Document:

BROKER-DEALER AGREEMENT DATED AUGUST 1, 2005

 EXHIBIT 4.39 
  
 BROKER-DEALER AGREEMENT 
  
 among 
  
 THE BANK OF NEW YORK, 
 as Auction Agent, 
  
 CITIGROUP GLOBAL MARKETS INC., 
 as Broker-Dealer 
  
 and 
  
 EL
PASO ELECTRIC COMPANY, 
 as Borrower 
  
 Dated as of August 1, 2005 
  
 relating to 
  
 $63,500,000 
 Maricopa County, Arizona Pollution Control Corporation 
 Pollution Control Refunding Revenue Bonds, 2005 Series B 
 (El Paso Electric Company Palo Verde Project) 
  
 and 
  
 $37,100,000 
 Maricopa County, Arizona Pollution Control Corporation 
 Pollution Control Refunding Revenue Bonds, 2005 Series C 
 (El Paso Electric Company Palo Verde Project) 

 TABLE OF CONTENTS 
  

					
			
	Section 1.	    	Definitions and Rules of Construction	  	1
			
	 1.1
	    	 Terms Defined by Reference
	  	1
			
	 1.2
	    	 Terms Defined Herein
	  	1
			
	 1.3
	    	 Rules of Construction
	  	2
			
	Section 2.	    	The Auction	  	3
			
	 2.1
	    	 Auction Procedures and Settlement Procedures
	  	3
			
	 2.2
	    	 Preparation for Each Auction
	  	3
			
	 2.3
	    	 Auction Schedule
	  	4
			
	 2.4
	    	 Notices
	  	5
			
	 2.5
	    	 Broker-Dealer Fee to Be Paid to Citigroup
	  	5
			
	 2.6
	    	 Settlement
	  	6
			
	 2.7
	    	 Submission Processing Representation
	  	6
			
	Section 3.	    	The Auction Agent	  	6
			
	 3.1
	    	 Duties and Responsibilities
	  	6
			
	 3.2
	    	 Rights of the Auction Agent
	  	7
			
	Section 4.	    	Miscellaneous	  	8
			
	 4.1
	    	 Termination
	  	8
			
	 4.2
	    	 Indemnification and Contribution
	  	8
			
	 4.3
	    	 Participant
	  	10
			
	 4.4
	    	 Communications
	  	10
			
	 4.5
	    	 Benefits
	  	12
			
	 4.6
	    	 Amendment; Waiver
	  	12
			
	 4.7
	    	 Successors and Assigns
	  	12
			
	 4.8
	    	 Severability
	  	12
			
	 4.9
	    	 Execution in Counterparts
	  	12
			
	 4.10
	    	 Disclosure
	  	12
			
	 4.11
	    	 Entire Agreement
	  	13
			
	Section 5.	    	Governing Law	  	13
			
	Exhibit A	    	Settlement Procedures	  	A-1
	Exhibit B	    	Notice of Transfer	  	B-1
	Exhibit C	    	Notice of Failure to Deliver	  	C-1
	Exhibit D	    	Form of Submission Processing Representation	  	D-1

  

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 BROKER-DEALER AGREEMENT 
  
 This BROKER-DEALER AGREEMENT dated as of August 1, 2005 (the “Agreement”) among THE BANK OF NEW YORK, as auction
agent (together with its successors and assigns, the “Auction Agent”), CITIGROUP GLOBAL MARKETS INC. (together with its successor and assigns, hereinafter referred to as “Citigroup”) and El Paso Electric Company (the
“Borrower”). 
  
 WHEREAS, Maricopa County, Arizona
Pollution Control Corporation (the “Issuer”) proposes to cause or has caused Union Bank of California, N.A., as trustee (the “Trustee”) to authenticate and deliver $63,500,000 aggregate principal amount of its Pollution Control
Refunding Revenue Bonds, 2005 Series B (El Paso Electric Company Palo Verde Project) and $37,100,000 aggregate principal amount of its Pollution Control Refunding Revenue Bonds, 2005 Series C (El Paso Electric Company Palo Verde Project)
(collectively, the “Series ARS”) pursuant to separate Indentures of Trust, each dated as of July 1, 2005 (as from time to time in effect, each, a “Trust Indenture” and collectively, the “Trust Indentures”), each between
the Issuer and the Trustee. 
  
 WHEREAS, each Trust Indenture
provides that the interest rate with respect to the Series ARS for each Auction Period after the initial ARS Interest Period shall, except under certain conditions, equal the rate per annum that the Auction Agent advises results from implementation
of the Auction Procedures (the “Auction Rate”). 
  
 WHEREAS, Citigroup is an Authorized Broker-Dealer listed in the Auction Agent Agreement, and the Auction Agent is entering into this Agreement pursuant to Section 2.06 of the Auction Agent Agreement. 
  
 WHEREAS, the Auction Procedures require the participation of one or more
Broker-Dealers. 
  
 NOW, THEREFORE, in consideration of the mutual
covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Auction Agent, as agent of the Trustee, and Citigroup agree as follows: 
  
 Section 1. Definitions and Rules of Construction. 
  
 1.1 Terms Defined by Reference. Capitalized terms used herein and not
otherwise defined shall have the meanings given such terms in each Trust Indenture, including applicable Exhibit B thereto, or the Auction Agent Agreement. 
  
 1.2 Terms Defined Herein. As used herein and in each Appendix hereto, the following terms shall have the following meanings, unless the context
otherwise requires: 
  
 “ARS Beneficial Owner”
shall mean the Person who is the beneficial owner of Series ARS according to the records of (i) a Securities Depository while the Series ARS are in book-entry form or (ii) the Trustee while the Series ARS are not in book-entry form. 

 “Auction” shall have the meaning specified in Section 2.1 hereof. 
  
 “Auction Agent Agreement” shall mean the Auction Agent
Agreement, dated as of August 1, 2005, by and among the Borrower, the Trustee and the Auction Agent relating to the Series ARS. 
  
 “Auction Procedures” shall mean the provisions that are set forth in Exhibit B of each Trust Indenture. 
  
 “Authorized Officer” shall mean each Vice President,
Assistant Vice President and Assistant Treasurer of the Auction Agent assigned to the Dealing and Trading Group of its Corporate Trust Department and every other officer or employee of the Auction Agent designated as an “Authorized
Officer” for purposes of this Agreement in a written communication to Citigroup. 
  
 “Citigroup Officer” shall mean each officer or employee of Citigroup designated as a “Citigroup Officer” for purposes of this Agreement in a written communication to the Auction Agent.

  
 “Notice of Failure to Deliver” shall mean a
notice substantially in the form of Exhibit C hereto. 
  
 “Notice of Transfer” shall mean a notice substantially in the form of Exhibit B hereto. 
  
 “Order Form” shall mean the form to be submitted by any Broker-Dealer on any Auction Date. 
  
 “Participant” shall mean, with respect to DTC or another
Securities Depository, a member of, or participant in, DTC or such other Securities Depository, respectively. 
  
 “Settlement Procedures” shall mean the Settlement Procedures attached hereto as Exhibit A. 
  
 “Submission Processing Deadline” shall mean the earlier of
(i) 40 minutes after the Submission Deadline and (ii) the time when the Auction Agent begins to disseminate the results of the Auction to the Broker-Dealers. 
  
 “Submission Processing Representation” is defined in Series B and Series C Indentures and shall be submitted to the Auction Agent
whenever Broker-Dealer implements a Submission Processing Deadline in the form attached hereto as Exhibit D.  
  
 1.3 Rules of Construction. Unless the context or use indicates another or different meaning or intent, the following rules shall apply to the
construction of this Agreement: 
  
 (a) Words importing the
singular number shall include the plural number and vice versa. 
  

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 The captions and headings herein are solely for convenience of reference and shall not constitute a part
of this Agreement nor shall they affect its meaning, construction or effect. 
  
 The words “hereof,” “herein,” “hereto,” and other words of similar import refer to this Agreement as a whole. 
  
 All references herein to a particular time of day shall be to New York City time. 
  
 Section 2. The Auction. 
  
 2.1 Auction Procedures and Settlement Procedures. 
  
 (a) On each Auction Date, the provisions of the Auction Procedures will be
followed by the Auction Agent for the purpose of determining the Applicable ARS Rate for the next Auction Period. Each periodic implementation of such procedures is hereinafter referred to as an “Auction.” 
  
 (b) All of the provisions contained in the Auction Procedures and the
Settlement Procedures are incorporated herein by reference in their entirety and shall be deemed to be a part of this Agreement to the same extent as if such provisions were fully set forth herein. 
  
 (c) Citigroup agrees to act as, and assumes the obligations of and
limitations and restrictions placed upon, a Broker-Dealer under each Trust Indenture and as otherwise set forth in this Agreement. 
  
 (d) Citigroup and other Broker-Dealers may participate in Auctions for their own accounts. The Auction Agent shall have no duty or liability with respect
to monitoring compliance with the provisions of this subsection (d). 
  
 2.2 Preparation for Each Auction. 
  
 (a) Not
later than 9:30 a.m., New York City time, on each Auction Date for the Series ARS, the Auction Agent shall advise Citigroup by telephone or other electronic communication acceptable to the parties of the All-Hold Rate and the Index used in
determining such rate. 
  
 (b) In the event the Auction Date for
any Auction shall be changed after the Auction Agent has given notice of such Auction Date pursuant to clause (vii) of paragraph (a) of the Settlement Procedures, the Auction Agent, by such means as the Auction Agent deems practicable, shall give
notice of such change to Citigroup not later than the earlier of 9:15 a.m., New York City time, on the new Auction Date and 9:15 a.m., New York City time, on the old Auction Date. Thereafter, Citigroup shall use its best efforts to promptly notify
its customers who are Existing Owners of such change in the Auction Date. 
  
 (c) The Auction Agent may, but shall have no duty to, request, from time to time, Citigroup to provide it with the number of its customers Citigroup believes are Existing Owners and the aggregate amount held by
Citigroup. Citigroup shall comply with any such 
  

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 request, and the Auction Agent shall keep confidential any such information, including information received as to the
identity of Bidders in any Auction, and shall not disclose any such information so provided to any person other than the Trustee, the Issuer, the Borrower and Citigroup, provided that the Auction Agent reserves the right to disclose any such
information if (i) it is ordered to do so by a court or regulatory judicial or quasi-judicial agency or authority, or (ii) it is advised by its counsel that its failure to do so would be unlawful or would impose upon it any actual or potential loss,
claim, damage, liability, or expense for which it has not received indemnity satisfactory to it. 
  
 2.3 Auction Schedule. (a) The Auction Agent shall conduct Auctions in accordance with the schedule set forth below. Such schedule may be changed by
the Auction Agent with the consent of the Trustee and the Broker-Dealers, which consent shall not be unreasonably withheld or delayed. The Auction Agent shall give notice pursuant to Section 4.3 hereof of any such change to each Broker-Dealer. Such
notice shall be given prior to the first Auction Date on which any such change shall be effective. Notwithstanding the foregoing, the Auction Agent will follow the Bond Market Association’s Market Practice Recommendation for shortened trading
days for the bond markets (the “BMA Recommendation”) unless the Auction Agent is instructed otherwise. In the event of a BMA Recommendation on an Auction Date, the Submission Deadline shall be 11:30 a.m. instead of 1:00 p.m., and as a
result the notices set forth in Section 2.4 hereof will occur earlier. 
  

			
	By 9:00 a.m.	  	The Auction Agent determines the All-Hold Rate and the Index.
		
	By 9:30 a.m.	  	The Auction Agent advises the Trustee and the Broker-Dealers of the All-Hold Rate and the Index, as set forth in Section 2.2(a) hereof.
		
	9:30 a.m.-l:00 p.m.	  	The Auction Agent assembles information (the “Bid Information”) communicated to it by Broker-Dealers as provided in Section 1.02(a) of the Auction Procedures. The submission deadline
(the “Submission Deadline”) is 1:00 p.m., New York City time; provided, however, that the Auction Agent shall be entitled to accept an Order from any Broker-Dealer following the Submission Deadline (but in any event prior to
the communication of Auction results as provided below), so long as the Order from such Broker-Dealer is accompanied by a Submission Processing Representation as defined in Section 2.07.
		
	 Not earlier than
         1:00 p.m.
	  	The Auction Agent makes the determination pursuant to Section 1.03(b) of the Auction Procedures.
		
	 By approximately
         3:00 p.m.
	  	The Auction Agent advises the Trustee and the Broker-Dealers of the Auction Rate for the next Auction Period and the results of the Auction as provided in Section 1.05(a) of the Auction
Procedures. Submitted Bids and Submitted Sell Orders are accepted and rejected in whole or in part and principal amount of Series ARS is allocated as provided in Section 1.04 of the Auction Procedures. The Auction Agent gives notice of Auction
results as set forth in paragraph (a) of the Settlement Procedures.

  

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 (b) In each Auction in which Citigroup submits one or more Orders, Citigroup may aggregate the Orders of
different Potential Owners or Existing Owners on whose behalf Citigroup is submitting Orders; provided, however, Bids may only be aggregated if the interest rates on the Bids are the same when rounded pursuant to the provisions of the Auction
Procedures. Notwithstanding the foregoing, the Auction Agent may at any time request that such Orders be separate for each different Potential Owner or Existing Owner. Each Order shall be in writing. 
  
 (c) Citigroup shall deliver to the Auction Agent (i) a Notice of Transfer in
writing of any transfer of Series ARS made through Citigroup by an Existing Owner to another person other than pursuant to an Auction, and (ii) a Notice of a Failure to Deliver in writing of the failure of any Series ARS to be transferred to or by
any person that purchased or sold Series ARS through Citigroup pursuant to an Auction. The Auction Agent is not required to accept any notice delivered pursuant to the terms of the foregoing sentence with respect to an Auction unless it is received
by the Auction Agent by 3:00 p.m., New York City time, on the Business Day next preceding the applicable Auction Date. 
  
 (d) Citigroup and other Broker-Dealers may submit Orders in Auctions for their own accounts; provided, however, that any Broker-Dealer that is an
affiliate of the Issuer or of the Borrower must submit at the next Auction therefor a Sell Order covering all Series ARS held for its own account. The Auction Agent shall have no duty or liability with respect to monitoring or enforcing compliance
with the requirements of this subsection (d). 
  
 (e) Citigroup
agrees to handle its customers’ Orders in accordance with its duties under applicable securities laws and rules. 
  
 2.4 Notices. 
  
 (a) On each Auction Date, the Auction Agent shall notify Citigroup by telephone or other electronic communication acceptable to the parties of the results
of the Auction as set forth in paragraph (a) of the Settlement Procedures. The Auction Agent shall notify Citigroup in writing of the disposition of all Orders submitted by Citigroup in the Auction held on such Auction Date by 10:30 a.m., New York
City time, on the Business Day next succeeding such Auction Date if previously requested by Citigroup. 
  
 (b) Citigroup shall notify each Existing Owner or Potential Owner on whose behalf Citigroup has submitted an Order as set forth in paragraph (b) of the
Settlement Procedures and take such other action as is required by Citigroup pursuant to the Settlement Procedures. 
  
 (c) The Auction Agent shall deliver to Citigroup all notices and certificates which the Auction Agent is required to deliver to Citigroup pursuant to
Article II of the Auction Agent Agreement after receipt of such notices and certificates at the times and in the manner set forth in the Auction Agent Agreement. 
  

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 (d) If any Auction Bonds are to be redeemed and those Bonds are held by a Securities Depository, the
Borrower shall include in the notice of the call for redemption delivered to the Securities Depository (i) a date placed under an item entitled “Publication Date for Securities Depository Purposes” and such date shall be three Business
Days after the Auction Date immediately preceding such redemption date and (ii) an instruction to Securities Depository to (x) determine on such Publication Date after the Auction held on the immediately preceding Auction Date has settled, the
Participants whose Securities Depository positions will be redeemed and the principal amount of such Auction Bonds to be redeemed from each such position (the “Securities Depository Redemption Information”), and (y) notify the Auction
Agent immediately after such determination of the positions of the Participants in such Auction Bonds immediately prior to such Auction settlement, the position of the Participants in such Auction Bonds immediately following such auction settlement,
and the Securities Depository Redemption Information. 
  
 2.5
Broker-Dealer Fee to Be Paid to Citigroup. On the first ARS Interest Payment Date and each ARS Interest Payment Date immediately following an Auction Date, the Auction Agent shall pay to Citigroup from moneys received from the Borrower
pursuant to Section 3.05 of the Auction Agent Agreement an amount equal to the product of (i) 0.25 of 1% per annum, multiplied by (ii) (A) in the case of the first ARS Interest Payment Date, the aggregate principal amount of Series ARS placed by
Citigroup on the Closing Date or (B) in the case of each ARS Interest Payment Date immediately following an Auction Date, for the period just elapsed, the sum of (x) the aggregate principal amount of the Series ARS placed by Citigroup in such
Auction that were (1) the subject of Submitted Bids of Existing Owners submitted by Citigroup and continued to be held as a result of such submission and (2) the subject of Submitted Bids of Potential Owners submitted by Citigroup and purchased as a
result of such submission and (y) the aggregate principal amount of the Series ARS subject to valid Hold Orders (determined in accordance with each Trust Indenture) that were acquired by such Existing Owners through Citigroup, or (C) if an Auction
was not held on such Auction Date, the aggregate principal amount of the Series ARS that were acquired by Existing Owners through Citigroup, multiplied by (iii) the number of days in such ARS Interest Period divided by (iv) 360. For purposes of
subclauses (ii)(B)(x)(1) and (ii)(B)(y) of the foregoing sentence, if any Existing Owner who acquired Series ARS through Citigroup transfers those Series ARS to another person other than pursuant to an Auction, then the Broker-Dealer for the Series
ARS so transferred shall continue to be Citigroup; provided, however, that if the transfer was effected by, or if the transferee is a Broker-Dealer other than Citigroup, then such Broker-Dealer shall be the Broker-Dealer for such Series ARS.

  
 2.6 Settlement. 
  
 (a) If any Existing Owner on whose behalf Citigroup has submitted a Bid or
Sell Order for Series ARS that was accepted in whole or in part fails to instruct its Participant to deliver the Series ARS subject to such Bid or Sell Order against payment therefor, Citigroup shall instruct such Participant to deliver such Series
ARS against payment therefor and Citigroup may deliver to the Potential Owner on whose behalf Citigroup submitted a Bid that was accepted 
  

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 in whole or in part, a principal amount of the Series ARS that is less than the principal amount of the Series ARS
specified in such Bid to be purchased by such Potential Owner. Notwithstanding the foregoing terms of this Section, any delivery or nondelivery of Series ARS which represents any departure from the results of an Auction, as determined by the Auction
Agent, shall be of no effect unless and until the Auction Agent shall have been notified of such delivery or non-delivery in accordance with the terms of Section 2.3(b) hereof. The Auction Agent shall have no duty or liability with respect to
enforcement of this subsection (a). 
  
 (b) None of the Auction
Agent, the Trustee, the Broker-Dealers, Borrower or the Issuer shall have any responsibility or liability with respect to the failure of an Existing Owner, a Potential Owner or its respective Participant to deliver Series ARS or to pay for Series
ARS sold or purchased pursuant to the Auction Procedures or otherwise. 
  
 2.7
Submission Processing Representation. Broker-Dealers may submit an Order after the Submission Deadline and prior to the Submission Processing Deadline if the Order was (i) received by the Broker-Dealer from Existing Owners or Potential Owners
prior to the Submission Deadline or (ii) initiated internally by the Broker-Dealer for its own account prior to the Submission Deadline. Each Order submitted to the Auction Agent after the Submission Deadline and prior to the Submission Processing
Deadline shall constitute a representation by the Broker-Dealer that such Order was (i) received from an Existing Owner or Potential Owner prior to the Submission Deadline or (ii) initiated internally by the Broker-Dealer for its own account prior
to the Submission Deadline (the “Submission Processing Representation”), and shall be accompanied by a written statement in the form of Exhibit D annexed hereto. 
  
 Section 3. The Auction Agent. 
  
 3.1 Duties and Responsibilities. 
  
 (a) The Auction Agent is acting solely as a non-fiduciary agent for the Trustee hereunder and owes no duties to any other
person by reason of this Agreement. 
  
 (b) The Auction Agent
undertakes hereunder to perform such duties and only such duties as are specifically set forth in the Auction Agent Agreement or herein or expressly incorporated in the Auction Agent Agreement or herein by reference against the Auction Agent and no
implied covenants or obligations shall be read into this Agreement by means of the provisions of each Trust Indenture or otherwise against the Auction Agent. 
  
 (c) In the absence of willful misconduct or gross negligence on its part, the Auction Agent shall not be liable for any action taken, suffered or omitted
or for any error of judgment made by it in the performance of its duties under this Agreement. The Auction Agent shall not be liable for any error of judgment made in good faith unless the Auction Agent shall have been grossly negligent in
ascertaining (or failing to ascertain) the pertinent facts. 
  
 3.2 Rights of the Auction Agent. 
  
 (a) The
Auction Agent may conclusively rely and shall be fully protected in acting or refraining from acting upon any communication authorized by this Agreement and upon any written instruction, notice, request, direction, consent, report, certificate or
other 

  

 -7- 

 
instrument, paper, document or communication reasonably believed by it to be genuine. The Auction Agent shall not be liable for acting or refraining from
acting upon any telephone communication authorized by this Agreement which the Auction Agent believes in good faith to have been given by the Trustee or by a Broker-Dealer. The Auction Agent may record telephone communications with the
Broker-Dealers, and Citigroup may record telephone communications with the Auction Agent. 
  
 (b) The Auction Agent may consult with counsel of its own choice, and the advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon. 
  
 (c) The
Auction Agent shall not be required to advance, expend or risk its own funds or otherwise incur or become exposed to financial liability in the performance of its duties hereunder. 
  
 (d) The Auction Agent may perform its duties and exercise its rights hereunder either directly or by or through agents or
attorneys and shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed by it with due care hereunder. 
  
 (e) The Auction Agent shall not be responsible or liable for any failure or delay in the performance of its obligations under this agreement arising out
of or caused, directly or indirectly, by circumstances beyond its reasonable control, including without limitation, acts of God; earthquakes; fires; floods; wars; civil or military disturbances; sabotage; acts of terrorism; epidemics; riots;
interruptions, loss or malfunctions or utilities; communications or computer (hardware or software) services; accidents; labor disputes; acts of civil or military authority or governmental actions; it being understood that the Auction Agent shall
use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances. 
  
 (f) The Auction Agent makes no representations as to and shall have no liability with respect to the correctness of the
recitals in, or the validity, accuracy or adequacy of this Agreement, any offering material used in connection with the offer and sale of the Series ARS or any other agreement or instrument executed in connection with the transactions contemplated
herein. 
  
 Section 4. Miscellaneous.

  
 4.1 Termination. Citigroup may resign at any time,
upon at least (30) Business Days notice to the other parties hereto; provided, however, that Citigroup may resign immediately if (a) it determines, in its reasonable judgment, that for any reason, including, without limitation, (i) a pending or
proposed change in applicable tax laws, (ii) a material adverse change in the financial condition of the Borrower, (iii) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national emergency or
war or other calamity or crisis, (iv) a down-grading of the Series ARS or (v) an imposition of material restrictions on the Series ARS or similar obligations, it is not advisable to attempt to auction the Series ARS, or (b) a Disclosure Statement,
as hereinafter defined, is necessary or desirable pursuant to Section 4.10(b) hereof 

  

 -8- 

 
and the Borrower fails to provide Citigroup with a Disclosure Statement reasonably satisfactory to Citigroup and its counsel. The Auction Agent at the
written direction of the Borrower shall terminate this Broker-Dealer Agreement at any time on at least five (5) Business Days notice to the other parties hereto. This Broker-Dealer Agreement shall terminate on termination of the Auction Agent
Agreement. 
  
 4.2 Indemnification and Contribution.

  
 (a) The Borrower agrees to indemnify and hold harmless
Citigroup, the directors, officers, employees and agents of Citigroup and each person who controls Citigroup within the meaning of either the Securities Act of 1933 (the “Securities Act”) or the Exchange Act of 1934 (the “Exchange
Act”) against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Securities Act, the Exchange Act or other Federal or state statutory law or regulation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Official Statement relating to
the Series ARS dated July 25, 2005 (the “Official Statement”) or a Disclosure Statement (or in any supplement or amendment thereto), or arise out of or are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Borrower will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made in the Official Statement or Disclosure Statement, or in any amendment thereof or supplement thereto, in
reliance upon and in conformity with written information furnished to the Borrower by or on behalf of Citigroup specifically for inclusion therein. This indemnity agreement will be in addition to any liability which the Borrower may otherwise have.

  
 (b) Citigroup agrees to indemnify and hold harmless the
Borrower, each of its official, directors, officers and employees, and each person who controls the Borrower within the meaning of either the Securities Act or the Exchange Act, to the same extent as the foregoing indemnity from the Borrower to
Citigroup, but only with reference to written information relating to Citigroup furnished to the Borrower by Citigroup specifically for inclusion in the Official Statement or Disclosure Statement (or in any amendment or supplement thereto). This
indemnity agreement will be in addition to any liability which Citigroup may otherwise have. The Borrower acknowledges that (i) the statements set forth in the last sentence of the last paragraph of the cover page regarding the delivery of the
Series ARS and (ii) the legend in block capital letters concerning overallotment and stabilization in the Official Statement and the Disclosure Statement constitute the only information furnished in writing by or on behalf of Citigroup for inclusion
in the Official Statement or Disclosure Statement (or in any amendment or supplement thereto). 
  
 (c) Promptly after receipt by an indemnified party under this Section 4.2 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is 

  

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to be made against the indemnifying party under this Section 4.2, notify the indemnifying party in writing of the commencement thereof; but the failure so to
notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses; and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party
shall be entitled to appoint counsel of the indemnifying party’s choice at the indemnifying party’s expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be satisfactory to the indemnified party.
Notwithstanding the indemnifying party’s election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party
shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest; (ii) the actual or
potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the indemnifying party; (iii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action; or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party will not, without the prior written
consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim,
action, suit or proceeding. 
  
 (d) In the event that the
indemnity provided in paragraph (a) or (b) of this Section 4.2 is unavailable to or insufficient to hold harmless an indemnified party for any reason, the Borrower and Citigroup agree to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively “Losses”) to which the Borrower and Citigroup may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Borrower on the one hand and by Citigroup on the other from the offering of the Series ARS. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the Borrower
and Citigroup shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Borrower on the one hand and of Citigroup on the other in connection with the statements or omissions
which resulted in such Losses, as well as any other relevant equitable considerations. In no case shall Citigroup be responsible for any amount in excess of the commission applicable to the Series ARS for which Citigroup has acted as Broker-Dealer.
Benefits received by the Borrower shall be deemed to be equal to the total net proceeds from the offering (before deducting expenses) received by it, and benefits received by Citigroup shall be deemed to be equal to the commissions applicable to
Series ARS for which 

  

 -10- 

 
Citigroup has acted as Broker-Dealer. Relative fault shall be determined by reference to, among other things, whether any untrue or any alleged untrue
statement of a material fact or the omission or alleged omission to state a material fact relates to information provided by the Borrower on the one hand or Citigroup on the other, the intent of the parties and their relative knowledge, information
and opportunity to correct or prevent such untrue statement or omission. The Borrower and Citigroup agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not
take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 4.2, each person who controls Citigroup within the meaning of either the Securities Act or the Exchange Act and each director,
officer, employee and agent of Citigroup shall have the same rights to contribution as Citigroup, and each person who controls the Borrower within the meaning of either the Securities Act or the Exchange Act and each official, director, officer and
employee of the Borrower shall have the same rights to contribution as the Borrower, subject in each case to the applicable terms and conditions of this paragraph (d). 
  
 4.3 Participant. Citigroup is, and shall remain for the term of this Agreement, a member of, or Participant in, the
Securities Depository (or an affiliate of such a member or Participant). 
  
 4.4 Communications. Except for (i) communications authorized to be made by telephone pursuant to this Agreement or the Auction Procedures and (ii) communications in connection with the Auctions (other than
those expressly required to be in writing or other electronic communication acceptable to the parties shall be deemed to be in writing), all notices, requests and other communications to any party hereunder shall be in writing (including facsimile
or similar writing) and shall be given to such party, addressed to it, at its address or facsimile number set forth below: 
  

			
	If to Citigroup, addressed:	  	CITIGROUP GLOBAL MARKETS INC.
	 	  	390 Greenwich Street, 5th Floor
	 	  	New York, NY 10013
	 	  	Attention: Auction Rate Trading
	 	  	Telephone: (212) 723-7082
	 	  	Facsimile: (212) 723-8809
		
	If to the Auction Agent, addressed:	  	THE BANK OF NEW YORK
	 	  	101 Barclay Street, 7W
	 	  	New York, New York 10286
	 	  	Attention: Corporate Trust Department – Dealing and Trading Group
	 	  	Telephone (212) 815-3450
	 	  	Facsimile: (212) 815-3440
		
	If to the Trustee, addressed:	  	UNION BANK OF CALIFORNIA, N.A.
	 	  	120 S. San Pedro, 4th Floor
	 	  	Los Angeles, California
	 	  	Attention: Corporate Trust Department
	 	  	Telephone: (213) 972-5675
	 	  	Facsimile: (213) 972-5694

  

 -11- 

			
	If to the Issuer, addressed:	  	MARICOPA COUNTY, ARIZONA
	 	  	POLLUTION CONTROL CORPORATION
	 	  	c/o Ryley Carlock & Applewhite
	 	  	One North Central Avenue, Suite 1200
	 	  	Phoenix, Arizona 85004-4417
	 	  	Attention: President
	 	  	Telephone: (602) 440-4802
	 	  	Facsimile: (602) 257-9582
		
	If to the Borrower, addressed:	  	EL PASO ELECTRIC COMPANY
	 	  	100 North Stanton
	 	  	El Paso, Texas 79901
	 	  	Attention: Treasurer
	 	  	Telephone: (915) 543-5983
	 	  	Facsimile: (915) 521-4779

  
 or such other address
or facsimile number as such party may hereafter specify for such purpose by notice to the other party. Each such notice, request or communication shall be effective when delivered at the address specified herein. Communications shall be given on
behalf of Citigroup by a Citigroup Officer and on behalf of the Auction Agent by an Authorized Officer. Citigroup may record telephone communications with the Auction Agent. 
  
 4.5 Benefits. Nothing in this Agreement, express or implied, shall give to any person, other than the Auction Agent,
Citigroup and their respective successors and assigns, any benefit of any legal or equitable right, remedy or claim under this Agreement. 
  
 4.6 Amendment; Waiver. 
  
 (a) This Agreement shall not be deemed or construed to be modified, amended, rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of each of the parties hereto. 
  
 (b) Failure of either party to this Agreement to exercise any right or remedy hereunder in the event of a breach of this Agreement by the other party shall not constitute a waiver of any such right or remedy with
respect to any subsequent breach. 
  
 4.7 Successors and
Assigns. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the respective successors and permitted assigns of each of Citigroup and the Auction Agent. 
  

 -12- 

 4.8 Severability. If any clause, provision or section of this Agreement shall be ruled invalid or
unenforceable by any court of competent jurisdiction, the invalidity or unenforceability of such clause, provision or section shall not affect any remaining clause, provision or sections hereof. 
  
 4.9 Execution in Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 
  
 4.10 Disclosure. 
  
 (a) The Borrower agrees to supply to Citigroup, at the Borrower’s expense, such number of copies of the Official Statement as Citigroup shall
reasonably request from time to time and, upon request of Citigroup, to amend the Official Statement so that the Official Statement will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they are made, not misleading. 
  
 (b) The Borrower shall promptly notify Citigroup of any material adverse change in the affairs of the Borrower, financial or otherwise. If Citigroup
determines (upon consultation and mutual agreement with the Borrower) that it is necessary or desirable to use a disclosure statement (other than the Official Statement), relating specifically to the Series ARS (a “Disclosure Statement”)
in connection with the solicitation of orders for the Series ARS, Citigroup will notify the Borrower, and the Borrower will provide Citigroup with a Disclosure Statement reasonably satisfactory to Citigroup and its counsel. The Borrower will supply
Citigroup, at the Borrower’s expense, with such number of copies of such Disclosure Statement as Citigroup requests from time to time and will, upon request of Citigroup, amend such Disclosure Statement (as well as the documents incorporated by
reference therein) so that such Disclosure Statement will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they are
made, not misleading. In connection with the use of any Disclosure Statement by Citigroup in its solicitation of orders for the Series ARS (other than the Official Statement), the Borrower will furnish to Citigroup such certificates,
accountants’ letters and opinions of counsel as would be customary in a public offering of tax-exempt securities underwritten by Citigroup. In addition, the Borrower will, at its own expense, take all steps reasonably requested by Citigroup
that Citigroup or its counsel may consider necessary or desirable to effect compliance with applicable federal or state securities laws. 
  
 4.11 Entire Agreement. This Broker-Dealer Agreement, and the other agreements and instruments executed and delivered in connection with the
issuance of the Series ARS, contain the entire agreement between the parties relating to the subject matter hereof, and there are no other representations, endorsements, promises, agreements or understandings, oral, written or implied, between the
parties relating to the subject matter hereof. 
  

 -13- 

 Section 5. Governing Law. 
  
 This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State, without giving effect to principles of conflicts of law thereof. The parties agree that all actions and proceedings arising out of this Agreement or any of the transactions contemplated hereby shall
be brought in the United States District Court in the County of New York and, in connection with any such action or proceeding submit to the jurisdiction of, and venue in, such court. To the extent permitted by law, each of the parties hereto also
irrevocably waives all right to trial by jury in any action, proceeding or counterclaim arising out of this Agreement or the transactions contemplated hereby. 
  

 -14- 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered under
seal by their proper and duly authorized officer as of the date first above written. 
  

			
	THE BANK OF NEW YORK, as Auction Agent
		
	By:	 	  

		
	Title:	 	  

	
	CITIGROUP GLOBAL MARKETS INC.,
	as Broker-Dealer
		
	By:	 	  

		
	Title:	 	  

	
	EL PASO ELECTRIC COMPANY, as Borrower
		
	By:	 	  

		
	Title:	 	  

 Exhibit A 
 Broker-Dealer 
 Agreement 
  
 SETTLEMENT PROCEDURES 
  

Capitalized terms used herein shall have the meanings given such terms in each Trust Indenture. 
  
 (a) Not later than 3:00 p.m., New York City time, on each Auction Date, the
Auction Agent shall notify by telephone (or by other means acceptable to the parties) each Broker-Dealer that participated in the Auction held on such Auction Date and submitted an Order on behalf of an Existing Owner or Potential Owner of:

  
 (i) the Auction Rate fixed for the next ARS
Interest Period; 
  
 (ii) whether there were
Sufficient Clearing Bids in such Auction; 
  
 (iii) if such Broker-Dealer (a “Seller’s Broker-Dealer”) submitted a Bid or a Sell Order on behalf of an Existing Owner, whether such Bid or Sell Order was accepted or rejected, in whole or in part, and the principal amount
of Series ARS, if any, to be sold by such Existing Owner; 
  
 (iv) if such Broker-Dealer (a “Buyer’s Broker-Dealer”) submitted a Bid on behalf of a Potential Owner, whether such Bid was accepted or rejected, in whole or in part, and the principal amount of Series
ARS, if any, to be purchased by such Potential Owner; 
  
 (v) if the aggregate principal amount of Series ARS to be sold by all Existing Owners on whose behalf such Broker-Dealer submitted a Bid or a Sell Order exceeds the aggregate principal amount of Series ARS to be purchased by all Potential
Owners on whose behalf such Broker-Dealer submitted a Bid, the name or names of one or more Buyer’s Broker-Dealers (and the name of the Participant, if any, of each such Buyer’s Broker-Dealer) acting for one or more purchasers of such
excess principal amount of Series ARS and the principal amount of Series ARS to be purchased from one or more Existing Owners on whose behalf such Broker-Dealer acted by one or more Potential Owners on whose behalf each of such Buyer’s
Broker-Dealers acted; 
  
 (vi) if the principal
amount of Series ARS to be purchased by all Potential Owners on whose behalf such Broker-Dealer submitted a Bid exceeds the aggregate principal amount of Series ARS to be sold by all Existing Owners on whose behalf such Broker-Dealer submitted a Bid
or a Sell Order, the name or names of one or more Seller’s Broker-Dealers (and the name of the Participant, if any, of each such Seller’s Broker-Dealer) acting for one or more sellers of such excess principal amount of 
  

 A-1 

 Series ARS and the principal amount of Series ARS to be sold to one or more Potential Owners on whose
behalf such Broker-Dealer acted by one or more Existing Owners on whose behalf each of such Seller’s Broker-Dealers acted; and 
  
 (vii) the Auction Date for the next succeeding Auction. 
  
 (b) On each Auction Date, each Broker-Dealer that submitted an Order on behalf of any Existing Owner or Potential Owner
shall: 
  
 (i) advise each Existing Owner and
Potential Owner on whose behalf such Broker-Dealer submitted a Bid or Sell Order in the Auction on such Auction Date whether such Bid or Sell Order was accepted or rejected, in whole or in part; 
  
 (ii) in the case of a Broker-Dealer that is a Buyer’s
Broker-Dealer, advise each Potential Owner on whose behalf such Broker-Dealer submitted a Bid that was accepted, in whole or in part, to instruct such Potential Owner’s Participant to pay to such Broker-Dealer (or its Participant) through the
Securities Depository the amount necessary to purchase the principal amount of Series ARS to be purchased pursuant to such Bid against receipt of such Series ARS; 
  
 (iii) in the case of a Broker-Dealer that is a Seller’s Broker-Dealer, instruct each Existing Owner on
whose behalf such Broker-Dealer submitted a Sell Order that was accepted, in whole or in part, or a Bid that was accepted, in whole or in part, to instruct such Existing Owner’s Participant to deliver to such Broker-Dealer (or its Participant)
through the Securities Depository the principal amount of Series ARS to be sold pursuant to such Order against payment therefor; 
  
 (iv) advise each Existing Owner on whose behalf such Broker-Dealer submitted an Order and each Potential Owner on whose behalf such
Broker-Dealer submitted a Bid of the Auction Rate for the next ARS Interest Period; 
  
 (v) advise each Existing Owner on whose behalf such Broker-Dealer submitted an Order of the next Auction Date; and 
  
 (vi) advise each Potential Owner on whose behalf such
Broker-Dealer submitted a Bid that was accepted, in whole or in part, of the next Auction Date. 
  
 (c) On the basis of the information provided to it pursuant to paragraph (a) above, each Broker-Dealer that submitted a Bid or Sell Order in an Auction is
required to allocate any funds received by it in connection with such Auction pursuant to paragraph (b)(ii) above, and any Series ARS received by it in connection with such Auction pursuant to paragraph (b)(iii) above among the Potential Owners, if
any, on whose behalf such Broker-Dealer submitted Bids, the Existing Owners, if any on whose behalf such Broker-Dealer submitted Bids or Sell Orders in such Auction, and any Broker-Dealers identified to it by the Auction Agent following such Auction
pursuant to paragraph (a)(v) or (a)(vi) above. 
  

 A-2 

 (d) On each Auction Date: 
  
 (i) each Potential Owner and Existing Owner with an Order in the Auction on such Auction Date shall instruct
its Participant as provided in (b)(ii) or (b)(iii) above, as the case may be; 
  
 (ii) each Seller’s Broker-Dealer that is not a Participant of the Securities Depository shall instruct its Participant to (A) pay through the Securities Depository to the Participant of the Existing Owner
delivering Series ARS to such Broker-Dealer following such Auction pursuant to (b)(iii) above the amount necessary to purchase such Series ARS against receipt of such Series ARS, and (B) deliver such Series ARS through the Securities Depository to a
Buyer’s Broker-Dealer (or its Participant) identified to such Seller’s Broker-Dealer pursuant to (a)(v) above against payment therefor; and 
  
 (iii) each Buyer’s Broker-Dealer that is not an Participant in the Securities Depository shall instruct its Participant to (A) pay
through the Securities Depository to Seller’s Broker-Dealer (or its Participant) identified following such Auction pursuant to (a)(vi) above the amount necessary to purchase the Series ARS to be purchased pursuant to (b)(ii) above against
receipt of such Series ARS, and (B) deliver such Series ARS through the Securities Depository to the Participant of the purchaser thereof against payment therefor. 
  
 (e) On the Business Day following each Auction Date: 
  
 (i) each Participant for a Bidder in the Auction on such Auction Date referred to in subparagraph (d)(i)
above shall instruct the Securities Depository to execute the transactions described under (b)(ii) or (b)(iii) above for such Auction, and the Securities Depository shall execute such transactions; 
  
 (ii) each Seller’s Broker-Dealer or its Participant
shall instruct the Securities Depository to execute the transactions described in subparagraph (d)(ii) above for such Auction, and the Securities Depository shall execute such transactions; and 
  
 (iii) each Buyer’s Broker-Dealer or its Participant
shall instruct the Securities Depository to execute the transactions described in subparagraph (d)(iii) above for such Auction, and the Securities Depository shall execute such transactions. 
  
 (f) If an Existing Owner selling Series ARS in an Auction fails to deliver
such Series ARS (by authorized book-entry), a Broker-Dealer may deliver to the Potential Owner on behalf of which it submitted a Bid that was accepted a principal amount of Series ARS that is less than the principal amount of Series ARS that
otherwise was to be purchased by such Potential Owner. In such event, the principal amount of Series ARS to be so delivered shall be 
  

 A-3 

 determined solely by such Broker-Dealer. Delivery of such lesser principal amount of Series ARS shall constitute good
delivery. Notwithstanding the foregoing terms of this paragraph (f), any delivery or nondelivery of Series ARS which shall represent any departure from the results of an Auction, as determined by the Auction Agent, shall be of no effect unless and
until the Auction Agent shall have been notified of such delivery or nondelivery in accordance with the provisions of the Auction Agent Agreement and the Broker-Dealer Agreement. 
  

 A-4 

 Exhibit B 
 Broker-Dealer 
 Agreement 
  
 NOTICE OF TRANSFER 
  
 (To be used only for transfers made other than pursuant to an Auction) 
  
 Maricopa County, Arizona Pollution Control Corporation 
 Pollution Control Refunding Revenue Bonds, 2005 Series B 
 (El Paso Electric Company Palo
Verde Project) 
  
 Maricopa County, Arizona Pollution Control
Corporation 
 Pollution Control Refunding Revenue Bonds, 2005 Series C 
 (El Paso Electric Company Palo Verde Project) 
  
 We are (check one) 
  

	 ̈	the Existing Owner named below; or 

  

	 ̈	the Broker-Dealer for such Existing Owner; or 

  

	 ̈	the Participant for such Existing Owner. 

  
 We hereby notify you that such Existing Owner has transferred $             (must be in
units 
 of $25,000) of Series ARS to ____________________________. 
  

			
	

	(Name of Existing Owner)
	
	

	(Name of Broker-Dealer)
	
	

	(Name of Participant)
		
	By:	 	  

	Name:	 	  

	Title:	 	  

  

 B-1 

 Exhibit C 
 Broker-Dealer 
 Agreement 
  
 NOTICE OF FAILURE TO DELIVER 
  
 (To be used only for failure to deliver Series ARS sold pursuant to an Auction) 
  
 Maricopa County, Arizona Pollution Control Corporation 
 Pollution Control Refunding Revenue Bonds, 2005 Series B 
 (El Paso Electric Company Palo Verde Project) 
  
 Maricopa County, Arizona Pollution Control Corporation 
 Pollution Control Refunding Revenue Bonds, 2005
Series C 
 (El Paso Electric Company Palo Verde Project) 
  
 We are (check one) 
  

			
	 ̈	 	a Broker-Dealer for
                                        
                 (the “Purchaser”), which purchased $             (must be in units of
$25,000) of the Series ARS in the Auction held on                          from the sale of such Series
ARS.
		
	 ̈	 	a Broker-Dealer for
                                        
                 (the “Seller”), which sold $             (must be in units of $25,000)
of the Series ARS in the Auction held on                         .
	
	We hereby notify you that (check one)
		
	 ̈	 	the Seller failed to deliver such Series ARS to the Purchaser.
		
	 ̈	 	the Purchaser failed to make payment to the Seller upon delivery of such Series ARS.

  

			
	  

 (Name of
Broker-Dealer)

		
	By:	 	  

	Name:	 	  

	Title:	 	  

  

 C-1 

 Exhibit D 
 Broker-Dealer 
 Agreement 
  
 FORM OF SUBMISSION PROCESSING REPRESENTATION 
  
 (To accompany Orders submitted after the Submission Deadline 
 and prior to the Submission Processing Deadline) 
  
 $63,500,000 
 Maricopa County, Arizona Pollution Control Corporation 
 Pollution Control Refunding Revenue Bonds, 2005 Series B 
 (El Paso Electric Company Palo Verde Project) 
 Auction Rate Securities 
  
 and 
  
 $37,100,000 
 Maricopa County, Arizona Pollution Control Corporation 
 Pollution Control Refunding Revenue Bonds, 2005 Series C 
 (El Paso Electric Company Palo Verde Project) 
 Auction Rate Securities 
  
 SUBMISSION PROCESSING
REPRESENTATION 
  
 Attention:                             
  
 The undersigned Broker-Dealer hereby represents that the Order submitted
herewith was (i) received from an Existing Owner or Potential Owner prior to the Submission Deadline or (ii) initiated internally by the Broker-Dealer for its own account prior to the Submission Deadline. 
  

			
	(Name of Broker-Dealer submitting this representation)
		
	By:	 	  

	Printed Name:	 	 
	Title:	 	 

  

 D-1AUCTION AGENT AGREEMENT DATED AUGUST 1, 2005

 EXHIBIT 4.40 
  

  
 AUCTION AGENT AGREEMENT 
  
 Dated as of August 1, 2005

  
 among 
  
 EL PASO ELECTRIC COMPANY 
  
 and 
  
 UNION BANK OF CALIFORNIA, N.A., 
 as Trustee 
  
 and 
  
 THE BANK OF NEW YORK, 
 as Auction Agent 
  
 Relating to 
  
 $63,500,000 
 Maricopa County, Arizona Pollution Control Corporation 
 Pollution Control Refunding Revenue Bonds, 2005 Series B 
 (El Paso Electric Company Palo Verde Project) 
  
 and 
  
 $37,100,000 
 Maricopa County, Arizona Pollution Control Corporation 
 Pollution Control Refunding Revenue Bonds, 2005 Series C 
 (El Paso Electric Company Palo Verde Project) 
  
  

 TABLE OF CONTENTS 
  

					
	 	 	 	  	Page

	ARTICLE I	  	 
	DEFINITIONS AND RULES OF CONSTRUCTION	  	 
			
	Section 1.01.	 	Terms Defined by Reference to Each Indenture	  	1
	Section 1.02.	 	Terms Defined Herein	  	1
	Section 1.03.	 	Rules of Construction	  	2
		
	ARTICLE II	  	 
	AUCTION	  	 
			
	Section 2.01.	 	Purpose; Appointment; Incorporation by Reference of Auction Procedures and Settlement Procedures.	  	3
	Section 2.02.	 	Preparation for Each Auction; Maintenance of Registry of Beneficial Owners.	  	3
	Section 2.03.	 	Auction Schedule	  	5
	Section 2.04.	 	Notice of Auction Results	  	6
	Section 2.05.	 	Notices to Existing Owners	  	7
	Section 2.06.	 	Broker-Dealer	  	7
	Section 2.07.	 	Ownership of the Bonds	  	7
	Section 2.08.	 	Access to and Maintenance of Auction Records	  	7
	Section 2.09.	 	Notice of Cure	  	8
	Section 2.10.	 	Sumission Processing Representation	  	8
		
	ARTICLE III	  	 
	THE AUCTION AGENT	  	 
			
	Section 3.01.	 	Duties and Responsibilities of the Auction Agent.	  	8
	Section 3.02.	 	Rights of the Auction Agent.	  	9
	Section 3.03.	 	Auction Agent’s Disclaimer	  	10
	Section 3.04.	 	Compensation, Expenses and Indemnification of the Auction Agent	  	10
	Section 3.05.	 	Broker-Dealer Fee	  	11
		
	ARTICLE IV	  	 
	REPRESENTATIONS AND WARRANTIES	  	 
			
	Section 4.01.	 	Representations and Warranties of the Trustee	  	11
	Section 4.02.	 	Representations and Warranties of the Auction Agent	  	12
		
	ARTICLE V	  	 
	MISCELLANEOUS	  	 
			
	Section 5.01.	 	Term of Agreement.	  	12
	Section 5.02.	 	Communications	  	13

  

 i 

					
	Section 5.03.	 	Entire Agreement	  	14
	Section 5.04.	 	Benefits; Successors and Assigns	  	14
	Section 5.05.	 	Amendment, Waiver	  	14
	Section 5.06.	 	Severability	  	14
	Section 5.07.	 	Execution in Counterparts	  	15
	Section 5.08.	 	Governing Law; Waiver of Jury Trial; Jurisdiction	  	15
			
	Exhibit A.	 	Form of Notice of ARS Payment Default	  	A-1
	Exhibit B.	 	Form of Notice of Cure of ARS Payment Default	  	B-1

  

 ii 

 AUCTION AGENT AGREEMENT 
  
 THIS AUCTION AGENT AGREEMENT, dated as of August 1, 2005 (the “Auction Agent Agreement”), among EL PASO ELECTRIC
COMPANY (the “Borrower”), THE BANK OF NEW YORK, as Auction Agent (the “Auction Agent”), and UNION BANK OF CALIFORNIA, N.A., as Trustee (the “Trustee”). 
  
 WITNESSETH 
  
 WHEREAS, concurrently with the execution and delivery of this Auction Agent Agreement, Maricopa County, Arizona Pollution Control Corporation (the
“Issuer”) is offering $63,500,000 in aggregate principal amount of its Pollution Control Refunding Revenue Bonds, 2005 Series B (El Paso Electric Company Palo Verde Project) and $37,100,000 in aggregate principal amount of its Pollution
Control Refunding Revenue Bonds, 2005 Series C (El Paso Electric Company Palo Verde Project) (collectively, the “Bonds”) pursuant to separate Indentures of Trust, each dated as of July 1, 2005 (as may be supplemented, each, an
“Indenture” and collectively, the “Indentures”) by and between the Issuer and the Trustee; 
  
 WHEREAS, the Trustee is entering into this Auction Agent Agreement as agent for the holders of the Bonds pursuant to each Indenture; and 
  
 WHEREAS, the Borrower hereby directs that the Auction Agent shall perform
certain duties set forth herein; 
  
 NOW, THEREFORE, the Borrower,
the Trustee and the Auction Agent hereby agree as follows: 
  
 ARTICLE I 
  
 DEFINITIONS AND RULES OF CONSTRUCTION

  
 Section 1.01. Terms Defined by Reference to Each
Indenture. Capitalized terms not defined herein shall have the respective meanings specified in each Indenture. 
  
 Section 1.02. Terms Defined Herein. As used herein, the following terms shall have the following meanings, unless the context otherwise requires:

  
 “Auction Agent Fee” means the annual administration
fee set forth in a written agreement between the Auction Agent and the Borrower. 
  
 “Authorized Representative” shall mean (i) in the case of the Auction Agent, each Vice President, Assistant Vice President and Assistant Treasurer in the Dealing and Trading Group of the Corporate Trust
Department of the Auction Agent and every other officer or employee of the Auction Agent designated an “Authorized Representative” for purposes hereof in a written communication delivered to the Trustee, (ii) in the case of the Borrower,
its Chief Financial Officer, its Treasurer and its Assistant Treasurer or any officer holding a substantially equivalent position and every other officer or employee of the Borrower designated an “Authorized 

 
Representative” for purposes hereof in a written communication delivered to the Trustee, and (iii) in the case of the Trustee, every officer or employee
of the Trustee designated as an “Authorized Representative” for purposes hereof in a written communication delivered to the Auction Agent. 
  
 “BMA Recommendation” is defined in Section 2.03 hereof. 
  

“Bond Register” is defined in Section 2.02(c) hereof. 
  
 “Broker-Dealer Agreement” shall mean each agreement among the Auction Agent, the Borrower and a Broker-Dealer
pursuant to which the Broker-Dealer agrees to participate in Auctions as set forth in the Auction Procedures, as from time to time amended or supplemented. Each Broker-Dealer Agreement shall be substantially in the form of the Broker-Dealer
Agreement, dated as of August 1, 2005, by and among the Auction Agent, the Borrower and Citigroup Global Markets Inc., as Broker-Dealer relating to the Bonds. 
  

“Existing Owner” means (a) with respect to and for the purpose of dealing with the Auction Agent in connection with an Auction, a Person who
is a Broker-Dealer listed in the records of the Auction Agent at the close of business on the Business Day immediately preceding the Auction Date for such Auction and (b) with respect to and for the purpose of dealing with a Broker-Dealer in
connection with an Auction, a Person who is a beneficial owner of the Bonds in the records of the Auction Agent. 
  
 “Person” means an individual, a corporation, a partnership, a trust, an unincorporated organization or a government or any agency or political
subdivision thereof. 
  
 “Settlement Procedures” shall
mean the Settlement Procedures set forth in Exhibit B to the Broker-Dealer Agreement. 
  
 “Submission Processing Deadline” shall mean the earlier of (i) 40 minutes after the Submission Deadline and (ii) the time when the Auction Agent begins to disseminate the results of the Auction to the
Broker-Dealers. 
  
 “Submission Processing
Representation” shall have the meaning specified in Section 2.10 hereof and shall be substantially in the form attached to the Broker-Dealer Agreement as Exhibit D. 
  
 Section 1.03. Rules of Contruction. Unless the context or use indicates another or different meaning or intent, the
following rules shall apply to the construction of this Auction Agent Agreement. 
  
 Words importing the singular number shall include the plural number and vice versa. 
  
 The captions and headings herein are solely for the convenience of reference and shall not constitute a part of this Auction Agent Agreement nor shall
they affect its meaning, construction or effect. 
  

 2 

 The words “hereof,” “herein” and other words of similar import refer to this Auction
Agent Agreement as a whole. 
  
 All references herein to a
particular time of day shall be to New York City time. 
  
 Each
reference to the purchase, sale or holding of Bonds shall refer to beneficial ownership interests in the Bonds unless the context clearly requires otherwise. 
  
 ARTICLE II 
  
 AUCTION 
  
 Section 2.01. Purpose; Appointment; Incorporation by Reference of Auction Procedures and Settlement Procedures. 
  
 Each Indenture provides that the interest rate on the Bonds for each Auction Period shall be the Auction Rate which shall be, except as otherwise provided
therein, the interest rate on the Bonds that the Auction Agent determines to have resulted from the implementation of the Auction Procedures. 
  
 Pursuant to Section 3A.06 of each Indenture, the Trustee hereby appoints The Bank of New York to act as Auction Agent. The Bank of New York hereby accepts
such appointment to perform the Auction Procedures, the Settlement Procedures and other duties herein, in the Broker-Dealer Agreement and in each Indenture specified to be performed by the Auction Agent. 
  
 The Settlement Procedures contained in Exhibit B to the Broker-Dealer
Agreement, the Auction Procedures contained in Exhibit B to each Indenture and other provisions relating to the Auction Procedures contained in each Indenture are hereby incorporated herein by reference in their entirety, and shall be deemed to be a
part hereof to the same extent as if such provisions were expressly set forth herein. In the event of a conflict between any of the provisions hereof and the provisions of the Settlement Procedures, the Auction Procedures and other procedures of the
Indentures, the provisions hereof shall control. No amendment of any provision of the Settlement Procedures, the Auction Procedures or any other provision of each Indenture that adversely affects any right, duty or obligation of the Auction Agent
shall be binding upon the Auction Agent without its consent. 
  
 Section 2.02. Preparation for Each Auction; Maintenance of Registry of Beneficial Owners. 
  
 (a) Prior to any Auction Date for which any change in Broker-Dealer is to be effective, the Trustee shall notify or cause to be notified the Auction Agent
and the Borrower in writing of such change and, if such change is the addition of a Broker-Dealer, the Borrower shall cause to be delivered to the Auction Agent, for execution by the Auction Agent pursuant to Section 2.06 hereof, a Broker-Dealer
Agreement manually signed by such Broker-Dealer. The Auction Agent shall have entered into a Broker-Dealer Agreement with each Broker-Dealer prior to the participation of any such Broker-Dealer in any Auction. The Auction Agent shall be entitled to
assume that there has been no change in the Broker-Dealer unless and until it has actual receipt of such notification from an Authorized Representative of the Trustee. 
  

 3 

 (b) On each Auction Date, the Auction Agent shall determine the All-Hold Rate and the Auction Rate. Not
later than 9:30 A.M. (New York City time) on each Auction Date, the Auction Agent shall advise the Trustee, the Borrower and the Broker-Dealer by facsimile or electronic transmission or by telephone (promptly confirmed by facsimile or electronic
transmission) of the All-Hold Rate and the Index used in determining such rate. 
  
 (c) The Auction Agent shall maintain a registry of the Existing Owners (the “Bond Register”) based on information provided to it from the Broker-Dealer and shall indicate thereon the identity of the
respective Broker-Dealer of each beneficial owner, if any, on whose behalf such Broker-Dealer submitted the most recent Order in any Auction which resulted in such Existing Owner continuing to hold or purchase such Bonds. The Auction Agent shall
keep such Bond Register current and accurate based solely on information provided to the Auction Agent by the Broker-Dealer and DTC or another Securities Depository. Each Broker-Dealer may under the Broker-Dealer Agreement to which it is a party to
deliver to the Auction Agent on the date of such Broker-Dealer Agreement, and from time to time thereafter as the Auction Agent may request, a list of the initial Existing Owners that purchased such Bonds through such Broker-Dealer. The Auction
Agent may conclusively rely upon, as evidence of the identities of the Existing Owners, the following: such lists; the results of Auctions; notices from DTC or another Securities Depository regarding the results of redemptions or mandatory tenders;
notices from any Existing Owner, the Participant of any Existing Owner or the Broker-Dealer of any Existing Owner with respect to such Existing Owner’s transfer of the Bonds to another Person. 
  
 (d) The Trustee shall provide to the Auction Agent any notice of redemption,
mandatory purchase or adjustment in the mode of determining the interest rate of the Bonds at or before the time any such notice is first given by the Trustee to any Existing Owner thereof. In the event of any partial redemption or mandatory
purchase of the Bonds, the Trustee shall promptly request DTC or another Securities Depository to notify the Auction Agent of the Participants whose Bonds have been called for redemption or mandatory purchase and the person or department at such
Participant to contact regarding such redemption or mandatory purchase and, within two Business Days, request each such Participant to disclose to the Auction Agent (upon selection by such Participant of the Existing Owners whose Bonds are to be
redeemed) the principal amount of Bonds of each such Existing Owner, if any, which are subject to such redemption or mandatory purchase, provided the Auction Agent shall have been furnished with the name and telephone number of a person or
department at such Participant from which it is to request such information. In the absence of receiving any such information with respect to an Existing Owner from such Existing Owner’s Participant (or otherwise), the Auction Agent may
continue to treat such Existing Owner as the beneficial owner of the principal amount of Bonds shown in the Auction Agent’s registry. 
  
 (e) The Auction Agent may refuse to register a transfer of beneficial ownership of Bonds from an Existing Owner to another Person unless (a) such transfer
is pursuant to an Auction or (b) the Auction Agent has been notified in writing (I) in a notice in the form of Exhibit B to the Broker-Dealer Agreement by such Existing Owner, the Broker-Dealer or a Participant for such Existing Owner of such
transfer, (II) in a notice in the form of Exhibit C to the Broker-Dealer Agreement by the Broker-Dealer of any Person that purchased or sold such Bonds in an Auction of the failure of such Bonds to be transferred as a result of such Auction, or
(III) in a notice from DTC or another Securities Depository regarding the results of mandatory 

  

 4 

 
tenders. In the event a notice referred to in the preceding clause (II) is received, the Auction Agent shall register the beneficial ownership of the Bonds
covered thereby in the name of the Existing Owner thereof prior to the Auction referred to in such notice. The Auction Agent shall not be required to accept any notice delivered pursuant to the terms of the foregoing sentence if received by the
Auction Agent after 3:00 P.M. (New York City time) on the Business Day next preceding an Auction Date. 
  
 (f) The Auction Agent may, but shall have no obligation to, request a Broker-Dealer, as set forth in the applicable Broker-Dealer Agreement, to provide
the Auction Agent with a list of their respective customers that such Broker-Dealer believes are Existing Owners of Bonds. The Auction Agent shall not disclose such information so provided to any Person other than the Trustee, the Issuer, the
Borrower and the Broker-Dealer that provided the same; provided, however, that the Auction Agent reserves the right and is authorized to disclose any such information if (A) it is ordered to do so by a court of competent jurisdiction or a
regulatory, judicial or quasi judicial agency or authority having the authority to compel such disclosure, (B) it is advised by its counsel that its failure to do so would be unlawful or (C) failure to do so would expose the Auction Agent to loss,
liability, claim, damage or expense for which it has not received indemnity satisfactory to it. 
  
 (g) In the event that the notice referred to in clause (vii) of paragraph (a) of the Settlement Procedures states an Auction Date that is subsequently
changed, the Auction Agent, by such means as the Auction Agent deems practicable, shall give notice of the new Auction Date not later than 9:15 A.M. (New York City time) on the earlier of the new Auction Date or the old Auction Date. 
  
 (h) The Auction Agent shall forward a copy of any notice of redemption,
mandatory purchase or adjustment in the mode of determining the interest rate of the Bonds received by it from the Trustee pursuant to the foregoing paragraph (d) to the Broker-Dealers on the Business Day following its receipt thereof by facsimile
or other electronic communication acceptable to the parties. 
  
 (i) If any Auction Bonds are to be redeemed and those Bonds are held by a Securities Depository, the Borrower shall include in the notice of the call for redemption delivered to the Securities Depository (i) a date placed under an item
entitled “Publication Date for Securities Depository Purposes” and such date shall be three Business Days after the Auction Date immediately preceding such redemption date and (ii) an instruction to Securities Depository to (x) determine
on such Publication Date after the Auction held on the immediately preceding Auction Date has settled, the Participants whose Securities Depository positions will be redeemed and the principal amount of such Auction Bonds to be redeemed from each
such position (the “Securities Depository Redemption Information”), and (y) notify the Auction Agent immediately after such determination of the positions of the Participants in such Auction Bonds immediately prior to such Auction
settlement, the position of the Participants in such Auction Bonds immediately following such auction settlement, and the Securities Depository Redemption Information. 
  
 Section 2.03. Auction Schedule. The Auction Agent shall conduct Auctions for the Bonds in accordance with the
schedule set forth below. Such schedule may be changed at any 

  

 5 

 
time by the Auction Agent at the written direction of the Borrower to reflect then currently accepted market practices for similar auctions. The Auction
Agent shall give written notice of any such change to each Broker-Dealer, the Borrower, the Issuer and the Trustee, which notice shall be given prior to the close of business on the Business Day next preceding the first Auction Date on which any
such change shall be effective. Notwithstanding the foregoing, the Auction Agent will follow the Bond Market Association’s Market Practice U.S. Holiday Recommendations for shortened trading days for the bonds markets (the “BMA
Recommendation”) unless the Auction Agent is instructed otherwise. In the event of a BMA Recommendation on an Auction Date the Submission Deadline will be 11:30 a.m., instead of 1:00 p.m., and as a result the notice set forth in Section 2.04
will occur earlier. 
  

			
	 Time

	 	 Event

	By 9:00 a.m.	 	Auction Agent determines the All-Hold Rate and the Index.
		
	By 9:30 A.M. (New York City time)	 	Auction Agent advises the Broker-Dealer of the All-Hold Rate and the Index, as set forth in Section 2.02(b) hereof.
		
	9:30 A.M. (New York City time) – 1:00 P.M. (New York City time) (11:00 A.M. (New York City time) in the case of a daily Auction Period).	 	Auction Agent assembles information communicated to it by the Broker-Dealer as provided in Section 1.02(a) of the Auction Procedures. Submission Deadline is 1:00 P.M. (New York City time)
(11:00 A.M. (New York City time) in the case of a daily Auction Period).
		
	As soon as practical after 1:00 P.M. (New York City time) and by no later than 3:00 P.M. (New York City time) (by 11:30 A.M. (New York City time) in the case of a daily Auction
Period).	 	Auction Agent accepts any Orders submitted prior to the Submission Deadline subject to extension pursuant to the Submission Processing Deadline if such Order is accompanied by a Submission
Processing Representation and makes determinations pursuant to Section 1.03(b) of the Auction Procedures.
		
	By approximately 3:00 P.M. (New York City time) but not later than the close of business (by 12:00 noon (New York City time) in the case of a daily Auction Period).	 	Submitted Bids and Submitted Sell Orders are accepted and rejected and the Bonds allocated as provided in Section 1.05 of the Auction Procedures. Auction Agent gives notice of the Auction
results as set forth in Section 2.04 hereof.

  
 Section 2.04.
Notice of Auction Results. Following such Auction, the Auction Agent shall follow the notification procedures set forth in paragraph (a) of the Settlement Procedures and shall take such other action as is required of the Auction Agent
pursuant to the Settlement 

  

 6 

 
Procedures. In addition, promptly after making the determinations required by Section 1.03(b) of the Auction Procedures on each Auction Date, the Auction
Agent shall give notice of the Auction Rate to the Trustee, the Borrower and the Broker-Dealer by facsimile or electronic transmission or by telephone (promptly confirmed by facsimile or electronic transmission) and the Trustee shall promptly give
written notice to DTC or another Securities Depository of such Auction Rate. The Auction Agent is authorized to release the Winning Bid Rate for public dissemination upon the written consent of the Borrower. 
  
 Section 2.05. Notices to Existing Owners. The Auction Agent shall be
entitled to conclusively rely upon the address of each Existing Owner delivered by such Existing Owner in connection with any notice to Existing Owners required to be given by the Auction Agent pursuant to this Article II. 
  
 Section 2.06. Broker-Dealer. On the date hereof, the Auction Agent
shall enter into a Broker-Dealer Agreement with Citigroup Global Markets Inc. The Auction Agent shall from time to time enter into such other Broker-Dealer Agreements as the Borrower shall request with written notice to the Trustee, the Auction
Agent and the existing Broker-Dealer. The Borrower shall cause to be delivered to the Auction Agent, for execution by the Auction Agent, a Broker-Dealer Agreement manually signed by such Broker-Dealer. 
  
 The Auction Agent shall terminate any Broker-Dealer Agreement as set forth
therein if so directed by the Borrower in writing with prior written notice to the Trustee. 
  
 Section 2.07. Ownership of the Bonds. Neither the Issuer nor the Borrower nor any Person controlled by any thereof may submit any Order or Bid, directly or indirectly, in any Auction. The Auction Agent shall
have no duty to monitor compliance with this Section 2.07. 
  
 Section 2.08. Access to and Maintenance of Auction Records. The Auction Agent shall afford to the Issuer, the Borrower and the Trustee and their respective agents, independent public accountants and counsel, access at reasonable
times during normal business hours to all books, records, documents and other information concerning the conduct and results of Auctions; provided that any such agent, accountant or counsel of the Issuer, the Borrower or the Trustee shall furnish
the Auction Agent with a letter from an Authorized Issuer Representative or an Authorized Representative of the Borrower or the Trustee, as applicable, requesting that the Auction Agent afford such person access. Except as provided in Sections
3.01(d) and 5.01(b) hereof, the Auction Agent shall maintain records relating to any Auction for a period of two years after such Auction and such records shall, in reasonable detail, accurately and fairly reflect the actions taken by the Auction
Agent hereunder. At the end of such two-year period the Auction Agent shall deliver such records upon written request to the Borrower and the Borrower shall maintain such records until six years after payment in full or defeasance of the Bonds. The
Auction Agent shall provide the Issuer, the Borrower and the Trustee with copies of any report the Auction Agent provides DTC or another Securities Depository concerning discrepancies between the records of the Auction Agent and DTC or another
Securities Depository of the aggregate portions registered in each CUSIP number. The Auction Agent shall not be responsible for any actions of the Issuer, the Borrower or the Trustee or their respective agents, accountants or counsel for passing on
confidential information as a result of access to the records of the Auction Agent. 
  

 7 

 Section 2.09. Notice of Cure. The Auction Agent shall forward a copy of any notice of cure or
waiver of an Event of Default under each Indenture it receives from the Trustee to the Broker-Dealer on the Business Day following the receipt thereof by facsimile or other means of electronic communication acceptable to the parties. 
  
 Section 2.10. Submission Processing Representation. Broker-Dealers may
submit an Order after the Submission Deadline and prior to the Submission Processing Deadline if the Order was (i) received by the Broker-Dealer from Existing Owners or Potential Owners prior to the Submission Deadline or (ii) initiated internally
by the Broker-Dealer for its own account prior to the Submission Deadline. Each Order submitted to the Auction Agent after the Submission Deadline and prior to the Submission Processing Deadline shall constitute a representation by the Broker-Dealer
that such Order was (i) received from an Existing Owner or Potential Owner prior to the Submission Deadline or (ii) initiated internally by the Broker-Dealer for its own account prior to the Submission Deadline (the “Submission Processing
Representation”), and shall be accompanied by a written statement in the form of Exhibit D annexed to the Broker-Dealer Agreement. 
  
 ARTICLE III 
  
 THE AUCTION AGENT 
  
 Section 3.01. Duties and Responsibilities of the Auction Agent. 
  
 (a) The Auction Agent is acting solely as a non-fiduciary agent of the Trustee and owes no duties, fiduciary or otherwise, to any other Person by reason of this Auction Agent Agreement, except as otherwise stated
herein, and no implied duties, fiduciary or otherwise, shall be read into this Auction Agent Agreement. 
  
 (b) The Auction Agent undertakes to perform such duties and only such duties as are expressly set forth herein, or expressly incorporated herein by
reference pursuant to Section 2.01 hereof, to be performed by it, and no implied covenants or obligations shall be read into this Auction Agent Agreement against the Auction Agent. 
  
 (c) The Trustee shall not be liable for any action, omission or error in judgment by the Auction Agent. In the absence of
gross negligence, grossly negligent failure to act or willful misconduct on its part, the Auction Agent, whether acting directly or through agents or attorneys as provided in Section 3.02(d) hereof, shall not be liable for any action taken,
suffered, or omitted or for any error of judgment made by it in the performance of its duties hereunder. The Auction Agent shall not be liable for any error of judgment made in good faith unless the Auction Agent shall have been grossly negligent in
ascertaining (or failing to ascertain) the pertinent facts necessary to make such judgment. In no event shall the Auction Agent be responsible or liable for special, indirect or consequential loss or damage of any kind whatsoever (including, but not
limited to, loss of profit), even if the Auction Agent has been advised of the likelihood of such loss or damage and regardless of the form of action. 
  

 8 

 (d) Upon termination of this Auction Agent Agreement, the Auction Agent shall promptly deliver to the
Borrower, the Auction records and accompanying documentation and any other documents referred to in Section 2.08 hereof to the extent not previously delivered to the Borrower. 
  
 (e) The Auction Agent shall not be: (i) required to and shall make no representations and have no responsibilities as to the
validity, accuracy, value or genuineness of any signatures or endorsements, other than its own, or any document delivered pursuant to or as contemplated by this Auction Agent Agreement; (ii) obligated to take any legal action hereunder that might,
in its judgment, involve any expense or liability, unless it has been furnished with reasonable indemnity; and (iii) responsible for or liable in any respect on account of the identity, authority or rights of any Person executing or delivering or
purporting to execute or deliver any document under this Auction Agent Agreement. 
  
 (f) The Auction Agent shall not be responsible or liable for any failure or delay in the performance of its obligations under this Auction Agent Agreement arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control, including without limitation, acts of God; earthquakes; fires; floods; wars; civil or military disturbances; acts of terrorism; sabotage; epidemics; riots; interruptions, loss or malfunction of utilities;
computer (hardware or software) or communications services; accidents; labor disputes; acts of civil or military authority or governmental actions; it being understood that the Auction Agent shall use reasonable efforts which are consistent with
accepted practices in the banking industry to resume performance as soon as practicable under the circumstances. 
  
 (g) To the extent there is a change in the Maximum Lawful Rate, the Borrower shall notify, in writing, the Auction Agent, or instruct the Trustee to do
the same, of such reduced Maximum Lawful Rate. 
  
 Section 3.02.
Rights of the Auction Agent. 
  
 (a) The Auction Agent may
rely conclusively upon, and shall be fully protected in acting or refraining from acting upon, any communication authorized hereby and upon any such written instruction, notice, request, direction, consent, report, certificate, share certificate or
other instrument, paper or other document believed by it to be genuine. The Auction Agent shall not be liable for acting in good faith upon any such communication made by telephone, facsimile or other electronic communication acceptable to the
parties which the Auction Agent reasonably believes to have been given by the particular party or parties. To the extent permitted by law, the Auction Agent may record telephone communications with the Borrower, the Issuer, the Trustee and the
Broker-Dealer, and each of such parties may record telephone communications with the Auction Agent. 
  
 (b) The Auction Agent may consult with counsel of its choice (provided such selection is made with reasonable care) and the advice of such counsel shall
be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. 
  

 9 

 (c) The Auction Agent shall not be required to advance, expend or risk its own funds or otherwise incur
or become exposed to financial liability for any failure or delay in the performance of its duties hereunder. 
  
 (d) The Auction Agent may perform its duties and exercise its rights hereunder either directly or by or through agents or attorneys and shall not be
responsible for any misconduct or negligence on the part of any agent or attorney appointed by it with due care. 
  
 (e) The Auction Agent shall have no obligation or liability in respect of the registration or exemption therefrom of the Bonds under federal or state
securities laws in respect of the sufficiency or the conformity of any transfer of the Bonds pursuant to the terms of this Auction Agent Agreement, any Broker-Dealer Agreement, each Indenture or any other document contemplated by any thereof.

  
 Section 3.03. Auction Agent’s Disclaimer. (a) The
Auction Agent makes no representation as to the validity, accuracy or adequacy of any Indenture or any offering material used in connection with the offer and sale of the Bonds. 
  
 (b) Trustee’s Disclaimer. The Trustee is entering into this Auction Agent Agreement in its capacity as Trustee
under each Indenture at the direction of the Borrower and the Trustee makes no representation or warranty as to the validity or adequacy of this Auction Agent Agreement, any Broker-Dealer Agreement or the Bonds or any offering material used in
connection with the Bonds. The Trustee shall have no responsibility for the Auction Agent or the Auction Agent’s performance under this Auction Agent Agreement. 
  
 Section 3.04. Compensation, Expenses and Indemnification of the Auction Agent. The Borrower shall pay (i) the Auction
Agent Fee for the Bonds on the first Interest Payment Date following the date hereof and annually thereafter, and (ii) upon request of the Auction Agent, reasonable expenses, disbursements and advances reasonably incurred or made by the Auction
Agent in accordance with this Auction Agent Agreement and any Broker-Dealer Agreement (including the reasonable compensation, expenses and disbursements of its agents and counsel), except any reasonable expense, disbursement or advance attributable
to the gross negligence or willful misconduct of the Auction Agent. The Auction Agent Fee represents compensation for the services of the Auction Agent in conducting Auctions for the benefit of the beneficial owners of the Bonds. The Auction Agent
Fee may be adjusted from time to time with the approval of the Borrower upon a written request of the Auction Agent delivered to the Borrower. The Borrower shall indemnify the Auction Agent, its directors, officers, agents and employees for, and
hold them harmless against any loss, liability or expense incurred without gross negligence or willful misconduct on their part arising out of or in connection with its agency under the Auction Agent Agreement and any Broker-Dealer Agreement,
including the costs and expenses of defending itself, its directors, officers, agents and employees against any claim of liability in connection with their exercise or performance of any of their duties thereunder (including the enforcement of this
provision), except such as may result from their gross negligence or willful misconduct. The Trustee shall have no responsibility for payment of the fees and expenses of the Auction Agent. 
  

 10 

 Section 3.05. Broker-Dealer Fee. While the Bonds are in an Auction Period on each Interest Payment
Date following each Auction Date, each Broker-Dealer shall be entitled to receive an amount equal to the fee specified for such Broker-Dealer in the Broker-Dealer Agreement. The Broker-Dealer Fee shall be calculated by the Auction Agent, which shall
be conclusive absent manifest error. Such amounts shall be communicated by the Auction Agent to the Borrower and the Trustee by 4:00 P.M. (New York City time), on the Business Day immediately preceding each Interest Payment Date. On or before 11:00
A.M. (New York City time) on each Interest Payment Date, the Borrower shall pay to the Trustee the amount due to the Broker-Dealer. By 1:00 P.M. (New York City time) on each Interest Payment Date, the Trustee shall deliver to the Auction Agent the
amount constituting the Broker-Dealer Fee, by wire transfer of immediately available funds to such account as the Auction Agent may designate. The amount constituting the Broker-Dealer Fee shall be held by the Auction Agent on behalf of the
Broker-Dealer, and as promptly as practicable after receipt of such fee, the Auction Agent shall deliver such fee to the Broker-Dealer, pursuant to the written instructions of the Broker-Dealer. If any Existing Owner who acquired Bonds through a
Broker-Dealer transfers any such Bonds to another Person other than through an Auction, the Broker-Dealer for the Bonds so transferred shall continue to be the Broker-Dealer with respect to such Bonds; provided, however, that if the transfer was
effected by, or if the transferee is, another Person who has met the requirements specified in the definition of “Broker-Dealer” contained in each Indenture and executed a Broker-Dealer Agreement, such Person shall be the Broker-Dealer for
such Bonds. 
  
 ARTICLE IV 
  
 REPRESENTATIONS AND WARRANTIES 
  
 Section 4.01. Representations and Warranties of the Trustee. The
Trustee hereby represents and warrants that: 
  
 (a) this Auction
Agent Agreement has been duly and validly authorized, executed and delivered by the Trustee and constitutes the legal, valid and binding limited obligation of the Trustee; 
  
 (b) neither the execution and delivery of this Auction Agent Agreement, the consummation of the transactions contemplated
hereby nor the fulfillment of or compliance with the terms and conditions of this Auction Agent Agreement will conflict with, or violate or result in a breach of the terms, conditions or provisions of, or constitute a default under the
organizational documents of the Trustee, any law or regulation, any order or decree of any court or public corporation having jurisdiction over such party, or any mortgage, resolution, contract, agreement or undertaking to which the Trustee is a
party or by which it is bound; and 
  
 (c) any approvals, consents
and orders of any governmental corporation, legislative body, board, agency or commission having jurisdiction over the Trustee which would constitute a condition precedent to or the absence of which would materially adversely affect the due
performance by the Trustee of its obligations under this Auction Agent Agreement have been obtained. 
  

 11 

 Section 4.02. Representations and Warranties of the Auction Agent. The Auction Agent hereby
represents and warrants that: 
  
 (a) this Auction Agreement has
been duly and validly authorized, executed and delivered by the Auction Agent and constitutes the legal, valid and binding limited obligation of the Auction Agent; 
  
 (b) neither the execution and delivery of this Auction Agreement, the consummation of the transactions contemplated hereby
nor the fulfillment of or compliance with the terms and conditions of this Auction Agreement will conflict with, or violate or result in a material breach of, the terms, conditions or provisions of, or constitute a default under, the organizational
documents of the Auction Agent, any law or regulation, any order or decree of any court or public corporation having jurisdiction over such party, or, to the best of the Auction Agent’s knowledge, any mortgage, resolution, contract, agreement
or undertaking to which the Auction Agent is a party or by which it is bound; and 
  
 (c) any approvals, consents and orders of any governmental corporation, legislative body, board, agency or commission having jurisdiction over the Auction Agent which would constitute a condition precedent to or the
absence of which would materially adversely affect the due performance by the Auction Agent of its obligations under this Auction Agreement have been obtained. 
  

ARTICLE V 
  
 MISCELLANEOUS 
  
 Section 5.01. Term of Agreement. 
  
 (a) This
Auction Agent Agreement shall remain in effect until (i) all Bonds are converted to a Rate Period other than the Auction Rate Period or are redeemed, paid or purchased and cancelled, (ii) the Bonds are no longer held by DTC or another Securities
Depository in book-entry form, (iii) this Auction Agent Agreement shall be terminated as provided in this Section 5.01, (iv) the Auction Agent resigns or is discharged of the duties and obligations created by the Indenture, or (v) the Auction Agent
is removed as provided in this Section 5.01. The Auction Agent may at any time resign and be discharged of the duties and obligations created by this Indenture by giving at least 45 days’ notice to the Trustee, the Broker-Dealer, the Issuer,
the Borrower, and the Bond Insurer. The Auction Agent may be removed at any time by the Trustee, upon the written direction of (i) the Borrower, with the consent of the Bond Insurer, (ii) the Bond Insurer, or (iii) the ARS Beneficial Owners of
66-2/3% of the aggregate principal amount of the ARS then Outstanding, with the consent of the Bond Insurer, by an instrument signed by the Trustee and filed with the Auction Agent, the Bond Insurer, the Issuer and the Borrower upon at least 30
days’ notice. Neither the resignation nor the removal of the Auction Agent pursuant to the preceding two sentences shall be effective until and unless a Substitute Auction Agent has been appointed and has accepted such appointment; provided,
however, that if a Substitute Auction Agent has not been so appointed within 45 days of the notice of resignation of the Auction Agent, the Auction Agent may petition a court of competent jurisdiction to appoint a Substitute Auction Agent.
Notwithstanding the foregoing, the Auction 

  

 12 

 
Agent may terminate the Auction Agent Agreement if, within 30 days after notifying the Trustee, the Issuer, the Borrower, and the Bond Insurer in writing
that it has not received payment of any Auction Agent Fee due it in accordance with the terms of the Auction Agent Agreement, the Auction Agent does not receive such payment. 
  
 (b) Except as otherwise provided in this paragraph (b), the respective rights and duties of the Trustee and the Auction
Agent under this Auction Agent Agreement shall cease upon termination of this Auction Agent Agreement. The representations and warranties of the Trustee contained herein, and the rights of the Auction Agent under Sections 3.02 and 3.04 hereof, shall
survive the termination hereof and the resignation or removal of the Auction Agent. Upon termination of this Auction Agent Agreement, the Auction Agent shall be deemed to have resigned as Auction Agent under the Broker-Dealer Agreement and shall
promptly deliver to the Borrower copies of all books and records maintained by it in connection with its duties hereunder. 
  
 Section 5.02. Communications. Except for (a) communications authorized to be by telephone pursuant to this Auction Agent Agreement or the Auction
Procedures and (b) communications in connection with Auctions (other than those expressly required to be in writing), all notices, requests and other communications to any party hereunder shall be in writing (including facsimile or other electronic
communication acceptable to the parties) and shall be given to such party, addressed to it, at its address, facsimile number or e-mail address set forth below: 
  

			
	If to the Trustee,	  	Union Bank of California, N.A.
	 	  	120 S. San Pedro, 4th Floor
	 	  	Los Angeles, California 90012
	 	  	Attention: Corporate Trust Department
	 	  	Facsimile No.: (213) 972-5694
	 	  	Telephone No.: (213) 972-5675
		
	If to the Auction Agent,	  	The Bank of New York
	 	  	101 Barclay Street – 7W
	 	  	Attention: Corporate Trust Department – Dealing and Trading Group
	 	  	Facsimile No.: (212) 815-3440
	 	  	Telephone No.:(212) 815-3450
		
	If to the Issuer,	  	Maricopa County, Arizona
	 	  	Pollution Control Corporation
	 	  	c/o Ryley Carlock & Applewhite
	 	  	One North Central Avenue, Suite 1200
	 	  	Phoenix, Arizona 85004-4417
	 	  	Attention: President
	 	  	Facsimile No.: (602) 257-9582
	 	  	Telephone No.: (602 440-4802

  

 13 

			
	If to the Borrower:	  	El Paso Electric Company
	 	  	100 North Stanton
	 	  	El Paso, Texas 79901
	 	  	Attention: Treasurer
	 	  	Telephone: (915) 543-5983
	 	  	Facsimile: (915) 521-4779

  
 or such other address, facsimile
number or e-mail address as such party may hereafter specify for such purpose by notice to the other parties. Each such notice, request or communication shall be effective (a) if given by facsimile, when such facsimile is transmitted to the
facsimile number specified herein or (b) if given by any other means, when delivered at the address specified herein. Communications shall be given on behalf of the parties hereto by one of their respective Authorized Representatives. 
  
 Section 5.03. Entire Agreement. This Auction Agent Agreement contains
the entire agreement between the parties relating to the subject matter hereof, and there are no other representations, endorsements, promises, agreements or understandings, oral, written or implied, between the parties relating to the subject
matter hereof. 
  
 Section 5.04. Benefits; Successors and
Assigns. This Auction Agent Agreement shall be binding upon, inure to the benefit of and be enforceable by the Trustee and the Auction Agent and their respective successors and assigns. Nothing herein, express or implied, shall give to any
Person, other than the Trustee and the Auction Agent and their respective successors or assigns, any benefit of any legal or equitable right, remedy or claim hereunder, except as otherwise expressly stated, other than the rights expressly granted to
the Borrower and the Issuer herein. 
  
 Any corporation or
association into which the Auction Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or
association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, provided such corporation or association is otherwise eligible hereunder, shall be and become the successor Auction Agent hereunder,
without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding. 
  
 Section 5.05. Amendment, Waiver. This Auction Agent Agreement shall not be deemed or construed to be modified,
amended, rescinded, cancelled or waived, in whole or in part, except by written instrument signed by a duly authorized representative of all the parties hereto. 
  

The failure of any party hereto to exercise any right or remedy hereunder in the event of a breach hereof by any party shall not constitute a waiver of
any such right or remedy with respect to any subsequent breach. 
  
 Section 5.06. Severability. If any clause, provision or section hereof shall be ruled invalid or unenforceable by any court or competent jurisdiction, the invalidity or unenforceability of such clause, provision or section shall not
affect any of the remaining clauses, provisions or sections hereof. 
  

 14 

 Section 5.07. Execution in Counterparts. This Auction Agent Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 
  
 Section 5.08. Governing Law; Waiver of Jury Trial; Jurisdiction. This Auction Agent Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to conflict of laws principles. The parties agree that all actions and proceedings arising out of this Auction Agent Agreement or any of the transactions contemplated hereby shall be brought in the
County of New York and, in connection with any such action or proceeding, submit to the jurisdiction of, and venue in, the County of New York. Each of the parties hereto also irrevocably waives all right to trial by jury in any action, proceeding or
counterclaim arising out of this Auction Agent Agreement or the transactions contemplated hereby. 
  

 15 

 IN WITNESS WHEREOF, the parties hereto have caused this Auction Agent Agreement to be duly executed and
delivered by their proper and duly Authorized Representatives as of the date first above written. 
  

			
	UNION BANK OF CALIFORNIA, N.A., as Trustee
		
	By:	 	  

	Name:	 	 
	Title:	 	 
	
	EL PASO ELECTRIC COMPANY
		
	By:	 	  

	Name:	 	 
	Title:	 	 
	
	THE BANK OF NEW YORK, as Auction Agent
		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

 16 

 EXHIBIT A 
  
 FORM OF NOTICE OF ARS PAYMENT DEFAULT 
  
 Maricopa County, Arizona Pollution Control Corporation 
 Pollution Control Refunding Revenue Bonds, 2005 Series B 
 (El Paso Electric Company Palo Verde Project) 
  
 Maricopa County, Arizona Pollution Control Corporation 
 Pollution Control Refunding Revenue Bonds, 2005 Series C 
 (El Paso Electric Company Palo Verde Project) 
  
 NOTICE IS HEREBY GIVEN that the ARS Payment Default with respect to the Bonds identified above has occurred. 
  

			
	Dated:	 	  

			
	

		
	By:	 	  

  

 A-1 

 EXHIBIT B 
  
 FORM OF NOTICE OF CURE OF ARS PAYMENT DEFAULT 
  
 Maricopa County, Arizona Pollution Control Corporation 
 Pollution Control Refunding Revenue Bonds, 2005 Series B 
 (El Paso Electric Company Palo Verde Project) 
  
 Maricopa County, Arizona Pollution Control Corporation 
 Pollution Control Refunding Revenue Bonds, 2005 Series C 
 (El Paso Electric Company Palo Verde Project) 
  
 NOTICE IS HEREBY GIVEN that the ARS Payment Default with respect to the Bonds identified above has been waived or cured. The next ARS Interest Payment Date is
             and the next scheduled Auction Date is             . 
  

			
	Dated:	 	  

  

			
	

		
	By:	 	  

  

 B-1

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