plus 1% per annum.

<PAGE> 27
(c) If any Creditor shall fail to make any payment to
the Issuing Bank in accordance with subsection (a), above, then,
in addition to other rights and remedies which the Issuing Bank
may have, the Agent is hereby authorized, at the request of the
Issuing Bank, to withhold and to apply to the payment of such
amounts owing by such Creditor to the Issuing Bank and any
related interest, that portion of any payments received by the
Agent that would otherwise be payable to such Creditor.

SECTION 2.09. Prepayments; Reinstatement of Letter of
Credit Amounts. (a) The Company may, upon at least two Business
Days' notice to the Agent stating the proposed date and principal
amount of the prepayment, and if such notice is given to the
Agent the Company shall, prepay the amount outstanding under any
Tender Advance in whole or in part (each such partial prepayment
shall be in the minimum amount of $[ ]) with accrued
interest to the date of such prepayment on the amount prepaid
(any such prepayment shall be applied to outstanding Tender
Advances in the inverse order of maturity); provided, however,
that with respect to any prepayment of any Eurodollar Advance
made on a day other than the last day of an Interest Period for
such Eurodollar Advance, the Company shall pay to the Agent, in
accordance with Section 2.11(b), an amount sufficient to
compensate the Issuing Bank and any Creditor for any loss, cost,
or expense incurred by it by reason of such prepayment on a day
other than the last day of an Interest Period.

<PAGE> 28
and made on a date other than a date on which interest on such
Tender Advance is scheduled to be paid hereunder, the Company
may pay interest accrued on such Tender Advance to the date of
prepayment on the next scheduled date for the payment of interest
on such Tender Advance, or if such Tender Advance shall have been
prepaid in whole, on the date which would have been the next such
scheduled date in the absence of such prepayment. The Company
irrevocably authorizes the Issuing Bank to rely on such
certificate and to reinstate the Letter of Credit in accordance
therewith.

(c) Upon the substitution of a letter of credit or
other credit facility for the Letter of Credit as provided in
Section 2.02(6) of the Indenture, all Tender Advances and accrued
and unpaid interest thereon and all other outstanding amounts
payable by the Company to the Issuing Bank, the Creditors and the
Agent under this Agreement shall be paid in full on the date the
Letter of Credit shall terminate as a result of such
substitution.

<PAGE> 29
issued or made after the Submission Date by any central bank or
other governmental authority (whether or not having the force of
law), there shall be any increase in the cost to the Issuing Bank
or any Creditor as a result of agreeing to make or making,
funding or maintaining Eurodollar Advances, or reduction in the
amount of any sum received in respect thereof, then the Company
shall from time to time, promptly after demand by the Issuing
Bank or such Creditor, as the case may be, pay to the Agent for
the account of the Issuing Bank or such Creditor, as the case may
be, additional amounts sufficient to reimburse the Issuing Bank
or such Creditor, as the case may be, for such increased cost or
reduced amount. A certificate as to the amount of such increased
cost or reduced amount, submitted to the Company (with a copy to
the Agent) by the Issuing Bank or such Creditor, as the case may
be, shall be conclusive and binding for all purposes, absent
manifest error.

(b) If, due to any change of interest rate on any
Eurodollar Advance pursuant to Section 2.07(e) or 2.07(f), any
prepayment pursuant to Section 2.09 of any Eurodollar Advance,
any acceleration of maturity of the Tender Advances pursuant to
Section 6.02, or for any other reason, a Eurodollar Advance is
subject to a change of interest rate, or any payment of principal
of any Eurodollar Advance is received, in each case other than on
the last day of an Interest Period relating to such Eurodollar
Advance, the Company shall, promptly upon demand by Issuing Bank
or any Creditor (with a copy of such demand to the Agent), pay to
the Agent for the account of the Issuing Bank or such Creditor,
as the case may be, any amounts required to compensate the
Issuing Bank or such Creditor, as the case may be, for any
additional losses, costs or expenses which it may reasonably
incur as a result of such change or payment, including, without
limitation, any loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired
by the Issuing Bank or such Creditor, as the case may be, to fund
or maintain such Eurodollar Advance but excluding loss of
anticipated profit. A certificate setting forth the amount of
such additional losses, costs or expenses, submitted by the
Issuing Bank or such Creditor, as the case may be, to the
Company (with a copy to the Agent), shall be conclusive and
binding for all purposes, absent manifest error.

<PAGE> 30
upon demand by the Issuing Bank or such Creditor, the Company
shall pay to the Agent for the account of the Issuing Bank and
such Creditor, from time to time as specified by the Issuing Bank
and such Creditor, additional amounts sufficient to compensate
the Issuing Bank and such Creditor for such increased cost. A
certificate as to the amount of such increased cost, submitted to
the Company (with a copy to the Agent) by the Issuing Bank and
such Creditor, shall be conclusive and binding for all purposes,
absent manifest error.

(d) If the Issuing Bank or any Creditor determines that
compliance with any law or regulation or any guideline or request
from any central bank or other governmental authority (whether or
not having the force of law), issued or made after the Submission
Date, affects the amount of capital required to be maintained by
the Issuing Bank or any Creditor or any corporation controlling
the Issuing Bank or such Creditor, as the case may be, and that
the amount of such capital is increased by or based upon the
existence of the Issuing Bank's or such Creditor's, as the case
may be, commitment hereunder and other commitments of this type
or the issuance of the Letter of Credit (or similar contingent
obligations), then, upon demand by the Issuing Bank or such
Creditor, as the case may be, the Company shall pay to the Agent
for the account of the Issuing Bank or such Creditor, as the case
may be, from time to time as specified by the Issuing Bank or
such Creditor, as the case may be, additional amounts sufficient
to compensate the Issuing Bank or such Creditor, as the case may
be, or such corporation in the light of such circumstances, to
the extent that the Issuing Bank or such Creditor, as the case
may be, reasonably determines such increase in capital to be
allocable to the existence of the Issuing Bank's or such
Creditor's, as the case may be, commitment hereunder. A
certificate as to such amounts submitted to the Company (with a
copy to the Agent) by the Issuing Bank or such Creditor, as the
case may be, shall be conclusive and binding for all purposes,
absent manifest error.

<PAGE> 31
(f) In calculating any amounts required to be paid by
the Company pursuant to this Section 2.11, the Issuing Bank or
such Creditor, as the case may be, shall make all determinations
and allocations on a reasonable basis.

SECTION 2.12. Payments and Computations. (a) The
Company shall make each payment hereunder not later than
12:00 noon (New York City time) (or, in the case of any payment
required by Section 2.05(a), as soon as practicable after the
Issuing Bank has made a payment under the Letter of Credit) on
the day when due in lawful money of the United States of America
to the Agent at its address referred to in Section 9.02 in same
day funds. The Agent will promptly thereafter cause to be
distributed like funds relating to the payment of principal,
interest, fees or other amounts payable to the Issuing Bank and
the Creditors to whom the same are payable at their respective
addresses referred to in Section 9.02.

(b) If, after the Agent has paid to the Issuing Bank or
any Creditor any amount pursuant to subsection (a) above, such
payment is rescinded or must otherwise be returned or must be
paid over by the Agent or the Issuing Bank to any Person, whether
pursuant to any bankruptcy or insolvency law, Section 9.04(c) or
otherwise, the Issuing Bank or such Creditor, as the case may
be, shall, at the request of the Agent or the Issuing Bank,
promptly repay to the Agent or the Issuing Bank, as the case may
be, an amount equal to such payment, together with any interest
required to be paid by the Agent or the Issuing Bank with respect
to such payment.

<PAGE> 32
time shall in such case be included in the computation of payment
of interest or commission, as the case may be; provided, however,
if such extension would cause such payment of interest on or
principal of a Eurodollar Advance to be made, or the last day of
an Interest Period for a Eurodollar Advance to occur, in the next
following calendar month, such payment shall be made, and the
last day of such Interest Period shall occur, on the next
preceding Business Day.

(b) Whenever the first day of any Interest Period
occurs on a day of an initial calendar month for which there is
no numerically corresponding day in the calendar month that
succeeds such initial calendar month by the number of months
equal to the number of months in such Interest Period, such
Interest Period shall end on the last Business Day of such
succeeding calendar month. Notwithstanding anything to the
contrary contained herein, each Interest Period that commences on
the last Business Day of a calendar month (or on any day for
which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last
Business Day of the appropriate subsequent calendar month.

SECTION 2.14. Extension of the Stated Termination Date.
(a) At least 60 but not more than 120 days before the initial
Stated Termination Date, the Company may request in a writing
delivered to the Agent (such request shall be accompanied by a
certificate from a duly authorized officer of the Company that
the representations and warranties in Section 4.01 are true and
correct as of the date of such request, before and after giving
effect to such request, as though made on and as of the date of
such request, and such request shall be irrevocable) that the
Issuing Bank, each Creditor and the Agent extend for one year the
then Stated Termination Date for purposes of this Agreement and
the Letter of Credit. If the Company shall make such request,
the Issuing Bank shall so extend the Stated Termination Date of
the Letter of Credit and the Issuing Bank, each Creditor and the
Agent shall extend the Stated Termination Date for purposes of
this Agreement, provided that on the date of such request by the
Company the representations and warranties in Section 4.01 are
true and correct, before and after giving effect to such request.
The Agent shall notify the Company in writing within 40 days of
receipt of such request whether (i) it has determined that the
Company has not satisfied the condition to extension set forth in
the proviso of the immediately preceding sentence or (ii) the
Stated Termination Date has been so extended.

(b) If the Stated Termination Date is extended as
provided for in Section 2.14(a), the Company may thereafter
request, at least 60 days but not more that 120 days before the
then Stated Termination Date, in a writing delivered to the Agent
(such request shall be accompanied by a certificate from a duly
authorized officer of the Company that the representations and
warranties in Section 4.01 are true and correct as of the date of
such request, before and after giving effect to such request, as

<PAGE> 33
though made on and as of the date of such request, and such
request shall be irrevocable) that the Issuing Bank, each
Creditor and the Agent extend for one year the then Stated
Termination Date for purposes of this Agreement and the Letter of
Credit. If the Company shall make such a request, the Agent
shall, on or before 40 days before the then Stated Termination
Date, notify the Company in writing whether or not the Issuing
Bank, each Creditor and the Agent consent to such request and, if
the Issuing Bank, each Creditor and the Agent do so consent, the
conditions for such extension. If the Agent shall not so notify
the Company, the Issuing Bank, each Creditor and the Agent shall
be deemed not to have consented to such request. The Company
acknowledges that none of the Issuing Bank, any Creditor or the
Agent has any obligation to, and none of such entities has given
any assurance, undertaking or commitment that it will, extend (or
consider extending) the Letter of Credit as set forth in this
Section 2.14(b).

(i) any lack of validity or enforceability of this
Agreement, the Letter of Credit, the Bonds, the Indenture,
the Loan Agreement, the Second Mortgage Bonds, Series , the
Second Mortgage Bond Indenture, the Remarketing Agent's
Agreement, or any other agreement or instrument relating
thereto (collectively, the "Related Documents");

<PAGE> 34
(iii) the existence of any claim, set-off, defense or
other right that the Company may have at any time against the
Trustee or any other beneficiary or any transferee of the
Letter of Credit (or any Persons or entities for whom the
Trustee, any such beneficiary or any such transferee may be
acting), the Issuing Bank, any Creditor, the Agent or any
other Person or entity, whether in connection with this
Agreement, the transactions contemplated hereby or by the
other Related Documents or any unrelated transaction;

(v) payment by the Issuing Bank under the Letter of
Credit against presentation of a draft or certificate which
does not comply with the terms of the Letter of Credit;

(i) any lack of validity or enforceability of the
Related Documents;

<PAGE> 35
whether in connection with this Agreement, the transactions
contemplated hereby or by the other Related Documents or any
unrelated transaction;

(v) payment by the Issuing Bank under the Letter of
Credit against presentation of a draft or certificate which
does not comply with the terms of the Letter of Credit;

SECTION 2.17. U.S. Taxes. (a) The Company agrees to
pay to the Issuing Bank and each Creditor with respect to any
period during which it is not a U.S. Person such additional
amounts as are necessary in order that the net payment of any
amount due to such non-U.S. Person hereunder after deduction for
or withholding in respect of any U.S. Tax imposed with respect to
such payment (or in lieu thereof, payment of such U.S. Tax by
such non-U.S. Person), will not be less than the amount stated
herein to be then due and payable, provided that the foregoing
obligation to pay such additional amounts shall not apply:

<PAGE> 36
date hereof, either entitled to submit a Form 1001 (relating
to the Issuing Bank or any such Creditor and entitling it to
a complete exemption from withholding on all interest to be
received by it hereunder in respect of any Tender Advance or
any other amount hereunder payable) or Form 4224 (relating to
all interest to be received by the Issuing Bank or any such
Creditor hereunder in respect of any Tender Advance or any
other amount hereunder payable), or

(b) Within 30 days after paying any amount to the
Issuing Bank or any such Creditor from which it is required by
law to make any deduction or withholding, and within 30 days
after it is required by law to remit such deduction or
withholding to any relevant taxing or other authority, the
Company shall deliver to the Issuing Bank or such Creditor, as
the case may be, evidence satisfactory to the Issuing Bank or
such Creditor, as the case may be, of such deduction, withholding
or payment (as the case may be).

<PAGE> 37
the events giving rise to such request for compensation if such
designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the reasonable opinion of the
Issuing Bank or such Creditor, as the case may be, be
disadvantageous to the Issuing Bank or such Creditor, as the case
may be, except that the Issuing Bank or such Creditor, as the
case may be, shall have no obligation to designate an applicable
lending office located in the United States of America.

SECTION 2.19. Net Payments. All payments under this
Agreement to the Agent, the Issuing Bank, or any Creditor shall
be made without set-off or counterclaim.

ARTICLE III

CONDITIONS OF ISSUANCE

SECTION 3.01. Conditions Precedent to Issuance of the
Letter of Credit. The obligation of the Issuing Bank to issue
the Letter of Credit is subject to the satisfaction or waiver in
writing by the Agent, in its sole discretion, of the following:
(i) the Agent shall have received on or before the date of the
issuance of the Letter of Credit the following, each dated such
day (unless otherwise indicated), in form and substance
satisfactory to and in sufficient copies for each Creditor:

<PAGE> 38
of Credit, the other Related Documents and the other matters
contemplated hereby and thereby, and of all other documents
evidencing any other necessary corporate action;

(e) a certified transcript relating to the issuance of
the Bonds;

(g) a certified copy of the Indenture and evidence
satisfactory to the Agent that the Indenture has been duly
adopted by the Issuer and accepted by the Trustee;

(h) the Second Mortgage Bonds, Series [ ], such series
having been duly completed, executed and pledged to the Agent
for its benefit and the benefit of the Issuing Bank and the
Creditors by the Company;

<PAGE> 39
(i) evidence of the completion of all recordings and
filings of or with respect to the Second Mortgage Bond
Indenture that the Agent may deem necessary or desirable in
order to perfect the security interest created thereby;

(j) a certified copy of the Second Mortgage Bond
Indenture;

(p) a favorable opinion of Mudge Rose Guthrie Alexander
& Ferdon, bond counsel, in form and substance reasonably
satisfactory to the Agent;

(q) a favorable opinion of , counsel to the
Issuer, or other counsel reasonably satisfactory to the
Agent, in form and substance reasonably satisfactory to the
Agent;

(r) a favorable opinion of Shearman & Sterling, special
counsel for the Issuing Bank, [to the extent required by the
agencies rating the Bonds];

(s) a certificate of the Clerk of the Board of
Supervisors of Maricopa County, Arizona certifying that the
resolutions approving the issuance of the Bonds are in full
force and effect;

<PAGE> 40
(t) a certificate of the Secretary of the Board of
Directors of the Issuer certifying that the resolutions
approving the issuance of the Bonds, the execution and
delivery of the Indenture and all documents delivered by the
Issuer in connection with the issuance of the Bonds are in
full force and effect;

(u) the articles of incorporation of the Issuer
(certified as of a recent date by the Arizona Corporation
Commission);

(v) a certificate of compliance of the Arizona
Corporation Commission, dated as of a recent date, to the
effect that the Issuer is in good standing and that franchise
taxes have been paid;

(w) a certificate of the Assistant Secretary of the
Issuer, dated the date of issuance of the Letter of Credit,
as to the incumbency of each of the officers of the Issuer
and members of its board of directors, and the bylaws of the
Issuer and that such bylaws are true, correct and complete
copies thereof and are in full force and effect;

(x) the Official Statement certified by the Secretary
of the Company to be a true and correct copy thereof;

(y) a certificate of the Trustee certifying the
incumbency and signature specimens of officials of the
Trustee authorized to make drawings, to execute and present
certificates and drafts under the Letter of Credit and
otherwise to communicate with the Issuing Bank regarding the
Letter of Credit, upon which the Issuing Bank may rely until
it receives a new such certificate;

(z) written acknowledgment from the Trustee that it has
received the Letter of Credit;

(aa) receipt from the Original Trustee under the
Original Resolution of the Original Letter of Credit and
written acknowledgment from the Original Trustee that the
Original Letter of Credit is of no further force and effect;

(bb) written evidence, satisfactory to the Agent, that
the First Mortgage Bonds, Series A/B, and the Second Mortgage
Bonds, Series A, have an Investment Grade Rating; and

(cc) a certificate of the chairman, president or chief
financial officer of the Company, certifying (A) that the
Effective Date has occurred as of the time of delivery
thereof or will occur concurrently with the delivery thereof
and (B) that, after giving effect to the transactions
contemplated under the Plan of Reorganization: (x) no event
has occurred and is continuing which constitutes an Event of
Default or would constitute an Event of Default but for the

<PAGE> 41
requirement that notice be given or the lapse of time or
both; and (y) the representations and warranties made by the
Company in Article IV hereof, and in each of the other
Related Documents, shall be true on and as of the Effective
Date with the same force and effect as if made on and as of
such date (or, if such representation or warranty is
expressly stated to have been made as of a specific date, as
of such specific date); and

(ii) the following has occurred on or before the date of
the issuance of the Letter of Credit:

(a) the Confirmation Order shall have been entered at
least 10 days prior to the date hereof, no stay of such order
shall be in effect and the Agent shall have received a
certified copy of such order;

(c) the Effective Date shall have occurred or shall
occur substantially simultaneously with the delivery of this
Agreement and of the other Related Documents; and

(d) the Refunding shall have occurred or shall occur
substantially simultaneously with the issuance of the Letter
of Credit [and the delivery of the other Related Documents].

and (b) the Agent shall have received such other approvals,
opinions or documents as the Issuing Bank or any Creditor
(through the Agent) may reasonably request.

<PAGE> 42
SECTION 3.03. Conditions Precedent to Each Tender
Advance. (a) Each payment made by the Issuing Bank under the
Letter of Credit pursuant to a Tender Draft shall constitute a
Tender Advance hereunder only if on the date of such payment by
the Issuing Bank the following statements shall be true in all
material respects:

(i) The representations and warranties contained in
Section 4.01 of this Agreement are correct on and as of the
date of such Tender Advance, before and after giving effect
to such Tender Advance and to the application of the proceeds
therefrom, as though made on and as of such date; and

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the
Company. The Company represents and warrants as follows:

<PAGE> 43
Commission, the New Mexico Public Service Commission or the
Public Utility Commission of Texas, or Regulation G, T, U or
X of the Board of Governors of the Federal Reserve System),
writ, judgment, injunction or decree applicable to the
Company or any contractual restriction binding on or
affecting the Company or any Subsidiary, and do not result in
or require the creation of any Lien of the Company or any
Subsidiary (except as provided in or contemplated by this
Agreement or the other Related Documents or the Plan of
Reorganization) upon or with respect to any properties of the
Company or any Subsidiary.

(c) No authorization or approval or other action by,
and no notice to or filing with, any governmental authority
or regulatory body is required for the due execution,
delivery and performance by the Company of this Agreement or
any other Related Document (including the issuance and pledge
of the Second Mortgage Bonds, Series [ ] and the creation
and perfection of the Liens on the property securing such
Bonds) except for (i) those that have been duly obtained or
made and are in full force and effect and are Final Approvals
and (ii) the Confirmation Order.

<PAGE> 44
liability to the PBGC (other than to pay premiums under
Section 4007 of ERISA) or any Plan or any Multiemployer Plan
(other than to make contributions in the ordinary course of
business). No reportable event, within the meaning of
Section 4043 of ERISA, has occurred with respect to any Plan,
except for any such event as to which the 30-day notice
requirement has been waived by the PBGC. Schedule B
(Actuarial Information) to the most recently filed annual
report (Form 5500 Series) for each Plan is complete and
accurate and fairly presents the funding status of such Plan,
and since the date of such Schedule B there has been no
change in such funding status that can reasonably be expected
to have a Material Adverse Effect.

(h) The Second Mortgage Bonds, Series , (i) have been
duly authorized, executed, authenticated, issued, pledged and
delivered in the manner provided for in the Second Mortgage
Bond Indenture and in compliance with all applicable law;
(ii) constitute the legal, valid and binding obligations of
the Company enforceable against the Company in accordance
with their terms and the terms of the Second Mortgage Bond
Indenture except insofar as enforceability may be limited or
otherwise affected by (a) bankruptcy, insolvency, moratorium,
reorganization or other similar laws of general application
relating to or affecting the rights and remedies of creditors
from time to time in effect and (b) general principles of
equity (regardless of whether enforceability is considered in
a proceeding in equity or at law); (iii) are entitled to the
security and benefits of the Second Mortgage Bond Indenture;
(iv) are secured equally and ratably with and only with all
other bonds issued and outstanding and which may hereafter
and thereafter be issued and outstanding under the Second
Mortgage Bond Indenture; (v) are secured by duly perfected
Liens on and security interests in the collateral purported
to secure such bonds in the Second Mortgage Bond Indenture
which Liens are subordinated in priority only to the Liens
and security interests granted under the First Mortgage Bond
Indenture and securing outstanding First Mortgage Bonds; and
(vi) constitute collateral security encumbered by valid, duly
perfected Liens thereon and security interests therein
securing the obligations of the Company under this Agreement
as purported to be provided in such indenture and herein.
The Company has executed, issued and delivered all Second
Mortgage Bonds, Series to the Agent for its benefit and
the ratable benefit of the Issuing Bank and the Creditors and
has made all such duly perfected pledges thereof to the Agent
for its benefit and the ratable benefit of the Issuing Bank
and the Creditors as are required to be executed, issued,
delivered and made under this Agreement and there are no
other Liens on such Second Mortgage Bonds.

(i) The Second Mortgage Bond Indenture creates a valid
and perfected second Lien on the Company's property as
described in the Second Mortgage Bond Indenture as collateral

<PAGE> 45
security for the Company's obligations under the Second
Mortgage Bond Indenture and the Second Mortgage Bonds, Series
[ ].

(j) No Material Adverse Effect has occurred since the
Effective Date.

(k) The operations and properties of the Company and
each of its Subsidiaries comply in all material respects with
all Environmental Laws, the Company and each of its
Subsidiaries possess and are in compliance with all required
Environmental Permits and no circumstances exist that are or
would be reasonably likely to (i) form the basis of an
Environmental Action against the Company or any of its
Subsidiaries or any of their properties or (ii) cause any
such property to be subject to any restrictions on ownership,
occupancy, use or transferability under any Environmental
Law, except as would not be likely to have a Material Adverse
Effect, and none of the properties of the Company or any of
its Subsidiaries is listed or proposed for listing on the
National Priorities or CERCLA List under CERCLA or any
analogous state list.

<PAGE> 46
(p) The Company is in material compliance with all
Environmental Laws and is not exposed to any costs or
liabilities under any Environmental Laws except as would not
be reasonably likely to result in a Material Adverse Effect
on the Company.

ARTICLE V

COVENANTS OF THE COMPANY

SECTION 5.01. Affirmative Covenants. So long as a
drawing is available under the Letter of Credit or the Issuing
Bank or any Creditor shall have any commitment hereunder or the
Company shall have not paid in full all amounts payable by the
Company hereunder to the Agent, the Issuing Bank, or any
Creditor, the Company agrees that, unless the Majority Creditors
shall otherwise consent in writing:

(a) Reporting Requirements. The Company shall deliver
to the Agent and each Creditor:

<PAGE> 47
and the related consolidated and consolidating balance
sheets of the Company and its Consolidated Subsidiaries
as at the end of such fiscal year, setting forth in each
case in comparative form the corresponding consolidated
and consolidating figures for the preceding fiscal year,
and accompanied (i) in the case of said consolidated
statements and balance sheet of the Company, by an
opinion thereon of independent certified public
accountants of recognized national standing, which
opinion shall state that said consolidated financial
statements fairly present the consolidated financial
condition and results of operations of the Company and
its Consolidated Subsidiaries as at the end of, and for,
such fiscal year in accordance with GAAP, consistently
applied, and a certificate of such accountants stating
that, in making the examination necessary for their
opinion, they obtained no knowledge, except as
specifically stated, of any failure by the Company to
comply with Section 5.02(a), (b) or (e)(xi), and (ii) in
the case of said consolidating statements and balance
sheets, by a certificate of a senior financial officer
of the Company, which certificate shall state that said
consolidating financial statements fairly present the
respective individual unconsolidated financial condition
and results of operations of the Company and of each of
its Consolidated Subsidiaries, in each case in
accordance with GAAP, consistently applied, as at the
end of, and for, such fiscal year;

<PAGE> 48
quarterly fiscal period or fiscal year and stating that
no event has occurred or is continuing which constitutes
an Event of Default or would constitute an Event of
Default but for the requirement that notice be given or
the lapse of time or both or, if any such event has
occurred and is continuing, a statement as to the nature
thereof and the action that the Company has taken or
proposes to take with respect thereto; and

(vi) such other financial data and information of
the Company or any of its Subsidiaries as the Agent, the
Issuing Bank or any Creditor may from time to time
reasonably request.

(b) Litigation. The Company will promptly give to the
Agent notice of all actions, suits, investigations,
litigation or legal or arbitral proceedings, and of all
proceedings by or before any governmental or regulatory
authority or agency (and any material development in respect
of such legal or other proceedings), in each case, known to
the Company, which is reasonably likely to have a Material
Adverse Effect.

<PAGE> 49
(f) Compliance with Environmental Laws. The Company
shall comply, and cause each of its Subsidiaries and all
lessees and other Persons occupying or operating on its
properties to comply, in all material respects, with all
Environmental Laws and Environmental Permits applicable to
its operations and properties; obtain and renew all
Environmental Permits necessary for its operations and
properties; and conduct, and cause each of its Subsidiaries
to conduct, any investigation, study, sampling and testing,
and undertake any cleanup, removal, remedial or other action
required under any Environmental Law to remove and clean up
all Hazardous Materials from any of its properties, in
accordance with the requirements of all Environmental Laws;
provided, however, that neither the Company nor any of its
Subsidiaries shall be required to undertake any such cleanup,
removal, remedial or other action to the extent that its
obligation to do so is being contested in good faith and by
proper proceedings and reserves, where required by GAAP, are
being maintained with respect to such circumstances.

<PAGE> 50
Credit Facility (as defined in the Indenture) for the Letter
of Credit, to surrender the Letter of Credit to the Issuing
Bank for cancellation.

(k) Bond Rating. The Company shall exercise its best
efforts to cause the Bonds to have a rating by Moody's
Investors Service, Inc. or by Standard & Poor's Corporation.

(l) Remarketing. The Company shall take all steps that
are necessary or appropriate to cause any Bonds acquired by
the Trustee on behalf of and for the account of the Company
or the Issuing Bank, the Agent or any other nominee of the
Issuing Bank to be remarketed (in the case of Bonds acquired
on behalf of or for the account of the Issuing Bank, the
Agent or any other nominee of the Issuing Bank, to the extent
the Issuing Bank requests that such Bonds be remarketed),
including (without limitation) preparing such disclosure and
other documents as are required to remarket the Bonds.

(n) Maintain Books and Records. The Company shall keep
adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently
applied.

<PAGE> 51
(a) Total EBITA to Interest Coverage Ratio. The
Company shall not permit the Interest Coverage Ratio to be
less than 1.40 to 1 at any time on or after the last day of
the first full fiscal quarter of the Company commencing after
the Effective Date.

(c) Prohibition of Fundamental Changes. The Company
shall not, and will not permit any of its Subsidiaries to,
enter into any transaction of merger, consolidation,
amalgamation, liquidation or dissolution; provided that the
Company or any of its Subsidiaries may merge or consolidate
with any other Person if (i) in any such transaction in which
the Company is a party, the Company is the surviving
corporation, (ii) in any such transaction in which the
Company is not a party, the surviving corporation shall be a
Subsidiary of the Company and (iii) after giving effect
thereto no Event of Default would exist hereunder. The
Company will not, and will not permit any of its Subsidiaries
to, convey, sell, lease, transfer or otherwise dispose of, in
one transaction or a series of transactions, all or
substantially all of its business or assets or assets
(excluding (i) accounts receivable, (ii) obsolete or worn-out
tools, equipment or other property no longer used or useful
in its business and (iii) inventory or other property sold or
disposed of in the ordinary course of business and on
ordinary business terms) which in the aggregate have a net
book value in excess of $50,000,000, whether now owned or
hereafter acquired, to any other Person. Notwithstanding the
foregoing provisions of this subsection (c):

(2) any Subsidiary of the Company may sell, lease,
transfer or otherwise dispose of any or all of its
property (upon voluntary liquidation or otherwise) to
the Company or a Subsidiary of the Company.

<PAGE> 52
Withdrawal Liability to any Multiemployer Plan, which (in the
reasonable opinion of the Agent) will have a Material Adverse
Effect. For purposes of this Section 5.02(d), "liability"
shall not include termination insurance premiums payable
under Section 4007 of ERISA. Upon request of the Agent, the
Company shall promptly furnish to the Agent a copy of
Schedule B (Actuarial Information) to the most recently filed
annual report (Form 5500 Series) of any Plan.

(i) Liens created pursuant to the Related
Documents or pursuant to the First Mortgage Bond
Indenture or the Second Mortgage Bond Indenture;

(ii) Liens created or otherwise in existence on the
Effective Date or contemplated by the Plan of
Reorganization;

(v) pledges or deposits under worker's
compensation, unemployment insurance and other social
security legislation;

<PAGE> 53
value of the property subject thereto, render title to
the property encumbered thereby unmarketable, materially
adversely affect the use of such property for its
present purposes or interfere with the ordinary conduct
of the business of the Company or any of its
Subsidiaries;

<PAGE> 54
(f) Change in Nature of Business. The Company shall
not make, or permit any of its Subsidiaries to make, any
material change in the nature of its business as carried on
at the date hereof.

(h) Related Documents. The Company shall not, subject
to specific rights contained in such agreements, amend, or
consent to the amendment of, any of the Related Documents,
which amendment would adversely affect the Agent, the Issuing
Bank or any Creditor; provided that the Second Mortgage Bond
Indenture may be amended in accordance with its terms; and
provided further that the consent of the Agent, the Issuing
Bank or such Creditor, as the case may be, may not be
unreasonably withheld.

(j) Bond Interest Term. The Company shall not cause
the Trustee to select a Bond Interest Term Rate (as defined
in the Indenture) for any Bond.

ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.01. Events of Default. The occurrence of any
of the following events shall be an "Event of Default" hereunder:

(a) The Company shall fail to pay any amount payable
under any provision of Article II or any other provision of
this Agreement within two days after the same becomes due and
payable; or

<PAGE> 55
(c) The Company shall default in the performance of any
of its obligations under clause (a)(iv) of Section 5.01 or
clauses (a), (b), (c) or (f) of Section 5.02; or a consensual
Lien shall be created by the Company or any of its
Subsidiaries in violation of Section 5.02(e); or the Company
shall default in its performance of any of its other
obligations under this Agreement or in any other Related
Document and such default in the performance of any such
other obligation shall continue unremedied for a period of 15
days after notice thereof to the Company by the Agent; or

(d) The Company or any of its Subsidiaries shall
default in the payment when due of any principal of or any
interest on any Debt aggregating $10,000,000 or more, or fail
to observe or perform any material term, covenant or
agreement contained in any agreement by which it is bound,
evidencing or securing Debt, in an aggregate amount of
$10,000,000 or more, or any other event shall occur or
condition shall exist under any agreement or instrument
relating to any such Debt, after the giving of any required
notice and for such period of time as would permit the holder
or holders thereof or of any obligations issued thereunder to
accelerate the maturity thereof, unless such failure or event
or condition shall have been cured by the Company or such
Subsidiary, as the case may be, or effectively waived by such
holder or holders; or

<PAGE> 56
commenced against the Company or any of its Material
Subsidiaries and the Company or any of its Material
Subsidiaries shall indicate its approval thereof, consent
thereto or acquiescence therein or such petition or
application shall not be dismissed on or before the 60th day
after the filing thereof; or

(h) There shall have been asserted against the Company
by a Governmental Person or other Person, a written
complaint, claim or demand asserting any claims or
liabilities, whether accrued, absolute or contingent, based
on or arising from the presence, release or disposal of
Hazardous Materials by the Company or any of its Subsidiaries
that is reasonably likely to be determined adversely to the
Company or any of its Subsidiaries, and the amount thereof
(either individually or in the aggregate) would, in such
event, have a Material Adverse Effect (after deducting any
portion thereof that is reasonably expected to be paid by
other creditworthy Persons); or

(k) Any "Event of Default" under and as defined in the
Related Documents shall have occurred and be continuing; or

<PAGE> 57
and void, or the validity or enforceability thereof shall be
contested by the Company, or a proceeding shall be commenced
by any Governmental Person having jurisdiction over the
Company seeking to establish the invalidity or
unenforceability thereof, or the Company shall deny that it
has any further liability or obligation under this Agreement
or any other Related Document after delivery thereof or the
Second Mortgage Bond Indenture shall for any reason (other
than pursuant to the terms thereof) cease to create a valid
and perfected second priority Lien on the Company's property
purported to be secured thereby.

SECTION 6.02. Upon an Event of Default. If any Event
of Default shall have occurred and be continuing, (A) the Issuing
Bank shall at the request, or may with the consent, of the
Majority Creditors (i) if the Letter of Credit shall not have
been issued, by notice to the Company, declare the obligation of
the Issuing Bank to issue the Letter of Credit to be terminated,
whereupon the same shall forthwith terminate, or, (ii) if the
Letter of Credit shall have been issued, give notice to the
Trustee pursuant to Section 9.01 of the Indenture that an Event
of Default hereunder has occurred and is continuing and, if a
drawing to pay interest on the Bonds shall have been made under
the Letter of Credit (other than such a drawing in respect of the
payment of interest upon scheduled or accelerated maturity, or
redemption, of the Bonds), and not reimbursed, notify the Trustee
prior to the fifteenth day following such drawing that the
Issuing Bank has not been reimbursed for such drawing and that
interest in the amount of such drawing will not be reinstated,
and (B) the Agent shall at the request, or may with the consent,
of the Majority Creditors (i) declare the Tender Advances, all
interest thereon and all other amounts payable hereunder or in
respect thereof, to be forthwith due and payable, whereupon the
Tender Advances, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment,
demand, protest, or further notice of any kind, all of which are
hereby expressly waived by the Company and (ii) exercise all
rights and remedies in respect of the Second Mortgage Bonds,
Series [ ] pledged as security hereunder; provided, however,
that in the event of the occurrence of an Event of Default
pursuant to subsections (f) or (g) of Section 6.01, (A) the
obligation of the Issuing Bank to issue the Letter of Credit
shall automatically be terminated and (B) the Tender Advances,
all interest thereon and all other amounts payable hereunder or
in respect thereof shall automatically become and be due and
payable, without presentment, demand, protest or any notice of
any kind, all of which are hereby expressly waived by the
Company.

<PAGE> 58
ARTICLE VII

SECURITY

<PAGE> 59
are insufficient to pay in full the amount of principal and
interest and other amounts due hereunder, the Company shall
remain liable for any such deficiency under the terms of this
Agreement.

SECTION 7.04. The Agent's Duties. The powers conferred
on the Agent hereunder are solely to protect its interest in the
collateral, including, without limitation, the Second Mortgage
Bonds, Series [ ], and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any
collateral in its possession and the accounting for moneys
actually received by it hereunder, the Agent shall have no duty
as to any collateral, as to ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any collateral, whether or not the
Agent, the Issuing Bank or any Creditor has or is deemed to have
knowledge of such matters, or as to the taking of any necessary
steps to preserve rights against any parties or any other rights
pertaining to any collateral. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any
collateral in its possession if such collateral is accorded
treatment substantially equal to that which the Agent accords its
own property.

ARTICLE VIII

THE AGENT, THE CREDITORS AND
THE ISSUING BANK

<PAGE> 60
SECTION 8.02. Reliance, Etc. Neither the Agent, the
Issuing Bank nor any of their directors, officers, agents or
employees shall be liable for any action taken or omitted to be
taken by it or them under or in connection with this Agreement or
any other Related Document, except for its or their own gross
negligence or willful misconduct. Without limitation of the
generality of the foregoing, the Agent and the Issuing Bank:
(i) may treat each Creditor as a Creditor hereunder until the
Agent receives written notice of the assignment or transfer of
the rights and obligations of any Creditor hereunder signed by
such Creditor and including the agreement of the assignee or
transferee to be bound hereby as it would have been if it had
been an original Creditor party hereto, in form satisfactory to
the Agent; (ii) may consult with legal counsel (including counsel
for the Company), independent public accountants and other
experts selected by it and shall not be liable for any action
taken or omitted to be taken in good faith by it in accordance
with the advice of such counsel, accountants or experts;
(iii) makes no warranty or representation to any Creditor and
shall not be responsible to any Creditor for any statements,
warranties or representations (whether written or oral) made in
or in connection with this Agreement or any other Related
Document; (iv) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms,
covenants or conditions of this Agreement or any other Related
Document on the part of the Company or any other party or to
inspect the property (including the books and records) of the
Company; (v) shall not be responsible to any Creditor for the due
execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Related
Document or any other instrument or document furnished pursuant
hereto or thereto; and (vi) shall incur no liability under or in
respect of this Agreement or any other Related Document by acting
upon any notice, consent, certificate or other instrument or
writing (which may be by telecopier, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper
party or parties.

<PAGE> 61
SECTION 8.04. Bank Credit Decision. Each Creditor
acknowledges that it has, independently and without reliance upon
the Agent, the Issuing Bank or any other Creditor and based on
the financial statements referred to in Section 4.01 and such
other documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this
Agreement. Each Creditor also acknowledges that it will,
independently and without reliance upon the Agent, the Issuing
Bank or any other Creditor and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action
under this Agreement.

SECTION 8.05. Indemnification. The Creditors agree to
indemnify the Agent and the Issuing Bank (to the extent not
reimbursed by the Company), ratably according to the respective
Participation Percentages, from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent or the Issuing Bank in any way
relating to or arising out of this Agreement or any action taken
or omitted by the Agent or the Issuing Bank under this Agreement,
provided that no Creditor shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from
the Agent's or the Issuing Bank's gross negligence or willful
misconduct. Without limitation of the foregoing, each Creditor
agrees to reimburse the Agent and the Issuing Bank promptly upon
demand for its ratable share of any out-of-pocket expenses
(including counsel fees) incurred by the Agent or the Issuing
Bank, as the case may be, in connection with the preparation,
execution, delivery, administration (except normal administrative
costs and fees and expenses of counsel related thereto prior to
an Event of Default), modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of rights or responsibilities
under, this Agreement or any other Related Document, to the
extent that the Agent or the Issuing Bank is not reimbursed for
such expenses by the Company.

<PAGE> 62
successor Agent, which shall be a commercial bank organized under
the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least
$250,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this
Article VII shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this
Agreement.

(b) The Issuing Bank shall not amend or waive any
provision or consent to the amendment or waiver of any Related
Document without the consent of the Majority Creditors, provided,
however, that any waiver or amendment of any provision of the
Letter of Credit or consent to the amendment or waiver of the
Letter of Credit shall require the written consent of all of the
Creditors.

ARTICLE IX

MISCELLANEOUS

<PAGE> 63
(other than fees payable solely to the Issuing Bank) or other
amounts payable hereunder, (e) change the aggregate unpaid
principal amount of any Tender Advance or any other amount
payable hereunder as a result of a draw on the Letter of Credit,
or the number of Creditors, which shall be required for the
Creditors or any of them to take any action hereunder, (f) amend
this Section 9.01, (g) amend this Agreement in a manner intended
to prefer one or more Creditors over any other Creditors, (h)
amend the definition of "Majority Creditors", or (i) release any
collateral, including, without limitation, the Second Mortgage
Bonds, Series [ ]; provided further that no amendment, waiver or
consent shall, unless in writing and signed by the Agent in
addition to the Creditors required above to take such action,
affect the rights or duties of the Agent under this Agreement;
provided further that no amendment, waiver or consent shall,
unless in writing and signed by the Issuing Bank in addition to
the Creditors required above to take such action, affect the
rights and duties of the Issuing Bank under this Agreement.

SECTION 9.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing
(including telecopier, telegraphic, telex or cable communication)
and mailed, telecopied, telegraphed, telexed, cabled or
delivered, if to the Company, at its address at, in the case of
deliveries, at its street address at [303 North Oregon Street, El
Paso, Texas 79901], in the case of mailings, to its mailing
address at [P.O. Box 982, El Paso, Texas 79960], in the case of
telex, to telex no. [5435710 (callback 915-543-5707)] and in the
case of telecopier to [915-521-4754], in each case to the
attention of the Secretary; if to the Issuing Bank, at its
address at [399 Park Avenue, New York, New York 10043],
Attention: [Energy West Department], telex no. [TLX 12-7773
NYWCGCB] and in the case of telecopier to [212-793-0642]; if to
the Agent, at its address at [399 Park Avenue, New York,
New York 10043], Attention: [Energy West Department], telex no.
[TLX 12-7773 NYWCGCB] and in the case of telecopier to
[212-793-0642]; if to any Creditor, at its address specified on
the signature pages hereof; and if to the Trustee, in the case of
deliveries, at its street address at [
,
], in the case of mailings, to its mailing
address at P.O. Box , , , and in the case
of telex, to telex no. , in each case to the attention of
[Corporate Trust Department] or, as to each such entity, at such
other place and/or address or number as shall be designated by
such entity in a written notice to the other such entities. All
such notices and communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in
the mails, telecopied, delivered to the telegraph company,
confirmed by telex answerback or delivered to the cable company,
respectively, addressed as aforesaid, except that notices to the
Agent or Issuing Bank pursuant to the provisions of Article II
shall not be effective until received by the Agent or Issuing
Bank, as the case may be.

<PAGE> 64
SECTION 9.03. No Waiver; Remedies. No failure on the
part of the Issuing Bank, the Agent or any Creditor to exercise,
and no delay in exercising, any right hereunder or under any
Related Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other
or further exercise thereof or the exercise of any other right.
The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.

SECTION 9.04. Rights of Setoff and Subrogation.
(a) Upon the occurrence and during the continuance of any Event
of Default, the Issuing Bank and each Creditor are hereby
authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and otherwise apply any and
all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing
by the Issuing Bank or such Creditor, as the case may be, to or
for the credit or the account of the Company against any and all
of the obligations of the Company now or hereafter existing under
this Agreement, the Second Mortgage Bond Indenture or the Second
Mortgage Bonds, Series [ ], whether or not the Issuing Bank
or such Creditor, as the case may be, shall have made any demand
hereunder or under such other documents and although such
obligations may be contingent or unmatured.

<PAGE> 65
equal to the Issuing Bank's or such Creditor's ratable share
(according to the proportion of (i) the amount of the Issuing
Bank's or such Creditor's required repayment to (ii) the total
amount so recovered from the purchasing Creditor) of any interest
or other amount paid or payable by the purchasing Creditor in
respect of the total amount so recovered.

(d) The Company agrees that the Issuing Bank and the
Creditors, as the case may be, shall be subrogated to all rights
of the Trustee and the holders of the Bonds, to the extent of any
payment made by the Issuing Bank pursuant to a drawing under the
Letter of Credit, provided that so long as the Bonds remain
unpaid and held by Persons other than the Company or any
Affiliate thereof, such right of subrogation shall in all
respects be subordinate to the rights of the Trustee and the
holders of the Bonds.

<PAGE> 66
(i) indemnification by the Company pursuant to this Section
9.05(a) shall be limited to the costs and expenses of the
Issuing Bank (including reasonable fees and expenses of the
Issuing Bank's counsel) of defending itself against such
allegation, (ii) if in any such action or proceeding it is
finally determined that the Issuing Bank Information
contained an inaccuracy in a material respect or an untrue
statement, then the Company shall not be required to
indemnify the Issuing Bank pursuant to this Section 9.05(a)
for any claims, damages, losses, liabilities, costs or
expenses to the extent caused by such inaccuracy or untrue
statement, and (iii) if any such action or proceeding shall
be settled by the Issuing Bank without there being a final
determination to the effect described in the preceding clause
(ii), unless the Letter of Credit is wrongfully dishonored
and such action or proceeding relates to such wrongful
dishonor, then the Company shall be required to indemnify the
Issuing Bank pursuant to this Section 9.05(a) for the
reasonable costs or expenses incurred in connection with such
action or proceeding prior to such settlement and, if such
action or proceeding is settled with the Company's consent,
for the costs and expenses of such settlement; or

(c) any case or proceeding pursuant to any bankruptcy,
insolvency, reorganization, moratorium or similar law or any
restructuring of the Company; or

(d) any cost or liability under any Environmental Law
arising out of the operation or assets of the Company; or

(e) any event or occurrence set forth in Section 5.04
of the Loan Agreement; or

<PAGE> 67
Nothing in this Section 9.05 is intended to limit the Company's
obligations contained in Article II. Without prejudice to the
survival of any other obligation of the Company hereunder, the
indemnities and obligations of the Company contained in this
Section 9.05 shall survive the payment in full of amounts payable
by the Company pursuant to Article II and the termination of the
Letter of Credit.

SECTION 9.06. Issuing Bank and Creditors. As between
the Issuing Bank, the Agent, and the Creditors on the one hand,
and the Company on the other hand, the Company assumes all risks
of the acts or omissions of the Trustee and any other beneficiary
or transferee of the Letter of Credit with respect to its use of
the Letter of Credit. Neither the Issuing Bank, the Agent, any
Creditor, nor any Participant nor any of their Affiliates and
their officers, directors, employers, agents and advisors shall
be liable or responsible for: (a) the use which may be made of
the Letter of Credit or any acts or omissions of the Trustee and
any other beneficiary or transferee in connection therewith;
(b) the validity, sufficiency or genuineness of documents, or of
any endorsement thereon, even if such documents should prove to
be in any or all respects invalid, insufficient, fraudulent or
forged; (c) payment by the Issuing Bank against presentation of
documents that do not comply with the terms of the Letter of
Credit, including failure of any documents to bear any reference
or adequate reference to the Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment
under the Letter of Credit, except that the Company shall have a
claim against the Issuing Bank, and the Issuing Bank shall be
liable to the Company, to the extent of any direct, but not
consequential, damages suffered by the Company which the Company
proves were caused by (i) the Issuing Bank's willful misconduct
or gross negligence in determining whether a draft or certificate
presented under the Letter of Credit complies with the terms of
the Letter of Credit or (ii) the Issuing Bank's willful failure
to make lawful payment under the Letter of Credit after the
presentation to it by the Trustee or a successor trustee under
the Indenture of a draft and certificate strictly complying with
the terms and conditions of the Letter of Credit. In furtherance
and not in limitation of the foregoing, the Issuing Bank may
accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of
any notice or information to the contrary.

<PAGE> 68
delivered in connection with this Agreement, including, without
limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Agent, the Issuing Bank and each Creditor, and
local counsel who may be retained by said counsel, with respect
thereto, with respect to advising the Agent, the Issuing Bank or
any such Creditor as to its rights and responsibilities, or the
perfection or preservation of rights or interests, under this
Agreement, any other Related Document and such other documents
which may be delivered in connection with this Agreement, with
respect to negotiations with the Company or with other creditors
of the Company, any Person controlling the Company or any of the
Company's Subsidiaries arising out of any Event of Default or any
events or circumstances that may give rise to an Event of Default
and with respect to presenting claims in or otherwise
participating in or monitoring any bankruptcy, insolvency or
other similar proceeding involving creditor's rights generally
and any proceeding ancillary thereto or in connection with the
negotiation of any restructuring or "work-out" (whether or not
consummated). The Company further agrees to pay on demand all
costs and expenses (including reasonable counsel fees and
expenses) of the Agent, the Issuing Bank and each Creditor in
connection with (i) the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement,
any other Related Document and any other documents which may be
delivered in connection with this Agreement, including, without
limitation, reasonable counsel fees and expenses in connection
with the enforcement of rights under this Section 9.07, or (ii)
any action or proceeding relating to a court order, injunction,
or other process or decree restraining or seeking to restrain the
Issuing Bank from paying any amount under the Letter of Credit.
In addition, the Company shall pay any and all stamp and other
administrative taxes and fees payable or determined to be payable
in connection with the execution, delivery, filing and recording
of this Agreement, the Letter of Credit, any other Related
Document or any such other documents, and agrees to save the
Agent, the Issuing Bank and each Creditor harmless from and
against any and all liabilities with respect to or resulting from
any delay in paying or omission to pay such taxes and fees.

<PAGE> 69
purchased shall be held by the Issuing Bank or the Agent or any
other nominee of the Issuing Bank, on behalf of all Creditors
(the "Holder"). The Holder may with the consent, or shall at the
request, of the Majority Creditors exercise its rights in respect
of the Bonds. Upon the sale, remarketing or refunding of any
Bonds so purchased, the Holder shall pay to the Agent for the
ratable benefit of the Creditors the proceeds of such sale,
remarketing or refunding. Upon receipt of such proceeds by the
Agent, the Agent shall ratably reimburse the Creditors their
share of such proceeds.

SECTION 9.09. Binding Effect; Assignments and
Participations. (a) This Agreement shall become effective when
it shall have been executed by the Company, the Agent, the
Issuing Bank and each Creditor and thereafter shall be binding
upon and inure to the benefit of the Company, the Agent, the
Issuing Bank and each Creditor and their respective successors
and assigns, except that the Company shall not have the right to
assign its rights hereunder or any interest herein without the
prior written consent of the Agent, the Issuing Bank and each
Creditor. The Issuing Bank and each Creditor, with the consent
of the Issuing Bank, which consent shall not be unreasonably
withheld, may assign to any Eligible Institution all or any part
of, or any interest (undivided or divided) in, its rights,
benefits and obligations (other than the Issuing Bank's
obligation to issue the Letter of Credit) under this Agreement,
and to the extent of that assignment such assignee shall have the
same rights, benefits and obligations (other than the Issuing
Bank's obligation to issue the Letter of Credit) against and to
the Company hereunder as it would have had if such assignee were
the Issuing Bank or such Creditor hereunder; provided that any
such assignment shall not be in an amount less than $5,000,000.

<PAGE> 70
Agreement shall be determined as if the Issuing Bank or any
Creditor had not sold or agreed to sell any participations in the
Letter of Credit or any Tender Advance or such other amounts, and
as if the Issuing Bank or any Creditor were maintaining the
Letter of Credit or any Tender Advance or such other amounts in
the same way that it is maintaining the portion of the Letter of
Credit or any Tender Advance or such other amounts in which no
participations have been sold. In the case of an Eligible
Participant, the Bank may agree with such Participant to take or
refrain from taking action hereunder or under any Related
Document as the Issuing Bank or any Creditor, as set forth in the
agreement executed by the Bank and such Participant shall
determine in favor of such Participant, with respect to taking or
refraining from taking action hereunder or under any other
Related Document. In no event shall the Issuing Bank or any
Creditor agree with any Restricted Participant to take or refrain
from taking any action hereunder or under any other Related
Document except that the Issuing Bank or any Creditor may agree
with a Restricted Participant that it will not, without the
consent of such Restricted Participant, agree to (i) extend the
date fixed for the payment of principal of or interest on any
Tender Advance or other amounts payable to such Restricted
Participant, (ii) reduce the amount of any such payment of
principal, (iii) reduce the rate at which interest is payable
thereon to a level below the rate at which such Restricted
Participant is entitled to receive such interest, (iv) alter the
rights or obligations of the Company to prepay any Tender Advance
or other amounts payable to such Restricted Participant or
(v) release any collateral, including, without limitation, the
Second Mortgage Bonds, Series [ ].

<PAGE> 71
SECTION 9.11. Severability. Any provision of this
Agreement which is prohibited, unenforceable or not authorized in
any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition, unenforceability or
non-authorization without invalidating the remaining provisions
hereof or affecting the validity, enforceability or legality of
such provision in any other jurisdiction.

SECTION 9.12. Headings. Section headings in this
Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other
purpose.

SECTION 9.13. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICT OF LAW
PRINCIPLES.

SECTION 9.14. Submission to Jurisdiction. THE COMPANY
HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR THE
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT, ANY RELATED DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OR OMISSIONS OF THE
AGENT, THE ISSUING BANK OR ANY CREDITOR IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR
ANY RELATED DOCUMENT. THE COMPANY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.

<PAGE> 72
EACH OTHER RELATED DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK ENTERING INTO
THIS AGREEMENT AND EACH SUCH OTHER RELATED DOCUMENT.

SECTION 9.18. Survival. The obligations of the Company
under Sections 2.11, 2.17, 9.05, 9.14 and 9.15 shall survive the
repayment of the Loans and the payment in full of all amounts
payable by the Company under Section 9.07.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date first above
written.

EL PASO ELECTRIC COMPANY

By
[Title]

Issuing Bank

CITIBANK, N.A.

By
Vice President

Agent

CITIBANK, N.A., as Agent

By
Vice President

<PAGE> 73
Participation
Percentage Creditors

100% CITIBANK, N.A.

By
Vice President

[399 Park Avenue
New York, New York 10043
Attention: Energy West
Department
Telex No. TLX 12-7773 NYWCGCB
Telecopier (212) 793-0642]

<PAGE> 74

EXHIBIT A

FORM OF LETTER OF CREDIT

IRREVOCABLE LETTER OF CREDIT

No. [ ]

, 199[ ]*

[Name and Address of Trustee]

Attention: Corporate Trust Department

Dear Sirs:

We hereby establish, at the request and for the account
of El Paso Electric Company, a Texas corporation (the "Company"),
in your favor, as Trustee under the Indenture of Trust, dated as
of , 199 (the "Indenture") between Maricopa County,
Arizona Pollution Control Corporation (the "Issuer") and you,
pursuant to which [$63,500,000]** in aggregate principal amount
of the Issuer's Pollution Control Refunding Revenue Bonds (El
Paso Electric Company Palo Verde Project), 19 Series (the
"Bonds"), were issued, our Irrevocable Letter of Credit No.
[________], in the amount of $[ ]*** (as more fully
described below), effective immediately and expiring at the close
of banking business at our 111 Wall Street, New York, New York
10043 office on or such later date as we shall
have agreed in writing (the "Stated Termination Date"), unless
earlier terminated in accordance with the terms hereof.

________________
* To be dated the date of issuance of the Letter of Credit.

** In no event shall the principal amount of the Bonds exceed
$63,500,000.

*** In no event shall the face amount of this Letter of Credit
exceed $69,294,375.

<PAGE> 75
We hereby irrevocably authorize you to draw on us, in an
aggregate amount not to exceed the amount of this Letter of
Credit set forth above and in accordance with the terms and
conditions and subject to the reductions in amount as hereinafter
set forth, (1) in one or more drawings by one or more of your
drafts, drawn on our 111 Wall Street, New York, New York 10043
office, payable at sight on a banking day (which shall be any day
other than a Saturday, Sunday or public or bank holiday or the
equivalent for banks generally under the laws of the State of New
York (a "Banking Day")), accompanied by a completed certificate
in substantially the form of Annex B attached hereto, which
drafts and certificates shall be in writing and signed by you
(any such draft accompanied by such certificate being your
"Interest Draft"), an amount not exceeding $[ ]; (2) in
one or more drawings by one or more of your drafts, drawn on our
111 Wall Street, New York, New York 10043 office, payable at
sight on a Banking Day, accompanied by a completed certificate in
substantially the form of Annex C attached hereto, which drafts
and certificates shall be in writing and signed by you (any such
draft accompanied by such certificate being your "Tender Draft"),
an aggregate amount not exceeding $[ ]; (3) in one or
more drawings by one or more of your drafts, drawn on our 111
Wall Street, New York, New York 10043 office, payable at sight on
a Banking Day, accompanied by a completed certificate in
substantially the form of Annex D attached hereto, which drafts
and certificates shall be in writing and signed by you (any such
draft accompanied by such certificate being your "Partial
Redemption Draft"), an aggregate amount not exceeding
$[________]; and (4) in a single drawing by your draft, drawn on
our 111 Wall Street, New York, New York 10043 office, payable at
sight on a Banking Day, accompanied by a completed certificate in
substantially the form of Annex E attached hereto, which draft
and certificate shall be in writing and signed by you (such draft
accompanied by such certificate being your "Final Draft"), an
amount not exceeding $[ ]; provided that in no event
will you have a right to make drawings under this Letter of
Credit for the payment of the principal of, or interest on, Bonds
held of record by the Company (or any Affiliate thereof) or held
by the Trustee or the Tender Agent for the account of the
Company; provided further with respect to any such Bonds that
were not so held by or for the account of the Company (or any
Affiliate thereof) on the immediately preceding Record Date (as
defined in the Indenture), you may, in accordance with the
Indenture, draw on us by your Interest Draft under clause (1).
Notwithstanding any other provision in this Letter of Credit, in
no event will you have a right to make a drawing under this
Letter of Credit for the payment of principal of or interest on
Bonds in a "Bond Interest Term" (as defined in the Indenture).
This Letter of Credit may not be drawn upon for the payment of
any premium which may be payable in respect of the Bonds.

<PAGE> 76
Upon our honoring any Interest Draft presented by you
hereunder, the amount of this Letter of Credit and the amounts
available to be drawn by you by any subsequent Interest Draft,
Tender Draft, Partial Redemption Draft or Final Draft shall be
automatically decreased by an amount equal to the amount of such
Interest Draft. If you shall not have received from us within 15
calendar days from the date of such drawing a notice from us to
the effect that we have not been reimbursed for such drawing in
the form of Annex H attached hereto appropriately completed, the
amount of this Letter of Credit and the amounts from time to time
available to be drawn by you by any Interest Draft, Tender Draft,
Partial Redemption Draft or Final Draft shall be automatically
and irrevocably reinstated in the amount of such drawing,
effective the 16th calendar day from the date of such drawing.

<PAGE> 77
Amounts otherwise received from you on behalf of the Company
shall first be applied in reimbursement of unreimbursed drawings
made by your Interest Draft.

<PAGE> 78
presentation thereof on the next succeeding Banking Day provided
that such drafts and certificates conform with the terms and
conditions of this Letter of Credit. If requested by you,
payment under this Letter of Credit may be made by wire transfer
of Federal Reserve Bank of New York funds to your account in a
bank on the Federal Reserve wire system or by deposit of same day
funds into a designated account that you maintain with us.

<PAGE> 79
This Letter of Credit shall be governed by the laws of
the State of New York, including the Uniform Commercial Code as
in effect in the State of New York. Communications with respect
to this Letter of Credit shall be in writing and shall be
addressed to us at 11l Wall Street, New York, New York 10043,
Attention: NATS Letter of Credit Operations, specifically
referring to the number of this Letter of Credit.

Very truly yours,

CITIBANK, N.A.

By
Vice President

<PAGE> 80
Annex A

CERTIFICATE FOR THE REDUCTION OF AMOUNTS AVAILABLE UNDER
IRREVOCABLE LETTER OF CREDIT NO. DATED
, 199

(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.

(2) The Trustee hereby notifies you that on or prior to
the date hereof $ principal amount of the Bonds
have been redeemed and paid or have been defeased pursuant to
the Indenture.

(3) Following the redemption and payment or the
defeasance referred to in paragraph (2) above, the aggregate
principal amount of all of the Bonds Outstanding (as defined
in the Indenture) is $ .

<PAGE> 81
(8) The amount available to be drawn by the Trustee
under the Letter of Credit by its Final Draft is reduced to
$ (such amount being equal to the sum of the
amounts specified in paragraphs (3) and (4) above) upon
receipt by the Bank of this Certificate.

(9) The amount of the Letter of Credit is reduced to
$ (such amount being equal to the sum of the
amounts specified in paragraph 8 above) upon receipt by the
Bank of this Certificate.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate this day of , 19 .

,
as Trustee

By
[Name and Title]

<PAGE> 82
Annex B

CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT
OF UP TO [ DAYS'] INTEREST ON THE MARICOPA COUNTY,
ARIZONA POLLUTION CONTROL CORPORATION'S POLLUTION
CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC
COMPANY PALO VERDE PROJECT), 199 SERIES (THE
"BONDS")

Irrevocable Letter of Credit No.

(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the day of ,
19 .

,
as Trustee

By
[Name and Title]

<PAGE> 83
Annex C

CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF
PRINCIPAL OF AND UP TO [ DAYS'] INTEREST ON THE MARICOPA
COUNTY, ARIZONA POLLUTION CONTROL CORPORATION'S POLLUTION
CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY
PALO VERDE PROJECT), 199 SERIES (THE "BONDS"), IN SUPPORT
OF A TENDER (OTHER THAN A MANDATORY TENDER UPON TERMINATION
OR EXPIRATION OF THE LETTER OF CREDIT)

Irrevocable Letter of Credit No.

(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.

(3) The amount of the Tender Draft accompanying this
Certificate is equal to the sum of (i) $ being
drawn in respect of the payment of unpaid principal of Bonds
(other than Bonds held of record by the Company (or any
Affiliate thereof) or held by the Trustee or the Tender Agent
for the account of the Company) to be purchased as a result
of a tender of the type described above and (ii) $
being drawn in respect of the payment of accrued and unpaid

<PAGE> 84
interest on such Bonds and does not include any amount of
interest which is included in any Interest Draft, Tender
Draft other than the Tender Draft accompanying this
certificate, Partial Redemption Draft or Final Draft
presented on or prior to the date of this Certificate.

(5) None of the Bonds in respect of which a drawing is
being made are in a Bond Interest Term.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the day of , 19__.

,
as Trustee

By
[Name and Title]

<PAGE> 85

Annex D

Irrevocable Letter of Credit No.

(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.

_______________
* To be used in case of an optional redemption.

<PAGE> 86
(3) The amount of the Partial Redemption Draft
accompanying this Certificate is equal to the sum of (i)
$________ being drawn in respect of the payment of unpaid
principal of Bonds (other than Bonds purchased by the Trustee
on behalf of or for the account of the Bank, pursuant to
Section 3.01(e) of the Indenture, Section 9.01(e) of the
Indenture or Section 13.03(d) of the Indenture and then held
by or on behalf of or for the account of the Bank or its
nominee and Bonds held of record by the Company (or any
Affiliate thereof) or held by the Trustee or Tender Agent for
the account of the Company to be redeemed, and (ii)
$_________ being drawn in respect of the payment of accrued
and unpaid interest on such Bonds and does not include any
amount of interest which is included in any Interest Draft,
Tender Draft, Partial Redemption Draft or Final Draft
presented on or prior to the date of this Certificate.

(6) None of the Bonds in respect of which a drawing is
being made are in a Bond Interest Term.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the day of , 19 .

,
as Trustee

By
[Name and Title]

<PAGE> 87

Annex E

CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF
PRINCIPAL OF AND UP TO DAYS' INTEREST ON THE MARICOPA
COUNTY, ARIZONA POLLUTION CONTROL CORPORATION'S POLLUTION
CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY
PALO VERDE PROJECT), 199 SERIES (THE "BONDS"), UPON
STATED OR ACCELERATED MATURITY OR OPTIONAL OR MANDATORY
REDEMPTION AS A WHOLE OR MANDATORY TENDER UPON TERMINATION OR
EXPIRATION OF THE LETTER OF CREDIT

Irrevocable Letter of Credit No.

The undersigned, a duly authorized officer of the
undersigned Trustee (the "Trustee"), hereby certifies to
Citibank, N.A. (the "Bank"), with reference to Irrevocable Letter
of Credit No. (the "Letter of Credit", the terms defined
therein and not otherwise defined herein being used herein as
therein defined) issued by the Bank in favor of the Trustee,
that:

(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.

(2) The Trustee is making a drawing under the Letter of
Credit (a) with respect to the payment, either at stated
maturity, upon acceleration, as a result of a redemption in
full pursuant to Section 3.01 of the Indenture [(the
direction from the Company and notice to the Bondholders with
respect to redemption was received and given by us no more
than 60 days prior to the date of this Certificate and we had
evidence, as of the date such notice was given by us to the
Bondholders, from two of Moody's Investors Services, Inc.,
Standard & Poor's Corporation and Duff & Phelps, Inc. that
the Company's First Mortgage Bonds, Series [ ], and Second
Mortgage Bonds, Series [ ], each had a rating of BBB- or
better (or equivalent) and such Bonds had not, as of such
date, been placed on any watch list)]* or (b) as a result of
a mandatory tender upon termination or expiration of the
Letter of Credit or substitution of another credit facility
for the Letter of Credit as contemplated by Section 2.02(6)
of the Indenture, of the unpaid principal amount of and up to
__ days' accrued and unpaid interest on, all of the Bonds
which are Outstanding (as defined in the Indenture) (other
than Bonds held of record by the Company (or any Affiliate
thereof) or held by the Trustee or the Tender Agent for the

_______________
* To be used in the case of an optional redemption.

<PAGE> 88
account of the Company), which payment is due on the date on
which this Certificate and the Final Draft it accompanies are
being presented to the Bank.

(3) The amount of the Final Draft accompanying this
Certificate is equal to the sum of (i) $ being drawn
in respect of the payment of unpaid principal of Bonds (other
than Bonds held of record by the Company (or any Affiliate
thereof) or held by the Trustee or the Tender Agent for the
account of the Company) and (ii) $ being drawn in
respect of the payment of accrued and unpaid interest on such
Bonds and does not include any amount of interest on the
Bonds which is included in any Interest Draft, Tender Draft
or Partial Redemption Draft presented on or prior to the date
of this Certificate.

(5) None of the Bonds in respect of which the drawing
is being made are in a Bond Interest Term.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the day of , 19
.

,
as Trustee

By
[Name and Title]

<PAGE> 89
Annex F

CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE UNDER
IRREVOCABLE LETTER OF CREDIT NO. , DATED
_________, 199

(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate this day of , 19 .

,
as Trustee

By
[Name and Title]

<PAGE> 90
Annex G

CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE UNDER
IRREVOCABLE LETTER OF CREDIT NO. , DATED
_________, 199

(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.

(3) The amount of such Tender Draft used to purchase
such Bonds which were not remarketed is $ .

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate this day of , 19 .

,
as Trustee

By
[Name and Title]

<PAGE> 91
Annex H

NOTICE THAT TRUSTEE'S RIGHT TO DRAW UNDER THE LETTER OF
CREDIT BY AN INTEREST DRAFT HAS NOT BEEN REINSTATED

[Name and Address of Trustee]

Attention: Corporate Trust Department

Irrevocable Letter of Credit No.

Dear Sirs:

CITIBANK, N.A.

<PAGE> 92
Annex I

INSTRUCTION TO TRANSFER

, 19

Citibank, N.A.
111 Wall Street
New York, New York 10043

Attention: NATS Letter of Credit Operations

Re: Irrevocable Letter of Credit No.

Gentlemen:

For value received, the undersigned beneficiary hereby
irrevocably transfers to:

[Name of Transferee]

[Address]

The Letter of Credit is returned herewith and in
accordance therewith we ask that this transfer be effective and
that you transfer the Letter of Credit to our transferee
or that, if so requested by the transferee, you issue a new
irrevocable letter of credit in favor of the transferee with
provisions consistent with the Letter of Credit.

Very truly yours,

,
as predecessor Trustee

By
[Name and Title]

<PAGE> 1

LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT

Dated as of , 199[ ]

among

EL PASO ELECTRIC COMPANY,

CREDIT SUISSE,
as Issuing Bank,

THE CREDITORS
Specified Herein

and

CREDIT SUISSE,
as Agent
for such Creditors

<PAGE> 2
TABLE OF CONTENTS

Section Page

Preliminary Statements............................ 1

ARTICLE I
DEFINITIONS

ARTICLE II
AMOUNT AND TERMS OF THE LETTER OF CREDIT

2.01 The Letter of Credit........................ 16
2.02 Issuing the Letter of Credit................ 16
2.03 Drawing Fee................................. 17
2.04 Commissions................................. 17
2.05 Reimbursement on the Date of the Draw....... 17
2.06 Tender Advances............................. 18
2.07 Interest on Advances........................ 19
2.08 Reimbursement of Issuing Bank, Etc.......... 22
2.09 Prepayments; Reinstatement of Letter of
Credit Amounts............................ 24
2.10 Additional Interest......................... 25
2.11 Increased Costs............................. 26
2.12 Payments and Computations................... 28
2.13 Payments on Non-Business Days............... 29
2.14 Extension of the Stated Termination
Date...................................... 29
2.15 Evidence of Debt............................ 30
2.16 Obligations Absolute........................ 31
2.17 U.S. Taxes.................................. 33
2.18 Applicable Lending Office................... 34
2.19 Net Payments................................ 34
2.20 Reinstatement of the Letter of Credit....... 35

ARTICLE III
CONDITIONS OF ISSUANCE

3.01 Conditions Precedent to Issuance of the
Letter of Credit.......................... 35
3.02 Additional Conditions Precedent to
Issuance of the Letter of Credit.......... 39
3.03 Conditions Precedent to Each
Tender Advance............................ 40

<PAGE> 3
Section Page

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

4.01 Representations and Warranties
of the Company........................... 40

ARTICLE V
COVENANTS OF THE COMPANY

5.01 Affirmative Covenants...................... 44
5.02 Negative Covenants......................... 50

ARTICLE VI
EVENTS OF DEFAULT

6.01 Events of Default.......................... 54
6.02 Upon an Event of Default................... 56

ARTICLE VII
SECURITY

7.01 Issuance and Pledge of Bonds............... 57
7.02 Application of Moneys...................... 58
7.03 Rights of Bondholders...................... 58
7.04 The Agent's Duties......................... 58

ARTICLE VIII
THE AGENT, THE CREDITORS AND
THE ISSUING BANK

8.01 Authorization and Action................... 59
8.02 Reliance, Etc. ............................ 59
8.03 The Agent, the Issuing Bank and
Affiliates............................... 60
8.04 Bank Credit Decision....................... 60
8.05 Indemnification............................ 61
8.06 Successor Agent............................ 61
8.07 Issuing Bank............................... 62

<PAGE> 4
Section Page

ARTICLE IX
MISCELLANEOUS

9.01 Amendments, Etc. .......................... 62
9.02 Notices, Etc. ............................. 63
9.03 No Waiver; Remedies........................ 64
9.04 Rights of Setoff and Subrogation........... 64
9.05 Indemnification............................ 65
9.06 Issuing Bank and Creditors................. 67
9.07 Costs, Expenses and Taxes.................. 68
9.08 Purchase Option............................ 69
9.09 Binding Effect; Assignments and
Participations........................... 69
9.10 Further Assurances......................... 71
9.11 Severability............................... 71
9.12 Headings................................... 71
9.13 Governing Law.............................. 71
9.14 Submission to Jurisdiction................. 71
9.15 Waiver of Trial by Jury.................... 72
9.16 Counterparts............................... 72
9.17 Integration................................ 72
9.18 Survival................................... 73

SCHEDULE I - Liens

EXHIBIT A - Form of Letter of Credit with Annexes A
through I thereto attached

ADDENDUM TO REIMBURSEMENT AGREEMENT

iii

<PAGE> 5

LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT

LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT, dated as
of [ ], 199[ ], among EL PASO ELECTRIC COMPANY, a Texas
corporation (the "Company"), CREDIT SUISSE ("Credit Suisse") as
issuing bank (the "Issuing Bank"), the Creditors (as hereinafter
defined) and Credit Suisse, as agent for the Creditors (the
"Agent").

PRELIMINARY STATEMENTS:

(1) The Company requested the Maricopa County, Arizona
Pollution Control Corporation (the "Issuer") to issue, pursuant
to the Indenture of Trust, dated as of December 1, 1984 (such
indenture as amended by Supplemental Indenture No. 1, dated as of
May 1, 1985 and Supplemental Trust Indenture No. 2, dated as of
June 1, 1986, the "Original Indenture") naming MBank El Paso as
trustee (the "Original Trustee"), $37,100,000 aggregate principal
amount of the Issuer's Pollution Control Refunding Revenue Bonds,
1984 Series E (El Paso Electric Company Palo Verde Project) (the
"Original Bonds"), to various purchasers.

(2) The Issuer and the Company entered into a Loan
Agreement, dated as of December 1, 1984 (the "Original Loan
Agreement"), which the Issuer assigned to the Original Trustee to
secure the payment of the Original Bonds, and pursuant to which,
among other things, the Company was required to furnish a letter
of credit in connection with its payment obligations under the
Original Loan Agreement.

(3) Pursuant to the terms of the Original Indenture
and the Original Loan Agreement, the Company was required to
furnish a letter of credit in connection with its obligation to
purchase Original Bonds pursuant to the Original Indenture.

(4) The Company and Credit Suisse entered into a
Letter of Credit and Reimbursement Agreement dated as of June 1,
1986 (the "Original Reimbursement Agreement"), pursuant to which
Credit Suisse issued its Irrevocable Letter of Credit dated June
18, 1986 (the "Original Letter of Credit") in respect of certain
of the Company's payment obligations relating to the Original
Bonds.

(5) Canadian Imperial Bank of Commerce ("CIBC") and
Credit Suisse entered into a Sale and Participation Agreement
dated as of December 31, 1986, as amended, pursuant to which
Credit Suisse sold and CIBC purchased an interest in the Original
Reimbursement Agreement, the Original Letter of Credit and the
Related Documents (as defined in the Original Reimbursement
Agreement).

<PAGE> 6
(6) On January 8, 1992, the Company commenced a
voluntary case (the "Bankruptcy Case") under chapter 11 of the
Bankruptcy Code (as hereinafter defined) (Case No. 92-10148-FM)
in the Bankruptcy Court (as hereinafter defined), and thereafter
has continued to operate its business and manage its assets as a
debtor-in-possession.

(7) The Company desires to restructure its outstanding
indebtedness and, in connection therewith, the Company has
requested the Issuer to, and the Issuer has agreed to, refund
(the "Refunding") the Original Bonds by issuing Pollution Control
Refunding Revenue Bonds (El Paso Electric Company Palo Verde
Project), 199 Series (the "Bonds") pursuant to the Indenture
of Trust dated as of , 199 a form of which has been filed
with the Bankruptcy Court in accordance with Section 7.6 of the
Plan of Reorganization (as hereinafter defined) (as such
Indenture may be amended, supplemented and modified from time to
time, the "Indenture"), naming [ ] as trustee (the
"Trustee").

(8) In connection with the Refunding, the Issuer and
the Company have entered into a Loan Agreement, dated as of ,
199 (as the same may be amended, supplemented and modified from
time to time, the "Loan Agreement"), which the Issuer has
assigned to the Trustee to secure payment of the Bonds, and
pursuant to which, among other things, in connection with the
initial delivery of the Bonds, the Company is required to furnish
a letter of credit in connection with its payment obligations
under the Loan Agreement.

[(9) In connection with the Refunding, the Trustee and
the Company have entered into a Tender Agreement, dated as of
, 199 , pursuant to which, among other things, the Company is
required to furnish a letter of credit in connection with its
obligation to purchase Bonds pursuant to Section 2.02 of the
Indenture and redeem Bonds pursuant to Section 3.01 of the
Indenture.]

(10) In connection with the Refunding and in
consideration therefor and as set forth in the Plan of
Reorganization, the Company, Credit Suisse and CIBC have agreed
to enter into this Letter of Credit and Reimbursement Agreement
(as amended, modified and supplemented from time to time, this
"Agreement") and the Related Documents (as defined herein)
pursuant to which Credit Suisse will issue, in substantially the
form of Exhibit A, a letter of credit (such letter of credit and
any successor letter of credit as provided for in such letter of

<PAGE> 7
credit being the "Letter of Credit"), in the amount of $[ ]*
(the "Commitment") of which [$37,100,000** shall support the
payment of principal of the Bonds and $[ ] shall support
the payment of interest on the Bonds for up to [ ] days computed
at [14%]*** per annum on the principal thereof and CIBC will
become a Creditor hereunder.

(11) On [ , ], an order was entered by the
court having jurisdiction over the Bankruptcy Case (the
"Bankruptcy Court") confirming the Plan of Reorganization, which
Plan of Reorganization provided, among other things, for the
Company to enter into this Agreement.

ARTICLE I

DEFINITIONS

"Affiliate" means, as to any Person, any other Person
that, directly or indirectly, controls, is controlled by or
is under common control with such Person or is a director or
officer of such Person. For purposes of this definition,
the term "control" (including the terms "controlling,"
"controlled by" and "under common control with") of a Person
means the possession, direct or indirect, of the power to
vote 5% or more of the Voting Stock of such Person or to
direct or cause the direction of the management and policies
of such Person, whether through the ownership of Voting
Stock, by contract or otherwise.

________________
* No to exceed face amount of Original Letter of Credit.

** Not to exceed the portion of the Original Letter of Credit
available to pay principal on the Original Bonds.

*** To be set at a market rate as determined by the Remarketing
Agent, but not to exceed 14% per annum.

<PAGE> 8
"Agent Payment Notice" has the meaning assigned to that
term in Section 2.08(a)(ii).

"Agreement" has the meaning assigned to that term in
Preliminary Statement (9).

"Alternate Base Rate" means a fluctuating interest rate
per annum as shall be in effect from time to time which rate
per annum shall at all times be equal to the higher of:

(i) the rate of interest announced publicly by
Credit Suisse in New York, New York, from time to time
as Credit Suisse's base rate, each change in such rate
to be effective as of Credit Suisse's opening of
business on the date such change occurs (extensions of
credit made by Credit Suisse may bear interest at rates
below, equal to or above such rate); or

(ii) the Federal Funds Rate plus .50 percent.

"Alternate Base Rate Advance" means a Tender Advance
bearing interest as provided in Section 2.07(a).

"Available Amount" in effect at any time means the
maximum amount available to be drawn at such time under the
Letter of Credit, the determination of such maximum amount
to assume compliance with all conditions for drawing and no
reduction for (i) any amount drawn by an Interest Draft
(unless such amount is not reinstated under the Letter of
Credit) or (ii) any amount drawn by a Tender Draft or (iii)
any amount not available to be drawn because Bonds are held
by or for the account of the Company.

"Banking Institution" means any financial institution
subject to regulation under Regulation D of the Board of
Governors of the Federal Reserve System and any other
banking institution or trust company or similar organization
incorporated or organized under the laws of a country other
than the United States, or a political subdivision of a
country other than the United States.

"Bankruptcy Case" has the meaning assigned to that term
in Preliminary Statement (5).

"Bankruptcy Code" means the Bankruptcy Reform Act of
1978, as heretofore and hereafter amended, and codified as
title 11 of the United States Code.

"Bankruptcy Court" has the meaning assigned to that
term in Preliminary Statement (10).

<PAGE> 9
"Bond Interest Amount" for any Payment Date with
respect to each Bond, means an amount equal to the accrued
interest on the principal amount of such Bond in accordance
with its terms from and including the first day of the
Quarterly Period for such Bond ending on such Payment Date
to but excluding the earlier of (i) the Payment Date and
(ii) the date such Bond ceases to be held by or for the
account of the Issuing Bank or the Agent or any other
nominee of the Issuing Bank.

"Bonds" has the meaning assigned to that term in
Preliminary Statement (6).

"Business Day" means any day of the year on which banks
are not required or authorized to close in New York City
and, if the applicable Business Day relates to any
Eurodollar Advances, on which dealings are carried on the
London interbank market.

"Capitalized Lease Obligation" means, with respect to
any lease of property which, in accordance with GAAP,
appears on the lessee's balance sheet as a capital lease,
the amount of the liability which should appear on such
balance sheet.

"CERCLA" means the Comprehensive Environmental
Response, Compensation, and Liability Act, as amended from
time to time.

"Code" means the Internal Revenue Code of 1986, as
amended from time to time.

"Commencement Date" means the earlier of (i) the
Effective Date and (ii) December 31, 1994.

"Commitment" has the meaning assigned to that term in
Preliminary Statement (9).

"Confirmation Order" means the order of the Bankruptcy
Court confirming the Plan of Reorganization.

<PAGE> 10
nominee of the Issuing Bank, from and including the first
day of the Quarterly Period for each such Bond ending on
such Payment Date to but excluding the earlier of (i) the
Payment Date and (ii) the date such Bond ceases to be held
by or for the account of the Issuing Bank, the Agent or any
other nominee of the Issuing Bank, at an interest rate per
annum equal at all times to the sum of (x) the Alternate
Base Rate in effect from time to time plus (y) .50% per
annum.

"Creditors" means the banks (including CIBC) listed on
the signature pages hereof under the caption "Creditors" and
any other Person which becomes a party hereto pursuant to
Section 9.09(a).

"Credit Termination Date" means the earlier of (i) the
day on which the Letter of Credit is surrendered by the
Trustee to the Issuing Bank for cancellation and (ii) the
Stated Termination Date.

"Debt" of any Person means, without duplication,
(a) all indebtedness of such Person for borrowed money or
for the deferred purchase price of property or services
(including, without limitation, all obligations, contingent
or otherwise, of such Person in connection with acceptance
facilities (other than acceptance facilities entered into in
connection with normal course trade transactions) and letter
of credit facilities to the extent such letter of credit
facilities support Debt), (b) all obligations of such Person
evidenced by notes, bonds, debentures or other similar
instruments, (c) all obligations of such Person created or
arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person,
(d) all Capitalized Lease Obligations of such Person,
(e) all obligations of such Person to purchase, redeem,
retire, defease or otherwise make any payment in respect of
any capital stock of or other ownership or profit interest
in such Person or any other Person or any warrants, rights
or options to acquire such capital stock, valued, in the
case of preferred stock, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid
dividends, (f) all Debt of others referred to in clauses (a)
through (e) above guaranteed directly or indirectly in any
manner by such Person, or in effect guaranteed directly or
indirectly by such Person through an agreement (i) to pay or
purchase such Debt or to advance or supply funds for the
payment or purchase of such Debt, (ii) to purchase, sell or
lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor
to make payment of such Debt or to assure the holder of such
Debt against loss, (iii) to supply funds to or in any other
manner invest in the debtor (including any agreement to pay

<PAGE> 11
for property or services irrespective of whether such
property is received or such services are rendered) or
(iv) otherwise to assure a creditor against loss, and
(g) all Debt referred to in clauses (a) through (e) above
secured by (or for which the holder of such Debt has an
existing right, contingent or otherwise, to be secured by)
any Lien on property (including, without limitation,
accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the
payment of such Debt. In cases where recourse to any Person
or any of its properties in respect of Debt is limited, the
amount of such Debt of such Person for purposes hereof shall
be so limited.

"Default Rate" means a fluctuating interest rate equal
to 2% per annum above the Alternate Base Rate in effect from
time to time.

"EBITA" means, for any period, the sum, for the Company
and its Consolidated Subsidiaries (determined on a
consolidated basis without duplication in accordance with
GAAP), of the following: (a) net operating income
(calculated before taxes, Interest Expense, extraordinary
items and unusual non-cash, non-recurring items and income
or loss attributable to equity in Affiliates) for such
period plus (b) amortization (to the extent deducted in
determining net operating income) for such period.

"Effective Date" means the Effective Date (as defined
therein) of the Plan of Reorganization.

"Eligible Institution" means (i) a bank or trust
company organized under the laws of the United States of
America, of any state therein, of the District of Columbia,
of any member country of the Organization for Economic
Cooperation and Development or of any political subdivision
of any such country, in each case, having assets in excess
of $500,000,000, (ii) an insurance company organized under
the laws of any state in the United States of America or of
the District of Columbia having assets in excess of
$500,000,000 or (iii) any other Person consented to by the
Company, which consent shall not be unreasonably withheld.

"Eligible Participant" has the meaning assigned to that
term in Section 9.09(b).

<PAGE> 12
governmental or regulatory authority for enforcement,
investigation, cleanup, removal, response, remedial or other
actions or damages pursuant to any Environmental Law and (b)
any claim by any Person seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive
relief resulting from Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the
environment.

"Environmental Permit" means any permit, approval,
identification number, license or other authorization
required under any Environmental Law.

"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the
regulations promulgated and rulings issued thereunder.

"Eurodollar Advance" means any Tender Advance bearing
interest at the Eurodollar Rate.

"Eurodollar Rate" for any Interest Period for any
Tender Advance means an interest rate per annum equal at all
times during such Interest Period to the sum of (x) the LIBO
Rate for such Interest Period plus (y) 1.50% per annum.

"Event of Default" has the meaning assigned to that
term in Section 6.01.

"Federal Funds Rate" means, for any period, a
fluctuating interest rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) equal for each day
during such period to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average
of the quotations for such day on such transactions received
by the Agent from three Federal funds brokers of recognized
standing selected by it.

<PAGE> 13
"Final Approval" means any authorizations, consents,
approvals, waivers, exceptions, variances, orders, licenses,
exemptions, publications, filings, notices to and
declarations of or with any governmental authority (other
than routine reporting requirements the failure to comply
with which will not affect the validity or enforceability of
any of the Related Documents or have a Material Adverse
Effect) or any other action in respect of any governmental
authority that is in full force and effect and is not the
subject of a pending appeal or reconsideration or other
review, and the time in which to make an appeal or request
the review or reconsideration of which has expired without
any appeal or request for review or reconsideration having
been taken or made.

"Final Draft" has the meaning assigned to that term in
the Letter of Credit.

"Final Order" means an order of the Bankruptcy Court
which (a) shall not have been reversed, stayed, modified or
amended and the time to appeal from, or to seek review or
rehearing of, shall have expired and as to which no appeal
or petition for review, rehearing or certiorari is pending,
or (b) if appealed from, shall have been affirmed and the
time to appeal from such affirmance or to seek review or
rehearing thereof, shall have expired or no further hearing,
appeal or petition for certiorari can be taken or granted.

"First Mortgage Bond Indenture" means the Indenture
dated as of between the Company and
, as trustee, providing for the issuance by the
Company of its first mortgage bonds.

"First Mortgage Bonds" means bonds issued by the
Company under the First Mortgage Bond Indenture.

"First Mortgage Bonds, Series A/B" means, collectively,
the First Mortgage Bonds, Series A and the First Mortgage
Bonds, Series B, in each case issued under the First
Mortgage Bond Indenture.

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

"Governmental Person" means any national, state or
local government, any political subdivision or any
government instrumentality, authority, body or entity,
including the Federal Deposit Insurance Corporation, the
Board of Governors of the Federal Reserve System, any
central bank or any comparable authority.

<PAGE> 14
"Hazardous Materials" means (a) petroleum or petroleum
products, asbestos in any form, radioactive or source
material, (b) any substances defined as or included in the
definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "extremely hazardous wastes",
"restricted hazardous wastes", "toxic substances", "toxic
pollutants", "contaminants" or "pollutants", or words of
similar import, under any Environmental Law and (c) any
other substance exposure to which is regulated under any
Environmental Law.

"Indemnified Party" has the meaning assigned to that
term in Section 9.05.

"Indenture" has the meaning assigned to that term in
Preliminary Statement (6).

"Interest Draft" has the meaning assigned to that term
in the Letter of Credit.

"Interest Expense" means, for any period, the sum, for
the Company and its Consolidated Subsidiaries (determined on
a consolidated basis without duplication in accordance with
GAAP), of the following: (a) all interest in respect of
Debt including, without limitation, interest capitalized
during such period (whether or not actually paid during such
period), including, without limitation, all commissions and
fees (other than up-front fees), plus (b) the net amounts
payable (or minus the net amounts receivable) under Interest
Rate Protection Agreements accrued during such period
(whether or not actually paid or received during such
period).

"Interest Period" has the meaning assigned to that term
in Section 2.07(b).

"Investment Grade Rating" means a rating of BBB- or
better (or equivalent rating) by any two of Moody's
Investors Service, Inc., Standard & Poor's Corporation and
Duff & Phelps, Inc.

<PAGE> 15
"Issuer" has the meaning assigned to that term in
Preliminary Statement (1).

"LC Payment Notice" has the meaning assigned to that
term in Section 2.08(a)(ii).

"Letter of Credit" has the meaning assigned to that
term in Preliminary Statement (9).

"Leverage Ratio" means, at any time, the ratio of Total
Debt at such time to the sum of (a) Total Capital at such
time plus (b) Total Debt at such time.

"LIBO Rate" for any Interest Period means an interest
rate per annum equal to the rate of interest per annum at
which deposits in United States dollars are offered by the
principal office of Credit Suisse in London, England to
prime banks in the London interbank market at 11:00 A.M.
(London time) two Business Days before the first day of such
Interest Period for a period equal to such Interest Period.

"Lien" means any lien, security interest or other
charge or encumbrance of any kind, or any other type of
preferential arrangement, including, without limitation, the
lien or retained security title of a conditional vendor and
any easement, right of way or other encumbrance on title to
real property.

"Loan Agreement" has the meaning assigned to that term
in Preliminary Statement (7).

"Majority Creditors" means Creditors which have an
aggregate Participation Percentage of more than 50%.

"Material Adverse Effect" means a material adverse
effect on (i) the property, business, operations, financial
condition, liabilities or capitalization of the Company and
its Subsidiaries taken as a whole, (ii) the ability of the
Company to perform its obligations under any of the Related
Documents, (iii) the validity or enforceability of any of
the Related Documents, (iv) the rights and remedies of the
Issuing Bank, the Creditors and the Agent or (v) the timely
payment of the principal of or interest hereunder or other
amounts payable in connection herewith.

"Material Subsidiary" means, at any time, a Subsidiary
of the Company (a) whose assets at such time exceed 10% of
the assets of the Company and its Subsidiaries (on a
consolidated basis) or (b) whose earnings at such time
exceed 10% of the earnings of the Company and its
Subsidiaries (on a consolidated basis).

<PAGE> 16
"Multiemployer Plan" means a multiemployer plan, as
defined in Section 4001(a)(3) of ERISA, to which the Company
or any ERISA Affiliate is making or accruing an obligation
to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make
contributions, such plan being maintained pursuant to one or
more collective bargaining agreements.

"Multiple Employer Plan" means a single employer plan,
as defined in Section 4001(a)(15) of ERISA, that (i) is
maintained for employees of the Company or an ERISA
Affiliate and at least one Person other than the Company and
its ERISA Affiliates or (ii) was so maintained and in
respect of which the Company or an ERISA Affiliate could
have liability under Section 4064 or 4069 of ERISA in the
event such plan has been or were to be terminated.

"Official Statement" means the Official Statement dated
[ , 199 ] of the Issuer relating to the Bonds,
together with the documents incorporated therein by
reference.

"Original Bonds" has the meaning assigned to that term
in Preliminary Statement (1).

"Original Indenture" has the meaning assigned to that
term in Preliminary Statement (1).

"Original Letter of Credit" has the meaning assigned to
that term in Preliminary Statement (4).

"Original Loan Agreement" has the meaning assigned to
that term in Preliminary Statement (2).

"Original Reimbursement Agreement" has the meaning
assigned to that term in Preliminary Statement (4).

"Original Trustee" has the meaning assigned to that
term in Preliminary Statement (1).

"Partial Redemption Draft" has the meaning assigned to
that term in the Letter of Credit.

"Participant" has the meaning assigned to that term in
Section 9.09(b).

<PAGE> 17
Creditor that became a party hereto by operation of Section
9.09(a), the percentage participation interest assumed by
such assignee Creditor as set forth in the instrument of
assignment referred to in Section 9.09(a), except as
provided in clause (iii) below, and (iii) with respect to
any Creditor described in clause (i) or (ii) above that
assigns a percentage of its interests in accordance with
Section 9.09(a), its participation percentage as reduced by
the percentage so assigned.

"Payment Amount" has the meaning set forth in Section
2.05(c).

"Payment Date" means the last day of each Quarterly
Period.

"Payment Period" has the meaning assigned to that term
in Section 2.06.

"PBGC" means the Pension Benefit Guaranty Corporation or
any successor thereto.

"Person" means an individual, a corporation, a
partnership, an association, a business trust or any other
entity or organization, including a Governmental Person.

"Plan" means a Single Employer Plan or a Multiple
Employer Plan.

"Preliminary Official Statement" means the Preliminary
Official Statement dated [ , 199 ] of the
Issuer relating to the Bonds, together with the documents
incorporated therein by reference.

"Quarterly Period" with respect to each Bond means the
period commencing on the date such Bond is purchased by the
Trustee or the Tender Agent on behalf of or for the account
of the Issuing Bank, the Agent or any other nominee of the
Issuing Bank and ending on the first to occur of March 31,
June 30, September 30 or December 31 thereafter, and,
thereafter, each subsequent period commencing on the last
day of the immediately preceding Quarterly Period and ending
on the first to occur of March 31, June 30, September 30 or
December 31 thereafter.

"Refunding" has the meaning assigned to that term in
Preliminary Statement (6).

<PAGE> 18
"Related Documents" has the meaning assigned to that
term in Section 2.16.

"Remarketing Agent's Agreement" means the remarketing
agreement dated as of , 199[ ] between the
Company and [ ].

"Second Mortgage Bond Indenture" means the Indenture
dated as of between the Company and
, as trustee, providing for the issuance by the
Company of its second mortgage bonds.

"Second Mortgage Bonds" means bonds issued by the
Company under the Second Mortgage Bond Indenture.

"Second Mortgage Bonds, Series A" means the Second
Mortgage Bonds, Series A issued under the Second Mortgage
Bond Indenture.

"Second Mortgage Bonds, Series Y-6" means the mortgage
bonds at any time issued by the Company and outstanding
pursuant to the Second Mortgage Bond Indenture, which
provide collateral security for the obligations of the
Company for principal, interest and letter of credit
commissions under this Agreement.

"Single Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (i) is
maintained for employees of the Company or an ERISA
Affiliate and no Person other than the Company and its ERISA
Affiliates or (ii) was so maintained and in respect of which
the Company or an ERISA Affiliate could have liability under
Section 4069 of ERISA in the event such plan has been or
were to be terminated.

"Stated Termination Date" means the earlier of (i)
December 31, 1998 and (ii) the last day of the fourth month
following the fourth anniversary of the Effective Date,
unless extended as provided in Section 2.14.

<PAGE> 19
"Tender Advance" has the meaning assigned to that term
in Section 2.06.

"Tender Agent" has the meaning assigned to that term in
the Indenture.

"Tender Draft" has the meaning assigned to that term in
the Letter of Credit.

"Total Capital" means, as at any date, the sum for the
Company and its Consolidated Subsidiaries (determined on a
consolidated basis without duplication in accordance with
GAAP), of the following:

(a) the amount of capital stock (excluding
treasury stock and capital stock subscribed for and
unissued and preferred stock mandatorily redeemable in
cash or redeemable in cash at the option of the holder
thereof), plus

(b) the amount of surplus and retained earnings
(or, in the case of a surplus or retained earnings
deficit, minus the amount of such deficit).

"Total Debt" means, as at any date, the aggregate
amount of all Debt of the Company and its Consolidated
Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP) (other than contingent
obligations in connection with acceptance facilities and
letters of credit).

"Trustee" means [ ] and its
successors and permitted assigns under the Indenture, as
trustee and paying agent.

"Voting Stock" means capital stock issued by a
corporation, or equivalent interests in any other Person,
the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of
directors (or Persons performing similar functions) of such
Person, even though the right so to vote has been suspended
by the happening of such a contingency.

"Withdrawal Liability" has the meaning given such term
under Part I of Subtitle E of Title IV of ERISA.

<PAGE> 20
SECTION 1.03. Accounting Terms. All accounting terms
not specifically defined herein shall be construed in accordance
with GAAP consistently applied, except as otherwise stated
herein.

ARTICLE II

AMOUNT AND TERMS OF THE LETTER OF CREDIT

SECTION 2.02. Issuing the Letter of Credit. The
Letter of Credit shall be issued on at least two Business Days'
notice from the Company to the Issuing Bank (which notice may be
furnished prior to the execution and delivery hereof) specifying
the Business Day of issuance thereof. On such Business Day
specified by the Company in such notice and upon fulfillment of
the applicable conditions set forth in Article III, the Issuing
Bank will issue the Letter of Credit to the Trustee.

<PAGE> 21
SECTION 2.03. Drawing Fee. The Company hereby agrees
to pay to the Agent, for the account of the Issuing Bank a
drawing fee of $100 per draw, payable at the time of each draw
under the Letter of Credit.

SECTION 2.04. Commissions. (a) The Company hereby
agrees to pay to the Agent, for the account of the Issuing Bank
and the Creditors, a letter of credit commission on the Available
Amount in effect from time to time (i) from the date of issuance
of the Letter of Credit to but excluding the first anniversary of
the Commencement Date, at the rate of .75% per annum, (ii) from
the first anniversary of the Commencement Date to but excluding
the second anniversary of the Commencement Date, at the rate of
.875% per annum, (iii) from the second anniversary of the
Commencement Date to but excluding the third anniversary of the
Commencement Date, at the rate of 1.00% per annum, (iv) from the
third anniversary of the Commencement Date to but excluding the
fourth anniversary of the Commencement Date, at the rate of
1.125% per annum, (v) from the fourth anniversary of the
Commencement Date to but excluding the Stated Termination Date,
at the rate of 1.25% per annum, (vi) if applicable pursuant to
Section 2.14(a), from the initial Stated Termination Date to but
excluding the fifth anniversary of the Commencement Date, at the
rate of 1.25% per annum, and (vii) if applicable pursuant to
Section 2.14(a), from the fifth anniversary of the Commencement
Date to but excluding the then current Stated Termination Date,
at the rate of 1.375% per annum. The Letter of Credit commission
shall be payable quarterly in arrears on the last Business Day of
each March, June, September and December, commencing on the last
day of the quarter in which the Letter of Credit is issued, until
the Credit Termination Date, and on the Credit Termination Date.
Such letter of credit commission shall be paid by the Agent to
the Issuing Bank and the Creditors as the Issuing Bank and the
Creditors have agreed prior to the time each such Creditor
becomes a party hereto.

<PAGE> 22
drawing to pay interest on the Bonds), a sum equal to such amount
so paid, plus (ii) on each day thereafter interest on any amount
remaining unpaid by the Company to the Agent under clause (i)
above, from the date of such draw until payment in full, at the
Default Rate.

(c) The Company shall pay to the Agent, on each
Payment Date the amount (the "Payment Amount") by which (i) the
aggregate Contract Interest Amount for the Quarterly Period
ending on such Payment Date exceeds (ii) the aggregate Bond
Interest Amount for such Quarterly Period with respect to all
Bonds held by or on behalf of or for the account of the Issuing
Bank, the Agent or any other nominee of the Issuing Bank during
such Quarterly Period. Any amounts due pursuant to this Section
2.05(c) that are not paid when due shall bear interest from the
date the same become due until such amounts are paid, payable on
demand, at an interest rate equal to the Default Rate.

<PAGE> 23
Except as otherwise provided in Section 2.09 or Section
6.02, each Tender Advance shall be payable in substantially equal
quarterly installments on the last day of each calendar quarter,
commencing on the last day of the calendar quarter in which the
90th day following the date of such Tender Advance occurs and
continuing until the Stated Termination Date in effect on the
date of such Tender Advance (each such approximately 90-day
period being a "Payment Period").

(a) Alternate Base Rate. Except to the extent that
the Company shall elect to pay interest on the unpaid
principal of any Tender Advance for any Interest Period
pursuant to subsection (c) of this Section 2.07, the Company
shall pay interest on the unpaid principal of each Tender
Advance from the date of such Tender Advance until the
principal amount of such Tender Advance is paid in full,
payable quarterly in arrears on the last day of each
calendar quarter and on the date such Tender Advance is paid
in full, at a fluctuating interest rate per annum in effect
from time to time equal to .50% per annum above the
Alternate Base Rate in effect from time to time.

(b) Interest Periods. The Company may from time to
time elect to have the interest on any Tender Advance
determined and payable for a specified period (an "Interest
Period" for such Tender Advance) in accordance with
subsection (c) of this Section 2.07. The first day of an
Interest Period for any Tender Advance shall be either the
date such Tender Advance is made, the date the Company
specifies as the first day of the Eurodollar Advance, or the
last day of the then current Interest Period for a
Eurodollar Advance. No Interest Period shall end after the
Stated Termination Date.

<PAGE> 24
however, that the Company may not select any Interest Period
which ends after any principal repayment installment date
unless, after giving effect to such selection, the aggregate
unpaid principal amount of Eurodollar Advances having
Interest Periods which end on or prior to such principal
repayment installment date and Alternate Base Rate Advances
shall be at least equal to the principal amount of the
Tender Advances due and payable on and prior to such date.

If the Company shall have made such election for any
Tender Advance for any such Interest Period, the Company
shall pay interest on such Tender Advance during such
Interest Period, payable on the last day of such Interest
Period and, if such Interest Period has a duration of more
than three months, on each day which occurs during such
Interest Period every three months from the first day of
such Interest Period, at the Eurodollar Rate for such
Interest Period for such Tender Advance.

(d) Default Interest. The Company shall pay interest
on the unpaid principal amount of any Tender Advance that is
not paid when due and on the unpaid amount of all interest,
and other amounts payable hereunder, that is not paid when
due, payable on demand, at a rate per annum equal at all
times to 2% per annum above the Alternate Base Rate in
effect from time to time. Notwithstanding anything in this
Agreement to the contrary, upon the occurrence and during
the continuance of an Event of Default, the right of the
Company to make an election in respect of the Eurodollar
Rate pursuant to Section 2.07(c) shall terminate (i)
automatically, in the case of an Event of Default under
Section 6.01(a) or (ii) upon notice to the Company by the
Bank, in all other cases; provided that no termination
referred to in either of the preceding clauses (i) or (ii)
shall affect any Eurodollar Advance during an Interest
Period in effect for such Eurodollar Advance at the time any
notice is received by the Company.

(e) Illegality, Etc. Notwithstanding any other
provision of this Agreement, if the Issuing Bank or any
Creditor (which shall at the time be a Banking Institution)
notifies the Company that the introduction of or any change
in or in the interpretation of any law or regulation that
occurs after the Submission Date makes it unlawful, or any
central bank or other governmental authority asserts after
the Submission Date that it is unlawful, for the Issuing
Bank or any Creditor to perform its obligations to make,
fund or maintain Eurodollar Advances hereunder (or
participation interests therein), (i) the right of the
Company to select the Eurodollar Rate for Tender Advances
held by the Issuing Bank or such Creditor, as the case may
be, and the obligation of the Issuing Bank and such

<PAGE> 25
Creditor, as the case may be, to make or maintain Eurodollar
Advances shall be suspended until the Issuing Bank or such
Creditor, as the case may be, shall notify the Company that
the circumstances causing such suspension no longer exist
and (ii) the rate of interest on all such Tender Advances
held by the Issuing Bank or such Creditor, as the case may
be, shall thereupon be .50% per annum above the Alternate
Base Rate in effect from time to time.

(ii) On and after the date on which the unpaid
principal amount of any Tender Advance shall be reduced, by
payment or prepayment or otherwise, to less than $1,000,000,
the rate of interest on the unpaid principal amount of such
Tender Advance shall be .50% per annum above the Alternate
Base Rate in effect from time to time and the right of the
Company to select a different rate for such Tender Advance
shall terminate; provided, however, that if and so long as
the Company shall select for such Tender Advance the same
Eurodollar Rate for and the same Interest Period as another
Tender Advance or other Tender Advances and the aggregate
unpaid principal amount of all such Tender Advances shall
equal or exceed $1,000,000, the Company shall have the right
to select such rate for such Interest Period for such Tender
Advance.

(g) Alternate Rate of Interest. In the event, and on
each occasion, that, on the day two Business Days prior to
the commencement of any Interest Period for a Eurodollar
Advance, the Agent shall have determined (which
determination shall be conclusive and binding upon the
Company absent manifest error) that reasonable means do not
exist for ascertaining the applicable Eurodollar Rate, the
Agent shall, as soon as practicable thereafter, give
written, facsimile or telegraphic notice of such
determination to the Company, and any request by the Company
for a Eurodollar Advance pursuant to subsection (c) of this
Section 2.07 shall be deemed a request for an Alternate Base
Rate Advance. After such notice shall have been given and
until the circumstances giving rise to such notice no longer
exist, each request for an Eurodollar Advance shall be
deemed to be a request for an Alternate Base Rate Advance.

<PAGE> 26
(h) Majority Creditors' Costs for Eurodollar Advances.
If, with respect to any Eurodollar Advances, the Majority
Creditors notify the Agent that the Eurodollar Rate for any
Interest Period for such Eurodollar Advances will not
adequately reflect the cost to such Majority Creditors of
making, funding or maintaining their respective Eurodollar
Advances for such Interest Period, the Agent shall forthwith
so notify the Company and the Creditors, whereupon

(i) each Eurodollar Advance will automatically,
on the last day of the then existing Interest Period
therefor, convert into an Alternate Base Rate Advance,
and

(ii) the obligation of the Creditors to make, or
to convert Alternate Base Rate Advances into,
Eurodollar Advances shall be suspended until the Agent
shall notify the Company and the Creditors that the
circumstances causing such suspension no longer exist.

(i) Notice. Promptly after the determination of any
interest rate provided for herein or any change therein, the
Agent shall give notice thereof to the Company.

<PAGE> 27
Notice) of such unreimbursed amount or Tender Advance paid or
made by the Issuing Bank, plus interest (if payment is not made
in accordance with clause (iv)) on such amount at a rate per
annum equal to the Federal Funds Rate from the date of payment by
the Issuing Bank to the date of payment to the Issuing Bank by
such Creditor. The failure of the Issuing Bank or the Agent to
give such LC Payment Notice or the Agent Payment Notice, as the
case may be, shall not affect any Creditor's obligations pursuant
to this subsection (a).

(b) The failure of any Creditor to make any payment to
the Issuing Bank in accordance with subsection (a), above, shall
not relieve any other Creditor of its obligation to make payment,
but neither the Issuing Bank nor any Creditor shall be
responsible for the failure of any other Creditor to make such
payment. If any Creditor shall fail to make any
payment to the Issuing Bank in accordance with subsection (a)(iv),
above, then such Creditor agrees to pay to the Issuing Bank
forthwith on demand such corresponding amount together with
interest thereon for the first two days following the day upon
which any such payment shall have been due and payable at the
Federal Funds Rate and thereafter until the date such amount is
repaid to the Issuing Bank at the Alternate Base Rate plus 1%
per annum.

<PAGE> 28
(c) If any Creditor shall fail to make any payment
to the Issuing Bank in accordance with subsection (a), above,
then, in addition to other rights and remedies which the
Issuing Bank may have, the Agent is hereby authorized, at the
request of the Issuing Bank, to withhold and to apply to the
payment of such amounts owing by such Creditor to the Issuing
Bank and any related interest, that portion of any payments
received by the Agent that would otherwise be payable to such
Creditor.

SECTION 2.09. Prepayments; Reinstatement of Letter
of Credit Amounts. (a) The Company may, upon at least two
Business Days' notice to the Agent stating the proposed date
and principal amount of the prepayment, and if such notice is
given to the Agent the Company shall, prepay the amount
outstanding under any Tender Advance in whole or in part (each
such partial prepayment shall be in the minimum amount of $[
]) with accrued interest to the date of such prepayment on
the amount prepaid (any such prepayment shall be applied to
outstanding Tender Advances in the inverse order of maturity);
provided, however, that with respect to any prepayment of any
Eurodollar Advance made on a day other than the last day of an
Interest Period for such Eurodollar Advance, the Company shall
pay to the Agent, in accordance with Section 2.11(b), an amount
sufficient to compensate the Issuing Bank and any Creditor for
any loss, cost, or expense incurred by it by reason of such
prepayment on a day other than the last day of an Interest
Period.

<PAGE> 29
any loss, cost, or expense incurred by it by reason of such
prepayment on a day other than the last day of an Interest
Period; provided further that, in the case of a prepayment
certified to the Issuing Bank by the Trustee as a prepayment of
a Tender Advance pursuant to this Section 2.09(b) and made on a
date other than a date on which interest on such Tender Advance
is scheduled to be paid hereunder, the Company may pay interest
accrued on such Tender Advance to the date of prepayment on the
next scheduled date for the payment of interest on such Tender
Advance, or if such Tender Advance shall have been prepaid in
whole, on the date which would have been the next such
scheduled date in the absence of such prepayment. The Company
irrevocably authorizes the Issuing Bank to rely on such
certificate and to reinstate the Letter of Credit in accordance
therewith.

(c) Upon the substitution of a letter of credit or
other credit facility for the Letter of Credit as provided in
Section 2.02(6) of the Indenture, all Tender Advances and
accrued and unpaid interest thereon and all other outstanding
amounts payable by the Company to the Issuing Bank, the
Creditors and the Agent under this Agreement shall be paid in
full on the date the Letter of Credit shall terminate as a
result of such substitution.

SECTION 2.10. Additional Interest. Subject to
Section 2.11(e)(ii), the Company shall pay to the Issuing Bank
and each Creditor additional interest on the unpaid principal
amount of any Eurodollar Advance by the Issuing Bank or such
Creditor, from the date of such Eurodollar Advance until such
principal amount is paid in full, at an interest rate per annum
equal at all times during each Interest Period for such
Eurodollar Advance to the remainder obtained by subtracting (i)
the LIBO Rate for the Interest Period for such Eurodollar
Advance from (ii) the rate obtained by dividing such LIBO Rate
by a percentage equal to 100% minus the reserve percentage
applicable during such Interest Period (or if more than one
such percentage shall be so applicable, the daily average of
such percentages for those days in such Interest Period during
which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors
of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal
reserve requirement) for the Issuing Bank or such Creditor, as
the case may be, with respect to liabilities or assets
consisting of or including Eurocurrency liabilities having a
term equal to such Interest Period, payable on each date on
which interest is payable on such Eurodollar Advance. Such
additional interest shall be determined by the Issuing Bank or
such Creditor, as the case may be, and notified to the Company
(with a copy to the Agent).

<PAGE> 30
SECTION 2.11. Increased Costs. (a) If due either
to (i) the introduction after the Submission Date of, or any
change (other than any change by way of imposition or increase
of reserve requirements in the case of Eurodollar Advances
referred to in Section 2.10), after the Submission Date, in or
in the interpretation of, any law or regulation or (ii) the
compliance by the Issuing Bank or any Creditor with any
guideline or request issued or made after the Submission Date
by any central bank or other governmental authority (whether or
not having the force of law), there shall be any increase in
the cost to the Issuing Bank or any Creditor as a result of
agreeing to make or making, funding or maintaining Eurodollar
Advances, or reduction in the amount of any sum received in
respect thereof, then the Company shall from time to time,
promptly after demand by the Issuing Bank or such Creditor, as
the case may be, pay to the Agent for the account of the
Issuing Bank or such Creditor, as the case may be, additional
amounts sufficient to reimburse the Issuing Bank or such
Creditor, as the case may be, for such increased cost or
reduced amount. A certificate as to the amount of such
increased cost or reduced amount, submitted to the Company
(with a copy to the Agent) by the Issuing Bank or such
Creditor, as the case may be, shall be conclusive and binding
for all purposes, absent manifest error.

(b) If, due to any change of interest rate on any
Eurodollar Advance pursuant to Section 2.07(e) or 2.07(f), any
prepayment pursuant to Section 2.09 of any Eurodollar Advance,
any acceleration of maturity of the Tender Advances pursuant to
Section 6.02, or for any other reason, a Eurodollar Advance is
subject to a change of interest rate, or any payment of
principal of any Eurodollar Advance is received, in each case
other than on the last day of an Interest Period relating to
such Eurodollar Advance, the Company shall, promptly upon
demand by Issuing Bank or any Creditor (with a copy of such
demand to the Agent), pay to the Agent for the account of the
Issuing Bank or such Creditor, as the case may be, any amounts
required to compensate the Issuing Bank or such Creditor, as
the case may be, for any additional losses, costs or expenses
which it may reasonably incur as a result of such change or
payment, including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by the Issuing Bank or such
Creditor, as the case may be, to fund or maintain such
Eurodollar Advance but excluding loss of anticipated profit. A
certificate setting forth the amount of such additional losses,
costs or expenses, submitted by the Issuing Bank or such
Creditor, as the case may be, to the Company (with a copy to
the Agent), shall be conclusive and binding for all purposes,
absent manifest error.

<PAGE> 31
(c) If after the Submission Date any change in any
law or regulation or in the interpretation thereof by any court
or administrative or governmental authority charged with the
administration thereof shall either (i) impose, modify or deem
applicable any reserve, special deposit or similar requirement
against letters of credit or guarantees issued by, or assets
held by, or deposits in or for the account of, the Issuing Bank
or any Creditor or (ii) impose on the Issuing Bank or on any
Creditor any other condition regarding this Agreement or the
Letter of Credit, and the result of any event referred to in
clause (i) or (ii) above shall be to increase the cost to the
Issuing Bank or any Creditor of issuing or maintaining, or (in
the case of such Creditor) acquiring a participation in, the
Letter of Credit, then, upon demand by the Issuing Bank or such
Creditor, the Company shall pay to the Agent for the account of
the Issuing Bank or such Creditor, from time to time as
specified by the Issuing Bank or such Creditor, additional
amounts sufficient to compensate the Issuing Bank or such
Creditor for such increased cost. A certificate as to the
amount of such increased cost, submitted to the Company (with a
copy to the Agent) by the Issuing Bank or such Creditor, shall
be conclusive and binding for all purposes, absent manifest
error.

(d) If the Issuing Bank or any Creditor determines
that compliance with any law or regulation or any guideline or
request from any central bank or other governmental authority
(whether or not having the force of law), issued or made after
the Submission Date, affects the amount of capital required to
be maintained by the Issuing Bank or any Creditor or any
corporation controlling the Issuing Bank or such Creditor, as
the case may be, and that the amount of such capital is
increased by or based upon the existence of the Issuing Bank's
or such Creditor's, as the case may be, commitment hereunder
and other commitments of this type or the issuance of the
Letter of Credit (or similar contingent obligations), then,
upon demand by the Issuing Bank or such Creditor, as the case
may be, the Company shall pay to the Agent for the account of
the Issuing Bank or such Creditor, as the case may be, from
time to time as specified by the Issuing Bank or such Creditor,
as the case may be, additional amounts sufficient to compensate
the Issuing Bank or such Creditor, as the case may be, or such
corporation in the light of such circumstances, to the extent
that the Issuing Bank or such Creditor, as the case may be,
reasonably determines such increase in capital to be allocable
to the existence of the Issuing Bank's or such Creditor's, as
the case may be, commitment hereunder. A certificate as to
such amounts submitted to the Company (with a copy to the
Agent) by the Issuing Bank or such Creditor, as the case may
be, shall be conclusive and binding for all purposes, absent
manifest error.

<PAGE> 32
(e) Notwithstanding any other provision in this
Section 2.11 to the contrary, (i) the Company is not
responsible for, and is not required to reimburse the Issuing
Bank or any Creditor for, any amounts that would otherwise be
payable by the Company pursuant to subsection (a), (b), (c) or
(d) of this Section 2.11 to the extent such amounts accrued 90
days or more prior to the date the Issuing Bank or any Creditor
provides to the Company a certificate which sets forth such
amounts owed to the Issuing Bank or such Creditor, as the case
may be, by the Company pursuant to such subsections and
(ii) the Company is responsible for, and is required to
reimburse the Issuing Bank and any Creditor for, any amounts
payable by the Company pursuant to Section 2.10 and this
Section 2.11, only so long as the Issuing Bank or such Creditor
is a Banking Institution.

(f) In calculating any amounts required to be paid
by the Company pursuant to this Section 2.11, the Issuing Bank
or such Creditor, as the case may be, shall make all
determinations and allocations on a reasonable basis.

SECTION 2.12. Payments and Computations. (a) The
Company shall make each payment hereunder not later than
12:00 noon (New York City time) (or, in the case of any payment
required by Section 2.05(a), as soon as practicable after the
Issuing Bank has made a payment under the Letter of Credit) on
the day when due in lawful money of the United States of
America to the Agent at its address referred to in Section 9.02
in same day funds. The Agent will promptly thereafter cause to
be distributed like funds relating to the payment of principal,
interest, fees or other amounts payable to the Issuing Bank and
the Creditors to whom the same are payable at their respective
addresses referred to in Section 9.02.

(b) If, after the Agent has paid to the Issuing Bank
or any Creditor any amount pursuant to subsection (a) above,
such payment is rescinded or must otherwise be returned or must
be paid over by the Agent or the Issuing Bank to any Person,
whether pursuant to any bankruptcy or insolvency law,
Section 9.04(c) or otherwise, the Issuing Bank or such
Creditor, as the case may be, shall, at the request of the
Agent or the Issuing Bank, promptly repay to the Agent or the
Issuing Bank, as the case may be, an amount equal to such
payment, together with any interest required to be paid by the
Agent or the Issuing Bank with respect to such payment.

(c) The Company hereby authorizes the Issuing Bank
and each Creditor, if and to the extent payment is not made
when due hereunder, to charge from time to time against any or
all of the Company's accounts with the Issuing Bank and each
Creditor any amount so due.

<PAGE> 33
(d) All computations of interest based on the
Alternate Base Rate shall be made by the Agent on the basis of
a year of 365 or 366 days, as the case may be, and computations
of the commissions hereunder and of interest based on the LIBO
Rate shall be made by the Agent on the basis of a year of 360
days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period
for which such interest or commitment fees are payable. Each
determination by the Agent of an interest rate hereunder shall
be conclusive and binding for all purposes, absent manifest
error.

SECTION 2.13. Payments on Non-Business Days. (a)
Whenever any payment hereunder shall be stated to be due, or
whenever the last day of any Interest Period, Payment Period or
Quarterly Period would otherwise occur, on a day which is not a
Business Day, such payment shall be made, and the last day of
such Interest Period, Payment Period or Quarterly Period shall
occur, on the next succeeding Business Day, and such extension
of time shall in such case be included in the computation of
payment of interest or commission, as the case may be;
provided, however, if such extension would cause such payment
of interest on or principal of a Eurodollar Advance to be made,
or the last day of an Interest Period for a Eurodollar Advance
to occur, in the next following calendar month, such payment
shall be made, and the last day of such Interest Period shall
occur, on the next preceding Business Day.

(b) Whenever the first day of any Interest Period
occurs on a day of an initial calendar month for which there is
no numerically corresponding day in the calendar month that
succeeds such initial calendar month by the number of months
equal to the number of months in such Interest Period, such
Interest Period shall end on the last Business Day of such
succeeding calendar month. Notwithstanding anything to the
contrary contained herein, each Interest Period that commences
on the last Business Day of a calendar month (or on any day for
which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last
Business Day of the appropriate subsequent calendar month.

<PAGE> 34
purposes of this Agreement and the Letter of Credit. If the
Company shall make such request, the Issuing Bank shall so
extend the Stated Termination Date of the Letter of Credit and
the Issuing Bank, each Creditor and the Agent shall extend the
Stated Termination Date for purposes of this Agreement,
provided that on the date of such request by the Company the
representations and warranties in Section 4.01 are true and
correct, before and after giving effect to such request. The
Agent shall notify the Company in writing within 40 days of
receipt of such request whether (i) it has determined that the
Company has not satisfied the condition to extension set forth
in the proviso of the immediately preceding sentence or (ii)
the Stated Termination Date has been so extended.

(b) If the Stated Termination Date is extended as
provided for in Section 2.14(a), the Company may thereafter
request, at least 60 days but not more than 120 days before the
then Stated Termination Date, in a writing delivered to the
Agent (such request shall be accompanied by a certificate from
a duly authorized officer of the Company that the
representations and warranties in Section 4.01 are true and
correct as of the date of such request, before and after giving
effect to such request, as though made on and as of the date of
such request, and such request shall be irrevocable) that the
Issuing Bank, each Creditor and the Agent extend for one year
the then Stated Termination Date for purposes of this Agreement
and the Letter of Credit. If the Company shall make such a
request, the Agent shall, on or before 40 days before the then
Stated Termination Date, notify the Company in writing whether
or not the Issuing Bank, each Creditor and the Agent consent to
such request and, if the Issuing Bank, each Creditor and the
Agent do so consent, the conditions for such extension. If the
Agent shall not so notify the Company, the Issuing Bank, each
Creditor and the Agent shall be deemed not to have consented to
such request. The Company acknowledges that none of the
Issuing Bank, any Creditor or the Agent has any obligation to,
and none of such entities has given any assurance, undertaking
or commitment that it will, extend (or consider extending) the
Letter of Credit as set forth in this Section 2.14(b).

SECTION 2.15. Evidence of Debt. The Agent shall
maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Company resulting
from each drawing under the Letter of Credit and from each
Tender Advance made from time to time hereunder and the amounts
of principal and interest payable and paid from time to time
hereunder. In any legal action or proceeding in respect of
this Agreement, the entries made in such account or accounts
shall, in the absence of manifest error, be conclusive evidence
of the existence and amounts of the obligations of the Company
therein recorded.

<PAGE> 35
SECTION 2.16. Obligations Absolute. (a) The
obligations of the Company under this Agreement and any other
agreement or instrument relating to the Letter of Credit shall
be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement and such other
agreement or instrument under all circumstances, including,
without limitation, the following circumstances, and regardless
of the use of proceeds of any drawing under the Letter of
Credit or any defense to payment related thereto:

(i) any lack of validity or enforceability of this
Agreement, the Letter of Credit, the Bonds, the Indenture,
the Loan Agreement, the Second Mortgage Bonds, Series ,
the Second Mortgage Bond Indenture, the Remarketing
Agent's Agreement, or any other agreement or instrument
relating thereto (collectively, the "Related Documents");

(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
obligations of the Company in respect of the Letter of
Credit or any other amendment or waiver of or any consent
to departure from all or any of the Related Documents;

(iii) the existence of any claim, set-off, defense or
other right that the Company may have at any time against
the Trustee or any other beneficiary or any transferee of
the Letter of Credit (or any Persons or entities for whom
the Trustee, any such beneficiary or any such transferee
may be acting), the Issuing Bank, any Creditor, the Agent
or any other Person or entity, whether in connection with
this Agreement, the transactions contemplated hereby or by
the other Related Documents or any unrelated transaction;

(v) payment by the Issuing Bank under the Letter of
Credit against presentation of a draft or certificate
which does not comply with the terms of the Letter of
Credit;

(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing, including,
without limitation, any other circumstance that might

<PAGE> 36
otherwise constitute a defense available to, or a
discharge of, the Company or a guarantor.

(b) The obligations of each Creditor under
Section 2.08 shall be unconditional and irrevocable, and shall
be paid strictly in accordance with the terms of this Agreement
(as the same may be amended from time to time) under all
circumstances, including, without limitation, the following
circumstances:

(i) any lack of validity or enforceability of the
Related Documents;

(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
obligations of the Company in respect of the Letter of
Credit or any other amendment or waiver of or any consent
to departure from all or any of the Related Documents
entered into in accordance with this Agreement;

(iii) the existence of any claim, set-off, defense or
other right that the Company may have at any time against
the Trustee or any other beneficiary or any transferee of
the Letter of Credit (or any Persons or entities for whom
the Trustee, any such beneficiary or any such transferee
may be acting), the Issuing Bank, or any other Person or
entity, whether in connection with this Agreement, the
transactions contemplated hereby or by the other Related
Documents or any unrelated transaction;

(v) payment by the Issuing Bank under the Letter of
Credit against presentation of a draft or certificate
which does not comply with the terms of the Letter of
Credit;

<PAGE> 37
(c) Without limiting the effect of subsections (a)
or (b) above, or any other provision hereof, the Company and
each Creditor agree with the Issuing Bank that the Issuing Bank
is authorized to make payments under the Letter of Credit upon
the presentation of the documents provided for therein and
without regard to whether the Company has failed to fulfill any
of its obligations with respect to any Related Document or any
Event of Default or event which with the giving of notice or
lapse of time or both would constitute an Event of Default or
other default has occurred thereunder or hereunder.

SECTION 2.17. U.S. Taxes. (a) The Company agrees
to pay to the Issuing Bank and each Creditor with respect to
any period during which it is not a U.S. Person such additional
amounts as are necessary in order that the net payment of any
amount due to such non-U.S. Person hereunder after deduction
for or withholding in respect of any U.S. Tax imposed with
respect to such payment (or in lieu thereof, payment of such
U.S. Tax by such non-U.S. Person), will not be less than the
amount stated herein to be then due and payable, provided that
the foregoing obligation to pay such additional amounts shall
not apply:

(i) to any payment to the Issuing Bank or any such
Creditor hereunder unless the Issuing Bank or any such
Creditor is, on the Submission Date (or on the date such
Person becomes the successor to, or the assignee of, the
Issuing Bank or any such Creditor as provided in Section
9.09) and on the date of any change in the applicable
lending office of the Issuing Bank or any such Creditor
after the date hereof, either entitled to submit a Form
1001 (relating to the Issuing Bank or any such Creditor
and entitling it to a complete exemption from withholding
on all interest to be received by it hereunder in respect
of any Tender Advance or any other amount hereunder
payable) or Form 4224 (relating to all interest to be
received by the Issuing Bank or any such Creditor
hereunder in respect of any Tender Advance or any other
amount hereunder payable), or

(ii) to any U.S. Tax imposed solely by reason of the
failure by such non-U.S. Person to comply with applicable
certification, information, documentation or other
reporting requirements concerning the nationality,
residence, identity or connections with the United States
of America of such non-U.S. Person if such compliance is
required by statute or regulation of the United States of
America as a precondition to relief or exemption from such
U.S. Tax.

<PAGE> 38
For the purposes of this Section 2.17(a), (w) "Form 1001" shall
mean Form 1001 (Ownership, Exemption, or Reduced Rate
Certificate) of the Department of the Treasury of the United
States of America, (x) "Form 4224" shall mean Form 4224
(Exemption from Withholding of Tax on Income Effectively
Connected with the Conduct of a Trade or Business in the United
States) of the Department of the Treasury of the United States
of America (or in relation to either such Form such successor
and related forms as may from time to time be adopted by the
relevant taxing authorities of the United States of America to
document a claim to which such Form relates), (y) "U.S. Person"
shall mean a citizen, national or resident of the United States
of America, a corporation, partnership or other entity created
or organized in or under any laws of the United States of
America, or any estate or trust that is subject to Federal
income taxation regardless of the source of its income and
(z) "U.S. Taxes" shall mean any present or future tax,
assessment or other charge or levy imposed by or on behalf of
the United States of America or any taxing authority thereof or
therein.

SECTION 2.18. Applicable Lending Office. If the
Issuing Bank or any Creditor requests compensation from the
Company under any of Section 2.11(a), 2.11(c), 2.11(d) or 2.17,
the Issuing Bank or such Creditor, as the case may be, will
designate a different applicable lending office for the
portions of any Tender Advance or other amount due hereunder
affected by the events giving rise to such request for
compensation if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the
reasonable opinion of the Issuing Bank or such Creditor, as the
case may be, be disadvantageous to the Issuing Bank or such
Creditor, as the case may be, except that the Issuing Bank or
such Creditor, as the case may be, shall have no obligation to
designate an applicable lending office located in the United
States of America.

SECTION 2.19. Net Payments. All payments under this
Agreement to the Agent, the Issuing Bank, or any Creditor shall
be made without set-off or counterclaim.

<PAGE> 39
SECTION 2.20. Reinstatement of the Letter of Credit.
Upon delivery to the Agent of any Bonds purchased by the
Trustee on behalf of or for the account of the Issuing Bank,
the Agent or any other nominee of the Issuing Bank pursuant to
subsection (e) of Section 3.01 of the Indenture, subsection (e)
of Section 9.01 of the Indenture, or subsection (d) of Section
13.03 of the Indenture with moneys drawn under the Letter of
Credit, the amounts available to be drawn under the Letter of
Credit shall be reinstated, without any further action by the
Company or any party other than the Issuing Bank, in an amount
equal to the amount of the moneys drawn under the Letter of
Credit to purchase such Bonds; provided, however, if at any
time any such purchase shall be rescinded, in whole or in part,
or some or all of the Bonds so purchased must otherwise be
returned by the Issuing Bank, the Agent or any other nominee of
the Issuing Bank, in each case, for any reason, the amounts so
reinstated shall not be available to be drawn until and unless
the Company reimburses the Issuing Bank or the Creditors, as
the case may be, for such amounts.

ARTICLE III

CONDITIONS OF ISSUANCE

SECTION 3.01. Conditions Precedent to Issuance of
the Letter of Credit. The obligation of the Issuing Bank to
issue the Letter of Credit is subject to the satisfaction or
waiver in writing by the Agent, in its sole discretion, of the
following: (i) the Agent shall have received on or before the
date of the issuance of the Letter of Credit the following,
each dated such day (unless otherwise indicated), in form and
substance satisfactory to and in sufficient copies for each
Creditor:

(a) certified copies of the restated articles of
incorporation and bylaws of the Company, a certified copy
of the resolutions of the Board of Directors of the
Company approving this Agreement, the form and content of
the Letter of Credit, the other Related Documents and the
other matters contemplated hereby and thereby, and of all
other documents evidencing any other necessary corporate
action;

(b) a copy of a certificate of the Secretary of
State of Texas dated a date reasonably close to the date
of issuance of the Letter of Credit listing the articles
of incorporation of the Company and each amendment thereto
on file in his office and certifying that (A) such
amendments are the only amendments to the Company's
articles of incorporation on file in his office and (B)
the Company is duly incorporated, validly existing and in
good standing under the laws of such State;

<PAGE> 40
(c) a telegram from such Secretary of State or such
other evidence satisfactory to the Agent certifying that
the Company is duly incorporated, validly existing and in
good standing under the laws of such State on the date of
issuance of the Letter of Credit;

(d) originals (or copies certified to be true copies
by an appropriate officer of the Company or, in the case
of the Issuer, by the county clerk of the Issuer) of all
governmental and regulatory approvals (including, without
limitation, approvals or orders of the Issuer and the
Federal Energy Regulatory Commission and the New Mexico
Public Service Commission approvals) legally required to
be obtained on the Effective Date and on the date of
issuance of the Letter of Credit for the Company to enter
into this Agreement and the other Related Documents and to
carry out the transactions contemplated hereby and
thereby;

(e) a certified transcript relating to the issuance
of the Bonds;

(f) a certificate of the Secretary of the Company
certifying the incumbency and the names and true
signatures of the officers of the Company authorized to
sign this Agreement and the other documents to be
delivered by it hereunder, together with a certificate of
another officer of the Company as to the incumbency and
specimen signature of the Secretary of the Company;

(g) a certified copy of the Indenture and evidence
satisfactory to the Agent that the Indenture has been duly
adopted by the Issuer and accepted by the Trustee;

(h) the Second Mortgage Bonds, Series Y-6, such
series having been duly completed, executed and pledged to
the Agent for its benefit and the benefit of the Issuing
Bank and the Creditors by the Company;

(i) evidence of the completion of all recordings and
filings of or with respect to the Second Mortgage Bond
Indenture that the Agent may deem necessary or desirable
in order to perfect the security interest created thereby;

(j) a certified copy of the Second Mortgage Bond
Indenture;

(k) a favorable opinion of Milbank, Tweed, Hadley &
McCloy, New York counsel for the Company (or other New
York counsel for the Company that is reasonably
satisfactory to the Agent and the Creditors), in form and
substance reasonably satisfactory to the Agent and the
Creditors;

<PAGE> 41
(l) a favorable opinion of Vinson & Elkins, Texas
counsel for the Company (or other Texas counsel for the
Company that is reasonably satisfactory to the Agent and
the Creditors), in form and substance reasonably
satisfactory to the Agent and the Creditors;

(m) a favorable opinion of Stoops & Burns, Arizona
counsel for the Company (or other Arizona counsel for the
Company that is reasonably satisfactory to the Agent and
the Creditors), in form and substance reasonably
satisfactory to the Agent and the Creditors;

(n) a favorable opinion of Taichert, Wiggins,
Virtue, Wilson & Najjar, New Mexico regulatory counsel for
the Company (or other New Mexico regulatory counsel for
the Company that is reasonably satisfactory to the Agent
and the Creditors), in form and substance reasonably
satisfactory to the Agent and the Creditors;

(o) a favorable opinion of [Milbank, Tweed, Hadley &
McCloy], federal regulatory counsel for the Company (or
other federal regulatory counsel for the Company that is
reasonably satisfactory to the Agent and the Creditors),
in form and substance reasonably satisfactory to the Agent
and the Creditors;

(p) a favorable opinion of Mudge Rose Guthrie
Alexander & Ferdon, bond counsel, in form and substance
reasonably satisfactory to the Agent and the Creditors;

(q) a favorable opinion of , counsel to the
Issuer (or other counsel for the Issuer that is reasonably
satisfactory to the Agent and the Creditors), in form and
substance reasonably satisfactory to the Agent and the
Creditors;

(r) a favorable opinion of Milbank, Tweed, Hadley &
McCloy, special counsel for the Issuing Bank, [to the
extent required by the agencies rating the Bonds];

(s) a certificate of the Clerk of the Board of
Supervisors of Maricopa County, Arizona certifying that
the resolutions approving the issuance of the Bonds are in
full force and effect;

(t) a certificate of the Secretary of the Board of
Directors of the Issuer certifying that the resolutions
approving the issuance of the Bonds, the execution and
delivery of the Indenture and all documents delivered by
the Issuer in connection with the issuance of the Bonds
are in full force and effect;

<PAGE> 42
(u) the articles of incorporation of the Issuer
(certified as of a recent date by the Arizona Corporation
Commission);

(v) a certificate of compliance of the Arizona
Corporation Commission, dated as of a recent date, to the
effect that the Issuer is in good standing and that
franchise taxes have been paid;

(w) a certificate of the Assistant Secretary of the
Issuer, dated the date of issuance of the Letter of
Credit, as to the incumbency of each of the officers of
the Issuer and members of its board of directors, and the
bylaws of the Issuer and that such bylaws are true,
correct and complete copies thereof and are in full force
and effect;

(x) the Official Statement certified by the
Secretary of the Company to be a true and correct copy
thereof;

(y) a certificate of the Trustee certifying the
incumbency and signature specimens of officials of the
Trustee authorized to make drawings, to execute and
present certificates and drafts under the Letter of Credit
and otherwise to communicate with the Issuing Bank
regarding the Letter of Credit, upon which the Issuing
Bank may rely until it receives a new such certificate;

(z) written acknowledgment from the Trustee that it
has received the Letter of Credit;

(aa) receipt from the Original Trustee under the
Original Indenture of the Original Letter of Credit and
written acknowledgment from the Original Trustee that the
Original Letter of Credit is of no further force and
effect;

(bb) written evidence, satisfactory to the Agent,
that the First Mortgage Bonds, Series A/B, and the Second
Mortgage Bonds, Series A, have an Investment Grade Rating;
and

(cc) a certificate of the chairman, president or
chief financial officer of the Company, certifying (A)
that the Effective Date has occurred as of the time of
delivery thereof or will occur concurrently with the
delivery thereof and (B) that, after giving effect to the
transactions contemplated under the Plan of
Reorganization: (x) no event has occurred and is
continuing which constitutes an Event of Default or would
constitute an Event of Default but for the requirement

<PAGE> 43
that notice be given or the elapse of time or both; and
(y) the representations and warranties made by the Company
in Article IV hereof, and in each of the other Related
Documents, shall be true on and as of the Effective Date
with the same force and effect as if made on and as of
such date (or, if such representation or warranty is
expressly stated to have been made as of a specific date,
as of such specific date); and

(ii) the following has occurred on or before the date of the
issuance of the Letter of Credit:

(a) the Confirmation Order shall have been entered
at least 10 days prior to the date hereof, no stay of such
order shall be in effect and the Agent shall have received
a certified copy of such order;

(b) the Plan of Reorganization shall have been
substantially consummated without waiver of any condition
or other modification (other than waivers or modifications
made in accordance with Section 6.6 of the Plan of
Reorganization);

(c) the Effective Date shall have occurred or shall
occur substantially simultaneously with the delivery of
this Agreement and of the other Related Documents; and

(d) the Refunding shall have occurred or shall occur
substantially simultaneously with the issuance of the
Letter of Credit [and the delivery of the other Related
Documents].

SECTION 3.02. Additional Conditions Precedent to
Issuance of the Letter of Credit. The obligation of the
Issuing Bank to issue the Letter of Credit shall be subject to
the further conditions precedent that on the date of the
issuance of the Letter of Credit (a) the following statements
shall be true in all material respects and the Agent shall have
received a certificate signed by a duly authorized officer of
the Company, dated the date of such issuance, stating that:

(i) The representations and warranties contained in
Section 4.01 of this Agreement are correct on and as of
the date of issuance of the Letter of Credit, before and
after giving effect to such issuance, as though made on
and as of such date; and

(ii) No event has occurred and is continuing, or
would result from such issuance of the Letter of Credit,
which constitutes an Event of Default or would constitute
an Event of Default but for the requirement that notice be
given or time elapse or both;

<PAGE> 44
and (b) the Agent shall have received such other approvals,
opinions or documents as the Issuing Bank or any Creditor
(through the Agent) may reasonably request.

(i) The representations and warranties contained in
Section 4.01 of this Agreement are correct on and as of
the date of such Tender Advance, before and after giving
effect to such Tender Advance and to the application of
the proceeds therefrom, as though made on and as of such
date; and

(ii) No event has occurred and is continuing, or
would result from such Tender Advance or from the
application of the proceeds therefrom, which constitutes
an Event of Default or would constitute an Event of
Default but for the requirement that notice be given or
time elapse or both.

(b) Unless the Company shall have previously advised
the Issuing Bank in writing that one or more of the above
statements in subsection (a) above is no longer true, the
Company shall be deemed to have represented and warranted, on
the date of each payment by the Issuing Bank under the Letter
of Credit pursuant to a Tender Draft, that on the date of such
payment the above statements are true.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the
Company. The Company represents and warrants as follows:

(a) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of
the State of Texas and is duly qualified to do business
in, and is in good standing under the laws of the States
of Texas, Arizona and New Mexico and has requisite
corporate power and authority, and all governmental
licenses, authorizations and approvals necessary, to
conduct its business and to own its properties, except
where the failure to have the same would not result in a
Material Adverse Effect.

<PAGE> 45
(b) The execution, delivery and performance by the
Company of this Agreement and the other Related Documents
to which it is a party are within the Company's corporate
powers, have been duly authorized by all necessary
corporate action, and do not contravene (i) the Company's
articles of incorporation or by-laws, which the Company
has adopted pursuant to the Plan of Reorganization or (ii)
any law, order, rule, regulation (including, without
limitation, any order, rule or regulation of the Federal
Energy Regulatory Commission, the New Mexico Public
Service Commission or the Public Utility Commission of
Texas, or Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System), writ, judgment,
injunction or decree applicable to the Company or any
contractual restriction binding on or affecting the
Company or any Subsidiary, and do not result in or require
the creation of any Lien of the Company or any Subsidiary
(except as provided in or contemplated by this Agreement
or the other Related Documents or the Plan of
Reorganization) upon or with respect to any properties of
the Company or any Subsidiary.

(c) No authorization or approval or other action by,
and no notice to or filing with, any governmental
authority or regulatory body is required for the due
execution, delivery and performance by the Company of this
Agreement or any other Related Document (including the
issuance and pledge of the Second Mortgage Bonds, Series
Y-6 and the creation and perfection of the Liens on the
property securing such Bonds) except for (i) those that
have been duly obtained or made and are in full force and
effect and are Final Approvals and (ii) the Confirmation
Order.

(d) This Agreement has been duly and validly
executed by the Company and constitutes, and the other
Related Documents when delivered hereunder will be, the
legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their
respective terms.

(e) There is no pending or overtly threatened
action, investigation, proceeding or notification which
has been instituted after the Effective Date affecting the
Company or any of its Subsidiaries before any court,
governmental agency or arbitrator which is reasonably
likely to have a Material Adverse Effect.

<PAGE> 46
supplement or amendment to any thereof shall be, accurate
in all material respects for the purposes for which its
use is, was, or shall be, authorized; and the Official
Statement did not as of its date of issue contain any
untrue statement of a material fact or omit to state any
material fact necessary to make the statements made
therein, in the light of the circumstances under which
they are or were made, not misleading.

(g) The Company and the ERISA Affiliates have
fulfilled their respective obligations under the minimum
funding standards of ERISA and the Code with respect to
each Plan and are in compliance with the presently
applicable provisions of ERISA and the Code except where
non-compliance would not have a Material Adverse Effect,
and have not incurred any liability to the PBGC (other
than to pay premiums under Section 4007 of ERISA) or any
Plan or any Multiemployer Plan (other than to make
contributions in the ordinary course of business). No
reportable event, within the meaning of Section 4043 of
ERISA, has occurred with respect to any Plan, except for
any such event as to which the 30-day notice requirement
has been waived by the PBGC. Schedule B (Actuarial
Information) to the most recently filed annual report
(Form 5500 Series) for each Plan is complete and accurate
and fairly presents the funding status of such Plan, and
since the date of such Schedule B there has been no change
in such funding status that can reasonably be expected to
have a Material Adverse Effect.

(h) The Second Mortgage Bonds, Series Y-6, (i) have
been duly authorized, executed, authenticated, issued,
pledged and delivered in the manner provided for in the
Second Mortgage Bond Indenture and in compliance with all
applicable law; (ii) constitute the legal, valid and
binding obligations of the Company enforceable against the
Company in accordance with their terms and the terms of
the Second Mortgage Bond Indenture except insofar as
enforceability may be limited or otherwise affected by
(a) bankruptcy, insolvency, moratorium, reorganization or
other similar laws of general application relating to or
affecting the rights and remedies of creditors from time
to time in effect and (b) general principles of equity
(regardless of whether enforceability is considered in a
proceeding in equity or at law); (iii) are entitled to the
security and benefits of the Second Mortgage Bond
Indenture; (iv) are secured equally and ratably with and
only with all other bonds issued and outstanding and which
may hereafter and thereafter be issued and outstanding
under the Second Mortgage Bond Indenture; (v) are secured
by duly perfected Liens on and security interests in the
collateral purported to secure such bonds in the Second

<PAGE> 47
Mortgage Bond Indenture which Liens are subordinated in
priority only to the Liens and security interests granted
under the First Mortgage Bond Indenture and securing
outstanding First Mortgage Bonds; and (vi) constitute
collateral security encumbered by valid, duly perfected
Liens thereon and security interests therein securing the
obligations of the Company under this Agreement as
purported to be provided in such indenture and herein.
The Company has executed, issued and delivered all Second
Mortgage Bonds, Series Y-6 to the Agent for its benefit
and the ratable benefit of the Issuing Bank and the
Creditors and has made all such duly perfected pledges
thereof to the Agent for its benefit and the ratable
benefit of the Issuing Bank and the Creditors as are
required to be executed, issued, delivered and made under
this Agreement and there are no other Liens on such Second
Mortgage Bonds.

(i) The Second Mortgage Bond Indenture creates a
valid and perfected second Lien on the Company's property
as described in the Second Mortgage Bond Indenture as
collateral security for the Company's obligations under
the Second Mortgage Bond Indenture and the Second Mortgage
Bonds, Series Y-6.

(j) No Material Adverse Effect has occurred since
the Effective Date.

(k) The operations and properties of the Company and
each of its Subsidiaries comply in all material respects
with all Environmental Laws, the Company and each of its
Subsidiaries possess and are in compliance with all
required Environmental Permits and no circumstances exist
that are or would be reasonably likely to (i) form the
basis of an Environmental Action against the Company or
any of its Subsidiaries or any of their properties or (ii)
cause any such property to be subject to any restrictions
on ownership, occupancy, use or transferability under any
Environmental Law, except as would not be likely to have a
Material Adverse Effect on the Company, and none of the
properties of the Company or any of its Subsidiaries is
listed or proposed for listing on the National Priorities
or CERCLA List under CERCLA or any analogous state list.

(l) The Indenture creates a valid, enforceable and
perfected first priority security interest in the Trust
Estate (as defined in the Indenture) for the benefit of
the holders of the Bonds, as security for the Issuer's
obligations of the holders of the Bonds under the
Indenture and pursuant to the terms of the Bonds.

<PAGE> 48
(m) The Company is not a "holding company" as such
term is defined in the Public Utility Holding Company Act
of 1935, as amended, nor an "investment company", or a
company "controlled" by an "investment company", within
the meaning of the Investment Company Act of 1940, as
amended.

(n) The Company and its Subsidiaries have filed all
United States Federal and state income tax returns and all
other material tax returns which are required to be filed
by them, and have paid all taxes due pursuant to such
returns or, to the extent deemed necessary or appropriate
by the Company and such Subsidiary, provided reserves for
the payment thereof, other than such taxes that the
Company or any Subsidiary is contesting in good faith by
appropriate legal proceedings.

(o) Prior to the issuance of the Letter of Credit,
the Confirmation Order has been entered and has not been
reversed, amended (except as consented to by the Issuing
Bank in its sole discretion), stayed, vacated or
rescinded. The Agent, the Issuing Bank and each Creditor
shall be entitled to enforce the remedies under this
Agreement without further application to or order by the
Bankruptcy Court.

(p) The operations and properties of the Company and
each of its Subsidiaries comply in all material respects
with all Environmental Laws, the Company and each of its
Subsidiaries possess and are in compliance with all
Environmental Permits and no circumstances exist that are
or would be reasonable likely to (i) form the basis of an
Environmental Action against the Company or any of its
Subsidiaries or any of their properties, or (ii) cause any
such property to be subject to any restriction on
ownership, occupancy, use or transferability under any
Environmental Law, except as could not be likely to have a
Material Adverse Effect and none of the property of the
Company or any of its Subsidiaries is listed or proposed
for listing on the National Priority List under CERCLA or
any analogous state list.

ARTICLE V

COVENANTS OF THE COMPANY

<PAGE> 49
Company hereunder to the Agent, the Issuing Bank, or any
Creditor, the Company agrees that, unless the Majority
Creditors shall otherwise consent in writing:

(a) Reporting Requirements. The Company shall
deliver to the Agent and each Creditor:

(i) as soon as available and in any event
within 45 days after the end of each of the first
three quarterly fiscal periods of each fiscal year of
the Company, consolidated and consolidating
statements of income, retained earnings and cash flow
of the Company and its Consolidated Subsidiaries for
such period and for the period from the beginning of
the respective fiscal year to the end of such period,
and the related consolidated and consolidating
balance sheets of the Company and its Consolidated
Subsidiaries at the end of such period, setting forth
in each case in comparative form the corresponding
consolidated and consolidating figures for the
corresponding period in the preceding fiscal year,
accompanied by a certificate of a senior financial
officer of the Company, which certificate shall state
that said consolidated financial statements fairly
present the consolidated financial condition and
results of operations of the Company and its
Consolidated Subsidiaries, and said consolidating
financial statements fairly present the respective
individual unconsolidated financial condition and
results of operations of the Company and of each of
its Consolidated Subsidiaries, in each case in
accordance with GAAP, consistently applied, as at the
end of, and for, such period (subject to normal
year-end audit adjustments);

(ii) as soon as available and in any event
within 90 days after the end of each fiscal year of
the Company, consolidated and consolidating
statements of income, retained earnings and cash flow
of the Company and its Consolidated Subsidiaries for
such fiscal year and the related consolidated and
consolidating balance sheets of the Company and its
Consolidated Subsidiaries as at the end of such
fiscal year, setting forth in each case in
comparative form the corresponding consolidated and
consolidating figures for the preceding fiscal year,
and accompanied (i) in the case of said consolidated
statements and balance sheet of the Company, by an
opinion thereon of independent certified public
accountants of recognized national standing, which
opinion shall state that said consolidated financial
statements fairly present the consolidated financial

<PAGE> 50
condition and results of operations of the Company
and its Consolidated Subsidiaries as at the end of,
and for, such fiscal year in accordance with GAAP,
consistently applied, and a certificate of such
accountants stating that, in making the examination
necessary for their opinion, they obtained no
knowledge, except as specifically stated, of any
failure by the Company to comply with Section
5.02(a), (b) or (e)(xi), and (ii) in the case of said
consolidating statements and balance sheets, by a
certificate of a senior financial officer of the
Company, which certificate shall state that said
consolidating financial statements fairly present the
respective individual unconsolidated financial
condition and results of operations of the Company
and of each of its Consolidated Subsidiaries, in each
case in accordance with GAAP, consistently applied,
as at the end of, and for, such fiscal year;

(iii) as soon as available copies of all proxy
statements, material reports and registration
statements which the Company or any of its
Subsidiaries files with the Securities and Exchange
Commission or any national securities exchange (other
than filings made pursuant to the Public Utility
Holding Company Act of 1935, as amended, public
offerings of securities under employee benefit plans,
customer stock purchase plans or dividend
reinvestment plans);

(iv) as soon as possible and in any event within
two days after the Company has knowledge of the
occurrence of each Event of Default continuing on the
date of such statement, a statement from the chief
financial officer of the Company setting forth
details of such Event of Default and the action that
the Company has taken and proposes to take with
respect thereto;

(v) at the time the Company furnishes each set
of financial statements pursuant to paragraph (i) or
(ii) above, a certificate of a senior financial
officer of the Company setting forth in reasonable
detail the computations necessary to determine
whether the Company is in compliance with subsections
(a), (b) and (e)(xi) of Section 5.02 as of the end of
the respective quarterly fiscal period or fiscal year
and stating that no event has occurred or is
continuing which constitutes an Event of Default or
would constitute an Event of Default but for the
requirement that notice be given or the lapse of time

<PAGE> 51
or both or, if any such event has occurred and is
continuing, a statement as to the nature thereof and
the action that the Company has taken or proposes to
take with respect thereto; and

(vi) such other financial data and information
of the Company or any of its Subsidiaries as the
Agent, the Issuing Bank or any Creditor may from time
to time reasonably request.

(b) Litigation. The Company will promptly give to
the Agent notice of all actions, suits, investigations,
litigation or legal or arbitral proceedings, and of all
proceedings by or before any governmental or regulatory
authority or agency (and any material development in
respect of such legal or other proceedings), in each case,
known to the Company, which is reasonably likely to have a
Material Adverse Effect.

(c) Preservation of Corporate Existence, Etc. The
Company shall (i) preserve and maintain its corporate
existence in the state of its incorporation and qualify
and remain qualified as a foreign corporation in each
jurisdiction in which such qualification is reasonably
necessary in view of its business, and (ii) pay and
discharge, and cause its Subsidiaries to pay and
discharge, all taxes, assessments and governmental charges
upon its income and its properties prior to the date on
which penalties are attached thereto, unless (A) such
taxes, assessments and governmental charges shall be
contested in good faith and by appropriate proceedings by
the Company or its Subsidiaries and (B) the Company or any
such Subsidiary shall set aside on its books adequate
reserves therefor to the extent required by GAAP. Nothing
contained in this clause (c) of Section 5.01 shall be
deemed to prohibit any transaction permitted by clause (c)
of Section 5.02.

(d) Maintenance of Insurance, Etc. The Company
shall, and shall cause its Subsidiaries to, maintain
insurance with responsible insurance companies or
associations or through its own program of self-insurance
in such amounts, with such deductibles, and covering such
risks as is usually carried by companies engaged in
similar business.

(e) Compliance with Laws, Etc. The Company shall
comply, and cause each of its Subsidiaries to comply, in
all material respects, with all applicable laws, rules,
regulations and orders, such compliance to include,
without limitation, compliance with ERISA, except where
the failure to so comply would not have a Material Adverse
Effect.

<PAGE> 52
(f) Compliance with Environmental Laws. The Company
shall comply, and cause each of its Subsidiaries and all
lessees and other Persons occupying or operating on its
properties to comply, in all material respects, with all
Environmental Laws and Environmental Permits applicable to
its operations and properties; obtain and renew all
Environmental Permits necessary for its operations and
properties; and conduct, and cause each of its
Subsidiaries to conduct, any investigation, study,
sampling and testing, and undertake any cleanup, removal,
remedial or other action required under any Environmental
Law to remove and clean up all Hazardous Materials from
any of its properties, in accordance with the requirements
of all Environmental Laws; provided, however, that neither
the Company nor any of its Subsidiaries shall be required
to undertake any such cleanup, removal, remedial or other
action to the extent that its obligation to do so is being
contested in good faith and by proper proceedings and
reserves, where required by GAAP, are being maintained
with respect to such circumstances.

(g) Visitation Rights. The Company shall, at any
reasonable time and from time to time, permit the Agent,
the Issuing Bank, any Creditor or any agents or
representatives of any thereof, to examine and make copies
of and abstracts from the records and books of account of,
and examine the properties of, the Company and any of its
Subsidiaries, and to discuss the affairs, finances and
accounts of the Company and any of its Subsidiaries with
any of their officers or directors and with their
independent certified public accountants.

(h) Maintenance of Properties, Etc. The Company
shall maintain and preserve, and cause each of its
Subsidiaries to maintain and preserve, all of its
properties that are used or useful in the conduct of its
business in good working order and condition, ordinary
wear and tear excepted; provided that this subsection (h)
shall not prevent the sale of any properties permitted by
subsection (c) of Section 5.02.

(i) Lien. The Company shall maintain the Lien
created or purported to be created by the Second Mortgage
Bond Indenture for the benefit of the Agent and the
ratable benefit of the Issuing Bank and the Creditors and
defend, preserve and protect such Lien against all claims
of all Persons.

<PAGE> 53
Indenture, to furnish to the Issuing Bank notice in the
form of Annex A to the Letter of Credit, and, upon a
redemption or defeasance of all the Bonds pursuant to the
Indenture or upon substitution of a Credit Facility (as
defined in the Indenture) for the Letter of Credit, to
surrender the Letter of Credit to the Issuing Bank for
cancellation.

(k) Bond Rating. The Company shall exercise its
best efforts to cause the Bonds to have a rating by
Moody's Investors Service, Inc. or by Standard & Poor's
Corporation.

(l) Remarketing. The Company shall take all steps
that are necessary or appropriate to cause any Bonds
acquired by the Trustee on behalf of and for the account
of the Company or the Issuing Bank, the Agent or any other
nominee of the Issuing Bank to be remarketed (in the case
of Bonds acquired on behalf of or for the account of the
Issuing Bank, the Agent or any other nominee of the
Issuing Bank, to the extent the Issuing Bank requests that
such Bonds be remarketed), including (without limitation)
preparing such disclosure and other documents as are
required to remarket the Bonds.

(m) Registration of Bonds. The Company shall cause
all Bonds which it (or any of its Affiliates) acquires, or
which are acquired for its (or any of its Affiliates)
account, to be registered forthwith in accordance with the
Indenture in the name of the Company (or such Affiliate).

(n) Maintain Books and Records. The Company shall
keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP
consistently applied.

(o) Additional Documents. As promptly as
practicable (but in any event not later than 30 days)
after the Effective Date, the Company will furnish to the
Agent, (i) certified copies of the recorded counterparts
of the First Mortgage Bond Indenture and evidencing the
filing thereof and (ii) certified copies of all notices
filed with respect to the First Mortgage Bond Indenture.

(p) Creation of Subsidiaries. The Company shall
not, and shall not permit any of its Subsidiaries to,
create any Subsidiaries of the Company or make any
investment in any Person except in compliance with the
Public Utility Holding Company Act of 1935, as amended,
and the regulations and orders of the Securities and
Exchange Commission thereunder.

<PAGE> 54
SECTION 5.02. Negative Covenants. So long as a
drawing is available under the Letter of Credit or the Issuing
Bank shall have any commitment hereunder or the Company shall
have not paid in full all amounts payable by the Company
hereunder to the Agent, the Issuing Bank, or any Creditor, the
Company agrees that, without the written consent of the
Majority Creditors:

(a) Total EBITA to Interest Coverage Ratio. The
Company shall not permit the Interest Coverage Ratio to be
less than 1.40 to 1 at any time on or after the last day
of the first full fiscal quarter of the Company commencing
after the Effective Date.

(b) Leverage Ratio. The Company shall not permit
the Leverage Ratio to exceed 0.68 to 1 at any time on or
after the last day of the first full fiscal quarter of the
Company commencing after the Effective Date.

(c) Prohibition of Fundamental Changes. The Company
shall not, and will not permit any of its Subsidiaries to,
enter into any transaction of merger, consolidation,
amalgamation, liquidation or dissolution; provided that
the Company or any of its Subsidiaries may merge or
consolidate with any other Person if (i) in any such
transaction in which the Company is a party, the Company
is the surviving corporation, (ii) in any such transaction
in which the Company is not a party, the surviving
corporation shall be a Subsidiary of the Company and
(iii) after giving effect thereto no Event of Default
would exist hereunder. The Company will not, and will not
permit any of its Subsidiaries to, convey, sell, lease,
transfer or otherwise dispose of, in one transaction or a
series of transactions, all or substantially all of its
business or assets or assets (excluding (i) accounts
receivable, (ii) obsolete or worn-out tools, equipment or
other property no longer used or useful in its business
and (iii) inventory or other property sold or disposed of
in the ordinary course of business and on ordinary
business terms) which in the aggregate have a net book
value in excess of $50,000,000, whether now owned or
hereafter acquired, to any other Person. Notwithstanding
the foregoing provisions of this subsection (c):

(1) any Subsidiary of the Company may be merged
or consolidated with or into: (A) the Company if the
Company shall be the continuing or surviving
corporation or (B) any other Subsidiary of the
Company; and

<PAGE> 55
(2) any Subsidiary of the Company may sell,
lease, transfer or otherwise dispose of any or all of
its property (upon voluntary liquidation or
otherwise) to the Company or a Subsidiary of the
Company.

(d) Compliance with ERISA. The Company shall not
(i) enter into any non-exempt prohibited transaction (as
defined in Section 4975 of the Code and in Section 406 of
ERISA) involving any Plan which may result in any
liability of the Company to any Person which (in the
reasonable opinion of the Agent) will have a Material
Adverse Effect or (ii) allow or suffer to exist any other
event or condition known to the Company which results in
any liability of the Company or any of its Subsidiaries to
the PBGC, or in any Withdrawal Liability to any
Multiemployer Plan, which (in the reasonable opinion of
the Agent) will have a Material Adverse Effect. For
purposes of this Section 5.02(d), "liability" shall not
include termination insurance premiums payable under
Section 4007 of ERISA. Upon request of the Agent, the
Company shall promptly furnish to the Agent a copy of
Schedule B (Actuarial Information) to the most recently
filed annual report (Form 5500 Series) of any Plan.

(i) Liens created pursuant to the Related
Documents or pursuant to the First Mortgage Bond
Indenture or the Second Mortgage Bond Indenture;

(ii) Liens created or otherwise in existence on
the Effective Date or contemplated by the Plan of
Reorganization;

(iii) Liens imposed by any governmental authority
for taxes, assessments or charges not yet due or
which are being contested in good faith and by
appropriate proceedings if adequate reserves with
respect thereto are maintained on the books of the
Company or the affected Subsidiaries, as the case may
be, in accordance with GAAP;

(iv) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens
arising in the ordinary course of business which are
not overdue for a period of more than 60 days or
which are being contested in good faith and by
appropriate proceedings;

<PAGE> 56
(v) pledges or deposits under worker's
compensation, unemployment insurance and other social
security legislation;

(vi) deposits to secure the performance of bids,
trade contracts (other than for borrowed money),
leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a
like nature incurred in the ordinary course of
business;

(vii) easements, rights-of-way, restrictions and
other similar encumbrances incurred in the ordinary
course of business and encumbrances consisting of
zoning restrictions, easements, licenses,
restrictions on the use of property or minor
imperfections in title thereto which, in the
aggregate, are not material in amount, and which do
not in any case materially detract from the value of
the property subject thereto, render title to the
property encumbered thereby unmarketable, materially
adversely affect the use of such property for its
present purposes or interfere with the ordinary
conduct of the business of the Company or any of its
Subsidiaries;

(viii) Liens on property of any corporation which
becomes a Subsidiary of the Company after the date of
this Agreement, provided that such Liens are in
existence at the time such corporation becomes a
Subsidiary of the Company and were not created in
anticipation thereof, provided further that such
Liens shall not extend to cover any property of the
Company or any of its other Subsidiaries and such
Liens shall not cover property of such Subsidiary
other than property of the types covered by the terms
of such Liens at the time such Subsidiary is
acquired;

(ix) Liens upon real and/or tangible personal
property acquired after the Effective Date (by
purchase, construction or otherwise) by the Company
or any of its Subsidiaries, each of which Liens
either (A) existed on such property before the time
of its acquisition and was not created in
anticipation thereof, or (B) was created solely for
the purpose of securing Debt representing, or
incurred to finance, refinance or refund, the cost
(including the cost of construction) of such
property; provided that no such Lien shall extend to
or cover any property of the Company or such
Subsidiary other than the property so acquired and
improvements thereon;

<PAGE> 57
(x) banker's liens, rights of set-off and Liens
on documents presented under commercial letters of
credit, in each case granted to banks in accordance
with customary banking practices or arising by
operation of law;

(xi) additional Liens upon real and/or personal
property created after the date hereof, provided that
on the date each such Lien is incurred, the lower of
(1) the fair market value of all property subject to
Liens permitted by this paragraph (xi) and not
otherwise permitted by this subsection (e) or (2) the
aggregate amount of all obligations secured by Liens
permitted by this paragraph (xi) and not otherwise
permitted by this subsection (e) shall not exceed 5%
of Total Capital on such date; and

(xii) any extension, renewal or replacement of
the foregoing, provided, however, that the Liens
permitted hereunder shall not be spread to cover any
additional Debt or property (other than a
substitution of like property).

(f) Change in Nature of Business. The Company shall
not make, or permit any of its Subsidiaries to make, any
material change in the nature of its business as carried
on at the date hereof.

(g) Optional Redemptions. The Company shall not
optionally redeem any Bonds unless the First Mortgage
Bonds, Series A/B, and the Second Mortgage Bonds, Series
A, shall each have an Investment Grade Rating and such
bonds have not been placed, with possible negative
consequences, on any watch list.

(h) Related Documents. The Company shall not,
subject to specific rights contained in such agreements,
amend, or consent to the amendment of, any of the Related
Documents, which amendment would adversely affect the
Agent, the Issuing Bank or any Creditor; provided that the
Second Mortgage Bond Indenture may be amended in
accordance with its terms; and provided further that the
consent of the Agent, the Issuing Bank or such Creditor,
as the case may be, may not be unreasonably withheld.

(i) Appointment. The Company shall not appoint any
successor to the Trustee or any Remarketing Agent (as
defined in the Indenture) or other agent appointed
pursuant to the Indenture or any additional Remarketing
Agents or other such agents with respect to the Bonds
without the consent of the Majority Creditors; provided
that the consent of the Majority Creditors may not be
unreasonably withheld.

<PAGE> 58
(j) Bond Interest Term. The Company shall not cause
the Trustee to select a Bond Interest Term Rate (as
defined in the Indenture) for any Bond.

ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.01. Events of Default. The occurrence of
any of the following events shall be an "Event of Default"
hereunder:

(a) The Company shall fail to pay any amount payable
under any provision of Article II or any other provision
of this Agreement within two days after the same becomes
due and payable; or

(b) Any representation, warranty or certification
made, or deemed made, by the Company in any Related
Document by the Company (or any of its officers), or any
certificate furnished to the Agent, the Issuing Bank or
any Creditor pursuant to the provisions thereof, shall
prove to have been false or misleading as of the time made
or furnished in any material respect; or

(c) The Company shall default in the performance of
any of its obligations under clause (a)(vi) of Section
5.01 or clauses (a), (b), (c) or (f) of Section 5.02; or a
consensual Lien shall be created by the Company or any of
its Subsidiaries in violation of Section 5.02(e); or the
Company shall default in its performance of any of its
other obligations under this Agreement or in any other
Related Document and such default in the performance of
any such other obligation shall continue unremedied for a
period of 15 days after notice thereof to the Company by
the Agent; or

(d) The Company or any of its Subsidiaries shall
default in the payment when due of any principal of or any
interest on any Debt aggregating $10,000,000 or more, or
fail to observe or perform any material term, covenant or
agreement contained in any agreement by which it is bound,
evidencing or securing Debt, in an aggregate amount of
$10,000,000 or more, or any other event shall occur or
condition shall exist under any agreement or instrument
relating to any such Debt, after the giving of any
required notice and for such period of time as would
permit the holder or holders thereof or of any obligations
issued thereunder to accelerate the maturity thereof,
unless such failure or event or condition shall have been
cured by the Company or such Subsidiary, as the case may
be, or effectively waived by such holder or holders; or

<PAGE> 59
(e) There shall remain in force, undischarged,
unsatisfied and unstayed, for more than 30 days, whether
or not consecutive, any final judgment against the Company
or any of its Material Subsidiaries that, together with
other outstanding final judgments, undischarged, against
the Company and all of its Material Subsidiaries exceeds
in the aggregate $10,000,000 (for the purposes hereof, the
term "final judgment" shall mean a judgment which is not
subject to appeal); or

(f) The Company or any of its Material Subsidiaries
shall make a general assignment for the benefit of
creditors, or admit in writing its inability to pay or
generally fail to pay its debts as they mature or become
due, or shall petition or apply for the appointment of a
trustee or other custodian, liquidator or receiver of the
Company or any of its Material Subsidiaries, as the case
may be, or any substantial part of its respective assets;
or the Company or any of its Material Subsidiaries shall
commence any case or other proceeding relating to the
Company or any of its Material Subsidiaries under any
bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or
similar law of any jurisdiction, now or hereafter in
effect, or the Company or any of its Material Subsidiaries
shall take any action to authorize or in furtherance of
any of the foregoing; or if any such petition or
application shall be filed or any such case or other
proceeding shall be commenced against the Company or any
of its Material Subsidiaries and the Company or any of its
Material Subsidiaries shall indicate its approval thereof,
consent thereto or acquiescence therein or such petition
or application shall not be dismissed on or before the
60th day after the filing thereof; or

(g) A decree or order is entered appointing any
trustee, custodian, liquidator or receiver or adjudicating
the Company or any of its Material Subsidiaries bankrupt
or insolvent, or approving a petition in any such case or
other proceeding, or a decree or order for relief is
entered in respect of the Company or any of its Material
Subsidiaries in an involuntary case under federal
bankruptcy laws as now or hereafter reconstituted; or

<PAGE> 60
the amount thereof (either individually or in the
aggregate) would, in such event, have a Material Adverse
Effect (after deducting any portion thereof that is
reasonably expected to be paid by other creditworthy
Persons); or

(i) The Confirmation Order shall be (i) reversed,
revoked or vacated in whole or in part by any Final Order
of a court of competent jurisdiction, or (ii) modified in
a manner or subjected to a stay that adversely affects the
Company's ability to perform any of its obligations
hereunder, as determined by the Agent in its sole
discretion; or

(j) Central and South West Corporation shall cease
directly or indirectly, to own (or otherwise shall cease,
directly or indirectly, to control the voting rights of)
at least 51% of the Voting Stock of the Company; or

(k) Any "Event of Default" under and as defined in
the Related Documents shall have occurred and be
continuing; or

(l) Any regulatory approval as set forth in
Section 3.01(d) or required to consummate the Plan of
Reorganization shall be rescinded if such rescission can
not be appealed by the Company and has a Material Adverse
Effect on the Company; or

(m) Any material provision of this Agreement or any
other Related Document shall at any time cease to be a
valid, binding obligation of the Company enforceable
against the Company, or any such agreement shall be
declared to be null and void, or the validity or
enforceability thereof shall be contested by the Company,
or a proceeding shall be commenced by any Governmental
Person having jurisdiction over the Company seeking to
establish the invalidity or unenforceability thereof, or
the Company shall deny that it has any further liability
or obligation under this Agreement or any other Related
Document after delivery thereof or the Second Mortgage
Bond Indenture shall for any reason (other than pursuant
to the terms thereof) cease to create a valid and
perfected second priority Lien on the Company's property
purported to be secured thereby.

<PAGE> 61
be terminated, whereupon the same shall forthwith terminate,
or, (ii) if the Letter of Credit shall have been issued, give
notice to the Trustee pursuant to Section 9.01 of the Indenture
that an Event of Default hereunder has occurred and is
continuing and, if a drawing to pay interest on the Bonds shall
have been made under the Letter of Credit (other than such a
drawing in respect of the payment of interest upon scheduled or
accelerated maturity, or redemption, of the Bonds), and not
reimbursed, notify the Trustee prior to the fifteenth day
following such drawing that the Issuing Bank has not been
reimbursed for such drawing and that interest in the amount of
such drawing will not be reinstated, and (B) the Agent shall at
the request, or may with the consent, of the Majority Creditors
(i) declare the Tender Advances, all interest thereon and all
other amounts payable hereunder or in respect thereof, to be
forthwith due and payable, whereupon the Tender Advances, all
such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand,
protest, or further notice of any kind, all of which are hereby
expressly waived by the Company and (ii) exercise all rights
and remedies in respect of the Second Mortgage Bonds, Series
Y-6 pledged as security hereunder; provided, however, that in
the event of the occurrence of an Event of Default pursuant to
subsections (f) or (g) of Section 6.01, (A) the obligation of
the Issuing Bank to issue the Letter of Credit shall
automatically be terminated and (B) the Tender Advances, all
interest thereon and all other amounts payable hereunder or in
respect thereof shall automatically become and be due and
payable, without presentment, demand, protest or any notice of
any kind, all of which are hereby expressly waived by the
Company.

ARTICLE VII

SECURITY

SECTION 7.01. Issuance and Pledge of Bonds.
Concurrently with the execution of this Agreement, the Company
shall execute, issue and deliver to the Agent for its benefit
and the ratable benefit of the Issuing Bank and each Creditor
the Second Mortgage Bonds, Series Y-6 as security for the
payment of all obligations of the Company now or hereafter
existing under this Agreement in respect of principal and
interest (which shall also, for the purposes thereof, consist
of letter of credit commissions), pursuant to and on the terms
of this Agreement and of the Second Mortgage Bond Indenture.
The Company hereby pledges to the Agent and grants to the
Agent, in each case, for its benefit and the ratable benefit of
the Issuing Bank and each Creditor a security interest in the
Second Mortgage Bonds Series Y-6 and all interest, cash,
instruments and other property from time to time received,

<PAGE> 62
receivable or otherwise distributed in respect of or in
exchange for any or all of such Bonds and proceeds of any and
all of the foregoing. The Second Mortgage Bond, Series Y-6
shall be registered in the name of the Agent or such nominee or
nominees as the Agent shall direct.

SECTION 7.02. Application of Moneys. Any moneys
received by the Agent, the Issuing Bank or any Creditor on
account of the Second Mortgage Bonds, Series Y-6 shall be
applied as follows: (a) moneys received on account of
principal of the Second Mortgage Bonds, Series Y-6 shall be
applied to the payment of any unpaid principal of the Tender
Advances or drawings under the Letter of Credit then due and
owing hereunder and (b) moneys received on account of interest
on the Second Mortgage Bonds, Series Y-6 shall be applied to
the payment of any accrued and unpaid interest then due and
owing hereunder.

SECTION 7.03. Rights of Bondholders. The Agent, as
holder of the Second Mortgage Bonds, Series Y-6 for its benefit
and the ratable benefit of the Issuing Bank and the Creditors,
shall have all the rights (including, without limitation,
voting rights) provided to holders of bonds in the Second
Mortgage Bond Indenture and shall have only such rights.
Without limiting the generality of the foregoing, (a) the
Second Mortgage Bonds, Series Y-6 may not be sold, assigned,
pledged or otherwise transferred by the Agent (except to a
successor Agent appointed in accordance with Section 8.06 to be
held as security as provided in this Article VII), whether
pursuant to the Uniform Commercial Code after an Event of
Default or otherwise except in connection with any assignment
of the Agent's rights and obligations under this Agreement as
provided for herein and (b) no payment of principal of or
interest on the Second Mortgage Bonds, Series Y-6, or any other
amount payable thereunder, shall be demanded or received except
if, and to the extent that, the corresponding payment remains
unpaid hereunder. To the extent that moneys recovered from the
Second Mortgage Bonds, Series Y-6 are insufficient to pay in
full the amount of principal and interest and other amounts due
hereunder, the Company shall remain liable for any such
deficiency under the terms of this Agreement.

<PAGE> 63
collateral, whether or not the Agent, the Issuing Bank or any
Creditor has or is deemed to have knowledge of such matters, or
as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any
collateral. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any
collateral in its possession if such collateral is accorded
treatment substantially equal to that which the Agent accords
its own property.

ARTICLE VIII

THE AGENT, THE CREDITORS AND
THE ISSUING BANK

SECTION 8.01. Authorization and Action. The Issuing
Bank and each Creditor hereby appoint and authorize the Agent
to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided
for by this Agreement (including, without limitation,
enforcement or collection of amounts due under this Agreement),
neither the Issuing Bank nor the Agent shall be required to
exercise any discretion or take any action, but the Agent shall
be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon
the instructions of the Majority Creditors, and such
instructions shall be binding upon all Creditors; provided,
however, that neither the Issuing Bank nor the Agent shall be
required to take any action which exposes the Issuing Bank or
the Agent to personal liability or which is contrary to this
Agreement or applicable law. The Agent agrees to give to the
Issuing Bank and each Creditor prompt notice of each notice
given to it by the Company and to give to each Creditor notice
of each notice delivered to it by the Issuing Bank, in each
case pursuant to the terms of this Agreement.

<PAGE> 64
form satisfactory to the Agent; (ii) may consult with legal
counsel (including counsel for the Company), independent public
accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or
representation to any Creditor and shall not be responsible to
any Creditor for any statements, warranties or representations
(whether written or oral) made in or in connection with this
Agreement or any other Related Document; (iv) shall not have
any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this
Agreement or any other Related Document on the part of the
Company or any other party or to inspect the property
(including the books and records) of the Company; (v) shall not
be responsible to any Creditor for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of
this Agreement or any other Related Document or any other
instrument or document furnished pursuant hereto or thereto;
and (vi) shall incur no liability under or in respect of this
Agreement or any other Related Document by acting upon any
notice, consent, certificate or other instrument or writing
(which may be by telecopier, telegram, cable or telex) believed
by it to be genuine and signed or sent by the proper party or
parties.

SECTION 8.03. The Agent, the Issuing Bank and
Affiliates. The Agent and the Issuing Bank shall have the same
rights and powers under this Agreement as any other Creditor
and may exercise the same as though they were not the Issuing
Bank and the Agent, respectively; and the term "Creditor" or
"Creditors" shall, unless otherwise expressly indicated,
include Credit Suisse in its individual capacity. The Agent,
the Issuing Bank and their respective Affiliates may accept
deposits from, lend money to, act as trustee under indentures
of, and generally engage in any kind of business with, the
Company, any of its Subsidiaries and any Person who may do
business with or own securities of the Company or any such
Subsidiary, all as if Credit Suisse was not the Agent or the
Issuing Bank and without any duty to account therefor to the
Creditors.

<PAGE> 65
Issuing Bank or any other Creditor and based on such documents
and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not
taking action under this Agreement.

SECTION 8.05. Indemnification. The Creditors agree
to indemnify the Agent and the Issuing Bank (to the extent not
reimbursed by the Company), ratably according to the respective
Participation Percentages, from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent or the Issuing Bank in any way
relating to or arising out of this Agreement or any action
taken or omitted by the Agent or the Issuing Bank under this
Agreement, provided that no Creditor shall be liable for any
portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's or the Issuing Bank's
gross negligence or willful misconduct. Without limitation of
the foregoing, each Creditor agrees to reimburse the Agent and
the Issuing Bank promptly upon demand for its ratable share of
any out-of-pocket expenses (including counsel fees) incurred by
the Agent or the Issuing Bank, as the case may be, in
connection with the preparation, execution, delivery,
administration (except normal administrative costs and fees and
expenses of counsel related thereto prior to an Event of
Default), modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or
legal advice in respect of rights or responsibilities under,
this Agreement or any other Related Document, to the extent
that the Agent or the Issuing Bank is not reimbursed for such
expenses by the Company.

<PAGE> 66
Agent, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this
Agreement. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Article VII shall
inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.

SECTION 8.07. Issuing Bank. (a) All notices
received by the Issuing Bank pursuant to this Agreement or any
other Related Document (other than the Letter of Credit) shall
be promptly delivered to the Agent for distribution to the
Creditors.

(b) The Issuing Bank shall not amend or waive any
provision or consent to the amendment or waiver of any Related
Document without the consent of the Majority Creditors,
provided, however, that any waiver or amendment of any
provision of the Letter of Credit or consent to the amendment
or waiver of the Letter of Credit shall require the written
consent of all of the Creditors.

(c) Upon receipt by the Issuing Bank from time to
time of any amount pursuant to the terms of any Related
Document (other than pursuant to the terms of this Agreement),
the Issuing Bank shall promptly deliver to the Agent such
amount.

ARTICLE IX

MISCELLANEOUS

of, or interest on, any Tender Advance or any fees (other than
fees payable solely to the Issuing Bank) or other amounts

<PAGE> 67
payable hereunder, (e) change the aggregate unpaid principal
amount of any Tender Advance or any other amount payable
hereunder as a result of a draw on the Letter of Credit, or the
number of Creditors, which shall be required for the Creditors
or any of them to take any action hereunder, (f) amend this
Section 9.01, (g) amend this Agreement in a manner intended to
prefer one or more Creditors over any other Creditors, (h)
amend the definition of "Majority Creditors", or (i) release
any collateral, including, without limitation, the Second
Mortgage Bonds, Series Y-6; provided further that no amendment,
waiver or consent shall, unless in writing and signed by the
Agent in addition to the Creditors required above to take such
action, affect the rights or duties of the Agent under this
Agreement; provided further that no amendment, waiver or
consent shall, unless in writing and signed by the Issuing Bank
in addition to the Creditors required above to take such
action, affect the rights and duties of the Issuing Bank under
this Agreement.

SECTION 9.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing
(including telecopier, telegraphic, telex or cable
communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered, if to the Company, at its address at, in
the case of deliveries, at its street address at [303 North
Oregon Street, El Paso, Texas 79901], in the case of mailings,
to its mailing address at [P.O. Box 982, El Paso, Texas 79960],
in the case of telex, to telex no. [5435710 (callback
915-543-5707)] and in the case of telecopier to [915-521-4754],
in each case to the attention of the Secretary; if to the
Issuing Bank, at its address at [___________________________],
Attention: [_____________], telex no. [_______________] and in
the case of telecopier to [___________]; if to the Agent, at
its address at [_____________________________], Attention:
[_____________], telex no. [_________________] and in the case
of telecopier to [_________________]; if to any Creditor, at
its address specified on the signature pages hereof; and if to
the Trustee, in the case of deliveries, at its street address
at [ ,
], in the case of mailings, to its mailing
address at P.O. Box , , , and in the case
of telex, to telex no. , in each case to the attention of
[Corporate Trust Department] or, as to each such entity, at
such other place and/or address or number as shall be
designated by such entity in a written notice to the other such
entities. All such notices and communications shall, when
mailed, telecopied, telegraphed, telexed or cabled, be
effective when deposited in the mails, telecopied, delivered to
the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively, addressed as

<PAGE> 68
aforesaid, except that notices to the Agent or Issuing Bank
pursuant to the provisions of Article II shall not be effective
until received by the Agent or Issuing Bank, as the case may
be.

SECTION 9.03. No Waiver; Remedies. No failure on
the part of the Issuing Bank, the Agent or any Creditor to
exercise, and no delay in exercising, any right hereunder or
under any Related Document shall operate as a waiver thereof;
nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.

SECTION 9.04. Rights of Setoff and Subrogation.
(a) Upon the occurrence and during the continuance of any
Event of Default, the Issuing Bank and each Creditor are hereby
authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and otherwise apply any and
all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time
owing by the Issuing Bank or such Creditor, as the case may be,
to or for the credit or the account of the Company against any
and all of the obligations of the Company now or hereafter
existing under this Agreement, the Second Mortgage Bond
Indenture or the Second Mortgage Bonds, Series Y-6, whether or
not the Issuing Bank or such Creditor, as the case may be,
shall have made any demand hereunder or under such other
documents and although such obligations may be contingent or
unmatured.

The Issuing Bank and each Creditor, as the case may
be, agree promptly to notify the Company after any such set-off
and application made by it, provided that the failure to give
such notice shall not affect the validity of such set-off and
application. The rights of the Issuing Bank and each Creditor
under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which
the Issuing Bank and each Creditor may have.

<PAGE> 69
of such Tender Advances or such other amounts, as the case may
be, owing to them as shall be necessary to cause such
purchasing Creditor to share the excess payment ratably with
each of them; provided, however, that if all or any portion of
such excess payment is thereafter recovered from such
purchasing Creditor, such purchase from the Issuing Bank or
such Creditor shall be rescinded and the Issuing Bank or such
Creditor shall repay to the purchasing Creditor the purchase
price to the extent of such recovery together with an amount
equal to the Issuing Bank's or such Creditor's ratable share
(according to the proportion of (i) the amount of the Issuing
Bank's or such Creditor's required repayment to (ii) the total
amount so recovered from the purchasing Creditor) of any
interest or other amount paid or payable by the purchasing
Creditor in respect of the total amount so recovered.

(c) Notwithstanding the foregoing, if any Creditor
shall obtain any such excess payment involuntarily, such
Creditor may, in lieu of purchasing participations from the
Issuing Bank and other Creditors in accordance with
subsection (b) above, on the date of receipt of such excess
payment, return such excess payment to the Agent for
distribution in accordance with Section 2.12.

(d) The Company agrees that the Issuing Bank and the
Creditors, as the case may be, shall be subrogated to all
rights of the Trustee and the holders of the Bonds, to the
extent of any payment made by the Issuing Bank pursuant to a
drawing under the Letter of Credit, provided that so long as
the Bonds remain unpaid and held by Persons other than the
Company or any Affiliate thereof, such right of subrogation
shall in all respects be subordinate to the rights of the
Trustee and the holders of the Bonds.

SECTION 9.05. Indemnification. The Company hereby
indemnifies and holds the Agent, the Issuing Bank, each
Creditor and each Participant and each of their Affiliates and
their officers, directors, employers, agents and advisors
(each, an "Indemnified Party") harmless from and against any
and all claims, damages, losses, liabilities, costs or expenses
(including, without limitation, reasonable fees and expenses of
counsel) that may be incurred by or asserted or awarded against
any Indemnified Party (except to the extent any claim, damage,
loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful
misconduct), in each case relating to or arising out of or in
connection with or by reason of:

<PAGE> 70
any amendment or supplement to the Official Statement, or
by reason of the omission or alleged omission to state
therein a material fact necessary to make such statements,
in the light of the circumstances under which they were
made, not misleading; provided, however, that, in the case
of any action or proceeding alleging an inaccuracy in a
material respect, or an untrue statement, with respect to
information supplied by and describing the Issuing Bank in
the Preliminary Official Statement or the Official
Statement (the "Bank Information"), (i) indemnification by
the Company pursuant to this Section 9.05(a) shall be
limited to the costs and expenses of the Issuing Bank
(including reasonable fees and expenses of the Issuing
Bank's counsel) of defending itself against such
allegation, (ii) if in any such action or proceeding it is
finally determined that the Issuing Bank Information
contained an inaccuracy in a material respect or an untrue
statement, then the Company shall not be required to
indemnify the Issuing Bank pursuant to this Section
9.05(a) for any claims, damages, losses, liabilities,
costs or expenses to the extent caused by such inaccuracy
or untrue statement, and (iii) if any such action or
proceeding shall be settled by the Issuing Bank without
there being a final determination to the effect described
in the preceding clause (ii), unless the Letter of Credit
is wrongfully dishonored and such action or proceeding
relates to such wrongful dishonor, then the Company shall
be required to indemnify the Issuing Bank pursuant to this
Section 9.05(a) for the reasonable costs or expenses
incurred in connection with such action or proceeding
prior to such settlement and, if such action or proceeding
is settled with the Company's consent, for the costs and
expenses of such settlement; or

(b) any representation, warranty or certification
made or deemed made in this Agreement by the Company (or
any of its officers), or any certificate furnished to the
Agent, the Issuing Bank or any Creditor pursuant to the
provisions hereof, proving to have been false or
misleading as of the time made or furnished in any
material respect; or

(c) any case or proceeding pursuant to any
bankruptcy, insolvency, reorganization, moratorium or
similar law or any restructuring of the Company; or

(d) any cost or liability under any Environmental
Law arising out of the operation or assets of the Company;
or

(e) any event or occurrence set forth in
Section 5.04 of the Loan Agreement; or

<PAGE> 71
(f) the execution and delivery or transfer of, or
wrongful payment or wrongful failure to make payment
under, the Letter of Credit; provided, however, that the
Company shall not be required to indemnify any Indemnified
Party pursuant to this Section 9.05 for any claims,
damages, losses, liabilities, costs or expenses to the
extent caused by (i) any Indemnified Party's willful
misconduct or gross negligence in determining whether a
draft or certificate presented under the Letter of Credit
complied with the terms of the Letter of Credit or (ii)
any Indemnified Party's wrongful failure to make lawful
payment under the Letter of Credit after the presentation
to it by the Trustee or a successor trustee under the
Indenture of a draft and certificate strictly complying
with the terms and conditions of the Letter of Credit.

Nothing in this Section 9.05 is intended to limit the Company's
obligations contained in Article II. Without prejudice to the
survival of any other obligation of the Company hereunder, the
indemnities and obligations of the Company contained in this
Section 9.05 shall survive the payment in full of amounts
payable by the Company pursuant to Article II and the
termination of the Letter of Credit.

SECTION 9.06. Issuing Bank and Creditors. As
between the Issuing Bank, the Agent, and the Creditors on the
one hand, and the Company on the other hand, the Company
assumes all risks of the acts or omissions of the Trustee and
any other beneficiary or transferee of the Letter of Credit
with respect to its use of the Letter of Credit. Neither the
Issuing Bank, the Agent, any Creditor, nor any Participant nor
any of their Affiliates and their officers, directors,
employers, agents and advisors shall be liable or responsible
for: (a) the use which may be made of the Letter of Credit or
any acts or omissions of the Trustee and any other beneficiary
or transferee in connection therewith; (b) the validity,
sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or
all respects invalid, insufficient, fraudulent or forged; (c)
payment by the Issuing Bank against presentation of documents
that do not comply with the terms of the Letter of Credit,
including failure of any documents to bear any reference or
adequate reference to the Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment
under the Letter of Credit, except that the Company shall have
a claim against the Issuing Bank, and the Issuing Bank shall be
liable to the Company, to the extent of any direct, but not
consequential, damages suffered by the Company which the
Company proves were caused by (i) the Issuing Bank's willful
misconduct or gross negligence in determining whether a draft
or certificate presented under the Letter of Credit complies
with the terms of the Letter of Credit or (ii) the Issuing

<PAGE> 72
Bank's willful failure to make lawful payment under the Letter
of Credit after the presentation to it by the Trustee or a
successor trustee under the Indenture of a draft and
certificate strictly complying with the terms and conditions of
the Letter of Credit. In furtherance and not in limitation of
the foregoing, the Issuing Bank may accept documents that
appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information
to the contrary.

SECTION 9.07. Costs, Expenses and Taxes. The
Company agrees to pay on demand all costs and expenses of the
Agent, the Issuing Bank and each Creditor in connection with
the preparation, execution, delivery, filing, recording,
administration (except normal administrative costs and fees and
expenses of counsel related thereto prior to an Event of
Default), modification and amendment of this Agreement and any
other documents which may be delivered in connection with this
Agreement including transfer of the Letter of Credit in
accordance with its terms and any other documents which may be
delivered in connection with this Agreement, including, without
limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Agent, the Issuing Bank and each Creditor, and
local counsel who may be retained by said counsel, with respect
thereto, with respect to advising the Agent, the Issuing Bank
or any such Creditor as to its rights and responsibilities, or
the perfection or preservation of rights or interests, under
this Agreement, any other Related Document and such other
documents which may be delivered in connection with this
Agreement, with respect to negotiations with the Company or
with other creditors of the Company, any Person controlling the
Company or any of the Company's Subsidiaries arising out of any
Event of Default or any events or circumstances that may give
rise to an Event of Default and with respect to presenting
claims in or otherwise participating in or monitoring any
bankruptcy, insolvency or other similar proceeding involving
creditor's rights generally and any proceeding ancillary
thereto or in connection with the negotiation of any
restructuring or "work-out" (whether or not consummated). The
Company further agrees to pay on demand all costs and expenses
(including reasonable counsel fees and expenses) of the Agent,
the Issuing Bank and each Creditor in connection with (i) the
enforcement (whether through negotiations, legal proceedings or
otherwise) of this Agreement, any other Related Document and
any other documents which may be delivered in connection with
this Agreement, including, without limitation, reasonable
counsel fees and expenses in connection with the enforcement of
rights under this Section 9.07, or (ii) any action or
proceeding relating to a court order, injunction, or other
process or decree restraining or seeking to restrain the
Issuing Bank from paying any amount under the Letter of Credit.
In addition, the Company shall pay any and all stamp and other

<PAGE> 73
administrative taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and
recording of this Agreement, the Letter of Credit, any other
Related Document or any such other documents, and agrees to
save the Agent, the Issuing Bank and each Creditor harmless
from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such
taxes and fees.

SECTION 9.08. Purchase Option. (a) The Company
acknowledges and consents to the effectiveness of the Indenture
and the Letter of Credit, and agrees to take any and all
actions as are necessary to ensure that the Issuing Bank shall
have the benefit of the option to purchase Bonds contemplated
therein.

(b) The Issuing Bank may with the consent, or shall
at the request, of the Majority Creditors exercise its right as
set forth in Sections 3.01(e), 9.01(e) or 13.03(d) of the
Indenture to purchase the Bonds. Upon any such purchase, the
Agent shall notify all Creditors of their pro rata share (based
on their Participation Percentage) of the purchase price of the
Bonds so purchased and upon receipt of such notice each
Creditor will pay to the Agent, for the benefit of the Issuing
Bank, such Creditor's pro rata share of the purchase price.
Any Bonds so purchased shall be held by the Issuing Bank or the
Agent or any other nominee of the Issuing Bank, on behalf of
all Creditors (the "Holder"). The Holder may with the consent,
or shall at the request, of the Majority Creditors exercise its
rights in respect of the Bonds. Upon the sale, remarketing or
refunding of any Bonds so purchased, the Holder shall pay to
the Agent for the ratable benefit of the Creditors the proceeds
of such sale, remarketing or refunding. Upon receipt of such
proceeds by the Agent, the Agent shall ratably reimburse the
Creditors their share of such proceeds.

SECTION 9.09. Binding Effect; Assignments and
Participations. (a) This Agreement shall become effective
when it shall have been executed by the Company, the Agent, the
Issuing Bank and each Creditor and thereafter shall be binding
upon and inure to the benefit of the Company, the Agent, the
Issuing Bank and each Creditor and their respective successors
and assigns, except that the Company shall not have the right
to assign its rights hereunder or any interest herein without
the prior written consent of the Agent, the Issuing Bank and
each Creditor. The Issuing Bank and each Creditor, with the
consent of the Issuing Bank, which consent shall not be
unreasonably withheld, may assign to any Eligible Institution
all or any part of, or any interest (undivided or divided) in,
its rights, benefits and obligations (other than the Issuing
Bank's obligation to issue the Letter of Credit) under this
Agreement, and to the extent of that assignment such assignee

<PAGE> 74
shall have the same rights, benefits and obligations (other
than the Issuing Bank's obligation to issue the Letter of
Credit) against and to the Company hereunder as it would have
had if such assignee were the Issuing Bank or such Creditor
hereunder; provided that any such assignment shall not be in an
amount less than $5,000,000.

(b) The Issuing Bank and each Creditor may sell or
agree to sell, to (i) any Eligible Institution (each such
Eligible Institution being an "Eligible Participant") or
(ii) one or more other Persons (each a "Restricted
Participant"; and together with any Eligible Participants being
referred to herein as a "Participant"), a participation in all
or any part of the Letter of Credit, any Tender Advance or
other amounts payable under this Agreement. Each Participant
shall be entitled to the rights and benefits of the provisions
of Section 5.01(a)(vi) with respect to its participation in the
Letter of Credit or such Tender Advance or such other amounts
as if (and the Company shall be directly obligated to such
Participant under such provisions as if) such Participant were
the "Creditor" for purposes of said Section, but, except as set
forth below, shall not have any other rights or benefits under
this Agreement or any other Related Document (the Participant's
rights against the Creditor in respect of such participation to
be those set forth in the agreements executed by the Creditor
in favor of the Participant). All amounts payable by the
Company to the Issuing Bank or any Creditor under Section 2.11
and 2.17 in respect of the Letter of Credit or any Tender
Advance or other amounts payable under this Agreement shall be
determined as if the Issuing Bank or any Creditor had not sold
or agreed to sell any participations in the Letter of Credit or
any Tender Advance or such other amounts, and as if the Issuing
Bank or any Creditor were maintaining the Letter of Credit or
any Tender Advance or such other amounts in the same way that
it is maintaining the portion of the Letter of Credit or any
Tender Advance or such other amounts in which no participations
have been sold. In the case of an Eligible Participant, the
Issuing Bank may agree with such Participant to take or refrain
from taking action hereunder or under any Related Document as
the Issuing Bank or any Creditor, as set forth in the agreement
executed by the Bank and such Participant, with respect to
taking or refraining from taking action hereunder or under any
other Related Document. In no event shall the Issuing Bank or
any Creditor agree with any Restricted Participant to take or
refrain from taking any action hereunder or under any other
Related Document except that the Issuing Bank or any Creditor
may agree with a Restricted Participant that it will not,
without the consent of such Restricted Participant, agree to
(i) extend the date fixed for the payment of principal of or
interest on any Tender Advance or other amounts payable to such
Restricted Participant, (ii) reduce the amount of any such
payment of principal, (iii) reduce the rate at which interest

<PAGE> 75
is payable thereon to a level below the rate at which such
Restricted Participant is entitled to receive such interest,
(iv) alter the rights or obligations of the Company to prepay
any Tender Advance or other amounts payable to such Restricted
Participant or (v) release any collateral, including, without
limitation, the Second Mortgage Bonds, Series Y-6.

(c) Notwithstanding any other provision set forth in
this Agreement, the Issuing Bank or any Creditor may at any
time create a security interest in all or any portion of its
rights under this Agreement (including, without limitation, the
Advances owing to it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the
Federal Reserve System.

SECTION 9.10. Further Assurances. The Company
agrees promptly to do such further acts and things, and to
execute and deliver such additional instruments (including,
without limitation, notices), at its own expense, as the Agent,
the Issuing Bank or any Creditor may at any time reasonably
request in order better to insure and confirm the Agent's, the
Issuing Bank's or any Creditor's, as the case may be, rights,
powers and remedies hereunder and under the other Related
Documents (including in order to perfect or protect any pledge
or security interest granted or purported to be granted hereby
or to enable the Agent, the Issuing Bank or any Creditor, as
the case may be, to exercise or enforce its rights and remedies
in respect hereof).

SECTION 9.11. Severability. Any provision of this
Agreement which is prohibited, unenforceable or not authorized
in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability
or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or
legality of such provision in any other jurisdiction.

SECTION 9.12. Headings. Section headings in this
Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other
purpose.

SECTION 9.13. GOVERNING LAW. THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICT OF LAW
PRINCIPLES.

<PAGE> 76
RELATING TO THIS AGREEMENT, ANY RELATED DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OR
OMISSIONS OF THE AGENT, THE ISSUING BANK OR ANY CREDITOR IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT OF THIS
AGREEMENT OR ANY RELATED DOCUMENT. THE COMPANY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.

TO THE EXTENT THAT THE COMPANY HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE)
WITH RESPECT TO ITSELF OR ITS PROPERTY, THE COMPANY HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT AND THE OTHER RELATED DOCUMENTS. THE
COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF TEXAS.

SECTION 9.15. Waiver of Trial by Jury. EACH OF THE
COMPANY AND THE AGENT, THE ISSUING BANK AND EACH CREDITOR
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER RELATED
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
THE COMPANY ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL
AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER
PROVISION OF EACH OTHER RELATED DOCUMENT TO WHICH IT IS A
PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
ISSUING BANK, THE AGENT AND EACH CREDITOR ENTERING INTO THIS
AGREEMENT AND EACH SUCH OTHER RELATED DOCUMENT.

SECTION 9.16. Counterparts. This Agreement may be
executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

SECTION 9.17. Integration. THIS AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AS TO
THE SUBJECT MATTER OF THIS AGREEMENT AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO.

<PAGE> 77
SECTION 9.18. Survival. The obligations of the
Company under Sections 2.11, 2.17, 9.05, 9.14 and 9.15 shall
survive the repayment of the Loans and the payment in full of
all amount payable by the Company under Section 9.07.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date first above
written.

EL PASO ELECTRIC COMPANY

By
[Title]

Issuing Bank

CREDIT SUISSE

By
Vice President

Agent

CREDIT SUISSE, as Agent

By
Vice President

Participation
Percentage Creditors

100% CREDIT SUISSE

By
Vice President

____________________________
____________________________
Attention: _________________
Telex No. __________________
Telecopier _________________

<PAGE> 78
EXHIBIT A

FORM OF LETTER OF CREDIT

IRREVOCABLE LETTER OF CREDIT

No. [ ]

, 199[ ]*

[Name and Address of Trustee]

Attention: Corporate Trust Department

Dear Sirs:

We hereby establish, at the request and for the
account of El Paso Electric Company, a Texas corporation (the
"Company"), in your favor, as Trustee under the Indenture of
Trust, dated as of , 199 (the "Indenture") between
Maricopa County, Arizona Pollution Control Corporation (the
"Issuer") and you, pursuant to which [$37,100,000]** in
aggregate principal amount of the Issuer's Pollution Control
Refunding Revenue Bonds (El Paso Electric Company Palo Verde
Project), 19 Series Y-6 (the "Bonds"), were issued, our
Irrevocable Letter of Credit No. [ ], in the amount
of $[ ]*** (as more fully described below), effective
immediately and expiring at the close of banking business at
our [_____________________________] office on
or such later date as we shall have agreed in writing (the
"Stated Termination Date"), unless earlier terminated in
accordance with the terms hereof.

_______________
* To be dated the date of issuance of the Letter of Credit.

** In no event shall the principal amount of the Bonds exceed
$37,100,000.

*** In no event shall the face amount of this Letter of Credit
exceed $40,454,459.

<PAGE> 79
payable at sight on a banking day (which shall be any day other
than a Saturday, Sunday or public or bank holiday or the
equivalent for banks generally under the laws of the State of
New York (a "Banking Day")), accompanied by a completed
certificate in substantially the form of Annex B attached
hereto, which drafts and certificates shall be in writing and
signed by you (any such draft accompanied by such certificate
being your "Interest Draft"), an amount not exceeding $[
]; (2) in one or more drawings by one or more of your drafts,
drawn on our [___________________] office, payable at sight on
a Banking Day, accompanied by a completed certificate in
substantially the form of Annex C attached hereto, which drafts
and certificates shall be in writing and signed by you (any
such draft accompanied by such certificate being your "Tender
Draft"), an aggregate amount not exceeding $[ ];
(3) in one or more drawings by one or more of your drafts,
drawn on our [_____________________] office, payable at sight
on a Banking Day, accompanied by a completed certificate in
substantially the form of Annex D attached hereto, which drafts
and certificates shall be in writing and signed by you (any
such draft accompanied by such certificate being your "Partial
Redemption Draft"), an aggregate amount not exceeding $[ ];
and (4) in a single drawing by your draft, drawn on our
[__________________] office, payable at sight on a Banking Day,
accompanied by a completed certificate in substantially the
form of Annex E attached hereto, which draft and certificate
shall be in writing and signed by you (such draft accompanied
by such certificate being your "Final Draft"), an amount not
exceeding $[ ]; provided that in no event will you
have a right to make drawings under this Letter of Credit for
the payment of the principal of, or interest on, Bonds held of
record by the Company (or any Affiliate thereof) or held by the
Trustee or the Tender Agent for the account of the Company;
provided further with respect to any such Bonds that were not
so held by or for the account of the Company (or any Affiliate
thereof) on the immediately preceding Record Date (as defined
in the Indenture), you may, in accordance with the Indenture,
draw on us by your Interest Draft under clause (1).
Notwithstanding any other provision in this Letter of Credit,
in no event will you have a right to make a drawing under this
Letter of Credit for the payment of principal of or interest on
Bonds in a "Bond Interest Term" (as defined in the Indenture).
This Letter of Credit may not be drawn upon for the payment of
any premium which may be payable in respect of the Bonds.

<PAGE> 80
from us to the effect that we have not been reimbursed for such
drawing in the form of Annex H attached hereto appropriately
completed, the amount of this Letter of Credit and the amounts
from time to time available to be drawn by you by any Interest
Draft, Tender Draft, Partial Redemption Draft or Final Draft
shall be automatically and irrevocably reinstated in the amount
of such drawing, effective the 16th calendar day from the date
of such drawing.

The amount of this Letter of Credit shall be decreased
upon our receipt of notice from you, in the form of Annex A
hereto, of a redemption or defeasance of less than all the
Bonds outstanding, by an amount equal to the amount stated in
said notice and the amounts available to be drawn by you by any
subsequent Interest Draft, Tender Draft, Partial Redemption
Draft or Final Draft shall be automatically decreased to the
amounts stated in such notice.

Upon our honoring any Tender Draft or Partial
Redemption Draft, (i) the amount of this Letter of Credit and
the amount available to be drawn by you by any subsequent
Tender Draft, Partial Redemption Draft or Final Draft shall be
automatically decreased by an amount equal to the amount of
such Tender Draft or such Partial Redemption Draft and (ii) the
amount available to be drawn by you by any Interest Draft shall
be automatically decreased by an amount equal to the amount
drawn under such draft in respect of accrued and unpaid
interest. In the case of any Tender Draft, the amount from
time to time available to be drawn by you by any Interest
Draft, Tender Draft or Partial Redemption Draft and Final Draft
shall be reinstated to the extent, but only to the extent, we
received reimbursement from the Company for amounts drawn
hereunder by such Tender Draft and we so notify you in writing.

In addition, the amount available from time to time to
be drawn by you by any Interest Draft, Tender Draft, Partial
Redemption Draft and Final Draft shall be automatically
reinstated, upon our receipt from you of the proceeds of the
resale of any Bonds purchased and held on behalf of the Company
with amounts drawn hereunder accompanied by a completed and
signed certificate substantially in the form of Annex F, by an
amount equal to the amount of the drawings made to purchase the
Bonds so resold. Amounts received from you on behalf of the
Company shall, if accompanied by a completed and signed
certificate substantially in the form of Annex F from you,
shall be applied to the extent of the amounts indicated therein
in reimbursement of unreimbursed drawings under your Tender
Drafts. Amounts otherwise received from you on behalf of the
Company shall first be applied in reimbursement of unreimbursed
drawings made by your Interest Draft.

<PAGE> 81
Upon delivery to us (i) of all Bonds purchased by you
on behalf of or for the account of the Bank pursuant to Section
3.01(e) of the Indenture, Section 9.01(e) of the Indenture, or
Section 13.03(d) of the Indenture with moneys drawn by a Tender
Draft and (ii) a completed and signed certificate substantially
in the form of Annex G, the Letter of Credit shall be
reinstated in an amount equal to the amount of such Tender
Draft used to purchase such Bonds so delivered; provided,
however, if at any time any such purchase shall be rescinded,
in whole or in part, or some or all of the Bonds so purchased
must otherwise be returned by the Bank, in each case, for any
reason, the amounts so reinstated shall not be available to be
drawn until and unless the Company reimburses us for such
amounts.

Funds under this Letter of Credit are available to you
against (1) your Interest Draft referring thereon to the number
of this Letter of Credit accompanied by your written and
completed certificate signed by you in substantially the form
of Annex B thereto, (2) your Tender Draft referring thereon to
the number of this Letter of Credit accompanied by your written
and completed certificate signed by you in substantially the
form of Annex C thereto, (3) your Partial Redemption Draft
referring thereon to the number of this Letter of Credit
accompanied by your written and completed certificate signed by
you in substantially the form of Annex D thereto and (4) your
Final Draft referring thereon to the number of this Letter of
Credit accompanied by your written and completed certificate
signed by you in substantially the form of Annex E thereto.
Each such draft and certificate shall be dated the date of its
presentation, and shall be presented at our office located at
[_________________], telex no.: [____________], Attention:
[_________________] (or at any other office or number in the
City and State of New York which may be designated by us by
written notice delivered to you) on or before 12:00 Noon (New
York City time), or by tested telex (or telecopier) on or
before 10:00 A.M. (New York City time), on the day (which shall
be a Banking Day) of our making funds available to you
hereunder. If we receive any of your drafts and certificates
at such office, all in strict conformity with the terms and
conditions of this Letter of Credit, on or prior to the
termination hereof and in any event not later than 12:00 Noon
(New York City time), or if such drafts and certificates are
presented by tested telex (or telecopier) not later than 10:00
A.M. (New York City time) on the Stated Termination Date, we
will honor the same after presentation thereof on the same day
in accordance with your payment instructions. If we receive
any of your drafts and certificates at such office after 12:00
Noon (New York City time), or if such drafts and certificates
are presented by tested telex (or telecopier) after 10:00 A.M.
(New York City time), on a Banking Day, we will honor the same
after presentation thereof on the next succeeding Banking Day

<PAGE> 82
provided that such drafts and certificates conform with the
terms and conditions of this Letter of Credit. If requested by
you, payment under this Letter of Credit may be made by wire
transfer of Federal Reserve Bank of New York funds to your
account in a bank on the Federal Reserve wire system or by
deposit of same day funds into a designated account that you
maintain with us.

This Letter of Credit shall automatically terminate
upon the earliest of (i) our honoring your Final Draft
presented hereunder, (ii) the date stated in any written notice
we receive from you as the effective date of termination of
this Letter of Credit, (iii) the date that you surrender the
Letter of Credit to us, (iv) the provision of any substitution
letter of credit or credit facility as provided in the
Indenture, (v) the date on which we receive written notice from
you that there is no longer any "Bond Outstanding" within the
meaning of the Indenture, and (vi) the Stated Termination Date.

This Letter of Credit is transferable in its entirety
(but not in part) to any transferee who has succeeded you as
Trustee under the Indenture and may be successively
transferred. Transfer of the available balance under this
Letter of Credit to such transferee shall be effected by the
presentation to us of this Letter of Credit accompanied by a
certificate in substantially the form of Annex I attached
hereto, together with a fee equal to 1/4 of 1% of the
"Available Amount". "Available Amount" means the maximum
amount available to be drawn at such time under the Letter of
Credit, the determination of such maximum amount to assume
compliance with all conditions for drawing and no reduction for
(i) any amount drawn by an Interest Draft (unless such amount
is not reinstated under the Letter of Credit) or (ii) any
amount drawn by a Tender Draft or (iii) any amount not
available to be drawn because Bonds are held by or for the
account of the Company (or any Affiliate thereof). Upon such
presentation and payment we shall forthwith transfer the same
to your transferee or, if so requested by your transferee,
issue an irrevocable letter of credit to your transferee with
provisions therein consistent with this Letter of Credit.

This Letter of Credit sets forth in full our
undertaking, and such undertaking shall not in any way be
modified, amended, amplified or limited by reference to any
document, instrument or agreement referred to herein
(including, without limitation, the Bonds), except only the
certificates and the drafts referred to herein; and any such
reference shall not be deemed to incorporate herein by
reference any document, instrument or agreement except for such
certificates and such drafts.

<PAGE> 83
This Letter of Credit shall be governed by the laws of
the State of New York, including the Uniform Commercial Code as
in effect in the State of New York. Communications with
respect to this Letter of Credit shall be in writing and
shall be addressed to us at [___________________], Attention:
[_________________], specifically referring to the number of
this Letter of Credit.

Very truly yours,

CREDIT SUISSE

By
Vice President

<PAGE> 84
Annex A

CERTIFICATE FOR THE REDUCTION OF AMOUNTS AVAILABLE
UNDER IRREVOCABLE LETTER OF CREDIT NO.
DATED , 199

The undersigned, a duly authorized officer of the
undersigned Trustee (the "Trustee"), hereby certifies to Credit
Suisse (the "Bank"), with reference to Irrevocable Letter of
Credit No. (the "Letter of Credit", the terms
defined therein and not otherwise defined herein being used
herein as therein defined) issued by the Bank in favor of the
Trustee, that:

(1) The Trustee is the Trustee under the Indenture
for the holders of the Bonds.

(2) The Trustee hereby notifies you that on or prior
to the date hereof $ principal amount of the
Bonds have been redeemed and paid or have been defeased
pursuant to the Indenture.

(3) Following the redemption and payment or the
defeasance referred to in paragraph (2) above, the
aggregate principal amount of all of the Bonds Outstanding
(as defined in the Indenture) is $ .

(4) The maximum amount of interest, computed in
accordance with the terms and conditions of the Bonds and
the Indenture, which would accrue on the Bonds referred to
in paragraph (3) above in any period of [ days] is
$ . None of the Bonds referred to in paragraph
(2) above were in a Bond Interest Term as of the date such
Bonds were redeemed, paid or defeased pursuant to the
Indenture.

(5) The maximum amount available to be drawn by the
Trustee under the Letter of Credit by any Interest Draft is
reduced to $ (such amount being equal to the
amount specified in paragraph (4) above) upon receipt by
the Bank of this Certificate.

(6) The maximum amount available to be drawn by the
Trustee under the Letter of Credit by any Tender Draft is
reduced to $ (such amount being equal to the sum
of the amounts specified in paragraphs (3) and (4) above)
upon receipt by the Bank of this Certificate.

(7) The maximum amount available to be drawn by the
Trustee under the Letter of Credit by any Partial
Redemption Draft is reduced to $ (such amount

<PAGE> 85
being equal to the sum of the amounts specified in
paragraphs (3) and (4) above) upon receipt by the Bank of
this Certificate.

(8) The amount available to be drawn by the Trustee
under the Letter of Credit by its Final Draft is reduced to
$ (such amount being equal to the sum of the
amounts specified in paragraphs (3) and (4) above) upon
receipt by the Bank of this Certificate.

(9) The amount of the Letter of Credit is reduced to
$ (such amount being equal to the sum of the
amounts specified in paragraph 8 above) upon receipt by the
Bank of this Certificate.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate this day of , 19 .

,
as Trustee

By
[Name and Title]

<PAGE> 86
Annex B

CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF
UP TO [ DAYS'] INTEREST ON THE MARICOPA COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION'S POLLUTION CONTROL REFUNDING
REVENUE BONDS (EL PASO ELECTRIC COMPANY PALO VERDE PROJECT),
199 SERIES Y-6 (THE "BONDS")

Irrevocable Letter of Credit No.

(1) The Trustee is the Trustee under the Indenture
for the holders of the Bonds.

(2) The Trustee is making a drawing under the Letter
of Credit with respect to a payment of days'
interest on the Bonds, which payment is due on the date on
which this Certificate and the Interest Draft it
accompanies are being presented to the Bank. None of the
Bonds in respect of which the drawing is being made
(i) were, on the Record Date (as defined in the Indenture)
held of record by the Company (or any Affiliate thereof) or
held by the Trustee or the Tender Agent for the account of
the Company or (ii) were on such date in a Bond Interest
Term.

(3) The amount of the Interest Draft accompanying
this Certificate is equal to $ . It was computed
in compliance with the terms and conditions of the Bonds
and the Indenture and does not include any amount of
interest on the Bonds which is included in any Interest
Draft, Tender Draft, Partial Redemption Draft or Final
Draft presented on or prior to the date of this Certificate
and does not exceed the amount available to be drawn by the
Trustee under the Letter of Credit.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the day of ,
19 .

,
as Trustee

By
[Name and Title]

<PAGE> 87
Annex C

CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF
PRINCIPAL OF AND UP TO [ DAYS'] INTEREST ON THE MARICOPA
COUNTY, ARIZONA POLLUTION CONTROL CORPORATION'S POLLUTION
CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY
PALO VERDE PROJECT), 199 SERIES Y-6 (THE "BONDS"), IN
SUPPORT OF A TENDER (OTHER THAN A MANDATORY TENDER UPON
TERMINATION OR EXPIRATION OF THE LETTER OF CREDIT)

Irrevocable Letter of Credit No.

(1) The Trustee is the Trustee under the Indenture
for the holders of the Bonds.

(2) The Trustee is making a drawing under the Letter
of Credit with respect to the payment, upon a tender of all
or less than all of the Bonds which are Outstanding (as
defined in the Indenture), of (i) the unpaid principal
amount of the Bonds to be purchased either (a) as a result
of a tender pursuant to the terms of Section 2.02 of the
Indenture (other than Section 2.02(6) of the Indenture) or
(b) as a result of a purchase of Bonds by the Bank pursuant
to Section 3.01(e) of the Indenture, Section 9.01(e) of the
Indenture or Section 13.03(d) of the Indenture (in each
case, other than Bonds held of record by the Company (or
any Affiliate thereof) or held by the Trustee or the Tender
Agent for the account of the Company in each case, and (ii)
the amount of interest (not exceeding [ days'] interest)
accrued and unpaid thereon from the Interest Accrual Date
(as defined in the Indenture) immediately preceding the
date of purchase through the day immediately preceding the
date of purchase thereof, which payment is due on the date
on which this Certificate and the Tender Draft it
accompanies are being presented to the Bank.

<PAGE> 88
Agent for the account of the Company) to be purchased as a
result of a tender of the type described above and (ii) $
being drawn in respect of the payment of accrued and
unpaid interest on such Bonds and does not include any
amount of interest which is included in any Interest Draft,
Tender Draft other than the Tender Draft accompanying this
certificate, Partial Redemption Draft or Final Draft
presented on or prior to the date of this Certificate.

(4) The amount of the Tender Draft accompanying this
Certificate was computed in compliance with the terms and
conditions of the Bonds and the Indenture and does not
exceed the amount available to be drawn by the Trustee
under the Letter of credit.

(5) None of the Bonds in respect of which a drawing
is being made are in a Bond Interest Term.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the day of , 19
.

,
as Trustee

By
[Name and Title]

<PAGE> 89
Annex D

Irrevocable Letter of Credit No.

(1) The Trustee is the Trustee under the Indenture
for the holders of the Bonds.

(2) The Trustee is making a drawing under the Letter
of Credit with respect to the payment, upon redemption of
less than all of the Bonds which are Outstanding (as
defined in the Indenture), of the unpaid principal amount
of and up to [ days'] accrued and unpaid interest to the
redemption date on, Bonds to be redeemed pursuant to the
terms of Section 3.01 of the Indenture (other than Bonds
purchased by the Tender Agent or the Trustee on behalf of
or for the account of the Bank, pursuant to Section 3.01(e)
of the Indenture, Section 9.01(e) of the Indenture or
Section 13.03(d) of the Indenture and held by or on behalf
of or for the account of the Bank or its nominee and Bonds
held of record by the Company (or any Affiliate thereof) or
held by the Trustee or Tender Agent for the account of the
Company). [The direction from the Company with respect to
redemption was received by us no more than 60 days prior to
the date of this certificate. We have evidence, as of the
date of this certificate, from two of Moody's Investors
Services, Inc., Standard & Poor's Corporation and Duff &
Phelps, Inc. that the Company's First Mortgage Bonds,
Series A/B, and Second Mortgage Bonds, Series A, each have
a rating of BBB- or better (or equivalent) and such Bonds
have not, as of the date of this certificate, been placed
on any watch list.]*

__________________
* To be used in case of an optional redemption.

<PAGE> 90
(3) The amount of the Partial Redemption Draft
accompanying this Certificate is equal to the sum of (i) $
being drawn in respect of the payment of unpaid
principal of Bonds (other than Bonds purchased by the
Trustee on behalf of or for the account of the Bank,
pursuant to Section 3.01(e) of the Indenture, Section
9.01(e) of the Indenture or Section 13.03(d) of the
Indenture and then held by or on behalf of or for the
account of the Bank or its nominee and Bonds held of record
by the Company (or any Affiliate thereof) or held by the
Trustee or Tender Agent for the account of the Company to
be redeemed, and (ii) $ being drawn in respect of
the payment of accrued and unpaid interest on such Bonds
and does not include any amount of interest which is
included in any Interest Draft, Tender Draft, Partial
Redemption Draft or Final Draft presented on or prior to
the date of this Certificate.

(4) The amount of the Partial Redemption Draft
accompanying this Certificate was computed in accordance
with the terms and conditions of the Bonds and the
Indenture and does not exceed the amount available to be
drawn under the Letter of Credit.

(5) This Certificate and the Partial Redemption Draft
it accompanies are dated, and are being presented to the
Bank on, the date on which the unpaid principal amount of
and accrued and unpaid interest on, Bonds to be redeemed
are due and payable under the Indenture upon redemption of
less than all of the Bonds which are Outstanding (as
defined in the Indenture).

(6) None of the Bonds in respect of which a drawing
is being made are in a Bond Interest Term.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the day of , 19
.

,
as Trustee

By
[Name and Title]

<PAGE> 91
Annex E

CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF
PRINCIPAL OF AND UP TO DAYS' INTEREST ON THE MARICOPA
COUNTY, ARIZONA POLLUTION CONTROL CORPORATION'S POLLUTION
CONTROL REFUNDING REVENUE BONDS (EL PASO ELECTRIC COMPANY
PALO VERDE PROJECT), 199 SERIES Y-6 (THE "BONDS"), UPON
STATED OR ACCELERATED MATURITY OR OPTIONAL OR MANDATORY
REDEMPTION AS A WHOLE OR MANDATORY TENDER UPON TERMINATION
OR EXPIRATION OF THE LETTER OF CREDIT

Irrevocable Letter of Credit No.

The undersigned, a duly authorized officer of the
undersigned Trustee (the "Trustee"), hereby certifies to Credit
Suisse (the "Bank"), with reference to Irrevocable Letter of
Credit No. (the "Letter of Credit", the terms defined
therein and not otherwise defined herein being used herein as
therein defined) issued by the Bank in favor of the Trustee,
that:

(1) The Trustee is the Trustee under the Indenture
for the holders of the Bonds.

(2) The Trustee is making a drawing under the Letter
of Credit (a) with respect to the payment, either at stated
maturity, upon acceleration, as a result of a redemption in
full pursuant to Section 3.01 of the Indenture [(the
direction from the Company and notice to the Bondholders
with respect to redemption was received and given by us no
more than 60 days prior to the date of this Certificate and
we had evidence, as of the date such notice was given by us
to the Bondholders, from two of Moody's Investors Services,
Inc., Standard & Poor's Corporation and Duff & Phelps, Inc.
that the Company's First Mortgage Bonds, Series A/B, and
Second Mortgage Bonds, Series A, each had a rating of BBB-
or better (or equivalent) and such Bonds had not, as of
such date, been placed on any watch list)]* or (b) as a
result of a mandatory tender upon termination or expiration
of the Letter of Credit or substitution of another credit
facility for the Letter of Credit as contemplated by
Section 2.02(6) of the Indenture, of the unpaid principal
amount of and up to days' accrued and unpaid interest
on, all of the Bonds which are Outstanding (as defined in
the Indenture) (other than Bonds held of record by the
Company (or any Affiliate thereof) or held by the Trustee

_______________
* To be used in the case of an optional redemption.

<PAGE> 92
or the Tender Agent for the account of the Company), which
payment is due on the date on which this Certificate and
the Final Draft it accompanies are being presented to the
Bank.

(3) The amount of the Final Draft accompanying this
Certificate is equal to the sum of (i) $ being
drawn in respect of the payment of unpaid principal of
Bonds (other than Bonds held of record by the Company (or
any Affiliate thereof) or held by the Trustee or the Tender
Agent for the account of the Company) and (ii) $
being drawn in respect of the payment of accrued and unpaid
interest on such Bonds and does not include any amount of
interest on the Bonds which is included in any Interest
Draft, Tender Draft or Partial Redemption Draft presented
on or prior to the date of this Certificate.

(4) The amount of the Final Draft accompanying this
Certificate was computed in compliance with the terms and
conditions of the Bonds and the Indenture and does not
exceed the amount available to be drawn by the Trustee
under the Letter of Credit.

(5) None of the Bonds in respect of which the drawing
is being made are in a Bond Interest Term.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the day of ,
19 .

,
as Trustee

By
[Name and Title]

<PAGE> 93
Annex F

CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE
UNDER IRREVOCABLE LETTER OF CREDIT NO. , DATED
, 199

(1) The Trustee is the Trustee under the Indenture
for the holders of the Bonds.

(2) The amount of $ paid to you today by the
Trustee on behalf of the Company is a payment made pursuant
to Section 2.09(b) of the Letter of Credit and
Reimbursement Agreement dated as of , 19 (the
"Reimbursement Agreement") between the Company and the Bank
for amounts drawn under the Letter of Credit and represents
unreimbursed drawings under Tender Draft[s] dated
[ ].

(3) The amount referred to in paragraph (2)
represents the amount of Bonds which were purchased with
proceeds of a draw on the Letter of Credit by a Tender
Draft dated , 19 . $ represents amounts paid
in respect of accrued interest on Bonds and $
represents amounts paid in respect of unpaid principal on
Bonds.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate this day of , 19 .

,
as Trustee

By
[Name and Title]

<PAGE> 94
Annex G

CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE
UNDER IRREVOCABLE LETTER OF CREDIT NO. , DATED
, 199

(1) The Trustee is the Trustee under the Indenture
for the holders of the Bonds.

(2) The Tender Agent has delivered to the Bank all
Bonds purchased pursuant to Section 3.01(e) of the
Indenture, Section 9.01(e) of the Indenture, or Section
13.03(d) of the Indenture, as the case may be, with
proceeds of a draw on the Letter of Credit by Tender Draft
dated , 19 .

(3) The amount of such Tender Draft used to purchase
such Bonds which were not remarketed is $ .

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate this day of , 19 .

,
as Trustee

By
[Name and Title]

<PAGE> 95
Annex H

NOTICE THAT TRUSTEE'S RIGHT TO DRAW UNDER THE LETTER OF
CREDIT BY AN INTEREST DRAFT HAS NOT BEEN REINSTATED

[Name and Address of Trustee]

Attention: Corporate Trust Department

Irrevocable Letter of Credit No.

Dear Sirs:

You are hereby advised that El Paso Electric Company
has not reimbursed us in an amount equal to the amount drawn by
you under the Interest Draft dated , 19 .
Therefore, the amount of our Irrevocable Letter of Credit No.
and the amounts available to be drawn by you by an
Interest Draft, Tender Draft, Partial Redemption Draft or Final
Draft (which available amounts have been decreased by an amount
equal to the amount of such Interest Draft) shall not be
reinstated in the amount of such Interest Draft.

CREDIT SUISSE

<PAGE> 96
Annex I

INSTRUCTION TO TRANSFER

, 19

Credit Suisse
_________________
_________________

Attention: ________________________

Re: Irrevocable Letter of Credit No.

Gentlemen:

For value received, the undersigned beneficiary hereby
irrevocably transfers to:

[Name of Transferee]

[Address]

By this transfer, all rights of the undersigned
beneficiary in the Letter of Credit are transferred to the
transferee and the transferee shall hereafter have the sole
rights as beneficiary thereof; provided, however, that no
rights shall be deemed to have been transferred to the
transferee until such transfer complies with the requirements
of the Letter of Credit pertaining to transfers.

<PAGE> 97
The Letter of Credit is returned herewith and in
accordance therewith we ask that this transfer be effective and
that you transfer the Letter of Credit to our transferee
or that, if so requested by the transferee, you issue a new
irrevocable letter of credit in favor of the transferee with
provisions consistent with the Letter of Credit.

Very truly yours,

,
as predecessor Trustee

By
[Name and Title]

<PAGE> 98
EXHIBIT B
TO LETTER CREDIT AND
REIMBURSEMENT AGREEMENT

OPINION OF COUNSEL TO THE COMPANY

[Date of issuance of
Letter of Credit]

[Name and address of
the L/C Issuer]

[Name of the Company]

Gentlemen:

We are counsel to , a[n]
corporation (the "Company"). In that capacity we
are familiar with the matters relating to the preparation,
execution and delivery of a Letter of Credit and Reimbursement
Agreement, dated as of , 19 (the "Reimbursement
Agreement"), between the Company and (the "Bank").
Terms defined in the Reimbursement Agreement are used herein as
therein defined. Among other things, we have examined:

(1) a fully executed counterpart of the Reimbursement
Agreement;

(2) the Letter of Credit referred to in the
Reimbursement Agreement;

(3) the [Articles] [Certificate] of Incorporation of
the Company and all amendments thereto (the "Charter");

(4) the by-laws of the Company as now in effect (the
"By-laws"); and

(5) the documents delivered by or on behalf of the
Company pursuant to Section 3.01 of the Reimbursement
Agreement.

We have also examined the originals, or copies
certified to our satisfaction, of (i) such other corporate
records of the Company, certificates of public officials and of
officers of the Company, (ii) the agreements, instruments and
documents which affect or purport to affect the obligations of
the Company under the Reimbursement Agreement, and (iii) such
other agreements, instruments and documents as we have deemed
necessary as a basis for the opinions hereinafter expressed.
As to questions of fact material to such opinions, we have,
when relevant facts were not independently established by us,

<PAGE> 99
relied upon certificates of the Company or its officers or of
public officials. We have assumed the due execution and
delivery of the Reimbursement Agreement by the Bank.

Based upon the foregoing and upon such investigation
as we have deemed necessary we are of the opinion that:

1. The Company is a corporation duly incorporated
validly existing and in good standing under the laws of the
State of and is duly qualified to do business in,
and is in good standing under the laws of, the State of
.

2. The execution, delivery and performance by the
Company of the Reimbursement Agreement and the Related
Documents to which it is a party are within the Company's
corporate powers, have been duly authorized by all
necessary corporate action, do not contravene (i) the
Charter or the By-laws, (ii) law or (iii) any contractual
restriction binding on or affecting the Company, and do not
result in or require the creation of any lien, security
interest or other charge or encumbrance (except as provided
in or contemplated by the Reimbursement Agreement or the
Indenture) upon or with respect to any of its properties.

3. No authorization, approval or other action by, and
no notice to or filing or registration with, any
governmental authority or regulatory body is required for
the due execution, delivery and performance by the Company
of the Reimbursement Agreement or any Related Document to
which it is a party [, except for , all of
which have been duly obtained or made and are in full force
and effect].

4. The Reimbursement Agreement and the Related
Documents to which the Company is a party have been duly
executed and delivered by the company and are the legal,
valid and binding obligations of the Company enforceable
against the Company in accordance with their respective
terms.

5. To the best of our knowledge, there is no pending
or threatened action or proceeding against or affecting the
Company or any of its subsidiaries before any court,
governmental agency or arbitrator which may materially
adversely affect the financial condition or operations of
the Company [, except ] or which purports
to affect the legality, validity or enforceability of the
Reimbursement Agreement or any Related Documents.

The opinions set forth above are subject to the following
qualifications:

<PAGE> 100
(a) The enforceability of the Company's obligations
under the Reimbursement Agreement and the Related Documents
is subject to the effect of any applicable bankruptcy,
insolvency, reorganization moratorium or similar laws
affecting creditors' rights generally.

(b) The enforceability of the Company's obligations
under the Reimbursement Agreement and the Related Documents
may be subject to general principles of equity, including
(without limitation) concepts of materiality,
reasonableness, good faith and fair dealing (regardless of
whether such enforceability is considered in a proceeding
in equity or at law).

Very truly yours,

<PAGE> 101
EXHIBIT C-1
TO LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT

MATTERS TO BE COVERED BY AN OPINION OF BOND COUNSEL

<PAGE> 102
EXHIBIT C-2
TO LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT

RELIANCE OPINION OF BOND COUNSEL

[Date of issuance of
Letter of Credit]

[Name and address of
L/C Issuer]

[Name of the Company]

Gentlemen:

We have acted as bond counsel in connection with the
issuance on the date hereof by [Name of Issuer] of its [Name of
Bond Issue] (the "Bonds").

Delivered herewith is a signed copy of our opinion of
even date herewith relating to the validity of the Bonds and to
other matters as set forth therein.* You are hereby authorized
to rely on such opinion as if it were addressed to you.

Very truly yours,

________________
* This reliance opinion should cover the bond opinion
delivered to the bond purchasers and the underwriters.
If there is more than one opinion (e.g., a separate tax
opinion), this reliance opinion should cover all such
opinions.

<PAGE> 103
EXHIBIT D
TO LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT

OPINION OF COUNSEL FOR THE BANK

[Date of issuance of
Letter of Credit]

[Name and address of
L/C Issuer]

[Name of the Company]

Gentlemen:

We have acted as your counsel in connection with the
preparation, execution and delivery of the Letter of Credit and
Reimbursement Agreement, dated as of , 19 (the
"Reimbursement Agreement"), between (the
"Company") and you and the issuance today by you of the Letter
of Credit referred to in the Reimbursement Agreement. Terms
defined in the Reimbursement Agreement are used herein as
therein defined.

In this connection we have examined the following
documents, each of which, unless otherwise indicated, is dated
the date hereof:

1. A counterpart of the Reimbursement Agreement,
executed by the parties thereto;

2. The Letter of Credit; and

3. The documents delivered pursuant to Section 3.01
and Section 3.02 of the Reimbursement Agreement and listed
on Annex A hereto, including an opinion of
counsel for the Company, delivered
pursuant to Section 3.01(d) of the Reimbursement Agreement,
and an opinion of , Bond Counsel, delivered
pursuant to Section 3.01(e) of the Reimbursement Agreement.

In our examination of the documents referred to above,
we have assumed the authenticity of all such documents
submitted to us as originals, the genuineness of all
signatures, the due authority of the parties executing such
documents, and the conformity to the originals of all such
documents submitted to us as copies. We have also assumed that
you have duly executed and delivered, with all necessary power
and authority (corporate and otherwise), the Reimbursement
Agreement and the Letter of Credit.

To the extent that our opinions expressed below
involve conclusions as to the matters set forth in paragraphs

<PAGE> 104
1, 2, and 3* of the above-mentioned opinion of , we
have assumed without independent investigation the correctness
of the matters set forth in such paragraphs [, our opinions
being subject to the assumptions, qualifications and
limitations set forth in such opinion of with
respect thereto].**

Based upon the foregoing and upon such other
investigation as we have deemed necessary, we are of the
following opinion:

1. The Reimbursement Agreement is the legal, valid
and binding obligation of the Company enforceable against
the Company in accordance with its terms.

2. The opinion of , counsel for the
Company, and the other documents referred to in item (3)
above, are substantially responsive to the requirements of
the Reimbursement Agreement.***

Our opinions above are subject to the following qualifications:

(a) Our opinion in paragraph 1 above is subject to
the effect of general principles of equity, including
(without limitation) concepts of materiality,
reasonableness, good faith and fair dealing (regardless of
whether considered in a proceeding in equity or at law).

(b) Our opinion in paragraph 1 above is also subject
to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting
creditors' rights generally.

___________________
* Such opinion should cover the laws of the jurisdiction of
the Company's organization and the laws of any other
jurisdiction, other than New York, which could apply under
New York conflict of laws rules. If such opinion does not
cover all such laws, we should consider what further
assumptions or qualifications we should state in our
opinion.

** If we need to rely on representations as to facts, we
should also consider the representations or certificates on
which we will rely and, if we do so rely, include a
statement as to that reliance. See Legal Opinions to Third
Parties: An Easier Path, 34 Bus. Law. 1891, 1900 (1979).

*** This opinion should state that it excludes (i) specified
certificates, if those certificates require computations or
other specified financial analysis, and (ii) other
specified documents (like insurance policies) which cannot
readily be reviewed by our examining their text against the
requirements of the Reimbursement Agreement.

<PAGE> 105
[( ) We express no opinion as to Section 2.16(v), 7.05
or 7.06 of the Reimbursement Agreement.]*

( ) Our opinions expressed above are limited to the
law of the State of New York and the Federal law of the
United States, and we do not express any opinion herein
concerning any other law. Without limiting the generality
of the foregoing, we express no opinion as to the effect of
the law of any jurisdiction other than the State of New
York wherein the Bank may be located or wherein enforcement
of the Reimbursement Agreement may be sought which limits
the rates of interest legally chargeable or collectible.**

Very truly yours,

"( ) We express no opinion, with regard to the
choice of law provisions of Section of the
Reimbursement Agreement, as to whether the provisions
of the New York Penal Law relating to usury (imposing
a maximum interest rate of 25% per annum) apply to the
Bank."

___________________
* Consider the enforceability of (a) the absoluteness of the
liability of the Company, or the protection from liability
of the Bank, from or against payment by the Bank against
non-conforming documents and (b) the indemnity of the Bank
against Securities Act violations.

** N.Y. General Obligations Law, Subsection 5-501..6b,
excludes loans of $2,500,000 or more from the N.Y. Penal
Law usury limit. If, however, such exclusion is not
applicable, consideration should be given to (i) adding to
the Reimbursement Agreement a maximum interest clause and
(ii) adding to the above opinion an additional
qualification to this effect:

<PAGE> 106
EXHIBIT A
to the Opinion dated , 19
of Milbank, Tweed, Hadley & McCloy

Documents

<PAGE> 107
ADDENDUM TO REIMBURSEMENT AGREEMENT

As set forth in Section 3.7 of the Modified Third
Amended Plan of Reorganization of the Debtor Providing For the
Acquisition of El Paso Electric Company by Central and South West
Corporation, filed August 27, 1993 (as corrected September 15,
1993) (the "Plan of Reorganization", unless otherwise defined
herein, terms defined therein are used herein as therein
defined), it is contemplated that the Maricopa Series E 1984 PCBs
(the "Maricopa PCBs") will be refunded on or soon after the
Effective Date. The Plan of Reorganization provides that in
connection with such refunding a new letter of credit is to be
issued on the Maricopa LC Terms by the bank (the "Bank") that
issued the LC relating to the Maricopa PCBs LC (the "Original
Maricopa PCB LC") or, if the conditions set forth in the Plan of
Reorganization are satisfied, by another financial institution.

If such refunding does not take place on the Effective
Date then, unless otherwise agreed by the Bank and the Debtor, on
the Effective Date the Bank and Reorganized EPE will enter into
an agreement in the form of the attached agreement and, in
addition, amend and restate the existing letter of credit and
reimbursement agreement (the "Amended and Restated Agreement") to
provide terms substantially similar to the attached agreement
(including, without limitation, terms with respect to the
repayment of principal and payment of interest and letter of
credit fees) with the following exceptions:

1. The Original Maricopa PCB LC will expire on the
expiration date thereof in effect on the Effective
Date.

2. Reorganized EPE will have no right to extend such
expiration date of the Original Maricopa PCB LC.

3. The obligations of Reorganized EPE under the Amended
and Restated Agreement will not be directly secured by
EPE Second Mortgage Bonds.

4. The obligations under the Maricopa PCBs will be
directly secured by EPE Second Mortgage Bonds.

5. All amounts payable under the Amended and Restated
Agreement and the Maricopa PCBs will be repaid upon the
refunding referred to below from the proceeds therefrom
or otherwise.

6. The Amended and Restated Agreement will contain
conforming changes to reflect the above terms.

<PAGE> 108
Notwithstanding anything herein to the contrary, the
Debtor has agreed to use all reasonable efforts (subject to
market conditions at the time and the need to preserve the
tax-exempt status of the Maricopa PCBs) to cause the Maricopa
PCBs to be refunded on the Effective Date or immediately
thereafter.

If it shall be determined that the tax-exempt status of
the Maricopa PCBs would be jeopardized as a result of a refunding
or the refunding otherwise does not occur, then unless otherwise
agreed between the Bank and the Debtor the existing letter of
credit and reimbursement agreement will be amended and restated
to provide terms substantially similar to the attached agreement
(including, without limitation, terms with respect to the
repayment of principal and interest and letter of credit fees).

<PAGE> 109
ADDENDUM TO REIMBURSEMENT AGREEMENT

As set forth in Section 3.7 of the Modified Third
Amended Plan of Reorganization of the Debtor Providing For the
Acquisition of El Paso Electric Company by Central and South West
Corporation, filed August 27, 1993 (as corrected September 15,
1993) (the "Plan of Reorganization", unless otherwise defined
herein, terms defined therein are used herein as therein
defined), it is contemplated that the Maricopa Series A 1985 PCBs
(the "Maricopa PCBs") will be refunded on or soon after the
Effective Date. The Plan of Reorganization provides that in
connection with such refunding a new letter of credit is to be
issued on the Maricopa LC Terms by the bank (the "Bank") that
issued the LC relating to the Maricopa PCBs LC (the "Original
Maricopa PCB LC") or, if the conditions set forth in the Plan of
Reorganization are satisfied, by another financial institution.

If such refunding does not take place on the Effective
Date then, unless otherwise agreed by the Bank and the Debtor, on
the Effective Date the Bank and Reorganized EPE will enter into
an agreement in the form of the attached agreement and, in
addition, amend and restate the existing letter of credit and
reimbursement agreement (the "Amended and Restated Agreement") to
provide terms substantially similar to the attached agreement
(including, without limitation, Sections 2.05(b) and (c) thereof
in respect of the Maricopa PCBs) with the following exceptions:

1. The Original Maricopa PCB LC will expire on the
expiration date thereof in effect on the Effective
Date.

2. Reorganized EPE will have no right to extend such
expiration date of the Original Maricopa PCB LC.

3. The obligations of Reorganized EPE under the Amended
and Restated Agreement will not be directly secured by
EPE Second Mortgage Bonds.

4. The obligations under the Maricopa PCBs will be
directly secured by EPE Second Mortgage Bonds.

5. All amounts payable under the Amended and Restated
Agreement and the Maricopa PCBs will be repaid upon the
refunding referred to below from the proceeds therefrom
or otherwise.

6. The Amended and Restated Agreement will contain
conforming changes to reflect the above terms.

<PAGE> 110
Notwithstanding anything herein to the contrary, the
Debtor has agreed to use all reasonable efforts (subject to
market conditions at the time and the need to preserve the
tax-exempt status of the Maricopa PCBs) to cause the Maricopa
PCBs to be refunded on the Effective Date or immediately
thereafter.

If it shall be determined that the tax-exempt status of
the Maricopa PCBs would be jeopardized as a result of a refunding
or the refunding otherwise does not occur, then unless otherwise
agreed between the Bank and the Debtor the existing letter of
credit and reimbursement agreement will be amended and restated
to provide terms substantially similar to the attached agreement
(including, without limitation, Sections 2.05(b) and (c) thereof
in respect of the Maricopa PCBs).

<PAGE> 1

LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT

Dated as of , 199[ ]

among

EL PASO ELECTRIC COMPANY,

WESTPAC BANKING CORPORATION,
as Issuing Bank,

THE CREDITORS
Specified Herein

and

WESTPAC BANKING CORPORATION,
as Agent
for such Creditors

<PAGE> 2
TABLE OF CONTENTS

PRELIMINARY STATEMENTS . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . 3
1.1. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . 3
1.2. Computation of Time Periods . . . . . . . . . . . . . . . . .14
1.3. Accounting Terms. . . . . . . . . . . . . . . . . . . . . . .14
1.4. Interpretation. . . . . . . . . . . . . . . . . . . . . . . .14

ARTICLE II. AMOUNT AND TERMS OF THE LETTER OF CREDIT. . . . . .15
2.1. The Letter of Credit. . . . . . . . . . . . . . . . . . . . .15
2.2. Issuing the Letter of Credit. . . . . . . . . . . . . . . . .15
2.3. Drawing Fee . . . . . . . . . . . . . . . . . . . . . . . . .15
2.4. Commissions . . . . . . . . . . . . . . . . . . . . . . . . .15
2.5. Reimbursement on the Date of the Draw . . . . . . . . . . . .16
2.6. Tender Advances . . . . . . . . . . . . . . . . . . . . . . .17
2.7. Interest on Advances. . . . . . . . . . . . . . . . . . . . .17
2.8. Reimbursement of Issuing Bank, Etc. . . . . . . . . . . . . .20
2.9. Prepayments; Reinstatement of Letter of
Credit Amounts. . . . . . . . . . . . . . . . . . . . . .22
2.10. Additional Interest. . . . . . . . . . . . . . . . . . . . .23
2.11. Increased Costs. . . . . . . . . . . . . . . . . . . . . . .24
2.12. Payments and Computations. . . . . . . . . . . . . . . . . .26
2.13. Payments on Non-Business Days. . . . . . . . . . . . . . . .27
2.14. Extension of the Stated Termination Date . . . . . . . . . .27
2.15. Evidence of Debt . . . . . . . . . . . . . . . . . . . . . .28
2.16. Obligations Absolute . . . . . . . . . . . . . . . . . . . .28
2.17. U.S. Taxes . . . . . . . . . . . . . . . . . . . . . . . . .30
2.18. Applicable Lending Office. . . . . . . . . . . . . . . . . .32
2.19. Net Payments . . . . . . . . . . . . . . . . . . . . . . . .32
2.20. Reinstatement of the Letter of Credit. . . . . . . . . . . .32

ARTICLE III. CONDITIONS OF ISSUANCE. . . . . . . . . . . . . . .32
3.1. Conditions Precedent to Issuance of the Letter of Credit. . .32
3.2. Additional Conditions Precedent to Issuance of the Letter
of Credit. . . . . . . . . . . . . . . . . . . . . . . .36
3.3. Conditions Precedent to Each Tender Advance . . . . . . . . .37

ARTICLE IV. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . .37
4.1. Representations and Warranties of the Company . . . . . . . .37

ARTICLE V. COVENANTS OF THE COMPANY. . . . . . . . . . . . . .41
5.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . .41
5.2. Negative Covenants. . . . . . . . . . . . . . . . . . . . . .45

ARTICLE VI. EVENTS OF DEFAULT 49
6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . .49
6.2. Upon an Event of Default. . . . . . . . . . . . . . . . . . .52

<PAGE> 3
ARTICLE VII. SECURITY. . . . . . . . . . . . . . . . . . . . . .52
7.1. Issuance and Pledge of Bonds. . . . . . . . . . . . . . . . .52
7.2. Application of Moneys . . . . . . . . . . . . . . . . . . . .53
7.3. Rights of Bondholders . . . . . . . . . . . . . . . . . . . .53
7.4. The Agent's Duties. . . . . . . . . . . . . . . . . . . . . .53

ARTICLE VIII. THE AGENT, THE CREDITORS AND THE ISSUING BANK . . .54
8.1. Authorization and Action. . . . . . . . . . . . . . . . . . .54
8.2. Reliance, Etc . . . . . . . . . . . . . . . . . . . . . . . .54
8.3. The Agent, the Issuing Bank and Affiliates. . . . . . . . . .55
8.4. Bank Credit Decision. . . . . . . . . . . . . . . . . . . . .55
8.5. Indemnification . . . . . . . . . . . . . . . . . . . . . . .55
8.6. Successor Agent . . . . . . . . . . . . . . . . . . . . . . .56
8.7. Issuing Bank. . . . . . . . . . . . . . . . . . . . . . . . .56

ARTICLE IX. MISCELLANEOUS . . . . . . . . . . . . . . . . . . .57
9.1. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . .57
9.2. Notices, Etc . . . . . . . . . . . . . . . . . . . . . . . .58
9.3. No Waiver; Remedies. . . . . . . . . . . . . . . . . . . . .58
9.4. Rights of Setoff and Subrogation . . . . . . . . . . . . . .58
9.5. Indemnification. . . . . . . . . . . . . . . . . . . . . . .60
9.6. Issuing Bank and Creditors . . . . . . . . . . . . . . . . .61
9.7. Costs, Expenses and Taxes. . . . . . . . . . . . . . . . . .62
9.8. Purchase Option. . . . . . . . . . . . . . . . . . . . . . .63
9.9. Binding Effect; Assignments and Participations . . . . . . .63
9.10. Further Assurances . . . . . . . . . . . . . . . . . . . . .65
9.11. Severability . . . . . . . . . . . . . . . . . . . . . . . .65
9.12. Headings . . . . . . . . . . . . . . . . . . . . . . . . . .66
9.13. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . .66
9.14. Submission to Jurisdiction . . . . . . . . . . . . . . . . .66
9.15. Waiver of Trial by Jury. . . . . . . . . . . . . . . . . . .66
9.16. Counterparts . . . . . . . . . . . . . . . . . . . . . . . .66
9.17. Integration. . . . . . . . . . . . . . . . . . . . . . . . .67
9.18. Survival . . . . . . . . . . . . . . . . . . . . . . . . . .67
9.19. Change in Lending Office . . . . . . . . . . . . . . . . . .67

EXHIBIT A - Form of Letter of Credit with Annexes A through I
thereto attached

<PAGE> 4
LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT

LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT, dated as of
[ ], 199[ ], among EL PASO ELECTRIC COMPANY, a Texas
corporation (the "Company") WESTPAC BANKING CORPORATION ("Westpac")
as issuing bank (the "Issuing Bank"), the Creditors (as hereinafter
defined) and Westpac, as agent for the Creditors (the "Agent").

PRELIMINARY STATEMENTS:

(1) The Company requested the Maricopa County, Arizona
Pollution Control Corporation (the "Issuer") to issue, pursuant to
the Trust Indenture dated as of August 1, 1985 between the Issuer
and MBank El Paso, National Association, as trustee, which Trust
Indenture has been supplemented and amended as provided in a
Supplemental Trust Indenture No. 1 dated as of July 1, 1986 between
the Issuer and MBank El Paso, National Association, as trustee, a
Supplemental Trust Indenture No. 2 dated as of June 1, 1992 between
the Issuer and Continental Bank, National Association, as successor
trustee, and a Supplemental Trust Indenture No. 3 dated _____
between the Issuer and Continental Bank, National Association, as
successor trustee (such Trust Indenture, as supplemented and amended
from time to time, being hereinafter called the "Original
Indenture", and such trustee and successor trustee being hereinafter
collectively called the "Original Trustee"), $59,235,000 aggregate
principal amount of the Issuer's Pollution Control Refunding Revenue
Bonds, 1985 Series A (El Paso Electric Company Palo Verde Project)
(the "Original Bonds"), to various purchasers.

(2) The Issuer and the Company entered into a Loan
Agreement, dated as of August 1, 1985 (the "Original Loan
Agreement"), which the Issuer assigned to the Original Trustee to
secure the payment of the Original Bonds, and pursuant to which,
among other things, the Company was required to furnish a letter of
credit in connection with its payment obligations under the Original
Loan Agreement.

(3) Pursuant to the Original Loan Agreement, the Company
was required to furnish a letter of credit to support the payment of
the Original Bonds and certain purchase obligations of the Company
in respect thereof.

(4) The Company and Westpac entered into a Letter of
Credit and Reimbursement Agreement dated as of August 1, 1985, (such
agreement as at any time amended, the "Original Reimbursement
Agreement"), pursuant to which Westpac issued its Irrevocable Letter
of Credit dated August 20, 1985 (the "Original Letter of Credit") in
respect of certain of the Company's payment obligations relating to
the Original Bonds. Canadian Imperial Bank of Commerce ("CIBC") and
Westpac entered into a Participation Agreement dated as of May 11,
1986 pursuant to which CIBC purchased from Westpac a participation
in the Original Reimbursement Agreement and the Original Letter of
Credit.

<PAGE> 5
(5) On January 8, 1992, the Company commenced a voluntary
case (the "Bankruptcy Case") under chapter 11 of the Bankruptcy Code
(as hereinafter defined) (Case No. 92-10148-FM) in the Bankruptcy
Court (as hereinafter defined), and thereafter has continued to
operate its business and manage its assets as a
debtor-in-possession.

(6) The Company desires to restructure its outstanding
indebtedness and, in connection therewith, the Company has requested
the Issuer to, and the Issuer has agreed to, refund (the
"Refunding") the Original Bonds by issuing Pollution Control Revenue
Refunding Bonds (El Paso Electric Company Palo Verde Project),
199 Series (the "Bonds") pursuant to the Indenture of Trust
dated as of , 199 a form of which has been filed with
the Bankruptcy Court in accordance with Section 7.6 of the Plan of
Reorganization (as hereinafter defined) (as such Indenture may be
amended, supplemented and modified from time to time, the
"Indenture"), naming [ ] as trustee (the "Trustee").

(7) In connection with the Refunding, the Issuer and the
Company have entered into a Loan Agreement, dated as of , 199
(as the same may be amended, supplemented and modified from time to
time, the "Loan Agreement"), which the Issuer has assigned to the
Trustee to secure payment of the Bonds, and pursuant to which, among
other things, in connection with the initial delivery of the Bonds,
the Company is required to furnish a letter of credit in connection
with its payment obligations under the Loan Agreement.

[(8) In connection with the Refunding, the Trustee and the
Company have entered into a Tender Agreement, dated as of
__________, 199___, pursuant to which, among other things, the
Company is required to furnish a letter of credit in connection with
its obligation to purchase Bonds pursuant to Section 2.2 of the
Indenture and redeem Bonds pursuant to Section 3.1 of the
Indenture.]

(9) In connection with the Refunding and in consideration
therefor and as set forth in the Plan of Reorganization, the
Company, Westpac and CIBC have agreed to enter into this Letter of
Credit and Reimbursement Agreement (as amended, modified and
supplemented from time to time, this "Agreement") and the Related
Documents (as defined herein) pursuant to which Westpac will issue,
in substantially the form of Exhibit A, a letter of credit (such
letter of credit and any successor letter of credit as provided for
in such letter of credit being the "Letter of Credit"), in the
amount of $[_________]* (the "Commitment") of which $59,235,000**
shall support the payment of principal of the Bonds and $[ ]
shall support the payment of interest on the Bonds for up to [__]

________________
* Not to exceed face amount of Original Letter of Credit.

** Not to exceed the portion of the Original Letter of Credit
available to pay principal on the Original Bonds.

<PAGE> 6
days computed at [14%]*** per annum on the principal thereof and
CIBC will become a Creditor hereunder.

(10) On [ , ], an order was entered by the
court having jurisdiction over the Bankruptcy Case (the "Bankruptcy
Court") confirming the Plan of Reorganization, which Plan of
Reorganization provided, among other things, for the Company to
enter into this Agreement.

NOW, THEREFORE, in consideration of the premises and of
the mutual covenants and agreements contained in the Plan of
Reorganization and herein and in order to induce the Issuing Bank to
issue the Letter of Credit, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

SECTION 1.1 Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and
plural forms of the terms defined):

"Affiliate" means, as to any Person, any other Person
that, directly or indirectly, controls, is controlled by or is
under common control with such Person or is a director or
officer of such Person. For purposes of this definition, the
term "control" (including the terms "controlling," "controlled
by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to vote 5% or more
of the Voting Stock of such Person or to direct or cause the
direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or
otherwise.

"Agent Payment Notice" has the meaning assigned to that
term in Section 2.8(a)(ii).

"Agreement" has the meaning assigned to that term in
Preliminary Statement (9).

"Alternate Base Rate" means for each day that interest
rate per annum as shall be equal to the higher of:

(i) the rate of interest established by Westpac in
New York, New York, from time to time as Westpac's base
rate in effect on such day, each change in such rate to be
effective as of Westpac's opening of business on the date
such change occurs (extensions of credit made by Westpac
may bear interest at rates below, equal to or above such
rate); or

________________
*** To be set a market rate as determined by the Remarketing Agent,
but not to exceed 14% per annum.

<PAGE> 7
(ii) the sum of (x) one percent and (y) the Fed Funds
Rate on such day.

"Alternate Base Rate Advance" means a Tender Advance
bearing interest as provided in Section 2.7(a).

"Available Amount" in effect at any time means the maximum
amount available to be drawn at such time under the Letter of
Credit, the determination of such maximum amount to assume
compliance with all conditions for drawing and no reduction for
(i) any amount drawn by an Interest Draft (unless such amount
is not reinstated under the Letter of Credit) or (ii) any
amount drawn by a Tender Draft or (iii) any amount not
available to be drawn because Bonds are held by or for the
account of the Company.

"Bankruptcy Case" has the meaning assigned to that term in
Preliminary Statement (5).

"Bankruptcy Code" means the Bankruptcy Reform Act of 1978,
as heretofore and hereafter amended, and codified as title 11
of the United States Code.

"Bankruptcy Court" has the meaning assigned to that term
in Preliminary Statement (10).

"Bond Interest Amount" for any Payment Date with respect
to each Bond, means an amount equal to the accrued interest on
the principal amount of such Bond in accordance with its terms
from and including the first day of the Quarterly Period for
such Bond ending on such Payment Date to but excluding the
earlier of (i) the Payment Date and (ii) the date such Bond
ceases to be held by or for the account of the Issuing Bank or
the Agent or any other nominee of the Issuing Bank.

"Bonds" has the meaning assigned to that term in
Preliminary Statement (6).

<PAGE> 8
"Capitalized Lease Obligation" means, with respect to any
lease of property which, in accordance with GAAP, appears on
the lessee's balance sheet as a capital lease, the amount of
the liability which should appear on such balance sheet.

"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to
time.

"Code" means the Internal Revenue Code of 1986, as amended
from time to time.

"Commencement Date" means the earlier of (i) the Effective
Date and (ii) December 31, 1994.

"Commitment" has the meaning assigned to that term in
Preliminary Statement (9).

"Confirmation Order" means the order of the Bankruptcy
Court confirming the Plan of Reorganization.

"Consolidated Subsidiary" means, for any Person, each
Subsidiary of such Person (whether now existing or hereafter
created or acquired) the financial statements of which shall be
(or should have been) consolidated with the financial
statements of such Person in accordance with GAAP.

"Contract Interest Amount" for any Payment Date means an
amount equal to the interest that would have accrued on an
amount equal to the purchase price paid for each Bond purchased
by the Trustee or the Tender Agent on behalf of or for the
account of the Issuing Bank, the Agent or any other nominee of
the Issuing Bank, from and including the first day of the
Quarterly Period for each such Bond ending on such Payment Date
to but excluding the earlier of (i) the Payment Date and
(ii) the date such Bond ceases to be held by or for the account
of the Issuing Bank, the Agent or any other nominee of the
Issuing Bank, at an interest rate per annum equal at all times
to the sum of (x) the Alternate Base Rate in effect from time
to time plus (y) .50% per annum.

"Creditors" means the banks (including CIBC) listed on the
signature pages hereof under the caption "Creditors" and any
other Person which becomes a party hereto pursuant to Section
9.9(a).

"Credit Termination Date" means the earlier of (i) the day
on which the Letter of Credit is surrendered by the Trustee to
the Issuing Bank for cancellation and (ii) the Stated
Termination Date.

<PAGE> 9
of such Person in connection with acceptance facilities (other
than acceptance facilities entered into in connection with
normal course commercial trade transactions) and letter of
credit facilities to the extent such letter of credit
facilities support Debt), (b) all obligations of such Person
evidenced by notes, bonds, debentures or other similar
instruments, (c) all obligations of such Person created or
arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person,
(d) all Capitalized Lease Obligations of such Person, (e) all
obligations of such Person to purchase, redeem, retire, defease
or otherwise make any payment in respect of any capital stock
of or other ownership or profit interest in such Person or any
other Person or any warrants, rights or options to acquire such
capital stock, valued, in the case of preferred stock, at the
greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends, (f) all Debt of others
referred to in clauses (a) through (e) above guaranteed
directly or indirectly in any manner by such Person, or in
effect guaranteed directly or indirectly by such Person through
an agreement (i) to pay or purchase such Debt or to advance or
supply funds for the payment or purchase of such Debt, (ii) to
purchase, sell or lease (as lessee or lessor) property, or to
purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Debt or to assure
the holder of such Debt against loss, (iii) to supply funds to
or in any other manner invest in the debtor (including any
agreement to pay for property or services irrespective of
whether such property is received or such services are
rendered) or (iv) otherwise to assure a creditor against loss,
and (g) all Debt referred to in clauses (a) through (e) above
secured by (or for which the holder of such Debt has an
existing right, contingent or otherwise, to be secured by) any
Lien on property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person
has not assumed or become liable for the payment of such Debt.
In cases where recourse to any Person or any of its properties
in respect of Debt is limited, the amount of such Debt of such
Person for purposes hereof shall be so limited.

"Default Rate" means a fluctuating interest rate equal to
2% per annum above the Alternate Base Rate in effect from time
to time.

"EBITA" means, for any period, the sum, for the Company
and its Consolidated Subsidiaries (determined on a consolidated
basis without duplication in accordance with GAAP), of the
following: (a) net operating income (calculated before taxes,
Interest Expense, extraordinary items and unusual non-cash,
non-recurring items and income or loss attributable to equity
in Affiliates) for such period plus (b) amortization (to the
extent deducted in determining net operating income) for such
period.

<PAGE> 10
"Effective Date" means the Effective Date (as defined
therein) of the Plan of Reorganization.

"Eligible Institution" means (i) a bank or trust company
organized under the laws of the United States of America, of
any state therein, of the District of Columbia, of any member
country of the Organization for Economic Cooperation and
Development or of any political subdivision of any such
country, in each case having assets in excess of $500,000,000,
(ii) an insurance company organized under the laws of any state
in the United States of America or of the District of Columbia
having assets in excess of $500,000,000 or (iii) any other
Person consented to by the Company, which consent shall not be
unreasonably withheld.

"Eligible Participant" has the meaning assigned to that
term in Section 9.9(b).

"Environmental Action" means any administrative,
regulatory or judicial action, suit, demand, demand letter,
claim, notice of non-compliance or violation, investigation,
proceeding, consent order or consent agreement relating in any
way to any Environmental Law or any Environmental Permit
including, without limitation, (a) any claim by any
governmental or regulatory authority for enforcement,
investigation, cleanup, removal, response, remedial or other
actions or damages pursuant to any Environmental Law and (b)
any claim by any Person seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive
relief resulting from Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the
environment.

"Environmental Law" means any federal, state or local law,
rule, regulation, order, writ, judgment, injunction, decree,
determination or award relating to the environment, health,
safety or Hazardous Materials.

"Environmental Permit" means any permit, approval,
identification number, license or other authorization required
under any Environmental Law.

"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.

"Eurodollar Advance" means any Tender Advance bearing
interest at the Eurodollar Rate.

<PAGE> 11
"Eurodollar Rate" for any Interest Period for any Tender
Advance means an interest rate per annum equal at all times
during such Interest Period to the sum of (x) the LIBO Rate for
such Interest Period plus (y) 1.50% per annum.

"Event of Default" has the meaning assigned to that term
in Section 6.1.

"Fed Funds Rate" means for each day the rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of 1%)
equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if the day for which
such rate is to be determined is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published
on the next succeeding Business Day, and (ii) if such rate is
not so published for any day, the Federal Funds Rate for such
day shall be the average rate charged to the Westpac on such
day on such transactions as determined by Westpac.

"Final Approval" means any authorizations, consents,
approvals, waivers, exceptions, variances, orders, licenses,
exemptions, publications, filings, notices to and declarations
of or with any governmental authority (other than routine
reporting requirements the failure to comply with which will
not affect the validity or enforceability of any of the Related
Documents or have a Material Adverse Effect) or any other
action in respect of any governmental authority that is in full
force and effect and is not the subject of a pending appeal or
reconsideration or other review, and the time in which to make
an appeal or request the review or reconsideration of which has
expired without any appeal or request for review or
reconsideration having been taken or made.

"Final Draft" has the meaning assigned to that term in the
Letter of Credit.

"Final Order" means an order of the Bankruptcy Court which
(a) shall not have been reversed, stayed, modified or amended
and the time to appeal from, or to seek review or rehearing of,
shall have expired and as to which no appeal or petition for
review, rehearing or certiorari is pending, or (b) if appealed
from, shall have been affirmed and the time to appeal from such
affirmance or to seek review or rehearing thereof, shall have
expired or no further hearing, appeal or petition for
certiorari can be taken or granted.

"First Mortgage Bond Indenture" means the Indenture dated
as of between the Company and
, as trustee, providing for the issuance by the Company of
its first mortgage bonds.

<PAGE> 12
"First Mortgage Bonds" means bonds issued by the Company
under the First Mortgage Bond Indenture.

"First Mortgage Bonds, Series A/B" means collectively, the
First Mortgage Bonds, Series A, and the First Mortgage Bonds,
Series B, in each case under the First Mortgage Bond Indenture.

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

"Hazardous Materials" means (a) petroleum or petroleum
products, asbestos in any form, radioactive or source material,
(b) any substances defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous
materials", "extremely hazardous wastes", "restricted hazardous
wastes", "toxic substances", "toxic pollutants", "contaminants"
or "pollutants", or words of similar import, under any
Environmental Law and (c) any other substance exposure to which
is regulated under any Environmental Law.

"Indemnified Party" has the meaning assigned to that term
in Section 9.5.

"Indenture" has the meaning assigned to that term in
Preliminary Statement (6).

"Interest Coverage Ratio" means, as at any date, the ratio
of (a) EBITA for the period of four consecutive fiscal quarters
ending on or most recently ended prior to such date to (b)
Interest Expense for such period.

"Interest Draft" has the meaning assigned to that term in
the Letter of Credit.

"Interest Expense" means, for any period, the sum, for the
Company and its Consolidated Subsidiaries (determined on a
consolidated basis without duplication in accordance with
GAAP), of the following: (a) all interest in respect of Debt
including, without limitation, interest capitalized during such
period (whether or not actually paid during such period),
including, without limitation, all commissions and fees (other
than up-front fees), plus (b) the net amounts payable (or minus
the net amounts receivable) under Interest Rate Protection
Agreements accrued during such period (whether or not actually
paid or received during such period).

"Interest Period" has the meaning assigned to that term in
Section 2.7(b).

<PAGE> 13
"Interest Rate Protection Agreement" means, for any
Person, an interest rate swap, cap or collar agreement,
interest rate future or option contracts or similar arrangement
providing for the transfer or mitigation of interest risks
either generally or under specific contingencies.

"Investment Grade Rating" means a rating of BBB- or better
(or equivalent rating) by any two of Moody's Investors Service,
Inc., Standard & Poor's Corporation and Duff & Phelps, Inc.

"Issuer" has the meaning assigned to that term in
Preliminary Statement (1).

"LC Payment Notice" has the meaning assigned to that term
in Section 2.8(a)(ii).

"Letter of Credit" has the meaning assigned to that term
in Preliminary Statement (9).

"Leverage Ratio" means, at any time, the ratio of Total
Debt to Total Capital at such time.

"LIBO Rate" for any Interest Period means an interest rate
per annum equal to the rate of interest per annum at which
deposits in United States dollars are offered by the principal
office of Westpac in London, England to prime banks in the
London interbank market at 11:00 A.M. (London time) two
Business Days before the first day of such Interest Period for
a period equal to such Interest Period.

"Loan Agreement" has the meaning assigned to that term in
Preliminary Statement (7).

"Majority Creditors" means Creditors which have an
aggregate Participation Percentage of more than 50%.

"Material Adverse Effect" means a material adverse effect
on (i) the property, business, operations, financial condition,
liabilities or capitalization of the Company and its
Subsidiaries taken as a whole, (ii) the ability of the Company
to perform its obligations under any of the Related Documents,
(iii) the validity or enforceability of any of the Related
Documents, (iv) the rights and remedies of the Issuing Bank,
the Creditors and the Agent or (v) the timely payment of the
principal of or interest hereunder or other amounts payable in
connection herewith.

<PAGE> 14
"Material Subsidiary" means, at any time, a Subsidiary of
the Company (a) whose assets at such time exceed 10% of the
assets of the Company and its Subsidiaries (on a consolidated
basis) or (b) whose earnings at such time exceed 10% of the
earnings of the Company and its Subsidiaries (on a consolidated
basis).

"Multiemployer Plan" means a multiemployer plan, as
defined in Section 4001(a)(3) of ERISA, to which the Company or
any ERISA Affiliate is making or accruing an obligation to make
contributions, or has within any of the preceding five plan
years made or accrued an obligation to make contributions, such
plan being maintained pursuant to one or more collective
bargaining agreements.

"Multiple Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (i) is maintained
for employees of the Company or an ERISA Affiliate and at least
one Person other than the Company and its ERISA Affiliates or
(ii) was so maintained and in respect of which the Company or
an ERISA Affiliate could have liability under Section 4064 or
4069 of ERISA in the event such plan has been or were to be
terminated.

"Official Statement" means the Official Statement dated [
, 199 ] of the Issuer relating to the Bonds,
together with the documents incorporated therein by reference.

"Original Bonds" has the meaning assigned to that term in
Preliminary Statement (1).

"Original Indenture" has the meaning assigned to that term
in Preliminary Statement (1).

"Original Letter of Credit" has the meaning assigned to
that term in Preliminary Statement (4).

"Original Loan Agreement" has the meaning assigned to that
term in Preliminary Statement (2).

"Original Reimbursement Agreement" has the meaning
assigned to that term in Preliminary Statement (4).

"Original Trustee" has the meaning assigned to that term
in Preliminary Statement (1).

"Partial Redemption Draft" has the meaning assigned to
that term in the Letter of Credit.

"Participant" has the meaning assigned to that term in
Section 9.9(b).

"Participation Percentage" means, as of any date of
determination (i) with respect to a Creditor initially a party
hereto, the percentage set forth opposite such Creditor's name

<PAGE> 15
on the signature pages hereof, except as provided in clause
(iii) below, (ii) with respect to a Creditor that became a
party hereto by operation of Section 9.9(a), the percentage
participation interest assumed by such assignee Creditor as set
forth in the instrument of assignment referred to in Section
9.9(a), except as provided in clause (iii) below, and (iii)
with respect to any Creditor described in clause (i) or (ii)
above that assigns a percentage of its interests in accordance
with Section 9.9(a), its participation percentage as reduced by
the percentage so assigned.

"Payment Amount" has the meaning set forth in Section
2.5(c).

"Payment Date" means the last day of each Quarterly
Period.

"Payment Period" has the meaning assigned to that term in
Section 2.6.

"PBGC" means the Pension Benefit Guaranty Corporation or
any successor thereto.

"Person" means an individual, a corporation, a
partnership, an association, a business trust or any other
entity or organization, including a Governmental Person.

"Plan" means a Single Employer Plan or a Multiple Employer
Plan.

"Plan of Reorganization" means the Modified Third Amended
Plan of Reorganization of the Debtor Providing for the
Acquisition of El Paso Electric Company by Central and South
West Corporation filed on August 27, 1993 (as corrected as of
September 15, 1993).

"Preliminary Official Statement" means the Preliminary
Official Statement dated [ , 199 ] of the Issuer
relating to the Bonds, together with the documents incorporated
therein by reference.

"Quarterly Period" with respect to each Bond means the
period commencing on the date such Bond is purchased by the
Trustee or the Tender Agent on behalf of or for the account of
the Issuing Bank, the Agent or any other nominee of the Issuing
Bank and ending on the first to occur of March 31, June 30,
September 30 or December 31 thereafter, and, thereafter, each
subsequent period commencing on the last day of the immediately
preceding Quarterly Period and ending on the first to occur of
March 31, June 30, September 30 or December 31 thereafter.

"Refunding" has the meaning assigned to that term in
Preliminary Statement (6).

<PAGE> 16
"Related Documents" has the meaning assigned to that term
in Section 2.16.

"Remarketing Agent's Agreement" means the remarketing
agreement dated as of , 199[ ] between the Company
and [ ].

"Second Mortgage Bond Indenture" means the Indenture dated
as of between the Company and _____________, as
trustee, providing for the issuance by the Company of its
second mortgage bonds.

"Second Mortgage Bonds" means bonds issued by the Company
under the Second Mortgage Bond Indenture.

"Second Mortgage Bonds, Series A" means Second Mortgage
Bonds, Series A, issued under the Second Mortgage Bond
Indenture.

"Second Mortgage Bonds, Series [ ]" means the mortgage
bonds at any time issued by the Company and outstanding
pursuant to the Second Mortgage Bond Indenture. [Bonds to be
rated].

"Single Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (i) is maintained
for employees of the Company or an ERISA Affiliate and no
Person other than the Company and its ERISA Affiliates or (ii)
was so maintained and in respect of which the Company or an
ERISA Affiliate could have liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated.

"Stated Termination Date" means the earlier of (i)
December 31, 1998 and (ii) the fourth anniversary of the
Effective Date, unless extended as provided in Section 2.14.

"Submission Date" means the date the form of this
Agreement was filed with the Bankruptcy Court prior to the date
creditors must have voted on the Plan of Reorganization in
accordance with Section 7.6 of the Plan of Reorganization.

"Tender Advance" has the meaning assigned to that term in
Section 2.6.

"Tender Agent" has the meaning assigned to that term in
the Indenture.

<PAGE> 17
"Tender Draft" has the meaning assigned to that term in
the Letter of Credit.

"Total Capital" means, as at any date, the sum for the
Company and its Consolidated Subsidiaries (determined on a
consolidated basis without duplication in accordance with
GAAP), of the following:

(a) the amount of capital stock (excluding treasury
stock and capital stock subscribed for and unissued and
preferred stock mandatorily redeemable in cash or
redeemable in cash at the option of the holder thereof),
plus

(b) the amount of surplus and retained earnings (or,
in the case of a surplus or retained earnings deficit,
minus the amount of such deficit).

"Trustee" means [ ] and its
successors and permitted assigns under the Indenture, as
trustee and paying agent.

"Voting Stock" means capital stock issued by a
corporation, or equivalent interests in any other Person, the
holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors
(or Persons performing similar functions) of such Person, even
though the right so to vote has been suspended by the happening
of such a contingency.

"Withdrawal Liability" has the meaning given such term
under Part I of Subtitle E of Title IV of ERISA.

SECTION 1.2 Computation of Time Periods. In this
Agreement, in the computation of a period of time from a specified
date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but
excluding".

SECTION 1.3 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
GAAP consistently applied, except as otherwise stated herein.

SECTION 1.4 Interpretation. In this Agreement the
singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to
statutes are to be construed as including all statutory provisions
consolidating, amending or replacing the statute referred to;

<PAGE> 18
references to "writing" include printing, typing, lithography and
other means of reproducing words in a tangible visible form;
references to sections (or any subdivision of a section), articles,
schedules, annexes and exhibits are to those of this Agreement
unless otherwise indicated; the words "including", "includes" and
"include" shall be deemed to be followed by the words "without
limitation"; references to agreements and other contractual
instruments shall be deemed to include all subsequent amendments and
other modifications to such instruments but only to the extent such
amendments and other modifications are not prohibited by the terms
of this Agreement or any other Related Document; and references to
Persons include their respective permitted successors and assigns
and, in the case of Governmental Persons, Persons succeeding to
their respective functions and capacities.
ARTICLE II
AMOUNT AND TERMS OF THE LETTER OF CREDIT

SECTION 2.1 The Letter of Credit. The Issuing Bank
agrees, on the terms and conditions hereinafter set forth, to issue
the Letter of Credit to the Trustee on any Business Day during the
period from the date hereof to and including [ ,
199 ] in the amount of the Commitment to support the payment of
principal of and interest on the Bonds as set forth in Preliminary
Statement (9) and expiring on the Stated Termination Date, unless
earlier terminated in accordance with the terms thereof.

SECTION 2.2 Issuing the Letter of Credit. The Letter
of Credit shall be issued on at least two Business Days' notice from
the Company to the Issuing Bank (which notice may be furnished prior
to the execution and delivery hereof) specifying the Business Day of
issuance thereof. On such Business Day specified by the Company in
such notice and upon fulfillment of the applicable conditions set
forth in Article III, the Issuing Bank will issue the Letter of
Credit to the Trustee.

SECTION 2.3 Drawing Fee. The Company hereby agrees to
pay to the Agent, for the account of the Issuing Bank a drawing fee
of $100 per draw, payable at the time of each draw under the Letter
of Credit.

SECTION 2.4 Commissions. (a) The Company hereby
agrees to pay to the Agent, for the account of the Issuing Bank and
the Creditors, a letter of credit commission on the Available Amount
in effect from time to time (i) from the date of issuance of the
Letter of Credit to but excluding the first anniversary of the
Commencement Date, at the rate of .75% per annum, (ii) from the
first anniversary of the Commencement Date to but excluding the
second anniversary of the Commencement Date, at the rate of .875%
per annum, (iii) from the second anniversary of the Commencement
Date to but excluding the third anniversary of the Commencement
Date, at the rate of 1.00% per annum, (iv) from the third
anniversary of the Commencement Date to but excluding the fourth
anniversary of the Commencement Date, at the rate of 1.125% per
annum and (v) if applicable pursuant to Section 2.14(a), from the

<PAGE> 19
fourth anniversary of the Commencement Date to but excluding the
fifth anniversary of the Commencement Date, at the rate of 1.25% per
annum. The Letter of Credit commission shall be payable quarterly
in arrears on the last Business Day of each _______, _______,
_______, and _______, commencing on the last day of the quarter in
which the Letter of Credit is issued, until the Credit Termination
Date, and on the Credit Termination Date. Such letter of credit
commission shall be paid by the Agent to the Issuing Bank and the
Creditors as the Issuing Bank and the Creditors shall agree.

(b) The Company hereby agrees to pay to the Agent, for
the account of the Issuing Bank, upon each transfer by the Trustee
of the Letter of Credit in accordance with its terms, a transfer
commission equal to 1/4 of 1% of the Available Amount then in
effect.

SECTION 2.5 Reimbursement on the Date of the Draw.

(a) Except as otherwise provided in subsections (b) and
(c) of this Section 2.5 and subject to the provisions of Sections
2.6 and 2.7, the Company hereby agrees to pay to the Agent (i) on
each date on which the Issuing Bank shall pay any amount under the
Letter of Credit pursuant to any draft (including, without
limitation, amounts in respect of any reinstatement of the interest
component at the election of the Issuing Bank in its sole discretion
notwithstanding any failure by the Company to reimburse the Issuing
Bank or the Creditors for any previous drawing to pay interest on
the Bonds), a sum equal to such amount so paid, plus (ii) on each
day thereafter interest on any amount remaining unpaid by the
Company to the Agent under clause (i) above, from the date of such
draw until payment in full, at the Default Rate.

(b) The Company shall have no obligation under
Section 2.5(a) or Section 2.6 in the case of a Tender Draft to pay
to the Agent, the Issuing Bank or any Creditor pursuant to this
Agreement the amount paid by the Issuing Bank under the Letter of
Credit if and to the extent the amount so paid under the Letter of
Credit shall have been used to purchase Bonds to be held by or on
behalf of and for the account of the Issuing Bank, the Agent or any
other nominee of the Issuing Bank pursuant to subsection (e) of
Section 3.01 of the Indenture, subsection (e) of Section 9.01 of the
Indenture or subsection (d) of Section 13.03 of the Indenture.
Notwithstanding the foregoing, the obligations of the Company under
this Agreement to pay to the Agent on behalf of the Issuing Bank and
the Creditors any amounts in respect of the amounts paid by the
Issuing Bank under the Letter of Credit referred to in the
immediately preceding sentence shall continue to be effective or
shall be reinstated, as the case may be, if at any time the purchase
of the Bonds by or on behalf of or for the account of the Issuing
Bank, the Agent or any other nominee of the Issuing Bank with the
proceeds of such amounts paid under the Letter of Credit is
rescinded in whole or in part or some or all of the Bonds so
purchased must otherwise be returned by the Issuing Bank, the Agent
or any other nominee of the Issuing Bank.

<PAGE> 20
(c) The Company shall pay to the Agent, on each Payment
Date the amount (the "Payment Amount") by which (i) the aggregate
Contract Interest Amount for the Quarterly Period ending on such
Payment Date exceeds (ii) the aggregate Bond Interest Amount for
such Quarterly Period with respect to all Bonds held by or on behalf
of or for the account of the Issuing Bank, the Agent or any other
nominee of the Issuing Bank during such Quarterly Period. Any
amounts due pursuant to this Section 2.5(c) that are not paid when
due shall bear interest from the date the same become due until such
amounts are paid, payable on demand, at an interest rate equal to
the Default Rate.

SECTION 2.6 Tender Advances. Except as provided in
Section 2.5(b), if the Issuing Bank shall make any payment under the
Letter of Credit pursuant to a Tender Draft and the conditions set
forth in Section 3.3(a) shall have been fulfilled, such payment
shall constitute an advance made by the Issuing Bank to the Company
on the date and in the amount of such payment, each such advance
being a "Tender Advance" and collectively the "Tender Advances".

Except as otherwise provided in Section 2.9 or Section
6.2, each Tender Advance shall be payable in substantially equal
quarterly installments on the last day of each calendar quarter,
commencing on the last day of the calendar quarter in which the 90th
day following the date of such Tender Advance occurs and continuing
until the Stated Termination Date in effect on the date of such
Tender Advance (each such approximately 90-day period being a
"Payment Period").

SECTION 2.7 Interest on Advances. The Company shall
pay interest on the unpaid principal amount of each Tender
Advance from the date of such Tender Advance until such principal
amount is paid in full at the applicable rate set forth below:

(a) Alternate Base Rate. Except to the extent that
the Company shall elect to pay interest on the unpaid
principal of any Tender Advance for any Interest Period
pursuant to subsection (c) of this Section 2.7, the Company
shall pay interest on the unpaid principal of each Tender
Advance from the date of such Tender Advance until the
principal amount of such Tender Advance is paid in full,
payable quarterly in arrears on the last day of each
calendar quarter and on the date such Tender Advance is paid
in full, at a fluctuating interest rate per annum in effect
from time to time equal to .50% per annum above the
Alternate Base Rate in effect from time to time.

<PAGE> 21
specifies as the first day of the Eurodollar Advance, or the
last day of the then current Interest Period for a
Eurodollar Advance. No Interest Period shall end after the
Stated Termination Date.

(c) Eurodollar Rate. The Company may from time to
time elect to pay interest on any Tender Advance at the
Eurodollar Rate for an Interest Period for such Tender
Advance by notice delivered to the Agent, specifying the
Tender Advance (which shall not be less than $1,000,000
unpaid principal amount during such Interest Period) and the
first day and duration of such Interest Period, received by
the Agent before 11:00 A.M. (New York City time) three
Business Days prior to the first day of such Interest
Period; provided that no more than four separate Interest
Periods in respect of Eurodollar Advances may be outstanding
at any one time. Such Interest Period shall be of 1, 3 or 6
months' duration, at the Company's election; provided,
however, that the Company may not select any Interest Period
which ends after any principal repayment installment date
unless, after giving effect to such selection, the aggregate
unpaid principal amount of Eurodollar Advances having
Interest Periods which end on or prior to such principal
repayment installment date and Alternate Base Rate Advances
shall be at least equal to the principal amount of the
Tender Advances due and payable on and prior to such date.

If the Company shall have made such election for any
Tender Advance for any such Interest Period, the Company
shall pay interest on such Tender Advance during such
Interest Period, payable on the last day of such Interest
Period and, if such Interest Period has a duration of more
than three months, on each day which occurs during such
Interest Period every three months from the first day of
such Interest Period, at the Eurodollar Rate for such
Interest Period for such Tender Advance.

(d) Default Interest. The Company shall pay interest
on the unpaid principal amount of any Tender Advance that is
not paid when due and on the unpaid amount of all interest,
and other amounts payable hereunder, that is not paid when
due, payable on demand, at a rate per annum equal at all
times to 2% per annum above the Alternate Base Rate in
effect from time to time. Notwithstanding anything in this
Agreement to the contrary, upon the occurrence and during
the continuance of an Event of Default, the right of the
Company to make an election in respect of the Eurodollar
Rate pursuant to Section 2.7(c) shall, terminate (i)
automatically in the case of an Event of Default under
Section 6.1(a) or (ii) upon notice to the Company by the
Bank, in all other cases; provided that no termination
referred to in either of the preceding clauses (i) or (ii)
shall affect any Eurodollar Advance during an Interest
Period in effect for such Eurodollar Advance at the time
such notice is received by the Company.

<PAGE> 22
(e) Illegality, Etc. Notwithstanding any other
provision of this Agreement, if the Issuing Bank or any
Creditor (which shall at the time be a Banking Institution)
notifies the Company that the introduction of or any change
in or in the interpretation of any law or regulation that
occurs after the Submission Date makes it unlawful, or any
central bank or other governmental authority asserts after
the Submission Date that it is unlawful, for the Issuing
Bank or any Creditor to perform its obligations to make,
fund or maintain Eurodollar Advances hereunder (or
participation interests therein), (i) the right of the
Company to select the Eurodollar Rate for Tender Advances
held by the Issuing Bank or such Creditor, as the case may
be, and the obligation of the Issuing Bank and such
Creditor, as the case may be, to make or maintain Eurodollar
Advances shall be suspended until the Issuing Bank or such
Creditor, as the case may be, shall notify the Company that
the circumstances causing such suspension no longer exist
and (ii) the rate of interest on all such Tender Advances
held by the Issuing Bank or such Creditor, as the case may
be, shall thereupon be .50% per annum above the Alternate
Base Rate in effect from time to time.

(f) Interest Rate Protection. (i) If the Company
shall fail to select the duration of any Interest Period for
any Eurodollar Advance in accordance with the provisions
contained in Section 2.7(c), the Agent will forthwith so
notify the Company and the Creditors and such Eurodollar
Advance will automatically, on the last day of the then
existing Interest Period therefor, convert into an Alternate
Base Rate Advance.

(ii) On and after the date on which the unpaid
principal amount of any Tender Advance shall be reduced, by
payment or prepayment or otherwise, to less than $1,000,000,
the rate of interest on the unpaid principal amount of such
Tender Advance shall be .50% per annum above the Alternate
Base Rate in effect from time to time and the right of the
Company to select a different rate for such Tender Advance
shall terminate; provided, however, that if and so long as
the Company shall select for such Tender Advance the same
Eurodollar Rate for and the same Interest Period as another
Tender Advance or other Tender Advances and the aggregate
unpaid principal amount of all such Tender Advances shall
equal or exceed $1,000,000, the Company shall have the right
to select such rate for such Interest Period for such Tender
Advance.

<PAGE> 23
exist for ascertaining the applicable Eurodollar Rate, the
Agent shall, as soon as practicable thereafter, give
written, facsimile or telegraphic notice of such
determination to the Company, and any request by the Company
for a Eurodollar Advance pursuant to subsection (c) of this
Section 2.7 shall be deemed a request for an Alternate Base
Rate Advance. After such notice shall have been given and
until the circumstances giving rise to such notice no longer
exist, each request for an Eurodollar Advance shall be
deemed to be a request for an Alternate Base Rate Advance.

(x) each Eurodollar Advance will automatically, on
the last day of the then existing Interest Period
therefor, convert into an Alternate Base Rate Advance,
and

(y) the obligation of the Creditors to make, or to
convert Alternate Base Rate Advances into, Eurodollar
Advances shall be suspended until the Agent shall
notify the Company and the Creditors that the
circumstances causing such suspension no longer exist.

(i) Notice. promptly after the determination of any
interest rate provided for herein or any change therein, the
Agent shall give notice thereof to the Company.

SECTION 2.8 Reimbursement of Issuing Bank, Etc.

(a)(i) The Issuing Bank hereby sells and transfers to
each Creditor, and each Creditor hereby acquires from the Issuing
Bank, an undivided interest and participation to the extent of
such Creditor's Participation Percentage in and to (A) the Letter
of Credit, including the obligations of the Issuing Bank under
and in respect thereof and the Company's reimbursement and other
obligations in respect thereof and (B) any Tender Advance made by
the Issuing Bank hereunder, whether now existing or hereafter
arising.

<PAGE> 24
Issuing Bank and the Agent shall give each Creditor prompt notice
thereof (an "Agent Payment Notice") no later than two hours
following the Agent's receipt of the LC Payment Notice at such
Creditor's address referred to in Section 9.2.

(iv) Each such payment by a Creditor shall be made to
the Agent for the account of the Issuing Bank at its address
referred to in Section 9.2 in lawful money of the United States
of America, in same day funds (1) not later than 2:30 p.m. (New
York City time) on the day any such Agent Payment Notice is
received by such Creditor, if such notice is received at or prior
to 12:00 noon (New York City time) on a Business Day; (2) not
later than 4:30 p.m. (New York City time) on the day any such
Agent Payment Notice is received by such Creditor, if such notice
is received after 12:00 noon (New York City time) but at or prior
to 2:30 p.m. (New York City time) on a Business Day; or (3) not
later than 12:00 noon (New York City time) on the Business Day
next succeeding the day any such Agent Payment Notice is received
by such Creditor, if such notice is received after 2:30 p.m. (New
York City time) on a Business Day. Each Creditor's obligation to
make each such payment to the Issuing Bank, and the Issuing
Bank's right to receive the same, shall be absolute and
unconditional and shall not be affected by any circumstance
whatsoever, including, without limiting the foregoing or
Section 2.16, the occurrence or continuance of an Event of
Default or the failure of any other Creditor to make any payment
under this Section 2.8. Each Creditor further agrees that each
such payment shall be made without any offset, abatement,
withholding or reduction whatsoever.

<PAGE> 25
for the first two days following the day upon which any such
payment shall have been due and payable at the Federal Funds Rate
and thereafter until the date such amount is repaid to the
Issuing Bank at the Alternate Base Rate plus 1% per annum.

SECTION 2.9 Prepayments; Reinstatement of Letter of
Credit Amounts.

(a) The Company may, upon at least two Business Days'
notice to the Agent stating the proposed date and principal
amount of the prepayment, and if such notice is given to the
Agent the Company shall, prepay the amount outstanding under any
Tender Advance in whole or in part (each such partial prepayment
shall be in the minimum amount of $[ ]) with accrued
interest to the date of such prepayment on the amount prepaid
(any such prepayment shall be applied to outstanding Tender
Advances in the inverse order of maturity); provided, however,
that with respect to any prepayment of any Eurodollar Advance
made on a day other than the last day of an Interest Period for
such Eurodollar Advance, the Company shall pay to the Agent, in
accordance with Section 2.11(b), an amount sufficient to
compensate the Issuing Bank and any Creditor for any loss, cost,
or expense incurred by it by reason of such prepayment on a day
other than the last day of an Interest Period.

<PAGE> 26
Issuing Bank and any Creditor, in accordance with Section
2.11(b), an amount sufficient to compensate the Issuing Bank and
any Creditor for any loss, cost, or expense incurred by it by
reason of such prepayment on a day other than the last day of an
Interest Period; provided further that, in the case of a
prepayment certified to the Issuing Bank by the Trustee as a
prepayment of a Tender Advance pursuant to this Section 2.9(b)
and made on a date other than a date on which interest on such
Tender Advance is scheduled to be paid hereunder, the Company may
pay interest accrued on such Tender Advance to the date of
prepayment on the next scheduled date for the payment of interest
on such Tender Advance, or if such Tender Advance shall have been
prepaid in whole, on the date which would have been the next such
scheduled date in the absence of such prepayment. The Company
irrevocably authorizes the Issuing Bank to rely on such
certificate and to reinstate the Letter of Credit in accordance
therewith.

(c) Upon the substitution of a letter of credit or
other credit facility for the Letter of Credit as provided in
Section 2.2(6) of the Indenture, all Tender Advances and accrued
and unpaid interest thereon and all other outstanding amounts
payable by the Company to the Issuing Bank, the Creditors and the
Agent under this Agreement shall be paid in full on the date the
Letter of Credit shall terminate as a result of such
substitution.

SECTION 2.10 Additional Interest. Subject to
Section 2.11(e)(ii), the Company shall pay to the Issuing Bank
and each Creditor additional interest on the unpaid principal
amount of any Eurodollar Advance by the Issuing Bank or such
Creditor, from the date of such Eurodollar Advance until such
principal amount is paid in full, at an interest rate per annum
equal at all times during each Interest Period for such
Eurodollar Advance to the remainder obtained by subtracting (i)
the LIBO Rate for the Interest Period for such Eurodollar Advance
from (ii) the rate obtained by dividing such LIBO Rate by a
percentage equal to 100% minus the reserve percentage applicable
during such Interest Period (or if more than one such percentage
shall be so applicable, the daily average of such percentages for
those days in such Interest Period during which any such
percentage shall be so applicable) under regulations issued from
time to time by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for the
Issuing Bank or such Creditor, as the case may be, with respect
to liabilities or assets consisting of or including Eurocurrency
liabilities having a term equal to such Interest Period, payable
on each date on which interest is payable on such Eurodollar
Advance. Such additional interest shall be determined by the
Issuing Bank or such Creditor, as the case may be, and notified
to the Company (with a copy to the Agent).

<PAGE> 27
SECTION 2.11 Increased Costs.

(a) If due either to (i) the introduction after the
Submission Date of, or any change (other than any change by way
of imposition or increase of reserve requirements in the case of
Eurodollar Advances referred to in Section 2.10), after the
Submission Date, in or in the interpretation of, any law or
regulation or (ii) the compliance by the Issuing Bank or any
Creditor with any guideline or request issued or made after the
Submission Date by any central bank or other governmental
authority (whether or not having the force of law), there shall
be any increase in the cost to the Issuing Bank or any Creditor
as a result of agreeing to make or making, funding or maintaining
Eurodollar Advances, or reduction in the amount of any sum
received in respect thereof, then the Company shall from time to
time, promptly after demand by the Issuing Bank or such Creditor,
as the case may be, pay to the Agent for the account of the
Issuing Bank or such Creditor, as the case may be, additional
amounts sufficient to reimburse the Issuing Bank or such
Creditor, as the case may be, for such increased cost or reduced
amount. A certificate as to the amount of such increased cost or
reduced amount, submitted to the Company (with a copy to the
Agent) by the Issuing Bank or such Creditor, as the case may be,
shall be conclusive and binding for all purposes, absent manifest
error.

(b) If, due to any change of interest rate on any
Eurodollar Advance pursuant to Section 2.7(e) or 2.7(f), any
prepayment pursuant to Section 2.9 of any Eurodollar Advance, any
acceleration of maturity of the Tender Advances pursuant to
Section 6.2, or for any other reason, a Eurodollar Advance is
subject to a change of interest rate, or any payment of principal
of any Eurodollar Advance is received, in each case other than on
the last day of an Interest Period relating to such Eurodollar
Advance, the Company shall, promptly upon demand by Issuing Bank
or any Creditor (with a copy of such demand to the Agent), pay to
the Agent for the account of the Issuing Bank or such Creditor,
as the case may be, any amounts required to compensate the
Issuing Bank or such Creditor, as the case may be, for any
additional losses, costs or expenses which it may reasonably
incur as a result of such change or payment, including, without
limitation, any loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired
by the Issuing Bank or such Creditor, as the case may be, to fund
or maintain such Eurodollar Advance but excluding loss of
anticipated profit. A certificate setting forth the amount of
such additional losses, costs or expenses, submitted by the
Issuing Bank or such Creditor, as the case may be, to the Company
(with a copy to the Agent), shall be conclusive and binding for
all purposes, absent manifest error.

<PAGE> 28
applicable any reserve, special deposit or similar requirement
against letters of credit or guarantees issued by, or assets held
by, or deposits in or for the account of, the Issuing Bank or any
Creditor or (ii) impose on the Issuing Bank or any Creditor any
other condition regarding this Agreement or the Letter of Credit,
and the result of any event referred to in clause (i) or (ii)
above shall be to increase the cost to the Issuing Bank or such
Creditor of issuing or maintaining, or in the case of such
Creditor, acquiring a participation in, the Letter of Credit,
then, upon demand by the Issuing Bank or such Creditor, the
Company shall pay to the Agent for the account of the Issuing
Bank or such Creditor, from time to time as specified by the
Issuing Bank or such Creditor, additional amounts sufficient to
compensate the Issuing Bank or such Creditor for such increased
cost. A certificate as to the amount of such increased cost,
submitted to the Company (with a copy to the Agent) by the
Issuing Bank or such Creditor, shall be conclusive and binding
for all purposes, absent manifest error.

(d) If the Issuing Bank or any Creditor determines
that compliance with any law or regulation or any guideline or
request from any central bank or other governmental authority
(whether or not having the force of law), issued or made after
the Submission Date, affects the amount of capital required to be
maintained by the Issuing Bank or any Creditor or any corporation
controlling the Issuing Bank or such Creditor, as the case may
be, and that the amount of such capital is increased by or based
upon the existence of the Issuing Bank's or such Creditor's, as
the case may be, commitment hereunder and other commitments of
this type or the issuance of the Letter of Credit (or similar
contingent obligations), then, upon demand by the Issuing Bank or
such Creditor, as the case may be, the Company shall pay to the
Agent for the account of the Issuing Bank or such Creditor, as
the case may be, from time to time as specified by the Issuing
Bank or such Creditor, as the case may be, additional amounts
sufficient to compensate the Issuing Bank or such Creditor, as
the case may be, or such corporation in the light of such
circumstances, to the extent that the Issuing Bank or such
Creditor, as the case may be, reasonably determines such increase
in capital to be allocable to the existence of the Issuing Bank's
or such Creditor's, as the case may be, commitment hereunder. A
certificate as to such amounts submitted to the Company (with a
copy to the Agent) by the Issuing Bank or such Creditor, as the
case may be, shall be conclusive and binding for all purposes,
absent manifest error.

<PAGE> 29
the Issuing Bank or such Creditor, as the case may be, by the
Company pursuant to such subsections and (ii) the Company is
responsible for, and is required to reimburse the Issuing Bank
and any Creditor for, any amounts payable by the Company pursuant
to Section 2.10 and this Section 2.11, only so long as the
Issuing Bank or such Creditor is a Banking Institution.

SECTION 2.12 Payments and Computations.

(a) The Company shall make each payment hereunder not
later than 12:00 noon (New York City time) (or, in the case of
any payment required by Section 2.5(a), as soon as practicable
after the Issuing Bank has made a payment under the Letter of
Credit) on the day when due in lawful money of the United States
of America to the Agent at its address referred to in Section 9.2
in same day funds. The Agent will promptly thereafter cause to
be distributed like funds relating to the payment of principal,
interest, fees or other amounts payable to the Issuing Bank and
the Creditors to whom the same are payable at their respective
addresses referred to in Section 9.2.

(b) If, after the Agent has paid to the Issuing Bank
or any Creditor any amount pursuant to subsection (a) above, such
payment is rescinded or must otherwise be returned or must be
paid over by the Agent or the Issuing Bank to any Person, whether
pursuant to any bankruptcy or insolvency law, Section 9.4(c) or
otherwise, the Issuing Bank or such Creditor, as the case may be,
shall, at the request of the Agent or the Issuing Bank, promptly
repay to the Agent or the Issuing Bank, as the case may be, an
amount equal to such payment, together with any interest required
to be paid by the Agent or the Issuing Bank with respect to such
payment.

(d) All computations of interest based on the
Alternate Base Rate shall be made by the Agent on the basis of a
year of 365 or 366 days, as the case may be, and computations of
the commissions hereunder and of interest based on the LIBO Rate
shall be made by the Agent on the basis of a year of 360 days, in
each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which
such interest or commitment fees are payable. Each determination
by the Agent of an interest rate hereunder shall be conclusive
and binding for all purposes, absent manifest error.

<PAGE> 30
SECTION 2.13 Payments on Non-Business Days.

(a) Whenever any payment hereunder shall be stated to
be due, or whenever the last day of any Interest Period, Payment
Period or Quarterly Period would otherwise occur, on a day which
is not a Business Day, such payment shall be made, and the last
day of such Interest Period, Payment Period or Quarterly Period
shall occur, on the next succeeding Business Day, and such
extension of time shall in such case be included in the
computation of payment of interest or commission, as the case may
be; provided, however, if such extension would cause such payment
of interest on or principal of a Eurodollar Advance to be made,
or the last day of an Interest Period for a Eurodollar Advance to
occur, in the next following calendar month, such payment shall
be made, and the last day of such Interest Period shall occur, on
the next preceding Business Day.

SECTION 2.14 Extension of the Stated Termination Date.

(a) At least 60 but not more than 120 days before the
initial Stated Termination Date, the Company may request in a
writing delivered to the Agent (such request shall be accompanied
by a certificate from a duly authorized officer of the Company
that the representations and warranties in Section 4.1 are true
and correct as of the date of such request, before and after
giving effect to such request, as though made on and as of the
date of such request, and such request shall be irrevocable) that
the Issuing Bank, each Creditor and the Agent extend for one year
the then Stated Termination Date for purposes of this Agreement
and the Letter of Credit. If the Company shall make such
request, the Issuing Bank shall so extend the Stated Termination
Date of the Letter of Credit and the Issuing Bank, each Creditor
and the Agent shall extend the Stated Termination Date for
purposes of this Agreement, provided that on the date of such
request by the Company the representations and warranties in
Section 4.1 are true and correct, before and after giving effect
to such request. The Agent shall notify the Company in writing
within 40 days of receipt of such request whether (i) it has
determined that the Company has not satisfied the condition to
extension set forth in the proviso of the immediately preceding
sentence or (ii) the Stated Termination Date has been so
extended.

<PAGE> 31
(b) If the Stated Termination Date is extended as
provided for in Section 2.14(a), the Company may thereafter
request, at least 60 days but not more that 120 days before the
then Stated Termination Date, in a writing delivered to the Agent
(such request shall be accompanied by a certificate from a duly
authorized officer of the Company that the representations and
warranties in Section 4.1 are true and correct as of the date of
such request, before and after giving effect to such request, as
though made on and as of the date of such request, and such
request shall be irrevocable) that the Issuing Bank, each
Creditor and the Agent extend for one year the then Stated
Termination Date for purposes of this Agreement and the Letter of
Credit. If the Company shall make such a request, the Agent
shall, on or before 40 days before the then Stated Termination
Date, notify the Company in writing whether or not the Issuing
Bank, each Creditor and the Agent consent to such request and, if
the Issuing Bank, each Creditor and the Agent do so consent, the
conditions for such extension. If the Agent shall not so notify
the Company, the Issuing Bank, each Creditor and the Agent shall
be deemed not to have consented to such request. The Company
acknowledges that none of the Issuing Bank, any Creditor or the
Agent has any obligation to, and none of such entities has given
any assurance, undertaking or commitment that it will, extend (or
consider extending) the Letter of Credit as set forth in this
Section 2.14(b).

SECTION 2.15 Evidence of Debt. The Agent shall
maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Company resulting
from each drawing under the Letter of Credit and from each Tender
Advance made from time to time hereunder and the amounts of
principal and interest payable and paid from time to time
hereunder. In any legal action or proceeding in respect of this
Agreement, the entries made in such account or accounts shall, in
the absence of manifest error, be conclusive evidence of the
existence and amounts of the obligations of the Company therein
recorded.

SECTION 2.16 Obligations Absolute. (a) The
obligations of the Company under this Agreement and any other
agreement or instrument relating to the Letter of Credit shall be
unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement and such other
agreement or instrument under all circumstances, including,
without limitation, the following circumstances, and regardless
of the use of proceeds of any drawing under the Letter of Credit
or any defense to payment related thereto:

(i) any lack of validity or enforceability of this
Agreement, the Letter of Credit, the Bonds, the Indenture,
the Loan Agreement, the Second Mortgage Bonds, Series ,
the Second Mortgage Bond Indenture, the Remarketing Agent's
Agreement, or any other agreement or instrument relating
thereto (collectively, the "Related Documents");

<PAGE> 32
(ii) any change in the time, manner or place of payment
of, or in any other term of, all or any of the obligations
of the Company in respect of the Letter of Credit or any
other amendment or waiver of or any consent to departure
from all or any of the Related Documents;

(iii) the existence of any claim, set-off, defense or
other right that the Company may have at any time against
the Trustee or any other beneficiary or any transferee of
the Letter of Credit (or any Persons or entities for whom
the Trustee, any such beneficiary or any such transferee may
be acting), the Issuing Bank, any Creditor, the Agent or any
other Person or entity, whether in connection with this
Agreement, the transactions contemplated hereby or by the
other Related Documents or any unrelated transaction;

(v) payment by the Issuing Bank under the Letter of
Credit against presentation of a draft or certificate which
does not comply with the terms of the Letter of Credit;

(b) The obligations of each Creditor under Section 2.8
shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement (as the
same may be amended from time to time) under all circumstances,
including, without limitation, the following circumstances:

(i) any lack of validity or enforceability of the
Related Documents;

(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
obligations of the Company in respect of the Letter of
Credit or any other amendment or waiver of or any consent to
departure from all or any of the Related Documents entered
into in accordance with this Agreement;

<PAGE> 33
(iii) the existence of any claim, set-off, defense or
other right that the Company may have at any time against
the Trustee or any other beneficiary or any transferee of
the Letter of Credit (or any Persons or entities for whom
the Trustee, any such beneficiary or any such transferee may
be acting), the Issuing Bank, or any other Person or entity,
whether in connection with this Agreement, the transactions
contemplated hereby or by the other Related Documents or any
unrelated transaction;

(v) payment by the Issuing Bank under the Letter of
Credit against presentation of a draft or certificate which
does not comply with the terms of the Letter of Credit;

SECTION 2.17 U.S. Taxes.

(a) The Company agrees to pay to the Issuing Bank and
each Creditor with respect to any period during which it is not a
U.S. Person such additional amounts as are necessary in order
that the net payment of any amount due to such non-U.S. Person
hereunder after deduction for or withholding in respect of any
U.S. Tax imposed with respect to such payment (or in lieu
thereof, payment of such U.S. Tax by such non-U.S. Person), will
not be less than the amount stated herein to be then due and
payable, provided that the foregoing obligation to pay such
additional amounts shall not apply:

<PAGE> 34
(i) to any payment to the Issuing Bank or any such
Creditor hereunder unless the Issuing Bank or any such
Creditor is, on the Submission Date (or on the date such
Person becomes the successor to, or the assignee of, the
Issuing Bank or any such Creditor as provided in Section
9.9) and on the date of any change in the applicable lending
office of the Issuing Bank or any such Creditor after the
date hereof, either entitled to submit a Form 1001 (relating
to the Issuing Bank or any such Creditor and entitling it to
a complete exemption from withholding on all interest to be
received by it hereunder in respect of any Tender Advance or
any other amount hereunder payable) or Form 4224 (relating
to all interest to be received by the Issuing Bank or any
such Creditor hereunder in respect of any Tender Advance or
any other amount hereunder payable), or

<PAGE> 35
SECTION 2.18 Applicable Lending Office. If the
Issuing Bank or any Creditor requests compensation from the
Company under any of Section 2.11(a), 2.11(c), 2.11(d) or 2.17,
the Issuing Bank or such Creditor, as the case may be, will
designate a different applicable lending office for the portions
of any Tender Advance or other amount due hereunder affected by
the events giving rise to such request for compensation if such
designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the reasonable opinion of the
Issuing Bank or such Creditor, as the case may be, be
disadvantageous to the Issuing Bank or such Creditor, as the case
may be, except that the Issuing Bank or such Creditor, as the
case may be, shall have no obligation to designate an applicable
lending office located in the United States of America.

SECTION 2.19 Net Payments. All payments under this
Agreement to the Agent, the Issuing Bank, or any Creditor shall
be made without set-off or counterclaim.

SECTION 2.20 Reinstatement of the Letter of Credit.
Upon delivery to the Agent of any Bonds purchased by the Trustee
on behalf of or for the account of the Issuing Bank, the Agent or
any other nominee of the Issuing Bank pursuant to subsection (e)
of Section 3.01 of the Indenture, subsection (e) of Section 9.01
of the Indenture, or subsection (d) of Section 13.03 of the
Indenture with moneys drawn under the Letter of Credit, the
amounts available to be drawn under the Letter of Credit shall be
reinstated, without any further action by the Company or any
party other than the Issuing Bank, in an amount equal to the
amount of the moneys drawn under the Letter of Credit to purchase
such Bonds; provided, however, if at any time any such purchase
shall be rescinded, in whole or in part, or some or all of the
Bonds so purchased must otherwise be returned by the Issuing
Bank, the Agent or any other nominee of the Issuing Bank, in each
case, for any reason, the amounts so reinstated shall not be
available to be drawn until and unless the Company reimburses the
Issuing Bank or the Creditors, as the case may be, for such
amounts.

ARTICLE III
CONDITIONS OF ISSUANCE

SECTION 3.1 Conditions Precedent to Issuance of the
Letter of Credit. The obligation of the Issuing Bank to issue
the Letter of Credit is subject to the satisfaction or waiver in
writing by the Agent, in its sole discretion, of the following:
(i) the Agent shall have received on or before the date of the
issuance of the Letter of Credit the following, each dated such
day (unless otherwise indicated), in form and substance
satisfactory to and in sufficient copies for each Creditor:

(a) certified copies of the restated articles of
incorporation and bylaws of the Company, a certified copy of
the resolutions of the Board of Directors of the Company

<PAGE> 36
approving this Agreement, the form and content of the Letter
of Credit, the other Related Documents and the other matters
contemplated hereby and thereby, and of all other documents
evidencing any other necessary corporate action;

(d) originals (or copies certified to be true copies by
an appropriate officer of the Company or, in the case of the
Issuer, by the county clerk of the Issuer) of all
governmental and regulatory approvals (including, without
limitation, approvals or orders of the Issuer and the
Federal Energy Regulatory Commission and the New Mexico
Public Service Commission approvals) legally required to be
obtained at the time of consummation of the Plan of
Reorganization and on the date of issuance of the Letter of
Credit for the Company to enter into this Agreement and the
other Related Documents and to carry out the transactions
contemplated hereby and thereby;

(e) a certified transcript relating to the issuance of
the Bonds;

(g) a certified copy of the Indenture and evidence
satisfactory to the Agent that the Indenture has been duly
adopted by the Issuer and accepted by the Trustee;

(h) the Second Mortgage Bonds, Series [ ], such series
having been duly completed, executed and pledged to the
Agent for its benefit and the benefit of the Issuing Bank
and the Creditors by the Company;

<PAGE> 37
(i) evidence of the completion of all recordings and
filings of or with respect to the Second Mortgage Bond
Indenture that the Agent may deem necessary or desirable in
order to perfect the security interest created thereby;

(j) a certified copy of the Second Mortgage Bond
Indenture;

(k) a favorable opinion of Milbank, Tweed, Hadley &
McCloy, New York counsel for the Company, or other New York
counsel for the Company reasonably satisfactory to the Agent
and the Creditors, in form and substance reasonably
satisfactory to the Agent;

(l) a favorable opinion of Vinson & Elkins, Texas
counsel for the Company, or other Texas counsel for the
Company reasonably satisfactory to the Agent and the
Creditors, in form and substance reasonably satisfactory to
the Agent and the Creditors;

(m) a favorable opinion of Stoops & Burns, Arizona
counsel for the Company, or other Arizona counsel for the
Company reasonably satisfactory to the Agent and the
Creditors, in form and substance reasonably satisfactory to
the Agent;

(n) a favorable opinion of Taichert, Wiggins, Virtue,
Wilson & Majjar, New Mexico regulatory counsel for the
Company, or other New Mexico counsel for the Company
reasonably satisfactory to the Agent and the Creditors, in
form and substance reasonably satisfactory to the Agent;

(o) a favorable opinion of [Milbank, Tweed, Hadley &
McCloy], federal regulatory counsel for the Company, or
other counsel reasonably satisfactory to the Agent and the
Creditors, in form and substance reasonably satisfactory to
the Agent;

(p) a favorable opinion of Mudge Rose Guthrie Alexander
& Ferdon, bond counsel, in form and substance reasonably
satisfactory to the Agent;

(q) a favorable opinion of ____________, counsel to the
Issuer, or other counsel reasonably satisfactory to the
Agent and the Creditors, in form and substance reasonably
satisfactory to the Agent;

(r) a favorable opinion of Gardner, Carton & Douglas,
special counsel for the Issuing Bank, [to the extent
required by the agencies rating the Bonds];

(s) a certificate of the Clerk of the Board of
Supervisors of Maricopa County, Arizona certifying that the
resolutions approving the issuance of the Bonds are in full
force and effect;

<PAGE> 38
(t) a certificate of the Secretary of the Board of
Directors of the Issuer certifying that the resolutions
approving the issuance of the Bonds, the execution and
delivery of the Indenture and all documents delivered by the
Issuer in connection with the issuance of the Bonds are in
full force and effect;

(u) the articles of incorporation of the Issuer
(certified as of a recent date by the Arizona Corporation
Commission);

(v) a certificate of compliance of the Arizona
Corporation Commission, dated as of a recent date, to the
effect that the Issuer is in good standing and that
franchise taxes have been paid;

(x) the Official Statement certified by the Secretary
of the Company to be a true and correct copy thereof;

(z) written acknowledgment from the Trustee that it has
received the Letter of Credit;

(bb) written evidence, satisfactory to the Agent, that
the First Mortgage Bonds, Series [ ], and the Second
Mortgage Bonds, Series [ ], have an Investment Grade
Rating; and

<PAGE> 39
requirement that notice be given or the elapse of time or
both; and (y) the representations and warranties made by the
Company in Article IV hereof, and in each of the other
Related Documents, shall be true on and as of the Effective
Date with the same force and effect as if made on and as of
such date (or, if such representation or warranty is
expressly stated to have been made as of a specific date, as
of such specific date); and

and (ii) the following has occurred on or before the date of the
issuance of the Letter of Credit:

(a) the Confirmation Order shall have been entered at
least 10 days prior to the date hereof, no stay of such
order shall be in effect and the Agent shall have received a
certified copy of such order;

(c) the Effective Date shall have occurred or shall
occur substantially simultaneously with the delivery of this
Agreement and of the other Related Documents; and

(d) the Refunding shall have occurred or shall occur
substantially simultaneously with the issuance of the Letter
of Credit [and the delivery of the other Related Documents].

SECTION 3.2 Additional Conditions Precedent to
Issuance of the Letter of Credit. The obligation of the Issuing
Bank to issue the Letter of Credit shall be subject to the
further conditions precedent that on the date of the issuance of
the Letter of Credit (a) the following statements shall be true
in all material respects and the Agent shall have received a
certificate signed by a duly authorized officer of the Company,
dated the date of such issuance, stating that:
(i) The representations and warranties contained in
Section 4.1 of this Agreement are correct on and as of the
date of issuance of the Letter of Credit, before and after
giving effect to such issuance, as though made on and as of
such date; and

and (b) the Agent shall have received such other approvals,
opinions or documents as the Issuing Bank or any Creditor
(through the Agent) may reasonably request.

<PAGE> 40
SECTION 3.3 Conditions Precedent to Each Tender
Advance. (a) Each payment made by the Issuing Bank under the
Letter of Credit pursuant to a Tender Draft shall constitute a
Tender Advance hereunder only if on the date of such payment by
the Issuing Bank the following statements shall be true in all
material respects:

(i) The representations and warranties contained in
Section 4.1 of this Agreement are correct on and as of the
date of such Tender Advance, before and after giving effect
to such Tender Advance and to the application of the
proceeds therefrom, as though made on and as of such date;
and

(ii) No event has occurred and is continuing, or would
result from such Tender Advance or from the application of
the proceeds therefrom, which constitutes an Event of
Default or would constitute an Event of Default but for the
requirement that notice be given or time elapse or both.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

SECTION 4.1 Representations and Warranties of the
Company. The Company represents and warrants as follows:

<PAGE> 41
Commission, the New Mexico Public Service Commission or the
Public Utility Commission of Texas, or Regulation G, T, U or
X of the Board of Governors of the Federal Reserve System),
writ, judgment, injunction or decree applicable to the
Company or any contractual restriction binding on or
affecting the Company or any Subsidiary, and do not result
in or require the creation of any Lien of the Company or any
Subsidiary (except as provided in or contemplated by this
Agreement or the other Related Documents or the Plan of
Reorganization) upon or with respect to any properties of
the Company or any Subsidiary.

(c) No authorization or approval or other action by,
and no notice to or filing with, any governmental authority
or regulatory body is required for the due execution,
delivery and performance by the Company of this Agreement or
any other Related Document (including the issuance and
pledge of the Second Mortgage Bonds, Series [ ] and the
creation and perfection of the Liens on the property
securing such Bonds) except for (i) those that have been
duly obtained or made and are in full force and effect and
are Final Approvals and (ii) the Confirmation Order.

(e) There is no pending or overtly threatened action,
investigation, proceeding or notification which has been
instituted after the Effective Date affecting the Company or
any of its Subsidiaries before any court, governmental
agency or arbitrator which is reasonably likely to have a
Material Adverse Effect.

(f) Except for information contained in Annex B to the
Official Statement describing the Issuing Bank, as to which
no representation is made, the Official Statement was, the
Preliminary Official Statement was, and any supplement or
amendment to any thereof shall be, accurate in all material
respects for the purposes for which its use is, was, or
shall be, authorized; and the Official Statement did not as
of its date of issue contain any untrue statement of a
material fact or omit to state any material fact necessary
to make the statements made therein, in the light of the
circumstances under which they are or were made, not
misleading.

<PAGE> 42
provisions of ERISA and the Code except where non-compliance
would not have a Material Adverse Effect, and have not
incurred any liability to the PBGC (other than to pay
premiums under Section 4007 of ERISA) or any Plan or any
Multiemployer Plan (other than to make contributions in the
ordinary course of business). No reportable event, within
the meaning of Section 4043 of ERISA, has occurred with
respect to any Plan, except for any such event as to which
the 30-day notice requirement has been waived by the PBGC.
Schedule B (Actuarial Information) to the most recently
filed annual report (Form 5500 Series) for each Plan is
complete and accurate and fairly presents the funding status
of such Plan, and since the date of such Schedule B there
has been no change in such funding status that can
reasonably be expected to have a Material Adverse Effect.

(h) The Second Mortgage Bonds, Series , (i) have been
duly authorized, executed, authenticated, issued, pledged
and delivered in the manner provided for in the Second
Mortgage Bond Indenture and in compliance with all
applicable law; (ii) constitute the legal, valid and binding
obligations of the Company enforceable against the Company
in accordance with their terms and the terms of the Second
Mortgage Bond Indenture except insofar as enforceability may
be limited or otherwise affected by (a) bankruptcy,
insolvency, moratorium, reorganization or other similar laws
of general application relating to or affecting the rights
and remedies of creditors from time to time in effect and
(b) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at
law); (iii) are entitled to the security and benefits of the
Second Mortgage Bond Indenture; (iv) are secured equally and
ratably with and only with all other bonds issued and
outstanding and which may hereafter and thereafter be issued
and outstanding under the Second Mortgage Bond Indenture;
(v) are secured by duly perfected Liens on and security
interests in the collateral purported to secure such bonds
in the Second Mortgage Bond Indenture which Liens are
subordinated in priority only to the Liens and security
interests granted under the First Mortgage Bond Indenture
and securing outstanding First Mortgage Bonds; and
(vi) constitute collateral security encumbered by valid,
duly perfected Liens thereon and security interests therein
securing the obligations of the Company under this Agreement
as purported to be provided in such indenture and herein.
The Company has executed, issued and delivered all Second
Mortgage Bonds, Series to the Agent for its benefit and
the ratable benefit of the Issuing Bank and the Creditors
and has made all such duly perfected pledges thereof to the
Agent for its benefit and the ratable benefit of the Issuing
Bank and the Creditors as are required to be executed,
issued, delivered and made under this Agreement and there
are no other Liens on such Second Mortgage Bonds.

<PAGE> 43
(i) The Second Mortgage Bond Indenture creates a valid
and perfected second Lien on the Company's property as
described in the Second Mortgage Bond Indenture as
collateral security for the Company's obligations under the
Second Mortgage Bond Indenture and the Second Mortgage
Bonds, Series [ ].

(j) No Material Adverse Effect has occurred since the
Effective Date.

(k) The operations and properties of the Company and
each of its Subsidiaries comply in all material respects
with all Environmental Laws, the Company and each of its
Subsidiaries possess and are in compliance with all required
Environmental Permits and no circumstances exist that are or
would be reasonably likely to (i) form the basis of an
Environmental Action against the Company or any of its
Subsidiaries or any of their properties or (ii) cause any
such property to be subject to any restrictions on
ownership, occupancy, use or transferability under any
Environmental Law, except as would not be likely to have a
Material Adverse Effect, and none of the properties of the
Company or any of its Subsidiaries is listed or proposed for
listing on the National Priorities or CERCLA List under
CERCLA or any analogous state list.

(m) The Company is not a "holding company" as such term
is defined in the Public Utility Holding Company Act of
1935, as amended, nor an "investment company", or a company
"controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.

<PAGE> 44
The Agent, the Issuing Bank and each Creditor shall be
entitled to enforce the remedies under this Agreement
without further application to or order by the Bankruptcy
Court.

ARTICLE V
COVENANTS OF THE COMPANY

SECTION 5.1 Affirmative Covenants. So long as a
drawing is available under the Letter of Credit or the Issuing
Bank or any Creditor shall have any commitment hereunder or the
Company shall have not paid in full all amounts payable by the
Company hereunder to the Agent, the Issuing Bank, or any
Creditor, the Company agrees that, unless the Majority Creditors
shall otherwise consent in writing:

(a) Reporting Requirements. The Company shall deliver
to the Agent and each Creditor:

(i) as soon as available and in any event within 45
days after the end of each of the first three quarterly
fiscal periods of each fiscal year of the Company,
consolidated and consolidating statements of income,
retained earnings and cash flow of the Company and its
Consolidated Subsidiaries for such period and for the period
from the beginning of the respective fiscal year to the end
of such period, and the related consolidated and
consolidating balance sheets of the Company and its
Consolidated Subsidiaries at the end of such period, setting
forth in each case in comparative form the corresponding
consolidated and consolidating figures for the corresponding
period in the preceding fiscal year, accompanied by a
certificate of a senior financial officer of the Company,
which certificate shall state that said consolidated
financial statements fairly present the consolidated
financial condition and results of operations of the Company
and its Consolidated Subsidiaries, and said consolidating
financial statements fairly present the respective
individual unconsolidated financial condition and results of
operations of the Company and of each of its Consolidated
Subsidiaries, in each case in accordance with GAAP,
consistently applied, as at the end of, and for, such period
(subject to normal year-end audit adjustments);

(ii) as soon as available and in any event within 90
days after the end of each fiscal year of the Company,
consolidated and consolidating statements of income,

<PAGE> 45
retained earnings and cash flow of the Company and its
Consolidated Subsidiaries for such fiscal year and the
related consolidated and consolidating balance sheets of the
Company and its Consolidated Subsidiaries as at the end of
such fiscal year, setting forth in each case in comparative
form the corresponding consolidated and consolidating
figures for the preceding fiscal year, and accompanied
(i) in the case of said consolidated statements and balance
sheet of the Company, by an opinion thereon of independent
certified public accountants of recognized national
standing, which opinion shall state that said consolidated
financial statements fairly present the consolidated
financial condition and results of operations of the Company
and its Consolidated Subsidiaries as at the end of, and for,
such fiscal year in accordance with GAAP, consistently
applied, and a certificate of such accountants stating that,
in making the examination necessary for their opinion, they
obtained no knowledge, except as specifically stated, of any
failure by the Company to comply with Section 5.2(a) or (b),
and (ii) in the case of said consolidating statements and
balance sheets, by a certificate of a senior financial
officer of the Company, which certificate shall state that
said consolidating financial statements fairly present the
respective individual unconsolidated financial condition and
results of operations of the Company and of each of its
Consolidated Subsidiaries, in each case in accordance with
GAAP, consistently applied, as at the end of, and for, such
fiscal year;

(iii) as soon as available copies of all proxy
statements, material reports and registration statements
which the Company or any of its Subsidiaries files with the
Securities and Exchange Commission or any national
securities exchange (other than filings made pursuant to the
Public Utility Holding Company Act of 1935, as amended,
public offerings of securities under employee benefit plans,
customer stock purchase plans or dividend reinvestment
plans);

(iv) as soon as possible and in any event within two
days after the Company has knowledge of the occurrence of
each Event of Default continuing on the date of such
statement, a statement from the chief financial officer of
the Company setting forth details of such Event of Default
and the action that the Company has taken and proposes to
take with respect thereto;

(v) at the time the Company furnishes each set of
financial statements pursuant to paragraph (i) or (ii)
above, a certificate of a senior financial officer of the
Company (A) setting forth in reasonable detail the
computations necessary to determine whether the Company is
in compliance with subsections (a) and (b) of Section 5.02
as of the end of the respective quarterly fiscal period or

<PAGE> 46
fiscal year and (B) stating that no event has occurred and
is continuing which constitutes an Event of Default or would
constitute an Event of Default but for the requirement that
notice be given or the lapse of time or both or, if such an
event has occurred and is continuing, a statement as to the
nature thereof and the action that the Company has taken or
proposes to take with respect thereto; and

(vi) such other financial data and information of the
Company or any of its Subsidiaries as the Agent, the Issuing
Bank or any Creditor may from time to time reasonably
request.

(c) Preservation of Corporate Existence, Etc. The
Company shall (i) preserve and maintain its corporate
existence in the state of its incorporation and qualify and
remain qualified as a foreign corporation in each
jurisdiction in which such qualification is reasonably
necessary in view of its business, and (ii) pay and
discharge, and cause its Subsidiaries to pay and discharge,
all taxes, assessments and governmental charges upon its
income and its properties prior to the date on which
penalties are attached thereto, unless (A) such taxes,
assessments and governmental charges shall be contested in
good faith and by appropriate proceedings by the Company or
its Subsidiaries and (B) the Company or any such Subsidiary
shall set aside on its books adequate reserves therefor to
the extent required by GAAP. Nothing contained in this
clause (c) of Section 5.1 shall be deemed to prohibit any
transaction permitted by clause (c) of Section 5.2.

<PAGE> 47
(f) Compliance with Environmental Laws. The Company
shall comply, and cause each of its Subsidiaries and all
ylessees and other Persons occupying or operating on its
properties to comply, in all material respects, with all
Environmental Laws and Environmental Permits applicable to
its operations and properties; obtain and renew all
Environmental Permits necessary for its operations and
properties; and conduct, and cause each of its Subsidiaries
to conduct, any investigation, study, sampling and testing,
and undertake any cleanup, removal, remedial or other action
required under any Environmental Law to remove and clean up
all Hazardous Materials from any of its properties, in
accordance with the requirements of all Environmental Laws;
provided, however, that neither the Company nor any of its
Subsidiaries shall be required to undertake any such
cleanup, removal, remedial or other action to the extent
that its obligation to do so is being contested in good
faith and by proper proceedings and reserves, where required
by GAAP, are being maintained with respect to such
circumstances.

(h) Maintenance of Properties, Etc. The Company shall
maintain and preserve, and cause each of its Subsidiaries to
maintain and preserve, all of its properties that are used
or useful in the conduct of its business in good working
order and condition, ordinary wear and tear excepted;
provided that this subsection (h) shall not prevent the sale
of any properties permitted by subsection (c) of
Section 5.2.

<PAGE> 48
all the Bonds pursuant to the Indenture or upon substitution
of a Credit Facility (as defined in the Indenture) for the
Letter of Credit, to surrender the Letter of Credit to the
Issuing Bank for cancellation.

(k) Bond Rating. The Company shall exercise its best
efforts to cause the Bonds to have a rating by Moody's
Investors Service, Inc. or by Standard & Poor's Corporation.

(l) Remarketing. The Company shall take all steps that
are necessary or appropriate to cause any Bonds acquired by
the Trustee on behalf of and for the account of the Company
or the Issuing Bank, the Agent or any other nominee of the
Issuing Bank to be remarketed (in the case of Bonds acquired
on behalf of or for the account of the Issuing Bank, the
Agent or any other nominee of the Issuing Bank, to the
extent the Issuing Bank requests that such Bonds be
remarketed), including (without limitation) preparing such
disclosure and other documents as are required to remarket
the Bonds.

(n) Maintain Books and Records. The Company shall keep
adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently
applied.

(o) Additional Documents. As promptly as practicable
(but in any event not later than 30 days) after the
Effective Date, the Company will furnish to the Agent,
(i) certified copies of recorded counterparts of the First
Mortgage Bond Indenture evidencing the filing thereof and
(ii) certified copies of all notices filed with respect to
the First Mortgage Bond Indenture.

SECTION 5.2 Negative Covenants. So long as a
drawing is available under the Letter of Credit or the Issuing
Bank shall have any commitment hereunder or the Company shall
have not paid in full all amounts payable by the Company
hereunder to the Agent, the Issuing Bank, or any Creditor, the
Company agrees that, without the written consent of the Majority
Creditors:

<PAGE> 49
(a) Total EBITA to Interest Coverage Ratio. The
Company shall not permit the Interest Coverage Ratio to be
less than 1.40 to 1 at any time on or after the last day of
the first full fiscal quarter of the Company commencing
after the Effective Date.

(b) Total Debt to Total Capital. The Company shall not
permit the Leverage Ratio to exceed 0.68 to 1 at any time on
or after the last day of the first full fiscal quarter of
the Company commencing after the Effective Date.

(c) Prohibition of Fundamental Changes. The Company
shall not, and will not perit any of its Subsidiaries to,
enter into any transaction of merger, consolidation,
amalgamation, liquidation or dissolution; provided that the
Company or any of its Subsidiaries may merge or consolidate
with any other Person if (i) in any such transaction in
which the Company is a party, the Company is the surviving
corporation, (ii) in any such transaction in which the
Company is not a party, the surviving corproation shall be a
Subsidiary of the Company and (iii) after giving effect
thereto no Event of Default would exist hereunder. The
Company will not, and will not permit any of its
Subsidiaries to, convey, sell, lease, transfer or otherwise
dispose of, in one transaction or a series of transactions,
all or substantially all of its business or assets or assets
(excluding (i) accounts receivable, (ii) obsolete or worn-
out tools, equipment or other property no longer used or
useful in its business and (iii) inventory or other property
sold or disposed of in the ordinary course of business and
on ordinary business terms) which in the aggregate have a
net book value in excess of $50,000,000, whether now owned
or hereafter acquired, to any other Person. Notwithstanding
the foregoing provisions of this subsection (c):

(1) any Subsidiary of the Company may be merged or
consolidated with or into: (A) the Company if the Company
shall be the continuing or surviving corporation or (B) any
other Subsidiary of the Company; and

(2) any Subsidiary of the Company may sell, lease,
transfer or otherwise dispose of any or all of its property
(upon voluntary liquidation or otherwise) to the Company or
a Subsidiary of the Company.

<PAGE> 50
Withdrawal Liability to any Multiemployer Plan, which (in
the reasonable opinion of the Agent) will have a Material
Adverse Effect. For purposes of this Section 5.2(d),
"liability" shall not include termination insurance premiums
payable under Section 4007 of ERISA. Upon request of the
Agent, the Company shall promptly furnish to the Agent a
copy of Schedule B (Actuarial Information) to the most
recently filed annual report (Form 5500 Series) of any Plan.

(i) Liens created pursuant to the Related Documents or
pursuant to the First Mortgage Bond Indenture or the Second
Mortgage Bond Indenture;

(ii) Liens created or otherwise in existence on the
Effective Date or contemplated by the Plan of
Reorganization;

(iii) Liens imposed by any governmental authority for
taxes, assessments or charges not yet due or which are being
contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the
books of the Company or the affected Subsidiaries, as the
case may be, in accordance with GAAP;

(iv) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in
the ordinary course of business which are not overdue for a
period of more than 60 days or which are being contested in
good faith and by appropriate proceedings;

(v) pledges or deposits under worker's compensation,
unemployment insurance and other social security
legislation;

(vi) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary
course of business;

<PAGE> 51
thereby unmarketable, materially adversely affect the use of
such property for its present purposes or interfere with the
ordinary conduct of the business of the Company or any of
its Subsidiaries;

(viii) Liens on property of any corporation which
becomes a Subsidiary of the Company after the date of this
Agreement, provided that such Liens are in existence at the
time such corporation becomes a Subsidiary of the Company
and were not created in anticipation thereof, provided
further that such Liens shall not extend to cover any
property of the Company or any of its other Subsidiaries and
such Liens shall not cover property of such Subsidiary other
than property of the types covered by the terms of such
Liens at the time such Subsidiary is acquired;

(ix) Liens upon real and/or tangible personal property
acquired after the Effective Date (by purchase, construction
or otherwise) by the Company or any of its Subsidiaries,
each of which Liens either (A) existed on such property
before the time of its acquisition and was not created in
anticipation thereof, or (B) was created solely for the
purpose of securing Debt representing, or incurred to
finance, refinance or refund, the cost (including the cost
of construction) of such property; provided that no such
Lien shall extend to or cover any property of the Company or
such Subsidiary other than the property so acquired and
improvements thereon;

(x) banker's liens, rights of set-off and Liens on
documents presented under commercial letters of credit, in
each case granted to banks in accordance with customary
banking practices or arising by operation of law;

(xi) additional Liens upon real and/or personal
property created after the date hereof, provided that, on
the date each such Lien is incurred, the lower of (1) the
fair market value of all property subject to Liens permitted
by this paragraph (xi) and not otherwise permitted by this
subsection (i) or (2) the aggregate amount of all
obligations secured by Liens permitted by this paragraph
(xi) and not otherwise permitted by this subsection (i)
shall not exceed 5% of Total Capital on such date; and

(xii) any extension, renewal or replacement of the
foregoing, provided, however, that the Liens permitted
hereunder shall not be spread to cover any additional Debt
or property (other than a substitution of like property).

(f) Change in Nature of Business. The Company shall
not make, or permit any of its Subsidiaries to make, any
material change in the nature of its business as carried on
at the date hereof.

<PAGE> 52
(g) Optional Redemptions. The Company shall not
optionally redeem any Bonds unless the First Mortgage Bonds,
Series [ ], and the Second Mortgage Bonds, Series [ ],
shall each have an Investment Grade Rating and such bonds
have not been placed, with possible negative consequences,
on any watch list.

(h) Related Documents. The Company shall not, subject
to specific rights contained in such agreements, amend, or
consent to the amendment of, any of the Related Documents,
which amendment would adversely affect the Agent, the
Issuing Bank or any Creditor; provided that the Second
Mortgage Bond Indenture may be amended in accordance with
its terms; and provided further that the consent of the
Agent, the Issuing Bank or such Creditor, as the case may
be, may not be unreasonably withheld.

(i) Appointment. The Company shall not appoint any
successor to the Trustee or any Remarketing Agent (as
defined in the Indenture) or other agent appointed pursuant
to the Indenture or any additional Remarketing Agents or
other such agents with respect to the Bonds without the
consent of the Majority Creditors; provided that the consent
of the Majority Creditors may not be unreasonably withheld.

(j) Bond Interest Term. The Company shall not cause
the Trustee to select a Bond Interest Term Rate (as defined
in the Indenture) for any Bond.

ARTICLE VI
EVENTS OF DEFAULT

SECTION 6.1 Events of Default. The occurrence of any
of the following events shall be an "Event of Default" hereunder:

(a) The Company shall fail to pay any amount payable
under any provision of Article II or any other provision of
this Agreement within two days after the same becomes due
and payable; or

(b) Any representation, warranty or certification made,
or deemed made, by the Company in any Related Document by
the Company (or any of its officers), or any certificate
furnished to the Agent, the Issuing Bank or any Creditor
pursuant to the provisions thereof, shall prove to have been
false or misleading as of the time made or furnished in any
material respect; or

(c) The Company shall default in the performance of any
of its obligations under clause (a)(iv) of Section 5.1 or
clauses (a), (b), (c) or (f) of Section 5.2; or a consensual
Lien shall be created by the Company or any of its
Subsidiaries in violation of Section 5.2(e); or the Company

<PAGE> 53
shall default in its performance of any of its other
obligations under this Agreement or in any other Related
Document and such default in the performance of any such
other obligation shall continue unremedied for a period of
15 days after notice thereof to the Company by the Agent; or

(d) The Company or any of its Subsidiaries shall
default in the payment when due of any principal of or any
interest on any Debt aggregating $10,000,000 or more, or
fail to observe or perform any material term, covenant or
agreement contained in any agreement by which it is bound,
evidencing or securing Debt, in an aggregate amount of
$10,000,000 or more, or any other event shall occur or
condition shall exist under any agreement or instrument
relating to any such Debt, after the giving of any required
notice and for such period of time as would permit the
holder or holders thereof or of any obligations issued
thereunder to accelerate the maturity thereof, unless such
failure or event or condition shall have been cured by the
Company or such Subsidiary, as the case may be, or
effectively waived by such holder or holders; or

(g) The Company or any of its Material Subsidiaries
shall make a general assignment for the benefit of
creditors, or admit in writing its inability to pay or
generally fail to pay its debts as they mature or become
due, or shall petition or apply for the appointment of a
trustee or other custodian, liquidator or receiver of the
Company or any of its Material Subsidiaries, as the case may
be, or any substantial part of its respective assets; or the
Company or any of its Material Subsidiaries shall commence
any case or other proceeding relating to the Company or any
of its Material Subsidiaries under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or the Company or
any of its Material Subsidiaries shall take any action to
authorize or in furtherance of any of the foregoing; or if
any such petition or application shall be filed or any such
case or other proceeding shall be commenced against the
Company or any of its Material Subsidiaries and the Company
or any of its Material Subsidiaries shall indicate its
approval thereof, consent thereto or acquiescence therein or
such petition or application shall not be dismissed on or
before the 60th day after the filing thereof; or

<PAGE> 54
(h) A decree or order is entered appointing any
trustee, custodian, liquidator or receiver or adjudicating
the Company or any of its Material Subsidiaries bankrupt or
insolvent, or approving a petition in any such case or other
proceeding, or a decree or order for relief is entered in
respect of the Company or any of its Material Subsidiaries
in an involuntary case under federal bankruptcy laws as now
or hereafter reconstituted; or

(i) There shall have been asserted against the Company
by a Governmental Person or other Person, a written
complaint, claim or demand asserting any claims or
liabilities, whether accrued, absolute or contingent, based
on or arising from the presence, release or disposal of
Hazardous Materials by the Company or any of its
Subsidiaries that is reasonably likely to be determined
adversely to the Company or any of its Subsidiaries, and the
amount thereof (either individually or in the aggregate)
would, in such event, have a Material Adverse Effect (after
deducting any portion thereof that is reasonably expected to
be paid by other creditworthy Persons); or

(j) The Confirmation Order shall be (i) reversed,
revoked or vacated in whole or in part by any Final Order of
a court of competent jurisdiction, or (ii) modified in a
manner or subjected to a stay that adversely affects the
Company's ability to perform any of its obligations
hereunder, as determined by the Agent in its sole
discretion; or

(k) Central and South West Corporation shall cease
directly or indirectly, to own (or otherwise shall cease,
directly or indirectly, to control the voting rights of) at
least 51% of the Voting Stock of the Company; or

(l) Any "Event of Default" under and as defined in the
Related Documents shall have occurred and be continuing; or

(m) Any regulatory approval as set forth in
Section 3.1(d) or required to consummate the Plan of
Reorganization shall be rescinded if such rescission can not
be appealed by the Company and has a Material Adverse Effect
on the Company; or

(n) Any material provision of this Agreement or any
other Related Document shall at any time cease to be a
valid, binding obligation of the Company enforceable against
the Company, or any such agreement shall be declared to be
null and void, or the validity or enforceability thereof
shall be contested by the Company, or a proceeding shall be
commenced by any Governmental Person having jurisdiction
over the Company seeking to establish the invalidity or
unenforceability thereof, or the Company shall deny that it
has any further liability or obligation under this Agreement

<PAGE> 55
or any other Related Document after delivery thereof or the
Second Mortgage Bond Indenture shall for any reason (other
than pursuant to the terms thereof) cease to create a valid
and perfected second priority Lien on the Company's property
purported to be secured thereby.

SECTION 6.2 Upon an Event of Default. If any Event of
Default shall have occurred and be continuing, (A) the Issuing
Bank shall at the request, or may with the consent, of the
Majority Creditors (i) if the Letter of Credit shall not have
been issued, by notice to the Company, declare the obligation of
the Issuing Bank to issue the Letter of Credit to be terminated,
whereupon the same shall forthwith terminate, or, (ii) if the
Letter of Credit shall have been issued, give notice to the
Trustee pursuant to Section 9.01 of the Indenture that an Event
of Default hereunder has occurred and is continuing and, if a
drawing to pay interest on the Bonds shall have been made under
the Letter of Credit (other than such a drawing in respect of the
payment of interest upon scheduled or accelerated maturity, or
redemption, of the Bonds), and not reimbursed, notify the Trustee
prior to the fifteenth day following such drawing that the
Issuing Bank has not been reimbursed for such drawing and that
interest in the amount of such drawing will not be reinstated,
and (B) the Agent shall at the request, or may with the consent,
of the Majority Creditors (i) declare the Tender Advances, all
interest thereon and all other amounts payable hereunder or in
respect thereof, to be forthwith due and payable, whereupon the
Tender Advances, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment,
demand, protest, or further notice of any kind, all of which are
hereby expressly waived by the Company and (ii) exercise all
rights and remedies in respect of the Second Mortgage Bonds,
Series [ ] pledged as security hereunder; provided, however,
that in the event of the occurrence of an Event of Default
pursuant to subsections (f) or (g) of Section 6.1, (A) the
obligation of the Issuing Bank to issue the Letter of Credit
shall automatically be terminated and (B) the Tender Advances,
all interest thereon and all other amounts payable hereunder or
in respect thereof shall automatically become and be due and
payable, without presentment, demand, protest or any notice of
any kind, all of which are hereby expressly waived by the
Company.

ARTICLE VII
SECURITY

SECTION 7.1 Issuance and Pledge of Bonds. Concurrently
with the execution of this Agreement, the Company shall execute,
issue and deliver to the Agent for its benefit and the ratable
benefit of the Issuing Bank and each Creditor the Second Mortgage
Bonds, Series [ ] as security for the payment of all obligations
of the Company now or hereafter existing under this Agreement in
respect of principal and interest pursuant to and on the terms of

<PAGE> 56
this Agreement and of the Second Mortgage Bond Indenture. The
Company hereby pledges to the Agent and grants to the Agent, in
each case, for its benefit and the ratable benefit of the Issuing
Bank and each Creditor a security interest in the Second Mortgage
Bonds Series [ ] and all interest, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
Bonds and proceeds of any and all of the foregoing. The Second
Mortgage Bond, Series [ ] shall be registered in the name of the
Agent or such nominee or nominees as the Agent shall direct.

SECTION 7.2 Application of Moneys. Any moneys received
by the Agent, the Issuing Bank or any Creditor on account of the
Second Mortgage Bonds, Series [ ] shall be applied as follows:
(a) moneys received on account of principal of the Second
Mortgage Bonds, Series [ ] shall be applied to the payment of
any unpaid principal of the Tender Advances or drawings under the
Letter of Credit then due and owing and (b) moneys received on
account of interest on the Second Mortgage Bonds, Series [ ]
shall be applied to the payment of any accrued and unpaid
interest then due and owing.

SECTION 7.3 Rights of Bondholders. The Agent, as
holder of the Second Mortgage Bonds, Series [ ] for its benefit
and the ratable benefit of the Issuing Bank and the Creditors,
shall have all the rights (including, without limitation, voting
rights) provided to holders of bonds in the Second Mortgage Bond
Indenture and shall have only such rights. Without limiting the
generality of the foregoing, (a) the Second Mortgage Bonds,
Series [ ] may not be sold, assigned, pledged or otherwise
transferred by the Agent (except to a successor Agent appointed
in accordance with Section 8.6 to be held as security as provided
under this Article VII), whether pursuant to the Uniform
Commercial Code after an Event of Default or otherwise except in
connection with any assignment of the Agent's rights and
obligations under this Agreement as provided for herein and
(b) no payment of principal of or interest on the Second Mortgage
Bonds, Series [ ], or any other amount payable thereunder, shall
be demanded or received except if, and to the extent that, the
corresponding payment remains unpaid hereunder. To the extent
that moneys recovered from the Second Mortgage Bonds, Series [ ]
are insufficient to pay in full the amount of principal and
interest and other amounts due hereunder, the Company shall
remain liable for any such deficiency under the terms of this
Agreement.

SECTION 7.4 The Agent's Duties. The powers conferred
on the Agent hereunder are solely to protect its interest in the
collateral, including, without limitation, the Second Mortgage
Bonds, Series [ ], and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any
collateral in its possession and the accounting for moneys
actually received by it hereunder, the Agent shall have no duty
as to any collateral, as to ascertaining or taking action with

<PAGE> 57
respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any collateral, whether or not the
Agent, the Issuing Bank or any Creditor has or is deemed to have
knowledge of such matters, or as to the taking of any necessary
steps to preserve rights against any parties or any other rights
pertaining to any collateral. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any
collateral in its possession if such collateral is accorded
treatment substantially equal to that which the Agent accords its
own property.

ARTICLE VIII
THE AGENT, THE CREDITORS AND THE ISSUING BANK

SECTION 8.1 Authorization and Action. The Issuing Bank
and each Creditor hereby appoint and authorize the Agent to take
such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental
thereto. As to any matters not expressly provided for by this
Agreement (including, without limitation, enforcement or
collection of amounts due under this Agreement), neither the
Issuing Bank nor the Agent shall be required to exercise any
discretion or take any action, but the Agent shall be required to
act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the
Majority Creditors, and such instructions shall be binding upon
all Creditors; provided, however, that neither the Issuing Bank
nor the Agent shall be required to take any action which exposes
the Issuing Bank or the Agent to personal liability or which is
contrary to this Agreement or applicable law. The Agent agrees
to give to the Issuing Bank and each Creditor prompt notice of
each notice given to it by the Company and to give to each
Creditor notice of each notice delivered to it by the Issuing
Bank, in each case pursuant to the terms of this Agreement.

SECTION 8.2 Reliance, Etc. Neither the Agent, the
Issuing Bank nor any of their directors, officers, agents or
employees shall be liable for any action taken or omitted to be
taken by it or them under or in connection with this Agreement or
any other Related Document, except for its or their own gross
negligence or willful misconduct. Without limitation of the
generality of the foregoing, the Agent and the Issuing Bank:
(i) may treat each Creditor as a Creditor hereunder until the
Agent receives written notice of the assignment or transfer of
the rights and obligations of any Creditor hereunder signed by
such Creditor and including the agreement of the assignee or
transferee to be bound hereby as it would have been if it had
been an original Creditor party hereto, in form satisfactory to
the Agent; (ii) may consult with legal counsel (including counsel
for the Company), independent public accountants and other
experts selected by it and shall not be liable for any action
taken or omitted to be taken in good faith by it in accordance

<PAGE> 58
with the advice of such counsel, accountants or experts;
(iii) makes no warranty or representation to any Creditor and
shall not be responsible to any Creditor for any statements,
warranties or representations (whether written or oral) made in
or in connection with this Agreement or any other Related
Document; (iv) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms,
covenants or conditions of this Agreement or any other Related
Document on the part of the Company or any other party or to
inspect the property (including the books and records) of the
Company; (v) shall not be responsible to any Creditor for the due
execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Related
Document or any other instrument or document furnished pursuant
hereto or thereto; and (vi) shall incur no liability under or in
respect of this Agreement or any other Related Document by acting
upon any notice, consent, certificate or other instrument or
writing (which may be by telecopier, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper
party or parties.

SECTION 8.3 The Agent, the Issuing Bank and Affiliates.
The Agent and the Issuing Bank shall have the same rights and
powers under this Agreement as any other Creditor and may
exercise the same as though they were not the Issuing Bank and
the Agent, respectively; and the term "Creditor" or "Creditors"
shall, unless otherwise expressly indicated, include Westpac in
its individual capacity. The Agent, the Issuing Bank and their
respective Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, and generally engage in any
kind of business with, the Company, any of its Subsidiaries and
any Person who may do business with or own securities of the
Company or any such Subsidiary, all as if Westpac was not the
Agent or the Issuing Bank and without any duty to account
therefor to the Creditors.

SECTION 8.4 Bank Credit Decision. Each Creditor
acknowledges that it has, independently and without reliance upon
the Agent, the Issuing Bank or any other Creditor and based on
the financial statements referred to in Section 4.1 and such
other documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this
Agreement. Each Creditor also acknowledges that it will,
independently and without reliance upon the Agent, the Issuing
Bank or any other Creditor and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action
under this Agreement.

SECTION 8.5 Indemnification. The Creditors agree to
indemnify the Agent and the Issuing Bank (to the extent not
reimbursed by the Company), ratably according to the respective
Participation Percentages, from and against any and all
liabilities, obligations, losses, damages, penalties, actions,

<PAGE> 59
judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent or the Issuing Bank in any way
relating to or arising out of this Agreement or any action taken
or omitted by the Agent or the Issuing Bank under this Agreement,
provided that no Creditor shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from
the Agent's or the Issuing Bank's gross negligence or willful
misconduct. Without limitation of the foregoing, each Creditor
agrees to reimburse the Agent and the Issuing Bank promptly upon
demand for its ratable share of any out-of-pocket expenses
(including counsel fees) incurred by the Agent or the Issuing
Bank, as the case may be, in connection with the preparation,
execution, delivery, administration (except normal administrative
costs and fees and expenses of counsel related thereto prior to
an Event of Default), modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of rights or responsibilities
under, this Agreement or any other Related Document, to the
extent that the Agent or the Issuing Bank is not reimbursed for
such expenses by the Company.

SECTION 8.6 Successor Agent. Subject to the
appointment and acceptance of a successor Agent as provided
below, the Agent may resign at any time by giving written notice
thereof to the Issuing Bank, the Creditors and the Company and
may be removed at any time with or without cause by the Issuing
Bank. Upon any such resignation or removal, the Issuing Bank
shall have the right to appoint a successor Agent which shall be
reasonably acceptable to the Majority Creditors. If no successor
Agent shall have been so appointed by the Issuing Bank, and shall
have accepted such appointment, within 30 days after the retiring
Agent's giving of notice of resignation or the Majority
Creditors' removal of the retiring Agent, then the retiring Agent
may, on behalf of the Issuing Bank and the Creditors, appoint a
successor Agent, which shall be a commercial bank organized under
the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least
$250,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this
Article VII shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this
Agreement.

SECTION 8.7 Issuing Bank.

(a) All notices received by the Issuing Bank pursuant
to this Agreement or any other Related Document (other than the
Letter of Credit) shall be promptly delivered to the Agent for

<PAGE> 60
distribution to the Creditors.

ARTICLE IX
MISCELLANEOUS

SECTION 9.1 Amendments, Etc. No amendment or waiver of
any provision of this Agreement nor consent to any departure by
the Company therefrom shall in any event be effective unless the
same shall be in writing and signed by the Majority Creditors,
and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given;
provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by the Issuing Bank and all the
Creditors, do any of the following: (a) waive any of the
conditions specified in Article III, (b) increase the amount of
the Letter of Credit or the Participation Percentage of any
Creditor or subject the Creditors to any additional obligations,
(c) reduce the principal of, or interest on, any Tender Advance
or any fees (other than fees payable solely to the Issuing Bank)
or other amounts payable hereunder, (d) extend the expiration
date of the Letter of Credit (except as provided in Section
2.14(a) hereof) postpone any date fixed for any payment of
principal of, or interest on, any Tender Advance or any fees
(other than fees payable solely to the Issuing Bank) or other
amounts payable hereunder, (e) change the aggregate unpaid
principal amount of any Tender Advance or any other amount
payable hereunder as a result of a draw on the Letter of Credit,
or the number of Creditors, which shall be required for the
Creditors or any of them to take any action hereunder, (f) amend
this Section 9.1, (g) amend this Agreement in a manner intended
to prefer one or more Creditors over any other Creditors, (h)
amend the definition of "Majority Creditors", or (i) release any
collateral, including, without limitation, the Second Mortgage
Bonds, Series [ ]; provided further that no amendment, waiver or
consent shall, unless in writing and signed by the Agent in
addition to the Creditors required above to take such action,
affect the rights or duties of the Agent under this Agreement;
provided further that no amendment, waiver or consent shall,
unless in writing and signed by the Issuing Bank in addition to
the Creditors required above to take such action, affect the
rights and duties of the Issuing Bank under this Agreement.

<PAGE> 61
SECTION 9.2 Notices, Etc. All notices and other
communications provided for hereunder shall be in writing
(including telecopier, telegraphic, telex or cable communication)
and mailed, telecopied, telegraphed, telexed, cabled or
delivered, if to the Company, at its address at, in the case of
deliveries, at its street address at [303 North Oregon Street, El
Paso, Texas 79901], in the case of mailings, to its mailing
address at [P.O. Box 982, El Paso, Texas 79960], in the case of
telex, to telex no. [5435710 (callback 915-543-5707)] and in the
case of telecopier to [915-521-4754], in each case to the
attention of the Secretary; if to the Issuing Bank, at its
address at [335 Madison Avenue, New York, New York 10017-4681],
Attention: [_______ Department], telex no. [_________] and in
the case of telecopier to [212-________]; if to the Agent, at its
address at [335 Madison Avenue, New York, New York 10017-4681],
Attention: [_______ Department], telex no. [_________] and in
the case of telecopier to [212-________]; if to any Creditor, at
its address specified on the signature pages hereof; and if to
the Trustee, in the case of deliveries, at its street address at
[ , ], in the
case of mailings, to its mailing address at P.O. Box _________,
and in the case of telex, to telex no. , in each case to
the attention of [Corporate Trust Department] or, as to each such
entity, at such other place and/or address or number as shall be
designated by such entity in a written notice to the other such
entities. All such notices and communications shall, when
mailed, telecopied, telegraphed, telexed or cabled, be effective
when deposited in the mails, telecopied, delivered to the
telegraph company, confirmed by telex answerback or delivered to
the cable company, respectively, addressed as aforesaid, except
that notices to the Agent or Issuing Bank pursuant to the
provisions of Article II shall not be effective until received by
the Agent or Issuing Bank, as the case may be.

SECTION 9.3 No Waiver; Remedies. No failure on the
part of the Issuing Bank, the Agent or any Creditor to exercise,
and no delay in exercising, any right hereunder or under any
Related Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other
or further exercise thereof or the exercise of any other right.
The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.

SECTION 9.4 Rights of Setoff and Subrogation.

(a) Upon the occurrence and during the continuance of
any Event of Default, the Issuing Bank and each Creditor are
hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and otherwise apply
any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at
any time owing by the Issuing Bank or such Creditor, as the case
may be, to or for the credit or the account of the Company
against any and all of the obligations of the Company now or

<PAGE> 62
hereafter existing under this Agreement, the Second Mortgage Bond
Indenture or the Second Mortgage Bonds, Series [ ], whether
or not the Issuing Bank or such Creditor, as the case may be,
shall have made any demand hereunder or under such other
documents and although such obligations may be contingent or
unmatured.

(b) If any Creditor shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of
setoff, or otherwise, but excluding all proceeds received by
assignments or sales of participations in accordance with
Section 9.4) on account of its participatory interests in any
Tender Advances or other amounts payable by the Company due to a
draw under the Letter of Credit (other than pursuant to Section
2.11 or 2.17) in excess of its ratable share of payments on
account of such Tender Advances or such other amounts obtained by
all the Creditors and the Issuing Bank, such Creditor shall
forthwith purchase from the other Creditors and the Issuing Bank
a participation in the portions of such Tender Advances or such
other amounts, as the case may be, owing to them as shall be
necessary to cause such purchasing Creditor to share the excess
payment ratably with each of them; provided, however, that if all
or any portion of such excess payment is thereafter recovered
from such purchasing Creditor, such purchase from the Issuing
Bank or such Creditor shall be rescinded and the Issuing Bank or
such Creditor shall repay to the purchasing Creditor the purchase
price to the extent of such recovery together with an amount
equal to the Issuing Bank's or such Creditor's ratable share
(according to the proportion of (i) the amount of the Issuing
Bank's or such Creditor's required repayment to (ii) the total
amount so recovered from the purchasing Creditor) of any interest
or other amount paid or payable by the purchasing Creditor in
respect of the total amount so recovered.

<PAGE> 63
Letter of Credit, provided that so long as the Bonds remain
unpaid and held by Persons other than the Company or any
Affiliate thereof, such right of subrogation shall in all
respects be subordinate to the rights of the Trustee and the
holders of the Bonds.

SECTION 9.5 Indemnification. The Company hereby
indemnifies and holds the Agent, the ssuing Bank, each Creditor
and each Participant and each of their Affiliates and their
officers, directors, employers, agents and advisors (each, an
"Indemnified Party") harmless from and against any and all
claims, damages, losses, liabilities, costs or expenses
(including, without limitation, reasonable fees and expenses of
counsel) that may be incurred by or asserted or awarded against
any Indemnified Party (except to the extent any claim, damage,
loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful
misconduct), in each case relating to or arising out of or in
connection with or by reason of:

(a) any inaccuracy or alleged inaccuracy in any
material respect, or any untrue statement or alleged untrue
statement of any material fact, contained in the Preliminary
Official Statement, the Official Statement or any amendment
or supplement to the Official Statement, or by reason of the
omission or alleged omission to state therein a material
fact necessary to make such statements, in the light of the
circumstances under which they were made, not misleading;
provided, however, that, in the case of any action or
proceeding alleging an inaccuracy in a material respect, or
an untrue statement, with respect to information supplied by
and describing the Issuing Bank in the Preliminary Official
Statement or the Official Statement (the "Bank
Information"), (i) indemnification by the Company pursuant
to this Section 9.5(a) shall be limited to the costs and
expenses of the Issuing Bank (including reasonable fees and
expenses of the Issuing Bank's counsel) of defending itself
against such allegation, (ii) if in any such action or
proceeding it is finally determined that the Issuing Bank
Information contained an inaccuracy in a material respect or
an untrue statement, then the Company shall not be required
to indemnify the Issuing Bank pursuant to this Section
9.5(a) for any claims, damages, losses, liabilities, costs
or expenses to the extent caused by such inaccuracy or
untrue statement, and (iii) if any such action or proceeding
shall be settled by the Issuing Bank without there being a
final determination to the effect described in the preceding
clause (ii), unless the Letter of Credit is wrongfully
dishonored and such action or proceeding relates to such
wrongful dishonor, then the Company shall be required to
indemnify the Issuing Bank pursuant to this Section 9.5(a)
for the reasonable costs or expenses incurred in connection

<PAGE> 64
with such action or proceeding prior to such settlement and,
if such action or proceeding is settled with the Company's
consent, for the costs and expenses of such settlement; or

(b) any representation, warranty or certification made
or deemed made in this Agreement by the Company (or any of
its officers), or any certificate furnished to the Agent,
the Issuing Bank or any Creditor pursuant to the provisions
hereof, proving to hve been false or misleading as of the
time made or furnished in any material respect; or

(c) any case or proceeding pursuant to any bankruptcy,
insolvency, reorganization, moratorium or similar law or any
restructuring of the Company; or

(d) any cost or liability under any Environmental Law
arising out of the operation or assets of the Company; or

(e) any event or occurrence set forth in Section 5.4 of
the Loan Agreement; or

(f) the execution and delivery or transfer of, or
wrongful payment or wrongful failure to make payment under,
the Letter of Credit; provided, however, that the Company
shall not be required to indemnify any Indemnified Party
pursuant to this Section 9.5 for any claims, damages,
losses, liabilities, costs or expenses to the extent caused
by (i) any Indemnified Party's willful misconduct or gross
negligence in determining whether a draft or certificate
presented under the Letter of Credit complied with the terms
of the Letter of Credit or (ii) any Indemnified Party's
wrongful failure to make lawful payment under the Letter of
Credit after the presentation to it by the Trustee or a
successor trustee under the Indenture of a draft and
certificate strictly complying with the terms and conditions
of the Letter of Credit.

Nothing in this Section 9.5 is intended to limit the Company's
obligations contained in Article II. Without prejudice to the
survival of any other obligation of the Company hereunder, the
indemnities and obligations of the Company contained in this
Section 9.5 shall survive the payment in full of amounts payable
by the Company pursuant to Article II and the termination of the
Letter of Credit.

SECTION 9.6 Issuing Bank and Creditors. As between the
Issuing Bank, the Agent, and the Creditors on the one hand, and
the Company on the other hand, the Company assumes all risks of
the acts or omissions of the Trustee and any other beneficiary or
transferee of the Letter of Credit with respect to its use of the
Letter of Credit. Neither the Issuing Bank, the Agent, any
Creditor, nor any Participant nor any of their Affiliates and
their officers, directors, employers, agents and advisors shall
be liable or responsible for: (a) the use which may be made of

<PAGE> 65
the Letter of Credit or any acts or omissions of the Trustee and
any other beneficiary or transferee in connection therewith;
(b) the validity, sufficiency or genuineness of documents, or of
any endorsement thereon, even if such documents should prove to
be in any or all respects invalid, insufficient, fraudulent or
forged; (c) payment by the Issuing Bank against presentation of
documents that do not comply with the terms of the Letter of
Credit, including failure of any documents to bear any reference
or adequate reference to the Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment
under the Letter of Credit, except that the Company shall have a
claim against the Issuing Bank, and the Issuing Bank shall be
liable to the Company, to the extent of any direct, but not
consequential, damages suffered by the Company which the Company
proves were caused by (i) the Issuing Bank's willful misconduct
or gross negligence in determining whether a draft or certificate
presented under the Letter of Credit complies with the terms of
the Letter of Credit or (ii) the Issuing Bank's willful failure
to make lawful payment under the Letter of Credit after the
presentation to it by the Trustee or a successor trustee under
the Indenture of a draft and certificate strictly complying with
the terms and conditions of the Letter of Credit. In furtherance
and not in limitation of the foregoing, the Issuing Bank may
accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of
any notice or information to the contrary.

SECTION 9.7 Costs, Expenses and Taxes. The Company
agrees to pay on demand all costs and expenses of the Agent, the
Issuing Bank and each Creditor in connection with the
preparation, execution, delivery, filing, recording,
administration (except normal administrative costs and fees and
expenses of counsel related thereto prior to an Event of
Default), modification and amendment of this Agreement and any
other documents which may be delivered in connection with this
Agreement including transfer of the Letter of Credit in
accordance with its terms and any other documents which may be
delivered in connection with this Agreement, including, without
limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Agent, the Issuing Bank and each Creditor, and
local counsel who may be retained by said counsel, with respect
thereto, with respect to advising the Agent, the Issuing Bank or
any such Creditor as to its rights and responsibilities, or the
perfection or preservation of rights or interests, under this
Agreement, any other Related Document and such other documents
which may be delivered in connection with this Agreement, with
respect to negotiations with the Company or with other creditors
of the Company, any Person controlling the Company or any of the
Company's Subsidiaries arising out of any Event of Default or any
events or circumstances that may give rise to an Event of Default
and with respect to presenting claims in or otherwise
participating in or monitoring any bankruptcy, insolvency or
other similar proceeding involving creditor's rights generally
and any proceeding ancillary thereto or in connection with the

<PAGE> 66
negotiation of any restructuring or "work-out" (whether or not
consummated). The Company further agrees to pay on demand all
costs and expenses (including reasonable counsel fees and
expenses) of the Agent, the Issuing Bank and each Creditor in
connection with (i) the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement,
any other Related Document and any other documents which may be
delivered in connection with this Agreement, including, without
limitation, reasonable counsel fees and expenses in connection
with the enforcement of rights under this Section 9.7, or (ii)
any action or proceeding relating to a court order, injunction,
or other process or decree restraining or seeking to restrain the
Issuing Bank from paying any amount under the Letter of Credit.
In addition, the Company shall pay any and all stamp and other
administrative taxes and fees payable or determined to be payable
in connection with the execution, delivery, filing and recording
of this Agreement, the Letter of Credit, any other Related
Document or any such other documents, and agrees to save the
Agent, the Issuing Bank and each Creditor harmless from and
against any and all liabilities with respect to or resulting from
any delay in paying or omission to pay such taxes and fees.

SECTION 9.8 Purchase Option. (a) The Company
acknowledges and consents to the effectiveness of the Indenture
and the Letter of Credit, and agrees to take any and all actions
as are necessary to ensure that the Issuing Bank shall have the
benefit of the option to purchase Bonds contemplated therein.

(b) The Issuing Bank may with the consent, or shall at
the request, of the Majority Creditors exercise its right as set
forth in Sections 3.1(e), 9.1(e) or 13.3(d) of the Indenture to
purchase the Bonds. Upon any such purchase, the Agent shall
notify all Creditors of their pro rata share (based on their
Participation Percentage) of the purchase price of the Bonds so
purchased and upon receipt of such notice each Creditor will pay
to the Agent, for the benefit of the Issuing Bank, such
Creditor's pro rata share of the purchase price. Any Bonds so
purchased shall be held by the Issuing Bank or the Agent or any
other nominee of the Issuing Bank, on behalf of all Creditors
(the "Holder"). The Holder may with the consent, or shall at the
request, of the Majority Creditors exercise its rights in respect
of the Bonds. Upon the sale, remarketing or refunding of any
Bonds so purchased, the Holder shall pay to the Agent for the
ratable benefit of the Creditors the proceeds of such sale,
remarketing or refunding. Upon receipt of such proceeds by the
Agent, the Agent shall ratably reimburse the Creditors their
share of such proceeds.

SECTION 9.9 Binding Effect; Assignments and
Participations. (a) This Agreement shall become effective when
it shall have been executed by the Company, the Agent, the
Issuing Bank and each Creditor and thereafter shall be binding
upon and inure to the benefit of the Company, the Agent, the
Issuing Bank and each Creditor and their respective successors

<PAGE> 67
and assigns, except that the Company shall not have the right to
assign its rights hereunder or any interest herein without the
prior written consent of the Agent, the Issuing Bank and each
Creditor. The Issuing Bank and each Creditor, with the consent
of the Issuing Bank, which consent shall not be unreasonably
withheld, may assign to any Eligible Institution all or any part
of, or any interest (undivided or divided) in, its rights,
benefits and obligations (other than the Issuing Bank's
obligation to issue the Letter of Credit) under this Agreement,
and to the extent of that assignment such assignee shall have the
same rights, benefits and obligations (other than the Issuing
Bank's obligation to issue the Letter of Credit) against and to
the Company hereunder as it would have had if such assignee were
the Issuing Bank or such Creditor hereunder; provided that any
such assignment shall not be in an amount less than $1,000,000.

(b) The Issuing Bank and each Creditor may sell or
agree to sell, to (i) any Eligible Institution (each such
Eligible Institution being an "Eligible Participant") or (ii) one
or more other Persons (each a "Restricted Participant"; and
together with any Eligible Participants being referred to herein
as a "Participant"), a participation in all or any part of the
Letter of Credit, any Tender Advance or other amounts payable
under this Agreement. Each Participant shall be entitled to the
rights and benefits of the provisions of Section 5.1(a)(vi) with
respect to its participation in the Letter of Credit or such
Tender Advance or such other amounts as if (and the Company shall
be directly obligated to such Participant under such provisions
as if) such Participant were the "Creditor" for purposes of said
Section, but, except as set forth below, shall not have any other
rights or benefits under this Agreement or any other Related
Document (the Participant's rights against the Creditor in
respect of such participation to be those set forth in the
agreements executed by the Creditor in favor of the Participant).
All amounts payable by the Company to the Issuing Bank or any
Creditor under Section 2.11 and 2.17 in respect of the Letter of
Credit or any Tender Advance or other amounts payable under this
Agreement shall be determined as if the Issuing Bank or any
Creditor had not sold or agreed to sell any participations in the
Letter of Credit or any Tender Advance or such other amounts, and
as if the Issuing Bank or any Creditor were maintaining the
Letter of Credit or any Tender Advance or such other amounts in
the same way that it is maintaining the portion of the Letter of
Credit or any Tender Advance or such other amounts in which no
participations have been sold. In the case of an Eligible
Participant, the Issuing Bank or Creditor may agree with such
Participant to take or refrain from taking such action hereunder
or under any Related Document as the Issuing Bank or any
Creditor, may agree with such Participant as set forth in the
agreement executed with such Participant. In no event shall the
Issuing Bank or any Creditor agree with any Restricted
Participant to take or refrain from taking any action hereunder
or under any other Related Document except that the Issuing Bank
or any Creditor may agree with a Restricted Participant that it

<PAGE> 68
will not, without the consent of such Restricted Participant,
agree to (i) extend the date fixed for the payment of principal
of or interest on any Tender Advance or other amounts payable to
such Restricted Participant, (ii) reduce the amount of any such
payment of principal, (iii) reduce the rate at which interest is
payable thereon to a level below the rate at which such
Restricted Participant is entitled to receive such interest,
(iv) alter the rights or obligations of the Company to prepay any
Tender Advance or other amounts payable to such Restricted
Participant or (v) release any collateral, including, without
limitation, the Second Mortgage Bonds, Series [ ].

(d) The Agent and each Creditor agree that, with the
consent of the Company, the Issuing Bank may cause a financial
institution satisfactory to the Company to assume the obligations
of the Issuing Bank under this Agreement and the Letter of Credit
pursuant to such documentation as the Company, the Issuing Bank
and such financial institution may agree, which may provide for
the issuance of a new letter of credit in substitution of the
Letter of Credit on substantially the same terms, whereupon the
Issuing Bank shall be discharged from its obligations hereunder
and under the Letter of Credit.

SECTION 9.10 Further Assurances. The Company agrees
promptly to do such further acts and things, and to execute and
deliver such additional instruments (including, without
limitation, notices), at its own expense, as the Agent, the
Issuing Bank or any Creditor may at any time reasonably request
in order better to insure and confirm the Agent's, the Issuing
Bank's or any Creditor's, as the case may be, rights, powers and
remedies hereunder and under the other Related Documents
(including in order to perfect or protect any pledge or security
interest granted or purported to be granted hereby or to enable
the Agent, the Issuing Bank or any Creditor, as the case may be,
to exercise or enforce its rights and remedies in respect
hereof).

SECTION 9.11 Severability. Any provision of this
Agreement which is prohibited, unenforceable or not authorized in
any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition, unenforceability or
non-authorization without invalidating the remaining provisions
hereof or affecting the validity, enforceability or legality of
such provision in any other jurisdiction.

<PAGE> 69
SECTION 9.12 Headings. Section headings in this
Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other
purpose.

SECTION 9.13 GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICT OF LAW
PRINCIPLES.

SECTION 9.14 Submission to Jurisdiction. THE COMPANY
HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR THE
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT, ANY RELATED DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OR OMISSIONS OF THE
AGENT, THE ISSUING BANK OR ANY CREDITOR IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR
ANY RELATED DOCUMENT. THE COMPANY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.

SECTION 9.15 Waiver of Trial by Jury. EACH OF THE
COMPANY AND THE AGENT, THE ISSUING BANK AND EACH CREDITOR HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER RELATED DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE COMPANY
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF
EACH OTHER RELATED DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK ENTERING INTO
THIS AGREEMENT AND EACH SUCH OTHER RELATED DOCUMENT.

SECTION 9.16 Counterparts. This Agreement may be
executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.

<PAGE> 70
SECTION 9.17 Integration. THIS AGREEMENT REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AS TO THE SUBJECT
MATTER OF THIS AGREEMENT AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES HERETO.

SECTION 9.18 Survival. The obligations of the Company
under Sections 2.11, 2.17, 9.5, 9.14 and 9.15 shall survive the
repayment of the Advances and all amounts payable by the Company
under Section 9.7.

SECTION 9.19 Change in Lending Office. Each Creditor
may from time to time change its lending office at which its
Advances are booked; provided, that the provisions of this
Agreement, including without limitation Section 2.18 hereof,
shall apply to the Advances maintained at each such lending
office.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date first above
written.

EL PASO ELECTRIC COMPANY

By_______________________________
[Title]

Issuing Bank

WESTPAC BANKING CORPORATION

By________________________________
Vice President

Agent

WESTPAC BANKING CORPORATION, as
Agent

By________________________________
Vice President

<PAGE> 71
Participation
Percentage Creditors

__% WESTPAC BANKING CORPORATION

By_________________________________
Vice President

[335 Madison Avenue
New York, New York 10017-4681
Attention: _____________
Department
Telex No. ______________
Telecopier (212) _____________]

__% CANADIAN IMPERIAL BANK OF COMMERCE

By________________________________
Vice President

___________________________________
___________________________________
___________________________________

Telex No. ______________
Telecopier No. _____________]

<PAGE> 72
EXHIBIT A

FORM OF LETTER OF CREDIT

IRREVOCABLE LETTER OF CREDIT

No. [ ]

________________, 199[ ]*

[Name and Address of Trustee]

Attention: Corporate Trust Department

Dear Sirs:

We hereby establish, at the request and for the account
of El Paso Electric Company, a Texas corporation (the "Company"),
in your favor, as Trustee under the Indenture of Trust, dated as
of , 199 (the "Indenture") between Maricopa County,
Arizona Pollution Control Corporation (the "Issuer") and you,
pursuant to which [$59,235,000]** in aggregate principal amount
of the Issuer's Pollution Control Refunding Revenue Bonds (El
Paso Electric Company Palo Verde Project), 19 Series (the
"Bonds"), were issued, our Irrevocable Letter of Credit No.
[________], in the amount of $[ ]*** (as more fully
described below), effective immediately and expiring at the close
of banking business at our 335 Madison Avenue, New York, New York
10017-4681 office on or such later date as we
shall have agreed in writing (the "Stated Termination Date"),
unless earlier terminated in accordance with the terms hereof.

We hereby irrevocably authorize you to draw on us, in
an aggregate amount not to exceed the amount of this Letter of
Credit set forth above and in accordance with the terms and
conditions and subject to the reductions in amount as hereinafter
set forth, (1) in one or more drawings by one or more of your
drafts, drawn on our 335 Madison Avenue, New York, New York
10017-4681 office, payable at sight on a banking day (which shall
be any day other than a Saturday, Sunday or public or bank
holiday or the equivalent for banks generally under the laws of
the State of New York (a "Banking Day")), accompanied by a
completed certificate in substantially the form of Annex B
attached hereto, which drafts and certificates shall be in
writing and signed by you (any such draft accompanied by such

_______________
* To be dated the date of issuance of the Letter of Credit.

** In no event shall the principal amount of the Bonds exceed
$59,235,000.

*** In no event shall the face amount of this Letter of Credit
exceed $64,279,712.

<PAGE> 73
certificate being your "Interest Draft"), an amount not exceeding
$[ ]; (2) in one or more drawings by one or more of your
drafts, drawn on our 335 Madison Avenue, New York, New York
10017-4681 office, payable at sight on a Banking Day, accompanied
by a completed certificate in substantially the form of Annex C
attached hereto, which drafts and certificates shall be in
writing and signed by you (any such draft accompanied by such
certificate being your "Tender Draft"), an aggregate amount not
exceeding $[ ]; (3) in one or more drawings by one or
more of your drafts, drawn on our 335 Madison Avenue, New York,
New York 10017-4681 office, payable at sight on a Banking Day,
accompanied by a completed certificate in substantially the form
of Annex D attached hereto, which drafts and certificates shall
be in writing and signed by you (any such draft accompanied by
such certificate being your "Partial Redemption Draft"), an
aggregate amount not exceeding $[ ]; and (4) in a single
drawing by your draft, drawn on our 335 Madison Avenue, New York,
New York 10017-4681 office, payable at sight on a Banking Day,
accompanied by a completed certificate in substantially the form
of Annex E attached hereto, which draft and certificate shall be
in writing and signed by you (such draft accompanied by such
certificate being your "Final Draft"), an amount not exceeding
$[___________]; provided that in no event will you have a right
to make drawings under this Letter of Credit for the payment of
the principal of, or interest on, Bonds held of record by the
Company (or any Affiliate thereof) or held by the Trustee or the
Tender Agent for the account of the Company; provided further
with respect to any such Bonds that were not so held by or for
the account of the Company (or any Affiliate therof) on the
immediately preceding Record Date (as defined in the Indenture),
you may, in accordance with the Indenture, draw on us by your
Interest Draft under clause (1). Notwithstanding any other
provision in this Letter of Credit, in no event will you have a
right to make a drawing under this Letter of Credit for the
payment of principal of or interest on Bonds in a "Bond Interest
Term" (as defined in the Indenture). This Letter of Credit may
not be drawn upon for the payment of any premium which may be
payable in respect of the Bonds.

Upon our honoring any Interest Draft presented by you
hereunder, the amount of this Letter of Credit and the amounts
available to be drawn by you by any subsequent Interest Draft,
Tender Draft, Partial Redemption Draft or Final Draft shall be
automatically decreased by an amount equal to the amount of such
Interest Draft. If you shall not have received from us within 15
calendar days from the date of such drawing a notice from us to
the effect that we have not been reimbursed for such drawing in
the form of Annex H attached hereto appropriately completed, the
amount of this Letter of Credit and the amounts from time to time
available to be drawn by you by any Interest Draft, Tender Draft,
Partial Redemption Draft or Final Draft shall be automatically
and irrevocably reinstated in the amount of such drawing,
effective the 16th calendar day from the date of such drawing.

<PAGE> 74
The amount of this Letter of Credit shall be decreased
upon our receipt of notice from you, in the form of Annex A
hereto, of a redemption or defeasance of less than all the Bonds
outstanding, by an amount equal to the amount stated in said
notice and the amounts available to be drawn by you by any
subsequent Interest Draft, Tender Draft, Partial Redemption Draft
or Final Draft shall be automatically decreased to the amounts
stated in such notice.

Upon our honoring any Tender Draft or Partial
Redemption Draft, (i) the amount of this Letter of Credit and the
amount available to be drawn by you by any subsequent Tender
Draft, Partial Redemption Draft or Final Draft shall be
automatically decreased by an amount equal to the amount of such
Tender Draft or such Partial Redemption Draft and (ii) the amount
available to be drawn by you by any Interest Draft shall be
automatically decreased by an amount equal to the amount drawn
under such draft in respect of accrued and unpaid interest. In
the case of any Tender Draft, the amount from time to time
available to be drawn by you by any Interest Draft, Tender Draft
or Partial Redemption Draft and Final Draft shall be reinstated
to the extent, but only to the extent, we received reimbursement
from the Company for amounts drawn hereunder by such Tender Draft
and we so notify you in writing.

Upon delivery to us (i) of all Bonds purchased by you
on behalf of or for the account of the Bank pursuant to Section
3.01(e) of the Indenture, Section 9.01(e) of the Indenture, or
Section 13.03(d) of the Indenture with moneys drawn by a Tender
Draft and (ii) a completed and signed certificate substantially
in the form of Annex G, the Letter of Credit shall be reinstated
in an amount equal to the amount of such Tender Draft used to
purchase such Bonds so delivered; provided, however, if at any
time any such purchase shall be rescinded, in whole or in part,
or some or all of the Bonds so purchased must otherwise be
returned by the Bank, in each case, for any reason, the amounts
so reinstated shall not be available to be drawn until and unless
the Company reimburses us for such amounts.

<PAGE> 75
Funds under this Letter of Credit are available to you
against (1) your Interest Draft referring thereon to the number
of this Letter of Credit accompanied by your written and
completed certificate signed by you in substantially the form of
Annex B thereto, (2) your Tender Draft referring thereon to the
number of this Letter of Credit accompanied by your written and
completed certificate signed by you in substantially the form of
Annex C thereto, (3) your Partial Redemption Draft referring
thereon to the number of this Letter of Credit accompanied by
your written and completed certificate signed by you in
substantially the form of Annex D thereto and (4) your Final
Draft referring thereon to the number of this Letter of Credit
accompanied by your written and completed certificate signed by
you in substantially the form of Annex E thereto. Each such
draft and certificate shall be dated the date of its
presentation, and shall be presented at our office located at 335
Madison Avenue, New York, New York 10017-4681, telex no.:
__________ , Attention: Letter of Credit Operations (or at any
other office or number in the City and State of New York which
may be designated by us by written notice delivered to you) on or
before 12:00 Noon (New York City time), or by tested telex (or
telecopier) on or before 10:00 A.M. (New York City time), on the
day (which shall be a Banking Day) of our making funds available
to you hereunder. If we receive any of your drafts and
certificates at such office, all in strict conformity with the
terms and conditions of this Letter of Credit, on or prior to the
termination hereof and in any event not later than 12:00 Noon
(New York City time), or if such drafts and certificates are
presented by tested telex (or telecopier) not later than 10:00
A.M. (New York City time) on the Stated Termination Date, we will
honor the same after presentation thereof on the same day in
accordance with your payment instructions. If we receive any of
your drafts and certificates at such office after 12:00 Noon (New
York City time), or if such drafts and certificates are presented
by tested telex (or telecopier) after 10:00 A.M. (New York City
time), on a Banking Day, we will honor the same after
presentation thereof on the next succeeding Banking Day provided
that such drafts and certificates conform with the terms and
conditions of this Letter of Credit. If requested by you,
payment under this Letter of Credit may be made by wire transfer
of Federal Reserve Bank of New York funds to your account in a
bank on the Federal Reserve wire system or by deposit of same day
funds into a designated account that you maintain with us.

This Letter of Credit shall automatically terminate
upon the earliest of (i) our honoring your Final Draft presented
hereunder, (ii) the date stated in any written notice we receive
from you as the effective date of termination of this Letter of
Credit, (iii) the date that you surrender the Letter of Credit to
us, (iv) the provision of any substitution letter of credit or
credit facility as provided in the Indenture, (v) the date on
which we receive written notice from you that there is no longer
any "Bond Outstanding" within the meaning of the Indenture, and
(vi) the Stated Termination Date.

<PAGE> 76
This Letter of Credit is transferable in its entirety
(but not in part) to any transferee who has succeeded you as
Trustee under the Indenture and may be successively transferred.
Transfer of the available balance under this Letter of Credit to
such transferee shall be effected by the presentation to us of
this Letter of Credit accompanied by a certificate in
substantially the form of Annex I attached hereto, together with
a fee equal to 1/4 of 1% of the "Available Amount". "Available
Amount" means the maximum amount available to be drawn at such
time under the Letter of Credit, the determination of such
maximum amount to assume compliance with all conditions for
drawing and no reduction for (i) any amount drawn by an Interest
Draft (unless such amount is not reinstated under the Letter of
Credit) or (ii) any amount drawn by a Tender Draft or (iii) any
amount not available to be drawn because Bonds are held by or for
the account of the Company (or any Affiliate thereof). Upon such
presentation and payment we shall forthwith transfer the same to
your transferee or, if so requested by your transferee, issue an
irrevocable letter of credit to your transferee with provisions
therein consistent with this Letter of Credit.

This Letter of Credit shall be governed by the laws of
the State of New York, including the Uniform Commercial Code as
in effect in the State of New York. Communications with respect
to this Letter of Credit shall be in writing and shall be
addressed to us at 335 Madison Avenue, New York, New York 10017-
4681, Attention: Letter of Credit Operations, specifically
referring to the number of this Letter of Credit.

Very truly yours,

WESTPAC BANKING CORPORATION

By__________________________
Vice President

<PAGE> 77
Annex A

CERTIFICATE FOR THE REDUCTION OF AMOUNTS AVAILABLE
UNDER IRREVOCABLE LETTER OF CREDIT NO.
DATED , 199

The undersigned, a duly authorized officer of the
undersigned Trustee (the "Trustee"), hereby certifies to Westpac
Banking Corporation (the "Bank"), with reference to Irrevocable
Letter of Credit No. (the "Letter of Credit", the
terms defined therein and not otherwise defined herein being used
herein as therein defined) issued by the Bank in favor of the
Trustee, that:

1. The Trustee is the Trustee under the Indenture for
the holders of the Bonds.

2. The Trustee hereby notifies you that on or prior
to the date hereof $ principal amount of the Bonds
have been redeemed and paid or have been defeased pursuant
to the Indenture.

3. Following the redemption and payment or the
defeasance referred to in paragraph 2. above, the aggregate
principal amount of all of the Bonds Outstanding (as defined
in the Indenture) is $ .

4. The maximum amount of interest, computed in
accordance with the terms and conditions of the Bonds and
the Indenture, which would accrue on the Bonds referred to
in paragraph 3. above in any period of [ days] is
$ . None of the Bonds referred to in paragraph 2.
above were in a Bond Interest Term as of the date such Bonds
were redeemed, paid or defeased pursuant to the Indenture.

5. The maximum amount available to be drawn by the
Trustee under the Letter of Credit by any Interest Draft is
reduced to $ (such amount being equal to the
amount specified in paragraph 4. above) upon receipt by the
Bank of this Certificate.

6. The maximum amount available to be drawn by the
Trustee under the Letter of Credit by any Tender Draft is
reduced to $ (such amount being equal to the sum
of the amounts specified in paragraphs 3. and 4. above) upon
receipt by the Bank of this Certificate.

7. The maximum amount available to be drawn by the
Trustee under the Letter of Credit by any Partial Redemption
Draft is reduced to $ (such amount being equal to
the sum of the amounts specified in paragraphs 3. and 4.
above) upon receipt by the Bank of this Certificate.

<PAGE> 78
8. The amount available to be drawn by the Trustee
under the Letter of Credit by its Final Draft is reduced to
$ (such amount being equal to the sum of the
amounts specified in paragraphs 3. and 4. above) upon
receipt by the Bank of this Certificate.

9. The amount of the Letter of Credit is reduced to
$ (such amount being equal to the sum of the
amounts specified in paragraph 8. above) upon receipt by the
Bank of this Certificate.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate this day of , 19 .

________________________,
as Trustee

By_______________________
[Name and Title]

<PAGE> 79
Annex B

CERTIFICATE FOR DRAWING IN CONNECTION WITH
THE PAYMENT OF UP TO [ DAYS'] INTEREST ON
THE MARICOPA COUNTY, ARIZONA POLLUTION
CONTROL CORPORATION'S POLLUTION CONTROL
REFUNDING REVENUE BONDS (EL PASO ELECTRIC
COMPANY PALO VERDE PROJECT), 199 SERIES
(THE "BONDS")

Irrevocable Letter of Credit No.

1. The Trustee is the Trustee under the Indenture for
the holders of the Bonds.

2. The Trustee is making a drawing under the Letter
of Credit with respect to a payment of days'
interest on the Bonds, which payment is due on the date on
which this Certificate and the Interest Draft it accompanies
are being presented to the Bank. None of the Bonds in
respect of which the drawing is being made (i) were, on the
Record Date (as defined in the Indenture) held of record by
the Company (or any Affiliate thereof) or held by the
Trustee or the Tender Agent for the account of the Company
or (ii) were on such day in a Bond Interest Term.

3. The amount of the Interest Draft accompanying this
Certificate is equal to $ . It was computed in
compliance with the terms and conditions of the Bonds and
the Indenture and does not include any amount of interest on
the Bonds which is included in any Interest Draft, Tender
Draft, Partial Redemption Draft or Final Draft presented on
or prior to the date of this Certificate and does not exceed
the amount available to be drawn by the Trustee under the
Letter of Credit.

<PAGE> 80
IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the day of ,
19 .

________________________,
as Trustee

By______________________
[Name and Title]

<PAGE> 81
Annex C

CERTIFICATE FOR DRAWING IN CONNECTION WITH
THE PAYMENT OF PRINCIPAL OF AND UP TO [___
DAYS'] INTEREST ON THE MARICOPA COUNTY,
ARIZONA POLLUTION CONTROL CORPORATION'S
POLLUTION CONTROL REFUNDING REVENUE BONDS (EL
PASO ELECTRIC COMPANY PALO VERDE PROJECT),
199 SERIES (THE "BONDS"), IN SUPPORT OF
A TENDER (OTHER THAN A MANDATORY TENDER UPON
TERMINATION OR EXPIRATION OF THE LETTER OF
CREDIT)

Irrevocable Letter of Credit No.

1. The Trustee is the Trustee under the Indenture for
the holders of the Bonds.

2. The Trustee is making a drawing under the Letter
of Credit with respect to the payment, upon a tender of all
or less than all of the Bonds which are Outstanding (as
defined in the Indenture), of (i) the unpaid principal
amount of the Bonds to be purchased either (a) as a result
of a tender pursuant to the terms of Section 2.02 of the
Indenture (other than Section 2.02(6) of the Indenture) or
(b) as a result of a purchase of Bonds by the Bank pursuant
to Section 3.01(e) of the Indenture, Section 9.01(e) of the
Indenture or Section 13.03(d) of the Indenture (in each
case, other than Bonds held of record by the Company (or any
Affiliate thereof) or held by the Trustee or the Tender
Agent for the account of the Company in each case, and (ii)
the amount of interest (not exceeding [____ days'] interest)
accrued and unpaid thereon from the Interest Accrual Date
(as defined in the Indenture) immediately preceding the date
of purchase through the day immediately preceding the date
of purchase thereof, which payment is due on the date on
which this Certificate and the Tender Draft it accompanies
are being presented to the Bank.

3. The amount of the Tender Draft accompanying this
Certificate is equal to the sum of (i) $ being
drawn in respect of the payment of unpaid principal of Bonds
(other than Bonds held of record by the Company (or any
Affiliate thereof) or held by the Trustee or the Tender
Agent for the account of the Company) to be purchased as a

<PAGE> 82
result of a tender of the type described above and (ii)
$ being drawn in respect of the payment of accrued
and unpaid interest on such Bonds and does not include any
amount of interest which is included in any Interest Draft,
Tender Draft other than the Tender Draft accompanying this
certificate, Partial Redemption Draft or Final Draft
presented on or prior to the date of this Certificate.

4. The amount of the Tender Draft accompanying this
Certificate was computed in compliance with the terms and
conditions of the Bonds and the Indenture and does not
exceed the amount available to be drawn by the Trustee under
the Letter of credit.

5. None of the Bonds in respect of which a drawing is
being made are in a Bond Interest Term.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the day of , 19 .

________________________,
as Trustee

By_______________________
[Name and Title]

<PAGE> 83
Annex D

CERTIFICATE FOR DRAWING IN CONNECTION WITH
THE PAYMENT OF PRINCIPAL OF AND UP TO [
DAYS'] INTEREST ON THE MARICOPA COUNTY,
ARIZONA POLLUTION CONTROL CORPORATION'S
POLLUTION CONTROL REFUNDING REVENUE BONDS (EL
PASO ELECTRIC COMPANY PALO VERDE PROJECT),
199 SERIES (THE "BONDS"), UPON PARTIAL
REDEMPTION

Irrevocable Letter of Credit No.

1. The Trustee is the Trustee under the
Indenture for the holders of the Bonds.

2. The Trustee is making a drawing under
the Letter of Credit with respect to the payment, upon
redemption of less than all of the Bonds which are
Outstanding (as defined in the Indenture), of the
unpaid principal amount of and up to [ days'] accrued
and unpaid interest to the redemption date on, Bonds to
be redeemed pursuant to the terms of Section 3.01 of
the Indenture (other than Bonds purchased by the Tender
Agent or the Trustee on behalf of or for the account of
the Bank, pursuant to Section 3.01(e) of the Indenture,
Section 9.01(e) of the Indenture or Section 13.03(d) of
the Indenture and held by or on behalf of or for the
account of the Bank or its nominee and Bonds held of
record by the Company (or any Affiliate thereof) or
held by the Trustee or Tender Agent for the account of
the Company). [The direction from the Company with
respect to redemption was received by us no more than
60 days prior to the date of this certificate. We have
evidence, as of the date of this certificate, from two
of Moody's Investors Services, Inc., Standard & Poor's
Corporation and Duff & Phelps, Inc. that the Company's
First Mortgage Bonds, Series [ ], and Second Mortgage
Bonds, Series [ ], each have a rating of BBB- or
better (or equivalent) and such Bonds have not, as of
the date of this certificate, been placed on any watch
list.]*

__________________
* To be used in case of an optional redemption.

<PAGE> 84
3. The amount of the Partial Redemption
Draft accompanying this Certificate is equal to the sum
of (i) $ being drawn in respect of the payment
of unpaid principal of Bonds (other than Bonds
purchased by the Trustee on behalf of or for the
account of the Bank, pursuant to Section 3.01(e) of the
Indenture, Section 9.01(e) of the Indenture or Section
13.03(d) of the Indenture and then held by or on behalf
of or for the account of the Bank or its nominee and
Bonds held of record by the Company (or any Affiliate
thereof) or held by the Trustee or Tender Agent for the
account of the Company to be redeemed, and (ii) $
being drawn in respect of the payment of accrued and
unpaid interest on such Bonds and does not include any
amount of interest which is included in any Interest
Draft, Tender Draft, Partial Redemption Draft or Final
Draft presented on or prior to the date of this
Certificate.

4. The amount of the Partial Redemption
Draft accompanying this Certificate was computed in
accordance with the terms and conditions of the Bonds
and the Indenture and does not exceed the amount
available to be drawn under the Letter of Credit.

5. This Certificate and the Partial
Redemption Draft it accompanies are dated, and are
being presented to the Bank on, the date on which the
unpaid principal amount of and accrued and unpaid
interest on, Bonds to be redeemed are due and payable
under the Indenture upon redemption of less than all of
the Bonds which are Outstanding (as defined in the
Indenture).

6. None of the Bonds in respect of which a
drawing is being made are in a Bond Interest Term.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the day of , 19 .

____________________,
as Trustee

By_______________________
[Name and Title]

<PAGE> 85
Annex E

CERTIFICATE FOR DRAWING IN CONNECTION WITH
THE PAYMENT OF PRINCIPAL OF AND UP TO
DAYS' INTEREST ON THE MARICOPA COUNTY,
ARIZONA POLLUTION CONTROL CORPORATION'S
POLLUTION CONTROL REFUNDING REVENUE BONDS (EL
PASO ELECTRIC COMPANY PALO VERDE PROJECT),
199 SERIES (THE "BONDS"), UPON STATED OR
ACCELERATED MATURITY OR OPTIONAL OR MANDATORY
REDEMPTION AS A WHOLE OR MANDATORY TENDER
UPON TERMINATION OR EXPIRATION OF THE LETTER
OF CREDIT

Irrevocable Letter of Credit No.

The undersigned, a duly authorized officer of the
undersigned Trustee (the "Trustee"), hereby certifies to Westpac
Banking Corporation (the "Bank"), with reference to Irrevocable
Letter of Credit No. (the "Letter of Credit", the terms
defined therein and not otherwise defined herein being used
herein as therein defined) issued by the Bank in favor of the
Trustee, that:

1. The Trustee is the Trustee under the
Indenture for the holders of the Bonds.

2. The Trustee is making a drawing under
the Letter of Credit (a) with respect to the payment,
either at stated maturity, upon acceleration, as a
result of a redemption in full pursuant to Section 3.01
of the Indenture [(the direction from the Company and
notice to the Bondholders with respect to redemption
was received and given by us no more than 60 days prior
to the date of this Certificate and we had evidence, as
of the date such notice was given by us to the
Bondholders, from two of Moody's Investors Services,
Inc., Standard & Poor's Corporation and Duff & Phelps,
Inc. that the Company's First Mortgage Bonds, Series
[ ], and Second Mortgage Bonds, Series [ ], each had
a rating of BBB- or better (or equivalent) and such
Bonds had not, as of such date, been placed on any
watch list)]* or (b) as a result of a mandatory tender
upon termination or expiration of the Letter of Credit
or substitution of another credit facility for the
Letter of Credit as contemplated by Section 2.02(6) of
the Indenture, of the unpaid principal amount of and up
to days' accrued and unpaid interest on, all of the
Bonds which are Outstanding (as defined in the
Indenture) (other than Bonds held of record by the
Company (or any Affiliate thereof) or held by the

_________________
* To be used in the case of an optional redemption.

<PAGE> 86
Trustee or the Tender Agent for the account of the
Company), which payment is due on the date on which
this Certificate and the Final Draft it accompanies are
being presented to the Bank.

3. The amount of the Final Draft
accompanying this Certificate is equal to the sum of
(i) $ being drawn in respect of the payment of
unpaid principal of Bonds (other than Bonds held of
record by the Company (or any Affiliate thereof) or
held by the Trustee or the Tender Agent for the account
of the Company) and (ii) $ being drawn in
respect of the payment of accrued and unpaid interest
on such Bonds and does not include any amount of
interest on the Bonds which is included in any Interest
Draft, Tender Draft or Partial Redemption Draft
presented on or prior to the date of this Certificate.

4. The amount of the Final Draft
accompanying this Certificate was computed in
compliance with the terms and conditions of the Bonds
and the Indenture and does not exceed the amount
available to be drawn by the Trustee under the Letter
of Credit.

5. None of the Bonds in respect of which
the drawing is being made are in a Bond Interest Term.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the day of ,
19 .

_________________________,
as Trustee

By________________________
[Name and Title]

<PAGE> 87
Annex F

CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS
AVAILABLE UNDER IRREVOCABLE LETTER OF CREDIT
NO. , DATED , 199__

1. The Trustee is the Trustee under the
Indenture for the holders of the Bonds.

2. The amount of $ paid to you today by
the Trustee on behalf of the Company is a payment made
pursuant to Section 2.9(b) of the Letter of Credit and
Reimbursement Agreement dated as of , 19 (the
"Reimbursement Agreement") between the Company and the Bank
for amounts drawn under the Letter of Credit and represents
unreimbursed drawings under Tender Draft[s] dated
[ ].

3. The amount referred to in paragraph 2.
represents the amount of Bonds which were purchased with
proceeds of a draw on the Letter of Credit by a Tender Draft
dated , 19 . $ represents amounts paid in
respect of accrued interest on Bonds and $
represents amounts paid in respect of unpaid principal on
Bonds.

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate this day of , 19 .

_______________________,
as Trustee

By______________________
[Name and Title]

<PAGE> 88
Annex G

CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS
AVAILABLE UNDER IRREVOCABLE LETTER OF CREDIT
NO. , DATED ,
199___

1. The Trustee is the Trustee under the
Indenture for the holders of the Bonds.

2. The Tender Agent has delivered to the Bank
all Bonds purchased pursuant to Section 3.01(e) of the
Indenture, Section 9.01(e) of the Indenture, or Section
13.03(d) of the Indenture, as the case may be, with
proceeds of a draw on the Letter of Credit by Tender
Draft dated , 19 .

3. The amount of such Tender Draft used to
purchase such Bonds which were not remarketed is
$ .

IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate this day of , 19 .

___________________________,
as Trustee

By__________________________
[Name and Title]

<PAGE> 89
Annex H

NOTICE THAT TRUSTEE'S RIGHT TO DRAW UNDER THE
LETTER OF CREDIT BY AN INTEREST DRAFT HAS NOT
BEEN REINSTATED

[Name and Address of Trustee]

Attention: Corporate Trust Department

Irrevocable Letter of Credit No.

Dear Sirs:

You are hereby advised that El Paso Electric Company
has not reimbursed us in an amount equal to the amount drawn by
you under the Interest Draft dated , 19 .
Therefore, the amount of our Irrevocable Letter of Credit No.
and the amounts available to be drawn by you by an
Interest Draft, Tender Draft, Partial Redemption Draft or Final
Draft (which available amounts have been decreased by an amount
equal to the amount of such Interest Draft) shall not be
reinstated in the amount of such Interest Draft.

WESTPAC BANKING
CORPORATION

_________________________
__

<PAGE> 90
Annex I

INSTRUCTION TO TRANSFER

__________________, 19__

Westpac Banking Corporation
335 Madison Avenue
New York, New York 10017-4681

Attention: Letter of Credit Operations

Re: Irrevocable Letter of Credit No.

Gentlemen:

For value received, the undersigned beneficiary hereby
irrevocably transfers to:

_______________________________
[Name of Transferee]

_______________________________
[Address]

The Letter of Credit is returned herewith and in
accordance therewith we ask that this transfer be effective and
that you transfer the Letter of Credit to our transferee

<PAGE> 91
or that, if so requested by the transferee, you issue a new
irrevocable letter of credit in favor of the transferee with
provisions consistent with the Letter of Credit.

Very truly yours,

__________________________,
as predecessor Trustee

By_________________________
[Name and Title]

<PAGE> 1

EXHIBIT B-9.1
-------------

ANNEX A

The following agreements as the same shall have been
amended to date:

1. ANPP Kyrene 500/230 KV Switchyard Interconnection
Agreement, effective on or about July 24, 1980.

2. Palo Verde-North Gila Line ANPP High Voltage
Switchyard Interconnection Agreement, effective on or about
June 7, 1984.

3. ANPP Transmission Project-Westwing Switchyard
Amended Interconnection Agreement, effective on or about
August 14, 1986.

4. All other agreements of any type or nature entered
into by SRP as operating agent relating to the ANPP High Voltage
Switchyard and/or the Valley Transmission System.

<PAGE>
<PAGE> 2
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
3091 3091 General Electric Company MA/Purch & Sale Renewed
Parts & Factory Repair
Work 08/06/82 12/31/99 60

3092 3092 Combustion Engineering MSSS Parts & Repair-
Mstr Purch Agmt w/POs
(Like Old) 08/14/81 01/01/99 60

PV81 3881 Decision Data Computer Corp. Equipment Maintenance 07/01/80 12/31/86 60

4443 Salt River Project Switchyard Intercon-
nection Agreement 08/20/81 01/01/99 60

PV81 4692 Harris Corp. Purchase/Installation
and Maintenance 04/20/92 01/01/99 60

PV81 4857 Genicom Corp. Printer Maintenance 01/01/81 01/01/99 60

PV82 C082 6077 Arthur Anderson and Company Disclosure of SIMS
Documentation 02/16/82 12/31/99 60

C082 6341 EPRI Software License for
VIPRE 07/09/82 01/01/99 60

6357 Bechtel Power Corporation Nuclear Incident
Assistance Agreement 11/18/81 12/31/99 60

6584 Applications Software Maintenance on ASI/
Inquiry Software 09/01/85 08/31/84 60

PV83 7542 XES, Inc. Equiment Maintenance 09/01/83 12/31/84 60

</TABLE>

<PAGE> 3
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
C083 7735 University Computing Co. UCC Operating Software 05/24/83 12/31/99 60

PV83 7926 CGA Computer Associates,Inc. Multiple Systems
Integrity License
Agreement 07/15/83 12/31/99 60

PV84 8980 Kaibab Industries Lubricants & Related
Services (Purch. Dept.
Admin.) 12/10/84 12/31/93 60

PV84 9028 Doble Engineering Equipment Lines &
Services 05/01/84 04/30/87 60

PV84 10021 10021 General Electric Company Master Purchase & Sale
Agreement for Renewal
Parts 05/10/84 12/31/99 60

PV84 10022 Hewlett Packard Maintenance for
Laboratory Gas
Chromatograph 01/01/84 10/31/88 60

PV72 10108 S.M. Stoller Corporation Fuel & Other Consulting
Services 08/18/72 01/01/01 60

PV85 10233 Impell Corporation FRATS Software License 08/19/86 01/01/99 60

PV85 10236 General Electric Info.Service Computer Services 06/01/85 06/01/88 60

PV85 10326 Expert-Ease Systems, Inc. Software License
Agreement 10/01/85 12/31/99 60

</TABLE>

<PAGE> 4
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV87 10370 10370 Combustion Engineering Perform Field Services 08/24/87 08/23/90 60

PV89 10421 The Bristol Group Ltd. Software License
Agreement 12/12/89 01/01/99 60

PV85 10433 General Data Systems Add Funding 11/01/85 10/30/86 60

PV85 10433 General Data Systems Software Maintenance
Agreement 11/01/85 10/31/86 60

PV86 10506 10506 TVA Sales Agreement for
Future Purchase from TVA 01/09/86 01/01/01 60

PV86 10582 Marriott Corp. Cafeteria and Vending
Services 08/21/86 07/25/88 60

PV86 10603 Nursefinders of Phoenix Health Services 11/01/86 10/31/87 60

PV86 10615 10615 NUS Corporation Consulting Services -
Master Agreement (New) 01/01/87 12/31/89 60

PV86 10620 Vance & Associates License Agreement 10/01/86 90/30/87 60

PV86 10624 Gould CSD Software License
Agreement 10/01/86 12/21/99 60

PV86 10649 Gould CSD Software License
Agreement 04/16/87 12/31/99 60

PV86 10661 10661 Chemical Waste Management,Inc Hazardous Waste Disposal
-Master Agreement 02/26/87 02/25/90 60

</TABLE>

<PAGE> 5
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV86 10662 10662 Combustion Engineering Professional Support
Services - Master
Agreement (New) 01/01/87 12/31/88 60

PV86 10676 Waste Management Group Procurement of RADMAN
Package 03/30/87 01/01/99 60

PV87 10678 Data General Software Support 01/14/87 01/01/99 60

PV86 10712 10712 Combustion Engineering Engineering Services
- Master Contract 07/01/87 06/30/90 60

PV86 10750 Oracle Corporation Software License Agrmt
- Part of CE RRACS
(PV85-10497 CO2) 07/21/87 01/01/01 60

PV86 10755 10755 Impell Corporation Unfunded Engineering
Master Agreement
- w/funded JO 02/01/87 01/31/90 60

PV86 10765 10765 Westinghouse Electric Corp. Off-Site Equipment
Repair - Adminstration
by Purchasing 11/03/86 11/02/89 60

PV86 10768 Moore Busienss Forms Maintenance 03/30/87 03/29/88 60

PV87 10850 10850 Westinghouse Electric Corp. NSSS Repair Services
- Master Agreement (Old) 02/01/87 01/31/90 60

PV87 10877 BRS Leasing Office Equipment
Maintenance 01/01/87 12/1/87 60

</TABLE>

<PAGE> 6
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV87 10896 Utility Data Institute Database Access & Use
of UDI Database for 1987 04/13/87 04/12/88 60

PV87 10913 Studsvik Nuclear Analysis
Computer Code Pkg 10/15/87 01/01/99 60

PV87 10956 Western Hydrovac Vactor Services/Cleaning
Clarifiers, Tanks,
Sumps, Pits, Vau 06/25/87 05/31/88 60

PV87 10978 10978 General Electric Company MA Technical Assistance
Services 09/15/88 09/14/91 60

0187 10990 Research Instruments Associa Liquid Scintillator
Maintenance/Emergency
Services 07/15/87 07/14/88 60

PV87 10994 Interfacts, Inc. Software License
Agreement for PC
Software 06/30/87 12/31/99 60

PV87 15476 ITT Courier Terminal Systems On-Site Maintenance
of PC Cards & Terminals 04/01/87 03/31/88 60

15698 Data General Maintenance 01/06/88 01/01/99 60

PV88 17480 Intergraph Corporation Equipment Services 12/01/88 01//01/99 60

PV88 17857 Expert-Ease Systems, Inc. Software Service
Agreement 10/21/88 01/01/99 60

PV88 17909 NPA Systems of California RMCS Maintenance 10/01/88 01/01/99 60

</TABLE>

<PAGE> 7
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV89 18870 Canberra Industries, Inc. Series 90-Equip.
Maintenance 10/27/88 01/01/99 60

PV89 18892 Wologong Group, Inc. End User License 04/07/89 01/01/99 60

PV89 19200 Relational Technology(INGRES) Sun Network License
Agreement 10/24/89 01/01/99 60

C089 19210 Engineering Design Automation Software License
Agreement 01/01/89 01/01/99 60

PV88 19245 Nuclear Data, Inc. Essential Software
Services for ND9900
System 06/19/89 01/01/99 60

PV89 19421 The Bristol Group Ltd. Software License
Agreement 12/12/89 01/01/99 60

PV89 19422 The Bristol Group Ltd. Software Support 09/01/89 01/01/99 60

PV89 19459 Encore Computer Corp. Simulator Maintenance 10/15/89 01/01/99 60

C089 19468 Parametric Technology License Agreement/
Pro Engineer 11/30/89 01/01/99 60

PV89 19775 The Technology Group, Inc. EZHANG License Agreement 11/30/89 01/01/99 60

C089 19777 Modular Computer Systems Compute Hardware
Maintenance 11/01/89 05/31/91 60

PV89 19784 Swanson Service License Agreement/ANSYS 01/01/90 12/31/90 60

</TABLE>

<PAGE> 8
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV90 19785 Georgia Tech Research GTRC GT STRUDL
End-User License
Agreement 12/12/89 01/01/99 60

PV89 19786 R.T. Bradshaw Software License
Agreement/Ductnet/Flow 12/05/89 01/01/99 60

PV90 19787 CHAM Of North America Software License
Agreement and Training/
Phoenics 12/01/89 12/31/90 60

PV89 19789 Sampson Technical Consultants License Agreement/STC
Thermal 01/01/89 12/31/99 60

PV89 19790 Mitchell & Gauthier
Associates Licensing Agreement/
ACSL/OPTDES 01/01/90 01/01/99 60

PV89 MSD14 19791 Impell Corporation Shake Computer Program 04/01/90 / / 60

PV89 19864 Computer Engineering Services PV Simulator RMS
Hardware Maintenance
Services 11/15/89 10/30/90 60

PV89 19918 Design Synthesis, Inc. Program Licensing
Agreement 01/01/90 01/01/99 60

OV89 19952 IMSL, Inc. Software License
Agreement 12/31/89 01/01/99 60

</TABLE>

<PAGE> 9
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV87 20033 Rollins Environmental
Services Transportation and/or
Disposal of Hazardous
Waste 07/01/87 06/30/90 60

PV87 20152 Southern California Edison SCE Personnel
Assistance Agreement 09/01/88 01/01/01 60

PV87 20160 20160 Black & Veatch Engrs. &
Architects Provide Professional
Support Servs (MA,
Loaned Servant & Svs. 10/15/87 10/14/90 60

PV87 20185 Dionex Corporation Repair/Maint. of Lab
Testing Equipment 03/01/88 03/01/89 60

PV87 20237 Scientific Ecology Group Inc. Off-Site Disposal
Services 01/01/88 12/31/93 60

PV88 20290 Environmental Systems Company Transportation and/or
Disposal of Hazardous
Waste 07/08/87 07/08/90 60

PV88 20292 Ground Improvement Techniques Non-Disclosure Agmt
Reiunderwater Hypalon
& Slope Repair 01/22/88 12/31/99 60

PV89 20314 Excel Mobile Wash Clean Unit 2 Transformer
Bus 02/18/89 12/31/89 60

PV88 20317 Comgraphix, Inc. Micrographics Equipment
Maintenance 01/01/88 12/31/88 60

</TABLE>

<PAGE> 10
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV88 20318 Hughes-Calihan Corporation Microfilm Equipment
Maintenance 01/01/88 12/31/88 60

PV88 20324 Freeze Technology Intl. Inc. Provide Freeze Plugging
Service 05/16/88 06/01/89 60

PV88 20326 Chambers, Inc. Fire Detection Sys Test
(I&C Personnel) &
Spare Parts 03/01/88 05/31/88 60

PV88 20335 Tennelec, Inc. Add Funding and Extend
Term 01/01/88 12/31/88 60

PV88 20336 20336 General Electric Company Master Agreement to
Provide Field Eng.
Services 04/10/89 04/09/92 60

PV88 10770 20416 Wackenhut Advanced Tech Corp. Issue new Contract for
Unit 1 Batch E Fab
Surveillance 06/01/88 03/21/89 60

PV88 20439 U.S. Pollution Control, Inc. Initiate a Contract
Based on APS Master
Agreement HWID02 07/25/88 07/24/90 60

PV88 10662 20466 Combustion Engineering Professional Support
Personnel (W.Kuntz) 07/15/88 09/01/88 60

PV88 10755 20484 Impell Corporation Establish a Contract
Between Licensing &
Impell Corp. 07/01/88 12/14/89 60

</TABLE>

<PAGE> 11
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV88 20516 20516 Williams Power Corporation Penetration Seals/
Thermolagging & Fire-
proofing Services 03/15/89 03/14/92 60

PV88 20519 20519 TRI International, Inc. Establish a Contract
Services Between
Licensing & TRI 08/15/88 08/15/89 60

PV88 20520 CEP Provide Offsite
Bioassay Services for
PVNGS Unit 1,2,3 03/01/89 02/29/92 60

PV88 20521 20521 Lamber, MacGill,Thomas, Inc. Inservice Inspection
Request for Proposal 12/15/88 12/14/91 60

PV88 20552 Impell Corporation Loaned Contract Labor
to Support the CWD
Project 10/14/88 10/31/91 60

PV88 20556 Interstate Nuclear Services Protective Clothing
Service 04/01/89 03/31/92 60

PV88 20559 20559 Earth Technology Corporation Soil Testing 01/01/89 03/14/92 60

PV88 20588 ABR Express Systems Freight Pick-up &
Delivery (1989 PO
#10801393) 07/01/89 06/30/90 60

PV88 20601 Sargent & Lundy Engineers Professional Support
Services 11/14/88 03/01/89 60

</TABLE>

<PAGE> 12
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV88 20640 S.L. Power Consultants Tech Services Contract
for J.M. Moreland 01/01/89 12/31/89 60

PV89 10978 20652 General Electric Company Provide Technical
Assistance for GE
Turbine Inspection 03/31/89 06/20/89 60

PV89 20669 NUS Corporation/EI Division Labor Contract 01/01/89 12/31/89 60

PV89 20686 Infotech Corporation Licensing Department
Review/Licensing
Excellence 03/01/89 06/30/89 60

PV89 20559 20704 Earth Technology Corporation Soil Testing 04/01/89 12/31/90 60

PV89 20751 Chemical Waste Management,Inc Handle, Trans,
Dispose Waste Material 04/24/89 04/24/91 60

PV89 20770 20770 Stone & Webster Engineering Master Agreement w/
Contracts Consulting
Services 01/01/90 12/31/92 60

PV89 20773 Varian Associates Unit 3 Chemistry's
Atomic Absorporation
Instrument 05/15/89 05/14/90 60

PV89 20801 Combustion Engineering Provide Contract Labor 06/05/89 07/31/89 60

PV89 20814 Analytical & Precision
Balance Service Balances in
ALL Chemistry Labs 06/16/89 06/16/90 60

</TABLE>

<PAGE> 13
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV89 20843 Bechtel Construction Inc. Contract Labor-Craft,
Professional & Non-
Manual 03/01/90 02/28/93 60

PV89 20852 TAD Energy Services Provide Staff
Augmentation for
8 License Training
Inst 08/21/89 02/22/91 60

PV89 20917 20917 Conam Nuclear, Inc. Eddy Current
Examination Services 12/15/89 12/14/92 60

PV89 20922 20922 Chem-Nuclear Systems, Inc. Provide Transportation
and Interim On-Site
Storage (Primary) 11/01/89 12/31/93 60

PV89 20923 20923 Pacific Nuclear Sys (PacNuc) Provide Radioactive
Waste Solidification/
Demineralization 04/01/90 12/31/93 60

PV89 20924 20924 Pacific Nuclear Sys (PacNuc) Provide Transportaion
and Interim On-Site
Storage (Back-up) 11/01/89 06/30/93 60

PV89 20933 Cornoyer Hedric Architects Architectural Design
Services for Admin-
istration Complex 02/12/90 10/01/92 60

PV89 20950 General Services, Inc. Engineering Support 09/18/89 06/30/90 60

</TABLE>

<PAGE> 14
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV89 20955 United Engineers &
Constructors Audits/Surveys and/or
Inspection/
Surveillances 11/01/89 10/31/92 60
PV89 20957 Management Analysis Company Audits/Surveys and/or
Inspection/
Surveillances 11/01/89 10/31/92 60

PV89 20968 20968 Tenera Establish Master for
Consulting Services
Support Personnel 11/01/89 10/31/92 60

PV89 20974 Sunstate Equipment
Corporation Tire repair service
for heavy equipment 04/16/90 04/15/91 60

PV89 21411 20983 PCI Energy Services Machining/Grinding
Service (Kuma 21411) 06/01/91 12/31/92 60

PV89 20990 Arizona Elevator, Inc. Elevator Services 05/01/90 12/31/92 60

PV89 21004 21004 Chem-Nuclear Systems, Inc. Provide Rad Waste
Solidification/
Demineralization Svc. 01/01/90 12/31/93 60

PV89 21007 Waste Management of Phoenix Provide Waste Removal
Service 01/01/90 12/31/93 60

PV89 20922 21020 Chem-Nuclear Systems, Inc. Provide Transportation
and Interim on-site
Storage 11/01/89 12/31/93 60

</TABLE>

<PAGE> 15
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV89 20132 Architectural Interiors, Inc. Architectural Designer,
Hold Pending Review
of Other Co. 12/04/89 12/31/89 60

PV89 21051 Ronn Lavitt, Ph.D. Personnel Psychological
Screening 06/01/90 05/31/92 60

PV90 20860 21072 United Energy Services Corp. Dean Valdez, and Gene
Hinsley 01/04/90 02/28/90 60

PV90 21073 Airnetics Engineering Co. Perform Preventive
Maintenance 01/20/90 12/31/90 60

PV90 21075 First Approach Provide Staff
Augmentation for Sims
Data Management &
Control 01/02/90 06/30/90 60

PV90 21077 United Energy Services Corp. Contract Labor request
for 2 Contract Sr.
Tech. Specialists 12/15/89 12/31/90 60

PV90 21411 21081 ITI Movats, Inc. Testing/Surveillance
of Motor Operated
Valves 01/01/90 12/31/91 60

PV90 21085 Furmanite America, Inc. Perform safety and
safety relief valve
set point testing 03/01/90 12/31/91 60

PV90 21089 Bechtel Power Corporation Engineering Partnering
Agreement 02/12/90 02/12/95 60

</TABLE>

<PAGE> 16
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV90 21090 Sargent & Lundy Engineers Engineering Partnering
Agreement 02/12/90 02/12/95 60

PV90 21093 Panasonic Industrial Co. Maintain Service
Contract 01/01/90 12/31/93 60

PV90 21097 Ace Mobile Wash New Ownership
R. Olson, (Ref.
PV88-20610) 01/13/90 04/30/91 60

PV90 21112 SMC ESMI (R. Morrison) PANDA Code Completion 01/29/90 06/02/90 60

PV90 21120 21120 Alimak Elevator Company Tendon Stressing
Platform Services
Agreement 04/01/90 03/31/92 60

PV90 21130 Sola Electric Maintain Service
Contract 03/15/90 03/31/92 60

PV90 21147 Western Hydrovac Remove Sand &
Anthracite for
Gravity Filter cell #9 03/02/90 12/31/90 60

PV90 21151 Atlan-Tech, Inc. Perform Irradiations
of PVNGS TLDS's 05/01/90 04/30/91 60

PV90 20924 21162 Pacific Nuclear Sys (PacNuc) To Provide
Transportation and
Interim on-site
Storage 04/02/90 12/31/94 60

</TABLE>

<PAGE> 17
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV90 21164 Devtech Associates, Inc. Hardware Installation
Engineer 03/19/90 06/19/90 60

PV90 21165 PRC Engineering Systems,Inc. Develop & Implement
Vendor Tech Manuel 11/19/90 12/31/93 60

PV90 21169 21169 Paul Monroe-Enertech Perform Snubber
Testing 12/01/90 11/30/93 60

PV90 21170 21170 ABB Power & T&D Company,Inc. Consulting Services/
Master Agreement 04/09/90 04/09/93 60

PV90 21182 Bartlett Nuclear Contract Labor for RP
& Chemistry 10/01/90 09/30/93 60

PV90 21186 Thunderbird Fire & Safety Halon Systems
Functional Test 05/07/90 05/06/93 60

PV90 21187 Fire Master Corporation Fire Extinguisher Refill
& Service 07/01/90 06/30/93 60

PV91 21192 The Atlantic Group Professional & Technical
(Awarded see CSR 9031
for RFP) 08/01/91 07/31/94 60

PV90 21192 The Atlantic Group Letter of Intent/
Initial Funding 08/01/91 08/31/94 60

PV90 21202 Nichols Institute Analyze and Confirm
Urine Specimens 05/23/90 05/31/92 60

</TABLE>

<PAGE> 18
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV90 21205 Protection Technology, Inc. Nuclear/Support
Security Services 06/01/90 05/31/92 60

PV90 21218 21218 Bunney's Inc. Cooling Tower
Maintenance 01/01/91 12/31/93 60

PV90 21218 21218 Bunney's Inc. Perform Cooling Tower
Fan Rework 08/26/91 12/31/91

PV90 21225 Consolidated Building
Services Janitorial Services
for PVNGS 10/01/90 09/20/93 60

PV91 21238 21238 Babcock Wilcox Nuclear Srvs. Purchase of Equipment
and Parts 10/07/91 10/06/94 60

PV90 21252 MPR Associates, Inc. Consulting Services
W/Contracts & J.O.'s 05/01/90 12/31/90 60

PV90 21252 21262 MPR Associates, Inc. Cooper-Bessermer
Owner's Group Project
Manager 05/01/90 12/31/90 60

PV90 21266 Southern Technical Services Office Facilities and
Support Staff 04/01/90 12/31/90 60

PV90 21281 McKenzie Laboratories Water Quality Analysis 10/26/90 11/30/92 60

PV90 21285 Desert Security Modification & Repair 09/09/90 12/31/91 60

</TABLE>

<PAGE> 19
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV90 21288 Nuclear Data Systems No Cost P.O. to
Execute Software
License Agreement 08/23/90 12/1/99 60

PV90 21291 Nuclear Data Services, Inc. Participation in Nuclear
Data Services Database 08/01/90 12/31/90 60

PV90 21292 Johson Yokogawa Corporation WRF C&MS Replacement
Project (Awarded see
RFP CSR9689) 06/01/91 01/01/99 60

PV89 10662 21294 Combustion Engineering MOV Program Engineering
Support 06/04/90 12/31/90 60

PV90 20923 21299 Pacific Nuclear Sys (PacNuc) Provide Radioactive
Waste Solidification/
Deminearlization Svc 04/01/90 06/14/93 60

PV90 21303 21303 BCP Technical Services Provide Engineering
Services 01/15/91 01/14/94 60

PV90 21306 J.G. Keppler Off-Site Safety Review
Committe Consultant 03/22/90 12/31/90 60

PV90 21307 S. Levy, Inc. Off-Site Safety Review
Committe Consultant 03/22/90 12/31/90 60

PV90 21308 21308 Babcock Wilcox Nuclear Srvs. Outage Support Services
- PP CSR 9746 01/01/91 12/31/93 60

</TABLE>

<PAGE> 20
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV90 21313 J.D. Shiffer Off-Site Safety Review
Committee Consultant
(Tract T&C) 03/22/90 12/31/90 60

PV90 21316 21316 Failure Prevention, Inc. Miscellaneous Consulting
Services w/Contract 07/24/90 07/23/93 60

PV90 10622 21318 Combustion Engineering Material Management
of Info. Support,
Provide Lee Troistel 09/01/90 12/31/91 60

PV90 21321 Friedman Recycling Sale of Recyclable
Paper 09/01/90 09/01/93 60

PV90 21323 Hartford Steam Boiler Vibration Diag.
Computer Program
-See Contract
No. 21086 08/29/90 01/01/01 60

PV90 21328 S3 Technologies Second Simulator
Procurement 12/01/90 03/30/93 60

PV90 21340 S&L Contracting Company Railroad Track
Maintenance 09/15/90 09/15/93 60

PV90 21341 Sundt Products Fiberglass Repair 10/01/90 10/01/93 60

PV90 21344 PMH Primary Care, Inc. Physician and MRO
Services for PVNGS 09/24/90 12/31/91 60

</TABLE>

<PAGE> 21
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV90 21350 NUS Corporation Review Licensing
Correspondence Against
the UFSAR 02/01/91 06/30/91 60

PV90 21353 21353 MQS Inspection, Inc. Miscellaneous Non-
Destructive Examinations 01/01/91 12/31/94 60

PV90 21354 Nuclear Regulatory Commission Dummy Contract for
Contracts database 01/01/90 12/31/99 60

PV90 21355 E&O Committee Dummy Contract for
Database 01/01/90 12/31/99 60

PV90 21356 INPO Dummy Contract for
Database 01/01/90 12/31/99 60

PV90 21357 Outside Review Board Dummy Contract for
Database 01/01/90 12/31/99 60

PV90 21360 L.A. Dept. of Water & Power Dummy Contract for
Database 01/01/90 12/31/99 60

PV90 21361 AZ Radiation Regulatory
Agency Dummy Contract for
Database 01/01/90 12/31/99 60

PV90 21363 Combustion Engineering Incore Detectors 09/01/90 09/01/91 60

PV90 21365 Johnson & Higgins Insurance Dummy Contract for
Database 01/01/90 12/31/99 60

</TABLE>

<PAGE> 22
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV90 21367 Boise Cascade Office Products Inventory & Restock
Supply Cabinet Service 10/15/90 12/31/91 60

PV90 21372 21372 Remote Systems, Inc. Technical Support
for Refueling Equipment 02/01/91 02/01/94 60

PV90 21373 Data Enterprises Code Software 10/18/90 12/31/99 60

PV90 21383 Naumann Hobb Material
Handling Lease/Buy Three Clark
Order Pickers 11/01/90 11/01/93 60

PV90 21384 Sun Microsystems Sun UNIX Hardware/
Software Maintenance
(Bid Award) 01/01/91 12/31/93 60

PV90 21386 21386 The Atlantic Group Pump, Valve, Actuator
and Control Rework 11/01/90 07/31/90 60

PV90 21391 Tenera Development of Instr.
Setpoint Software
(see PP csr10303) 05/15/91 12/31/92 60

PV91 21392 CEP Radiological Services
(Awarded see CSR 10318
for RFP) 08/01/91 08/01/94 60

PV90 21393 Infotech Corporation Develop 89 Series
Procedures 10/01/90 03/15/91 60

PV90 21394 Combustion Engineering Regional Expediting
Services 01/01/92 12/31/92 60
</TABLE>

<PAGE> 23
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV90 21397 21397 Pro-Tech Services Provide Procedure
Upgrade Service 11/01/90 12/30/94 60

PV90 21406 Advance Technologies Software License
Agreement 11/01/90 01/01/99 60

PV90 21407 S3 Technologies Provide Services,
Materials draft escrow
terms 09/04/91 03/21/96 60

PV90 21411 21411 Westinghouse Electric Corp. Engineering Services 03/20/91 03/19/94 60

PV90 21308 21414 Babcock Wilcox Nuclear Srvs. Provide Outage
Management Team 11/01/90 12/03/93 60

PV90 21420 DCA, Inc. Upgrade and Support
for DCA Communication
Interface Equip. 12/15/90 12/15/91 60

PV90 21421 Emtac Electrical, Inc. Security and Safeguards
Related Electrical Work 05/01/91 04/30/94 60

PV90 21425 EPRI MOV Performance
Prediction Prg. -
Admin Tracking PO
Only 07/01/90 12/31/95 60

PV90 21433 Sundt Corp. Evap. Pond #1 Re-Line
(Award see csr 10484
for RFP) 10/01/91 01/31/92 60

PV90 21435 BBN Software Products Software License
Agreement 12/05/90 12/05/91 60

</TABLE>

<PAGE> 24
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV90 21437 Software Partner/32 Tape Management System
for VAX 11/28/90 12/31/99 60

PV90 21438 Infincom, Inc. Provide Turnkey Copy
Center & Mail Room
Services 03/01/91 12/31/93 60

PV90 10662 21440 Combustion Engineering Provide Staff
Augmentation to QA 12/10/90 12/31/91 60

PV90 21448 E.D. Smith Paving Place Asphalt Road
and Sidewalk at U-3 12/17/90 12/31/90 60

PV90 21450 Combustion Engineering Controlled Program
License Agreement-NPS-2 11/20/90 01/01/99 60

PV90 21453 BW/IP International Provide Technical
Assistance 01/01/91 12/31/91 60

PV91 20860 21455 United Energy Services Corp. Evaluation of RX Eng.
(Awarded see csr 10702
for RFP) 07/15/91 08/06/91 60

PV91 21461 Combustion Engineering Engineering Partnership
Agreement 01/11/91 01/11/96 60

PV91 21473 Access Company Tracking for Contractors
on PO's 01/01/91 01/01/99 60

PV91 21480 Southern California Edison Parts Transfer
Agreement 01/01/01 01/01/92 60

PV91 20751 21486 Chemical Waste Management,Inc Hazardous Waste
Handling, transport,
and disposal 01/01/91 12/31/91 60

</TABLE>

<PAGE> 25
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV91 21490 Ace Mobile Wash On-Site Vehicle
& Trolley Stop Washing
Service (see CSR 11094) 05/01/91 04/30/93 60

PV91 21499 Perkin-Elmer Corporation Preventive Maint.
Service for U-1 01/01/91 01/31/92 60

PV91 21500 Perkin-Elmer Corporation Preventive Maintenance
for U-2 Chemistry's AA 01/01/91 01/31/92 60

PV91 21507 AZ Corp. Commission Dummy Contract Number
for Badging 01/01/91 01/01/99 60

PV91 21513 Sunland Computer Services Computer Equipment
Maintenance (see CSR
11413 for RFP) 08/19/91 07/31/94 60

PV91 20860 21516 United Energy Services Corp. Develop and Teach NPRDS 02/18/91 03/31/91 60

PV91 21519 Arizona State University Participation in ASU
Interactive Instruc-
tional TV Program 01/02/91 08/30/91 60

PV91 21524 Performance Plus Provide One Week
Training Seminar 02/25/91 03/02/91 60

PV91 21525 B&W Legal Review of
Confidentiality
Agreement for
Concurrance 04/01/91 10/01/91 60

</TABLE>

<PAGE> 26
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV91 21539 Intergraph Corporation Volume Purchase
Agreement 05/30/91 04/30/94 60

PV91 21540 Vector Engineering, Inc. Cosulant Service for
Evap-Pond #1 (Awarded
see csr11635) 05/02/91 07/01/92 60

PV91 21545 Digital Equipment Corporation Loan of Products
Agreement 03/20/91 05/20/91 60

PV91 21555 Mettler Repair U-1 Chem Auto-
titrator & Maintenance
in U-2&3 Chem. 03/28/91 04/05/91 60

PV91 21556 Performance/Safety/
Reliability Consultants to asst
PVNGS w/INPO Evaluation 03/25/91 05/15/91 60

PV91 21557 BFA/Aquila Banyan Software Support
(RFP csr12661) 05/15/91 05/1494 60

PV91 21569 Sanderson Ford, Inc. Personnel Transportation
awarded see csr 11823
for RFP 09/01/91 12/31/95 60

PV91 21571 21571 Graver Water Division Field Services 04/08/91 04/07/94 60

PV91 21577 21577 BW/IP International Field Services 04/19/91 04/18/94 60

PV91 21579 Precision Visuals Purchase of PV WAVE
Software 07/19/91 01/01/99 60

</TABLE>

<PAGE> 27
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV91 21582 Signal Technology Purchase of N Power
Software 06/01/91 01/01/99 60

PV91 21585 Nutech Engineering Six Month
Evaluation Period
for Outside Hire
Contract 04/29/91 07/01/92 60

PV91 21410 21590 Allied Technology Provide DAW/Volume
Reduction Service 04/05/91 12/31/93 60

PV91 21603 AZ Time Recorder Maintenance of "Time
Recorder" 03/14/91 03/13/92 60

PV91 21607 Information International On-Site Leonardo
Training 06/17/91 06/21/92 60

PV91 21608 Integrated Management
Services Develop NPE CATS
program, manage SBO
Project 04/01/91 09/30/91 60

PV91 10615 21609 NUS Corporation Provability Risk
Assessment PRA
Workstation 03/01/91 12/31/91 60

PV91 21612 Orbisphere Labs 05/16/91 05/15/94 60

PV91 21615 Ramendra P. Roy Provide Consulting
Services 05/31/91 05/31/92 60

PV91 21620 21620 TRI International Consulting Services 05/22/91 05/22/94 60

PV91 21621 NPS Engr. & Tech. Services Qc Contract Labor
Personnel 10/01/91 09/30/93 50

</TABLE>

<PAGE> 28
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV91 20968 21627 Tenera EQ Consulting Services 06/03/91 07/31/91 60

PV91 21634 S3 Technologies Secrecy Agreement 06/01/91 12/31/93 60

PV91 21636 AVTV Renew Annual Exchange
Maintenance for 8mm Tape 07/01/91 06/30/92 60

PV91 21637 SYBASE Software License
Agreement 06/06/91 01/01/99 60

PV91 21644 Digital Tools Purchase of Autoplan
Software 08/01/91 01/01/99 60

PV91 21647 Bell Atlantic Tricon Leasing Lease/Purchase
Agreement for
Warehouse Carousels 01/01/91 01/01/92 60

PV91 21650 Arizona State Univesity Monitoring and Testing
of Porcelain
Contamination 07/01/91 06/30/93 60

PV91 21652 MDM Engineering Corporation Engineering Support
(see RFP CSR 12456) 08/05/91 12/31/92 60

PV91 21660 S3 Technologies Secrecy Agreement
Between APS, SE and
GP (Butch Colby) 06/01/91 12/31/93 60

PV91 21665 Fuel Quality Service Supply portable
Equipment and Filter
Diesel Fuel in 06/27/91 03/01/92 60

</TABLE>

<PAGE> 29
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV91 21672 Bentley Systems Beta Test Site
Agreement/Microstation
SPARC Version 4.0 07/15/91 01/15/92 60

PV91 21679 PRC Engineering Systems,Inc. Engineering Study for
Proposed IEEE Study 07/08/91 08/08/91 60

PV91 21687 United Energy Services Corp. Site Labor Contract 08/01/91 07/31/94 60

PV91 21688 IDS/SAIC Site Labor Contract 08/01/91 07/31/94 60

PV91 21695 Corporate Research Systems Background Screening 09/01/91 08/31/93 60

PV91 21696 Crystal Bottled Water Forklift Trianing and
Site Access for Water
Delivery 08/01/91 12/31/91 60

PV91 21699 Gundle Lining Systems Liner portion of
Evaporation Pond Reline 08/01/91 05/01/92 60

PV91 21704 Integrated Management
Services Development of a Model
Design Change 08/05/91 12/30/91 60

PV91 21706 Western Technologies, Inc. Soil, Asphalt, &
Concrete Testing Service 07/31/91 09/30/91 60

PV91 21708 Barrington Consulting Non Disclosure Agreement 08/05/91 09/05/91 60

PV91 21711 Western Technologies, Inc. Concrete Cylinder and
Grout Cube Testing 08/01/91 12/31/91 60

</TABLE>

<PAGE> 30
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV91 21716 Accurate Corrosion Control Palo Verde Cathodic
Protection Survey 10/21/91 04/30/92 60

PV91 21723 OI Analytical Extend Warranty of
Units &,2,&3 TOC
Analyzers Model 700 08/22/91 12/31/91 60

PV91 21728 21728 Arco Enterprises, Inc. Field Services 10/01/91 12/31/91 60

PV91 21730 Arizona State University Participation in ASU
Instructional TV
Program 08/31/91 08/30/92 60

PV91 21731 Liebert New Maintenance
Requirement of UPS
Equipment 09/18/91 09/17/92 60

PV91 21735 Halliburton (NUS) EPRI Agreement 07/26/91 08/01/92 60

PV91 21739 Western Hydrovac Vacuum Drilling 09/09/91 10/01/91 60

PV91 21745 Impell Corporation Provide Licensing
Service on Various
Regulatory issues 09/30/91 12/31/91 60

PV91 21749 Office Designs Design Services 01/01/91 12/31/92 60

PV91 21755 Field Lining Systems HPDE Welding Services 09/18/91 09/20/91 60

</TABLE>

<PAGE> 31
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV92 21759 Halliburton (NUS) Upgrades to the
ERFDADS (See CSR
12938 for RFP) 02/02/92 04/03/94 60

PV91 21760 Progressive Roofing Roof Removal and Repair
(Awarded see csr 12949
for RFP) 12/03/91 12/03/95 60

PV91 21770 Focus Learning Corporation RP Tech. Job & Task
Analysis (See CSR
13005 for RFP) 03/02/92 07/31/92 60

PV91 21775 Training Concepts Qa Program Implemen-
tation Training 10/01/91 03/31/92 60

PV91 21169 21777 Paul Monroe-Enertech Perform Hydraulic
Snubber Functional
Testing 10/06/91 12/31/91 60

PV91 21780 Request for Proposal Clerical Contract
Labor Personnel / / / / 60

PV91 21792 Southern California Edison Ongoing Personnel
Assistance from APS
to SCE 10/01/91 01/01/99 60

PV91 21794 Nuclear Oversight Committee Dummy Contract for
Tracking 10/01/91 12/31/99 60

PV91 21801 Cleveland Technical Perform Diesel Fuel
Oil Analysis 12/01/91 12/01/92 60

</TABLE>

<PAGE> 32
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV91 21804 EPRI Tailored Collaboration
Agreement 11/01/91 12/31/93 60

PV91 21807 Sargent & Lundy Engineers License Agreement-R-
Base Software 11/01/91 01/01/99 60

PV92 21810 Poison Lab Analyze and confirm
Specimens per 10CFR
Part 26 11/01/91 11/01/92 60

PV91 21308 21813 Babcock Wilcox Nuclear Srvs. Design and install
Access Hole in U2 (See
CSR 13261 RFP) 11/29/91 12/31/91 60

PV91 21818 Westinghouse Electric Corp. Rapid EIDMS Access
Agreement 11/18/91 01/01/99 60

PV91 21819 American Telephone &Telegraph Batteries at Units
1,2, and 3 11/30/91 12/31/93 60

PV91 21819 American Telephone &Telegraph Funding for Letter
of Intent 12/04/91 12/01/93 60

PV91 21835 21821 Western Technologies, Inc. Provide Testing Per
APS Spec/ASTM Standard 01/01/92 12/31/92 55

PV91 21825 PRC Engineering Services Corp Vendor Engineering
Services 12/01/91 12/31/92 60

PV91 21826 United Energy Services Corp. Consulting Services/
Letter of Intent 01/20/92 12/31/92 60

</TABLE>

<PAGE> 33
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV91 21826 United Energy Services Corp. Balance of funding
for SLD's/SFD's
Project 01/20/92 12/31/92 60

PV91 10750 21828 Oracle Corporation Provide License of
Pro-Fortran &
Transaction
Processing 11/20/91 01/01/99 60

PV91 10750 21829 Oracle Corporation Oracle S/W + Annual
Maintenance 11/22/91 01/01/99 60

PV91 21831 Beckman & Associates Consulting Services 01/06/92 01/06/95 60

PV91 21833 Tenera EQ Program Enhancement
Plan (See CSR 13325
for RFP) 02/01/92 02/01/94 60

PV91 21834 Digital Equipment Corporation Annual Maintenance 12/01/91 12/01/92 60

PV91 21835 21835 Western Technologies, Inc. Miscellaneous Testing
Services 01/01/92 12/31/95 55

PV91 21838 Arizona Surplus Material Surplus and Disposal
Service 01/13/92 12/31/92 60

PV91 21841 Halliburton (NUS) RAPID 01/01/92 12/31/92 50

PV91 21842 Request for Proposal Perform Underwater
Inspection 04/01/92 03/31/95 30

</TABLE>

<PAGE> 34
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV91 10370 21843 Combustion Engineering Modify OPS Modules
(See CSR 12816) 03/28/91 09/30/92 60

PV91 21847 Infotech Corporation Training Development
and Training 01/02/92 06/30/92 60

PV91 21308 21849 Babcock Wilcox Nuclear Srvs. SG Emergency Access
Hole Design & Install
(see CSR13417 RFP) 01/16/92 05/01/92 60

PV91 21852 University of Arizona Technical Training &
Consulting Support
Services 01/01/92 12/31/92 50

PV91 41118 21863 NUS Corporation Comprehensive
Laboratory
Analysis Services 01/01/92 01/30/93 60

PV92 21871 Computational Systems, Inc. Software Maintenance 11/30/91 05/31/93 60

PV92 21872 Walsh Brothers Systems Furniture
Assembly and
Installation 01/02/92 12/31/92 55

PV92 21873 Boise Cascade Corporation Furniture Repair 01/02/92 12/31/92 60

PV92 21875 Bentley Systems Beta Test Site
Agreement 02/01/92 06/01/92 60

PV92 MSD09 21876 First Approach Software Quality
Assurance/Development
& Maintenance 01/02/92 07/31/92 60

PV92 21879 Service America Corporation Vending Machine
Services-Admin Complex 01/08/92 01/07/95 55

</TABLE>

<PAGE> 35
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV92 21308 21880 Babcock Wilcox Nuclear Srvs. U1 Inconel-600 project.
(see CSR 13528 for RFP) 01/20/92 05/31/92 60

PV92 21884 Analytical & Precision
Balance Maintain and
Repair Laboratory
Balances 01/01/92 01/01/93 60

PV92 21886 Lift-It Mfg. Co., Inc. Train Personnel on the
usage of Synthetic
Slings 01/16/92 01/18/92 60

PV92 44074 21887 Digital Equipment Corporation OPS Computer Equip
Maintenance 10/10/91 09/30/92 60

PV92 21728 21888 Arco Enterprises, Inc. Sandlasting U-1 Turbine
Parts 02/10/92 05/31/92 60

PV92 21889 21889 Heflin Industries Liner Repair &
Inspection Services 03/01/92 02/28/95 60

PV92 21890 General Physics Corporation Evaluate and Revise
Training Courses 01/15/92 03/31/92 60

PV92 21892 Beckman & Associates Commitment Action
Tracking System Program 01/13/92 12/31/92 60

PV92 21896 Mahr Business Products Service Brother
Typewriters & Equip. 01/01/92 12/31/92 04

PV92 21897 Typewriter Service of Arizona Maintenance & Repair
of IBM & Xerox Type-
writers 01/01/92 12/31/92 04

</TABLE>

<PAGE> 36
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV92 21900 Dionex Corporation Provide Service for
Unit Chemistry's
Ion Chromatographs 03/01/92 03/01/93 03

PV92 21902 Beckman & Associates Project Mgmt. Services 01/20/92 02/14/92 60

PV92 21904 PRC Engineering Systems, Inc. Recruiting Contract
w/6 months Evaluation
Period 01/01/92 12/31/92 60

PV92 21905 Operations Technology, Inc. Procurement and
Maintenance for
TCCURVE 01/27/92 01/31/93 60

PV92 21907 Request for Proposal Provide Portable
Demineralizer Service 02/01/92 02/01/95 41

PV92 21910 Teledyne Engineering Services Install and Calibrate
Strain Gauges 02/05/92 04/30/92 55

PV92 21911 MOS Inc. Additional Equipment
Qualification Training 11/01/91 12/31/92 60

PV92 21914 Request for Proposal Maintenance of a
Medical Assistance
Program 01/31/92 01/31/93 20

PV92 21169 21918 Paul Monroe-Enertech Perform Hydraulic
Snubber Testing 02/01/92 12/31/92 60

PV92 21921 Solar Turbines Letter of Intent for
Caterpillar 07/30/91 08/31/91 60

</TABLE>

<PAGE> 37
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV92 21921 Solar Turbines Revision to Allow
Solar to Procure
the Generator 07/30/92 08/01/92 60

PV92 21921 Solar Turbines Furnish and Install Gas
Turbine Generators 08/31/92 11/30/93 60

PV92 21923 Request for Proposal Containment Tendons
Inservice Testing 07/27/92 01/20/93 29

PV92 21926 NUS Corporation Secrecy Agreement 07/02/92 07/01/93 60

PV92 21929 Request for Proposal Develop a System
Performance Monitoring
and Trending Prg. 04/15/92 12/31/92 41

PV90 21169 21930 Paul Monroe-Enertech Provide Status 4120
Snubber Test Machine
Training 02/14/92 04/30/92 55

PV92 21411 21931 ITI Movats Inc. Provide Manpower for
Diagnostic Testing 02/18/92 05/18/92 50

PV92 21933 Request for Proposal Present PVNGS Plant
Systems Coourse To STA s 05/18/92 08/07/92 20

PV92 21935 Outdoor Systems Billboards at
intersection of
Wintersburg Road 04/17/92 04/16/92 60

</TABLE>

<PAGE> 38
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV92 21937 United Energy Service Corp. Perform Evaluation of
PVNGS Emergency
Operation Procedures 03/16/92 03/20/92 50

PV92 21939 Eaton Corp/Cutler-Hammer Provide Technical
Assistance 02/19/92 02/29/92 55

PV92 21941 Carousel Intergrated Systems Maintence for Warehouse
parts Carousel (first
year) 03/01/92 02/28/93 50

PV92 21942 INPO INPO Loaned Position Kent
Hamlin 10/15/91 10/30/93 60

PV92 21944 Infotech Corporation Software Error & Activity
Tracking systems(SEATS) 02/24/92 07/31/92 60

PV92 21947 ARA/CORY Refreshment, Inc. Provide Refreshment
Services at New Admin
Complex 02/15/92 02/14/95 50

PV92 21959 Request for Proposal Root Cause of Failure 04/15/92 09/15/92 26

PV92 21960 Request for Proposal RFP To Construct
Training Center 03/02/92 04/30/92 29

PV92 21963 Request for Proposal Fire Protection JCO
Assessment 04/20/92 05/22/92 40

PV92 21964 Halliburton (NUS) 10CFR20 Upgrades (Awarded
see crs13873 for RFP) 09/30/92 07/30/94 60

</TABLE>

<PAGE> 39
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV92 21972 Comgraphix, Inc. Nun-Disclosure Agreement-
Tracking Only 03/17/92 12/31/93 60

PV92 21975 Cove s Edge, Inc. Consulting Service 05/01/92 12/31/92 60

PV92 21977 Concurrent Computer Corp. Maint Agreement for 5500
RTU System is U3 05/01/92 04/30/93 60
PV92 21979 Request for Proposal Background Screening 04/20/92 01/01/99 20

PV92 21981 Lambert, MacGill, Thomas,
Inc. Erosion/Corrosion 01/01/92 12/31/92 03

PV92 21983 RIX Company, Inc. Seal Around Conduit
installation Bldg. A 03/30/92 04/06/92 55

PV92 21984 Paul Monroe-Enertech Technical Asssistance 03/20/92 03/25/92 20

PV92 21985 Westinghouse Electric Corp. Proprietary Information
Agreement 02/24/92 01/01/99 60

PV92 10370 22011 Combustion Engineering Handholes in Steam
Generator 05/30/92 12/31/93 60

PV92 22014 Lucas Mgmt. System Inc. Corporate License
Evaluation of Artemis
Prestige for Windows 06/15/92 12/31/92 60

PV92 22019 I-Corp, International Consulting Services for
Evaluation of Leak
Detection 04/22/92 04/29/92 60

</TABLE>

<PAGE> 40
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV92 22028 Optilan Maintence and Upgrades 09/01/91 12/31/92 60

PV92 22039 American Telephone &
Telegraph Funding for Letter of
Intent 06/01/92 12/01/93 60

PV92 22043 American Fence Rework Isolation Zone
Inner and Outer Fence
and Gates 07/16/92 08/15/92 60

PV92 22058 Bunney s Inc. Unit 3 Structural
Repairs 09/15/92 12/15/92 60

PV92 22060 Babcock Wilcox Nuclear Srvs. Steam Generator Tube
Removal U2R4 02/01/93 07/31/93 60

PV92 22064 Genral Electric Company Refurbishment of
Switchgear 123 E-NAN-SO3
Cubicle AA 10/01/92 11/30/94 60

PV92 22064 Gneral Electric Company Extend Letter of Intent
to Initiate Design
Drawings 12/15/92 01/01/93 60

PV92 20336 22064 General Electric Company Design Fabricate &
Install Switchgear
Cubicle 01/04/93 12/15/94 60

PV92 22068 Maricopa Comm College Instruct GOC Classes on
District Site 08/24/92 06/15/93 60

</TABLE>

<PAGE> 41
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV92 22090 Conam Nuclear, Inc. ECT of the Unit 3 Upper
Pressurizer I-600
Nozzles 09/15/92 10/15/92 60

PV92 21308 22091 Babcock Wilcox Nuclear Srvs. Units 2 & 3 Pressurizer
Nozzle Replacement 01/04/93 12/31/94 60

PV92 22100 S3 Technologies Escrow Account for second
Similar Project 04/01/92 12/31/99 60

PV92 22101 Structural Integrity Provide Fracture
Mechhanic Computer
Software 07/01/92 12/31/99 60

PV92 44074 22102 Digital Equipment Corporation Software License
Agreement 05/01/92 01/01/99 60

PV92 22104 OGDEN/ERCE Service Water System
Self Assessment (see CSR
14224 for RFP) 03/11/93 05/15/93 60

PV92 22105 IBM Hardware/Software Lease/
Purchase 06/29/92 06/28/94 60

PV92 40513 22107 CARA Corporation CMIS Phase IIa Project 05/26/92 09/30/92 60

PV92 22108 Perkin-Elmer Corporation Chemistry Data Management
Software (awarded see CSR
14233) 10/02/93 12/31/93 60

</TABLE>

<PAGE> 42
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV92 22113 Halliburton(NUS) Provide Hardware /
Software for Implementing
ERDS 07/01/92 04/25/94 60

PV92 22116 American Netronic Graneda Software License 07/27/92 01/01/99 60

PV92 22118 Utility Resource Associates Provide Software Maint.
Support(awarded see 14298
for RFP) 11/20/92 12/31/93 60

PV92 44179 22122 Cisco Systems, Inc. Maintenance on upgraded
CISCO Router Model AGS 08/01/92 12/31/92 60

PV92 22125 Tenera Support Evaluation of
Individual Plant for
External Events 04/08/93 12/31/94 60

PV92 40513 22126 CARA Corporation Intergrated Budgets and
Cost Project 06/29/92 12/31/92 60

PV92 22133 Hewlett Packard Service Maint.
Agreement for RCPOMS 08/20/92 12/31/93 60

PV92 22134 Infotech Corproation Re-Engineer PRAM 08/25/92 01/31/92 60

PV92 44195 22135 Bell Alantic Maintence Agreement 09/01/92 08/31/94 60

PV92 22136 Sargent & Lamdy Engineers Develop License for PC
Based IMS Software // // 45

</TABLE>

<PAGE> 43
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV92 44074 22140 Digital Equipment Corporation DEC Equipment
Maintenance 08/01/92 07/31/92 60

PV92 22143 Tor Engineering Drawwing Revisions 09/15/92 12/31/92 60

PV92 22144 Stagg Systems PM Basis Project 09/23/92 12/20/92 60

PV92 22146 Stagg Systems TRMS Enhancement and
Support Project 06/04/92 12/31/92 60

PV92 22152 Infotech Corporation Suppor Snubber Reduction
Program 01/01/93 07/31/93 60

PV92 22161 Randy Siddell Softwarre Distribution
Agreement 11/15/92 12/31/99 60

PV92 22162 Behavioral Consultant
Services Evaluation Assessment
of Palo Verde Personnel 11/16/92 03/01/93 60

PV92 22163 Qualtec Professional Services Limited Release 11/20/92 12/31/99 60

PV92 22164 HTH Associates Distribution Agreement 11/20/92 12/31/99 60

PV92 22165 PRC Engineering Systems, Inc. Provide Faciliation of
Modification Process 11/12/92 03/28/93 60

PV92 22166 EG&G Idaho, Inc. Access to Studsvik Casmo
3 code on the NFM LAN 12/01/92 12/31/93 60

PV92 22171 Index Index Participation
Agreement Membership 01/01/93 12/31/99 60

</TABLE>

<PAGE> 44
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV92 22172 Dr. Dennis Duffy Reommed Fix Options
Unit 1 TB Pipe Leak 11/10/92 12/31/93 60

PV92 22173 Oracle Corporation Purchase of RDEMS and
supporting products 12/31/92 12/31/93 60

PV92 22174 Camberra Provide Maintenance
Support 01/01/92 12/31/93 60

PV92 20903 22176 S3 Technologies Existing Simular
Relocation Project 12/18/92 12/31/93 60

PV92 22177 Jesse R. Wyatt P.E. Ltd Structural Evaluation for
Unit 2 Ccooling Tower 01/01/93 12/31/92 60

PV92 22033 22178 Bechtel Power Coporation Provide Energy Support
Services 12/01/92 12//31/93 60

PV93 22179 CHAM, Ltd. License Agreement for
Phoenics Software 12/14/92 12/31/93 60

PV93 22181 Computer Power Group Provide Software Support
(see csr15156 for RFP) 01/01/93 07/0193 60

PV93 22182 A-Z Micrographic Micrographic Equioment
Maintenance 01/01/93 12/31/93 60

PV93 10712 22184 Combustion Engineering Provide Engineering
Services 01/01/93 12/31/93 60

</TABLE>

<PAGE> 45
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV93 22185 Bechtel Software, Inc. Software, Licenses and
Support 01/01/93 12/31/96 60

PV93 22186 Tor Engineering Cooling Tower Drawing
Additions/Revisions 02/04/93 12/31/93 60

PV93 22187 Tetra Eng. Gp., Inc. Drift and Setpoint
Statistics training
Course 02/15/93 03/31/93 60

85 44195 22189 Bell Alantic Equipment Maintenance 02/01/93 12/31/93 60

PV93 22190 Lee & Northrup Maintenance Agreement
Service 03/01/93 02/28/94 60

PV93 22192 Training-Ala-Carte Provide Windows Training 04/01/93 12/31/93 60

PV93 22193 Structural Integrity Assoc. Evaluation of U2
Essential Cooling Water
Heat Exchanger 04/12/92 04/30/93 60

PV93 22194 Aptech, Inc. Allowable Flaw Sizes for
Steam generator Tubing 04/09/93 07/30/93 60

PV93 22196 Computer Engineering Services IMUX 04/13/93 12/31/93 60

</TABLE>

<PAGE> 46
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV93 22197 Computer Engineering Services Check Adequacy of Escrow
Account for PV90-21292 09/01/93 12/31/93 60

PV93 22198 Cygna Energy Services (carts)Software Program
(see csr15845 for RFP) 08/01/93 01/31/94 55

PV90 22199 AEA O Donnell, Inc. Support U2 SG Tube
Failure Root Cause Team 04/20/93 06/30/93 60

PV92 22213 Pacific Nuclear Sys (NUTECH) Provide Fire Protection
Egineering Services 10/05/92 01/15/94 60

PV92 22242 22242 Welding Services, Inc. Issue Master Agreement
for Future Services 02/01/93 01/01/95 26

PV92 21421 22250 EMTAC Electrical, Inc. Upgrade Camera /Detection
Equipment Per Dcp
A-PJ-SK-092 12/21/92 01/01/94 60

PV93 10370 22256 Combustion Engineering Redundent COLSS 01/08/93 12/31/93 60

PV93 22256 Combustion Engineering Add Funding 01/08/93 12/31/93 60

PV93 22267 MQS, Inc. Equipment Qualification
Training 01/30/93 12/31/93 60

PV93 22290 Bunney s Inc. Implement Structural Mods
at Unit 1 & 2 cooling
Towers 01/0493 12/15/93 60

</TABLE>

<PAGE> 47
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV93 22294 Motorola PVNGS Two Way Radio
Equipment/Sevvices 03/31/93 12/31/96 28

PV93 22294 Motorola Letter of Intent 06/30/93 07/30/93 60

PV93 21308 22299 Babcock Wilcox Nuclear Srvs. Permanent Refueling Pool
Seal (see CSR 16181 for
RFP) 08/01/93 06/30/95 10

PV93 22300 DCS Systems, Inc. Modification to ABB-CE
Nuclear Fuel Fabrication
Facilities 04/26/93 12/31/93 60

PV93 22301 Arizona Potroleum Clean Diesel Fuel
Storage Tanks (see CSR
15881 for Rfp) 06/14/93 07/15/93 60

PV93 22302 PRC Engineering Systems, Inc. Project Team Training
& Provide Senior
Faciliator 05/10/93 08/31/93 60

PV93 22303 Nuclear Safety Review
Committee Off-Site Safety Review
Committee Consultant 07/01/93 12/31/93 60

PV93 22303 Nuclear Safety Review
Concepts Off-Site Safety Review
Committee Consultant 07/01/93 12/31/93 60

PV93 22304 IBM Add AS/400 to Maintenance
at end of Waranty Period 06/17/93 06/16/94 60

PV93 22305 Visual Numerics Provide support to
Develop Steam Generator
Presentation 05/24/93 05/27/93 60
</TABLE>

<PAGE> 48
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV93 22306 Quarles/Brady/Fannin Establish Administrative
P.O. for Payment of
Invoices 05/01/93 12/31/3 60

PV93 22307 Kimball & Curry Legal Services 05/31/93 12/31/93 60

PV93 22308 Halliburton(NUS) Software License for PRA
Workstation 06/01/93 01/01/99 60

PV93 22310 Alden Lorents Cost Control System
Project Consulting 06/07/93 08/20/93 60

PV93 22311 Request for Proposal U2 SG Chem. Cleanup and
Sludge Lancing 06/01/93 06/30/93 41

PV93 22313 Interleaf, Inc. Purchase Interleaf 5.3 06/15/93 01/01/99 60

PV93 22314 Hewlett Packard Hardware and operating
Software Maintenance 05/01/93 04/30/94 60

PV92 22315 Polymetrics, Inc. Inspect Ultra Filtration 07/30/93 08/15/93 60

PV93 22316 Focas Learning Corp. Obtain PVNGS Vision
Database Site License 07/06/93 07/06/94 60

PV93 22317 Combustion Engineering Obtain ABB-CE Reload
Engineering Software 06/01/93 01/01/99 60

PV93 22318 Viasoft Non-Disclosure Agreement 06/18/93 01/01/99 60

</TABLE>

<PAGE> 49
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV93 22319 Niagara Technical Consultant Technical Consulting
Services U2 Chemical
Cleanup 06/30/93 12/31/93 60

PV93 22320 Dan Wilson(ASU) Instruct Class on IEE-
476/546 ASU will pay 06/07/93 08/31/93 60

PV93 22321 Institute of Conf. Mgmt. Training Configuration
Management 07/01/93 12/31/93 60

PV93 22322 Infotech Coporation Phase II Changes for I/O
EDEMS 07/15/93 10/30/93 60

PV93 22323 Computer Products Onsite Training for
Course #3000 RTT/G2 07/20/93 12/31/93 55

PV93 22324 CSC Index Re-Engineering Services 05/01/93 008/31/93 60

PV93 22325 Fabricon 3 EA Boric Acid Treatment
Skids (see CSR 16181 for
RFP) 07/21/92 06/30/94 60

PV93 22326 Yankee Atomic Electric Co. Generation of Fabrication
Bid Specification 07/20/93 10/29/93 60

PV93 22330 Request for Propoal Provide Programmer &
Analysis Support 09/06/93 12/31/93 80

PV93 22331 PLG, Inc. Provide Consulting
Services 08/19/93 12/31/93 60

</TABLE>

<PAGE> 50
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV93 22332 Structural Integrity Assoc. Evaluation U2 CW Heat
Exchanger Tube
Degradation 08/04/93 09/06/93 60

PV93 22334 Lucas Management Transfer of Technical
Knowledge 09/07/93 10/02/93 60

PV93 22410 22410 Nuclear Energy Services, Inc. Establish Master
Agreement 05/01/93 12/31/95 26

PV93 21835 22433 Western Technologies, Inc. Concrete cylinder
Compression Test 05/01/93 12/29/93 60

PV93 22435 EEMC Provide Air Quality
Testing Services for
for Sta Blackout Proj 05/15/93 10/15/93 60

PV93 10370 22436 Combustion Engineering Steam Generator Sludge
Removal 05/03/93 06/03/93 60

PV93 22511 22511 Halliburton NUS Corporation Master Agreement for
Computer Services
Support 09/01/93 12/31/96 10

PV89 40104 Bechtel Power Corporation BECAP & ME101 Software/
Services 07/01/89 12/31/90 60

PV90 40308 C-TS & Associates SQA Procedure Develop-
ment 03/01/90 08/31/90 60

</TABLE>

<PAGE> 51
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV90 40416 CAD Southwest Corporation Hardware/Software
Maintenance 06/01/90 01/01/99 60

PV90 40417 Sargent & Landy Engineers Software Access License 06/06/90 01/01/99 60

PV89 40493 K&ll Prof Mgmt Svcs Equipment Maintenance
(Administrative P.O.) 08/01/89 07/31/90 60

PV90 40513 40513 CARA Corporation Software Dev & Consult 05/01/90 04/30/93 60

PV90 40533 40533 Devtech Associates, Inc. Software Dev/Computer
Consuulting 05/01/90 04/30/93 60

PV93 42875 Halliburton NUS Corporation Enviromental Consulting 05/31/93 09/30/93 60

PV90 MSD12 44015 Computer Power Group Computer Consuulting
Services (was Cornell
Computer)see 11964 07/03/90 03/31/91 60

PV90 44065 Boeing Computer Services Software Licence
Agreement/EZ5 11/14/90 11/13/91 60

PV90 44066 Universal Technical Systems Software Licence /Tk
Solver 11/12/90 01/01/99 60

PV90 44071 HRS Systems, Inc. Program License Agreement
/HAAS 11/01/90 10/31/95 60

MCP MCP09 MCP09 Sun Microsystems Supply Installation &
Maintenance 11/30/88 12/31/99 60

PV87 MSD07 MSD07 AGR Information Services Software Dev 02/01/87 01/31/90 60

</TABLE>

<PAGE> 52
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - 411 (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
MSD08 MSD08 MICON, Inc. Incoporate Whistleblower
Language 03/17/93 12/31/93 60

MSD09 MSD09 First Approach Computer Consulting
Svcs 06/15/87 06/14/90 60

MSD12 MSD12 Computer Power Group Computer Consultant
Services 03/01/88 02/28/91 60

MSD15 MSD15 Stagg Systems Computer Consulting
Software Licensing 11/14/89 11/13/92 60

MSD18 MSD18 Impell Pacific Software Dev/Computer
Consulting 12/01/89 / / 60

PV87 PVTA1 PVTA1 Combustion Engineering NSSS Tech Assist-Master
Agreement (Replace w/
PV86-10725) 01/01/84 12/31/88 60

</TABLE>

<PAGE> 53
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
2654 Energy, Inc. ARMP Disclosure
Statement 05/08/79 01/01/99 60

3091 3091 General Electric Company MA/Purch & Sale Renewed
Parts & Factory Repair
Work 08/06/82 12/31/99 60

3092 3092 Combustion Engineering MSSS Parts & Repair-
Mstr Purch Agmt w/POs
(Like Old) 08/14/81 01/01/99 60

PV80 3182 Wixdorf Computers Maintenance Agreement 04/14/80 01/01/99 60

PV81 3881 Decision Data Computer Corp. Equipment Maintenance 07/01/80 12/31/86 60

4443 Salt River Project Switchyard Intercon-
nection Agreement 08/20/81 01/01/99 60

PV81 4655 IBM Typewriter Maintenance 11/05/81 01/01/99 60

PV81 4692 Harris Corp. Purchase/Installation
and Maintenance 04/20/92 01/01/99 60

PV81 4857 Genicom Corp. Printer Maintenance 01/01/81 01/01/99 60

PV82 C082 6077 Arthur Anderson and Company Disclosure of SIMS
Documentation 02/16/82 12/31/99 60

C082 6341 EPRI Software License for
VIPRE 07/09/82 01/01/99 60

6357 Bechtel Power Corporation Nuclear Incident
Assistance Agreement 11/18/81 12/31/99 60

</TABLE>

<PAGE> 54
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
6584 Applications Software Maintenance on ASI/
Inquiry Software 09/01/85 08/31/84 60

PV83 7542 XES, Inc. Equiment Maintenance 09/01/83 12/31/84 60

C083 7735 University Computing Co. UCC Operating Software 05/24/83 12/31/99 60

PV83 CO83 7926 CGA Computer Associates,Inc. Multiple Systems
Integrity License
Agreement 07/15/83 12/31/99 60

PV84 8980 Kaibab Industries Lubricants & Related
Services (Purch. Dept.
Admin.) 12/10/84 12/31/93 60

PV84 9028 Doble Engineering Equipment Lines &
Services 05/01/84 04/30/87 60

MCP MCP09 00009 Sun Microsystems Supply Installation
& Maintenance 11/30/88 12/31/99 60

PV84 10021 10021 General Electric Company Master Purchase & Sale
Agreement for Renewal
Parts 05/10/84 12/31/99 60

PV72 10108 S.M. Stoller Corporation Fuel & Other Consulting
Services 08/18/72 01/01/01 60

PV85 10233 Impell Corporation FRATS Software License 08/19/86 01/01/99 60

PV85 10236 General Electric Info.Service Computer Services 06/01/85 06/01/88 60

PV85 10326 Expert-Ease Systems, Inc. Software License
Agreement 10/01/85 12/31/99 60

</TABLE>

<PAGE> 55
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV85 10352 10352 Technical Info. Systems, Inc. Provide Software Support
for Security System 12/31/85 12/30/88 60

PV87 10370 10370 Combustion Engineering Perform Field Services 08/24/87 08/23/90 60

PV89 10421 The Bristol Group Ltd. Software License
Agreement 12/12/89 01/01/99 60

PV85 10433 General Data Systems Add Funding 11/01/85 10/30/86 60

PV85 10433 General Data Systems Software Maintenance
Agreement 11/01/85 10/31/86 60

PV86 10506 10506 TVA Sales Agreement for
Future Purchase from TVA 01/09/86 01/01/01 60

PV86 10582 Marriott Corp. Cafeteria and Vending
Services 08/21/86 07/25/88 60

10582 Marriott Corp. Change Charge and Home
Units and Account 01/01/01 01/01/01 60

PV86 10603 Nursefinders of Phoenix Health Services 11/01/86 10/31/87 60

PV86 10603 Nursefinders of Phoenix Change Terms Code from
"00" to "10" 11/01/86 09/28/92 60

PV86 10615 10615 NUS Corporation Consulting Services -
Master Agreement (New) 01/01/87 12/31/89 60

PV86 10620 Vance & Associates License Agreement 10/01/86 90/30/87 60

PV86 10624 Gould CSD Software License
Agreement 10/01/86 12/21/99 60

</TABLE>

<PAGE> 56
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV86 10639 10639 Sargent & Lundy Engineers Engineering Services
Master Agreement 06/20/86 06/19/89 60

PV86 10640 10640 Black & Veatch Engrs.
& Architects Unfunded Engineering
Mater Agreement w/
Funded JD 06/20/86 06/19/89 60

PV86 10649 Gould CSD Software License
Agreement 04/16/87 12/31/99 60

PV86 10662 10662 Combustion Engineering Professional Support
Services - Master
Agreement (New) 01/01/87 12/31/88 60

PV86 10676 Waste Management Group Procurement of RADMAN
Package 03/30/87 01/01/99 60

PV87 10678 Data General Software Support 01/14/87 01/01/99 60

PV86 10712 10712 Combustion Engineering Engineering Services
- Master Contract 07/01/87 06/30/90 60

PV86 10750 Oracle Corporation Software License Agrmt
- Part of CE RRACS
(PV85-10497 CO2) 07/21/87 01/01/01 60

PV86 10755 10755 Impell Corporation Unfunded Engineering
Master Agreement
- w/funded JO 02/01/87 01/31/90 60

PV86 10765 10765 Westinghouse Electric Corp. Off-Site Equipment
Repair - Adminstration
by Purchasing 11/03/86 11/02/89 60

</TABLE>

<PAGE> 57
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV86 10768 Moore Business Forms Maintenance 03/30/87 03/29/88 60

PV86 10770 10770 Wackenhut Advanced Tech.
Corp. Reload Pellet Sampling
During NUC Fuel
Fabrication-U123-MA 03/02/87 03/02/90 60

PV87 10850 10850 Westinghouse Electric Corp. NSSS Repair Services
- Master Agreement (Old) 02/01/87 01/31/90 60

PV87 10877 BRS Leasing Office Equipment
Maintenance 01/01/87 12/1/87 60

PV87 10896 Utility Data Institute Database Access & Use
of UDI Database for 1987 04/13/87 04/12/88 60

PV87 10905 Canberra Industries, Inc. Whole Body Counter
Maintenance Services 04/25/87 04/24/88 60

PV87 10913 Studsvik Nuclear Analysis
Computer Code Pkg 10/15/87 01/01/99 60

PV87 10930 Diversified Inspections,Inc. Aerial Lift & Crane
Equipment Inspection 05/15/87 05/14/88 60

PV87 10956 Western Hydrovac Vactor Services/Cleaning
Clarifiers, Tanks,
Sumps, Pits, Vau 06/25/87 05/31/88 60

PV87 10978 10978 General Electric Company MA Technical Assistance
Services 09/15/88 09/14/91 60

0187 10990 Research Instruments Associa Liquid Scintillator
Maintenance/Emergency
Services 07/15/87 07/14/88 60

</TABLE>

<PAGE> 58
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV87 10994 Interfacts, Inc. Software License
Agreement for PC
Software 06/30/87 12/31/99 60

PV87 15476 ITT Courier Terminal Systems On-Site Maintenance
of PC Cards & Terminals 04/01/87 03/31/88 60

15698 Data General Maintenance 01/06/88 01/01/99 60

PV87 16811 Digital Equipment Corporation Field Service Agreement 10/01/87 09/30/88 60

PV88 17480 Intergraph Corporation Equipment Services 12/01/88 01//01/99 60

PV88 17857 Expert-Ease Systems, Inc. Software Service
Agreement 10/21/88 01/01/99 60

PV88 17909 NPA Systems of California RMCS Maintenance 10/01/88 01/01/99 60

PV89 18870 Canberra Industries, Inc. Series 90-Equip.
Maintenance 10/27/88 01/01/99 60

PV89 18892 Wologong Group, Inc. End User License 04/07/89 01/01/99 60

PV89 19200 Relational Technology(INGRES) Sun Network License
Agreement 10/24/89 01/01/99 60

C089 19210 Engineering Design Automation Software License
Agreement 01/01/89 01/01/99 60

PV88 19245 Nuclear Data, Inc. Essential Software
Services for ND9900
System 06/19/89 01/01/99 60

PV89 19421 The Bristol Group Ltd. Software License
Agreement 12/12/89 01/01/99 60

</TABLE>

<PAGE> 59
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV89 19422 The Bristol Group Ltd. Software Support 09/01/89 01/01/99 60

PV89 19459 Encore Computer Corp. Simulator Maintenance 10/15/89 01/01/99 60

C089 19468 Parametric Technology License Agreement/
Pro Engineer 11/30/89 01/01/99 60

PV89 19775 The Technology Group, Inc. EZHANG License Agreement 11/30/89 01/01/99 60

C089 19777 Modular Computer Systems Compute Hardware
Maintenance 11/01/89 05/31/91 60

PV90 19785 Georgia Tech Research GTRC GT STRUDL
End-User License
Agreement 12/12/89 01/01/99 60

PV89 19786 R.T. Bradshaw Software License
Agreement/Ductnet/Flow 12/05/89 01/01/99 60

PV90 19787 CHAM Of North America Software License
Agreement and Training/
Phoenics 12/01/89 12/31/90 60

PV89 19789 Sampson Technical Consultants License Agreement/STC
Thermal 01/01/89 12/31/99 60

PV89 19790 Mitchell & Gauthier
Associates Licensing Agreement/
ACSL/OPTDES 01/01/90 01/01/99 60

PV89 MSD14 19791 Impell Corporation Shake Computer Program 04/01/90 / / 60

</TABLE>

<PAGE> 60
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV89 19864 Computer Engineering Services PV Simulator RMS
Hardware Maintenance
Services 11/15/89 10/30/90 60

PV89 19918 Design Synthesis, Inc. Program Licensing
Agreement 01/01/90 01/01/99 60

OV89 19952 IMSL, Inc. Software License
Agreement 12/31/89 01/01/99 60

PV87 20046 Erin Engineering & Research Reliability Engineering
Support 01/02/88 01/01/91 60

PV87 20050 Sargent & Lundy Engineers Eng-Svs to Provide
Control Wiring Diagrams
& Other Design 07/29/88 08/21/90 60

PV87 20152 Southern California Edison SCE Personnel
Assistance Agreement 09/01/88 01/01/01 60

PV87 20160 20160 Black & Veatch Engrs. &
Architects Provide Professional
Support Servs (MA,
Loaned Servant & Svs. 10/15/87 10/14/90 60

PV87 20237 Scientific Ecology Group Inc. Off-Site Disposal
Services 01/01/88 12/31/93 60

PV88 20292 Ground Improvement Techniques Non-Disclosure Agmt
Reiunderwater Hypalon
& Slope Repair 01/22/88 12/31/99 60

PV93 20310 Foxboro Co. Vendor Support to
Identify Source of
U3 FWCS-2 Disturbance 03/08/93 03/09/93 60

</TABLE>

<PAGE> 61
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV89 20314 Excel Mobile Wash Clean Unit 2 Transformer
Bus 02/18/89 12/31/89 60

PV88 20317 Comgraphix, Inc. Micrographics Equipment
Maintenance 01/01/88 12/31/88 60
PV88 20318 Hughes-Calihan Corporation Microfilm Equipment
Maintenance 01/01/88 12/31/88 60

PV88 20324 Freeze Technology Intl. Inc. Provide Freeze Plugging
Service 05/16/88 06/01/89 60

PV88 20326 Chambers, Inc. Fire Detection Sys Test
(I&C Personnel) &
Spare Parts 03/01/88 05/31/88 60

PV88 20335 Tennelec, Inc. Add Funding and Extend
Term 01/01/88 12/31/88 60

PV88 20336 20336 General Electric Company Master Agreement to
Provide Field Eng.
Services 04/10/89 04/09/92 60

PV88 10770 20416 Wackenhut Advanced Tech Corp. Issue new Contract for
Unit 1 Batch E Fab
Surveillance 06/01/88 03/21/89 60

PV88 20439 U.S. Pollution Control, Inc. Initiate a Contract
Based on APS Master
Agreement HWID02 07/25/88 07/24/90 60

PV88 10662 20466 Combustion Engineering Professional Support
Personnel (W.Kuntz) 07/15/88 09/01/88 60

</TABLE>

<PAGE> 62
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV88 20520 CEP Provide Offsite
Bioassay Services for
PVNGS Unit 1,2,3 03/01/89 02/29/92 60

PV88 20552 Impell Corporation Loaned Contract Labor
to Support the CWD
Project 10/14/88 10/31/91 60

PV88 20556 Interstate Nuclear Services Protective Clothing
Service 04/01/89 03/31/92 60

PV88 20559 20559 Earth Technology Corporation Soil Testing 01/01/89 03/14/92 60

PV88 20588 ABR Express Systems Freight Pick-up &
Delivery (1989 PO
#10801393) 07/01/89 06/30/90 60

PV88 20601 Sargent & Lundy Engineers Professional Support
Services 11/14/88 03/01/89 60

PV88 20640 S.L. Power Consultants Tech Services Contract
for J.M. Moreland 01/01/89 12/31/89 60

PV89 20687 Eastman Kodak Company Micrographics Equipment
Maintenance 01/01/89 12/31/89 60

PV89 20559 20704 Earth Technology Corporation Soil Testing 04/01/89 12/31/90 60

PV89 20751 Chemical Waste Management,Inc Handle, Trans,
Dispose Waste Material 04/24/89 04/24/91 60

PV89 20770 20770 Stone & Webster Engineering Master Agreement w/
Contracts Consulting
Services 01/01/90 12/31/92 60

</TABLE>

<PAGE> 63
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV89 20773 Varian Associates Unit 3 Chemistry's
Atomic Absorporation
Instrument 05/15/89 05/14/90 60

PV89 20814 Analytical & Precision
Balance Service Balances in
ALL Chemistry Labs 06/16/89 06/16/90 60

PV89 20843 Bechtel Construction Inc. Contract Labor-Craft,
Professional & Non-
Manual 03/01/90 02/28/93 60

PV89 20917 20917 Conam Nuclear, Inc. Eddy Current
Examination Services 12/15/89 12/14/92 60

PV89 20922 20922 Chem-Nuclear Systems, Inc. Provide Transportation
and Interim On-Site
Storage (Primary) 11/01/89 12/31/93 60

PV89 20923 20923 Pacific Nuclear Sys (PacNuc) Provide Radioactive
Waste Solidification/
Demineralization 04/01/90 12/31/93 60

PV89 20924 20924 Pacific Nuclear Sys (PacNuc) Provide Transportaion
and Interim On-Site
Storage (Back-up) 11/01/89 06/30/93 60

PV89 20933 Cornoyer Hedric Architects Architectural Design
Services for Admin-
istration Complex 02/12/90 10/01/92 60

PV89 20950 General Services, Inc. Engineering Support 09/18/89 06/30/90 60

</TABLE>

<PAGE> 64
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV89 20952 BETA Products, Inc. Revise & Redraw
the SESS System
Technical Manual
Drawings 10/03/89 12/31/90 60

PV89 20955 United Engineers &
Constructors Audits/Surveys and/or
Inspection/
Surveillances 11/01/89 10/31/92 60
PV89 20957 Management Analysis Company Audits/Surveys and/or
Inspection/
Surveillances 11/01/89 10/31/92 60

PV89 20968 20968 Tenera Establish Master for
Consulting Services
Support Personnel 11/01/89 10/31/92 60

PV89 20974 Sunstate Equipment
Corporation Tire repair service
for heavy equipment 04/16/90 04/15/91 60

PV89 21411 20983 PCI Energy Services Machining/Grinding
Service (Kuma 21411) 06/01/91 12/31/92 60

PV89 20990 Arizona Elevator, Inc. Elevator Services 05/01/90 12/31/92 60

PV89 21004 21004 Chem-Nuclear Systems, Inc. Provide Rad Waste
Solidification/
Demineralization Svc. 01/01/90 12/31/93 60

PV89 21007 Waste Management of Phoenix Provide Waste Removal
Service 01/01/90 12/31/93 60

</TABLE>

<PAGE> 65
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV89 20632 21019 Computer Engineering Services Suppor of IIR into
PNUX Failures 11/15/88 12/30/89 60

PV89 20922 21020 Chem-Nuclear Systems, Inc. Provide Transportation
and Interim on-site
Storage 11/01/89 12/31/93 60

PV89 20132 Architectural Interiors, Inc. Architectural Designer,
Hold Pending Review
of Other Co. 12/04/89 12/31/89 60

PV89 21034 APTECH Provide Metallurgical
Project Engineering 01/01/90 06/30/90 60
PV89 21051 Ronn Lavit, Ph.D. Personnel Psychological
Screening 06/01/90 05/31/92 60

PV90 21070 Environmental & Energy
Service Engineering Assistance
in Technical Reviews 12/11/89 02/28/90 60

PV90 20860 21072 United Energy Services Corp. Dean Valdez, and Gene
Hinsley 01/04/90 02/28/90 60

PV90 21073 Airnetics Engineering Co. Perform Preventive
Maintenance 01/20/90 12/31/90 60

PV90 21075 First Approach Provide Staff
Augmentation for Sims
Data Management &
Control 01/02/90 06/30/90 60

PV90 21077 United Energy Services Corp. Contract Labor request
for 2 Contract Sr.
Tech. Specialists 12/15/89 12/31/90 60

</TABLE>

<PAGE> 66
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV90 21411 21081 ITI Movats, Inc. Testing/Surveillance
of Motor Operated
Valves 01/01/90 12/31/91 60

PV90 21085 Furmanite America, Inc. Perform safety and
safety relief valve
set point testing 03/01/90 12/31/91 60

PV90 21086 Hartford Steam Boiler Company Nuclear Inservice
Inspections 02/01/90 02/01/93 60

PV90 21089 Bechtel Power Corporation Engineering Partnering
Agreement 02/12/90 02/12/95 60
PV90 21090 Sargent & Lundy Engineers Engineering Partnering
Agreement 02/12/90 02/12/95 60

PV90 21093 Panasonic Industrial Co. Maintain Service
Contract 01/01/90 12/31/93 60

PV90 21097 Ace Mobile Wash New Ownership
R. Olson, (Ref.
PV88-20610) 01/13/90 04/30/91 60

PV90 21112 SMC ESMI (R. Morrison) PANDA Code Completion 01/29/90 06/02/90 60

PV90 21120 21120 Alimak Elevator Company Tendon Stressing
Platform Services
Agreement 04/01/90 03/31/92 60

PV90 21130 Sola Electric Maintain Service
Contract 03/15/90 03/31/92 60

PV90 21147 Western Hydrovac Remove Sand &
Anthracite for
Gravity Filter cell #9 03/02/90 12/31/90 60

</TABLE>

<PAGE> 67
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV90 21147 Western Hydrovac Change Unit # from
8512 to 8617 03/02/90 12/31/93 60

PV90 21151 Atlan-Tech, Inc. Perform Irradiations
of PVNGS TLDS's 05/01/90 04/30/91 60

PV90 21157 General Physics Corporation MED Job/Task Analysis 05/15/90 12/15/90 60

PV90 20924 21162 Pacific Nuclear Sys (PacNuc) To Provide
Transportation and
Interim on-site
Storage 04/02/90 12/31/94 60

PV90 21164 Devtech Associates, Inc. Hardware Installation
Engineer 03/19/90 06/19/90 60

PV90 21165 PRC Engineering Systems,Inc. Develop & Implement
Vendor Tech Manuel 11/19/90 12/31/93 60

PV90 21169 21169 Paul Monroe-Enertech Perform Snubber
Testing 12/01/90 11/30/93 60

PV90 21170 21170 ABB Power & T&D Company,Inc. Consulting Services/
Master Agreement 04/09/90 04/09/93 60

PV90 21177 Dionex Corporation Service Units 1,2,&
3's Ion Chromato-
graphs 03/01/90 02/28/91 60

PV90 21182 Bartlett Nuclear Contract Labor for RP
& Chemistry 10/01/90 09/30/93 60

PV90 21186 Thunderbird Fire & Safety Halon Systems
Functional Test 05/07/90 05/06/93 60

</TABLE>

<PAGE> 68
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV90 21187 Fire Master Corporation Fire Extinguisher Refill
& Service 07/01/90 06/30/93 60

PV91 21192 The Atlantic Group Professional & Technical
(Awarded see CSR 9031
for RFP) 08/01/91 07/31/94 60

PV90 21192 The Atlantic Group Letter of Intent/
Initial Funding 08/01/91 08/31/94 60

PV90 21202 Nichols Institute Analyze and Confirm
Urine Specimens 05/23/90 05/31/92 60

PV90 21205 Protection Technology, Inc. Nuclear/Support
Security Services 06/01/90 05/31/92 60

PV90 21218 21218 Bunney's Inc. Cooling Tower
Maintenance 01/01/91 12/31/93 60

PV90 21218 21218 Bunney's Inc. Perform Cooling Tower
Fan Rework 08/26/91 12/31/91

PV90 21225 Consolidated Building
Services Janitorial Services
for PVNGS 10/01/90 09/20/93 60

PV91 21238 21238 Babcock Wilcox Nuclear Srvs. Purchase of Equipment
and Parts 10/07/91 10/06/94 60

PV90 21252 MPR Associates, Inc. Consulting Services
W/Contracts & J.O.'s 05/01/90 12/31/90 60

PV90 21256 Ron French & Associates Cost Control Consulting 06/18/90 10/31/90 60

</TABLE>

<PAGE> 69
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV90 21252 21262 MPR Associates, Inc. Cooper-Bessermer
Owner's Group Project
Manager 05/01/90 12/31/90 60

PV90 21266 Southern Technical Services Office Facilities and
Support Staff 04/01/90 12/31/90 60

PV90 21281 McKenzie Laboratories Water Quality Analysis 10/26/90 11/30/92 60

PV90 21285 Desert Security Modification & Repair 09/09/90 12/31/91 60

PV90 21288 Nuclear Data Systems No Cost P.O. to
Execute Software
License Agreement 08/23/90 12/1/99 60

PV90 21291 Nuclear Data Services, Inc. Participation in Nuclear
Data Services Database 08/01/90 12/31/90 60

PV90 21292 Johson Yokogawa Corporation WRF C&MS Replacement
Project (Awarded see
RFP CSR9689) 06/01/91 01/01/99 60

PV89 10662 21294 Combustion Engineering MOV Program Engineering
Support 06/04/90 12/31/90 60

PV90 20923 21299 Pacific Nuclear Sys (PacNuc) Provide Radioactive
Waste Solidification/
Deminearlization Svc 04/01/90 06/14/93 60

PV90 21303 21303 BCP Technical Services Provide Engineering
Services 01/15/91 01/14/94 60

PV90 21306 J.G. Keppler Off-Site Safety Review
Committe Consultant 03/22/90 12/31/90 60

</TABLE>

<PAGE> 70
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV90 21307 S. Levy, Inc. Off-Site Safety Review
Committe Consultant 03/22/90 12/31/90 60

PV90 21308 21308 Babcock Wilcox Nuclear Srvs. Outage Support Services
- PP CSR 9746 01/01/91 12/31/93 60

PV90 21313 J.D. Shiffer Off-Site Safety Review
Committee Consultant
(Tract T&C) 03/22/90 12/31/90 60

PV90 21316 21316 Failure Prevention, Inc. Miscellaneous Consulting
Services w/Contract 07/24/90 07/23/93 60

PV90 10622 21318 Combustion Engineering Material Management
of Info. Support,
Provide Lee Troistel 09/01/90 12/31/91 60

PV90 21321 Friedman Recycling Sale of Recyclable
Paper 09/01/90 09/01/93 60

PV90 21323 Hartford Steam Boiler Vibration Diag.
Computer Program
-See Contract
No. 21086 08/29/90 01/01/01 60

PV90 21324 Andrew Carter Associates,Inc. Support Services for
Assessment Activities 08/10/90 10/12/90 60

PV90 21328 S3 Technologies Second Simulator
Procurement 12/01/90 03/30/93 60

PV92 22033 21332 Bechtel Construction Inc. Site Services for PVNGS 06/01/92 05/31/95 60

</TABLE>

<PAGE> 71
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV90 21333 Hewlett Packard Maintain the
Hewlett Packard Computer
for RCPOMS 10/01/90 10/01/91 60

PV90 21340 S&L Contracting Company Railroad Track
Maintenance 09/15/90 09/15/93 60

PV90 21340 S&L Contracting Company Change Unit # from 8512
to 8617 09/15/90 09/15/93 60

PV90 21341 Sundt Products Fiberglass Repair 10/01/90 10/01/93 60

PV90 21341 Sundt Products Change Unit # from 8512
to 8517 10/01/90 09/30/93 60

PV90 21344 PMH Primary Care, Inc. Physician and MRO
Services for PVNGS 09/24/90 12/31/91 60

PV90 21347 General Physics Corporation Simulator Procurement
and Consulting Services 09/04/90 03/30/93 60

PV90 21354 Nuclear Regulatory Commission Dummy Contract for
Contracts database 01/01/90 12/31/99 60

PV90 21355 E&O Committee Dummy Contract for
Database 01/01/90 12/31/99 60

PV90 21356 INPO Dummy Contract for
Database 01/01/90 12/31/99 60

PV90 21357 Outside Review Board Dummy Contract for
Database 01/01/90 12/31/99 60

PV90 21360 L.A. Dept. of Water & Power Dummy Contract for
Database 01/01/90 12/31/99 60

</TABLE>

<PAGE> 72
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV90 21361 AZ Radiation Regulatory
Agency Dummy Contract for
Database 01/01/90 12/31/99 60

PV90 21363 Combustion Engineering Incore Detectors 09/01/90 09/01/91 60

PV90 21365 Johnson & Higgins Insurance Dummy Contract for
Database 01/01/90 12/31/99 60

PV90 21367 Boise Cascade Office Products Inventory & Restock
Supply Cabinet Service 10/15/90 12/31/91 60

PV90 21372 21372 Remote Systems, Inc. Technical Support
for Refueling Equipment 02/01/91 02/01/94 60

PV90 21373 Data Enterprises Code Software 10/18/90 12/31/99 60

PV90 21375 Buckeye Autowrecking Towing Services 11/01/90 10/31/91 60

PV90 21383 Naumann Hobb Material
Handling Lease/Buy Three Clark
Order Pickers 11/01/90 11/01/93 60

PV90 21384 Sun Microsystems Sun UNIX Hardware/
Software Maintenance
(Bid Award) 01/01/91 12/31/93 60

PV90 21386 21386 The Atlantic Group Pump, Valve, Actuator
and Control Rework 11/01/90 07/31/90 60

PV90 21391 Tenera Development of Instr.
Setpoint Software
(see PP csr10303) 05/15/91 12/31/92 60

</TABLE>

<PAGE> 73
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV91 21392 CEP Radiological Services
(Awarded see CSR 10318
for RFP) 08/01/91 08/01/94 60

PV90 21394 Combustion Engineering Regional Expediting
Services 01/01/92 12/31/92 60
PV90 21406 Advance Technologies Software License
Agreement 11/01/90 01/01/99 60

PV90 21407 S3 Technologies Provide Services,
Materials draft escrow
terms 09/04/91 03/21/96 60

PV90 21411 21411 Westinghouse Electric Corp. Engineering Services 03/20/91 03/19/94 60

PV90 21308 21414 Babcock Wilcox Nuclear Srvs. Provide Outage
Management Team 11/01/90 12/03/93 60

PV90 21416 PCMS, Inc. Provide PREMIS Software 01/15/91 12/31/93 60

PV90 21420 DCA, Inc. Upgrade and Support
for DCA Communication
Interface Equip. 12/15/90 12/15/91 60

PV90 21421 Emtac Electrical, Inc. Security and Safeguards
Related Electrical Work 05/01/91 04/30/94 60

PV90 21425 EPRI MOV Performance
Prediction Prg. -
Admin Tracking PO
Only 07/01/90 12/31/95 60

</TABLE>

<PAGE> 74
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV90 21433 Sundt Corp. Evap. Pond #1 Re-Line
(Award see csr 10484
for RFP) 10/01/91 01/31/92 60

PV90 21435 BBN Software Products Software License
Agreement 12/05/90 12/05/91 60

PV90 21437 Software Partner/32 Tape Management System
for VAX 11/28/90 12/31/99 60

PV90 21438 Infincom, Inc. Provide Turnkey Copy
Center & Mail Room
Services 03/01/91 12/31/93 60

PV 21438 Infincom, Inc. Change Charge and Home
Units and Account 03/01/91 02/28/94 60

PV90 10662 21440 Combustion Engineering Provide Staff
Augmentation to QA 12/10/90 12/31/91 60

PV90 21448 E.D. Smith Paving Place Asphalt Road
and Sidewalk at U-3 12/17/90 12/31/90 60

PV90 21449 IBM Business Systems
Planning 01/07/91 03/14/91 60

PV90 21450 Combustion Engineering Controlled Program
License Agreement-NPS-2 11/20/90 01/01/99 60

PV90 21453 BW/IP International Provide Technical
Assistance 01/01/91 12/31/91 60

PV91 21461 Combustion Engineering Engineering Partnership
Agreement 01/11/91 01/11/96 60

</TABLE>

<PAGE> 75
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

PRE
<CAPTION> MTR_NO K_NO COMPANY NAME TITLE START END STATUS

PV91 <S> <C> <C> <C> <C> <C> <C>
<C> 21473 Access Company Tracking for Contractors
on PO's 01/01/91 01/01/99 60

PV91 20751 21486 Chemical Waste Management,Inc Hazardous Waste
Handling, transport,
and disposal 01/01/91 12/31/91 60
PV91 21490 Ace Mobile Wash On-Site Vehicle
& Trolley Stop Washing
Service (see CSR 11094) 05/01/91 04/30/93 60

PV91 21499 Perkin-Elmer Corporation Preventive Maint.
Service for U-1 01/01/91 01/31/92 60

PV91 21500 Perkin-Elmer Corporation Preventive Maintenance
for U-2 Chemistry's AA 01/01/91 01/31/92 60

PV91 21507 AZ Corp. Commission Dummy Contract Number
for Badging 01/01/91 01/01/99 60

PV91 21513 Sunland Computer Services Computer Equipment
Maintenance (see CSR
11413 for RFP) 08/19/91 07/31/94 60

PV91 20860 21516 United Energy Services Corp. Develop and Teach NPRDS 02/18/91 03/31/91 60

PV91 21519 Arizona State University Participation in ASU
Interactive Instruc-
tional TV Program 01/02/91 08/30/91 60

PV91 21524 Performance Plus Provide One Week
Training Seminar 02/25/91 03/02/91 60

</TABLE>

<PAGE> 76
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV91 21525 B&W Legal Review of
Confidentiality
Agreement for
Concurrance 04/01/91 10/01/91 60

PV91 21539 Intergraph Corporation Volume Purchase
Agreement 05/30/91 04/30/94 60

PV91 21540 Vector Engineering, Inc. Cosulant Service for
Evap-Pond #1 (Awarded
see csr11635) 05/02/91 07/01/92 60

PV91 21545 Digital Equipment Corporation Loan of Products
Agreement 03/20/91 05/20/91 60

PV91 21555 Mettler Repair U-1 Chem Auto-
titrator & Maintenance
in U-2&3 Chem. 03/28/91 04/05/91 60

PV91 21557 BFA/Aquila Banyan Software Support
(RFP csr12661) 05/15/91 05/1494 60

PV91 21569 Sanderson Ford, Inc. Personnel Transportation
awarded see csr 11823
for RFP 09/01/91 12/31/95 60

PV 21569 Sanderson Ford, Inc. Change Charge and
Home Units and
Account 01/01/01 12/31/95 60

PV91 21571 21571 Graver Water Division Field Services 04/08/91 04/07/94 60

PV91 21577 21577 BW/IP International Field Services 04/19/91 04/18/94 60

</TABLE>

<PAGE> 77
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV91 21579 Precision Visuals Purchase of PV WAVE
Software 07/19/91 01/01/99 60
PV91 21582 Signal Technology Purchase of N Power
Software 06/01/91 01/01/99 60

PV91 21585 Nutech Engineering Six Month
Evaluation Period
for Outside Hire
Contract 04/29/91 07/01/92 60

PV91 21410 21590 Allied Technology Provide DAW/Volume
Reduction Service 04/05/91 12/31/93 60

PV91 21595 Corporated Education
Resources Executive Track/Grown/
Charter 04/29/91 01/01/99 60

PV91 21603 AZ Time Recorder Maintenance of "Time
Recorder" 03/14/91 03/13/92 60

PV91 21606 First Approach Sims PM Program
Modifications 05/06/91 06/28/91 60

PV91 21607 Information International On-Site Leonardo
Training 06/17/91 06/21/92 60

PV91 21608 Integrated Management
Services Develop NPE CATS
program, manage SBO
Project 04/01/91 09/30/91 60

PV91 10615 21609 NUS Corporation Provability Risk
Assessment PRA
Workstation 03/01/91 12/31/91 60

</TABLE>

<PAGE> 78
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV91 21612 Orbisphere Labs 05/16/91 05/15/94 60

PV91 21615 Ramendra P. Roy Provide Consulting
Services 05/31/91 05/31/92 60

PV91 21620 21620 TRI International Consulting Services 05/22/91 05/22/94 60

PV91 21621 NPS Engr. & Tech. Services Qc Contract Labor
Personnel 10/01/91 09/30/93 50
PV91 20968 21627 Tenera EQ Consulting Services 06/03/91 07/31/91 60

PV91 21634 S3 Technologies Secrecy Agreement 06/01/91 12/31/93 60

PV91 21636 AVTV Renew Annual Exchange
Maintenance for 8mm Tape 07/01/91 06/30/92 60

PV91 21637 SYBASE Software License
Agreement 06/06/91 01/01/99 60

PV91 21642 Amalgamated Services, Inc. Support for Resolution
of PRS 1771 06/24/91 08/23/91 60

PV91 21644 Digital Tools Purchase of Autoplan
Software 08/01/91 01/01/99 60

PV91 21646 Amalgamated Services, Inc. Qualification of
Hastings Flow
Transducer 06/24/91 11/20/91 60

PV91 21647 Bell Atlantic Tricon Leasing Lease/Purchase
Agreement for
Warehouse Carousels 01/01/91 01/01/92 60

</TABLE>

<PAGE> 79
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV91 21650 Arizona State Univesity Monitoring and Testing
of Porcelain
Contamination 07/01/91 06/30/93 60

PV91 21652 MDM Engineering Corporation Engineering Support
(see RFP CSR 12456) 08/05/91 12/31/92 60

PV91 21660 S3 Technologies Secrecy Agreement
Between APS, SE and
GP (Butch Colby) 06/01/91 12/31/93 60

PV91 21665 Fuel Quality Service Supply portable
Equipment and Filter
Diesel Fuel in 06/27/91 03/01/92 60

PV91 21669 Digital Equipment Corporation Purchase Compilers and
Tape Drive 06/04/91 01/01/99 60

PV91 21679 PRC Engineering Systems,Inc. Engineering Study for
Proposed IEEE Study 07/08/91 08/08/91 60

PV91 21687 United Energy Services Corp. Site Labor Contract 08/01/91 07/31/94 60

PV91 21688 IDS/SAIC Site Labor Contract 08/01/91 07/31/94 60

PV91 21695 Corporate Research Systems Background Screening 09/01/91 08/31/93 60

PV91 21696 Crystal Bottled Water Forklift Trianing and
Site Access for Water
Delivery 08/01/91 12/31/91 60

PV91 21697 Kaisi Engineering Perform Analysis on
Butterfly Valves 07/17/91 08/19/91 60

</TABLE>

<PAGE> 80
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV91 21699 Gundle Lining Systems Liner portion of
Evaporation Pond Reline 08/01/91 05/01/92 60

PV91 21703 Amalgamated Services, Inc. Support for Resolution
of PRS 1771 07/26/91 08/15/91 60

PV91 21704 Integrated Management
Services Development of a Model
Design Change 08/05/91 12/30/91 60

PV91 21706 Western Technologies, Inc. Soil, Asphalt, &
Concrete Testing Service 07/31/91 09/30/91 60

PV91 21708 Barrington Consulting Non Disclosure Agreement 08/05/91 09/05/91 60

PV91 21711 Western Technologies, Inc. Concrete Cylinder and
Grout Cube Testing 08/01/91 12/31/91 60
PV91 21716 Accurate Corrosion Control Palo Verde Cathodic
Protection Survey 10/21/91 04/30/92 60

PV91 21723 OI Analytical Extend Warranty of
Units &,2,&3 TOC
Analyzers Model 700 08/22/91 12/31/91 60

PV91 21728 21728 Arco Enterprises, Inc. Field Services 10/01/91 12/31/91 60

PV91 21730 Arizona State University Participation in ASU
Instructional TV
Program 08/31/91 08/30/92 60

PV91 21731 Liebert New Maintenance
Requirement of UPS
Equipment 09/18/91 09/17/92 60

</TABLE>

<PAGE> 81
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)

<CAPTION>
PRE MTR_NO K_NO COMPANY NAME TITLE START END STATUS
<S> <C> <C> <C> <C> <C> <C> <C>
PV91 21735 Halliburton (NUS) EPRI Agreement 07/26/91 08/01/92 60

PV91 21736 Kaisi Engineering Hydraulic Calculation
for Valeves NV
401/402/403 08/09/91 10/09/91 60

PV91 21739 Western Hydrovac Vacuum Drilling 09/09/91 10/01/91 60

PV91 21749 Office Designs Design Services 01/01/91 12/31/92 60

PV91 21755 Field Lining Systems HPDE Welding Services 09/18/91 09/20/91 60

PV92 21759 Halliburton (NUS) Upgrades to the
ERFDADS (See CSR
12938 for RFP) 02/02/92 04/03/94 60

PV91 21760 Progressive Roofing Roof Removal and Repair
(Awarded see csr 12949
for RFP) 12/03/91 12/03/95 60

PV91 21775 Training Concepts Qa Program Implemen-
tation Training 10/01/91 03/31/92 60

PV91 21780 Request for Proposal Clerical Contract
Labor Personnel / / / / 60

PV91 21794 Nuclear Oversight Committee Dummy Contract for
Tracking 10/01/91 12/31/99 60

PV91 21801 Cleveland Technical Perform Diesel Fuel
Oil Analysis 12/01/91 12/01/92 60
PV91 20632 21803 Computer Engineering
Services Review Requirements
Maxtrix 10/15/91 12/30/91 60

</TABLE>

<PAGE> 82
<TABLE>
ANNEX A 10/26/93 ACTIVE CONTRACTS BY CONTRACT NUMBER - PV SITE (continued)