<PAGE>
================================================================================
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____ TO ____
COMMISSION FILE NUMBER 0-296
EL PASO ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
TEXAS 74-0607870
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Kayser Center, 100 North Stanton, El Paso, Texas 79901
(Address of principal executive offices) (Zip Code)
(915) 543-5711
(Registrant's telephone number, including area code)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
--- ---
INDICATE BY CHECK MARK WHETHER THE REGISTRANT HAS FILED ALL DOCUMENTS AND
REPORTS REQUIRED TO BE FILED BY SECTIONS 12, 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 SUBSEQUENT TO THE DISTRIBUTION OF SECURITIES UNDER A PLAN
CONFIRMED BY A COURT. YES X NO
--- ---
AS OF MAY 1, 1998, THERE WERE 60,272,270 SHARES OF THE COMPANY'S NO PAR VALUE
COMMON STOCK OUTSTANDING.
================================================================================
<PAGE>
EL PASO ELECTRIC COMPANY
INDEX TO FORM 10-Q
Page No.
------------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - March 31, 1998 and December 31, 1997.................1
Statements of Operations - Three Months and Twelve Months
Ended March 31, 1998 and 1997........................................3
Statements of Comprehensive Operations - Three Months and
Twelve Months Ended March 31, 1998 and 1997..........................4
Statements of Cash Flows - Three Months Ended March 31, 1998
and 1997.............................................................5
Notes to Financial Statements.........................................6
Independent Auditor's Review Report..................................12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................................13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.............................................19
Item 6. Exhibits and Reports on Form 8-K..............................19
i
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EL PASO ELECTRIC COMPANY
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS MARCH 31,
(IN THOUSANDS) 1998 DECEMBER 31,
(UNAUDITED) 1997
---------------- ---------------
<S> <C> <C>
UTILITY PLANT:
Electric plant in service.............................................. $1,540,204 $1,538,572
Less accumulated depreciation and amortization......................... 185,703 164,283
---------- ----------
Net plant in service................................................. 1,354,501 1,374,289
Construction work in progress.......................................... 51,421 43,761
Nuclear fuel; includes fuel in process of $2,339 and
$9,910, respectively................................................. 88,647 86,609
Less accumulated amortization.......................................... 45,682 40,142
---------- ----------
Net nuclear fuel..................................................... 42,965 46,467
---------- ----------
Net utility plant.................................................. 1,448,887 1,464,517
---------- ----------
CURRENT ASSETS:
Cash and temporary investments......................................... 113,468 111,227
Accounts receivable, principally trade, net of allowance for
doubtful accounts of $5,162 and $5,124, respectively................. 53,326 58,960
Inventories, at cost................................................... 27,447 27,130
Net undercollection of fuel revenues................................... 12,679 13,870
Prepayments and other.................................................. 9,714 6,930
---------- ----------
Total current assets............................................... 216,634 218,117
---------- ----------
LONG-TERM CONTRACT RECEIVABLE............................................ 26,559 27,659
---------- ----------
DEFERRED CHARGES AND OTHER ASSETS:
Accumulated deferred income taxes, net................................. 37,692 43,208
Decommissioning trust fund............................................. 40,576 38,438
Other.................................................................. 20,180 20,674
---------- ----------
Total deferred charges and other assets............................ 98,448 102,320
---------- ----------
TOTAL ASSETS....................................................... $1,790,528 $1,812,613
========== ==========
See accompanying notes to financial statements.
</TABLE>
1
<PAGE>
EL PASO ELECTRIC COMPANY
BALANCE SHEETS (Continued)
<TABLE>
<CAPTION>
CAPITALIZATION AND LIABILITIES MARCH 31,
(IN THOUSANDS EXCEPT FOR SHARE DATA) 1998 DECEMBER 31,
(UNAUDITED) 1997
---------------- ----------------
<S> <C> <C>
CAPITALIZATION:
Common stock, stated value $1 per share, 100,000,000 shares
authorized, 60,101,891 and 60,060,034 shares issued and outstanding;
and 174,893 and 196,404 restricted shares, respectively.............. $ 60,277 $ 60,256
Capital in excess of stated value..................................... 241,363 241,222
Unearned compensation--restricted stock awards........................ (885) (1,138)
Accumulated earnings.................................................. 76,476 69,484
Accumulated other comprehensive income (loss) (unrealized
gains (losses) on marketable securities)............................ 213 (184)
---------- ----------
Common stock equity............................................... 377,444 369,640
Preferred stock, cumulative, no par value, 2,000,000 shares
authorized:
Redemption required--1,247,747 and 1,213,188 shares issued and
and outstanding, respectively; at liquidation preference........ 124,775 121,319
Long-term debt........................................................ 872,280 938,562
Financing and capital lease obligations............................... 25,333 28,248
---------- ----------
Total capitalization............................................ 1,399,832 1,457,769
---------- ----------
CURRENT LIABILITIES:
Current maturities of long-term debt and financing and
capital lease obligations........................................... 64,148 28,463
Accounts payable, principally trade................................... 22,950 24,957
Taxes accrued other than federal income taxes......................... 19,590 19,292
Interest accrued...................................................... 19,799 21,172
Other................................................................. 18,820 17,439
---------- ----------
Total current liabilities....................................... 145,307 111,323
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES:
Decommissioning....................................................... 96,321 94,917
Accrued postretirement benefit liability.............................. 76,593 75,531
Accrued pension liability............................................. 33,824 33,909
Other................................................................. 38,651 39,164
---------- ----------
Total deferred credits and other liabilities.................... 245,389 243,521
---------- ----------
COMMITMENTS AND CONTINGENCIES
TOTAL CAPITALIZATION AND LIABILITIES............................ $1,790,528 $1,812,613
========== ==========
See accompanying notes to financial statements.
</TABLE>
2
<PAGE>
EL PASO ELECTRIC COMPANY
STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31,
-------------------------- --------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Base revenues................................................ $ 107,300 $ 103,654 $ 462,625 $ 462,115
Fuel revenues and economy sales.............................. 28,486 30,960 127,698 123,548
Other........................................................ 1,159 1,243 4,803 4,261
----------- ----------- ----------- -----------
136,945 135,857 595,126 589,924
----------- ----------- ----------- -----------
ENERGY EXPENSES:
Fuel......................................................... 25,482 28,466 110,473 111,018
Purchased and interchanged power............................. 3,164 2,786 20,508 19,246
----------- ----------- ----------- -----------
28,646 31,252 130,981 130,264
----------- ----------- ----------- -----------
OPERATING REVENUES NET OF ENERGY EXPENSES...................... 108,299 104,605 464,145 459,660
----------- ----------- ----------- -----------
OTHER OPERATING EXPENSES:
Other operations............................................. 32,570 30,964 133,522 129,996
Maintenance.................................................. 8,202 9,429 33,555 37,406
Depreciation and amortization................................ 22,227 21,905 89,057 89,715
Taxes other than income taxes................................ 11,360 11,074 43,637 42,658
----------- ----------- ----------- -----------
74,359 73,372 299,771 299,775
----------- ----------- ----------- -----------
OPERATING INCOME............................................... 33,940 31,233 164,374 159,885
----------- ----------- ----------- -----------
OTHER INCOME (DEDUCTIONS):
Investment income............................................ 2,635 1,109 7,621 5,069
Litigation settlement, net................................... - - 7,500 -
Settlement of bankruptcy professional fees................... 376 (413) 1,151 1,892
Gain on sale of investment................................... - - - 3,844
Other, net................................................... (26) (290) (390) (895)
----------- ----------- ----------- -----------
2,985 406 15,882 9,910
----------- ----------- ----------- -----------
INCOME BEFORE INTEREST CHARGES................................. 36,925 31,639 180,256 169,795
----------- ----------- ----------- -----------
INTEREST CHARGES (CREDITS):
Interest on long-term debt................................... 20,336 22,225 84,228 94,261
Other interest............................................... 1,765 1,620 6,345 6,523
Interest capitalized and deferred............................ (1,621) (1,350) (6,146) (5,645)
----------- ----------- ----------- -----------
20,480 22,495 84,427 95,139
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES..................................... 16,445 9,144 95,829 74,656
INCOME TAX EXPENSE............................................. 5,930 3,552 36,869 28,834
----------- ----------- ----------- -----------
INCOME BEFORE EXTRAORDINARY LOSS ON
REPURCHASES OF DEBT.......................................... 10,515 5,592 58,960 45,822
EXTRAORDINARY LOSS ON REPURCHASES OF DEBT, NET OF
FEDERAL INCOME TAX BENEFIT................................... - (2,244) - (2,244)
----------- ----------- ----------- -----------
NET INCOME..................................................... 10,515 3,348 58,960 43,578
PREFERRED STOCK DIVIDEND REQUIREMENTS.......................... 3,523 3,149 13,518 12,085
----------- ----------- ----------- -----------
Net income applicable to common stock.......................... $ 6,992 $ 199 $ 45,442 $ 31,493
=========== =========== =========== ===========
BASIC EARNINGS PER COMMON SHARE:
Income before extraordinary loss on repurchases of debt...... $ 0.116 $ 0.040 $ 0.756 $ 0.561
Extraordinary loss on repurchases of debt, net of
federal income tax benefit................................ - (0.037) - (0.037)
----------- ----------- ----------- -----------
Net income................................................ $ 0.116 $ 0.003 $ 0.756 $ 0.524
=========== =========== =========== ===========
DILUTED EARNINGS PER COMMON SHARE:
Income before extraordinary loss on repurchases of debt...... $ 0.116 $ 0.040 $ 0.753 $ 0.560
Extraordinary loss on repurchases of debt, net of
federal income tax benefit................................ - (0.037) - (0.037)
----------- ----------- ----------- -----------
Net income................................................ $ 0.116 $ 0.003 $ 0.753 $ 0.523
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING........... 60,164,142 60,113,585 60,140,972 60,086,144
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES AND
DILUTIVE POTENTIAL COMMON SHARES OUTSTANDING................. 60,443,574 60,350,268 60,353,532 60,183,093
=========== =========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
3
<PAGE>
EL PASO ELECTRIC COMPANY
STATEMENTS OF COMPREHENSIVE OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31,
----------------------- ----------------------
1998 1997 1998 1997
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
NET INCOME................................................ $10,515 $3,348 $58,960 $43,578
OTHER COMPREHENSIVE INCOME (LOSS):
Net unrealized gain (loss) on marketable securities,
less applicable income tax benefit (expense)
of $(213), $125, $(115) and $(65), respectively...... 397 (232) 213 120
------- ------ ------- -------
COMPREHENSIVE INCOME...................................... 10,912 3,116 59,173 43,698
PREFERRED STOCK DIVIDEND REQUIREMENTS..................... 3,523 3,149 13,518 12,085
------- ------ ------- -------
COMPREHENSIVE INCOME (LOSS) APPLICABLE
TO COMMON STOCK......................................... $ 7,389 $ (33) $45,655 $31,613
======= ====== ======= =======
See accompanying notes to financial statements.
</TABLE>
4
<PAGE>
EL PASO ELECTRIC COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------
1998 1997
------------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................................ $ 10,515 $ 3,348
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization................................... 28,184 27,082
Deferred income taxes, net...................................... 5,302 3,272
Other operating activities...................................... 1,222 645
Extraordinary loss on repurchases of debt, net of federal
income tax benefit........................................... - 2,244
Change in:
Accounts receivable............................................. 5,634 6,981
Federal income tax receivable................................... - 17,219
Inventories..................................................... (317) 503
Prepayments and other........................................... (2,784) 1,750
Long-term contract receivable................................... 1,100 826
Accounts payable................................................ (2,007) (10,875)
Interest accrued................................................ (1,373) (2,774)
Net undercollection of fuel revenues............................ 1,191 (4,204)
Other current liabilities....................................... 1,959 782
Deferred charges and credits.................................... 1,603 3,721
--------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES..................... 50,229 50,520
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant........................................ (12,686) (23,838)
Investment in decommissioning trust fund.......................... (1,528) (1,411)
Other investing activities........................................ 79 19
--------- --------
NET CASH USED FOR INVESTING ACTIVITIES........................ (14,135) (25,230)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchases of and payments on long-term debt..................... (29,554) (53,181)
Net proceeds from (repayments of) financing obligations........... (3,494) 3,844
Redemption of capital lease obligations........................... (770) (739)
Other financing activities........................................ (35) -
--------- --------
NET CASH USED FOR FINANCING ACTIVITIES........................ (33,853) (50,076)
--------- --------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY INVESTMENTS........... 2,241 (24,786)
CASH AND TEMPORARY INVESTMENTS AT BEGINNING OF PERIOD............... 111,227 68,767
--------- --------
CASH AND TEMPORARY INVESTMENTS AT END OF PERIOD..................... $ 113,468 $ 43,981
========= ========
See accompanying notes to financial statements.
</TABLE>
5
<PAGE>
EL PASO ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
A. PRINCIPLES OF PREPARATION
Pursuant to the rules and regulations of the Securities and Exchange
Commission, certain financial information has been condensed and certain
footnote disclosures have been omitted. Such information and disclosures are
normally included in financial statements prepared in accordance with generally
accepted accounting principles.
These condensed financial statements should be read in conjunction with the
financial statements and notes thereto in the Annual Report of El Paso Electric
Company (the "Company") on Form 10-K for the year ended December 31, 1997 (the
"1997 Form 10-K"). Capitalized terms used in this report and not defined herein
have the meaning ascribed for such terms in the 1997 Form 10-K. In the opinion
of management of the Company, the accompanying financial statements contain all
adjustments necessary to present fairly the financial position of the Company at
March 31, 1998 and December 31, 1997; the results of operations for the three
and twelve months ended March 31, 1998 and 1997; and cash flows for the three
months ended March 31, 1998 and 1997. The results of operations for the three
and twelve months ended March 31, 1998 are not necessarily indicative of the
results to be expected for the full calendar year.
SUPPLEMENTAL STATEMENTS OF CASH FLOW DISCLOSURES (IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------------
1998 1997
---------------- ---------------
<S> <C> <C>
Cash (refunded) paid for:
Income taxes, net................................ $ - $(17,219)
Interest......................................... 18,991 21,999
Reorganization items--professional
fees and other............................... 1,273 155
Non-cash investing and financing activities:
Issuance of preferred stock for
pay-in-kind dividend......................... 3,456 3,089
Issuance of restricted shares of
common stock................................. 195 59
</TABLE>
6
<PAGE>
EL PASO ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
RECONCILIATION OF BASIC AND DILUTED EARNINGS PER COMMON SHARE
The reconciliation of basic and diluted earnings per common share before
extraordinary items is presented below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------------------------------------------------
1998 1997
----------------------------------- -----------------------------------
PER PER
COMMON COMMON
INCOME SHARES SHARE INCOME SHARES SHARE
-------------- ---------- ------- -------------- ---------- -------
(In thousands) (In thousands)
<S> <C> <C> <C> <C> <C> <C>
Income before extraordinary item..... $10,515 $5,592
Less: Preferred stock dividends.... 3,523 3,149
------- ------
Basic earnings per common share:
Income applicable to common
stock.............................. 6,992 60,164,142 $0.116 2,443 60,113,585 $0.040
====== ======
Effect of dilutive securities:
Unvested restricted stock........... - 16,434 - 16,596
Stock options....................... - 262,998 - 220,087
------- ---------- ------ ----------
Diluted earnings per common share:
Income applicable to common
stock.............................. $ 6,992 60,443,574 $0.116 $2,443 60,350,268 $0.040
======= ========== ======= ====== ========== =======
</TABLE>
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED MARCH 31,
------------------------------------------------------------------------
1998 1997
----------------------------------- -----------------------------------
PER PER
COMMON COMMON
INCOME SHARES SHARE INCOME SHARES SHARE
-------------- ---------- ------- -------------- ---------- -------
(In thousands) (In thousands)
<S> <C> <C> <C> <C> <C> <C>
Income before extraordinary item..... $58,960 $45,822
Less: Preferred stock dividends.... 13,518 12,085
------- -------
Basic earnings per common share:
Income applicable to common
stock.............................. 45,442 60,140,972 $0.756 33,737 60,086,144 $0.561
====== ======
Effect of dilutive securities:
Unvested restricted stock........... - 23,050 - 19,742
Stock options....................... - 189,510 - 77,207
------- ---------- ------- ----------
Diluted earnings per common share:
Income applicable to common
stock.............................. $45,442 60,353,532 $0.753 $33,737 60,183,093 $0.560
======= ========== ====== ======= ========== ======
</TABLE>
7
<PAGE>
EL PASO ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
B. RATE MATTERS
For a full discussion of the Company's rate matters, see Note B of Notes to
Financial Statements in the 1997 Form 10-K.
NEW MEXICO RATE MATTERS
Pending Rate Case. In October 1996, the New Mexico Commission issued an
order in Case No. 2722, requiring the Company to answer certain ratepayer
complaints and to file a rate filing package, including cost of service data and
supporting testimony. On March 3, 1997, the Company filed with the New Mexico
Commission all of the rate filing package data required by the Commission's
order. Although the Company's filing demonstrates a revenue deficiency of
approximately $8.6 million under current rates, the Company did not request a
rate change to recover the deficiency. On April 17, 1998, testimony was filed
by the New Mexico Commission staff and intervenors which included
recommendations based on (i) traditional original cost ratemaking and (ii)
revaluation of the Company's generating assets. The recommendations ranged from
the staff's proposed 5.2% reduction (approximately $4 million) in total
jurisdictional base revenues, based on original cost ratemaking, to the City of
Las Cruces' proposed 12% reduction in jurisdictional base rates (approximately
$9.2 million), based on projected future declining costs. The New Mexico
Commission could order a rate reduction, which could be more or less than the
parties' recommendations, or, alternatively, in response to economic factors and
regulatory, political and competitive pressures, the Company could agree to a
rate reduction. Prosecution of the rate case before the New Mexico Commission
is expected to be completed before the end of 1998. The Company is unable at
this time to predict the outcome of this proceeding.
FEDERAL REGULATORY MATTERS
In September 1996, one of the wholesale power marketers that submitted a bid
in 1996 to the Comision Federal de Electricidad de Mexico ("CFE") in connection
with renewal of the interchange agreement for the supply of power during 1997 to
Ciudad Juarez, Mexico, filed a complaint against the Company with the Federal
Energy Regulatory Commission ("FERC"). The complaint sought emergency relief
and requested the FERC to direct the Company to enter into an agreement to
provide firm point-to-point transmission service to the CFE under the Company's
open access transmission tariff. In October 1996, the FERC issued an order
requiring the Company to provide point-to-point transmission service over the
Company's transmission system to substation facilities near the United
States/Mexico border. The FERC, however, concurred with the Company's position
that the FERC does not have jurisdiction to order transmission across the
border, suggesting that the Department of Energy ("DOE") has such jurisdiction.
The DOE subsequently issued a Notice of Delegation and Assignment which
delegated to the FERC the DOE's authority to carry out its duties in this case.
The Company responded by asserting its belief that the DOE does not have
authority to require transmission access for delivery of power to the CFE,
however, the Company agreed to provide access, to the extent transmission
capacity is available to a winning bidder other than the Company, pending
resolution of this jurisdictional dispute.
8
<PAGE>
EL PASO ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
In April 1998, the FERC issued its order in this proceeding, finding that the
DOE has the authority, which has now been delegated to the FERC, to require the
Company to provide open access transmission service, upon a finding that so
doing would be in the public interest. Accordingly, the FERC has ordered the
Company to revise its open transmission tariff to provide non-discriminatory
open access transmission service over the United States portion of the lines
connecting the Company's Diablo and Ascarate substations in the United States
with the Insurgentes and Riverena substations in Mexico. There are currently no
pending transmission requests for cross-border transactions.
C. COMMITMENTS AND CONTINGENCIES
For a full discussion of commitments and contingencies, including
environmental matters related to the Company, see Note H of Notes to Financial
Statements in the 1997 Form 10-K. In addition, see Note C of Notes to Financial
Statements in the 1997 Form 10-K regarding matters related to Palo Verde,
including liability and insurance matters, decommissioning and the operation of
steam generators.
D. LITIGATION
For a full discussion of litigation, see Note I of Notes to Financial
Statements in the 1997 Form 10-K.
LITIGATION WITH LAS CRUCES
Las Cruces is attempting to replace the Company as the electric service
provider in Las Cruces by acquiring, through condemnation or a negotiated
purchase, the distribution assets and other facilities used to provide electric
service to customers in Las Cruces. Sales to customers in Las Cruces represent
approximately 8% of the Company's operating revenues.
In April 1995, Las Cruces filed a complaint against the Company in the
District Court for Dona Ana County, New Mexico, seeking a declaratory judgment
that Las Cruces has a right of eminent domain to condemn the electric
distribution system and related facilities owned and operated by the Company
within and adjacent to the city limits that provide or assist in the provision
of electricity within the municipal boundaries of Las Cruces. In May 1995, the
Company removed the case to federal district court in New Mexico. Following a
trial on the merits, the Federal Magistrate granted the Company's motion to
certify to the New Mexico Supreme Court the question as to whether Las Cruces
possesses the authority to condemn the Company's property for use as a municipal
utility when that property is already devoted to public use. The New Mexico
Supreme Court heard oral arguments in February 1997, but prior to issuing a
ruling, the New Mexico legislature enacted a bill which purports to give Las
Cruces the authority to condemn the Company's distribution system within its
city limits and a territory extending five miles beyond the municipal boundary.
In February 1998, the New Mexico Supreme Court ruled that the subsequent
legislation rendered moot the certified question before the Supreme Court. In
April 1998, the Federal Magistrate also dismissed the case as moot. On
9
<PAGE>
EL PASO ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
February 26, 1998, the Company received notice from Las Cruces of its intent to
file a condemnation action in New Mexico district court. The Company is
currently evaluating how to respond to the Federal Magistrate's ruling.
If Las Cruces succeeds in its efforts to condemn the Company's distribution
system, the Company could lose its Las Cruces customer base, although the
Company would be entitled to receive "just compensation" as established by New
Mexico law. "Just compensation" is generally defined as the amount of money
that would fairly compensate the party whose property is condemned. It is the
Company's opinion that this amount would be the difference between the value of
the Company's entire system prior to the taking, as compared to the value of the
entire system after the taking. See Note B of Notes to Financial Statements in
the 1997 Form 10-K for a full discussion of stranded costs.
Las Cruces has taken several actions to position itself to acquire portions
of the Company's distribution system and certain related facilities. In August
1994, Southwestern Public Service Company ("SPS") and Las Cruces entered into an
agreement granting SPS the right to provide all of the electric power and energy
required by Las Cruces if it succeeds in its efforts to obtain the Company's
distribution system. In addition, Las Cruces sold approximately $73 million in
revenue bonds in October 1995 to provide funding to finance the acquisition by
condemnation or negotiated purchase of the Company's electrical distribution
assets within and adjacent to the Las Cruces city limits.
The Company has filed a lawsuit in the Dona Ana County District Court and is
pursuing a complaint simultaneously before the New Mexico Commission challenging
the legality of the sale of the revenue bonds. In addition, the New Mexico
Commission is investigating the agreement between SPS and Las Cruces which,
under certain circumstances, would grant Las Cruces an option to sell to SPS
electric utility assets acquired through condemnation. In August 1996, the Dona
Ana County District Court issued an opinion letter stating that Section 3-23-3
of the New Mexico Municipal Code is inapplicable to home rule municipalities and
Las Cruces, therefore, was not required to acquire the New Mexico Commission's
approval before issuing revenue bonds to acquire utility property. However, the
Court did agree with the Company that the revenue bonds, in this case backed by
utility revenues, are subject to the same requirements as those imposed on other
revenue bonds backed by gross receipts tax revenues. Therefore, if the Court's
finding of the applicability of Las Cruces' home rule authority is overturned on
appeal, the Company's position that the issuance of the bonds required prior
approval could be upheld. The Company filed an appeal with the New Mexico Court
of Appeals and Las Cruces requested an expedited ruling from the Court of
Appeals. In August 1997, the New Mexico Court of Appeals certified to the New
Mexico Supreme Court the issues related to Las Cruces' authority to issue the
revenue bonds. Oral argument before the Supreme Court was held in November
1997.
In July 1996, Las Cruces exercised its right under Order No. 888 to request
that the Company calculate Las Cruces' stranded cost obligation should it leave
the Company's system and operate its own municipal utility. The Company's
initial non-binding calculation was provided within the statutory period. Las
Cruces subsequently filed a request at the FERC for a determination that Las
Cruces would have no stranded cost obligation to the Company or, in the
alternative, that the FERC convene a hearing to establish the amount of any
stranded costs. In August 1997, the FERC issued an order
10
<PAGE>
EL PASO ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
denying Las Cruces' request for a determination that Las Cruces would have no
stranded cost obligation, and providing for evidentiary hearings on the
following stranded costs issues: (i) whether the Company has met the "reasonable
expectation" standard so as to justify recovery of stranded costs from Las
Cruces; and (ii) if so, the amount of stranded costs that the Company may
recover from Las Cruces. An evidentiary hearing on these issues was held before
an administrative law judge of the FERC in February 1998. The Company submitted
evidence in that proceeding showing that it was entitled to recover stranded
generation costs from Las Cruces of $101 million. In contrast, the FERC staff
recommended that the Company be permitted to recover stranded costs of $37.0
million, and Las Cruces claimed that its stranded cost obligation was in the
range of $0 to $17.4 million. The issues in that proceeding are currently being
briefed by the parties, and the process is expected to continue throughout 1998.
In April 1997, Las Cruces announced its plan to build a substation and
distribution lines to serve a new customer in a city-owned industrial park. Las
Cruces stated that SPS would construct, operate and maintain the new substation
facility, and that the rates for this new customer would be significantly lower
than the Company's current rates. Las Cruces has approved a contract with SPS
to provide operation and maintenance services for the proposed Las Cruces
electric distribution system, substations and associated transmission
facilities.
The Company continues to believe that it can provide lower cost electric
service to customers in Las Cruces than can be achieved through a municipal
takeover. Accordingly, the Company has stated its strong preference for a
resolution of its differences with Las Cruces through negotiation rather than
litigation and condemnation. A negotiated settlement of the Company's pending
rate case in New Mexico could include a reduction in rates or a settlement of
all issues in New Mexico, which would likely create increased political and
economic pressure on the Company to reduce rates in Texas.
The Company is unable to predict the outcome of Las Cruces' efforts to
replace the Company as its electric service provider or the effects it may have
on the Company's financial position, results of operations and cash flows. The
Company does not believe it is probable that a loss has been incurred and,
therefore, has made no provision in the accompanying financial statements
related to these matters.
11
<PAGE>
Independent Auditors' Review Report
-----------------------------------
The Shareholders and the Board of Directors
El Paso Electric Company:
We have reviewed the accompanying condensed balance sheet of El Paso Electric
Company (the Company) as of March 31, 1998, the related condensed statements of
operations and comprehensive operations for the three months and twelve months
ended March 31, 1998 and 1997 and the related condensed statements of cash flows
for the three months ended March 31, 1998 and 1997. These condensed financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed financial statements referred to above for them to be
in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of El Paso Electric Company as of December 31,
1997, and the related statements of operations, comprehensive operations,
changes in common stock equity, and cash flows for the year then ended (not
presented herein); and in our report dated February 6, 1998, we expressed an
unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying condensed balance sheet as of December
31, 1997, is fairly stated, in all material respects, in relation to the balance
sheet from which it has been derived.
KPMG Peat Marwick LLP
El Paso, Texas
April 23, 1998
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information contained in this Item 2 updates, and should be read in
conjunction with, the information set forth in Part II, Item 7 of the Company's
1997 Form 10-K.
Statements in this document, other than statements of historical information,
are forward-looking statements that are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements, as well as other oral and written forward-looking
statements made by or on behalf of the Company from time to time, including
statements contained in the Company's filings with the Securities and Exchange
Commission and its reports to stockholders, involve known and unknown risks and
other factors which may cause the Company's actual results in future periods to
differ materially from those expressed in any forward-looking statements. Any
such statement is qualified by reference to the risks and factors discussed
below under the headings "Operational and Prospects and Challenges" and
"Liquidity and Capital Resources" and in the Company's filings with the
Securities and Exchange Commission, which are available from the Securities and
Exchange Commission or which may be obtained upon request from the Company. The
Company cautions that the foregoing list of important factors is not exclusive.
The Company does not undertake to update any forward-looking statement that may
be made from time to time by or on behalf of the Company.
OPERATIONAL PROSPECTS AND CHALLENGES
While the Company prepares for a new era of deregulation and competition in
the electric utility industry, the Rate Stipulation provides a certain level of
stability in the rates that the Company currently charges the majority of its
customers. During the Freeze Period, the Company's strategic goals include (i)
serving the growing need for electricity within its retail service territory;
(ii) continuing to focus on its strategic location on the border with Mexico;
(iii) enhancing long-term relationships with its largest retail customers; (iv)
continuing to reduce operating costs; and (v) developing an energy-related
services business.
The Company faces a number of challenges which could negatively impact its
operations during the Freeze Period. The primary challenge is the risk of
increased costs, including the risk of additional or unanticipated costs at Palo
Verde resulting from (i) increases in operation and maintenance expenses; (ii)
the possible replacement of steam generators; (iii) an extended outage of any of
the Palo Verde units; (iv) increases in estimates of decommissioning costs; (v)
the storage of radioactive materials; and (vi) compliance with the various
requirements and regulations governing commercial nuclear generating stations.
There can be no assurance that the Company's revenues will be sufficient to
recover any increased costs incurred during the Freeze Period, including any
such increased costs in connection with Palo Verde or increases in other costs
of operation, whether as a result of higher than anticipated levels of
inflation, changes in tax laws or regulatory requirements, or other causes.
Another risk to the Company's operations is the potential loss of customers.
The Company's wholesale and large retail customers have, in varying degrees,
additional alternate sources of economical power, including co-generation of
electric power. For example, a 504 MW combined-cycle generating plant located
in Samalayuca, Chihuahua, which is scheduled to be fully operational by the end
of 1998, when the Company's current power contract expires, will give the CFE
the current capacity to supply electricity to portions of northern Chihuahua,
including the geographic area currently served by the Company. If the Company
loses a significant portion of its retail customer base or wholesale sales, the
Company may not be able to replace such revenues through either the addition of
new customers or an
13
<PAGE>
increase in rates to remaining customers. The New Mexico State Legislature has
passed legislation which gives Las Cruces the apparent legal authority to
condemn the Company's distribution system and related assets located within its
city limits, and the Company has received notice from Las Cruces of its intent
to file an eminent domain proceeding. If Las Cruces succeeds in its efforts, the
Company could lose its Las Cruces customer base, although the Company would
receive "just compensation" as established by the court.
In recent years, the United States has closed a large number of military
bases and there can be no assurance that Holloman Air Force Base ("Holloman"),
White Sands Missile Range ("White Sands") or the United States Army Air Defense
Center at Fort Bliss ("Ft. Bliss") will not be closed in the future or that the
Company will not lose all or some of its military base sales. The Company's
sales to the military bases represent approximately 3% of operating revenues.
The Company signed a contract with Ft. Bliss in August 1996, under which Ft.
Bliss will take service from the Company through 1999, with the right thereafter
to continue service on a year-to-year basis for two years. The Company has a
contract to provide retail electric service to Holloman for a ten-year term
which began in December 1995. In August 1996, the Army advised the Company that
White Sands would continue to purchase retail electric service from the Company
pursuant to the existing retail service contract for an indefinite period. The
Army will provide the Company written notice of termination of such contract not
less than one year in advance of the termination date.
The Company does not currently have an agreement with New Mexico regulatory
authorities or parties to past New Mexico regulatory proceedings comparable to
the Rate Stipulation. The Company is currently involved in a proceeding before
the New Mexico Commission in which the level of its rates is being examined.
The New Mexico Commission could, after hearing, order a rate reduction, which
could be more or less than the parties' recommendations, or, alternatively, in
response to regulatory, political and competitive pressures, the Company could
agree to a rate reduction. Any such agreement by the Company would likely
create increased political and economic pressure on the Company to reduce rates
in Texas. Prosecution of the case before the New Mexico Commission is expected
to be completed in 1998. The Company is unable at this time to predict with
certainty the outcome of this proceeding.
The Company faces the same concerns as most other companies that use
computers relating to the Year 2000 problem. The problem is that many computer
applications do not correctly differentiate a one year difference between the
years 1999 and 2000. Applications that are date sensitive may not properly
calculate information or may not function.
The Company began working on the Year 2000 computer concern during the last
quarter of 1996. To allow adequate time for additional testing and correction,
the Company is attempting to either (i) revise current computer systems to be
Year 2000 compliant, or (ii) replace systems with new ones that are Year 2000
compliant by the end of 1998. Incremental costs of the project are anticipated
to be immaterial as the Company is using internal resources to modify and test
programs. The Company anticipates spending approximately $1.8 million to revise
current computer systems and is expensing such amount as incurred.
Because of the integrated nature of the Company's business with other
utilities and its joint facilities operated by other utilities, the Company is
inquiring about and reviewing the activities of the other utilities which
comprise the integrated system. In addition, the Company is inquiring about and
reviewing the activities of its financial institutions and major suppliers to
determine their compliance with Year 2000 issues. Given the complex nature of
this problem and the potential overlap with systems
14
<PAGE>
beyond the Company's control, the Company cannot assure that it will not
experience some difficulty relating to the Year 2000 problem.
Finally, the electric utility industry in general is facing significant
challenges and increased competition as a result of changes in federal
provisions relating to third-party transmission services and independent power
production, as well as potential changes in state regulatory provisions relating
to wholesale and retail service. Both the Texas and New Mexico Commissions have
conducted proceedings related to industry restructuring and stranded cost
recovery; however, restructuring legislation has yet to be passed in either
state. The potential effects of deregulation are particularly important to the
Company because its rates are significantly higher than the national and
regional averages. In the face of increased competition, there can be no
assurance that such competition will not adversely affect the future operations,
cash flow and financial condition of the Company.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal liquidity requirements through the end of the decade
are expected to consist of interest and principal payments on the Company's
indebtedness and capital expenditures related to the Company's generating
facilities and transmission and distribution systems. The Company expects that
cash flows from operations will be sufficient for such purposes.
Long-term capital requirements of the Company will consist primarily of
construction of electric utility plant, payment of interest on and retirement of
debt, and payment of dividends on and redemption of preferred stock. The
Company has no current plans to construct any new generating capacity through at
least 2004. Utility construction expenditures will consist primarily of
expanding and updating the transmission and distribution systems and the cost of
betterments and improvements to Palo Verde and other generating facilities.
The Company anticipates that internally generated funds will be sufficient to
meet its construction requirements, provide for the retirement of debt and
redemption of preferred stock at maturity and enable the Company to meet other
contingencies that may exist, such as compliance with environmental regulation,
pending litigation and any claims for indemnification. At March 31, 1998, the
Company had approximately $113.5 million in cash and cash equivalents. The
Company also has a $100 million revolving credit facility, which provides up to
$60 million for nuclear fuel purchases and up to $50 million (depending on the
amount of borrowings outstanding for nuclear fuel purchases) for working capital
needs. At March 31, 1998, approximately $48.5 million had been drawn for
nuclear fuel purchases. No amounts have been drawn on this facility for working
capital needs.
The Company has a high debt-to-capitalization ratio and significant debt
service obligations. Due to the Rate Stipulation and competitive pressures, the
Company does not expect to be able to raise its base rates in the event of
increases in nonfuel costs or loss of revenues. Accordingly, soon after its
emergence from bankruptcy, the Company established debt reduction as a high
priority in order to gain additional financial flexibility to address the
evolving competitive market.
The Company has significantly reduced its long-term debt following the
Reorganization. From June 1, 1996 through March 31, 1998, the Company
repurchased approximately $230.3 million of first mortgage bonds as part of an
aggressive deleveraging program and has reduced its annual interest expense by
approximately $17.9 million. Long-term indebtedness as a percentage of
capitalization was reduced from 74% at June 30, 1996 to 64% at March 31, 1998.
15
<PAGE>
The Company continues to believe that the orderly reduction of debt with a
goal of achieving a capital structure that is more typical in the electric
utility industry and, ultimately, an investment grade rating, is a significant
component of long-term shareholder value creation. Accordingly, the Company will
regularly evaluate market conditions and, when appropriate, use a portion of its
available cash to reduce its fixed obligations through open market purchases of
first mortgage bonds. However, the significant amount of debt reduction that
the Company has achieved since the Reorganization, and the need for cash both to
meet upcoming bond maturities and, if appropriate, early redemption of the
Series A Preferred Stock, may result in a lower volume of repurchases in the
future. Accordingly, the Company may experience a net increase in cash as it
evaluates the comparative economic value of using excess cash for purposes other
than open market purchases of its first mortgage bonds.
The degree to which the Company is leveraged could have important
consequences on the Company's liquidity, including (i) the Company's ability to
obtain additional financing for working capital, capital expenditures,
acquisitions, general corporate or other purposes could be limited in the
future; (ii) a substantial portion of the Company's cash flow from operations
will be dedicated to the payment of principal and interest on its indebtedness
and, if appropriate, the early redemption of its Series A Preferred Stock; and
(iii) the Company's substantial leverage may place the Company at a competitive
disadvantage by limiting its financial flexibility to respond to the demands of
the competitive market and make it more vulnerable to adverse economic or
business changes.
RESULTS OF OPERATIONS
Net income applicable to common stock before extraordinary item was
approximately $7.0 million, or $0.12 diluted earnings per common share, for the
three months ended March 31, 1998, compared with $2.4 million, or $0.04 diluted
earnings per common share, for the same period a year ago. For the twelve
months ended March 31, 1998, net income applicable to common stock before
extraordinary item was approximately $45.4 million, or $0.75 diluted earnings
per common share, compared with $33.7 million, or $0.56 diluted earnings per
common share for the same period a year ago.
Operating revenues net of energy expenses increased $3.7 million and $4.5
million for the three and twelve months ended March 31, 1998 compared to the
same periods last year, primarily due to increased KWH sales. The twelve-month
increase was also due to increased revenue per KWH from the CFE. Comparisons of
KWH sales and operating revenues are shown below (In thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31: INCREASE/(DECREASE)
- ---------------------------- --------------------------
1998 1997 AMOUNT PERCENT
--------------- --------------- --------------------------
<S> <C> <C> <C> <C>
Electric KWH Sales:
Retail Customers........................ 1,326,074 1,271,729 54,345 4.3%
Other Utilities......................... 459,334 384,756 74,578 19.4
---------- ---------- ----------
Total.................................. 1,785,408 1,656,485 128,923 7.8
========== ========== ==========
Operating Revenues:
Retail Customers........................ $ 110,739 $ 113,313 $ (2,574) (2.3)%
Other Utilities......................... 26,206 22,544 3,662 16.2
---------- ---------- ----------
Total.................................. $ 136,945 $ 135,857 $ 1,088 0.8
========== ========== ==========
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED MARCH 31: INCREASE/(DECREASE)
- ----------------------------- --------------------------
1998 1997 AMOUNT PERCENT
--------------- --------------- --------------------------
<S> <C> <C> <C>
Electric KWH Sales:
Retail Customers........................ 5,838,792 5,673,203 165,589 2.9%
Other Utilities......................... 1,972,463 1,782,458 190,005 10.7
---------- ---------- --------
Total.................................. 7,811,255 7,455,661 355,594 4.8
========== ========== ========
Operating Revenues:
Retail Customers........................ $ 495,294 $ 484,349 $ 10,945 2.3%
Other Utilities......................... 99,832 105,575 (5,743) (5.4)
---------- ---------- --------
Total.................................. $ 595,126 $ 589,924 $ 5,202 0.9
========== ========== ========
</TABLE>
Other operations and maintenance expense increased $0.4 million for the
three months ended March 31, 1998 compared to the same period last year as a
result of increased operations expense of $1.6 million partially offset by a
decrease of $1.2 million in maintenance expenses. The increased operations
expense was primarily due to a $0.9 million increase in professional fees
related to regulatory issues and an additional accrual for sick leave of $0.7
million. The decrease in maintenance expense was primarily due to a $1.1
million decrease in maintenance costs at a Company-owned generating plant.
Other operations and maintenance expense decreased $0.3 million for the
twelve months ended March 31, 1998 compared to the same period last year as a
result of decreased maintenance expense of $3.9 million offset by an increase of
$3.5 million in operations expense. The decrease in maintenance expense was
primarily due to a $1.4 million decrease in maintenance expense at Palo Verde
due to the timing and duration of refueling and maintenance outages and a $1.2
million decrease in maintenance costs at a Company-owned generating plant. The
increase in operations expense was primarily due to a $2.8 million increase in
professional fees related to regulatory issues and a $2.2 million employee bonus
in 1997 offset in part by a $2.7 million decrease in operations expense at Palo
Verde.
Depreciation and amortization expense was essentially unchanged for the
three and twelve months ended March 31, 1998 compared to the same periods last
year.
Taxes other than income taxes increased $0.3 million and $1.0 million
for the three and twelve months ended March 31, 1998, respectively, compared to
the same periods last year, primarily due to an increase in Texas property taxes
resulting from changes in regulatory operating income and an increase in payroll
taxes. The increase was partially offset by a decrease in Arizona property
taxes resulting from a 1996 regulatory plant write-down and depreciation.
Other income increased $2.6 million for the three months ended March
31, 1998 compared to the same period last year primarily as a result of
increased investment income of $1.5 million, due to increased levels of cash,
and an increase of $0.8 million due to favorable settlements of bankruptcy
professional fees. Other income increased $6.0 million for the twelve month
period ended March 31, 1998 when compared to the same period last year due to a
favorable litigation settlement in June 1997 of $7.5 million, net of legal fees
and expenses, and increased investment income of $2.6 million due to increase
levels of cash. These increases were partially offset by a gain on sale of
investment of $3.8 million in August 1996.
17
<PAGE>
Interest charges decreased $2.0 million and $10.7 million for the three
and twelve months ended March 31, 1998 compared to the same periods last year,
primarily due to a reduction in outstanding debt as a result of open market
purchases of the Company's first mortgage bonds.
Income tax expense increased $2.4 million and $8.0 million for the
three and twelve months ended March 31, 1998, respectively, compared to the same
periods last year, primarily due to changes in pretax income including a
favorable litigation settlement and certain permanent differences.
Extraordinary loss on repurchases of debt for the three and twelve
months ended March 31, 1997 represents the payment of premiums on debt
repurchased and the recognition of unamortized issuance expenses on that debt of
$2.2 million, net of federal income tax benefit of $1.2 million, with no
comparable amounts for the same periods in 1998.
18
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company hereby incorporates by reference the information set forth in
Part I of this report under Note D of Notes to Financial Statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: See Index to Exhibits incorporated herein by reference.
(b) Reports on Form 8-K:
None
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EL PASO ELECTRIC COMPANY
By: /s/ Gary R. Hedrick
---------------------------------------
Gary R. Hedrick
Vice President, Chief Financial Officer
and Treasurer
(Duly Authorized Officer and
Principal Financial Officer)
Dated: May 13, 1998
20
<PAGE>
EL PASO ELECTRIC COMPANY
INDEX TO EXHIBITS
Exhibit
Number Exhibit
------ -------
11 Statement re Computation of Per Share Earnings
15 Letter re Unaudited Interim Financial Information
27 Financial Data Schedule (EDGAR filing only)
+99.01 Form of Stock Option Agreement between the Company and certain key
officers of the Company.
99.02 Stock Option Agreement, dated as of January 3, 1998, with
Terry D. Bassham.
99.03 Stock Option Agreement, dated as of January 3, 1998, with
John C. Horne.
++99.04 Form of Restricted Stock Award Agreement between the Company and
certain key officers of the Company.
99.05 Restricted Stock Award Agreement, dated as of April 6, 1998, with
Robert C. McNiel.
99.06 Restricted Stock Award Agreement, dated as of March 23, 1998, with
Susanne M. Sickles.
99.07 Restricted Stock Award Agreement, dated as of April 6, 1998, with
Guillermo Silva, Jr.
99.08 Restricted Stock Award Agreement, dated as of March 23, 1998, with
Pedro Serrano, Jr.
99.09 Restricted Stock Award Agreement, dated as of March 24, 1998, with
Thomas L. Newsom.
99.10 Restricted Stock Award Agreement, dated as of March 19, 1998, with
John A. Whitacre.
99.11 Restricted Stock Award Agreement, dated as of March 25, 1998, with
Terry D. Bassham.
99.12 Restricted Stock Award Agreement, dated as of March 30, 1998, with
Eduardo A. Rodriguez.
99.13 Restricted Stock Award Agreement, dated as of March 20, 1998, with
Gary R. Hedrick.
99.14 Restricted Stock Award Agreement, dated as of March 25, 1998, with
John C. Horne.
21
<PAGE>
+ Four agreements, substantially identical in all material respects
to this Exhibit, have been entered into with J. Frank Bates;
Michael L. Blough; Gary R. Hedrick; and Eduardo A. Rodriguez,
officers of the Company.
++ Two agreements, substantially identical in all material respects to
this Exhibit, have been entered into with Julius F. Bates and
Michael L. Blough, officers of the Company.
22
<PAGE>
EXHIBIT 11
EL PASO ELECTRIC COMPANY
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-----------------------------
1998 1997
------------ ------------
<S> <C> <C>
NET INCOME APPLICABLE TO COMMON STOCK:
Income before extraordinary loss on
repurchases of debt $ 6,992 $ 2,443
Extraordinary loss on repurchases of debt,
net of federal income tax benefit -- (2,244)
------------ ------------
Net income applicable to common stock $ 6,992 $ 199
============ ============
BASIC EARNINGS PER COMMON SHARE:
Weighted average number of common
shares outstanding 60,164,142 60,113,585
============ ============
Net income per common share:
Income before extraordinary loss on
repurchases of debt $ 0.116 $ 0.040
Extraordinary loss on repurchases of debt,
net of federal income tax benefit -- (0.037)
------------ ------------
Net income $ 0.116 $ 0.003
============ ============
DILUTED EARNINGS PER COMMON SHARE:
Weighted average number of common
shares outstanding 60,164,142 60,113,585
------------ ------------
Effect of dilutive potential common stock options based on the treasury
stock method using average market price:
Quarter ended March 31 262,998 220,087
Quarter ended June 30 -- --
Quarter ended September 30 -- --
Quarter ended December 31 -- --
Effect of dilutive potential restricted common stock
based on the treasury stock method using
average market price:
Quarter ended March 31 16,434 16,596
Quarter ended June 30 -- --
Quarter ended September 30 -- --
Quarter ended December 31 -- --
------------ ------------
279,432 236,683
Divided by number of quarters 1 1
------------ ------------
Net effect of dilutive potential common stock 279,432 236,683
------------ ------------
Weighted average number of common shares and
dilutive potential common shares outstanding 60,443,574 60,350,268
============ ============
Net income per common share:
Income before extraordinary loss on
repurchases of debt $ 0.116 $ 0.040
Extraordinary loss on repurchases of debt,
net of federal income tax benefit -- (0.037)
------------ ------------
Net income $ 0.116 $ 0.003
============ ============
</TABLE>
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED MARCH 31,
-----------------------------
1998 1997
------------ ------------
<S> <C> <C>
NET INCOME APPLICABLE TO COMMON STOCK:
Income before extraordinary loss on
repurchases of debt $ 45,442 $ 33,737
Extraordinary loss on repurchases of debt,
net of federal income tax benefit -- (2,244)
------------ ------------
Net income applicable to common stock $ 45,442 $ 31,493
============ ============
BASIC EARNINGS PER COMMON SHARE:
Weighted average number of common
shares outstanding 60,140,972 60,086,144
============ ============
Net income per common share:
Income before extraordinary loss on
repurchases of debt $ 0.756 $ 0.561
Extraordinary loss on repurchases of debt,
net of federal income tax benefit -- (0.037)
------------ ------------
Net income $ 0.756 $ 0.524
============ ============
DILUTED EARNINGS PER COMMON SHARE:
Weighted average number of common
shares outstanding 60,140,972 60,086,144
------------ ------------
Effect of dilutive potential common stock options based on the treasury
stock method using average market price:
Quarter ended March 31 262,998 220,087
Quarter ended June 30 177,747 14,787
Quarter ended September 30 134,451 36,147
Quarter ended December 31 182,844 37,807
Effect of dilutive potential restricted common stock
based on the treasury stock method using
average market price:
Quarter ended March 31 16,434 16,596
Quarter ended June 30 20,014 19,808
Quarter ended September 30 23,717 21,246
Quarter ended December 31 32,036 21,316
------------ ------------
850,241 387,794
Divided by number of quarters 4 4
------------ ------------
Net effect of dilutive potential common stock 212,560 96,949
------------ ------------
Weighted average number of common shares and
dilutive potential common shares outstanding 60,353,532 60,183,093
============ ============
Net income per common share:
Income before extraordinary loss on
repurchases of debt $ 0.753 $ 0.560
Extraordinary loss on repurchases of debt,
net of federal income tax benefit -- (0.037)
------------ ------------
Net income $ 0.753 $ 0.523
============ ============
</TABLE>
<PAGE>
Exhibit 15
El Paso Electric Company
El Paso, Texas
Ladies and Gentlemen:
Re: Registration Statement No. 333-17971
With respect to the subject registration statement, we acknowledge our awareness
of the use therein of our report dated April 23, 1998 related to our review of
interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such a report is not
considered part of the registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of sections 7 and 11 of the Act.
Very truly yours,
KPMG Peat Marwick LLP
El Paso, Texas
April 23, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET OF EL PASO ELECTRIC COMPANY AS OF MARCH 31, 1998 AND THE RELATED
STATEMENTS OF INCOME AND CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,448,887
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 216,634
<TOTAL-DEFERRED-CHARGES> 98,448
<OTHER-ASSETS> 26,559
<TOTAL-ASSETS> 1,790,528
<COMMON> 60,277
<CAPITAL-SURPLUS-PAID-IN> 240,478
<RETAINED-EARNINGS> 76,689
<TOTAL-COMMON-STOCKHOLDERS-EQ> 377,444
124,775
0
<LONG-TERM-DEBT-NET> 872,280
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 37,119
0
<CAPITAL-LEASE-OBLIGATIONS> 25,333
<LEASES-CURRENT> 27,029
<OTHER-ITEMS-CAPITAL-AND-LIAB> 326,548
<TOT-CAPITALIZATION-AND-LIAB> 1,790,528
<GROSS-OPERATING-REVENUE> 136,945
<INCOME-TAX-EXPENSE> 5,094
<OTHER-OPERATING-EXPENSES> 103,005
<TOTAL-OPERATING-EXPENSES> 108,099
<OPERATING-INCOME-LOSS> 28,846
<OTHER-INCOME-NET> 2,149
<INCOME-BEFORE-INTEREST-EXPEN> 30,995
<TOTAL-INTEREST-EXPENSE> 20,480
<NET-INCOME> 10,515
3,523
<EARNINGS-AVAILABLE-FOR-COMM> 6,992
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 73,665
<CASH-FLOW-OPERATIONS> 50,229
<EPS-PRIMARY> 0.116<F1>
<EPS-DILUTED> 0.116<F1>
<FN>
<F1>PRIMARY AND FULLY DILUTED EARNINGS PER SHARE ARE NO LONGER BEING CALCULATED,
PER SFAS NO. 128. THE AMOUNTS SHOWN REPRESENT BASIC AND DILUTED EARNINGS PER
SHARE, RESPECTIVELY.
</FN>
</TABLE>
<PAGE>
Exhibit 99.01
EL PASO ELECTRIC COMPANY
STOCK OPTION AGREEMENT
(INCENTIVE STOCK OPTIONS)
El Paso Electric Company, a Texas corporation (the "Company"), hereby
grants to ____________________ (the "Optionee") as of January 2, 1998 (the
"Option Date"), pursuant to the provisions of the El Paso Electric Company 1996
Long-Term Incentive Plan (the "Plan"), an option to purchase from the Company
(the "Option") 26,666 shares of its Common Stock, no par value ("Stock"), at the
price of $7.50 per share upon and subject to the terms and conditions set forth
below.
1. Option Subject to Acceptance of Agreement. The Option shall be
null and void unless the Optionee shall accept this Agreement by executing it in
the space provided below and returning such original execution copy to the
Company.
2. Time and Manner of Exercise of Option.
2.1. Maximum Term of Option. In no event may the Option be
exercised, in whole or in part, after January 2, 2008 (the "Expiration Date").
2.2. Exercise of Option. (a) Except as otherwise provided by
Sections 2.2(b) and 2.2(c) hereof and by Section 6.8 of the Plan, the Option
shall become exercisable (i) on January 2, 2002, with respect to one-half of the
number of shares of stock subject to the option on the option date and (ii) on
January 2, 2003, with respect to the remaining one-half of the shares of stock
subject to the option on the option date.
(b) If the Optionee's employment by the Company terminates by reason
of Disability, the Option shall be exercisable only to the extent it is
exercisable on the effective date of the Optionee's termination of employment
and may thereafter be exercised by the Optionee or the Optionee's Legal
Representative until and including the earliest to occur of (i) the date which
is 90 days after the effective date of the Optionee's termination of employment
and (ii) the Expiration Date.
(c) If the Optionee's employment by the Company terminates by reason
of retirement, the Option shall be exercisable only to the extent it is
exercisable on the effective date of the Optionee's termination of employment
and may thereafter be exercised by the Optionee or the Optionee's Legal
Representative until and including the earliest to occur of (i) the date which
is 90 days after the effective date of the Optionee's termination of employment
and (ii) the Expiration Date.
(d) If the Optionee's employment by the Company terminates by reason
of death, the Option shall be exercisable only to the extent it is exercisable
on the date of death and may thereafter be exercised by the Optionee or the
Optionee's Legal
<PAGE>
Representative or Permitted Transferees, as the case may be, until and including
the earliest to occur of (i) the date which is 90 days after the date of death
and (ii) the Expiration Date.
(e) If the Optionee's employment by the Company terminates for any
reason other than Disability, retirement or death, the Option shall be
exercisable only to the extent it is exercisable on the effective date of the
Optionee's termination of employment and may thereafter be exercised by the
Optionee or the Optionee's Legal Representative until and including the earliest
to occur of (i) the date which is 90 days after the effective date of the
Optionee's termination of employment and (ii) the Expiration Date.
(f) If the Optionee dies during the period set forth in Section
2.2(b) following termination of employment by reason of Disability, or if the
Optionee dies during the period set forth in Section 2.2(c) following
termination of employment, or if the Optionee dies during the period set forth
in Section 2.2(e) following termination of employment for any reason other than
Disability or retirement, the Option shall be exercisable only to the extent it
is exercisable on the date of death and may thereafter be exercised by the
Optionee's Legal Representative or Permitted Transferees, as the case may be,
until and including the earliest to occur of (i) the date which is 90 days after
the date of death and (ii) the Expiration Date.
2.3 Method of Exercise. Subject to the limitations set forth in
this Agreement, the Option may be exercised by the Optionee (1) by giving
written notice to the Company specifying the number of whole shares of Stock to
be purchased and accompanied by payment therefor in full (or arrangement made
for such payment to the Company's satisfaction) either (i) in cash, (ii) by
delivery of previously owned whole shares of Stock (which the Optionee has held
for at least six months prior to the delivery of such shares or which the
Optionee purchased on the open market and for which the Optionee has good title,
free and clear of all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price
payable pursuant to the Option by reason of such exercise, (iii) in cash by a
broker-dealer acceptable to the Company to whom the Optionee has submitted an
irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by
executing such documents as the Company may reasonably request. The Committee
may disapprove an election pursuant to any of clauses (ii) - (iv) if the
Committee determines, based on the opinion of recognized securities counsel,
that the method of exercise so elected would result in liability to the Optionee
under Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or the regulations promulgated thereunder. Any fraction of a
share of Stock which would be required to pay such purchase price shall be
disregarded and the remaining amount due shall be paid in cash by the Optionee.
No certificate representing a share of Stock shall be delivered until the full
purchase price therefor has been paid .
2.4 Termination of Option. (a) In no event may the Option be
exercised after it terminates as set forth in this Section 2.4. The Option
shall terminate,
-2-
<PAGE>
to the extent not exercised pursuant to Section 2.3 or earlier terminated
pursuant to Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of the
shares of Stock subject to the Option expire or are exercised, canceled or
forfeited, the Optionee shall, upon the Company's request, promptly return this
Agreement to the Company for full or partial cancellation, as the case may be.
Such cancellation shall be effective regardless of whether the Optionee returns
this Agreement. If the Optionee continues to have rights to purchase shares of
Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of
this Agreement to the Company, either (i) mark this Agreement to indicate the
extent to which the Option has expired or been exercised, canceled or forfeited
or (ii) issue to the Optionee a substitute option agreement applicable to such
rights, which agreement shall otherwise be substantially similar to this
Agreement in form and substance.
3. Additional Terms and Conditions of Option.
3.1. Nontransferability of Option. The Option may not be transferred
by the Optionee other than (i) by will or the laws of descent and distribution
or pursuant to beneficiary designation procedures approved by the Company or
(ii) as otherwise permitted under Rule 16b-3 under the Exchange Act as may be
set forth in an amendment to this Agreement. Except to the extent permitted by
the foregoing sentence, during the Optionee's lifetime the Option is exercisable
only by the Optionee or the Optionee's Legal Representative. Except to the
extent permitted by the foregoing, the Option may not be sold, transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by
operation of law or otherwise) or be subject to execution, attachment or similar
process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate,
encumber or otherwise dispose of the Option, the Option and all rights hereunder
shall immediately become null and void.
3.2. Investment Representation. The Optionee hereby represents and
covenants that (a) any share of Stock purchased upon exercise of the Option will
be purchased for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such purchase has been registered under the Securities Act and any
applicable state securities laws; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Optionee shall submit a written
statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of purchase of any shares
hereunder or (y) is true and correct as of the date of any sale of any such
shares, as applicable. As a further condition precedent to any exercise of the
Option, the Optionee shall comply with all regulations and requirements of any
regulatory
-3-
<PAGE>
authority having control of or supervision over the issuance or delivery of the
shares and, in connection therewith, shall execute any documents which the Board
or the Committee shall in its sole discretion deem necessary or advisable.
3.3. Withholding Taxes. (a) As a condition precedent to the
delivery of Stock upon exercise of the Option, the Optionee shall, upon request
by the Company, pay to the Company in addition to the purchase price of the
shares, such amount of cash as the Company may be required, under all applicable
federal, state, local or other laws or regulations, to withhold and pay over as
income or other withholding taxes (the "Required Tax Payments") with respect to
such exercise of the Option. If the Optionee shall fail to advance the Required
Tax Payments after request by the Company, the Company may, in its discretion,
deduct any Required Tax Payments from any amount then or thereafter payable by
the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.3(a), (2) delivery to the Company
of previously owned whole shares of Stock (which the Optionee has held for at
least six months prior to the delivery of such shares or which the Optionee
purchased on the open market and for which the Optionee has good title, free and
clear of all liens and encumbrances) having a Fair Market Value, determined as
of the date the obligation to withhold or pay taxes first arises in connection
with the Option (the "Tax Date"), equal to the Required Tax Payments, (3)
authorizing the Company to withhold whole shares of Stock which would otherwise
be delivered to the Optionee upon exercise of the Option having a Fair Market
Value, determined as of the Tax Date, equal to the Required Tax Payments, (4) a
cash payment by a broker-dealer acceptable to the Company to whom the Optionee
has submitted an irrevocable notice of exercise or (5) any combination of (1),
(2) and (3). The Committee may disapprove an election pursuant to any of
clauses (2)-(5) if the Committee determines, based on the opinion of recognized
securities counsel, that the method so elected would result in liability to the
Optionee under Section 16(b) of the Exchange Act or the regulations promulgated
thereunder. Shares of Stock to be delivered or withheld may not have a Fair
Market Value in excess of the minimum amount of the Required Tax Payments. Any
fraction of a share of Stock which would be required to satisfy any such
obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Optionee. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
3.4 Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Option and the
purchase price per security shall be appropriately adjusted by the Committee
without an increase in the aggregate purchase price. If any adjustment would
result in a fractional security being subject to the Option, the Company shall
pay the Optionee, in connection with the first exercise of the Option, in whole
or in part, occurring after such adjustment, an amount in cash determined by
-4-
<PAGE>
multiplying (i) the fraction of such security (rounded to the nearest hundredth)
by (ii) the excess, if any, of (A) the Fair Market Value on the exercise date
over (B) the exercise price of the Option. The decision of the Committee
regarding any such adjustment shall be final, binding and conclusive.
3.5. Compliance with Applicable Law. The Option is subject to the
condition that if the listing, registration or qualification of the shares
subject to the Option upon any securities exchange or under any law, or the
consent or approval of any governmental body, or the taking of any other action
is necessary or desirable as a condition of, or in connection with, the purchase
or delivery of shares hereunder, the Option may not be exercised, in whole or in
part, unless such listing, registration, qualification, consent or approval
shall have been effected or obtained, free of any conditions not acceptable to
the Company. The Company agrees to use reasonable efforts to effect or obtain
any such listing, registration, qualification, consent or approval.
3.6. Delivery of Certificates. Upon the exercise of the Option, in
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares purchased against full payment
therefor. The Company shall pay all original issue or transfer taxes and all
fees and expenses incident to such delivery, except as otherwise provided in
Section 3.3.
3.7. Option Confers No Rights as Stockholder. The Optionee shall not
be entitled to any privileges of ownership with respect to shares of Stock
subject to the Option unless and until purchased and delivered upon the exercise
of the Option, in whole or in part, and the Optionee becomes a stockholder of
record with respect to such delivered shares; and the Optionee shall not be
considered a stockholder of the Company with respect to any such shares not so
purchased and delivered.
3.8. Option Confers No Rights to Continued Employment. In no event
shall the granting of the Option or its acceptance by the Optionee give or be
deemed to give the Optionee any right to continued employment by the Company.
3.9. Decisions of Board or Committee. The Board or the Committee
shall have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action
made or taken by the Board or the Committee regarding the Plan or this Agreement
shall be final, binding and conclusive.
3.10. Company to Reserve Shares. The Company shall at all times
prior to the expiration or termination of the Option reserve and keep available,
either in its treasury or out of its authorized but unissued shares of Stock,
the full number of shares subject to the Option from time to time.
-5-
<PAGE>
3.11. Agreement Subject to the Plan. This Agreement is subject to
the provisions of the Plan and shall be interpreted in accordance therewith.
The Optionee hereby acknowledges receipt of a copy of the Plan.
4. Miscellaneous Provisions.
4.1. Designation as an Incentive Stock Option. The Option is hereby
designated as constituting an "incentive stock option" within meaning of section
422 of the Internal Revenue Code of 1986, as amended (the "Code"); this
Agreement shall be interpreted and treated consistently with such designation.
4.2. Meaning of Certain Terms. As used herein, the term "Legal
Representative" shall include an executor, administrator, legal representative,
guardian or similar person and the term "Permitted Transferee" shall include any
transferee (i) pursuant to a transfer permitted under Section 6.4 of the Plan
and Section 3.1 hereof or (ii) designated pursuant to beneficiary designation
procedures approved by the Company.
4.3. Successors. This Agreement shall be binding upon and inure to
the benefit of any successor or successors of the Company and any person or
persons who shall, upon the death of the Optionee, acquire any rights hereunder
in accordance with this Agreement or the Plan.
4.4. Notices. All notices, requests or other communications provided
for in this Agreement shall be made, if to the Company, to Kayser Building, 100
North Stanton, El Paso, Texas 79901, Attention: Corporate Secretary, and if to
the Optionee, to __________________________________________________. All
notices, requests or other communications provided for in this Agreement shall
be made in writing either (a) by personal delivery to the party entitled
thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the
United States mails to the last known address of the party entitled thereto or
(d) by express courier service. The notice, request or other communication
shall be deemed to be received upon personal delivery, upon confirmation of
receipt of facsimile transmission or upon receipt by the party entitled thereto
if by United States mail or express courier service; provided, however, that if
a notice, request or other communication is not received during regular business
hours, it shall be deemed to be received on the next succeeding business day of
the Company.
4.5. Governing Law. This Agreement, the Option and all
determinations made and actions taken pursuant hereto and thereto, to the extent
not governed by the laws of the United States, shall be governed by the laws of
the State of Texas and construed in accordance therewith without giving effect
to principles of conflicts of laws.
-6-
<PAGE>
4.6. Counterparts. This Agreement may be executed in two
counterparts each of which shall be deemed an original and both of which
together shall constitute one and the same instrument.
EL PASO ELECTRIC COMPANY
By:
----------------------------------
Name: Kenneth R. Heitz
Title: Director
Accepted this 3rd day of January, 1998
- --------------------------------------
<PAGE>
Exhibit 99.01
EL PASO ELECTRIC COMPANY
STOCK OPTION AGREEMENT
FOR EMPLOYEES
(NON-QUALIFIED STOCK OPTIONS)
El Paso Electric Company, a Texas corporation (the "Company"), hereby
grants to _______________ (the "Optionee") as of January 2, 1998 (the "Option
Date"), pursuant to the provisions of the El Paso Electric Company 1996 Long-
Term Incentive Plan (the "Plan"), a non-qualified option to purchase from the
Company (the "Option") 73,334 shares of its Common Stock, no par value
("Stock"), at the price of $7.50 per share upon and subject to the terms and
conditions set forth below.
1. Option Subject to Acceptance of Agreement. The Option shall be
null and void unless the Optionee shall accept this Agreement by executing it in
the space provided below and returning such original execution copy to the
Company.
2. Time and Manner of Exercise of Option.
2.1. Maximum Term of Option. In no event may the Option be
exercised, in whole or in part, after January 2, 2008 (the "Expiration Date").
2.2. Exercise of Option. (a) Except as otherwise provided by
Sections 2.2(b) and 2.2(c) hereof and by Section 6.8 of the Plan, the Option
shall become exercisable on the anniversary date of the grant as set forth
below:
Year Exercisable Amount Exercisable
---------------- ------------------
1999 20,000
2000 20,000
2001 20,000
2002 6,667
2003 6,667
(b) If the Optionee's employment by the Company terminates by reason
of Disability, the Option shall be exercisable only to the extent it is
exercisable on the effective date of the Optionee's termination of employment
and may thereafter be exercised by the Optionee or the Optionee's Legal
Representative until and including the earliest to occur of (i) the date which
is 120 days after the effective date of the Optionee's termination of employment
and (ii) the Expiration Date.
(c) If the Optionee's employment by the Company terminates by reason
of retirement, the Option shall be exercisable only to the extent it is
exercisable on the effective date of the Optionee's termination of employment
and may thereafter be exercised by the Optionee or the Optionee's Legal
Representative until and including
<PAGE>
the earliest to occur of (i) the date which is 120 days after the effective date
of the Optionee's termination of employment and (ii) the Expiration Date.
(d) If the Optionee's employment by the Company terminates by reason
of death, the Option shall be exercisable only to the extent it is exercisable
on the date of death and may thereafter be exercised by the Optionee or the
Optionee's Legal Representative or Permitted Transferees, as the case may be,
until and including the earliest to occur of (i) the date which is 120 days
after the date of death and (ii) the Expiration Date.
(e) If the Optionee's employment by the Company terminates for any
reason other than Disability, retirement or death, the Option shall be
exercisable only to the extent it is exercisable on the effective date of the
Optionee's termination of employment and may thereafter be exercised by the
Optionee or the Optionee's Legal Representative until and including the earliest
to occur of (i) the date which is 120 days after the effective date of the
Optionee's termination of employment and (ii) the Expiration Date.
(f) If the Optionee dies during the period set forth in Section
2.2(b) following termination of employment by reason of Disability, or if the
Optionee dies during the period set forth in Section 2.2(c) following
termination of employment, or if the Optionee dies during the period set forth
in Section 2.2(e) following termination of employment for any reason other than
Disability or retirement, the Option shall be exercisable only to the extent it
is exercisable on the date of death and may thereafter be exercised by the
Optionee's Legal Representative or Permitted Transferees, as the case may be,
until and including the earliest to occur of (i) the date which is 90 days after
the date of death and (ii) the Expiration Date.
2.3 Method of Exercise. Subject to the limitations set forth in this
Agreement, the Option may be exercised by the Optionee (1) by giving written
notice to the Company specifying the number of whole shares of Stock to be
purchased and accompanied by payment therefor in full (or arrangement made for
such payment to the Company's satisfaction) either (i) in cash, (ii) by delivery
of previously owned whole shares of Stock (which the Optionee has held for at
least six months prior to the delivery of such shares or which the Optionee
purchased on the open market and for which the Optionee has good title, free and
clear of all liens and encumbrances) having a Fair Market Value, determined as
of the date of exercise, equal to the aggregate purchase price payable pursuant
to the Option by reason of such exercise, (iii) in cash by a broker-dealer
acceptable to the Company to whom the Optionee has submitted an irrevocable
notice of exercise or (iv) a combination of (i) and (ii), and (2) by executing
such documents as the Company may reasonably request. The Committee may
disapprove an election pursuant to any of clauses (ii) - (iv) if the Committee
determines, based on the opinion of recognized securities counsel, that the
method of exercise so elected would result in liability to the Optionee under
Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the regulations promulgated thereunder. Any fraction of a share of
Stock which would be required to
-2-
<PAGE>
pay such purchase price shall be disregarded and the remaining amount due shall
be paid in cash by the Optionee. No certificate representing a share of Stock
shall be delivered until the full purchase price therefor has been paid.
2.4 Termination of Option. (a) In no event may the Option be
exercised after it terminates as set forth in this Section 2.4. The Option
shall terminate, to the extent not exercised pursuant to Section 2.3 or earlier
terminated pursuant to Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of the
shares of Stock subject to the Option expire or are exercised, cancelled or
forfeited, the Optionee shall, upon the Company's request, promptly return this
Agreement to the Company for full or partial cancellation, as the case may be.
Such cancellation shall be effective regardless of whether the Optionee returns
this Agreement. If the Optionee continues to have rights to purchase shares of
Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of
this Agreement to the Company, either (i) mark this Agreement to indicate the
extent to which the Option has expired or been exercised, cancelled or forfeited
or (ii) issue to the Optionee a substitute option agreement applicable to such
rights, which agreement shall otherwise be substantially similar to this
Agreement in form and substance.
3. Additional Terms and Conditions of Option.
3.1. Nontransferability of Option. The Option may not be transferred
by the Optionee other than (i) by will or the laws of descent and distribution
or pursuant to beneficiary designation procedures approved by the Company or
(ii) as otherwise permitted under Rule 16b-3 under the Exchange Act as may be
set forth in an amendment to this Agreement. Except to the extent permitted by
the foregoing sentence, during the Optionee's lifetime the Option is exercisable
only by the Optionee or the Optionee's Legal Representative. Except to the
extent permitted by the foregoing, the Option may not be sold, transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by
operation of law or otherwise) or be subject to execution, attachment or similar
process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate,
encumber or otherwise dispose of the Option, the Option and all rights hereunder
shall immediately become null and void.
3.2. Investment Representation. The Optionee hereby represents and
covenants that (a) any share of Stock purchased upon exercise of the Option will
be purchased for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such purchase has been registered under the Securities Act and any
applicable state securities laws; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Optionee shall submit a written
statement, in form satisfactory to the Company, to the
-3-
<PAGE>
effect that such representation (x) is true and correct as of the date of
purchase of any shares hereunder or (y) is true and correct as of the date of
any sale of any such shares, as applicable. As a further condition precedent to
any exercise of the Option, the Optionee shall comply with all regulations and
requirements of any regulatory authority having control of or supervision over
the issuance or delivery of the shares and, in connection therewith, shall
execute any documents which the Board or the Committee shall in its sole
discretion deem necessary or advisable.
3.3. Withholding Taxes. (a) As a condition precedent to the
delivery of Stock upon exercise of the Option, the Optionee shall, upon request
by the Company, pay to the Company in addition to the purchase price of the
shares, such amount of cash as the Company may be required, under all applicable
federal, state, local or other laws or regulations, to withhold and pay over as
income or other withholding taxes (the "Required Tax Payments") with respect to
such exercise of the Option. If the Optionee shall fail to advance the Required
Tax Payments after request by the Company, the Company may, in its discretion,
deduct any Required Tax Payments from any amount then or thereafter payable by
the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.3(a), (2) delivery to the Company
of previously owned whole shares of Stock (which the Optionee has held for at
least six months prior to the delivery of such shares or which the Optionee
purchased on the open market and for which the Optionee has good title, free and
clear of all liens and encumbrances) having a Fair Market Value, determined as
of the date the obligation to withhold or pay taxes first arises in connection
with the Option (the "Tax Date"), equal to the Required Tax Payments, (3)
authorizing the Company to withhold whole shares of Stock which would otherwise
be delivered to the Optionee upon exercise of the Option having a Fair Market
Value, determined as of the Tax Date, equal to the Required Tax Payments, (4) a
cash payment by a broker-dealer acceptable to the Company to whom the Optionee
has submitted an irrevocable notice of exercise or (5) any combination of (1),
(2) and (3). The Committee may disapprove an election pursuant to any of
clauses (2)-(5) if the Committee determines, based on the opinion of recognized
securities counsel, that the method so elected would result in liability to the
Optionee under Section 16(b) of the Exchange Act or the regulations promulgated
thereunder. Shares of Stock to be delivered or withheld may not have a Fair
Market Value in excess of the minimum amount of the Required Tax Payments. Any
fraction of a share of Stock which would be required to satisfy any such
obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Optionee. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
3.4 Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Option and the
purchase price per security shall be
-4-
<PAGE>
appropriately adjusted by the Committee without an increase in the aggregate
purchase price. If any adjustment would result in a fractional security being
subject to the Option, the Company shall pay the Optionee, in connection with
the first exercise of the Option, in whole or in part, occurring after such
adjustment, an amount in cash determined by multiplying (i) the fraction of such
security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A)
the Fair Market Value on the exercise date over (B) the exercise price of the
Option. The decision of the Committee regarding any such adjustment shall be
final, binding and conclusive.
3.5. Compliance with Applicable Law. The Option is subject to the
condition that if the listing, registration or qualification of the shares
subject to the Option upon any securities exchange or under any law, or the
consent or approval of any governmental body, or the taking of any other action
is necessary or desirable as a condition of, or in connection with, the purchase
or delivery of shares hereunder, the Option may not be exercised, in whole or in
part, unless such listing, registration, qualification, consent or approval
shall have been effected or obtained, free of any conditions not acceptable to
the Company. The Company agrees to use reasonable efforts to effect or obtain
any such listing, registration, qualification, consent or approval.
3.6. Delivery of Certificates. Upon the exercise of the Option, in
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares purchased against full payment
therefor. The Company shall pay all original issue or transfer taxes and all
fees and expenses incident to such delivery, except as otherwise provided in
Section 3.3.
3.7. Option Confers No Rights as Stockholder. The Optionee shall not
be entitled to any privileges of ownership with respect to shares of Stock
subject to the Option unless and until purchased and delivered upon the exercise
of the Option, in whole or in part, and the Optionee becomes a stockholder of
record with respect to such delivered shares; and the Optionee shall not be
considered a stockholder of the Company with respect to any such shares not so
purchased and delivered.
3.8. Option Confers No Rights to Continued Employment. In no event
shall the granting of the Option or its acceptance by the Optionee give or be
deemed to give the Optionee any right to continued employment by the Company.
3.9. Decisions of Board or Committee. The Board or the Committee
shall have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action
made or taken by the Board or the Committee regarding the Plan or this Agreement
shall be final, binding and conclusive.
3.10. Company to Reserve Shares. The Company shall at all times
prior to the expiration or termination of the Option reserve and keep available,
either in its
-5-
<PAGE>
treasury or out of its authorized but unissued shares of Stock, the full number
of shares subject to the Option from time to time.
3.11. Agreement Subject to the Plan. This Agreement is subject to
the provisions of the Plan and shall be interpreted in accordance therewith.
The Optionee hereby acknowledges receipt of a copy of the Plan.
4. Miscellaneous Provisions.
4.1. Designation as Nonqualified Stock Option. The Option is hereby
designated as not constituting an "incentive stock option" within meaning of
section 422 of the Internal Revenue Code of 1986, as amended (the "Code"); this
Agreement shall be interpreted and treated consistently with such designation.
4.2. Meaning of Certain Terms. As used herein, the term "Legal
Representative" shall include an executor, administrator, legal representative,
guardian or similar person and the term "Permitted Transferee" shall include any
transferee (i) pursuant to a transfer permitted under Section 6.4 of the Plan
and Section 3.1 hereof or (ii) designated pursuant to beneficiary designation
procedures approved by the Company.
4.3. Successors. This Agreement shall be binding upon and inure to
the benefit of any successor or successors of the Company and any person or
persons who shall, upon the death of the Optionee, acquire any rights hereunder
in accordance with this Agreement or the Plan.
4.4. Notices. All notices, requests or other communications provided
for in this Agreement shall be made, if to the Company, to Kayser Building, 100
North Stanton, El Paso, Texas 79901, Attention: Corporate Secretary, and if to
the Optionee, to ________________________________________________. All notices,
requests or other communications provided for in this Agreement shall be made in
writing either (a) by personal delivery to the party entitled thereto, (b) by
facsimile with confirmation of receipt, (c) by mailing in the United States
mails to the last known address of the party entitled thereto or (d) by express
courier service. The notice, request or other communication shall be deemed to
be received upon personal delivery, upon confirmation of receipt of facsimile
transmission or upon receipt by the party entitled thereto if by United States
mail or express courier service; provided, however, that if a notice, request or
other communication is not received during regular business hours, it shall be
deemed to be received on the next succeeding business day of the Company.
4.5. Governing Law. This Agreement, the Option and all
determinations made and actions taken pursuant hereto and thereto, to the extent
not governed by the laws of the United States, shall be governed by the laws of
the State of Texas and construed in accordance therewith without giving effect
to principles of conflicts of laws.
-6-
<PAGE>
4.6. Counterparts. This Agreement may be executed in two
counterparts each of which shall be deemed an original and both of which
together shall constitute one and the same instrument.
EL PASO ELECTRIC COMPANY
By:
-----------------------------------
Name: Kenneth R. Heitz
Title: Director
Accepted this 3rd day of January, 1998
- ---------------------------------------
<PAGE>
Exhibit 99.02
EL PASO ELECTRIC COMPANY
STOCK OPTION AGREEMENT
(INCENTIVE STOCK OPTIONS)
El Paso Electric Company, a Texas corporation (the "Company"), hereby
grants to Terry D. Bassham (the "Optionee") as of January 2, 1998 (the "Option
Date"), pursuant to the provisions of the El Paso Electric Company 1996 Long-
Term Incentive Plan (the "Plan"), an option to purchase from the Company (the
"Option") 66,665 shares of its Common Stock, no par value ("Stock"), at the
price of $7.50 per share upon and subject to the terms and conditions set forth
below.
1. Option Subject to Acceptance of Agreement. The Option shall be
null and void unless the Optionee shall accept this Agreement by executing it in
the space provided below and returning such original execution copy to the
Company.
2. Time and Manner of Exercise of Option.
2.1. Maximum Term of Option. In no event may the Option be exercised,
in whole or in part, after January 2, 2008 (the "Expiration Date").
2.2. Exercise of Option. (a) Except as otherwise provided by Sections
2.2(b) and 2.2(c) hereof and by Section 6.8 of the Plan, the Option shall become
exercisable (i) on January 2, 1999, with respect to one-fifth of the number of
shares of Stock subject to the Option on the Option Date and (ii) on January 2,
2000, with respect to an additional one-fifth of the shares of Stock subject to
the Option on the Option Date, (iii) on January 2, 2001 with respect to an
additional one-fifth of the shares of Stock subject to the Option on the Option
Date, (iv) on January 2, 2002 with respect to an additional one-fifth of the
number of shares of Stock subject to the Option on the Option Date and (v) on
January 1, 2003 with respect to the remaining one-fifth of the shares of Stock
subject to the Option on the Option Date.
(b) If the Optionee's employment by the Company terminates by reason
of Disability, the Option shall be exercisable only to the extent it is
exercisable on the effective date of the Optionee's termination of employment
and may thereafter be exercised by the Optionee or the Optionee's Legal
Representative until and including the earliest to occur of (i) the date which
is 90 days after the effective date of the Optionee's termination of employment
and (ii) the Expiration Date.
(c) If the Optionee's employment by the Company terminates by reason
of retirement, the Option shall be exercisable only to the extent it is
exercisable on the effective date of the Optionee's termination of employment
and may thereafter be exercised by the Optionee or the Optionee's Legal
Representative until and including the earliest to occur of (i) the date which
is 90 days after the effective date of the Optionee's termination of employment
and (ii) the Expiration Date.
<PAGE>
(d) If the Optionee's employment by the Company terminates by reason
of death, the Option shall be exercisable only to the extent it is exercisable
on the date of death and may thereafter be exercised by the Optionee or the
Optionee's Legal Representative or Permitted Transferees, as the case may be,
until and including the earliest to occur of (i) the date which is 90 days after
the date of death and (ii) the Expiration Date.
(e) If the Optionee's employment by the Company terminates for any
reason other than Disability, retirement or death, the Option shall be
exercisable only to the extent it is exercisable on the effective date of the
Optionee's termination of employment and may thereafter be exercised by the
Optionee or the Optionee's Legal Representative until and including the earliest
to occur of (i) the date which is 90 days after the effective date of the
Optionee's termination of employment and (ii) the Expiration Date.
(f) If the Optionee dies during the period set forth in Section
2.2(b) following termination of employment by reason of Disability, or if the
Optionee dies during the period set forth in Section 2.2(c) following
termination of employment, or if the Optionee dies during the period set forth
in Section 2.2(e) following termination of employment for any reason other than
Disability or retirement, the Option shall be exercisable only to the extent it
is exercisable on the date of death and may thereafter be exercised by the
Optionee's Legal Representative or Permitted Transferees, as the case may be,
until and including the earliest to occur of (i) the date which is 90 days after
the date of death and (ii) the Expiration Date.
2.3 Method of Exercise. Subject to the limitations set forth in this
Agreement, the Option may be exercised by the Optionee (1) by giving written
notice to the Company specifying the number of whole shares of Stock to be
purchased and accompanied by payment therefor in full (or arrangement made for
such payment to the Company's satisfaction) either (i) in cash, (ii) by delivery
of previously owned whole shares of Stock (which the Optionee has held for at
least six months prior to the delivery of such shares or which the Optionee
purchased on the open market and for which the Optionee has good title, free and
clear of all liens and encumbrances) having a Fair Market Value, determined as
of the date of exercise, equal to the aggregate purchase price payable pursuant
to the Option by reason of such exercise, (iii) in cash by a broker-dealer
acceptable to the Company to whom the Optionee has submitted an irrevocable
notice of exercise or (iv) a combination of (i) and (ii), and (2) by executing
such documents as the Company may reasonably request. The Committee may
disapprove an election pursuant to any of clauses (ii) - (iv) if the Committee
determines, based on the opinion of recognized securities counsel, that the
method of exercise so elected would result in liability to the Optionee under
Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the regulations promulgated thereunder. Any fraction of a share of
Stock which would be required to pay such purchase price shall be disregarded
and the remaining amount due shall be paid in cash by the Optionee. No
certificate representing a share of Stock shall be delivered until the full
purchase price therefor has been paid.
-2-
<PAGE>
2.4 Termination of Option. (a) In no event may the Option be
exercised after it terminates as set forth in this Section 2.4. The Option
shall terminate, to the extent not exercised pursuant to Section 2.3 or earlier
terminated pursuant to Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of the
shares of Stock subject to the Option expire or are exercised, canceled or
forfeited, the Optionee shall, upon the Company's request, promptly return this
Agreement to the Company for full or partial cancellation, as the case may be.
Such cancellation shall be effective regardless of whether the Optionee returns
this Agreement. If the Optionee continues to have rights to purchase shares of
Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of
this Agreement to the Company, either (i) mark this Agreement to indicate the
extent to which the Option has expired or been exercised, canceled or forfeited
or (ii) issue to the Optionee a substitute option agreement applicable to such
rights, which agreement shall otherwise be substantially similar to this
Agreement in form and substance.
3. Additional Terms and Conditions of Option.
3.1. Nontransferability of Option. The Option may not be transferred
by the Optionee other than (i) by will or the laws of descent and distribution
or pursuant to beneficiary designation procedures approved by the Company or
(ii) as otherwise permitted under Rule 16b-3 under the Exchange Act as may be
set forth in an amendment to this Agreement. Except to the extent permitted by
the foregoing sentence, during the Optionee's lifetime the Option is exercisable
only by the Optionee or the Optionee's Legal Representative. Except to the
extent permitted by the foregoing, the Option may not be sold, transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by
operation of law or otherwise) or be subject to execution, attachment or similar
process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate,
encumber or otherwise dispose of the Option, the Option and all rights hereunder
shall immediately become null and void.
3.2. Investment Representation. The Optionee hereby represents and
covenants that (a) any share of Stock purchased upon exercise of the Option will
be purchased for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such purchase has been registered under the Securities Act and any
applicable state securities laws; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Optionee shall submit a written
statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of purchase of any shares
hereunder or (y) is true and correct as of the date of any sale of any such
shares, as applicable. As a further condition precedent to any exercise of the
Option,
-3-
<PAGE>
the Optionee shall comply with all regulations and requirements of any
regulatory authority having control of or supervision over the issuance or
delivery of the shares and, in connection therewith, shall execute any documents
which the Board or the Committee shall in its sole discretion deem necessary or
advisable.
3.3. Withholding Taxes. (a) As a condition precedent to the delivery
of Stock upon exercise of the Option, the Optionee shall, upon request by the
Company, pay to the Company in addition to the purchase price of the shares,
such amount of cash as the Company may be required, under all applicable
federal, state, local or other laws or regulations, to withhold and pay over as
income or other withholding taxes (the "Required Tax Payments") with respect to
such exercise of the Option. If the Optionee shall fail to advance the Required
Tax Payments after request by the Company, the Company may, in its discretion,
deduct any Required Tax Payments from any amount then or thereafter payable by
the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.3(a), (2) delivery to the Company
of previously owned whole shares of Stock (which the Optionee has held for at
least six months prior to the delivery of such shares or which the Optionee
purchased on the open market and for which the Optionee has good title, free and
clear of all liens and encumbrances) having a Fair Market Value, determined as
of the date the obligation to withhold or pay taxes first arises in connection
with the Option (the "Tax Date"), equal to the Required Tax Payments, (3)
authorizing the Company to withhold whole shares of Stock which would otherwise
be delivered to the Optionee upon exercise of the Option having a Fair Market
Value, determined as of the Tax Date, equal to the Required Tax Payments, (4) a
cash payment by a broker-dealer acceptable to the Company to whom the Optionee
has submitted an irrevocable notice of exercise or (5) any combination of (1),
(2) and (3). The Committee may disapprove an election pursuant to any of
clauses (2)-(5) if the Committee determines, based on the opinion of recognized
securities counsel, that the method so elected would result in liability to the
Optionee under Section 16(b) of the Exchange Act or the regulations promulgated
thereunder. Shares of Stock to be delivered or withheld may not have a Fair
Market Value in excess of the minimum amount of the Required Tax Payments. Any
fraction of a share of Stock which would be required to satisfy any such
obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Optionee. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
3.4 Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Option and the
purchase price per security shall be appropriately adjusted by the Committee
without an increase in the aggregate purchase price. If any adjustment would
result in a fractional security being subject to the Option, the Company shall
pay the Optionee, in connection with the first exercise of the Option,
-4-
<PAGE>
in whole or in part, occurring after such adjustment, an amount in cash
determined by multiplying (i) the fraction of such security (rounded to the
nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value on
the exercise date over (B) the exercise price of the Option. The decision of the
Committee regarding any such adjustment shall be final, binding and conclusive.
3.5. Compliance with Applicable Law. The Option is subject to the
condition that if the listing, registration or qualification of the shares
subject to the Option upon any securities exchange or under any law, or the
consent or approval of any governmental body, or the taking of any other action
is necessary or desirable as a condition of, or in connection with, the purchase
or delivery of shares hereunder, the Option may not be exercised, in whole or in
part, unless such listing, registration, qualification, consent or approval
shall have been effected or obtained, free of any conditions not acceptable to
the Company. The Company agrees to use reasonable efforts to effect or obtain
any such listing, registration, qualification, consent or approval.
3.6. Delivery of Certificates. Upon the exercise of the Option, in
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares purchased against full payment
therefor. The Company shall pay all original issue or transfer taxes and all
fees and expenses incident to such delivery, except as otherwise provided in
Section 3.3.
3.7. Option Confers No Rights as Stockholder. The Optionee shall not
be entitled to any privileges of ownership with respect to shares of Stock
subject to the Option unless and until purchased and delivered upon the exercise
of the Option, in whole or in part, and the Optionee becomes a stockholder of
record with respect to such delivered shares; and the Optionee shall not be
considered a stockholder of the Company with respect to any such shares not so
purchased and delivered.
3.8. Option Confers No Rights to Continued Employment. In no event
shall the granting of the Option or its acceptance by the Optionee give or be
deemed to give the Optionee any right to continued employment by the Company.
3.9. Decisions of Board or Committee. The Board or the Committee
shall have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action
made or taken by the Board or the Committee regarding the Plan or this Agreement
shall be final, binding and conclusive.
3.10. Company to Reserve Shares. The Company shall at all times prior
to the expiration or termination of the Option reserve and keep available,
either in its treasury or out of its authorized but unissued shares of Stock,
the full number of shares subject to the Option from time to time.
-5-
<PAGE>
3.11. Agreement Subject to the Plan. This Agreement is subject to
the provisions of the Plan and shall be interpreted in accordance therewith.
The Optionee hereby acknowledges receipt of a copy of the Plan.
4. Miscellaneous Provisions.
4.1. Designation as an Incentive Stock Option. The Option is hereby
designated as constituting an "incentive stock option" within meaning of section
422 of the Internal Revenue Code of 1986, as amended (the "Code"); this
Agreement shall be interpreted and treated consistently with such designation.
4.2. Meaning of Certain Terms. As used herein, the term "Legal
Representative" shall include an executor, administrator, legal representative,
guardian or similar person and the term "Permitted Transferee" shall include any
transferee (i) pursuant to a transfer permitted under Section 6.4 of the Plan
and Section 3.1 hereof or (ii) designated pursuant to beneficiary designation
procedures approved by the Company.
4.3. Successors. This Agreement shall be binding upon and inure to
the benefit of any successor or successors of the Company and any person or
persons who shall, upon the death of the Optionee, acquire any rights hereunder
in accordance with this Agreement or the Plan.
4.4. Notices. All notices, requests or other communications
provided for in this Agreement shall be made, if to the Company, to Kayser
Building, 100 North Stanton, El Paso, Texas 79901, Attention: Corporate
Secretary, and if to the Optionee, to Terry D. Bassham, 365 La Mirada Circle, El
Paso, Texas 79932. All notices, requests or other communications provided for in
this Agreement shall be made in writing either (a) by personal delivery to the
party entitled thereto, (b) by facsimile with confirmation of receipt, (c) by
mailing in the United States mails to the last known address of the party
entitled thereto or (d) by express courier service. The notice, request or other
communication shall be deemed to be received upon personal delivery, upon
confirmation of receipt of facsimile transmission or upon receipt by the party
entitled thereto if by United States mail or express courier service; provided,
however, that if a notice, request or other communication is not received during
regular business hours, it shall be deemed to be received on the next succeeding
business day of the Company.
4.5. Governing Law. This Agreement, the Option and all
determinations made and actions taken pursuant hereto and thereto, to the extent
not governed by the laws of the United States, shall be governed by the laws of
the State of Texas and construed in accordance therewith without giving effect
to principles of conflicts of laws.
-6-
<PAGE>
4.6. Counterparts. This Agreement may be executed in two
counterparts each of which shall be deemed an original and both of which
together shall constitute one and the same instrument.
EL PASO ELECTRIC COMPANY
By:
------------------------------
Name: Kenneth R. Heitz
Title: Director
Accepted this 3rd day of January, 1998
- --------------------------------------
Terry D. Bassham
<PAGE>
Exhibit 99.02
EL PASO ELECTRIC COMPANY
STOCK OPTION AGREEMENT
FOR EMPLOYEES
(NON-QUALIFIED STOCK OPTIONS)
El Paso Electric Company, a Texas corporation (the "Company"), hereby
grants to Terry D. Bassham (the "Optionee") as of January 2, 1998 (the "Option
Date"), pursuant to the provisions of the El Paso Electric Company 1996 Long-
Term Incentive Plan (the "Plan"), a non-qualified option to purchase from the
Company (the "Option") 33,335 shares of its Common Stock, no par value
("Stock"), at the price of $7.50 per share upon and subject to the terms and
conditions set forth below.
1. Option Subject to Acceptance of Agreement. The Option shall be
null and void unless the Optionee shall accept this Agreement by executing it in
the space provided below and returning such original execution copy to the
Company.
2. Time and Manner of Exercise of Option.
2.1. Maximum Term of Option. In no event may the Option be
exercised, in whole or in part, after January 2, 2008 (the "Expiration Date").
2.2. Exercise of Option. (a) Except as otherwise provided by
Sections 2.2(b) and 2.2(c) hereof and by Section 6.8 of the Plan, the Option
shall become exercisable (i) on January 2, 1999 with respect to one-fifth of the
number of shares of Stock subject to the Option on the Option Date, (ii) on
January 2, 2000 with respect to an additional one-fifth of the number of shares
of Stock subject to the Option on the Option Date, (iii) on January 2, 2001 with
respect to an additional one-fifth of the shares of Stock subject to the Option
on the Option Date, (iv) on January 2, 2002 with respect to an additional one-
fifth of the number of shares of Stock subject to the Option on the Option Date
and (v) on January 1, 2003 with respect to the remaining one-fifth of the shares
of Stock subject to the Option on the Option Date.
(b) If the Optionee's employment by the Company terminates by reason
of Disability, the Option shall be exercisable only to the extent it is
exercisable on the effective date of the Optionee's termination of employment
and may thereafter be exercised by the Optionee or the Optionee's Legal
Representative until and including the earliest to occur of (i) the date which
is 120 days after the effective date of the Optionee's termination of employment
and (ii) the Expiration Date.
(c) If the Optionee's employment by the Company terminates by reason
of retirement, the Option shall be exercisable only to the extent it is
exercisable on the effective date of the Optionee's termination of employment
and may thereafter be exercised by the Optionee or the Optionee's Legal
Representative until and including the earliest to occur of (i) the date which
is 120 days after the effective date of the Optionee's termination of employment
and (ii) the Expiration Date.
<PAGE>
(d) If the Optionee's employment by the Company terminates by reason
of death, the Option shall be exercisable only to the extent it is exercisable
on the date of death and may thereafter be exercised by the Optionee or the
Optionee's Legal Representative or Permitted Transferees, as the case may be,
until and including the earliest to occur of (i) the date which is 120 days
after the date of death and (ii) the Expiration Date.
(e) If the Optionee's employment by the Company terminates for any
reason other than Disability, retirement or death, the Option shall be
exercisable only to the extent it is exercisable on the effective date of the
Optionee's termination of employment and may thereafter be exercised by the
Optionee or the Optionee's Legal Representative until and including the earliest
to occur of (i) the date which is 120 days after the effective date of the
Optionee's termination of employment and (ii) the Expiration Date.
(f) If the Optionee dies during the period set forth in Section
2.2(b) following termination of employment by reason of Disability, or if the
Optionee dies during the period set forth in Section 2.2(c) following
termination of employment, or if the Optionee dies during the period set forth
in Section 2.2(e) following termination of employment for any reason other than
Disability or retirement, the Option shall be exercisable only to the extent it
is exercisable on the date of death and may thereafter be exercised by the
Optionee's Legal Representative or Permitted Transferees, as the case may be,
until and including the earliest to occur of (i) the date which is 90 days after
the date of death and (ii) the Expiration Date.
2.3 Method of Exercise. Subject to the limitations set forth in this
Agreement, the Option may be exercised by the Optionee (1) by giving written
notice to the Company specifying the number of whole shares of Stock to be
purchased and accompanied by payment therefor in full (or arrangement made for
such payment to the Company's satisfaction) either (i) in cash, (ii) by delivery
of previously owned whole shares of Stock (which the Optionee has held for at
least six months prior to the delivery of such shares or which the Optionee
purchased on the open market and for which the Optionee has good title, free and
clear of all liens and encumbrances) having a Fair Market Value, determined as
of the date of exercise, equal to the aggregate purchase price payable pursuant
to the Option by reason of such exercise, (iii) in cash by a broker-dealer
acceptable to the Company to whom the Optionee has submitted an irrevocable
notice of exercise or (iv) a combination of (i) and (ii), and (2) by executing
such documents as the Company may reasonably request. The Committee may
disapprove an election pursuant to any of clauses (ii) - (iv) if the Committee
determines, based on the opinion of recognized securities counsel, that the
method of exercise so elected would result in liability to the Optionee under
Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the regulations promulgated thereunder. Any fraction of a share of
Stock which would be required to pay such purchase price shall be disregarded
and the remaining amount due shall be
-2-
<PAGE>
paid in cash by the Optionee. No certificate representing a share of Stock shall
be delivered until the full purchase price therefor has been paid.
2.4 Termination of Option. (a) In no event may the Option be
exercised after it terminates as set forth in this Section 2.4. The Option
shall terminate, to the extent not exercised pursuant to Section 2.3 or earlier
terminated pursuant to Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of the
shares of Stock subject to the Option expire or are exercised, canceled or
forfeited, the Optionee shall, upon the Company's request, promptly return this
Agreement to the Company for full or partial cancellation, as the case may be.
Such cancellation shall be effective regardless of whether the Optionee returns
this Agreement. If the Optionee continues to have rights to purchase shares of
Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of
this Agreement to the Company, either (i) mark this Agreement to indicate the
extent to which the Option has expired or been exercised, canceled or forfeited
or (ii) issue to the Optionee a substitute option agreement applicable to such
rights, which agreement shall otherwise be substantially similar to this
Agreement in form and substance.
3. Additional Terms and Conditions of Option.
3.1. Nontransferability of Option. The Option may not be transferred
by the Optionee other than (i) by will or the laws of descent and distribution
or pursuant to beneficiary designation procedures approved by the Company or
(ii) as otherwise permitted under Rule 16b-3 under the Exchange Act as may be
set forth in an amendment to this Agreement. Except to the extent permitted by
the foregoing sentence, during the Optionee's lifetime the Option is exercisable
only by the Optionee or the Optionee's Legal Representative. Except to the
extent permitted by the foregoing, the Option may not be sold, transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by
operation of law or otherwise) or be subject to execution, attachment or similar
process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate,
encumber or otherwise dispose of the Option, the Option and all rights hereunder
shall immediately become null and void.
3.2. Investment Representation. The Optionee hereby represents and
covenants that (a) any share of Stock purchased upon exercise of the Option will
be purchased for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such purchase has been registered under the Securities Act and any
applicable state securities laws; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Optionee shall submit a written
statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of purchase of any
-3-
<PAGE>
shares hereunder or (y) is true and correct as of the date of any sale of any
such shares, as applicable. As a further condition precedent to any exercise of
the Option, the Optionee shall comply with all regulations and requirements of
any regulatory authority having control of or supervision over the issuance or
delivery of the shares and, in connection therewith, shall execute any documents
which the Board or the Committee shall in its sole discretion deem necessary or
advisable.
3.3. Withholding Taxes. (a) As a condition precedent to the delivery
of Stock upon exercise of the Option, the Optionee shall, upon request by the
Company, pay to the Company in addition to the purchase price of the shares,
such amount of cash as the Company may be required, under all applicable
federal, state, local or other laws or regulations, to withhold and pay over as
income or other withholding taxes (the "Required Tax Payments") with respect to
such exercise of the Option. If the Optionee shall fail to advance the Required
Tax Payments after request by the Company, the Company may, in its discretion,
deduct any Required Tax Payments from any amount then or thereafter payable by
the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.3(a), (2) delivery to the Company
of previously owned whole shares of Stock (which the Optionee has held for at
least six months prior to the delivery of such shares or which the Optionee
purchased on the open market and for which the Optionee has good title, free and
clear of all liens and encumbrances) having a Fair Market Value, determined as
of the date the obligation to withhold or pay taxes first arises in connection
with the Option (the "Tax Date"), equal to the Required Tax Payments, (3)
authorizing the Company to withhold whole shares of Stock which would otherwise
be delivered to the Optionee upon exercise of the Option having a Fair Market
Value, determined as of the Tax Date, equal to the Required Tax Payments, (4) a
cash payment by a broker-dealer acceptable to the Company to whom the Optionee
has submitted an irrevocable notice of exercise or (5) any combination of (1),
(2) and (3). The Committee may disapprove an election pursuant to any of
clauses (2)-(5) if the Committee determines, based on the opinion of recognized
securities counsel, that the method so elected would result in liability to the
Optionee under Section 16(b) of the Exchange Act or the regulations promulgated
thereunder. Shares of Stock to be delivered or withheld may not have a Fair
Market Value in excess of the minimum amount of the Required Tax Payments. Any
fraction of a share of Stock which would be required to satisfy any such
obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Optionee. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
3.4 Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Option and the
purchase price per security shall be appropriately adjusted by the Committee
without an increase in the aggregate purchase
-4-
<PAGE>
price. If any adjustment would result in a fractional security being subject to
the Option, the Company shall pay the Optionee, in connection with the first
exercise of the Option, in whole or in part, occurring after such adjustment, an
amount in cash determined by multiplying (i) the fraction of such security
(rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair
Market Value on the exercise date over (B) the exercise price of the Option. The
decision of the Committee regarding any such adjustment shall be final, binding
and conclusive.
3.5. Compliance with Applicable Law. The Option is subject to the
condition that if the listing, registration or qualification of the shares
subject to the Option upon any securities exchange or under any law, or the
consent or approval of any governmental body, or the taking of any other action
is necessary or desirable as a condition of, or in connection with, the purchase
or delivery of shares hereunder, the Option may not be exercised, in whole or in
part, unless such listing, registration, qualification, consent or approval
shall have been effected or obtained, free of any conditions not acceptable to
the Company. The Company agrees to use reasonable efforts to effect or obtain
any such listing, registration, qualification, consent or approval.
3.6. Delivery of Certificates. Upon the exercise of the Option, in
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares purchased against full payment
therefor. The Company shall pay all original issue or transfer taxes and all
fees and expenses incident to such delivery, except as otherwise provided in
Section 3.3.
3.7. Option Confers No Rights as Stockholder. The Optionee shall not
be entitled to any privileges of ownership with respect to shares of Stock
subject to the Option unless and until purchased and delivered upon the exercise
of the Option, in whole or in part, and the Optionee becomes a stockholder of
record with respect to such delivered shares; and the Optionee shall not be
considered a stockholder of the Company with respect to any such shares not so
purchased and delivered.
3.8. Option Confers No Rights to Continued Employment. In no event
shall the granting of the Option or its acceptance by the Optionee give or be
deemed to give the Optionee any right to continued employment by the Company.
3.9. Decisions of Board or Committee. The Board or the Committee
shall have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action
made or taken by the Board or the Committee regarding the Plan or this Agreement
shall be final, binding and conclusive.
3.10. Company to Reserve Shares. The Company shall at all times
prior to the expiration or termination of the Option reserve and keep available,
either in its treasury or out of its authorized but unissued shares of Stock,
the full number of shares subject to the Option from time to time.
-5-
<PAGE>
3.11. Agreement Subject to the Plan. This Agreement is subject to
the provisions of the Plan and shall be interpreted in accordance therewith.
The Optionee hereby acknowledges receipt of a copy of the Plan.
4. Miscellaneous Provisions.
4.1. Designation as Nonqualified Stock Option. The Option is hereby
designated as not constituting an "incentive stock option" within meaning of
section 422 of the Internal Revenue Code of 1986, as amended (the "Code"); this
Agreement shall be interpreted and treated consistently with such designation.
4.2. Meaning of Certain Terms. As used herein, the term "Legal
Representative" shall include an executor, administrator, legal representative,
guardian or similar person and the term "Permitted Transferee" shall include any
transferee (i) pursuant to a transfer permitted under Section 6.4 of the Plan
and Section 3.1 hereof or (ii) designated pursuant to beneficiary designation
procedures approved by the Company.
4.3. Successors. This Agreement shall be binding upon and inure to
the benefit of any successor or successors of the Company and any person or
persons who shall, upon the death of the Optionee, acquire any rights hereunder
in accordance with this Agreement or the Plan.
4.4. Notices. All notices, requests or other communications
provided for in this Agreement shall be made, if to the Company, to Kayser
Building, 100 North Stanton, El Paso, Texas 79901, Attention: Corporate
Secretary, and if to the Optionee, to "Address". All notices, requests or other
communications provided for in this Agreement shall be made in writing either
(a) by personal delivery to the party entitled thereto, (b) by facsimile with
confirmation of receipt, (c) by mailing in the United States mails to the last
known address of the party entitled thereto or (d) by express courier service.
The notice, request or other communication shall be deemed to be received upon
personal delivery, upon confirmation of receipt of facsimile transmission or
upon receipt by the party entitled thereto if by United States mail or express
courier service; provided, however, that if a notice, request or other
communication is not received during regular business hours, it shall be deemed
to be received on the next succeeding business day of the Company.
4.5. Governing Law. This Agreement, the Option and all
determinations made and actions taken pursuant hereto and thereto, to the extent
not governed by the laws of the United States, shall be governed by the laws of
the State of Texas and construed in accordance therewith without giving effect
to principles of conflicts of laws.
-6-
<PAGE>
4.6. Counterparts. This Agreement may be executed in two
counterparts each of which shall be deemed an original and both of which
together shall constitute one and the same instrument.
EL PASO ELECTRIC COMPANY
By:
----------------------------------
Name: Kenneth R. Heitz
Title: Director
Accepted this 3rd day of January, 1998
- --------------------------------------
Terry D. Bassham
<PAGE>
Exhibit 99.03
EL PASO ELECTRIC COMPANY
STOCK OPTION AGREEMENT
(INCENTIVE STOCK OPTIONS)
El Paso Electric Company, a Texas corporation (the "Company"), hereby
grants to John C. Horne (the "Optionee") as of January 2, 1998 (the "Option
Date"), pursuant to the provisions of the El Paso Electric Company 1996 Long-
Term Incentive Plan (the "Plan"), an option to purchase from the Company (the
"Option") 10,000 shares of its Common Stock, no par value ("Stock"), at the
price of $7.50 per share upon and subject to the terms and conditions set forth
below.
1. Option Subject to Acceptance of Agreement. The Option shall be
null and void unless the Optionee shall accept this Agreement by executing it in
the space provided below and returning such original execution copy to the
Company.
2. Time and Manner of Exercise of Option.
2.1. Maximum Term of Option. In no event may the Option be
exercised, in whole or in part, after January 2, 2008 (the "Expiration Date").
2.2. Exercise of Option. (a) Except as otherwise provided by
Sections 2.2(b) and 2.2(c) hereof and by Section 6.8 of the Plan, the Option
shall become exercisable (i) on January 2, 2002, with respect to one-half of the
number of shares of stock subject to the option on the option date and (ii) on
January 2, 2003, with respect to the remaining one-half of the shares of stock
subject to the option on the option date.
(b) If the Optionee's employment by the Company terminates by reason
of Disability, the Option shall be exercisable only to the extent it is
exercisable on the effective date of the Optionee's termination of employment
and may thereafter be exercised by the Optionee or the Optionee's Legal
Representative until and including the earliest to occur of (i) the date which
is 90 days after the effective date of the Optionee's termination of employment
and (ii) the Expiration Date.
(c) If the Optionee's employment by the Company terminates by reason
of retirement, the Option shall be exercisable only to the extent it is
exercisable on the effective date of the Optionee's termination of employment
and may thereafter be exercised by the Optionee or the Optionee's Legal
Representative until and including the earliest to occur of (i) the date which
is 90 days after the effective date of the Optionee's termination of employment
and (ii) the Expiration Date.
(d) If the Optionee's employment by the Company terminates by reason
of death, the Option shall be exercisable only to the extent it is exercisable
on the date of death and may thereafter be exercised by the Optionee or the
Optionee's Legal
<PAGE>
Representative or Permitted Transferees, as the case may be, until and including
the earliest to occur of (i) the date which is 90 days after the date of death
and (ii) the Expiration Date.
(e) If the Optionee's employment by the Company terminates for any
reason other than Disability, retirement or death, the Option shall be
exercisable only to the extent it is exercisable on the effective date of the
Optionee's termination of employment and may thereafter be exercised by the
Optionee or the Optionee's Legal Representative until and including the earliest
to occur of (i) the date which is 90 days after the effective date of the
Optionee's termination of employment and (ii) the Expiration Date.
(f) If the Optionee dies during the period set forth in Section
2.2(b) following termination of employment by reason of Disability, or if the
Optionee dies during the period set forth in Section 2.2(c) following
termination of employment, or if the Optionee dies during the period set forth
in Section 2.2(e) following termination of employment for any reason other than
Disability or retirement, the Option shall be exercisable only to the extent it
is exercisable on the date of death and may thereafter be exercised by the
Optionee's Legal Representative or Permitted Transferees, as the case may be,
until and including the earliest to occur of (i) the date which is 90 days after
the date of death and (ii) the Expiration Date.
2.3 Method of Exercise. Subject to the limitations set forth in this
Agreement, the Option may be exercised by the Optionee (1) by giving written
notice to the Company specifying the number of whole shares of Stock to be
purchased and accompanied by payment therefor in full (or arrangement made for
such payment to the Company's satisfaction) either (i) in cash, (ii) by delivery
of previously owned whole shares of Stock (which the Optionee has held for at
least six months prior to the delivery of such shares or which the Optionee
purchased on the open market and for which the Optionee has good title, free and
clear of all liens and encumbrances) having a Fair Market Value, determined as
of the date of exercise, equal to the aggregate purchase price payable pursuant
to the Option by reason of such exercise, (iii) in cash by a broker-dealer
acceptable to the Company to whom the Optionee has submitted an irrevocable
notice of exercise or (iv) a combination of (i) and (ii), and (2) by executing
such documents as the Company may reasonably request. The Committee may
disapprove an election pursuant to any of clauses (ii) - (iv) if the Committee
determines, based on the opinion of recognized securities counsel, that the
method of exercise so elected would result in liability to the Optionee under
Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the regulations promulgated thereunder. Any fraction of a share of
Stock which would be required to pay such purchase price shall be disregarded
and the remaining amount due shall be paid in cash by the Optionee. No
certificate representing a share of Stock shall be delivered until the full
purchase price therefor has been paid.
2.4 Termination of Option. (a) In no event may the Option be
exercised after it terminates as set forth in this Section 2.4. The Option
shall terminate,
-2-
<PAGE>
to the extent not exercised pursuant to Section 2.3 or earlier terminated
pursuant to Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of the
shares of Stock subject to the Option expire or are exercised, canceled or
forfeited, the Optionee shall, upon the Company's request, promptly return this
Agreement to the Company for full or partial cancellation, as the case may be.
Such cancellation shall be effective regardless of whether the Optionee returns
this Agreement. If the Optionee continues to have rights to purchase shares of
Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of
this Agreement to the Company, either (i) mark this Agreement to indicate the
extent to which the Option has expired or been exercised, canceled or forfeited
or (ii) issue to the Optionee a substitute option agreement applicable to such
rights, which agreement shall otherwise be substantially similar to this
Agreement in form and substance.
3. Additional Terms and Conditions of Option.
3.1. Nontransferability of Option. The Option may not be transferred
by the Optionee other than (i) by will or the laws of descent and distribution
or pursuant to beneficiary designation procedures approved by the Company or
(ii) as otherwise permitted under Rule 16b-3 under the Exchange Act as may be
set forth in an amendment to this Agreement. Except to the extent permitted by
the foregoing sentence, during the Optionee's lifetime the Option is exercisable
only by the Optionee or the Optionee's Legal Representative. Except to the
extent permitted by the foregoing, the Option may not be sold, transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by
operation of law or otherwise) or be subject to execution, attachment or similar
process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate,
encumber or otherwise dispose of the Option, the Option and all rights hereunder
shall immediately become null and void.
3.2. Investment Representation. The Optionee hereby represents and
covenants that (a) any share of Stock purchased upon exercise of the Option will
be purchased for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such purchase has been registered under the Securities Act and any
applicable state securities laws; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Optionee shall submit a written
statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of purchase of any shares
hereunder or (y) is true and correct as of the date of any sale of any such
shares, as applicable. As a further condition precedent to any exercise of the
Option, the Optionee shall comply with all regulations and requirements of any
regulatory
-3-
<PAGE>
authority having control of or supervision over the issuance or delivery of the
shares and, in connection therewith, shall execute any documents which the Board
or the Committee shall in its sole discretion deem necessary or advisable.
3.3. Withholding Taxes. (a) As a condition precedent to the
delivery of Stock upon exercise of the Option, the Optionee shall, upon request
by the Company, pay to the Company in addition to the purchase price of the
shares, such amount of cash as the Company may be required, under all applicable
federal, state, local or other laws or regulations, to withhold and pay over as
income or other withholding taxes (the "Required Tax Payments") with respect to
such exercise of the Option. If the Optionee shall fail to advance the Required
Tax Payments after request by the Company, the Company may, in its discretion,
deduct any Required Tax Payments from any amount then or thereafter payable by
the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.3(a), (2) delivery to the Company
of previously owned whole shares of Stock (which the Optionee has held for at
least six months prior to the delivery of such shares or which the Optionee
purchased on the open market and for which the Optionee has good title, free and
clear of all liens and encumbrances) having a Fair Market Value, determined as
of the date the obligation to withhold or pay taxes first arises in connection
with the Option (the "Tax Date"), equal to the Required Tax Payments, (3)
authorizing the Company to withhold whole shares of Stock which would otherwise
be delivered to the Optionee upon exercise of the Option having a Fair Market
Value, determined as of the Tax Date, equal to the Required Tax Payments, (4) a
cash payment by a broker-dealer acceptable to the Company to whom the Optionee
has submitted an irrevocable notice of exercise or (5) any combination of (1),
(2) and (3). The Committee may disapprove an election pursuant to any of
clauses (2)-(5) if the Committee determines, based on the opinion of recognized
securities counsel, that the method so elected would result in liability to the
Optionee under Section 16(b) of the Exchange Act or the regulations promulgated
thereunder. Shares of Stock to be delivered or withheld may not have a Fair
Market Value in excess of the minimum amount of the Required Tax Payments. Any
fraction of a share of Stock which would be required to satisfy any such
obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Optionee. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
3.4 Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Option and the
purchase price per security shall be appropriately adjusted by the Committee
without an increase in the aggregate purchase price. If any adjustment would
result in a fractional security being subject to the Option, the Company shall
pay the Optionee, in connection with the first exercise of the Option, in whole
or in part, occurring after such adjustment, an amount in cash determined by
-4-
<PAGE>
multiplying (i) the fraction of such security (rounded to the nearest hundredth)
by (ii) the excess, if any, of (A) the Fair Market Value on the exercise date
over (B) the exercise price of the Option. The decision of the Committee
regarding any such adjustment shall be final, binding and conclusive.
3.5. Compliance with Applicable Law. The Option is subject to the
condition that if the listing, registration or qualification of the shares
subject to the Option upon any securities exchange or under any law, or the
consent or approval of any governmental body, or the taking of any other action
is necessary or desirable as a condition of, or in connection with, the purchase
or delivery of shares hereunder, the Option may not be exercised, in whole or in
part, unless such listing, registration, qualification, consent or approval
shall have been effected or obtained, free of any conditions not acceptable to
the Company. The Company agrees to use reasonable efforts to effect or obtain
any such listing, registration, qualification, consent or approval.
3.6. Delivery of Certificates. Upon the exercise of the Option, in
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares purchased against full payment
therefor. The Company shall pay all original issue or transfer taxes and all
fees and expenses incident to such delivery, except as otherwise provided in
Section 3.3.
3.7. Option Confers No Rights as Stockholder. The Optionee shall not
be entitled to any privileges of ownership with respect to shares of Stock
subject to the Option unless and until purchased and delivered upon the exercise
of the Option, in whole or in part, and the Optionee becomes a stockholder of
record with respect to such delivered shares; and the Optionee shall not be
considered a stockholder of the Company with respect to any such shares not so
purchased and delivered.
3.8. Option Confers No Rights to Continued Employment. In no event
shall the granting of the Option or its acceptance by the Optionee give or be
deemed to give the Optionee any right to continued employment by the Company.
3.9. Decisions of Board or Committee. The Board or the Committee
shall have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action
made or taken by the Board or the Committee regarding the Plan or this Agreement
shall be final, binding and conclusive.
3.10. Company to Reserve Shares. The Company shall at all times
prior to the expiration or termination of the Option reserve and keep available,
either in its treasury or out of its authorized but unissued shares of Stock,
the full number of shares subject to the Option from time to time.
-5-
<PAGE>
3.11. Agreement Subject to the Plan. This Agreement is subject to
the provisions of the Plan and shall be interpreted in accordance therewith.
The Optionee hereby acknowledges receipt of a copy of the Plan.
4. Miscellaneous Provisions.
4.1. Designation as an Incentive Stock Option. The Option is hereby
designated as constituting an "incentive stock option" within meaning of section
422 of the Internal Revenue Code of 1986, as amended (the "Code"); this
Agreement shall be interpreted and treated consistently with such designation.
4.2. Meaning of Certain Terms. As used herein, the term "Legal
Representative" shall include an executor, administrator, legal representative,
guardian or similar person and the term "Permitted Transferee" shall include any
transferee (i) pursuant to a transfer permitted under Section 6.4 of the Plan
and Section 3.1 hereof or (ii) designated pursuant to beneficiary designation
procedures approved by the Company.
4.3. Successors. This Agreement shall be binding upon and inure to
the benefit of any successor or successors of the Company and any person or
persons who shall, upon the death of the Optionee, acquire any rights hereunder
in accordance with this Agreement or the Plan.
4.4. Notices. All notices, requests or other communications provided
for in this Agreement shall be made, if to the Company, to Kayser Building, 100
North Stanton, El Paso, Texas 79901, Attention: Corporate Secretary, and if to
the Optionee, to John C. Horne, 6124 Laguna Vista Drive, El Paso, Texas 79932.
All notices, requests or other communications provided for in this Agreement
shall be made in writing either (a) by personal delivery to the party entitled
thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the
United States mails to the last known address of the party entitled thereto or
(d) by express courier service. The notice, request or other communication
shall be deemed to be received upon personal delivery, upon confirmation of
receipt of facsimile transmission or upon receipt by the party entitled thereto
if by United States mail or express courier service; provided, however, that if
a notice, request or other communication is not received during regular business
hours, it shall be deemed to be received on the next succeeding business day of
the Company.
4.5. Governing Law. This Agreement, the Option and all
determinations made and actions taken pursuant hereto and thereto, to the extent
not governed by the laws of the United States, shall be governed by the laws of
the State of Texas and construed in accordance therewith without giving effect
to principles of conflicts of laws.
-6-
<PAGE>
4.6. Counterparts. This Agreement may be executed in two
counterparts each of which shall be deemed an original and both of which
together shall constitute one and the same instrument.
EL PASO ELECTRIC COMPANY
By:
----------------------------------
Name: Kenneth R. Heitz
Title: Director
Accepted this 3rd day of January, 1998
- --------------------------------------
John C. Horne
<PAGE>
Exhibit 99.03
EL PASO ELECTRIC COMPANY
STOCK OPTION AGREEMENT
FOR EMPLOYEES
(NON-QUALIFIED STOCK OPTIONS)
El Paso Electric Company, a Texas corporation (the "Company"), hereby
grants to John C. Horne (the "Optionee") as of January 2, 1998 (the "Option
Date"), pursuant to the provisions of the El Paso Electric Company 1996 Long-
Term Incentive Plan (the "Plan"), a non-qualified option to purchase from the
Company (the "Option") 15,000 shares of its Common Stock, no par value
("Stock"), at the price of $7.50 per share upon and subject to the terms and
conditions set forth below.
1. Option Subject to Acceptance of Agreement. The Option shall be
null and void unless the Optionee shall accept this Agreement by executing it in
the space provided below and returning such original execution copy to the
Company.
2. Time and Manner of Exercise of Option.
2.1. Maximum Term of Option. In no event may the Option be
exercised, in whole or in part, after January 2, 2008 (the "Expiration Date").
2.2. Exercise of Option. (a) Except as otherwise provided by
Sections 2.2(b) and 2.2(c) hereof and by Section 6.8 of the Plan, the Option
shall become exercisable on the anniversary date of the grant as set forth
below:
Year Exercisable Amount Exercisable
---------------- ------------------
1999 5,000
2000 5,000
2001 5,000
(b) If the Optionee's employment by the Company terminates by reason
of Disability, the Option shall be exercisable only to the extent it is
exercisable on the effective date of the Optionee's termination of employment
and may thereafter be exercised by the Optionee or the Optionee's Legal
Representative until and including the earliest to occur of (i) the date which
is 120 days after the effective date of the Optionee's termination of employment
and (ii) the Expiration Date.
(c) If the Optionee's employment by the Company terminates by reason
of retirement, the Option shall be exercisable only to the extent it is
exercisable on the effective date of the Optionee's termination of employment
and may thereafter be exercised by the Optionee or the Optionee's Legal
Representative until and including the earliest to occur of (i) the date which
is 120 days after the effective date of the Optionee's termination of employment
and (ii) the Expiration Date.
<PAGE>
(d) If the Optionee's employment by the Company terminates by reason
of death, the Option shall be exercisable only to the extent it is exercisable
on the date of death and may thereafter be exercised by the Optionee or the
Optionee's Legal Representative or Permitted Transferees, as the case may be,
until and including the earliest to occur of (i) the date which is 120 days
after the date of death and (ii) the Expiration Date.
(e) If the Optionee's employment by the Company terminates for any
reason other than Disability, retirement or death, the Option shall be
exercisable only to the extent it is exercisable on the effective date of the
Optionee's termination of employment and may thereafter be exercised by the
Optionee or the Optionee's Legal Representative until and including the earliest
to occur of (i) the date which is 120 days after the effective date of the
Optionee's termination of employment and (ii) the Expiration Date.
(f) If the Optionee dies during the period set forth in Section
2.2(b) following termination of employment by reason of Disability, or if the
Optionee dies during the period set forth in Section 2.2(c) following
termination of employment, or if the Optionee dies during the period set forth
in Section 2.2(e) following termination of employment for any reason other than
Disability or retirement, the Option shall be exercisable only to the extent it
is exercisable on the date of death and may thereafter be exercised by the
Optionee's Legal Representative or Permitted Transferees, as the case may be,
until and including the earliest to occur of (i) the date which is 90 days after
the date of death and (ii) the Expiration Date.
2.3 Method of Exercise. Subject to the limitations set forth in this
Agreement, the Option may be exercised by the Optionee (1) by giving written
notice to the Company specifying the number of whole shares of Stock to be
purchased and accompanied by payment therefor in full (or arrangement made for
such payment to the Company's satisfaction) either (i) in cash, (ii) by delivery
of previously owned whole shares of Stock (which the Optionee has held for at
least six months prior to the delivery of such shares or which the Optionee
purchased on the open market and for which the Optionee has good title, free and
clear of all liens and encumbrances) having a Fair Market Value, determined as
of the date of exercise, equal to the aggregate purchase price payable pursuant
to the Option by reason of such exercise, (iii) in cash by a broker-dealer
acceptable to the Company to whom the Optionee has submitted an irrevocable
notice of exercise or (iv) a combination of (i) and (ii), and (2) by executing
such documents as the Company may reasonably request. The Committee may
disapprove an election pursuant to any of clauses (ii) - (iv) if the Committee
determines, based on the opinion of recognized securities counsel, that the
method of exercise so elected would result in liability to the Optionee under
Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the regulations promulgated thereunder. Any fraction of a share of
Stock which would be required to pay such purchase price shall be disregarded
and the remaining amount due shall be paid in cash by the Optionee. No
certificate representing a share of Stock shall be delivered until the full
purchase price therefor has been paid.
-2-
<PAGE>
2.4 Termination of Option. (a) In no event may the Option be
exercised after it terminates as set forth in this Section 2.4. The Option shall
terminate, to the extent not exercised pursuant to Section 2.3 or earlier
terminated pursuant to Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of the
shares of Stock subject to the Option expire or are exercised, cancelled or
forfeited, the Optionee shall, upon the Company's request, promptly return this
Agreement to the Company for full or partial cancellation, as the case may be.
Such cancellation shall be effective regardless of whether the Optionee returns
this Agreement. If the Optionee continues to have rights to purchase shares of
Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of
this Agreement to the Company, either (i) mark this Agreement to indicate the
extent to which the Option has expired or been exercised, cancelled or forfeited
or (ii) issue to the Optionee a substitute option agreement applicable to such
rights, which agreement shall otherwise be substantially similar to this
Agreement in form and substance.
3. Additional Terms and Conditions of Option.
3.1. Nontransferability of Option. The Option may not be transferred
by the Optionee other than (i) by will or the laws of descent and distribution
or pursuant to beneficiary designation procedures approved by the Company or
(ii) as otherwise permitted under Rule 16b-3 under the Exchange Act as may be
set forth in an amendment to this Agreement. Except to the extent permitted by
the foregoing sentence, during the Optionee's lifetime the Option is exercisable
only by the Optionee or the Optionee's Legal Representative. Except to the
extent permitted by the foregoing, the Option may not be sold, transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by
operation of law or otherwise) or be subject to execution, attachment or similar
process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate,
encumber or otherwise dispose of the Option, the Option and all rights hereunder
shall immediately become null and void.
3.2. Investment Representation. The Optionee hereby represents and
covenants that (a) any share of Stock purchased upon exercise of the Option will
be purchased for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such purchase has been registered under the Securities Act and any
applicable state securities laws; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Optionee shall submit a written
statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of purchase of any shares
hereunder or (y) is true and correct as of the date of any sale of any such
shares, as applicable. As a further condition precedent to any exercise of the
Option,
-3-
<PAGE>
the Optionee shall comply with all regulations and requirements of any
regulatory authority having control of or supervision over the issuance or
delivery of the shares and, in connection therewith, shall execute any documents
which the Board or the Committee shall in its sole discretion deem necessary or
advisable.
3.3. Withholding Taxes. (a) As a condition precedent to the
delivery of Stock upon exercise of the Option, the Optionee shall, upon request
by the Company, pay to the Company in addition to the purchase price of the
shares, such amount of cash as the Company may be required, under all applicable
federal, state, local or other laws or regulations, to withhold and pay over as
income or other withholding taxes (the "Required Tax Payments") with respect to
such exercise of the Option. If the Optionee shall fail to advance the Required
Tax Payments after request by the Company, the Company may, in its discretion,
deduct any Required Tax Payments from any amount then or thereafter payable by
the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.3(a), (2) delivery to the Company
of previously owned whole shares of Stock (which the Optionee has held for at
least six months prior to the delivery of such shares or which the Optionee
purchased on the open market and for which the Optionee has good title, free and
clear of all liens and encumbrances) having a Fair Market Value, determined as
of the date the obligation to withhold or pay taxes first arises in connection
with the Option (the "Tax Date"), equal to the Required Tax Payments, (3)
authorizing the Company to withhold whole shares of Stock which would otherwise
be delivered to the Optionee upon exercise of the Option having a Fair Market
Value, determined as of the Tax Date, equal to the Required Tax Payments, (4) a
cash payment by a broker-dealer acceptable to the Company to whom the Optionee
has submitted an irrevocable notice of exercise or (5) any combination of (1),
(2) and (3). The Committee may disapprove an election pursuant to any of
clauses (2)-(5) if the Committee determines, based on the opinion of recognized
securities counsel, that the method so elected would result in liability to the
Optionee under Section 16(b) of the Exchange Act or the regulations promulgated
thereunder. Shares of Stock to be delivered or withheld may not have a Fair
Market Value in excess of the minimum amount of the Required Tax Payments. Any
fraction of a share of Stock which would be required to satisfy any such
obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Optionee. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
3.4 Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Option and the
purchase price per security shall be appropriately adjusted by the Committee
without an increase in the aggregate purchase price. If any adjustment would
result in a fractional security being subject to the Option, the Company shall
pay the Optionee, in connection with the first exercise of the Option,
-4-
<PAGE>
in whole or in part, occurring after such adjustment, an amount in cash
determined by multiplying (i) the fraction of such security (rounded to the
nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value on
the exercise date over (B) the exercise price of the Option. The decision of the
Committee regarding any such adjustment shall be final, binding and conclusive.
3.5. Compliance with Applicable Law. The Option is subject to the
condition that if the listing, registration or qualification of the shares
subject to the Option upon any securities exchange or under any law, or the
consent or approval of any governmental body, or the taking of any other action
is necessary or desirable as a condition of, or in connection with, the purchase
or delivery of shares hereunder, the Option may not be exercised, in whole or in
part, unless such listing, registration, qualification, consent or approval
shall have been effected or obtained, free of any conditions not acceptable to
the Company. The Company agrees to use reasonable efforts to effect or obtain
any such listing, registration, qualification, consent or approval.
3.6. Delivery of Certificates. Upon the exercise of the Option, in
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares purchased against full payment
therefor. The Company shall pay all original issue or transfer taxes and all
fees and expenses incident to such delivery, except as otherwise provided in
Section 3.3.
3.7. Option Confers No Rights as Stockholder. The Optionee shall not
be entitled to any privileges of ownership with respect to shares of Stock
subject to the Option unless and until purchased and delivered upon the exercise
of the Option, in whole or in part, and the Optionee becomes a stockholder of
record with respect to such delivered shares; and the Optionee shall not be
considered a stockholder of the Company with respect to any such shares not so
purchased and delivered.
3.8. Option Confers No Rights to Continued Employment. In no event
shall the granting of the Option or its acceptance by the Optionee give or be
deemed to give the Optionee any right to continued employment by the Company.
3.9. Decisions of Board or Committee. The Board or the Committee
shall have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action
made or taken by the Board or the Committee regarding the Plan or this Agreement
shall be final, binding and conclusive.
3.10. Company to Reserve Shares. The Company shall at all times
prior to the expiration or termination of the Option reserve and keep available,
either in its treasury or out of its authorized but unissued shares of Stock,
the full number of shares subject to the Option from time to time.
-5-
<PAGE>
3.11. Agreement Subject to the Plan. This Agreement is subject to
the provisions of the Plan and shall be interpreted in accordance therewith.
The Optionee hereby acknowledges receipt of a copy of the Plan.
4. Miscellaneous Provisions.
4.1. Designation as Nonqualified Stock Option. The Option is hereby
designated as not constituting an "incentive stock option" within meaning of
section 422 of the Internal Revenue Code of 1986, as amended (the "Code"); this
Agreement shall be interpreted and treated consistently with such designation.
4.2. Meaning of Certain Terms. As used herein, the term "Legal
Representative" shall include an executor, administrator, legal representative,
guardian or similar person and the term "Permitted Transferee" shall include any
transferee (i) pursuant to a transfer permitted under Section 6.4 of the Plan
and Section 3.1 hereof or (ii) designated pursuant to beneficiary designation
procedures approved by the Company.
4.3. Successors. This Agreement shall be binding upon and inure to
the benefit of any successor or successors of the Company and any person or
persons who shall, upon the death of the Optionee, acquire any rights hereunder
in accordance with this Agreement or the Plan.
4.4. Notices. All notices, requests or other communications provided
for in this Agreement shall be made, if to the Company, to Kayser Building, 100
North Stanton, El Paso, Texas 79901, Attention: Corporate Secretary, and if to
the Optionee, to John C. Horne, 6124 Laguna Vista Drive, El Paso, Texas 79932.
All notices, requests or other communications provided for in this Agreement
shall be made in writing either (a) by personal delivery to the party entitled
thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the
United States mails to the last known address of the party entitled thereto or
(d) by express courier service. The notice, request or other communication
shall be deemed to be received upon personal delivery, upon confirmation of
receipt of facsimile transmission or upon receipt by the party entitled thereto
if by United States mail or express courier service; provided, however, that if
a notice, request or other communication is not received during regular business
hours, it shall be deemed to be received on the next succeeding business day of
the Company.
4.5. Governing Law. This Agreement, the Option and all
determinations made and actions taken pursuant hereto and thereto, to the extent
not governed by the laws of the United States, shall be governed by the laws of
the State of Texas and construed in accordance therewith without giving effect
to principles of conflicts of laws.
-6-
<PAGE>
4.6. Counterparts. This Agreement may be executed in two
counterparts each of which shall be deemed an original and both of which
together shall constitute one and the same instrument.
EL PASO ELECTRIC COMPANY
By:
-----------------------------------------------
Name: Kenneth R. Heitz
Title: Director
Accepted this 3rd day of January, 1998
- ---------------------------------------
John C. Horne
<PAGE>
Exhibit 99.04
EL PASO ELECTRIC COMPANY
RESTRICTED STOCK AWARD AGREEMENT
El Paso Electric Company, a Texas corporation (the 'Company'), hereby
grants to _______________ (the "Holder"), pursuant to the provisions of the El
Paso Electric Company 1996 Long-Term Incentive Plan (the "Plan"), a restricted
stock award (the "Award") of 2,935 shares of the Company's Common Stock, no par
value ("Stock"), upon and subject to the restrictions, terms and conditions set
forth below. Capitalized terms not defined herein shall have the meanings
specified in the Plan.
1. Award Subject to Acceptance of Agreement. The Award shall be null and
void unless the Holder shall accept this Agreement by executing it in the space
provided below and returning it to the Company and execute and return one or
more irrevocable stock powers. As soon as practicable after the Holder has
executed this Agreement and such stock power or powers and returned the same to
the Company, the Company shall cause to be issued in the Holder's name a stock
certificate or certificates representing the total number of shares of Stock
subject to the Award.
2. Rights as a Stockholder. Holder shall have the right to vote the
shares of Stock subject to the Award. During the Restriction Period as to any
shares of Stock, cash dividends which would otherwise be payable on any such
shares of will be credited to the Holder in the form of additional unvested
shares of Stock as if the dividend had purchased additional shares at the
closing market price on the date such dividend is paid, and such additional
shares (including shares received as stock dividend or stock split), shall be
delivered to the Company (and the Holder shall, if requested by the Company,
execute and return one or more irrevocable stock powers related thereto) and
shall be subject to the same restrictions as the shares of Stock with respect to
which such dividend or other distribution was made.
3. Custody and Delivery of Certificates Representing Shares. The Company
shall hold the certificate or certificates representing the shares of Stock
subject to the Award until the restrictions on such Award shall have lapsed, in
whole or in part, pursuant to Section 4 hereof, and the Company shall as soon
thereafter as practicable, subject to Section 5.3, deliver the certificate or
certificates for such shares to the Holder and destroy the stock power or powers
relating to such shares. If such stock power or powers also relates to shares
as to which restrictions remain in effect, the Company may require, as a
condition precedent to delivery of any certificate pursuant to this Section 3,
the execution and delivery to the Company of one or more stock powers relating
to such shares.
4. Restriction Period and Vesting. (a) The restrictions on the Award
shall lapse on the earliest of the following: (i) with respect to one-fifth of
the aggregate number of shares of Stock subject to the Award on February 19,
1998 and as to an additional one-fifth of such aggregate number of shares on
each anniversary thereof
<PAGE>
during the years 1999 through 2002, inclusive, or (ii) in accordance with
Section 6.8 of the Plan (the "Restriction Period").
(b) If the Holder's employment with the Company is terminated by the
Company during the Restriction Period or by reason of the Holder's "Permanent
and Total Disability" (as such term is defined in the Plan), or by reason of the
Holder's voluntary resignation or retirement or his death, then any shares of
Stock as to which restrictions have not lapsed shall be forfeited.
5. Additional Terms and Conditions of Award.
5.1. Nontransferability of Award. During the Restriction Period, the
shares of Stock subject to the Award as to which restrictions remain in effect
may not be transferred by the Holder other than by will, the laws of descent and
distribution or pursuant to beneficiary designation procedures approved by the
Company. Except to the extent permitted by the foregoing, during the
Restriction Period, the shares of Stock subject to the Award as to which
restrictions remain in effect may not be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate or encumber, or
otherwise dispose of such shares, the Award shall immediately become null and
void.
5.2. Investment Representation. The Holder hereby represents and
covenants that (a) any share of Stock acquired upon the lapse of restrictions
will be acquired for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such acquisition has been registered under the Securities Act and
any applicable state securities law; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Holder shall submit a written
statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of acquisition of any
shares hereunder or (y) is true and correct as of the date of any sale of any
such shares, as applicable. As a further condition precedent to the delivery to
the Holder of any shares subject to the Award, the Holder shall comply with all
regulations and requirements of any regulatory authority having control of or
supervision over the issuance of the shares and, in connection therewith, shall
execute any documents which the Board or any committee authorized by the Board
shall in its sole discretion deem necessary or advisable.
-2-
<PAGE>
5.3. Withholding Taxes. (a) As a condition precedent to the delivery to the
Holder of any shares of Stock subject to the Award, the Holder may, upon request
by the Company, pay to the Company such amount of cash as the Company may be
required, under all applicable federal, state, local or other laws or
regulations, to withhold and pay over as income or other withholding taxes (the
"Required Tax Payments") with respect to the Award. If the Holder shall fail to
advance the Required Tax Payments after request by the Company, the Company may,
in its discretion, deduct any Required Tax Payments from any amount then or
thereafter payable by the Company to the Holder.
(b) The Holder may elect to satisfy his or her obligation to advance
the Required Tax Payments by any of the following means: (1) a cash payment to
the Company pursuant to Section 5.3(a), (2) delivery to the Company of
previously owned whole shares of Stock (which the Holder has held for at least
six months prior to the delivery of such shares or which the Holder purchased on
the open market and for which the Holder has good title, free and clear of all
liens and encumbrances) having a Fair Market Value, determined as of the date
the obligation to withhold or pay taxes first arises in connection with the
Award (the "Tax Date"), equal to the Required Tax Payments, (3) authorizing the
Company to withhold from the shares of Stock otherwise to be delivered to the
Holder pursuant to the Award, a number of whole shares of Stock having a Fair
Market Value, determined as of the Tax Date, equal to the Required Tax Payments,
(4) a cash payment by a broker-dealer acceptable to the Company through whom the
Holder has sold the shares with respect to which the Required Tax Payments have
arisen or (5) any combination of (1), (2) and (3). The Committee may disapprove
an election pursuant to any of clauses (2)-(5) if the Committee determines,
based on the opinion of recognized securities counsel, that the method so
elected would result in liability to the Optionee under Section 16(b) of the
Securities Exchange Act of 1934, as amended, or the regulations promulgated
thereunder. Shares of Stock to be delivered or withheld may have a Fair Market
Value in excess of the minimum amount of the Required Tax Payments, but not in
excess of the amount determined by applying the Holder's maximum marginal tax
rate. Any fraction of a share of Stock which would be required to satisfy such
an obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Holder. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
5.4. Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Award shall be
appropriately adjusted by the Committee. If any adjustment would result in a
fractional security being subject to the Award, the Company shall pay the Holder
in connection with the vesting, if any, of such fractional security, an amount
-3-
<PAGE>
in cash determined by multiplying (i) such fraction (rounded to the nearest
hundredth) by (ii) the Fair Market Value on the vesting date. The decision of
the Committee regarding any such adjustment shall be final, binding and
conclusive.
5.5. Compliance with Applicable Law. Award is subject to the condition
that if the listing, registration or qualification of the shares subject to the
Award upon any securities exchange or under any law, or the consent or approval
of any governments body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the vesting or delivery of
shares hereunder, the shares of Stock subject to the Award may not be delivered,
in whole or in part, unless such listing, registration, qualification, consent
or approval shall have been effected or obtained, free of any conditions not
acceptable to the Company. The Company agrees to use reasonable efforts to
effect or obtain any :such listing, registration, qualification, consent or
approval.
5.6. Agreement Subject to the Plan. This Agreement is subject to the
provisions of the Plan and shall be interpreted in accordance therewith. The
Holder hereby acknowledges receipt of a copy of the Plan.
6. Miscellaneous Provisions.
6.1. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Holder, acquire any rights hereunder in
accordance with this Agreement or the Plan.
6.2. Notices. All notices, requests or other communications provided for
in this Agreement shall be made, if to the Company, to Kayser Building, 100
North Stanton, El Paso, Texas 79901, Attention: Corporate Secretary, and if to
the Holder, to ________________________________. All notices, requests or other
communications provided for in this Agreement shall be made in writing either
(a) by personal delivery to the party entitled thereto, (b) by facsimile with
confirmation of receipt, (c) by mailing in the United States mails to the last
known address of the party entitled thereto or (d) by express courier service.
The notice, request or other communication shall be deemed to be received upon
personal delivery, upon confirmation of receipt of facsimile transmission, or
upon receipt by the party entitled thereto if by United States mail or express
courier service; provided, however, that if a notice, request or other
communication is not received during regular business hours, it shall be deemed
to be received on the next succeeding business day of the Company.
-4-
<PAGE>
6.3. Governing Law. This Agreement, the Award and all determinations made
and actions taken pursuant hereto and thereto, to the extent not otherwise
governed by the laws of the United States, shall be governed by the laws of the
State of Texas and construed in accordance therewith without giving effect to
conflicts of laws principles.
6.4. Counterparts. This Agreement may be executed in two counterpart each
of which shall be deemed an original and both of which together shall constitute
one and the same instrument.
EL PASO ELECTRIC COMPANY
By:
--------------------------------
Name: Kenneth R. Heitz
Title: Director
Acceptance Date:
---------------
- -------------------------------
-5-
<PAGE>
Exhibit 99.05
EL PASO ELECTRIC COMPANY
RESTRICTED STOCK AWARD AGREEMENT
El Paso Electric Company, a Texas corporation (the 'Company'), hereby
grants to Robert C. McNiel (the "Holder"), pursuant to the provisions of the El
Paso Electric Company 1996 Long-Term Incentive Plan (the "Plan"), a restricted
stock award (the "Award") of 2,390 shares of the Company's Common Stock, no par
value ("Stock"), upon and subject to the restrictions, terms and conditions set
forth below. Capitalized terms not defined herein shall have the meanings
specified in the Plan.
1. Award Subject to Acceptance of Agreement. The Award shall be null and
void unless the Holder shall accept this Agreement by executing it in the space
provided below and returning it to the Company and execute and return one or
more irrevocable stock powers. As soon as practicable after the Holder has
executed this Agreement and such stock power or powers and returned the same to
the Company, the Company shall cause to be issued in the Holder's name a stock
certificate or certificates representing the total number of shares of Stock
subject to the Award.
2. Rights as a Stockholder. Holder shall have the right to vote the
shares of Stock subject to the Award. During the Restriction Period as to any
shares of Stock, cash dividends which would otherwise be payable on any such
shares of will be credited to the Holder in the form of additional unvested
shares of Stock as if the dividend had purchased additional shares at the
closing market price on the date such dividend is paid, and such additional
shares (including shares received as stock dividend or stock split), shall be
delivered to the Company (and the Holder shall, if requested by the Company,
execute and return one or more irrevocable stock powers related thereto) and
shall be subject to the same restrictions as the shares of Stock with respect to
which such dividend or other distribution was made.
3. Custody and Delivery of Certificates Representing Shares. The Company
shall hold the certificate or certificates representing the shares of Stock
subject to the Award until the restrictions on such Award shall have lapsed, in
whole or in part, pursuant to Section 4 hereof, and the Company shall as soon
thereafter as practicable, subject to Section 5.3, deliver the certificate or
certificates for such shares to the Holder and destroy the stock power or powers
relating to such shares. If such stock power or powers also relates to shares
as to which restrictions remain in effect, the Company may require, as a
condition precedent to delivery of any certificate pursuant to this Section 3,
the execution and delivery to the Company of one or more stock powers relating
to such shares.
4. Restriction Period and Vesting. (a) The restrictions on the Award
shall lapse on the earliest of the following: (i) with respect to one-fifth of
the aggregate number of shares of Stock subject to the Award on February 19,
1998 and as to an additional one-fifth of such aggregate number of shares on
each anniversary thereof
<PAGE>
during the years 1999 through 2002, inclusive, or (ii) in accordance with
Section 6.8 of the Plan (the "Restriction Period").
(b) If the Holder's employment with the Company is terminated by the
Company during the Restriction Period or by reason of the Holder's "Permanent
and Total Disability" (as such term is defined in the Plan), or by reason of the
Holder's voluntary resignation or retirement or his death, then any shares of
Stock as to which restrictions have not lapsed shall be forfeited.
5. Additional Terms and Conditions of Award.
5.1. Nontransferability of Award. During the Restriction Period, the
shares of Stock subject to the Award as to which restrictions remain in effect
may not be transferred by the Holder other than by will, the laws of descent and
distribution or pursuant to beneficiary designation procedures approved by the
Company. Except to the extent permitted by the foregoing, during the
Restriction Period, the shares of Stock subject to the Award as to which
restrictions remain in effect may not be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate or encumber, or
otherwise dispose of such shares, the Award shall immediately become null and
void.
5.2. Investment Representation. The Holder hereby represents and
covenants that (a) any share of Stock acquired upon the lapse of restrictions
will be acquired for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such acquisition has been registered under the Securities Act and
any applicable state securities law; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Holder shall submit a written
statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of acquisition of any
shares hereunder or (y) is true and correct as of the date of any sale of any
such shares, as applicable. As a further condition precedent to the delivery to
the Holder of any shares subject to the Award, the Holder shall comply with all
regulations and requirements of any regulatory authority having control of or
supervision over the issuance of the shares and, in connection therewith, shall
execute any documents which the Board or any committee authorized by the Board
shall in its sole discretion deem necessary or advisable.
-2-
<PAGE>
5.3. Withholding Taxes. (a) As a condition precedent to the delivery to the
Holder of any shares of Stock subject to the Award, the Holder may, upon request
by the Company, pay to the Company such amount of cash as the Company may be
required, under all applicable federal, state, local or other laws or
regulations, to withhold and pay over as income or other withholding taxes (the
"Required Tax Payments") with respect to the Award. If the Holder shall fail to
advance the Required Tax Payments after request by the Company, the Company may,
in its discretion, deduct any Required Tax Payments from any amount then or
thereafter payable by the Company to the Holder.
(b) The Holder may elect to satisfy his or her obligation to advance
the Required Tax Payments by any of the following means: (1) a cash payment to
the Company pursuant to Section 5.3(a), (2) delivery to the Company of
previously owned whole shares of Stock (which the Holder has held for at least
six months prior to the delivery of such shares or which the Holder purchased on
the open market and for which the Holder has good title, free and clear of all
liens and encumbrances) having a Fair Market Value, determined as of the date
the obligation to withhold or pay taxes first arises in connection with the
Award (the "Tax Date"), equal to the Required Tax Payments, (3) authorizing the
Company to withhold from the shares of Stock otherwise to be delivered to the
Holder pursuant to the Award, a number of whole shares of Stock having a Fair
Market Value, determined as of the Tax Date, equal to the Required Tax Payments,
(4) a cash payment by a broker-dealer acceptable to the Company through whom the
Holder has sold the shares with respect to which the Required Tax Payments have
arisen or (5) any combination of (1), (2) and (3). The Committee may disapprove
an election pursuant to any of clauses (2)-(5) if the Committee determines,
based on the opinion of recognized securities counsel, that the method so
elected would result in liability to the Optionee under Section 16(b) of the
Securities Exchange Act of 1934, as amended, or the regulations promulgated
thereunder. Shares of Stock to be delivered or withheld may have a Fair Market
Value in excess of the minimum amount of the Required Tax Payments, but not in
excess of the amount determined by applying the Holder's maximum marginal tax
rate. Any fraction of a share of Stock which would be required to satisfy such
an obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Holder. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
5.4. Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Award shall be
appropriately adjusted by the Committee. If any adjustment would result in a
fractional security being subject to the Award, the Company shall pay the Holder
in connection with the vesting, if any, of such fractional security, an amount
-3-
<PAGE>
in cash determined by multiplying (i) such fraction (rounded to the nearest
hundredth) by (ii) the Fair Market Value on the vesting date. The decision of
the Committee regarding any such adjustment shall be final, binding and
conclusive.
5.5. Compliance with Applicable Law. Award is subject to the condition
that if the listing, registration or qualification of the shares subject to the
Award upon any securities exchange or under any law, or the consent or approval
of any governments body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the vesting or delivery of
shares hereunder, the shares of Stock subject to the Award may not be delivered,
in whole or in part, unless such listing, registration, qualification, consent
or approval shall have been effected or obtained, free of any conditions not
acceptable to the Company. The Company agrees to use reasonable efforts to
effect or obtain any :such listing, registration, qualification, consent or
approval.
5.6. Agreement Subject to the Plan. This Agreement is subject to the
provisions of the Plan and shall be interpreted in accordance therewith. The
Holder hereby acknowledges receipt of a copy of the Plan.
6. Miscellaneous Provisions.
6.1. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Holder, acquire any rights hereunder in
accordance with this Agreement or the Plan.
6.2. Notices. All notices, requests or other communications provided for
in this Agreement shall be made, if to the Company, to Kayser Building, 100
North Stanton, El Paso, Texas 79901, Attention: Corporate Secretary, and if to
the Holder, to 4860 Sage Road, Las Cruces, New Mexico 88001. All notices,
requests or other communications provided for in this Agreement shall be made in
writing either (a) by personal delivery to the party entitled thereto, (b) by
facsimile with confirmation of receipt, (c) by mailing in the United States
mails to the last known address of the party entitled thereto or (d) by express
courier service. The notice, request or other communication shall be deemed to
be received upon personal delivery, upon confirmation of receipt of facsimile
transmission, or upon receipt by the party entitled thereto if by United States
mail or express courier service; provided, however, that if a notice, request or
other communication is not received during regular business hours, it shall be
deemed to be received on the next succeeding business day of the Company.
-4-
<PAGE>
6.3. Governing Law. This Agreement, the Award and all determinations made
and actions taken pursuant hereto and thereto, to the extent not otherwise
governed by the laws of the United States, shall be governed by the laws of the
State of Texas and construed in accordance therewith without giving effect to
conflicts of laws principles.
6.4. Counterparts. This Agreement may be executed in two counterpart each
of which shall be deemed an original and both of which together shall constitute
one and the same instrument.
EL PASO ELECTRIC COMPANY
By:
--------------------------------
Name: Kenneth R. Heitz
Title: Director
Acceptance Date:
------------------
- ----------------------------------
Robert C. McNiel
-5-
<PAGE>
Exhibit 99.06
EL PASO ELECTRIC COMPANY
RESTRICTED STOCK AWARD AGREEMENT
El Paso Electric Company, a Texas corporation (the 'Company'), hereby
grants to Susanne M. Sickles (the "Holder"), pursuant to the provisions of the
El Paso Electric Company 1996 Long-Term Incentive Plan (the "Plan"), a
restricted stock award (the "Award") of 1,110 shares of the Company's Common
Stock, no par value ("Stock"), upon and subject to the restrictions, terms and
conditions set forth below. Capitalized terms not defined herein shall have the
meanings specified in the Plan.
1. Award Subject to Acceptance of Agreement. The Award shall be null and
void unless the Holder shall accept this Agreement by executing it in the space
provided below and returning it to the Company and execute and return one or
more irrevocable stock powers. As soon as practicable after the Holder has
executed this Agreement and such stock power or powers and returned the same to
the Company, the Company shall cause to be issued in the Holder's name a stock
certificate or certificates representing the total number of shares of Stock
subject to the Award.
2. Rights as a Stockholder. Holder shall have the right to vote the
shares of Stock subject to the Award. During the Restriction Period as to any
shares of Stock, cash dividends which would otherwise be payable on any such
shares of will be credited to the Holder in the form of additional unvested
shares of Stock as if the dividend had purchased additional shares at the
closing market price on the date such dividend is paid, and such additional
shares (including shares received as stock dividend or stock split), shall be
delivered to the Company (and the Holder shall, if requested by the Company,
execute and return one or more irrevocable stock powers related thereto) and
shall be subject to the same restrictions as the shares of Stock with respect to
which such dividend or other distribution was made.
3. Custody and Delivery of Certificates Representing Shares. The Company
shall hold the certificate or certificates representing the shares of Stock
subject to the Award until the restrictions on such Award shall have lapsed, in
whole or in part, pursuant to Section 4 hereof, and the Company shall as soon
thereafter as practicable, subject to Section 5.3, deliver the certificate or
certificates for such shares to the Holder and destroy the stock power or powers
relating to such shares. If such stock power or powers also relates to shares
as to which restrictions remain in effect, the Company may require, as a
condition precedent to delivery of any certificate pursuant to this Section 3,
the execution and delivery to the Company of one or more stock powers relating
to such shares.
4. Restriction Period and Vesting. (a) The restrictions on the Award
shall lapse on the earliest of the following: (i) with respect to one-fifth of
the aggregate number of shares of Stock subject to the Award on February 19,
1998 and as to an additional one-fifth of such aggregate number of shares on
each anniversary thereof
<PAGE>
during the years 1999 through 2002, inclusive, or (ii) in accordance with
Section 6.8 of the Plan (the "Restriction Period").
(b) If the Holder's employment with the Company is terminated by the
Company during the Restriction Period or by reason of the Holder's "Permanent
and Total Disability" (as such term is defined in the Plan), or by reason of the
Holder's voluntary resignation or retirement or his death, then any shares of
Stock as to which restrictions have not lapsed shall be forfeited.
5. Additional Terms and Conditions of Award.
5.1. Nontransferability of Award. During the Restriction Period, the
shares of Stock subject to the Award as to which restrictions remain in effect
may not be transferred by the Holder other than by will, the laws of descent and
distribution or pursuant to beneficiary designation procedures approved by the
Company. Except to the extent permitted by the foregoing, during the
Restriction Period, the shares of Stock subject to the Award as to which
restrictions remain in effect may not be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate or encumber, or
otherwise dispose of such shares, the Award shall immediately become null and
void.
5.2. Investment Representation. The Holder hereby represents and
covenants that (a) any share of Stock acquired upon the lapse of restrictions
will be acquired for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such acquisition has been registered under the Securities Act and
any applicable state securities law; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Holder shall submit a written
statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of acquisition of any
shares hereunder or (y) is true and correct as of the date of any sale of any
such shares, as applicable. As a further condition precedent to the delivery to
the Holder of any shares subject to the Award, the Holder shall comply with all
regulations and requirements of any regulatory authority having control of or
supervision over the issuance of the shares and, in connection therewith, shall
execute any documents which the Board or any committee authorized by the Board
shall in its sole discretion deem necessary or advisable.
-2-
<PAGE>
5.3. Withholding Taxes. (a) As a condition precedent to the delivery to the
Holder of any shares of Stock subject to the Award, the Holder may, upon request
by the Company, pay to the Company such amount of cash as the Company may be
required, under all applicable federal, state, local or other laws or
regulations, to withhold and pay over as income or other withholding taxes (the
"Required Tax Payments") with respect to the Award. If the Holder shall fail to
advance the Required Tax Payments after request by the Company, the Company may,
in its discretion, deduct any Required Tax Payments from any amount then or
thereafter payable by the Company to the Holder.
(b) The Holder may elect to satisfy his or her obligation to advance the
Required Tax Payments by any of the following means: (1) a cash payment to the
Company pursuant to Section 5.3(a), (2) delivery to the Company of previously
owned whole shares of Stock (which the Holder has held for at least six months
prior to the delivery of such shares or which the Holder purchased on the open
market and for which the Holder has good title, free and clear of all liens and
encumbrances) having a Fair Market Value, determined as of the date the
obligation to withhold or pay taxes first arises in connection with the Award
(the "Tax Date"), equal to the Required Tax Payments, (3) authorizing the
Company to withhold from the shares of Stock otherwise to be delivered to the
Holder pursuant to the Award, a number of whole shares of Stock having a Fair
Market Value, determined as of the Tax Date, equal to the Required Tax Payments,
(4) a cash payment by a broker-dealer acceptable to the Company through whom the
Holder has sold the shares with respect to which the Required Tax Payments have
arisen or (5) any combination of (1), (2) and (3). The Committee may disapprove
an election pursuant to any of clauses (2)-(5) if the Committee determines,
based on the opinion of recognized securities counsel, that the method so
elected would result in liability to the Optionee under Section 16(b) of the
Securities Exchange Act of 1934, as amended, or the regulations promulgated
thereunder. Shares of Stock to be delivered or withheld may have a Fair Market
Value in excess of the minimum amount of the Required Tax Payments, but not in
excess of the amount determined by applying the Holder's maximum marginal tax
rate. Any fraction of a share of Stock which would be required to satisfy such
an obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Holder. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
5.4. Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Award shall be
appropriately adjusted by the Committee. If any adjustment would result in a
fractional security being subject to the Award, the Company shall pay the Holder
in connection with the vesting, if any, of such fractional security, an amount
-3-
<PAGE>
in cash determined by multiplying (i) such fraction (rounded to the nearest
hundredth) by (ii) the Fair Market Value on the vesting date. The decision of
the Committee regarding any such adjustment shall be final, binding and
conclusive.
5.5. Compliance with Applicable Law. Award is subject to the condition
that if the listing, registration or qualification of the shares subject to the
Award upon any securities exchange or under any law, or the consent or approval
of any governments body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the vesting or delivery of
shares hereunder, the shares of Stock subject to the Award may not be delivered,
in whole or in part, unless such listing, registration, qualification, consent
or approval shall have been effected or obtained, free of any conditions not
acceptable to the Company. The Company agrees to use reasonable efforts to
effect or obtain any :such listing, registration, qualification, consent or
approval.
5.6. Agreement Subject to the Plan. This Agreement is subject to the
provisions of the Plan and shall be interpreted in accordance therewith. The
Holder hereby acknowledges receipt of a copy of the Plan.
6. Miscellaneous Provisions.
6.1. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Holder, acquire any rights hereunder in
accordance with this Agreement or the Plan.
6.2. Notices. All notices, requests or other communications provided for
in this Agreement shall be made, if to the Company, to Kayser Building, 100
North Stanton, El Paso, Texas 79901, Attention: Corporate Secretary, and if to
the Holder, to Rt. 1, Box 1021, Anthony, New Mexico 88021. All notices,
requests or other communications provided for in this Agreement shall be made in
writing either (a) by personal delivery to the party entitled thereto, (b) by
facsimile with confirmation of receipt, (c) by mailing in the United States
mails to the last known address of the party entitled thereto or (d) by express
courier service. The notice, request or other communication shall be deemed to
be received upon personal delivery, upon confirmation of receipt of facsimile
transmission, or upon receipt by the party entitled thereto if by United States
mail or express courier service; provided, however, that if a notice, request or
other communication is not received during regular business hours, it shall be
deemed to be received on the next succeeding business day of the Company.
-4-
<PAGE>
6.3. Governing Law. This Agreement, the Award and all determinations made
and actions taken pursuant hereto and thereto, to the extent not otherwise
governed by the laws of the United States, shall be governed by the laws of the
State of Texas and construed in accordance therewith without giving effect to
conflicts of laws principles.
6.4. Counterparts. This Agreement may be executed in two counterpart each
of which shall be deemed an original and both of which together shall constitute
one and the same instrument.
EL PASO ELECTRIC COMPANY
By:
------------------------------
Name: Kenneth R. Heitz
Title: Director
Acceptance Date:
----------------
- --------------------------------
Susanne M. Sickles
-5-
<PAGE>
Exhibit 99.07
EL PASO ELECTRIC COMPANY
RESTRICTED STOCK AWARD AGREEMENT
El Paso Electric Company, a Texas corporation (the 'Company'), hereby
grants to Guillermo Silva, Jr. (the "Holder"), pursuant to the provisions of the
El Paso Electric Company 1996 Long-Term Incentive Plan (the "Plan"), a
restricted stock award (the "Award") of 1,060 shares of the Company's Common
Stock, no par value ("Stock"), upon and subject to the restrictions, terms and
conditions set forth below. Capitalized terms not defined herein shall have the
meanings specified in the Plan.
1. Award Subject to Acceptance of Agreement. The Award shall be null and
void unless the Holder shall accept this Agreement by executing it in the space
provided below and returning it to the Company and execute and return one or
more irrevocable stock powers. As soon as practicable after the Holder has
executed this Agreement and such stock power or powers and returned the same to
the Company, the Company shall cause to be issued in the Holder's name a stock
certificate or certificates representing the total number of shares of Stock
subject to the Award.
2. Rights as a Stockholder. Holder shall have the right to vote the
shares of Stock subject to the Award. During the Restriction Period as to any
shares of Stock, cash dividends which would otherwise be payable on any such
shares of will be credited to the Holder in the form of additional unvested
shares of Stock as if the dividend had purchased additional shares at the
closing market price on the date such dividend is paid, and such additional
shares (including shares received as stock dividend or stock split), shall be
delivered to the Company (and the Holder shall, if requested by the Company,
execute and return one or more irrevocable stock powers related thereto) and
shall be subject to the same restrictions as the shares of Stock with respect to
which such dividend or other distribution was made.
3. Custody and Delivery of Certificates Representing Shares. The Company
shall hold the certificate or certificates representing the shares of Stock
subject to the Award until the restrictions on such Award shall have lapsed, in
whole or in part, pursuant to Section 4 hereof, and the Company shall as soon
thereafter as practicable, subject to Section 5.3, deliver the certificate or
certificates for such shares to the Holder and destroy the stock power or powers
relating to such shares. If such stock power or powers also relates to shares
as to which restrictions remain in effect, the Company may require, as a
condition precedent to delivery of any certificate pursuant to this Section 3,
the execution and delivery to the Company of one or more stock powers relating
to such shares.
4. Restriction Period and Vesting. (a) The restrictions on the Award
shall lapse on the earliest of the following: (i) with respect to one-fifth of
the aggregate number of shares of Stock subject to the Award on February 19,
1998 and as to an additional one-fifth of such aggregate number of shares on
each anniversary thereof
<PAGE>
during the years 1999 through 2002, inclusive, or (ii) in accordance with
Section 6.8 of the Plan (the "Restriction Period").
(b) If the Holder's employment with the Company is terminated by the
Company during the Restriction Period or by reason of the Holder's "Permanent
and Total Disability" (as such term is defined in the Plan), or by reason of the
Holder's voluntary resignation or retirement or his death, then any shares of
Stock as to which restrictions have not lapsed shall be forfeited.
5. Additional Terms and Conditions of Award.
5.1. Nontransferability of Award. During the Restriction Period, the
shares of Stock subject to the Award as to which restrictions remain in effect
may not be transferred by the Holder other than by will, the laws of descent and
distribution or pursuant to beneficiary designation procedures approved by the
Company. Except to the extent permitted by the foregoing, during the
Restriction Period, the shares of Stock subject to the Award as to which
restrictions remain in effect may not be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate or encumber, or
otherwise dispose of such shares, the Award shall immediately become null and
void.
5.2. Investment Representation. The Holder hereby represents and
covenants that (a) any share of Stock acquired upon the lapse of restrictions
will be acquired for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such acquisition has been registered under the Securities Act and
any applicable state securities law; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Holder shall submit a written
statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of acquisition of any
shares hereunder or (y) is true and correct as of the date of any sale of any
such shares, as applicable. As a further condition precedent to the delivery to
the Holder of any shares subject to the Award, the Holder shall comply with all
regulations and requirements of any regulatory authority having control of or
supervision over the issuance of the shares and, in connection therewith, shall
execute any documents which the Board or any committee authorized by the Board
shall in its sole discretion deem necessary or advisable.
-2-
<PAGE>
5.3. Withholding Taxes. (a) As a condition precedent to the delivery to the
Holder of any shares of Stock subject to the Award, the Holder may, upon request
by the Company, pay to the Company such amount of cash as the Company may be
required, under all applicable federal, state, local or other laws or
regulations, to withhold and pay over as income or other withholding taxes (the
"Required Tax Payments") with respect to the Award. If the Holder shall fail to
advance the Required Tax Payments after request by the Company, the Company may,
in its discretion, deduct any Required Tax Payments from any amount then or
thereafter payable by the Company to the Holder.
(b) The Holder may elect to satisfy his or her obligation to advance the
Required Tax Payments by any of the following means: (1) a cash payment to the
Company pursuant to Section 5.3(a), (2) delivery to the Company of previously
owned whole shares of Stock (which the Holder has held for at least six months
prior to the delivery of such shares or which the Holder purchased on the open
market and for which the Holder has good title, free and clear of all liens and
encumbrances) having a Fair Market Value, determined as of the date the
obligation to withhold or pay taxes first arises in connection with the Award
(the "Tax Date"), equal to the Required Tax Payments, (3) authorizing the
Company to withhold from the shares of Stock otherwise to be delivered to the
Holder pursuant to the Award, a number of whole shares of Stock having a Fair
Market Value, determined as of the Tax Date, equal to the Required Tax Payments,
(4) a cash payment by a broker-dealer acceptable to the Company through whom the
Holder has sold the shares with respect to which the Required Tax Payments have
arisen or (5) any combination of (1), (2) and (3). The Committee may disapprove
an election pursuant to any of clauses (2)-(5) if the Committee determines,
based on the opinion of recognized securities counsel, that the method so
elected would result in liability to the Optionee under Section 16(b) of the
Securities Exchange Act of 1934, as amended, or the regulations promulgated
thereunder. Shares of Stock to be delivered or withheld may have a Fair Market
Value in excess of the minimum amount of the Required Tax Payments, but not in
excess of the amount determined by applying the Holder's maximum marginal tax
rate. Any fraction of a share of Stock which would be required to satisfy such
an obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Holder. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
5.4. Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Award shall be
appropriately adjusted by the Committee. If any adjustment would result in a
fractional security being subject to the Award, the Company shall pay the Holder
in connection with the vesting, if any, of such fractional security, an amount
-3-
<PAGE>
in cash determined by multiplying (i) such fraction (rounded to the nearest
hundredth) by (ii) the Fair Market Value on the vesting date. The decision of
the Committee regarding any such adjustment shall be final, binding and
conclusive.
5.5. Compliance with Applicable Law. Award is subject to the condition
that if the listing, registration or qualification of the shares subject to the
Award upon any securities exchange or under any law, or the consent or approval
of any governments body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the vesting or delivery of
shares hereunder, the shares of Stock subject to the Award may not be delivered,
in whole or in part, unless such listing, registration, qualification, consent
or approval shall have been effected or obtained, free of any conditions not
acceptable to the Company. The Company agrees to use reasonable efforts to
effect or obtain any :such listing, registration, qualification, consent or
approval.
5.6. Agreement Subject to the Plan. This Agreement is subject to the
provisions of the Plan and shall be interpreted in accordance therewith. The
Holder hereby acknowledges receipt of a copy of the Plan.
6. Miscellaneous Provisions.
6.1. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Holder, acquire any rights hereunder in
accordance with this Agreement or the Plan.
6.2. Notices. All notices, requests or other communications provided for
in this Agreement shall be made, if to the Company, to Kayser Building, 100
North Stanton, El Paso, Texas 79901, Attention: Corporate Secretary, and if to
the Holder, to 4629 R.T. Cassidy, El Paso, Texas 79924. All notices, requests
or other communications provided for in this Agreement shall be made in writing
either (a) by personal delivery to the party entitled thereto, (b) by facsimile
with confirmation of receipt, (c) by mailing in the United States mails to the
last known address of the party entitled thereto or (d) by express courier
service. The notice, request or other communication shall be deemed to be
received upon personal delivery, upon confirmation of receipt of facsimile
transmission, or upon receipt by the party entitled thereto if by United States
mail or express courier service; provided, however, that if a notice, request or
other communication is not received during regular business hours, it shall be
deemed to be received on the next succeeding business day of the Company.
-4-
<PAGE>
6.3. Governing Law. This Agreement, the Award and all determinations made
and actions taken pursuant hereto and thereto, to the extent not otherwise
governed by the laws of the United States, shall be governed by the laws of the
State of Texas and construed in accordance therewith without giving effect to
conflicts of laws principles.
6.4. Counterparts. This Agreement may be executed in two counterpart each
of which shall be deemed an original and both of which together shall constitute
one and the same instrument.
EL PASO ELECTRIC COMPANY
By:
-------------------------------
Name: Kenneth R. Heitz
Title: Director
Acceptance Date:
----------------
- --------------------------------
Guillermo Silva, Jr.
-5-
<PAGE>
Exhibit 99.08
EL PASO ELECTRIC COMPANY
RESTRICTED STOCK AWARD AGREEMENT
El Paso Electric Company, a Texas corporation (the 'Company'), hereby
grants to Pedro Serrano, Jr. (the "Holder"), pursuant to the provisions of the
El Paso Electric Company 1996 Long-Term Incentive Plan (the "Plan"), a
restricted stock award (the "Award") of 1,050 shares of the Company's Common
Stock, no par value ("Stock"), upon and subject to the restrictions, terms and
conditions set forth below. Capitalized terms not defined herein shall have the
meanings specified in the Plan.
1. Award Subject to Acceptance of Agreement. The Award shall be null and
void unless the Holder shall accept this Agreement by executing it in the space
provided below and returning it to the Company and execute and return one or
more irrevocable stock powers. As soon as practicable after the Holder has
executed this Agreement and such stock power or powers and returned the same to
the Company, the Company shall cause to be issued in the Holder's name a stock
certificate or certificates representing the total number of shares of Stock
subject to the Award.
2. Rights as a Stockholder. Holder shall have the right to vote the
shares of Stock subject to the Award. During the Restriction Period as to any
shares of Stock, cash dividends which would otherwise be payable on any such
shares of will be credited to the Holder in the form of additional unvested
shares of Stock as if the dividend had purchased additional shares at the
closing market price on the date such dividend is paid, and such additional
shares (including shares received as stock dividend or stock split), shall be
delivered to the Company (and the Holder shall, if requested by the Company,
execute and return one or more irrevocable stock powers related thereto) and
shall be subject to the same restrictions as the shares of Stock with respect to
which such dividend or other distribution was made.
3. Custody and Delivery of Certificates Representing Shares. The Company
shall hold the certificate or certificates representing the shares of Stock
subject to the Award until the restrictions on such Award shall have lapsed, in
whole or in part, pursuant to Section 4 hereof, and the Company shall as soon
thereafter as practicable, subject to Section 5.3, deliver the certificate or
certificates for such shares to the Holder and destroy the stock power or powers
relating to such shares. If such stock power or powers also relates to shares
as to which restrictions remain in effect, the Company may require, as a
condition precedent to delivery of any certificate pursuant to this Section 3,
the execution and delivery to the Company of one or more stock powers relating
to such shares.
4. Restriction Period and Vesting. (a) The restrictions on the Award
shall lapse on the earliest of the following: (i) with respect to one-fifth of
the aggregate number of shares of Stock subject to the Award on February 19,
1998 and as to an additional one-fifth of such aggregate number of shares on
each anniversary thereof
<PAGE>
during the years 1999 through 2002, inclusive, or (ii) in accordance with
Section 6.8 of the Plan (the "Restriction Period").
(b) If the Holder's employment with the Company is terminated by the
Company during the Restriction Period or by reason of the Holder's "Permanent
and Total Disability" (as such term is defined in the Plan), or by reason of the
Holder's voluntary resignation or retirement or his death, then any shares of
Stock as to which restrictions have not lapsed shall be forfeited.
5. Additional Terms and Conditions of Award.
5.1. Nontransferability of Award. During the Restriction Period, the
shares of Stock subject to the Award as to which restrictions remain in effect
may not be transferred by the Holder other than by will, the laws of descent and
distribution or pursuant to beneficiary designation procedures approved by the
Company. Except to the extent permitted by the foregoing, during the
Restriction Period, the shares of Stock subject to the Award as to which
restrictions remain in effect may not be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate or encumber, or
otherwise dispose of such shares, the Award shall immediately become null and
void.
5.2. Investment Representation. The Holder hereby represents and
covenants that (a) any share of Stock acquired upon the lapse of restrictions
will be acquired for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such acquisition has been registered under the Securities Act and
any applicable state securities law; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Holder shall submit a written
statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of acquisition of any
shares hereunder or (y) is true and correct as of the date of any sale of any
such shares, as applicable. As a further condition precedent to the delivery to
the Holder of any shares subject to the Award, the Holder shall comply with all
regulations and requirements of any regulatory authority having control of or
supervision over the issuance of the shares and, in connection therewith, shall
execute any documents which the Board or any committee authorized by the Board
shall in its sole discretion deem necessary or advisable.
-2-
<PAGE>
5.3. Withholding Taxes. (a) As a condition precedent to the delivery to the
Holder of any shares of Stock subject to the Award, the Holder may, upon request
by the Company, pay to the Company such amount of cash as the Company may be
required, under all applicable federal, state, local or other laws or
regulations, to withhold and pay over as income or other withholding taxes (the
"Required Tax Payments") with respect to the Award. If the Holder shall fail to
advance the Required Tax Payments after request by the Company, the Company may,
in its discretion, deduct any Required Tax Payments from any amount then or
thereafter payable by the Company to the Holder.
(b) The Holder may elect to satisfy his or her obligation to advance
the Required Tax Payments by any of the following means: (1) a cash payment to
the Company pursuant to Section 5.3(a), (2) delivery to the Company of
previously owned whole shares of Stock (which the Holder has held for at least
six months prior to the delivery of such shares or which the Holder purchased on
the open market and for which the Holder has good title, free and clear of all
liens and encumbrances) having a Fair Market Value, determined as of the date
the obligation to withhold or pay taxes first arises in connection with the
Award (the "Tax Date"), equal to the Required Tax Payments, (3) authorizing the
Company to withhold from the shares of Stock otherwise to be delivered to the
Holder pursuant to the Award, a number of whole shares of Stock having a Fair
Market Value, determined as of the Tax Date, equal to the Required Tax Payments,
(4) a cash payment by a broker-dealer acceptable to the Company through whom the
Holder has sold the shares with respect to which the Required Tax Payments have
arisen or (5) any combination of (1), (2) and (3). The Committee may disapprove
an election pursuant to any of clauses (2)-(5) if the Committee determines,
based on the opinion of recognized securities counsel, that the method so
elected would result in liability to the Optionee under Section 16(b) of the
Securities Exchange Act of 1934, as amended, or the regulations promulgated
thereunder. Shares of Stock to be delivered or withheld may have a Fair Market
Value in excess of the minimum amount of the Required Tax Payments, but not in
excess of the amount determined by applying the Holder's maximum marginal tax
rate. Any fraction of a share of Stock which would be required to satisfy such
an obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Holder. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
5.4. Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Award shall be
appropriately adjusted by the Committee. If any adjustment would result in a
fractional security being subject to the Award, the Company shall pay the Holder
in connection with the vesting, if any, of such fractional security, an amount
-3-
<PAGE>
in cash determined by multiplying (i) such fraction (rounded to the nearest
hundredth) by (ii) the Fair Market Value on the vesting date. The decision of
the Committee regarding any such adjustment shall be final, binding and
conclusive.
5.5. Compliance with Applicable Law. Award is subject to the condition
that if the listing, registration or qualification of the shares subject to the
Award upon any securities exchange or under any law, or the consent or approval
of any governments body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the vesting or delivery of
shares hereunder, the shares of Stock subject to the Award may not be delivered,
in whole or in part, unless such listing, registration, qualification, consent
or approval shall have been effected or obtained, free of any conditions not
acceptable to the Company. The Company agrees to use reasonable efforts to
effect or obtain any :such listing, registration, qualification, consent or
approval.
5.6. Agreement Subject to the Plan. This Agreement is subject to the
provisions of the Plan and shall be interpreted in accordance therewith. The
Holder hereby acknowledges receipt of a copy of the Plan.
6. Miscellaneous Provisions.
6.1. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Holder, acquire any rights hereunder in
accordance with this Agreement or the Plan.
6.2. Notices. All notices, requests or other communications provided for
in this Agreement shall be made, if to the Company, to Kayser Building, 100
North Stanton, El Paso, Texas 79901, Attention: Corporate Secretary, and if to
the Holder, to 4115 Bliss Ave., El Paso, Texas 79903. All notices, requests or
other communications provided for in this Agreement shall be made in writing
either (a) by personal delivery to the party entitled thereto, (b) by facsimile
with confirmation of receipt, (c) by mailing in the United States mails to the
last known address of the party entitled thereto or (d) by express courier
service. The notice, request or other communication shall be deemed to be
received upon personal delivery, upon confirmation of receipt of facsimile
transmission, or upon receipt by the party entitled thereto if by United States
mail or express courier service; provided, however, that if a notice, request or
other communication is not received during regular business hours, it shall be
deemed to be received on the next succeeding business day of the Company.
-4-
<PAGE>
6.3. Governing Law. This Agreement, the Award and all determinations made
and actions taken pursuant hereto and thereto, to the extent not otherwise
governed by the laws of the United States, shall be governed by the laws of the
State of Texas and construed in accordance therewith without giving effect to
conflicts of laws principles.
6.4. Counterparts. This Agreement may be executed in two counterpart each
of which shall be deemed an original and both of which together shall constitute
one and the same instrument.
EL PASO ELECTRIC COMPANY
By:
-----------------------------------
Name: Kenneth R. Heitz
Title: Director
Acceptance Date:
----------------
- --------------------------------
Pedro Serrano, Jr.
-5-
<PAGE>
Exhibit 99.09
EL PASO ELECTRIC COMPANY
RESTRICTED STOCK AWARD AGREEMENT
El Paso Electric Company, a Texas corporation (the 'Company'), hereby
grants to Thomas L. Newsom (the "Holder"), pursuant to the provisions of the El
Paso Electric Company 1996 Long-Term Incentive Plan (the "Plan"), a restricted
stock award (the "Award") of 1,045 shares of the Company's Common Stock, no par
value ("Stock"), upon and subject to the restrictions, terms and conditions set
forth below. Capitalized terms not defined herein shall have the meanings
specified in the Plan.
1. Award Subject to Acceptance of Agreement. The Award shall be null and
void unless the Holder shall accept this Agreement by executing it in the space
provided below and returning it to the Company and execute and return one or
more irrevocable stock powers. As soon as practicable after the Holder has
executed this Agreement and such stock power or powers and returned the same to
the Company, the Company shall cause to be issued in the Holder's name a stock
certificate or certificates representing the total number of shares of Stock
subject to the Award.
2. Rights as a Stockholder. Holder shall have the right to vote the
shares of Stock subject to the Award. During the Restriction Period as to any
shares of Stock, cash dividends which would otherwise be payable on any such
shares of will be credited to the Holder in the form of additional unvested
shares of Stock as if the dividend had purchased additional shares at the
closing market price on the date such dividend is paid, and such additional
shares (including shares received as stock dividend or stock split), shall be
delivered to the Company (and the Holder shall, if requested by the Company,
execute and return one or more irrevocable stock powers related thereto) and
shall be subject to the same restrictions as the shares of Stock with respect to
which such dividend or other distribution was made.
3. Custody and Delivery of Certificates Representing Shares. The Company
shall hold the certificate or certificates representing the shares of Stock
subject to the Award until the restrictions on such Award shall have lapsed, in
whole or in part, pursuant to Section 4 hereof, and the Company shall as soon
thereafter as practicable, subject to Section 5.3, deliver the certificate or
certificates for such shares to the Holder and destroy the stock power or powers
relating to such shares. If such stock power or powers also relates to shares
as to which restrictions remain in effect, the Company may require, as a
condition precedent to delivery of any certificate pursuant to this Section 3,
the execution and delivery to the Company of one or more stock powers relating
to such shares.
4. Restriction Period and Vesting. (a) The restrictions on the Award
shall lapse on the earliest of the following: (i) with respect to one-fifth of
the aggregate number of shares of Stock subject to the Award on February 19,
1998 and as to an additional one-fifth of such aggregate number of shares on
each anniversary thereof
<PAGE>
during the years 1999 through 2002, inclusive, or (ii) in accordance with
Section 6.8 of the Plan (the "Restriction Period").
(b) If the Holder's employment with the Company is terminated by the
Company during the Restriction Period or by reason of the Holder's "Permanent
and Total Disability" (as such term is defined in the Plan), or by reason of the
Holder's voluntary resignation or retirement or his death, then any shares of
Stock as to which restrictions have not lapsed shall be forfeited.
5. Additional Terms and Conditions of Award.
5.1. Nontransferability of Award. During the Restriction Period, the
shares of Stock subject to the Award as to which restrictions remain in effect
may not be transferred by the Holder other than by will, the laws of descent and
distribution or pursuant to beneficiary designation procedures approved by the
Company. Except to the extent permitted by the foregoing, during the
Restriction Period, the shares of Stock subject to the Award as to which
restrictions remain in effect may not be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate or encumber, or
otherwise dispose of such shares, the Award shall immediately become null and
void.
5.2. Investment Representation. The Holder hereby represents and
covenants that (a) any share of Stock acquired upon the lapse of restrictions
will be acquired for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such acquisition has been registered under the Securities Act and
any applicable state securities law; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Holder shall submit a written
statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of acquisition of any
shares hereunder or (y) is true and correct as of the date of any sale of any
such shares, as applicable. As a further condition precedent to the delivery to
the Holder of any shares subject to the Award, the Holder shall comply with all
regulations and requirements of any regulatory authority having control of or
supervision over the issuance of the shares and, in connection therewith, shall
execute any documents which the Board or any committee authorized by the Board
shall in its sole discretion deem necessary or advisable.
-2-
<PAGE>
5.3. Withholding Taxes. (a) As a condition precedent to the delivery to the
Holder of any shares of Stock subject to the Award, the Holder may, upon request
by the Company, pay to the Company such amount of cash as the Company may be
required, under all applicable federal, state, local or other laws or
regulations, to withhold and pay over as income or other withholding taxes (the
"Required Tax Payments") with respect to the Award. If the Holder shall fail to
advance the Required Tax Payments after request by the Company, the Company may,
in its discretion, deduct any Required Tax Payments from any amount then or
thereafter payable by the Company to the Holder.
(b) The Holder may elect to satisfy his or her obligation to advance
the Required Tax Payments by any of the following means: (1) a cash payment to
the Company pursuant to Section 5.3(a), (2) delivery to the Company of
previously owned whole shares of Stock (which the Holder has held for at least
six months prior to the delivery of such shares or which the Holder purchased on
the open market and for which the Holder has good title, free and clear of all
liens and encumbrances) having a Fair Market Value, determined as of the date
the obligation to withhold or pay taxes first arises in connection with the
Award (the "Tax Date"), equal to the Required Tax Payments, (3) authorizing the
Company to withhold from the shares of Stock otherwise to be delivered to the
Holder pursuant to the Award, a number of whole shares of Stock having a Fair
Market Value, determined as of the Tax Date, equal to the Required Tax Payments,
(4) a cash payment by a broker-dealer acceptable to the Company through whom the
Holder has sold the shares with respect to which the Required Tax Payments have
arisen or (5) any combination of (1), (2) and (3). The Committee may disapprove
an election pursuant to any of clauses (2)-(5) if the Committee determines,
based on the opinion of recognized securities counsel, that the method so
elected would result in liability to the Optionee under Section 16(b) of the
Securities Exchange Act of 1934, as amended, or the regulations promulgated
thereunder. Shares of Stock to be delivered or withheld may have a Fair Market
Value in excess of the minimum amount of the Required Tax Payments, but not in
excess of the amount determined by applying the Holder's maximum marginal tax
rate. Any fraction of a share of Stock which would be required to satisfy such
an obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Holder. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
5.4. Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Award shall be
appropriately adjusted by the Committee. If any adjustment would result in a
fractional security being subject to the Award, the Company shall pay the Holder
in connection with the vesting, if any, of such fractional security, an amount
-3-
<PAGE>
in cash determined by multiplying (i) such fraction (rounded to the nearest
hundredth) by (ii) the Fair Market Value on the vesting date. The decision of
the Committee regarding any such adjustment shall be final, binding and
conclusive.
5.5. Compliance with Applicable Law. Award is subject to the condition
that if the listing, registration or qualification of the shares subject to the
Award upon any securities exchange or under any law, or the consent or approval
of any governments body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the vesting or delivery of
shares hereunder, the shares of Stock subject to the Award may not be delivered,
in whole or in part, unless such listing, registration, qualification, consent
or approval shall have been effected or obtained, free of any conditions not
acceptable to the Company. The Company agrees to use reasonable efforts to
effect or obtain any :such listing, registration, qualification, consent or
approval.
5.6. Agreement Subject to the Plan. This Agreement is subject to the
provisions of the Plan and shall be interpreted in accordance therewith. The
Holder hereby acknowledges receipt of a copy of the Plan.
6. Miscellaneous Provisions.
6.1. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Holder, acquire any rights hereunder in
accordance with this Agreement or the Plan.
6.2. Notices. All notices, requests or other communications provided for
in this Agreement shall be made, if to the Company, to Kayser Building, 100
North Stanton, El Paso, Texas 79901, Attention: Corporate Secretary, and if to
the Holder, to 6883 Orizaba, El Paso, Texas 79912. All notices, requests or
other communications provided for in this Agreement shall be made in writing
either (a) by personal delivery to the party entitled thereto, (b) by facsimile
with confirmation of receipt, (c) by mailing in the United States mails to the
last known address of the party entitled thereto or (d) by express courier
service. The notice, request or other communication shall be deemed to be
received upon personal delivery, upon confirmation of receipt of facsimile
transmission, or upon receipt by the party entitled thereto if by United States
mail or express courier service; provided, however, that if a notice, request or
other communication is not received during regular business hours, it shall be
deemed to be received on the next succeeding business day of the Company.
-4-
<PAGE>
6.3. Governing Law. This Agreement, the Award and all determinations made
and actions taken pursuant hereto and thereto, to the extent not otherwise
governed by the laws of the United States, shall be governed by the laws of the
State of Texas and construed in accordance therewith without giving effect to
conflicts of laws principles.
6.4. Counterparts. This Agreement may be executed in two counterpart each
of which shall be deemed an original and both of which together shall constitute
one and the same instrument.
EL PASO ELECTRIC COMPANY
By:
-----------------------------
Name: Kenneth R. Heitz
Title: Director
Acceptance Date:
---------------------
- -------------------------------------
Thomas L. Newsom
-5-
<PAGE>
Exhibit 99.10
EL PASO ELECTRIC COMPANY
RESTRICTED STOCK AWARD AGREEMENT
El Paso Electric Company, a Texas corporation (the 'Company'), hereby
grants to John A. Whitacre (the "Holder"), pursuant to the provisions of the El
Paso Electric Company 1996 Long-Term Incentive Plan (the "Plan"), a restricted
stock award (the "Award") of 1,085 shares of the Company's Common Stock, no par
value ("Stock"), upon and subject to the restrictions, terms and conditions set
forth below. Capitalized terms not defined herein shall have the meanings
specified in the Plan.
1. Award Subject to Acceptance of Agreement. The Award shall be null and
void unless the Holder shall accept this Agreement by executing it in the space
provided below and returning it to the Company and execute and return one or
more irrevocable stock powers. As soon as practicable after the Holder has
executed this Agreement and such stock power or powers and returned the same to
the Company, the Company shall cause to be issued in the Holder's name a stock
certificate or certificates representing the total number of shares of Stock
subject to the Award.
2. Rights as a Stockholder. Holder shall have the right to vote the
shares of Stock subject to the Award. During the Restriction Period as to any
shares of Stock, cash dividends which would otherwise be payable on any such
shares of will be credited to the Holder in the form of additional unvested
shares of Stock as if the dividend had purchased additional shares at the
closing market price on the date such dividend is paid, and such additional
shares (including shares received as stock dividend or stock split), shall be
delivered to the Company (and the Holder shall, if requested by the Company,
execute and return one or more irrevocable stock powers related thereto) and
shall be subject to the same restrictions as the shares of Stock with respect to
which such dividend or other distribution was made.
3. Custody and Delivery of Certificates Representing Shares. The Company
shall hold the certificate or certificates representing the shares of Stock
subject to the Award until the restrictions on such Award shall have lapsed, in
whole or in part, pursuant to Section 4 hereof, and the Company shall as soon
thereafter as practicable, subject to Section 5.3, deliver the certificate or
certificates for such shares to the Holder and destroy the stock power or powers
relating to such shares. If such stock power or powers also relates to shares
as to which restrictions remain in effect, the Company may require, as a
condition precedent to delivery of any certificate pursuant to this Section 3,
the execution and delivery to the Company of one or more stock powers relating
to such shares.
4. Restriction Period and Vesting. (a) The restrictions on the Award
shall lapse on the earliest of the following: (i) with respect to one-fifth of
the aggregate number of shares of Stock subject to the Award on February 19,
1998 and as to an additional one-fifth of such aggregate number of shares on
each anniversary thereof
<PAGE>
during the years 1999 through 2002, inclusive, or (ii) in accordance with
Section 6.8 of the Plan (the "Restriction Period").
(b) If the Holder's employment with the Company is terminated by the
Company during the Restriction Period or by reason of the Holder's "Permanent
and Total Disability" (as such term is defined in the Plan), or by reason of the
Holder's voluntary resignation or retirement or his death, then any shares of
Stock as to which restrictions have not lapsed shall be forfeited.
5. Additional Terms and Conditions of Award.
5.1. Nontransferability of Award. During the Restriction Period, the
shares of Stock subject to the Award as to which restrictions remain in effect
may not be transferred by the Holder other than by will, the laws of descent and
distribution or pursuant to beneficiary designation procedures approved by the
Company. Except to the extent permitted by the foregoing, during the
Restriction Period, the shares of Stock subject to the Award as to which
restrictions remain in effect may not be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate or encumber, or
otherwise dispose of such shares, the Award shall immediately become null and
void.
5.2. Investment Representation. The Holder hereby represents and
covenants that (a) any share of Stock acquired upon the lapse of restrictions
will be acquired for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such acquisition has been registered under the Securities Act and
any applicable state securities law; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Holder shall submit a written
statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of acquisition of any
shares hereunder or (y) is true and correct as of the date of any sale of any
such shares, as applicable. As a further condition precedent to the delivery to
the Holder of any shares subject to the Award, the Holder shall comply with all
regulations and requirements of any regulatory authority having control of or
supervision over the issuance of the shares and, in connection therewith, shall
execute any documents which the Board or any committee authorized by the Board
shall in its sole discretion deem necessary or advisable.
-2-
<PAGE>
5.3. Withholding Taxes. (a) As a condition precedent to the delivery to the
Holder of any shares of Stock subject to the Award, the Holder may, upon request
by the Company, pay to the Company such amount of cash as the Company may be
required, under all applicable federal, state, local or other laws or
regulations, to withhold and pay over as income or other withholding taxes (the
"Required Tax Payments") with respect to the Award. If the Holder shall fail to
advance the Required Tax Payments after request by the Company, the Company may,
in its discretion, deduct any Required Tax Payments from any amount then or
thereafter payable by the Company to the Holder.
(b) The Holder may elect to satisfy his or her obligation to advance
the Required Tax Payments by any of the following means: (1) a cash payment to
the Company pursuant to Section 5.3(a), (2) delivery to the Company of
previously owned whole shares of Stock (which the Holder has held for at least
six months prior to the delivery of such shares or which the Holder purchased on
the open market and for which the Holder has good title, free and clear of all
liens and encumbrances) having a Fair Market Value, determined as of the date
the obligation to withhold or pay taxes first arises in connection with the
Award (the "Tax Date"), equal to the Required Tax Payments, (3) authorizing the
Company to withhold from the shares of Stock otherwise to be delivered to the
Holder pursuant to the Award, a number of whole shares of Stock having a Fair
Market Value, determined as of the Tax Date, equal to the Required Tax Payments,
(4) a cash payment by a broker-dealer acceptable to the Company through whom the
Holder has sold the shares with respect to which the Required Tax Payments have
arisen or (5) any combination of (1), (2) and (3). The Committee may disapprove
an election pursuant to any of clauses (2)-(5) if the Committee determines,
based on the opinion of recognized securities counsel, that the method so
elected would result in liability to the Optionee under Section 16(b) of the
Securities Exchange Act of 1934, as amended, or the regulations promulgated
thereunder. Shares of Stock to be delivered or withheld may have a Fair Market
Value in excess of the minimum amount of the Required Tax Payments, but not in
excess of the amount determined by applying the Holder's maximum marginal tax
rate. Any fraction of a share of Stock which would be required to satisfy such
an obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Holder. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
5.4. Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Award shall be
appropriately adjusted by the Committee. If any adjustment would result in a
fractional security being subject to the Award, the Company shall pay the Holder
in connection with the vesting, if any, of such fractional security, an amount
-3-
<PAGE>
in cash determined by multiplying (i) such fraction (rounded to the nearest
hundredth) by (ii) the Fair Market Value on the vesting date. The decision of
the Committee regarding any such adjustment shall be final, binding and
conclusive.
5.5. Compliance with Applicable Law. Award is subject to the condition
that if the listing, registration or qualification of the shares subject to the
Award upon any securities exchange or under any law, or the consent or approval
of any governments body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the vesting or delivery of
shares hereunder, the shares of Stock subject to the Award may not be delivered,
in whole or in part, unless such listing, registration, qualification, consent
or approval shall have been effected or obtained, free of any conditions not
acceptable to the Company. The Company agrees to use reasonable efforts to
effect or obtain any :such listing, registration, qualification, consent or
approval.
5.6. Agreement Subject to the Plan. This Agreement is subject to the
provisions of the Plan and shall be interpreted in accordance therewith. The
Holder hereby acknowledges receipt of a copy of the Plan.
6. Miscellaneous Provisions.
6.1. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Holder, acquire any rights hereunder in
accordance with this Agreement or the Plan.
6.2. Notices. All notices, requests or other communications provided for
in this Agreement shall be made, if to the Company, to Kayser Building, 100
North Stanton, El Paso, Texas 79901, Attention: Corporate Secretary, and if to
the Holder, to 333 Kingswood Loop, El Paso, Texas 79932. All notices, requests
or other communications provided for in this Agreement shall be made in writing
either (a) by personal delivery to the party entitled thereto, (b) by facsimile
with confirmation of receipt, (c) by mailing in the United States mails to the
last known address of the party entitled thereto or (d) by express courier
service. The notice, request or other communication shall be deemed to be
received upon personal delivery, upon confirmation of receipt of facsimile
transmission, or upon receipt by the party entitled thereto if by United States
mail or express courier service; provided, however, that if a notice, request or
other communication is not received during regular business hours, it shall be
deemed to be received on the next succeeding business day of the Company.
-4-
<PAGE>
6.3. Governing Law. This Agreement, the Award and all determinations made
and actions taken pursuant hereto and thereto, to the extent not otherwise
governed by the laws of the United States, shall be governed by the laws of the
State of Texas and construed in accordance therewith without giving effect to
conflicts of laws principles.
6.4. Counterparts. This Agreement may be executed in two counterpart each
of which shall be deemed an original and both of which together shall constitute
one and the same instrument.
EL PASO ELECTRIC COMPANY
By:
---------------------------------
Name: Kenneth R. Heitz
Title: Director
Acceptance Date:
-----------------
- ---------------------------------
John A. Whitacre
-5-
<PAGE>
Exhibit 99.11
EL PASO ELECTRIC COMPANY
RESTRICTED STOCK AWARD AGREEMENT
El Paso Electric Company, a Texas corporation (the 'Company'), hereby
grants to Terry D. Bassham (the "Holder"), pursuant to the provisions of the El
Paso Electric Company 1996 Long-Term Incentive Plan (the "Plan"), a restricted
stock award (the "Award") of 2,770 shares of the Company's Common Stock, no par
value ("Stock"), upon and subject to the restrictions, terms and conditions set
forth below. Capitalized terms not defined herein shall have the meanings
specified in the Plan.
1. Award Subject to Acceptance of Agreement. The Award shall be null and
void unless the Holder shall accept this Agreement by executing it in the space
provided below and returning it to the Company and execute and return one or
more irrevocable stock powers. As soon as practicable after the Holder has
executed this Agreement and such stock power or powers and returned the same to
the Company, the Company shall cause to be issued in the Holder's name a stock
certificate or certificates representing the total number of shares of Stock
subject to the Award.
2. Rights as a Stockholder. Holder shall have the right to vote the
shares of Stock subject to the Award. During the Restriction Period as to any
shares of Stock, cash dividends which would otherwise be payable on any such
shares of will be credited to the Holder in the form of additional unvested
shares of Stock as if the dividend had purchased additional shares at the
closing market price on the date such dividend is paid, and such additional
shares (including shares received as stock dividend or stock split), shall be
delivered to the Company (and the Holder shall, if requested by the Company,
execute and return one or more irrevocable stock powers related thereto) and
shall be subject to the same restrictions as the shares of Stock with respect to
which such dividend or other distribution was made.
3. Custody and Delivery of Certificates Representing Shares. The Company
shall hold the certificate or certificates representing the shares of Stock
subject to the Award until the restrictions on such Award shall have lapsed, in
whole or in part, pursuant to Section 4 hereof, and the Company shall as soon
thereafter as practicable, subject to Section 5.3, deliver the certificate or
certificates for such shares to the Holder and destroy the stock power or powers
relating to such shares. If such stock power or powers also relates to shares
as to which restrictions remain in effect, the Company may require, as a
condition precedent to delivery of any certificate pursuant to this Section 3,
the execution and delivery to the Company of one or more stock powers relating
to such shares.
4. Restriction Period and Vesting. (a) The restrictions on the Award
shall lapse on the earliest of the following: (i) with respect to one-fifth of
the aggregate number of shares of Stock subject to the Award on February 19,
1998 and as to an additional one-fifth of such aggregate number of shares on
each anniversary thereof
<PAGE>
during the years 1999 through 2002, inclusive, or (ii) in accordance with
Section 6.8 of the Plan (the "Restriction Period").
(b) If the Holder's employment with the Company is terminated by the
Company during the Restriction Period or by reason of the Holder's "Permanent
and Total Disability" (as such term is defined in the Plan), or by reason of the
Holder's voluntary resignation or retirement or his death, then any shares of
Stock as to which restrictions have not lapsed shall be forfeited.
5. Additional Terms and Conditions of Award.
5.1. Nontransferability of Award. During the Restriction Period, the
shares of Stock subject to the Award as to which restrictions remain in effect
may not be transferred by the Holder other than by will, the laws of descent and
distribution or pursuant to beneficiary designation procedures approved by the
Company. Except to the extent permitted by the foregoing, during the
Restriction Period, the shares of Stock subject to the Award as to which
restrictions remain in effect may not be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate or encumber, or
otherwise dispose of such shares, the Award shall immediately become null and
void.
5.2. Investment Representation. The Holder hereby represents and
covenants that (a) any share of Stock acquired upon the lapse of restrictions
will be acquired for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such acquisition has been registered under the Securities Act and
any applicable state securities law; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Holder shall submit a written
statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of acquisition of any
shares hereunder or (y) is true and correct as of the date of any sale of any
such shares, as applicable. As a further condition precedent to the delivery to
the Holder of any shares subject to the Award, the Holder shall comply with all
regulations and requirements of any regulatory authority having control of or
supervision over the issuance of the shares and, in connection therewith, shall
execute any documents which the Board or any committee authorized by the Board
shall in its sole discretion deem necessary or advisable.
-2-
<PAGE>
5.3. Withholding Taxes. (a) As a condition precedent to the delivery to the
Holder of any shares of Stock subject to the Award, the Holder may, upon request
by the Company, pay to the Company such amount of cash as the Company may be
required, under all applicable federal, state, local or other laws or
regulations, to withhold and pay over as income or other withholding taxes (the
"Required Tax Payments") with respect to the Award. If the Holder shall fail to
advance the Required Tax Payments after request by the Company, the Company may,
in its discretion, deduct any Required Tax Payments from any amount then or
thereafter payable by the Company to the Holder.
(b) The Holder may elect to satisfy his or her obligation to advance
the Required Tax Payments by any of the following means: (1) a cash payment to
the Company pursuant to Section 5.3(a), (2) delivery to the Company of
previously owned whole shares of Stock (which the Holder has held for at least
six months prior to the delivery of such shares or which the Holder purchased on
the open market and for which the Holder has good title, free and clear of all
liens and encumbrances) having a Fair Market Value, determined as of the date
the obligation to withhold or pay taxes first arises in connection with the
Award (the "Tax Date"), equal to the Required Tax Payments, (3) authorizing the
Company to withhold from the shares of Stock otherwise to be delivered to the
Holder pursuant to the Award, a number of whole shares of Stock having a Fair
Market Value, determined as of the Tax Date, equal to the Required Tax Payments,
(4) a cash payment by a broker-dealer acceptable to the Company through whom the
Holder has sold the shares with respect to which the Required Tax Payments have
arisen or (5) any combination of (1), (2) and (3). The Committee may disapprove
an election pursuant to any of clauses (2)-(5) if the Committee determines,
based on the opinion of recognized securities counsel, that the method so
elected would result in liability to the Optionee under Section 16(b) of the
Securities Exchange Act of 1934, as amended, or the regulations promulgated
thereunder. Shares of Stock to be delivered or withheld may have a Fair Market
Value in excess of the minimum amount of the Required Tax Payments, but not in
excess of the amount determined by applying the Holder's maximum marginal tax
rate. Any fraction of a share of Stock which would be required to satisfy such
an obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Holder. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
5.4. Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Award shall be
appropriately adjusted by the Committee. If any adjustment would result in a
fractional security being subject to the Award, the Company shall pay the Holder
in connection with the vesting, if any, of such fractional security, an amount
-3-
<PAGE>
in cash determined by multiplying (i) such fraction (rounded to the nearest
hundredth) by (ii) the Fair Market Value on the vesting date. The decision of
the Committee regarding any such adjustment shall be final, binding and
conclusive.
5.5. Compliance with Applicable Law. Award is subject to the condition
that if the listing, registration or qualification of the shares subject to the
Award upon any securities exchange or under any law, or the consent or approval
of any governments body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the vesting or delivery of
shares hereunder, the shares of Stock subject to the Award may not be delivered,
in whole or in part, unless such listing, registration, qualification, consent
or approval shall have been effected or obtained, free of any conditions not
acceptable to the Company. The Company agrees to use reasonable efforts to
effect or obtain any :such listing, registration, qualification, consent or
approval.
5.6. Agreement Subject to the Plan. This Agreement is subject to the
provisions of the Plan and shall be interpreted in accordance therewith. The
Holder hereby acknowledges receipt of a copy of the Plan.
6. Miscellaneous Provisions.
6.1. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Holder, acquire any rights hereunder in
accordance with this Agreement or the Plan.
6.2. Notices. All notices, requests or other communications provided for
in this Agreement shall be made, if to the Company, to Kayser Building, 100
North Stanton, El Paso, Texas 79901, Attention: Corporate Secretary, and if to
the Holder, to 365 La Mirada, El Paso, Texas 79932. All notices, requests or
other communications provided for in this Agreement shall be made in writing
either (a) by personal delivery to the party entitled thereto, (b) by facsimile
with confirmation of receipt, (c) by mailing in the United States mails to the
last known address of the party entitled thereto or (d) by express courier
service. The notice, request or other communication shall be deemed to be
received upon personal delivery, upon confirmation of receipt of facsimile
transmission, or upon receipt by the party entitled thereto if by United States
mail or express courier service; provided, however, that if a notice, request or
other communication is not received during regular business hours, it shall be
deemed to be received on the next succeeding business day of the Company.
-4-
<PAGE>
6.3. Governing Law. This Agreement, the Award and all determinations made
and actions taken pursuant hereto and thereto, to the extent not otherwise
governed by the laws of the United States, shall be governed by the laws of the
State of Texas and construed in accordance therewith without giving effect to
conflicts of laws principles.
6.4. Counterparts. This Agreement may be executed in two counterpart each
of which shall be deemed an original and both of which together shall constitute
one and the same instrument.
EL PASO ELECTRIC COMPANY
By:
--------------------------------
Name: Kenneth R. Heitz
Title: Director
Acceptance Date:
-------------------
- -----------------------------------
Terry D. Bassham
-5-
<PAGE>
Exhibit 99.12
EL PASO ELECTRIC COMPANY
RESTRICTED STOCK AWARD AGREEMENT
El Paso Electric Company, a Texas corporation (the 'Company'), hereby
grants to Eduardo A. Rodriguez (the "Holder"), pursuant to the provisions of the
El Paso Electric Company 1996 Long-Term Incentive Plan (the "Plan"), a
restricted stock award (the "Award") of 4,370 shares of the Company's Common
Stock, no par value ("Stock"), upon and subject to the restrictions, terms and
conditions set forth below. Capitalized terms not defined herein shall have the
meanings specified in the Plan.
1. Award Subject to Acceptance of Agreement. The Award shall be null and
void unless the Holder shall accept this Agreement by executing it in the space
provided below and returning it to the Company and execute and return one or
more irrevocable stock powers. As soon as practicable after the Holder has
executed this Agreement and such stock power or powers and returned the same to
the Company, the Company shall cause to be issued in the Holder's name a stock
certificate or certificates representing the total number of shares of Stock
subject to the Award.
2. Rights as a Stockholder. Holder shall have the right to vote the
shares of Stock subject to the Award. During the Restriction Period as to any
shares of Stock, cash dividends which would otherwise be payable on any such
shares of will be credited to the Holder in the form of additional unvested
shares of Stock as if the dividend had purchased additional shares at the
closing market price on the date such dividend is paid, and such additional
shares (including shares received as stock dividend or stock split), shall be
delivered to the Company (and the Holder shall, if requested by the Company,
execute and return one or more irrevocable stock powers related thereto) and
shall be subject to the same restrictions as the shares of Stock with respect to
which such dividend or other distribution was made.
3. Custody and Delivery of Certificates Representing Shares. The Company
shall hold the certificate or certificates representing the shares of Stock
subject to the Award until the restrictions on such Award shall have lapsed, in
whole or in part, pursuant to Section 4 hereof, and the Company shall as soon
thereafter as practicable, subject to Section 5.3, deliver the certificate or
certificates for such shares to the Holder and destroy the stock power or powers
relating to such shares. If such stock power or powers also relates to shares
as to which restrictions remain in effect, the Company may require, as a
condition precedent to delivery of any certificate pursuant to this Section 3,
the execution and delivery to the Company of one or more stock powers relating
to such shares.
4. Restriction Period and Vesting. (a) The restrictions on the Award
shall lapse on the earliest of the following: (i) with respect to one-fifth of
the aggregate number of shares of Stock subject to the Award on February 19,
1998 and as to an additional one-fifth of such aggregate number of shares on
each anniversary thereof
<PAGE>
during the years 1999 through 2002, inclusive, or (ii) in accordance with
Section 6.8 of the Plan (the "Restriction Period").
(b) If the Holder's employment with the Company is terminated by the
Company during the Restriction Period or by reason of the Holder's "Permanent
and Total Disability" (as such term is defined in the Plan), or by reason of the
Holder's voluntary resignation or retirement or his death, then any shares of
Stock as to which restrictions have not lapsed shall be forfeited.
5. Additional Terms and Conditions of Award.
5.1. Nontransferability of Award. During the Restriction Period, the
shares of Stock subject to the Award as to which restrictions remain in effect
may not be transferred by the Holder other than by will, the laws of descent and
distribution or pursuant to beneficiary designation procedures approved by the
Company. Except to the extent permitted by the foregoing, during the
Restriction Period, the shares of Stock subject to the Award as to which
restrictions remain in effect may not be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate or encumber, or
otherwise dispose of such shares, the Award shall immediately become null and
void.
5.2. Investment Representation. The Holder hereby represents and
covenants that (a) any share of Stock acquired upon the lapse of restrictions
will be acquired for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such acquisition has been registered under the Securities Act and
any applicable state securities law; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Holder shall submit a written
statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of acquisition of any
shares hereunder or (y) is true and correct as of the date of any sale of any
such shares, as applicable. As a further condition precedent to the delivery to
the Holder of any shares subject to the Award, the Holder shall comply with all
regulations and requirements of any regulatory authority having control of or
supervision over the issuance of the shares and, in connection therewith, shall
execute any documents which the Board or any committee authorized by the Board
shall in its sole discretion deem necessary or advisable.
-2-
<PAGE>
5.3. Withholding Taxes. (a) As a condition precedent to the delivery to the
Holder of any shares of Stock subject to the Award, the Holder may, upon request
by the Company, pay to the Company such amount of cash as the Company may be
required, under all applicable federal, state, local or other laws or
regulations, to withhold and pay over as income or other withholding taxes (the
"Required Tax Payments") with respect to the Award. If the Holder shall fail to
advance the Required Tax Payments after request by the Company, the Company may,
in its discretion, deduct any Required Tax Payments from any amount then or
thereafter payable by the Company to the Holder.
(b) The Holder may elect to satisfy his or her obligation to advance
the Required Tax Payments by any of the following means: (1) a cash payment to
the Company pursuant to Section 5.3(a), (2) delivery to the Company of
previously owned whole shares of Stock (which the Holder has held for at least
six months prior to the delivery of such shares or which the Holder purchased on
the open market and for which the Holder has good title, free and clear of all
liens and encumbrances) having a Fair Market Value, determined as of the date
the obligation to withhold or pay taxes first arises in connection with the
Award (the "Tax Date"), equal to the Required Tax Payments, (3) authorizing the
Company to withhold from the shares of Stock otherwise to be delivered to the
Holder pursuant to the Award, a number of whole shares of Stock having a Fair
Market Value, determined as of the Tax Date, equal to the Required Tax Payments,
(4) a cash payment by a broker-dealer acceptable to the Company through whom the
Holder has sold the shares with respect to which the Required Tax Payments have
arisen or (5) any combination of (1), (2) and (3). The Committee may disapprove
an election pursuant to any of clauses (2)-(5) if the Committee determines,
based on the opinion of recognized securities counsel, that the method so
elected would result in liability to the Optionee under Section 16(b) of the
Securities Exchange Act of 1934, as amended, or the regulations promulgated
thereunder. Shares of Stock to be delivered or withheld may have a Fair Market
Value in excess of the minimum amount of the Required Tax Payments, but not in
excess of the amount determined by applying the Holder's maximum marginal tax
rate. Any fraction of a share of Stock which would be required to satisfy such
an obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Holder. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
5.4. Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Award shall be
appropriately adjusted by the Committee. If any adjustment would result in a
fractional security being subject to the Award, the Company shall pay the Holder
in connection with the vesting, if any, of such fractional security, an amount
-3-
<PAGE>
in cash determined by multiplying (i) such fraction (rounded to the nearest
hundredth) by (ii) the Fair Market Value on the vesting date. The decision of
the Committee regarding any such adjustment shall be final, binding and
conclusive.
5.5. Compliance with Applicable Law. Award is subject to the condition
that if the listing, registration or qualification of the shares subject to the
Award upon any securities exchange or under any law, or the consent or approval
of any governments body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the vesting or delivery of
shares hereunder, the shares of Stock subject to the Award may not be delivered,
in whole or in part, unless such listing, registration, qualification, consent
or approval shall have been effected or obtained, free of any conditions not
acceptable to the Company. The Company agrees to use reasonable efforts to
effect or obtain any :such listing, registration, qualification, consent or
approval.
5.6. Agreement Subject to the Plan. This Agreement is subject to the
provisions of the Plan and shall be interpreted in accordance therewith. The
Holder hereby acknowledges receipt of a copy of the Plan.
6. Miscellaneous Provisions.
6.1. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Holder, acquire any rights hereunder in
accordance with this Agreement or the Plan.
6.2. Notices. All notices, requests or other communications provided for
in this Agreement shall be made, if to the Company, to Kayser Building, 100
North Stanton, El Paso, Texas 79901, Attention: Corporate Secretary, and if to
the Holder, to 6404 Los Altos, El Paso, Texas 79912. All notices, requests or
other communications provided for in this Agreement shall be made in writing
either (a) by personal delivery to the party entitled thereto, (b) by facsimile
with confirmation of receipt, (c) by mailing in the United States mails to the
last known address of the party entitled thereto or (d) by express courier
service. The notice, request or other communication shall be deemed to be
received upon personal delivery, upon confirmation of receipt of facsimile
transmission, or upon receipt by the party entitled thereto if by United States
mail or express courier service; provided, however, that if a notice, request or
other communication is not received during regular business hours, it shall be
deemed to be received on the next succeeding business day of the Company.
-4-
<PAGE>
6.3. Governing Law. This Agreement, the Award and all determinations made
and actions taken pursuant hereto and thereto, to the extent not otherwise
governed by the laws of the United States, shall be governed by the laws of the
State of Texas and construed in accordance therewith without giving effect to
conflicts of laws principles.
6.4. Counterparts. This Agreement may be executed in two counterpart each
of which shall be deemed an original and both of which together shall constitute
one and the same instrument.
EL PASO ELECTRIC COMPANY
By:
--------------------------------------------
Name: Kenneth R. Heitz
Title: Director
Acceptance Date:
---------------
- --------------------------------
Eduardo A. Rodriguez
-5-
<PAGE>
Exhibit 99.13
EL PASO ELECTRIC COMPANY
RESTRICTED STOCK AWARD AGREEMENT
El Paso Electric Company, a Texas corporation (the 'Company'), hereby
grants to Gary R. Hedrick (the "Holder"), pursuant to the provisions of the El
Paso Electric Company 1996 Long-Term Incentive Plan (the "Plan"), a restricted
stock award (the "Award") of 3,060 shares of the Company's Common Stock, no par
value ("Stock"), upon and subject to the restrictions, terms and conditions set
forth below. Capitalized terms not defined herein shall have the meanings
specified in the Plan.
1. Award Subject to Acceptance of Agreement. The Award shall be null and
void unless the Holder shall accept this Agreement by executing it in the space
provided below and returning it to the Company and execute and return one or
more irrevocable stock powers. As soon as practicable after the Holder has
executed this Agreement and such stock power or powers and returned the same to
the Company, the Company shall cause to be issued in the Holder's name a stock
certificate or certificates representing the total number of shares of Stock
subject to the Award.
2. Rights as a Stockholder. Holder shall have the right to vote the
shares of Stock subject to the Award. During the Restriction Period as to any
shares of Stock, cash dividends which would otherwise be payable on any such
shares of will be credited to the Holder in the form of additional unvested
shares of Stock as if the dividend had purchased additional shares at the
closing market price on the date such dividend is paid, and such additional
shares (including shares received as stock dividend or stock split), shall be
delivered to the Company (and the Holder shall, if requested by the Company,
execute and return one or more irrevocable stock powers related thereto) and
shall be subject to the same restrictions as the shares of Stock with respect to
which such dividend or other distribution was made.
3. Custody and Delivery of Certificates Representing Shares. The Company
shall hold the certificate or certificates representing the shares of Stock
subject to the Award until the restrictions on such Award shall have lapsed, in
whole or in part, pursuant to Section 4 hereof, and the Company shall as soon
thereafter as practicable, subject to Section 5.3, deliver the certificate or
certificates for such shares to the Holder and destroy the stock power or powers
relating to such shares. If such stock power or powers also relates to shares
as to which restrictions remain in effect, the Company may require, as a
condition precedent to delivery of any certificate pursuant to this Section 3,
the execution and delivery to the Company of one or more stock powers relating
to such shares.
4. Restriction Period and Vesting. (a) The restrictions on the Award
shall lapse on the earliest of the following: (i) with respect to one-fifth of
the aggregate number of shares of Stock subject to the Award on February 19,
1998 and as to an additional one-fifth of such aggregate number of shares on
each anniversary thereof
<PAGE>
during the years 1999 through 2002, inclusive, or (ii) in accordance with
Section 6.8 of the Plan (the "Restriction Period").
(b) If the Holder's employment with the Company is terminated by the
Company during the Restriction Period or by reason of the Holder's "Permanent
and Total Disability" (as such term is defined in the Plan), or by reason of the
Holder's voluntary resignation or retirement or his death, then any shares of
Stock as to which restrictions have not lapsed shall be forfeited.
5. Additional Terms and Conditions of Award.
5.1. Nontransferability of Award. During the Restriction Period, the
shares of Stock subject to the Award as to which restrictions remain in effect
may not be transferred by the Holder other than by will, the laws of descent and
distribution or pursuant to beneficiary designation procedures approved by the
Company. Except to the extent permitted by the foregoing, during the
Restriction Period, the shares of Stock subject to the Award as to which
restrictions remain in effect may not be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate or encumber, or
otherwise dispose of such shares, the Award shall immediately become null and
void.
5.2. Investment Representation. The Holder hereby represents and
covenants that (a) any share of Stock acquired upon the lapse of restrictions
will be acquired for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such acquisition has been registered under the Securities Act and
any applicable state securities law; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Holder shall submit a written
statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of acquisition of any
shares hereunder or (y) is true and correct as of the date of any sale of any
such shares, as applicable. As a further condition precedent to the delivery to
the Holder of any shares subject to the Award, the Holder shall comply with all
regulations and requirements of any regulatory authority having control of or
supervision over the issuance of the shares and, in connection therewith, shall
execute any documents which the Board or any committee authorized by the Board
shall in its sole discretion deem necessary or advisable.
-2-
<PAGE>
5.3. Withholding Taxes. (a) As a condition precedent to the delivery to the
Holder of any shares of Stock subject to the Award, the Holder may, upon request
by the Company, pay to the Company such amount of cash as the Company may be
required, under all applicable federal, state, local or other laws or
regulations, to withhold and pay over as income or other withholding taxes (the
"Required Tax Payments") with respect to the Award. If the Holder shall fail to
advance the Required Tax Payments after request by the Company, the Company may,
in its discretion, deduct any Required Tax Payments from any amount then or
thereafter payable by the Company to the Holder.
(b) The Holder may elect to satisfy his or her obligation to advance
the Required Tax Payments by any of the following means: (1) a cash payment to
the Company pursuant to Section 5.3(a), (2) delivery to the Company of
previously owned whole shares of Stock (which the Holder has held for at least
six months prior to the delivery of such shares or which the Holder purchased on
the open market and for which the Holder has good title, free and clear of all
liens and encumbrances) having a Fair Market Value, determined as of the date
the obligation to withhold or pay taxes first arises in connection with the
Award (the "Tax Date"), equal to the Required Tax Payments, (3) authorizing the
Company to withhold from the shares of Stock otherwise to be delivered to the
Holder pursuant to the Award, a number of whole shares of Stock having a Fair
Market Value, determined as of the Tax Date, equal to the Required Tax Payments,
(4) a cash payment by a broker-dealer acceptable to the Company through whom the
Holder has sold the shares with respect to which the Required Tax Payments have
arisen or (5) any combination of (1), (2) and (3). The Committee may disapprove
an election pursuant to any of clauses (2)-(5) if the Committee determines,
based on the opinion of recognized securities counsel, that the method so
elected would result in liability to the Optionee under Section 16(b) of the
Securities Exchange Act of 1934, as amended, or the regulations promulgated
thereunder. Shares of Stock to be delivered or withheld may have a Fair Market
Value in excess of the minimum amount of the Required Tax Payments, but not in
excess of the amount determined by applying the Holder's maximum marginal tax
rate. Any fraction of a share of Stock which would be required to satisfy such
an obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Holder. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
5.4. Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Award shall be
appropriately adjusted by the Committee. If any adjustment would result in a
fractional security being subject to the Award, the Company shall pay the Holder
in connection with the vesting, if any, of such fractional security, an amount
-3-
<PAGE>
in cash determined by multiplying (i) such fraction (rounded to the nearest
hundredth) by (ii) the Fair Market Value on the vesting date. The decision of
the Committee regarding any such adjustment shall be final, binding and
conclusive.
5.5. Compliance with Applicable Law. Award is subject to the condition
that if the listing, registration or qualification of the shares subject to the
Award upon any securities exchange or under any law, or the consent or approval
of any governments body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the vesting or delivery of
shares hereunder, the shares of Stock subject to the Award may not be delivered,
in whole or in part, unless such listing, registration, qualification, consent
or approval shall have been effected or obtained, free of any conditions not
acceptable to the Company. The Company agrees to use reasonable efforts to
effect or obtain any :such listing, registration, qualification, consent or
approval.
5.6. Agreement Subject to the Plan. This Agreement is subject to the
provisions of the Plan and shall be interpreted in accordance therewith. The
Holder hereby acknowledges receipt of a copy of the Plan.
6. Miscellaneous Provisions.
6.1. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Holder, acquire any rights hereunder in
accordance with this Agreement or the Plan.
6.2. Notices. All notices, requests or other communications provided for
in this Agreement shall be made, if to the Company, to Kayser Building, 100
North Stanton, El Paso, Texas 79901, Attention: Corporate Secretary, and if to
the Holder, to 215-J Mulberry, El Paso, Texas 79932. All notices, requests or
other communications provided for in this Agreement shall be made in writing
either (a) by personal delivery to the party entitled thereto, (b) by facsimile
with confirmation of receipt, (c) by mailing in the United States mails to the
last known address of the party entitled thereto or (d) by express courier
service. The notice, request or other communication shall be deemed to be
received upon personal delivery, upon confirmation of receipt of facsimile
transmission, or upon receipt by the party entitled thereto if by United States
mail or express courier service; provided, however, that if a notice, request or
other communication is not received during regular business hours, it shall be
deemed to be received on the next succeeding business day of the Company.
-4-
<PAGE>
6.3. Governing Law. This Agreement, the Award and all determinations made
and actions taken pursuant hereto and thereto, to the extent not otherwise
governed by the laws of the United States, shall be governed by the laws of the
State of Texas and construed in accordance therewith without giving effect to
conflicts of laws principles.
6.4. Counterparts. This Agreement may be executed in two counterpart each
of which shall be deemed an original and both of which together shall constitute
one and the same instrument.
EL PASO ELECTRIC COMPANY
By:
-----------------------------
Name: Kenneth R. Heitz
Title: Director
Acceptance Date:
-------------------
- -----------------------------------
Gary R. Hedrick
-5-
<PAGE>
Exhibit 99.14
EL PASO ELECTRIC COMPANY
RESTRICTED STOCK AWARD AGREEMENT
El Paso Electric Company, a Texas corporation (the 'Company'), hereby
grants to John C. Horne (the "Holder"), pursuant to the provisions of the El
Paso Electric Company 1996 Long-Term Incentive Plan (the "Plan"), a restricted
stock award (the "Award") of 2,865 shares of the Company's Common Stock, no par
value ("Stock"), upon and subject to the restrictions, terms and conditions set
forth below. Capitalized terms not defined herein shall have the meanings
specified in the Plan.
1. Award Subject to Acceptance of Agreement. The Award shall be null and
void unless the Holder shall accept this Agreement by executing it in the space
provided below and returning it to the Company and execute and return one or
more irrevocable stock powers. As soon as practicable after the Holder has
executed this Agreement and such stock power or powers and returned the same to
the Company, the Company shall cause to be issued in the Holder's name a stock
certificate or certificates representing the total number of shares of Stock
subject to the Award.
2. Rights as a Stockholder. Holder shall have the right to vote the
shares of Stock subject to the Award. During the Restriction Period as to any
shares of Stock, cash dividends which would otherwise be payable on any such
shares of will be credited to the Holder in the form of additional unvested
shares of Stock as if the dividend had purchased additional shares at the
closing market price on the date such dividend is paid, and such additional
shares (including shares received as stock dividend or stock split), shall be
delivered to the Company (and the Holder shall, if requested by the Company,
execute and return one or more irrevocable stock powers related thereto) and
shall be subject to the same restrictions as the shares of Stock with respect to
which such dividend or other distribution was made.
3. Custody and Delivery of Certificates Representing Shares. The Company
shall hold the certificate or certificates representing the shares of Stock
subject to the Award until the restrictions on such Award shall have lapsed, in
whole or in part, pursuant to Section 4 hereof, and the Company shall as soon
thereafter as practicable, subject to Section 5.3, deliver the certificate or
certificates for such shares to the Holder and destroy the stock power or powers
relating to such shares. If such stock power or powers also relates to shares
as to which restrictions remain in effect, the Company may require, as a
condition precedent to delivery of any certificate pursuant to this Section 3,
the execution and delivery to the Company of one or more stock powers relating
to such shares.
4. Restriction Period and Vesting. (a) The restrictions on the Award
shall lapse on the earliest of the following: (i) with respect to one-fifth of
the aggregate number of shares of Stock subject to the Award on February 19,
1998 and as to an additional one-fifth of such aggregate number of shares on
each anniversary thereof
<PAGE>
during the years 1999 through 2002, inclusive, or (ii) in accordance with
Section 6.8 of the Plan (the "Restriction Period").
(b) If the Holder's employment with the Company is terminated by the
Company during the Restriction Period or by reason of the Holder's "Permanent
and Total Disability" (as such term is defined in the Plan), or by reason of the
Holder's voluntary resignation or retirement or his death, then any shares of
Stock as to which restrictions have not lapsed shall be forfeited.
5. Additional Terms and Conditions of Award.
5.1. Nontransferability of Award. During the Restriction Period, the
shares of Stock subject to the Award as to which restrictions remain in effect
may not be transferred by the Holder other than by will, the laws of descent and
distribution or pursuant to beneficiary designation procedures approved by the
Company. Except to the extent permitted by the foregoing, during the
Restriction Period, the shares of Stock subject to the Award as to which
restrictions remain in effect may not be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate or encumber, or
otherwise dispose of such shares, the Award shall immediately become null and
void.
5.2. Investment Representation. The Holder hereby represents and
covenants that (a) any share of Stock acquired upon the lapse of restrictions
will be acquired for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such acquisition has been registered under the Securities Act and
any applicable state securities law; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Holder shall submit a written
statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of acquisition of any
shares hereunder or (y) is true and correct as of the date of any sale of any
such shares, as applicable. As a further condition precedent to the delivery to
the Holder of any shares subject to the Award, the Holder shall comply with all
regulations and requirements of any regulatory authority having control of or
supervision over the issuance of the shares and, in connection therewith, shall
execute any documents which the Board or any committee authorized by the Board
shall in its sole discretion deem necessary or advisable.
-2-
<PAGE>
5.3. Withholding Taxes. (a) As a condition precedent to the delivery to the
Holder of any shares of Stock subject to the Award, the Holder may, upon request
by the Company, pay to the Company such amount of cash as the Company may be
required, under all applicable federal, state, local or other laws or
regulations, to withhold and pay over as income or other withholding taxes (the
"Required Tax Payments") with respect to the Award. If the Holder shall fail to
advance the Required Tax Payments after request by the Company, the Company may,
in its discretion, deduct any Required Tax Payments from any amount then or
thereafter payable by the Company to the Holder.
(b) The Holder may elect to satisfy his or her obligation to advance
the Required Tax Payments by any of the following means: (1) a cash payment to
the Company pursuant to Section 5.3(a), (2) delivery to the Company of
previously owned whole shares of Stock (which the Holder has held for at least
six months prior to the delivery of such shares or which the Holder purchased on
the open market and for which the Holder has good title, free and clear of all
liens and encumbrances) having a Fair Market Value, determined as of the date
the obligation to withhold or pay taxes first arises in connection with the
Award (the "Tax Date"), equal to the Required Tax Payments, (3) authorizing the
Company to withhold from the shares of Stock otherwise to be delivered to the
Holder pursuant to the Award, a number of whole shares of Stock having a Fair
Market Value, determined as of the Tax Date, equal to the Required Tax Payments,
(4) a cash payment by a broker-dealer acceptable to the Company through whom the
Holder has sold the shares with respect to which the Required Tax Payments have
arisen or (5) any combination of (1), (2) and (3). The Committee may disapprove
an election pursuant to any of clauses (2)-(5) if the Committee determines,
based on the opinion of recognized securities counsel, that the method so
elected would result in liability to the Optionee under Section 16(b) of the
Securities Exchange Act of 1934, as amended, or the regulations promulgated
thereunder. Shares of Stock to be delivered or withheld may have a Fair Market
Value in excess of the minimum amount of the Required Tax Payments, but not in
excess of the amount determined by applying the Holder's maximum marginal tax
rate. Any fraction of a share of Stock which would be required to satisfy such
an obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Holder. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
5.4. Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Award shall be
appropriately adjusted by the Committee. If any adjustment would result in a
fractional security being subject to the Award, the Company shall pay the Holder
in connection with the vesting, if any, of such fractional security, an amount
-3-
<PAGE>
in cash determined by multiplying (i) such fraction (rounded to the nearest
hundredth) by (ii) the Fair Market Value on the vesting date. The decision of
the Committee regarding any such adjustment shall be final, binding and
conclusive.
5.5. Compliance with Applicable Law. Award is subject to the condition
that if the listing, registration or qualification of the shares subject to the
Award upon any securities exchange or under any law, or the consent or approval
of any governments body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the vesting or delivery of
shares hereunder, the shares of Stock subject to the Award may not be delivered,
in whole or in part, unless such listing, registration, qualification, consent
or approval shall have been effected or obtained, free of any conditions not
acceptable to the Company. The Company agrees to use reasonable efforts to
effect or obtain any :such listing, registration, qualification, consent or
approval.
5.6. Agreement Subject to the Plan. This Agreement is subject to the
provisions of the Plan and shall be interpreted in accordance therewith. The
Holder hereby acknowledges receipt of a copy of the Plan.
6. Miscellaneous Provisions.
6.1. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Holder, acquire any rights hereunder in
accordance with this Agreement or the Plan.
6.2. Notices. All notices, requests or other communications provided for
in this Agreement shall be made, if to the Company, to Kayser Building, 100
North Stanton, El Paso, Texas 79901, Attention: Corporate Secretary, and if to
the Holder, to 6124 Laguna Vista Drive, El Paso, Texas 79932. All notices,
requests or other communications provided for in this Agreement shall be made in
writing either (a) by personal delivery to the party entitled thereto, (b) by
facsimile with confirmation of receipt, (c) by mailing in the United States
mails to the last known address of the party entitled thereto or (d) by express
courier service. The notice, request or other communication shall be deemed to
be received upon personal delivery, upon confirmation of receipt of facsimile
transmission, or upon receipt by the party entitled thereto if by United States
mail or express courier service; provided, however, that if a notice, request or
other communication is not received during regular business hours, it shall be
deemed to be received on the next succeeding business day of the Company.
-4-
<PAGE>
6.3. Governing Law. This Agreement, the Award and all determinations made
and actions taken pursuant hereto and thereto, to the extent not otherwise
governed by the laws of the United States, shall be governed by the laws of the
State of Texas and construed in accordance therewith without giving effect to
conflicts of laws principles.
6.4. Counterparts. This Agreement may be executed in two counterpart each
of which shall be deemed an original and both of which together shall constitute
one and the same instrument.
EL PASO ELECTRIC COMPANY
By:
---------------------------------------
Name: Kenneth R. Heitz
Title: Director
Acceptance Date:
---------------
- -------------------------------
John C. Horne
-5-
