Exhibit 4.01
THIS INSTRUMENT GRANTS A SECURITY INTEREST BY A UTILITY
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS
_______________________________________________________
SECOND
SUPPLEMENTAL INDENTURE
____________________
EL PASO ELECTRIC COMPANY
TO
STATE STREET BANK AND TRUST COMPANY
TRUSTEE
DATED AS OF AUGUST 19, 1997
____________________
CREATING ISSUES OF
COLLATERAL SERIES I FIRST MORTGAGE BONDS
COLLATERAL SERIES J FIRST MORTGAGE BONDS
SUPPLEMENTAL TO GENERAL MORTGAGE INDENTURE
AND DEED OF TRUST
DATED AS OF FEBRUARY 1, 1996
_______________________________________________________
THIS IS A SECURITY AGREEMENT GRANTING A SECURITY INTEREST
IN PERSONAL PROPERTY INCLUDING PERSONAL PROPERTY
AFFIXED TO REALTY AS WELL AS A MORTGAGE
UPON REAL ESTATE AND OTHER PROPERTY
TABLE OF CONTENTS
ARTICLE 1
Definitions
SECTION 1.01. Terms Incorporated by Reference............................. 2
SECTION 1.02. Additional Definitions...................................... 3
SECTION 1.03. Other Definitions........................................... 4
ARTICLE 2
The Series I Bonds and the Series J Bonds
SECTION 2.01. Terms of Series I Bonds and the Series J Bonds.............. 4
SECTION 2.02. Payment of Interest......................................... 7
SECTION 2.03. Registrar and Paying Agent; Transfer and Exchange of Bonds.. 7
SECTION 2.04. Definitive Bonds............................................ 8
SECTION 2.05. Execution, Authentication and Delivery...................... 8
ARTICLE 3
Redemptions and Repurchases
SECTION 3.01. Mandatory Redemption of Series I Bonds and Series J Bonds... 8
ARTICLE 4
Covenants
SECTION 4.01. Restricted Payments......................................... 9
SECTION 4.02. Incurrence of Indebtedness.................................. 11
SECTION 4.03. Limitation on Liens......................................... 13
SECTION 4.04. Dividend and Other Payment Restrictions
Affecting Subsidiaries...................................... 14
SECTION 4.05. Xxxxxx, Consolidation or Sale of Assets..................... 14
SECTION 4.06. Transactions with Affiliates................................ 15
SECTION 4.07. Insurance................................................... 15
SECTION 4.08. Payments for Consents....................................... 15
SECTION 4.09. Reports..................................................... 16
SECTION 4.10. Restrictions on Release of Mortgaged Property............... 17
SECTION 4.11. Application of Certain Proceeds of Sales or Condemnations... 17
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ARTICLE 5
Events of Default
SECTION 5.01. Events of Default........................................... 18
ARTICLE 6
The Trustee
SECTION 6.01. Trustee's Disclaimer........................................ 20
ARTICLE 7
Miscellaneous
SECTION 7.01. Reference to Original Indenture............................. 20
SECTION 7.02. Benefits of Original Indenture.............................. 20
SECTION 7.03. Governing Law............................................... 20
SECTION 7.04. Successors.................................................. 21
SECTION 7.05. Counterparts................................................ 21
SCHEDULES
Schedule 1 - Existing Investments of the Company
EXHIBITS
Exhibit A - Form of Series I Bond
Exhibit B - Form of Series J Bond
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SECOND SUPPLEMENTAL INDENTURE
THIS SECOND SUPPLEMENTAL INDENTURE, dated as of August 19, 1997 (the
"Supplemental Indenture"), between EL PASO ELECTRIC COMPANY, a Texas corporation
(the "Company"), whose principal office is located at 000 Xxxxx Xxxxxxx Xxxxxx,
Xx Xxxx, Xxxxx, 00000, and STATE STREET BANK AND TRUST COMPANY, a banking
corporation organized under the laws of The Commonwealth of Massachusetts, as
Trustee (the "Trustee"), whose principal corporate trust office is located at
000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, 00000.
WITNESSETH
WHEREAS, the Company and the Trustee have entered into that (i) General
Mortgage Indenture and Deed of Trust, dated as of February 1, 1996 (the
"Original Indenture"), relating to the issuance of Bonds as may be created and
established from time to time in one or more series; (ii) First Supplemental
Indenture dated as of February 1, 1996 (the "First Supplemental Indenture" and,
together with the Original Indenture, the "Indenture"); and
WHEREAS, the Company issued Xxxxx pursuant to the terms of the Original
Indenture and the First Supplemental Indenture, and mortgaged and pledged the
Mortgaged Property to secure payment of the Bonds; and
WHEREAS, pursuant to the Indenture, there have been executed,
authenticated, delivered and issued and there are now outstanding Bonds of
series and in principal amounts as follows:
Issued and
Series Designation Outstanding Amount
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7.25% Series A First Mortgage Bonds due 1999 $ 77,792,000
7.75% Series B First Mortgage Bonds due 2001 $ 68,323,000
8.25% Series C First Mortgage Bonds due 2003 $138,219,000
8.90% Series D First Mortgage Bonds due 2006 $235,957,000
9.40% Series E First Mortgage Bonds due 2011 $285,900,000
Collateral Series F First Mortgage Bonds $163,841,823
Collateral Series G First Mortgage Bonds $ 34,134,780
Collateral Series H First Mortgage Bonds $100,000,000;
and
WHEREAS, the Collateral Series F First Mortgage Bonds will be extinguished
and retired pursuant to their terms on or around September 23, 1997 upon the
surrender and cancellation thereof by the Holders thereof in connection with the
refinancing of the Maricopa LCs and the replacement of the Maricopa
Reimbursement Agreement with the New Maricopa Reimbursement Agreement; and
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WHEREAS, the Collateral Series G First Mortgage Bonds will be extinguished
and retired pursuant to their terms on or about September 23, 1997 upon the
surrender and cancellation thereof by the Holders thereof in connection with the
refinancing of the Farmington LC and the replacement of the Farmington
Reimbursement Agreement with the New Farmington Reimbursement Agreement; and
WHEREAS, Section 4.01 of the Original Indenture permits the issuance of
additional Bonds to secure Indebtedness or reimbursement obligations of the
Company in a principal amount not exceeding 100% of the principal amount of
certain Retired Bonds, including Retired Initial Series Bonds that were issued
for the purpose of securing the repayment of any Indebtedness or reimbursement
obligations of the Company; and
WHEREAS, the Company desires in and by this Supplemental Indenture to
create new series of Bonds to be issued under the Original Indenture, to
designate such series and to set forth the form, the maturity date, interest
rate and other terms of the Bonds of such series; and
WHEREAS, it is provided in the Original Indenture, among other things, that
the Company shall execute and file with the Trustee, and the Trustee at the
request of the Company, when required by the Original Indenture, shall join in
indentures supplemental thereto, and which thereafter shall form a part thereof,
for the purpose, among others, of providing for the creation of any series of
Bonds and specifying the form and provisions of the Bonds of such series; and
WHEREAS, all acts and things have been done and performed which are
necessary to make this Supplemental Indenture, when duly executed and delivered,
a valid, binding and legal instrument in accordance with its terms and for the
purposes herein expressed; and the execution and delivery of this Supplemental
Indenture have been in all respects duly authorized.
NOW THEREFORE, in consideration of the premises and in further
consideration of the sum of One Dollar in lawful money of the United States of
America paid to the Company by the Trustee at or before the execution and
delivery of this Supplemental Indenture, the receipt whereof is hereby
acknowledged, and of other good and valuable consideration, it is agreed by and
between the Company and the Trustee as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01 Terms Incorporated by Reference.
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Except for the terms defined in this Supplemental Indenture, all
capitalized terms used in this Supplemental Indenture have the respective
meanings set forth in the Indenture.
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SECTION 1.02 Additional Definitions.
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"Collateral Series Bonds" means, collectively, the Series F Bonds,
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Series G Bonds and Series H Bonds.
"New Farmington LC Agent" means Barclays Bank PLC, New York Branch, as
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agent for the Issuing Bank and the New Farmington LC Creditors under the New
Farmington Reimbursement Agreement, and its successors.
"New Farmington LC Creditors" means the Creditors specified in the New
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Farmington Reimbursement Agreement and their respective successors.
"New Farmington Reimbursement Agreement" means that certain Letter of
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Credit and Reimbursement Agreement to be entered into among the Company,
Barclays Bank PLC, New York Branch, as Issuing Bank, and the Creditors specified
therein, and Barclays Bank PLC, New York Branch, as Administrative Agent for the
Issuing Bank and the Creditors, and Union Bank of California, N.A., as
Documentation Agent, as the same may be amended from time to time.
"New Maricopa LC Agent" means Barclays Bank PLC, New York Branch, as
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agent for the Issuing Bank and the New Maricopa LC Creditors under the New
Maricopa Reimbursement Agreement, and its successors.
"New Maricopa LC Creditors" means the Creditors specified in the New
-------------------------
Maricopa Reimbursement Agreement and their respective successors.
"New Maricopa Reimbursement Agreement" means that certain Letter of
------------------------------------
Credit and Reimbursement Agreement to be entered into among the Company,
Barclays Bank PLC, New York Branch, as Issuing Bank, and the Creditors specified
therein, and Barclays Bank PLC, New York Branch, as Administrative Agent for the
Issuing Bank and the Creditors, and Union Bank of California, N.A. as
Documentation Agent, as the same may be amended from time to time.
"New Reimbursement Agent" means the New Maricopa LC Agent and the New
-----------------------
Farmington LC Agent, as the context may require.
"New Reimbursement Agreement" means the New Maricopa Reimbursement
---------------------------
Agreement and the New Farmington Reimbursement Agreement, as the context may
require.
"Second Issuance Date" means the date that Series I Bonds or Series J
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Bonds are first issued pursuant to this Supplemental Indenture.
"Series I Bonds" means the Collateral Series I First Mortgage Bonds of
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the Company.
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"Series J Bonds" means the Collateral Series J First Mortgage Bonds of
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the Company.
SECTION 1.03. Other Definitions.
Defined in
Term Section
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"Affiliate Transaction" 4.06
"Excess Proceeds" 4.11
"Net Proceeds" 4.11
"Payment Default" 5.01
"Restricted Payments" 4.01
"Series I or J Redemption Demand" 3.01
ARTICLE 2
THE SERIES I BONDS AND SERIES X XXXXX
SECTION 2.01 Terms of Series I Bonds and the Series J Bonds.
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(a) There are hereby created and established two new series of Bonds to be
issued and secured by the Lien of the Indenture, having the respective series
designations and maximum aggregate principal amounts (subject to Section 2.09 of
the Original Indenture) as follows:
Maximum
Series Designation Principal Amount
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Collateral Series I First Mortgage Bonds $163,841,823
Collateral Series J First Mortgage Bonds $ 34,134,780
(i) The Series I Bonds are issued to provide for payment by the
Company of the principal, reimbursement obligations, interest, commissions,
fees, charges, expenses and other amounts due under the New Maricopa
Reimbursement Agreement. For purposes of the Series I Bonds, (i) interest shall
include, without limitation, interest payable under Article II of the New
Maricopa Reimbursement Agreement and (ii) commissions and fees shall include,
without limitation, the letter of credit fees and fronting fees payable under
Section 2.04 of the New Maricopa Reimbursement Agreement and the drawing fee,
agency fee and transfer fee payable under Section 2.03 of the New Maricopa
Reimbursement Agreement. The Series I Bonds will be issued to and registered in
the name of the New Maricopa LC Agent and will not be transferable except to a
successor to such New Maricopa LC Agent under the New Maricopa Reimbursement
Agreement. The Series I Bonds shall be limited to an aggregate principal amount
of $163,841,823, but the
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aggregate principal amount thereof outstanding at any time shall not exceed (if
less) such lesser amount as is equal to the sum of (a) the aggregate Available
Amount of all Letters of Credit outstanding at such time, plus (b) the aggregate
principal amount of Tender Advances (as such terms are defined in the New
Maricopa Reimbursement Agreement) then outstanding under the New Maricopa
Reimbursement Agreement, plus (c) the aggregate amount of all other unreimbursed
drawings under such Letters of Credit which are then outstanding. The principal
amount of the Series I Bonds shall be payable in such amount and on such date or
dates set forth in the New Maricopa Reimbursement Agreement for the payment of
principal or the reimbursement of drawings under the Letters of Credit, but not
later than the Stated Termination Date (as defined in the New Maricopa
Reimbursement Agreement) for the last Letter of Credit outstanding under the
Reimbursement Agreement or December 31, 2000, whichever shall occur first.
Interest will accrue and be payable on the Series I Bonds at the rates per
annum, in the amounts, and on each date set forth in the New Maricopa
Reimbursement Agreement for the accrual and payment of interest, commissions,
fees, charges, expenses and other amounts due thereunder. Any payment made in
respect of the Company's obligations to pay principal, reimbursement
obligations, interest, commissions, fees, charges, expenses and other amounts
under the New Maricopa Reimbursement Agreement shall be deemed a payment in
respect of the Series I Bonds, but such payment shall not reduce the principal
amount of the Series I Bonds unless the sum of (a) the aggregate Available
Amount of all Letters of Credit outstanding at such time, plus (b) the aggregate
principal amount of Tender Advances then outstanding under the New Maricopa
Reimbursement Agreement, plus (c) the aggregate amount of all other unreimbursed
drawings under such Letters of Credit which are then outstanding is reduced
concurrently with such payment; provided, however, if after a drawing under a
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Letter of Credit issued under the New Maricopa Reimbursement Agreement such
Letter of Credit shall have been reinstated in respect of such drawing prior to
the Maricopa LC Agent having received reimbursement for such drawing from the
Company, the reimbursement of such reinstated amount shall not reduce the
principal amount of the Series I Bonds.
(ii) The Series J Bonds are issued to provide for payment by the
Company of the principal, reimbursement obligations, interest, commissions,
fees, charges, expenses and other amounts due under the New Farmington
Reimbursement Agreement. For purposes of the Series J Bonds, (i) interest shall
include, without limitation, interest payable under Article II of the New
Farmington Reimbursement Agreement and (ii) commissions and fees shall include,
without limitation, the letter of credit fees and fronting fees payable under
Section 2.04 of the New Farmington Reimbursement Agreement and the drawing fee,
agency fee and transfer fee payable under Section 2.03 of the New Farmington
Reimbursement Agreement. The Series J Bonds will be issued to and registered in
the name of the New Farmington LC Agent and will be not be transferable except
to a successor to the New Farmington LC Agent under the New Farmington
Reimbursement Agreement. The Series J Bonds shall be limited to an aggregate
principal amount of $34,134,780, but the aggregate principal amount thereof
outstanding at any time shall not exceed (if less) such lesser amount as is
equal to the sum of (a) the aggregate Available Amount of the Letter of Credit
outstanding at such time, plus (b) the aggregate principal amount of Tender
Advances (as such terms are defined in the New Farmington Reimbursement
Agreement) then outstanding under the New Farmington Reimbursement Agreement,
plus (c) the aggregate amount of all other unreimbursed
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drawings under the Letter of Credit which are then outstanding. The principal
amount of the Series J Bonds shall be payable in such amount and on such date or
dates set forth in the New Farmington Reimbursement Agreement for the payment of
principal or the reimbursement of drawings under the Letter of Credit, but not
later than the Stated Termination Date (as defined in the New Farmington
Reimbursement Agreement) or December 31, 2000, whichever shall occur first.
Interest will accrue and be payable on the Series J Bonds at the rates per annum
and on each date set forth in the New Farmington Reimbursement Agreement for the
accrual and payment of interest, commissions, fees, charges, expenses and other
amounts due thereunder. Any payment made in respect of the Company's obligations
to pay principal, reimbursement obligations, interest, commissions, fees,
charges, expenses and other amounts under the New Farmington Reimbursement
Agreement shall be deemed a payment in respect of the Series J Bonds, but such
payment shall not reduce the principal amount of the Series J Bonds unless the
sum of (a) the aggregate Available Amount of the Letter of Credit outstanding at
such time, plus (b) the aggregate principal amount of Tender Advances then
outstanding under the New Farmington Reimbursement Agreement, plus (c) the
aggregate amount of all other unreimbursed drawings under such Letter of Credit
which are then outstanding is reduced concurrently with such payment; provided,
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however, if after a drawing under the Letter of Credit issued under the New
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Farmington Reimbursement Agreement the Letter of Credit shall have been
reinstated in respect of such drawing prior to the New Farmington LC Agent
having received reimbursement for such drawing from the Company, the
reimbursement of such reinstated amount shall not reduce the principal amount of
the Series J Bonds.
(b) The Trustee may conclusively presume that the Company's obligations to
make payments of principal, interest, fees and other amounts under the
respective New Reimbursement Agreement have been satisfied and discharged,
unless and until the Trustee shall have received a Series I or J Redemption
Demand for the Series I Bonds or the Series J Bonds, as the case may be. The
Company shall provide the Trustee with complete copies of each New Reimbursement
Agreement promptly upon the Second Issuance Date and shall provide the Trustee
with all copies of any amendment, modification or extension to any such New
Reimbursement Agreement promptly upon execution thereof. The Trustee shall be
fully protected in relying on such Series I or J Redemption Demand from the New
Maricopa LC Agent with respect to a Series I Bond or the New Farmington LC Agent
with respect to a Series J Bond or the absence of such Series I or J Redemption
Demand and shall have no duty to inquire into the rights, obligations or
performance of any party to a New Reimbursement Agreement. In the event that all
of the Company's obligations under a New Reimbursement Agreement have been paid
in full and discharged, the Series I Bonds or Series J Bonds issued to secure
such New Reimbursement Agreement shall be deemed paid in full and the New
Maricopa LC Agent holding such Series I Bonds or New Farmington LC Agent holding
such Series J Bonds, as applicable, shall surrender such Bonds to the Trustee
for cancellation.
(c) The Series I Bonds and Series J Bonds are entitled to the protections
of the covenants contained in Article 4 hereof and are subject to the provisions
pertaining to Events of Default contained in Article 5 hereof. The Series I
Bonds and Series J Bonds shall be issuable in fully registered form, without
coupons. The Series I Bonds shall be numbered RI-001 consecutively upwards and
the Series J Bonds shall be numbered RJ-001 consecutively upwards. The Series I
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Bonds and Series J Bonds shall be dated as described in Section 2.03 of the
Original Indenture, except that the Series I Bonds and Series J Bonds first
issued shall be dated as of their date of initial issuance.
(d) The Series I Bonds shall be substantially in the form of Exhibit A and
the Series J Bonds shall be substantially in the form of Exhibit B, which
exhibits shall be a part of this Supplemental Indenture. Additional terms are
contained in the forms of the Series I Bonds and the Series J Bonds, which terms
are incorporated by reference herein.
SECTION 2.02 Payment of Interest.
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So long as there is no existing Default in the payment of interest on the
Series I Bonds or Series J Bonds, the Person in whose name any Series I Bond or
Series J Bond, as applicable, is registered at the close of business on any
record date with respect to any interest payment date shall be entitled to
receive the interest payable on such interest payment date, notwithstanding any
transfer or exchange of such Series I Bond or Series J Bond subsequent to the
record date and on or prior to such interest payment date, except as and to the
extent the Company shall default in the payment of the interest due on such
interest payment date, in which case such defaulted interest shall be paid to
the Person in whose name such Series I Bond or Series J Bond, as applicable, is
registered on the record date for the payment of such defaulted interest.
SECTION 2.03 Registrar and Paying Agent; Transfer and Exchange of Bonds.
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The Company initially appoints the Trustee as Registrar, Paying Agent and
agent for service of demands and notices to or upon the Company in respect of
this Supplemental Indenture and the Series I Bonds and the Series J Bonds.
Subject to the limitations on transfer of Series I Bonds and Series J Bonds
contained in Section 2.01 of this Supplemental Indenture, Series I Bonds and the
Series J Bonds shall be transferrable and exchangeable at the option of the
Holders thereof and upon surrender thereof at the office or agency of the
Company in the City and State of New York (initially State Street Bank and Trust
Company, N.A.) or at the principal corporate trust office of the Trustee, for
registered Series I Bonds or Series J Bonds of the same series without coupons
of the same aggregate principal amount but of different authorized denomination
or denominations, and such exchanges and any transfer of Series I Bonds or
Series J Bonds will be made without service charge (except for any applicable
taxes or fees required by law).
SECTION 2.04 Definitive Bonds.
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Definitive Series I Bonds and Series J Bonds may be in the form of fully
engraved Bonds or Bonds typed, printed or lithographed with or without steel
engraved borders. Until Series I Bonds or Series J Bonds in definitive form are
ready for delivery, the Company may execute, and upon its
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request in writing the Trustee shall authenticate and deliver, Series I Bonds
and Series J Bonds, as applicable, in temporary form as provided in Section 2.08
of the Original Indenture.
SECTION 2.05 Execution, Authentication and Delivery.
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Series I Bonds and Series X Xxxxx shall be executed, authenticated and
delivered pursuant to Article 4 of the Original Indenture.
ARTICLE 3
REDEMPTIONS AND REPURCHASES
SECTION 3.01 Mandatory Redemption of Series I Bonds and Series J Bonds.
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Upon receipt by the Trustee of a written demand for redemption from a
Holder of Series I Bonds or Series J Bonds (a "Series I or J Redemption
Demand"), such Series I Bonds or Series J Bonds, as applicable, shall be
redeemed at a redemption price of 100% (expressed as a percentage of principal
amount) plus accrued interest thereon through the redemption date, in cash.
Such Series I Bonds or Series J Bonds, as applicable, shall be redeemed in the
amount specified in the Series I or J Redemption Demand, which amount shall be
equal to all outstanding principal, reimbursement obligations, interest,
commissions, fees, charges, expenses and other amounts then due and owing under
the applicable New Reimbursement Agreement. The Series I or J Redemption Demand
shall also state (i) that an "Event of Default" has occurred and is continuing
under the terms of the applicable New Reimbursement Agreement, (ii) that payment
of the principal amount outstanding under such New Reimbursement Agreement, all
interest thereon and all other amounts payable thereunder are immediately due
and payable, and (iii) that such Holder of Series I Bonds or Series J Bonds, as
the case may be, has demanded payment thereof from the Company. The portion of
the Series I Bonds or Series J Bonds, as applicable, subject to redemption shall
be redeemed on the fifth Business Day following receipt by the Trustee of such
Series I or J Redemption Demand. Any payment made to the Holder of Series I
Bonds or Series J Bonds, as applicable, pursuant to a Series I or J Redemption
Demand shall constitute a payment by the Company in respect of its obligations
under the New Reimbursement Agreement applicable to the redeemed Series I Bonds
or Series J Bonds. The Series I or J Redemption Demand shall be rescinded and
shall be null and void for all purposes of the Indenture upon receipt by the
Trustee, no later than the Business Day prior to the date fixed for redemption,
of a certificate of the Holder of Series I Bonds or Series J Bonds previously
making such Series I or J Redemption Demand (a) stating that there has been a
waiver of such Event of Default, or (b) withdrawing said Series I or J
Redemption Demand.
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ARTICLE 4
COVENANTS
For the benefit of the Series I Bonds and the Series J Bonds, the Company
agrees that it shall not fail to observe any of the following covenants:
SECTION 4.01 Restricted Payments.
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The Company shall not, and shall not permit any of its Subsidiaries,
directly or indirectly, to: (i) declare or pay any dividend or make any
distribution on account of the Company's or any of its Subsidiaries' Equity
Interests, including, without limitation, any payment in connection with any
merger or consolidation involving the Company (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of the
Company or dividends or distributions payable by a Subsidiary of the Company to
the Company or to any Wholly Owned Subsidiary of the Company); (ii) purchase,
redeem or otherwise acquire or retire for value any Equity Interests of the
Company, any of its Subsidiaries or any direct or indirect parent of the Company
(other than any Equity Interests owned by the Company); (iii) make any principal
payment on, or purchase, redeem, defease or otherwise acquire or retire for
value any Subordinated Indebtedness, except at final maturity; or (iv) make any
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being referred to as "Restricted Payments"), unless, at
the time of and after giving effect to such Restricted Payment:
(A) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(B) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
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been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of Subordinated Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in clause (a) of the first
paragraph of Section 4.02 of this Supplemental Indenture; provided,
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however, that this clause (B) shall not apply to the payment of dividends
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in respect of Common Stock; and
(C) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Subsidiaries after the
Initial Issuance Date (excluding Restricted Payments permitted by clauses
(i), (ii), (iv) and (vi) of the next succeeding paragraph), is less than
the sum of (i) 50% of an amount equal to the Consolidated Net Income of the
Company minus dividends (whether in cash or in kind) paid in respect of its
Series A Preferred Stock for the period (taken as one accounting period)
from the day after the Initial Issuance Date to the end of the Company's
most recently ended fiscal quarter for which internal financial statements
are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus (ii) 100% of the aggregate net cash proceeds received by the
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Company from the issuance or sale since the Initial Issuance Date of Equity
Interests (other than Disqualified Stock) of the Company or of debt
securities of the Company that have been converted into such Equity
Interests of the Company, plus (iii) $10,000,000;
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provided, however, that the foregoing limitations contained in clause (C) of the
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first paragraph of this Section 4.01 shall not apply during any period
commencing on the date of delivery to the Trustee of an Officers' Certificate to
the effect that the Investor Series Bonds of the series having the longest
maturity then Outstanding have been rated Investment Grade by a Rating Agency
identified in such certificate and terminating on the date upon which such
securities cease to be rated, or are downgraded or placed on a "watch list" for
possible downgrading below, Investment Grade by every Rating Agency which
provided the Investment Grade rating (or if a Rating Agency is then no longer
able to provide rating information, by any other Rating Agency which similarly
rated such series of Investor Series Bonds Investment Grade).
The foregoing provisions shall not prohibit: (i) the payment of dividends,
whether paid in kind or in cash, in respect of the Series A Preferred Stock in
accordance with the terms thereof; (ii) the purchase, redemption or other
acquisition or retirement for value of the Series A Preferred Stock (provided,
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however, in the case of the foregoing clauses (i) and (ii),the Company shall not
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pay any cash dividends on (except cash paid solely in lieu of the Company's
issuance of any fractional shares of Series A Preferred Stock paid as in kind
dividends on the Series A Preferred Stock) or purchase, redeem, acquire or
retire any Series A Preferred Stock until the earlier to occur of (A) the date
of delivery to the Trustee of an Officers' Certificate to the effect that the
Investor Series Bonds having the longest maturity then Outstanding have been
rated Investment Grade by a Rating Agency identified in such certificate, and
terminating on the date upon which such securities cease to be rated or are
downgraded or placed on a "watch list" for possible downgrading below Investment
Grade by every Rating Agency which provided the Investment Grade rating, and (B)
February 12, 1999); (iii) the payment of any dividend within 60 days after the
date of declaration thereof, if at said date of declaration such payment would
have complied with the provisions of the Indenture; (iv) the redemption,
repurchase, retirement or other acquisition of any Equity Interests of the
Company in exchange for, or out of the proceeds of, the substantially concurrent
sale (other than to a Subsidiary of the Company) of other Equity Interests of
the Company (other than any Disqualified Stock); provided, however, that the
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amount of any such net cash proceeds that are utilized for any such redemption,
repurchase, retirement or other acquisition shall be excluded from clause
(C)(ii) of the first paragraph of this Section 4.01; (v) the repurchase,
redemption or other acquisition or retirement for value of any Equity Interests
of the Company or any Subsidiary of the Company held by any member of the
Company's (or any of its Subsidiaries') management; provided, however, that the
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aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $250,000 in any twelve-month period, plus the
aggregate cash proceeds received by the Company during such twelve-month period
from any reissuance of Equity Interests by the Company to members of management
of the Company and its Subsidiaries; and (vi) the repurchase by the Company of
the Series A Preferred Stock on or prior to February 12, 1999 in accordance with
the terms thereof upon the occurrence of a Change of Control; provided, further,
-------- -------
that in the case of each of clauses (i) through (vi) above, no Default or Event
of Default shall have occurred and be continuing immediately after such
transaction.
The amount of all Restricted Payments (other than cash) shall be the fair
market value (evidenced by a resolution of the Board of Directors set forth in
an Officers' Certificate delivered to the Trustee) on the date of the Restricted
Payment of the asset(s) proposed to be transferred by the Company or such
Subsidiary, as the case may be. Not later than the date of making any
Restricted
-10-
Payment, and so long as the limitations contained in clause (C) of the first
paragraph of this Section 4.01 apply, the Company shall deliver to the Trustee
an Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required in this Section
4.01 were computed, which calculations may be based upon the Company's latest
available financial statements.
SECTION 4.02 Incurrence of Indebtedness.
--------------------------
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guaranty or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and the
Company shall not issue any Disqualified Stock; provided, however, that (a) the
-------- -------
Company may incur Subordinated Indebtedness (including Acquired Debt) and issue
shares of Disqualified Stock if the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
Subordinated Indebtedness is incurred or such Disqualified Stock is issued would
have been at least 2.0 to 1, and (b) the Company may incur any Indebtedness
(including Acquired Debt) other than Subordinated Indebtedness if the Fixed
Charge Coverage Ratio for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred would have
been at least 2.5 to 1, in each case, determined on a pro forma basis (including
--- -----
a pro forma application of the net proceeds therefrom), as if such additional
--- -----
Indebtedness had been incurred, or the Disqualified Stock had been issued, as
the case may be, at the beginning of such four-quarter period.
The foregoing provisions shall not apply to: (i) Indebtedness represented
by the Initial Series Bonds; (ii) Plan Indebtedness other than the Initial
Series Bonds; (iii) Indebtedness arising under a nuclear fuel financing facility
(including, without limitation, any Indebtedness represented by the nuclear fuel
financing portion of the New Credit Agreement); provided, however, that an
-------- -------
amount equal to the amount of such nuclear fuel financing facility (after
deduction for any transaction costs) shall have been applied pursuant to the
Plan or, thereafter, the positive difference, if any, between the amount of the
nuclear fuel financing facility and the amount previously applied either
pursuant to the Plan or to retire Investor Series Bonds shall be used within 45
days of the receipt thereof by the Company to retire Investor Series Bonds then
Outstanding through open market purchases of such Bonds; (iv) Indebtedness
arising under an accounts receivable financing facility and/or contract payments
financing facility; provided, however, that the net proceeds (after deduction
-------- -------
for any transaction costs) from such facility shall be used within 45 days of
the receipt thereof by the Company to retire Investor Series Bonds then
Outstanding through open market purchases of such Bonds; (v) any Indebtedness
(not otherwise arising under clauses (iii) and (iv) above) issued to a bank or
other commercial lender (including, without limitation, Indebtedness represented
by the working capital portion of the New Credit Agreement, if issued);
provided, however, that any advances thereunder which shall result at any time
-------- -------
in an amount outstanding in excess of $50,000,000 thereunder (after deduction
for any transaction costs) shall be used within 45 days of receipt by the
Company to retire Investor Series Bonds then Outstanding through open market
purchases of such Bonds); (vi) the incurrence by the Company or any of its
Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money
-11-
obligations, or extensions, refinancings, renewals or replacements thereof, in
each case incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvement of property used in the business of
the Company or such Subsidiary, in an aggregate principal amount not to exceed
$5,000,000 at any time outstanding; (vii) the incurrence by the Company or any
of its Subsidiaries of (A) Permitted Refinancing Indebtedness in exchange for,
or the net proceeds of which are used to extend, refinance, renew, replace,
defease or refund, Indebtedness permitted under clause (ii) above, and (B) any
Indebtedness in exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease or refund, Indebtedness permitted under
clauses (iii), (iv) or (v) above so long as the principal amount of such
Indebtedness does not exceed the principal amount of the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of accrued interest and premiums, if any, thereon and the reasonable expenses
incurred in connection therewith); (viii) the incurrence by the Company or any
of its Subsidiaries of intercompany Indebtedness between and among the Company
and any of its Wholly Owned Subsidiaries; provided, however, that (A) any
-------- -------
subsequent issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than a Wholly Owned Subsidiary and (B)
any sale or other transfer of any such Indebtedness to a Person that is not
either the Company or a Wholly Owned Subsidiary shall be deemed, in each case,
to constitute an incurrence of such Indebtedness by the Company or such
Subsidiary, as the case may be; (ix) the incurrence by the Company or any of its
Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing
or hedging interest rate risk with respect to any floating rate Indebtedness
that is permitted by the terms of the Indenture to be outstanding; (x) Bonds
issued from time to time to secure the obligations of the Company under (A) each
New Facility Agreement or New Reimbursement Agreement, (B) the pollution control
bonds for which the New Maricopa Reimbursement Agreement and/or New Farmington
Reimbursement Agreements provides credit support, or (C) any financing entered
into in connection with the extension, refinancing, renewal or refunding of all
or part of the Indebtedness under such New Facility Agreement or New
Reimbursement Agreement, the Indebtedness in respect of such pollution control
bonds for which such New Facility Agreement or New Reimbursement Agreement
provides credit support, or the Indebtedness under such extension, refinancing,
renewal or refunding; provided, however, that each such Bond shall by its terms
-------- -------
provide that it shall be deemed paid in full at such time as the Company's
obligations referenced in the above subclauses (A), (B) or (C) of this clause
(x) which such Bond is intended to secure, as the case may be, are paid in full
and discharged, and that any payment made in respect of such Bond shall be
deemed a payment made in respect of such underlying obligation which such Bond
is intended to secure; and (xi) Subordinated Indebtedness incurred after the
third anniversary of the Initial Issuance Date for the purpose of financing the
redemption or repurchase of any Series A Preferred Stock of the Company,
provided that (A) the principal amount of such Subordinated Indebtedness does
not exceed the aggregate redemption or repurchase price of such Series A
Preferred Stock (plus accrued dividends thereon and reasonable expenses incurred
in connection therewith), (B) the interest rate on such Subordinated
Indebtedness shall not exceed the dividend or coupon rate payable in respect of
such Series A Preferred Stock, and (C) the maturity date of such Subordinated
Indebtedness shall be no sooner than the mandatory redemption date for the
Series A Preferred Stock occurring in the year 2008.
-12-
SECTION 4.03 Limitation on Liens.
-------------------
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien on any
Mortgaged Property now owned or hereafter acquired, other than the Lien of the
Indenture and Permissible Encumbrances (provided, however, that, for purposes of
-------- -------
this Section 4.03 only, Permissible Encumbrances of the type set forth in clause
(a) of the definition of Permissible Encumbrances, other than the Lien of the
Indenture, shall not be permitted hereunder).
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien on any
assets other than the Mortgaged Property now owned or hereafter acquired by the
Company or a Subsidiary of the Company, other than (i) Permissible Encumbrances
(provided, however, that, for purposes of this Section 4.03 only, Permissible
-------- -------
Encumbrances of the type set forth in clause (a) of the definition of
Permissible Encumbrances, other than the Lien of the Indenture, shall not be
permitted hereunder), (ii) Liens existing on the Second Issuance Date, (iii)
Liens on nuclear fuel, cores and materials, and interests in such nuclear fuel,
cores and materials, pursuant to a nuclear fuel financing facility permitted
under clause (iii) of the second paragraph of Section 4.02 of this Supplemental
Indenture; (iv) Liens incurred in connection with an accounts receivable
facility and/or contract payments facility permitted under clause (iv) of the
second paragraph of Section 4.02 of this Supplemental Indenture; (v) Liens with
respect to Indebtedness incurred by the Company or a Subsidiary of the Company
in connection with the acquisition or lease by the Company or such Subsidiary
after the Second Issuance Date of furniture, fixtures, equipment and other
assets not owned by the Company as of the Second Issuance Date in connection
with the ordinary course of business of the Company or such Subsidiary and
otherwise permitted under Section 4.02 of this Supplemental Indenture; provided,
--------
however, that (a) such Indebtedness shall not be secured by any assets of the
-------
Company or any Subsidiary of the Company other than the asset with respect to
which such Indebtedness is incurred; and (b) the Lien securing such Indebtedness
shall be created within 90 days of the incurrence of such Indebtedness; (vi)
Liens incurred or deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of social
security; (vii) Liens on the assets of any Person existing at the time such
assets are acquired by the Company or any of its Subsidiaries, whether by
merger, consolidation, purchase of assets or otherwise so long as such Liens (a)
are not created, incurred or assumed in contemplation of such assets being
acquired by the Company or any of its Subsidiaries, and (b) do not extend to any
other assets of the Company or any of its Subsidiaries; and (viii) Liens arising
from any Permitted Refinancing Indebtedness with respect to the foregoing;
provided, however, that the Lien shall be limited to all or part of the property
-------- -------
or assets which secured the Indebtedness so refinanced.
SECTION 4.04 Dividend and Other Payment Restrictions Affecting Subsidiaries.
--------------------------------------------------------------
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary to:
(a)(i) pay dividends or make any other distributions to the Company or any of
its Subsidiaries (A) on its Capital Stock or (B) with respect to any other
interest or
-13-
participation in, or measured by, its profits or (ii) pay any Indebtedness owed
to the Company or any of its Subsidiaries, (b) make loans or advances to the
Company or any of its Subsidiaries or (c) transfer any of its properties or
assets to the Company or any of its Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (i) the Indenture and the Bonds,
(ii) the New Facility Agreements or New Reimbursement Agreements, (iii)
applicable law, (iv) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Subsidiaries as in effect at the
time of such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, provided, however, that the Consolidated Cash Flow of such Person is
-------- -------
not taken into account in determining whether such acquisition was permitted by
the terms of the Indenture, (v) by reason of customary non-assignment provisions
in leases entered into in the ordinary course of business and consistent with
past practices, (vi) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the nature described in
clause (c) above on the property so acquired, or (vii) Permitted Refinancing
Indebtedness, provided, however, that the restrictions contained in the
-------- -------
agreements governing such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced.
SECTION 4.05 Merger, Consolidation or Sale of Assets.
---------------------------------------
In addition to the provisions of Section 12.01 of the Indenture, the
Company shall not, directly or indirectly, consolidate or merge with or into
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of the
Mortgaged Property in one or more related transactions, or assign any of its
obligations under the Indenture, to another corporation, Person or entity,
unless (i) immediately before and after such transaction no Default or Event of
Default exists, and (ii) the Successor Entity (or the Company, in the case of a
consolidation or merger in which the Company is the surviving entity) (a) has
Consolidated Net Worth immediately after the transaction (but prior to any
revaluation or recalculation of Consolidated Net Worth as of the date of the
transaction relating to a carry-over basis (if any) of the assets acquired in
the transaction (as determined in accordance with GAAP)) equal to or greater
than the Consolidated Net Worth of the Company immediately preceding the
transaction, and (b) shall, at the time of such transaction and after giving pro
---
forma effect thereto as if such transaction had occurred at the beginning of the
-----
applicable four-quarter period, be permitted to incur at least $1.00 of
additional Subordinated Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in clause (a) of the first paragraph of Section 4.02 of this
Supplemental Indenture.
SECTION 4.06 Transactions with Affiliates.
----------------------------
The Company shall not, and shall not permit any of its Subsidiaries to,
sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into or make any contract,
agreement, understanding, loan, advance or Guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(a) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Subsidiary
-14-
than those that would have been obtained in a comparable transaction by the
Company or such Subsidiary with an unrelated Person, and (b) the Company
delivers to the Trustee (i) with respect to any Affiliate Transaction involving
aggregate consideration in excess of $5,000,000, a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (a) above and that such Affiliate Transaction
has been approved by a majority of the disinterested members of the Board of
Directors, and (ii) with respect to any Affiliate Transaction involving
aggregate consideration in excess of $10,000,000, an opinion as to the fairness
to the Company or such subsidiary of such Affiliate Transaction from a financial
point of view issued by an investment banking firm of national standing with
total assets in excess of $1,000,000,000; provided, however, that (x) any
-------- -------
employment agreement entered into by the Company or any of its Subsidiaries,
provided that the Company delivers to the Trustee a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that such transaction
has been approved by a majority of the disinterested members of the Board of
Directors, (y) transactions between or among the Company and/or its
Subsidiaries, and (z) transactions permitted under Section 4.01 of this
Supplemental Indenture, in each case, shall not be deemed Affiliate
Transactions.
SECTION 4.07 Insurance.
---------
Until such time as the Series I Bonds and Series J Bonds shall have been
paid in full, the Company shall, and shall cause its Subsidiaries to, maintain
insurance with responsible carriers against such risks and in such amounts as is
customarily carried by similar businesses with such deductibles, retentions,
self-insured amounts and co-insurance provisions as are customarily carried by
similar businesses of similar size, including, without limitation, general
liability, special liability, property and casualty and nuclear insurance.
SECTION 4.08 Payments for Consents.
---------------------
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Bonds for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of the
Indenture or the Bonds unless such consideration is offered to be paid or agreed
to be paid to all Holders of the Bonds that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
SECTION 4.09 Reports.
-------
The Company shall file with the Trustee, within 15 days of filing them with
the Commission, copies of the annual reports and of the information, documents
and other reports (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) that the Company is required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
If the Company is not subject to the requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall nevertheless file with the Commission and the
Trustee, on the date upon which it would have been required to file with the
Commission, financial statements, including any notes thereto (and with respect
to annual reports, an auditor's report by a firm of established national
reputation, upon which the Trustee may conclusively rely), and a "Management's
Discussion and
-15-
Analysis of Financial Condition and Results of Operations," both comparable to
that which the Company would have been required to include in such annual
reports, information, documents or other reports if the Company were subject to
the requirements of Section 13 or 15(d) of the Exchange Act; provided, however,
-------- -------
that the Company shall not be required to register under the Exchange Act by
virtue of this provision, if it were not otherwise required to do so.
If the Company is required to furnish annual or quarterly reports to
its stockholders pursuant to the Exchange Act, the Company shall cause any
annual report furnished to its stockholders generally and any quarterly or other
financial reports it furnishes to its stockholders generally to be filed with
the Trustee and the Company shall cause such reports to be mailed to the Holders
at their addresses appearing in the register of Bonds maintained by the
Registrar. If the Company is not required to furnish annual or quarterly
reports to its stockholders pursuant to the Exchange Act, the Company shall
cause its financial statements referred to in the immediately preceding
paragraph, including any notes thereto (and with respect to annual reports, an
auditors' report by a firm of established national reputation), and a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," to be so mailed to the Holders within 120 days after the end of
each of the Company's fiscal years and within 60 days after the end of each of
the first three fiscal quarters of each year.
So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered to the Trustee pursuant to this Section 4.09 shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation reasonably
satisfactory to the Trustee) that in making the examination necessary for
certification of such financial statements nothing has come to their attention
which would lead them to believe that the Company has violated any provisions of
Sections 7.01(a) of the Original Indenture or Sections 4.01 through 4.06 of this
Supplemental Indenture or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
SECTION 4.10 Restrictions on Release of Mortgaged Property.
---------------------------------------------
The Company covenants and agrees that so long as any Series I Bonds or
Series J Bonds are Outstanding, it shall not release or cause to release any
Mortgaged Property on the basis of Section 9.04 of the Original Indenture.
Section 9.04 of the Original Indenture is hereby deemed inoperative until such
time as the Series I Bonds and Series J Bonds are no longer Outstanding at which
time (and only at such time) the provisions of such section shall be reinstated
with full force and effect.
SECTION 4.11 Application of Certain Proceeds of Sales or Condemnations.
---------------------------------------------------------
The Company covenants and agrees that, in the event of the sale or
condemnation of Bondable Property, it shall deposit the Net Proceeds thereof
with the Trustee to the extent required by the Original Indenture. Within one
year of the receipt by the Trustee of any Excess Proceeds, the Company will (i)
reinvest, or enter into an agreement with respect to the reinvestment of, such
Excess Proceeds in real or tangible personal property integral to the
generation, transmission or
-16-
distribution of electricity (which property shall automatically be deemed to
constitute Bondable Property for purposes of the Indenture) or (ii) use such
Excess Proceeds to repurchase Investor Series Bonds through open market
purchases of such Investor Series Bonds. To the extent that, after application
of such Excess Proceeds in accordance with clauses (i) and (ii) above, any
Excess Proceeds remain in an amount less than $1,000 (or an amount necessary to
purchase one Bond), such remaining Excess Proceeds shall remain on deposit with
the Trustee.
Notwithstanding anything to the contrary contained in Articles 3 or 5 of
the Original Indenture, the Company shall not use any Excess Proceeds as a basis
upon which to issue additional Bonds under the Indenture, unless and until such
Excess Proceeds are reinvested as contemplated by clause (i) of the preceding
paragraph.
As used in this Section 4.11, "Excess Proceeds" shall mean an amount equal
to (x) the aggregate Net Proceeds from all such sales or condemnations occurring
within any twelve month period (which, within such twelve month period, have not
been reinvested in real or tangible personal property integral to the
generation, transmission or distribution of electricity (which property shall
automatically be deemed to constitute Bondable Property)), the value of which
sales or condemnations shall be determined as of the date of such sale or
condemnation, minus (y) the amount, if any, required under Section 2(j) of the
-----
Rate Stipulation (as such term is defined in the Plan) to be paid or credited to
ratepayers as a result of each such sale or condemnation, if and only if the
Company is required to make such payment or credit to ratepayers over a period
of twelve months or less, minus (z) $10,000,000. The amount of Excess Proceeds
-----
shall be determined as of the date of sale or condemnation and shall be
deposited and applied as such amount is received by the Company or the Trustee
(as the case may be). "Net Proceeds" means the aggregate cash proceeds received
by the Company or any of its Subsidiaries in respect of any sale or condemnation
of Bondable Property (including, without limitation, any cash received upon the
sale or other disposition of any non-cash consideration received in any such
sale or condemnation), net of the direct costs relating to such sale or
condemnation (including, without limitation, legal, accounting and investment
banking fees, and sales commissions) and any expenses incurred in the relocation
of assets (which relocation is required as a result of such sale or
condemnation), taxes paid or payable which are attributable to such sale or
condemnation (after taking into account any available tax credits or deductions
and any tax sharing arrangements), and any cash reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP.
ARTICLE 5
EVENTS OF DEFAULT
SECTION 5.01 Events of Default.
-----------------
(a) So long as any Series I Bonds or Series J Bonds are Outstanding, in
addition to the Events of Default specified in clauses (i) through (vi) of the
Section 11.01(a) under the Original Indenture, each of the following is also an
Event of Default:
-17-
(i) failure by the Company to comply with the requirements of Sections
3.01, 4.01, 4.02 or 4.05 of this Supplemental Indenture or Section 12.01 of
the Original Indenture;
(ii) a default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness of the Company or any of its Subsidiaries (or the payment of
which is Guaranteed by the Company or any of its Subsidiaries) whether such
Indebtedness or Guarantee now exists, or is created after the date of this
Supplemental Indenture, which default (a) is caused by a failure to pay
principal of, interest on or other amounts owing in respect of such
Indebtedness at maturity of such Indebtedness (a "Payment Default") or (b)
has resulted in the acceleration of such Indebtedness prior to its
expressed maturity; and in each case the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $10,000,000 or more;
(iii) the failure by the Company or any of its Subsidiaries to pay
one or more final judgments aggregating in excess of $10,000,000, not
otherwise covered and payable by insurance, which judgments are not paid,
discharged or stayed for a period of 60 days;
(iv) by decree of a court of competent jurisdiction any Subsidiary of
the Company is adjudicated a bankrupt or insolvent, or an order is made by
such court for the winding up or liquidation of the affairs of any
Subsidiary of the Company or approving a petition seeking reorganization or
arrangement of a Subsidiary of the Company under any Bankruptcy Law, or, by
order of such court, a trustee, liquidator, receiver, assignee or similar
official under any Bankruptcy Law is appointed for a Subsidiary of the
Company or for the property of such Subsidiary, and such decree or order
shall continue in effect for a period of 60 days; or
(v) a Subsidiary of the Company files a petition for voluntary
bankruptcy, or consents to the filing of any order for relief against it in
an involuntary case, or makes an assignment for the benefit of creditors,
or consents to the appointment of a trustee, liquidator, receiver, assignee
or similar official under any Bankruptcy Law of such Subsidiary, or files a
petition or answer or consent seeking reorganization or arrangement under
any Bankruptcy Law, or consents to the filing of any such petition, or
files a petition to take advantage of any law for the relief of debtors.
(b) So long as any Series I Bonds or Series J Bonds are Outstanding,
Section 11.03(a) of the Original Indenture is hereby replaced with the
following:
"In case of the occurrence and during the continuance of any Event of
Default with respect to any Bonds at the time Outstanding, the Trustee or
the Holders of at least 25% in aggregate principal amount of the then
Outstanding Bonds (or, in case the Event of Default affects the rights of
the Holders of Bonds of one or more series which does not similarly affect
the rights of Holders of other series of Bonds at the time Outstanding,
then at least 25% in aggregate principal amount of the then Outstanding
Bonds of any such affected series) may,
-18-
by notice in writing delivered to the Company, declare the Principal of and
all accrued interest on all the Bonds due and payable immediately, and upon
any such declaration, the same shall be immediately due and payable.
Notwithstanding the foregoing, if an Event of Default specified in clauses
(iv) or (v) of Section 11.01(a) of the Original Indenture or, with respect
to any Significant Subsidiary or any group of Subsidiaries that, taken
together, would constitute a Significant Subsidiary, an Event of Default
specified in clauses (iv) and (v) of Section 5.01(a) of this Supplemental
Indenture occurs, such an amount shall become immediately due and payable
without any declaration or any other act on the part of the Trustee or any
other Holder. The foregoing provisions, however, are subject to the
condition that if at any time after the Principal of said Bonds shall have
been so declared due and payable and before any sale of the Mortgaged
Property shall have been made pursuant to the Original Indenture, all
arrears of interest upon all of said Bonds, with interest upon overdue
installments of interest at the same rates respectively as were borne by
the respective Bonds on which installments of interest were overdue, shall
either be paid by the Company or be collected out of the Mortgaged
Property, and all other Events of Default shall have been remedied, then
the Holders of at least 25% in aggregate principal amount of the
Outstanding Bonds (unless such declaration has been made only with respect
to the series of Bonds affected by such Event of Default, in which event at
least 25% in aggregate principal amount of the Outstanding Bonds of such
series), by written notice to the Company and to the Trustee, may rescind
such declaration and its consequences; but no such rescission shall extend
to or affect any subsequent Event of Default, or impair any right
consequent thereon."
ARTICLE 6
THE TRUSTEE
SECTION 6.01 Trustee's Disclaimer.
--------------------
The Trustee shall not be responsible in any manner whatsoever for or in
respect of the validity or sufficiency of this Supplemental Indenture or the due
execution hereof by the Company, or for or in respect of the recitals and
statements contained herein, all of which recitals and statements are made
solely by the Company.
Except as herein otherwise provided, no duties, responsibilities or
liabilities are assumed, or shall be construed to be assumed, by the Trustee by
reason of this Supplemental Indenture other than as set forth in the Indenture,
and this Supplemental Indenture is executed and accepted on behalf of the
Trustee, subject to all the terms and conditions set forth in the Indenture, as
fully to all intents as if the same were set forth at length herein.
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ARTICLE 7
MISCELLANEOUS
SECTION 7.01 Reference to Original Indenture.
-------------------------------
Except insofar as otherwise expressly provided herein, all the provisions,
definitions, terms and conditions of the Original Indenture, as it has been and
may from time to time be amended, shall be deemed to be incorporated in and made
a part of this Supplemental Indenture; and the Original Indenture as heretofore
supplemented and as supplemented by this Supplemental Indenture is in all
respects ratified and confirmed; and the Original Indenture, as amended, and
this Supplemental Indenture shall be read, taken and construed as one and the
same instrument.
SECTION 7.02 Benefits of Original Indenture.
------------------------------
Nothing in this Supplemental Indenture is intended, or shall be construed,
to give to any Person, other than the parties hereto and the Holders of Series I
Bonds and Series J Bonds issued under and secured by the Original Indenture, any
legal or equitable right, remedy or claim under or in respect of this
Supplemental Indenture, or under any covenant, condition or provision herein
contained, all the covenants, conditions and provisions of this Supplemental
Indenture being intended to be, and being, for the sole and exclusive benefit of
the parties hereto and of the Holders of Series I Bonds and Series J Bonds
issued and to be issued under the Original Indenture and this Supplemental
Indenture.
SECTION 7.03 Governing Law.
-------------
In view of the fact that Bondholders may reside in various states and the
desire to establish with certainty that this Supplemental Indenture will be
governed by and construed and interpreted in accordance with the law of a state
having a well developed body of commercial and financial law relevant to
transactions of the type contemplated herein, this Supplemental Indenture and
each Series I Bond and Series J Bond shall be construed in accordance with and
governed by the laws of the State of New York (without regard to the conflict of
laws provisions thereof) applicable to agreements made and to be performed
therein, except to the extent that the TIA shall be applicable and except to the
extent the law of any jurisdiction wherein any portion of the Mortgaged Property
is located shall mandatorily govern the perfection, priority or enforcement of
the Lien of the Indenture with respect to such portion of the Mortgaged
Property.
SECTION 7.04 Successors.
----------
All covenants, stipulations and agreements of the Company in this
Supplemental Indenture and the Series I Bonds and Series J Bonds shall bind its
successors and assigns. All agreements of the Trustee in this Supplemental
Indenture shall bind its successor.
-20-
SECTION 7.05 Counterparts.
------------
This Supplemental Indenture may be executed in any number of counterparts,
and each of such counterparts when so executed shall be deemed to be an
original, but all such counterparts shall together constitute by one and the
same instrument.
-21-
IN WITNESS WHEREOF, EL PASO ELECTRIC COMPANY has caused this
Supplemental Indenture to be executed by its Chairman of the Board, Chief
Executive Officer, President or one of its Vice Presidents, and duly attested by
its Secretary or one of its Assistant Secretaries, and STATE STREET BANK AND
TRUST COMPANY has caused the same to be executed by one of its Vice Presidents
or Assistant Vice Presidents and its corporate seal to be hereunto affixed, and
duly attested by one of its Assistant Secretaries, as of the day and year first
above written.
EL PASO ELECTRIC COMPANY
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------------
Xxxx X. Xxxxxxx
Vice President and Chief Financial Officer
Attest:
/s/ Xxxxxxxxx Xxxxx, Xx.
---------------------------------
Secretary
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STATE STREET BANK AND
TRUST COMPANY
By: /s/ Xxxx X. Xxxxx
----------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President
[Corporate Seal]
Attest:
/s/ X. Xxxxxxx
---------------------------------
Title: Assistant Secretary
-23-
ACKNOWLEDGMENT
--------------
STATE OF TEXAS )
) SS.
COUNTY OF EL PASO )
On the 20th day of August 1997, before me personally came Xxxx X. Xxxxxxx,
to me known, who, being by me duly sworn, did depose and say that he resides in
El Paso, Texas; that he is the Vice President and Chief Financial Officer of El
Paso Electric Company, a Texas corporation, the corporation described in and
which executed the foregoing instrument; and that he signed his name thereto by
authority of the board of directors of said corporation.
/s/ Xxxxx Xxxxxx
-----------------------------------------------------
Notary Public
(Notary Seal)
-24-
ACKNOWLEDGMENT
--------------
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
On the 20th day of August 1997, before me personally came Xxxx X. Xxxxx, to
me known, who, being by me duly sworn, did depose and say that she resides in
Stoughton, Massachusetts; that she is a Vice President of State Street Bank and
Trust Company, a banking corporation organized under the laws of The
Commonwealth of Massachusetts, the corporation described in and which executed
the foregoing instrument; that she knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it was so affixed
by authority of the board of directors of said corporation, and that she signed
her name thereto by like authority.
/s/ Xxxxxx X. Junior
-----------------------------------------------------
Notary Public
(Notary Seal)
-25-
Schedule 1
Existing Investments of the Company
1. Note receivable from Wheeler Peak Capital Corporation for $125,000, balance
due at October 31, 1991.
2. Contributions to and interests of the Company in decommissioning trusts
relating to the Palo Verde Nuclear Generating Station (to the extent such
contributions and interests constitute investments).
3. Other minor investments existing on the date of this Supplemental
Indenture, which were obtained in the ordinary course of business and, in
the aggregate, have a book value of less than $200,000.
-26-
