Document:

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                                                                    EXHIBIT 4.28

                                                                  EXECUTION COPY

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                              REMARKETING AGREEMENT

                                     between

                            EL PASO ELECTRIC COMPANY

                                       and

                            SALOMON SMITH BARNEY INC.

                                   $37,100,000
                            MARICOPA COUNTY, ARIZONA
                          POLLUTION CONTROL CORPORATION
                   Pollution Control Refunding Revenue Bonds,
                                  2002 Series A
                 (El Paso Electric Company, Palo Verde Project)

                           Dated as of August 1, 2002

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                              REMARKETING AGREEMENT

         THIS REMARKETING AGREEMENT is dated as of August 1, 2002 (the
"Agreement"), between EL PASO ELECTRIC COMPANY, a Texas corporation (the
"Company") and SALOMON SMITH BARNEY INC. (the "Agent").

                              W I T N E S S E T H :

         WHEREAS, the Agent, the Company and the Maricopa County, Arizona
Pollution Control Corporation (the "Issuer"), have agreed for the Agent to act
as exclusive remarketing agent on behalf of the Company in connection with the
offering and sale from time to time in the secondary market of $37,100,000
principal amount of the Maricopa County, Arizona Pollution Control Corporation
Pollution Control Refunding Revenue Bonds, 2002 Series A (El Paso Electric
Company, Palo Verde Project) due May 1, 2037 (the "Bonds") and to determine the
interest rate necessary to remarket the Bonds in accordance with and pursuant to
the Indenture of Trust between the Issuer and JPMorgan Chase Bank, as Trustee
(the "Trustee"), dated as of August 1, 2002 (the "Indenture"). (All capitalized
terms used herein and not defined herein shall have the meanings specified in
the Indenture);

         WHEREAS, concurrently with the execution and delivery of this
Agreement, the Company is entering into a Tender Agreement, dated as of the date
hereof (the "Tender Agreement"), with Salomon Smith Barney Inc., as tender
agent;

         NOW, THEREFORE, in consideration of the premises the parties hereto do
hereby covenant and agree as follows:

         Section 1.  Appointment of Agent; Responsibilities of Agent.

          (a) Subject to the terms and conditions herein contained, the Company,
effective as of the date hereof, hereby appoints the Agent, and the Agent hereby
accepts such appointment, as exclusive remarketing agent in connection with the
offering and sale of the Bonds from time to time in the secondary market.

          (b) The Agent hereby represents that it is a member of the National
Association of Securities Dealers, Inc., and has a combined capital stock,
surplus and undivided profits of at least $15,000,000 and is authorized by law
to perform the duties imposed upon it by the Indenture.

          (c) The Agent accepts and assumes all the obligations, duties and
rights of the remarketing agent under the Indenture.

          (d) The Agent's responsibilities hereunder will include (i) the
soliciting of purchases of Bonds from investors able to purchase municipal
obligations, (ii) effecting and processing such purchases, (iii) billing and
receiving payment for Bonds purchased, (iv) causing the proceeds from the
secondary sale of the Bonds to be transferred to the Tender Agent or the
Trustee, as the case may be, (v) keeping such books and records as shall be
consistent with prudent industry practice and making such books and records
available for inspection by the

<PAGE>

Issuer, the Trustee, the Tender Agent and the Company at all reasonable times
and (vi) performing such other related functions as may be requested by the
Company and agreed to by the Agent.

          (e) In connection with the performance of the foregoing
responsibilities, the Agent further agrees to hold all moneys delivered to it
hereunder for the purchase of Bonds as agent and bailee of, and in escrow for
the benefit of, the person or entity which shall have so delivered such moneys.

  Section 2.  Furnishing of Offering Materials. (a) The Company agrees to
furnish the Agent with as many copies as the Agent may reasonably request of (i)
the Official Statement, dated July 23, 2002, (including all appendices thereto)
describing the Bonds (as amended and supplemented, the "2002 Official
Statement"), (ii) each document or report relating to the Company which has been
filed with the Securities and Exchange Commission pursuant to Section 13, 14 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
subsequent to the date of the 2002 Official Statement (an "SEC Report"), (iii)
an annual remarketing supplement to the 2002 Official Statement if requested by
the Agent or such other disclosure document that may be used in connection with
the remarketing of the Bonds by the Agent, and (iv) such other information with
respect to the Company and the Bonds as the Agent shall reasonably request from
time to time.

          (b) If, at any time during the term of this Agreement, any event known
to the Company relating to or affecting the Company, the Indenture, the Loan
Agreement (referred to as the "Agreement" in the Indenture), the Tender
Agreement or the Bonds shall occur which might affect the correctness or
completeness of any statement of a material fact contained in the 2002 Official
Statement, any supplement thereto or any SEC Report, the Company will promptly
notify the Agent in writing of the circumstances and details of such event.

  Section 3.  Representations, Warranties, Covenants and Agreements of
the Company. The Company represents, warrants, covenants, and agrees with the
Agent as follows:

          (a) The Company has been duly incorporated and is in good standing
under the laws of the State of Texas, has corporate power and authority to own
its properties and to conduct its business and possesses all material licenses
and approvals necessary for the conduct of its business and the Company is duly
qualified to do business and is in good standing as a foreign corporation in the
States of New Mexico and Arizona;

          (b) The Company has full power and authority to take all actions
required or permitted to be taken by it by or under, and to perform and observe
the covenants and agreements on its part contained in, this Agreement, the
Tender Agreement, the Loan Agreement, the Continuing Disclosure Agreement and
any other instrument or agreement relating thereto to which it is a party;

          (c) The Company has, on or before the date hereof, duly taken all
action necessary to be taken by it prior to such date for: (i) the execution,
delivery and performance of this Agreement, the Tender Agreement, the Loan
Agreement, the Continuing Disclosure Agreement and any other instrument or
agreement to which it is a party and which has been or

<PAGE>

will be executed in connection with the transactions contemplated by the
foregoing documents, and (ii) the carrying out, giving effect to, consummation
and performance of the transactions and obligations contemplated hereby and by
the 2002 Official Statement; provided, that no representation is made with
respect to compliance with the securities or "Blue Sky" laws of the various
states of the United States;

          (d) This Agreement, the Loan Agreement, the Tender Agreement, the
Continuing Disclosure Agreement and any other instrument or agreement to which
the Company is a party and which has been or will be executed in connection with
the consummation of the transactions contemplated by the foregoing documents,
when duly and validly executed and delivered by the parties hereto and thereto,
will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws, judicial decisions or principles of equity relating to
or affecting the enforcement of creditors' rights or contractual obligations
generally;

          (e) The execution and delivery of this Agreement, the Loan Agreement,
the Tender Agreement, the Continuing Disclosure Agreement and any other
instrument or agreement to which the Company is a party and which has been or
will be executed in connection with the consummation of the transactions
contemplated by the foregoing documents, the compliance with the terms,
conditions or provisions hereof and thereof, and the consummation of the
transactions herein and therein contemplated did not upon the date of execution
and delivery thereof and will not violate any law or any regulation, order,
writ, injunction or decree of any court or governmental instrumentality
applicable to the Company, or result in a breach of any of the terms, conditions
or provisions of, or constitute a default under, or result in the creation or
imposition of any mortgage, lien, charge or encumbrance of any nature whatsoever
upon any of the properties or assets of the Company pursuant to the terms of its
Articles of Incorporation or By-laws, or any mortgage, indenture, agreement or
instrument to which the Company is a party or by which it or any of its
properties is bound;

          (f) All authorizations, consents and approvals of, notices to,
registrations or filings with, or actions in respect of any governmental body,
agency or other instrumentality or court required in connection with the
execution, delivery and performance by the Company of this Agreement, the Tender
Agreement, the Continuing Disclosure Agreement, the Loan Agreement and any other
agreement or instrument to which the Company is a party and which has been or
will be executed in connection with the consummation of the transactions
contemplated by the foregoing documents have been obtained, given or taken and
are in full force and effect, provided that no representation is made with
respect to compliance with the securities or "Blue Sky" laws of the various
states of the United States;

          (g) Except as described in the 2002 Official Statement or any SEC
Report, there is no action, suit, proceeding, inquiry or investigation before or
by any court, public board or body pending or, to the knowledge of the Company,
threatened against or affecting the Company wherein an unfavorable decision,
ruling or finding would have a material adverse effect on the properties,
business, condition (financial or other) or results of operations of the Company
or the transactions contemplated by this Agreement or by the 2002 Official
Statement or which would materially adversely affect the validity or
enforceability of, or the authority or ability of the

<PAGE>

Company to perform its obligations under, this Agreement, the Loan Agreement,
the Tender Agreement, the Continuing Disclosure Agreement or any other agreement
or instrument to which the Company is a party and which is used or contemplated
for use in consummation of the transactions contemplated by this Agreement or
the 2002 Official Statement.

          (h) The Company is not in violation of any provision of its Articles
of Incorporation or By-laws;

          (i) The Company will not take or omit to take any action which action
or omission would in any way cause the interest on the Bonds to be subject to
Federal income tax under the Code;

          (j) The Company will cooperate with the Agent in the qualification of
the Bonds for offering and sale and the determination of the eligibility of the
Bonds for investment under the laws of such jurisdictions as the Agent shall
designate and will use its best efforts to continue any such qualification in
effect so long as required for the distribution of the Bonds by the Agent,
provided that the Company shall not be required to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to general service of process in any jurisdiction where it is not now
so subject. It is understood that the Company shall not be responsible for
compliance with or the consequences of failure to comply with applicable state
securities or "Blue Sky" laws;

          (k) The information contained in the 2002 Official Statement and each
SEC Report as of the date on which the 2002 Official Statement or SEC Report is
furnished to the Agent, will not contain any untrue statement of a material fact
and will not omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No representation is made in this subsection (k), however, with
respect to any information furnished in writing to the Company by or on behalf
of the Agent specifically for inclusion in the 2002 Official Statement;

          (l) The documents incorporated by reference in the 2002 Official
Statement have been prepared by the Company in conformity with the requirements
of the Exchange Act and the rules and regulations thereunder and such documents
have been timely filed as required thereby; and

          (m) Any certificate signed by any authorized officer or officers of
the Company and delivered to the Agent shall be deemed a representation by the
Company to the Agent as to the statements made therein.

     Section 4. Conditions to Agent's Obligations. The obligations of the Agent
under this Agreement have been undertaken in reliance on, and shall be subject
to, the due performance by the Company of its obligations and agreements to be
performed hereunder and to the accuracy of and compliance with the
representations, warranties, covenants and agreements of the Company contained
herein, in each case on and as of the date of delivery of this Agreement and on
and as of each date on which Bonds are to be offered and sold pursuant to this
Agreement. The obligations of the Agent hereunder with respect to each date on
which Bonds are to be offered

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and sold pursuant to this Agreement are also subject, in the discretion of the
Agent, to the following further conditions:

          (a) The Indenture, the Loan Agreement, the Tender Agreement and the
Continuing Disclosure Agreement shall be in full force and effect and shall not
have been amended, modified or supplemented in any way which would materially
and adversely affect the Bonds, except as may have been agreed to in writing by
the Agent, and there shall be in full force and effect such additional
resolutions, agreements, certificates (including such certificates as may be
required by regulations of the Internal Revenue Service in order to establish
the tax-exempt character of interest on the Bonds) and opinions as shall be
necessary to effect a secondary remarketing of the Bonds in the manner
contemplated by this Agreement, which resolutions, agreements, certificates and
opinions, at the request of the Agent, shall be satisfactory in form and
substance to Pillsbury Winthrop LLP., bond counsel to the Issuer, or Pillsbury
Winthrop LLP, counsel to the Agent; and

          (b) There shall have been no material adverse change in the
properties, business, condition (financial or other) or results of operations of
the Company since the date of the 2002 Official Statement or any supplement
thereto relating to the Bonds being offered on such date, and no Event of
Default under Section 10.01 (a)(i), (ii), (iii), (iv), (v), (vi) or (vii) of the
Indenture, shall have occurred and be continuing and no event shall have
occurred and be continuing which, with the passage of time or giving of notice
or both, would constitute such an Event of Default and the Agent shall receive
such certificates, accountants' letters and opinions of counsel as it shall
reasonably request in connection with the remarketing of the Bonds.

     Section 5. Term and Termination of Remarketing Agreement. This Agreement
shall become effective upon execution by the Agent and the Company and shall
continue in full force and effect until all of the Bonds have either matured or
have been retired, subject to the right of the Agent to resign and the right of
the Company to remove the Agent, as provided in Section 14.02(a) of the
Indenture.

     In the event of the resignation or removal of the Agent, the Agent shall
pay over, assign and deliver any moneys and Bonds held by it in such capacity to
its successor or, if there be no successor, to the Trustee.

     Section 6. Payment of Fees and Expenses. In consideration of the services
to be performed by the Agent under this Agreement, the Company agrees to pay to
the Agent such fees as the Company and the Agent agree to in writing from time
to time.

     Section 7. Indemnification. (a) The Company agrees to indemnify and hold
harmless Salomon Smith Barney Inc., as the Agent hereunder and as the Tender
Agent under the Tender Agreement ("Smith Barney") and each of its officers,
directors and employees and each person who controls Smith Barney within the
meaning of Section 15 of the Securities Act of 1933, as amended (the "Act")
(collectively, the "Indemnified Persons" and individually, an "Indemnified
Person") from and against any losses, claims, damages or liabilities to which
any Indemnified Person may become subject under any statute or at law or in
equity or otherwise, and shall reimburse any such Indemnified Person for any
legal or other expenses incurred by it in connection with investigating any
claim against it and defending any action, but only to the

<PAGE>

extent that such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of, or are based upon, (i) an allegation or determination
that the Bonds, the obligations of the Company under the Loan Agreement, this
Agreement or the Tender Agreement should have been registered under the Act or
the Indenture should have been qualified under the Trust Indenture Act of 1939,
as amended, (ii) an allegation or determination of negligence or wrongdoing in
connection with Smith Barney's performance of its duties under this Agreement,
the Tender Agreement or the Indenture, or (iii) any untrue statement or alleged
untrue statement of a material fact contained in any document referred to in
Section 2 hereof (a "Disclosure Statement") or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading, provided,
however, the indemnity of the Company provided by this Section 7 shall not
extend to or cover, and the Company shall 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 untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by Smith Barney specifically for inclusion
therein. The Company shall not be liable under clause (ii) of the preceding
sentence for Smith Barney's gross negligence or willful misconduct.

          (b) An Indemnified Person shall, promptly after the receipt of notice
of the commencement of any action against such Indemnified Person in respect of
which indemnification may be sought against Smith Barney or the Company, as the
case may be (in either case the "Indemnifying Person"), notify the Indemnifying
Person in writing of the commencement thereof. In case any such action shall be
brought against any Indemnified Person, and such Indemnified Person shall notify
the Indemnifying Person, the Indemnifying Person may, or if so requested by such
Indemnified Person shall, participate in or assume the defense thereof, with
counsel reasonably satisfactory to such Indemnified Person, and after notice
from the Indemnifying Person to such Indemnified Person of its election so to
assume the defense thereof, such Indemnified Person shall reasonably cooperate
in the defense thereof, including without limitation, the settlement of
outstanding claims, and the Indemnifying Person shall not be liable to such
Indemnified Person under this Section 7 for any legal or other expenses
subsequently incurred by such Indemnified Person in connection with the defense
thereof other than reasonable costs of any investigation; provided, however,
that if the named parties to any such action (including any impleaded parties)
include both an Indemnified Person and the Company, and the Indemnified Person
shall have reasonably concluded that there may be one or more legal defenses
available to it which are different from or additional to and conflict with
those available to the Company, the Indemnified Person shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of the Indemnified Person;
provided further, however, that (i) the Indemnifying Person shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (in addition to local counsel) at any one time
for an Indemnified Person and its officers, directors and employees and all
other persons so controlling such Indemnified Person and (ii) the Indemnifying
Person shall not be liable for any settlement of any such claim or action
effected without its written consent. Any obligation under this Section of an
Indemnifying Person to reimburse an Indemnified Person for expenses include the
obligation to make advances

<PAGE>

to the Indemnified Person to cover such expenses in reasonable amounts and at
reasonable periodic intervals not more often than monthly as requested by the
Indemnified Person.

          (c) Smith Barney agrees to indemnify and hold harmless the Company,
its directors and officers to the same extent as the indemnity from the Company
to the Indemnified Persons described in subsection (a) of this Section but only
with respect to any untrue statement or alleged untrue statement, omission or
alleged omission which has been included in the 2002 Official Statement and any
supplement thereto, or omitted therefrom, in reliance upon and in conformity
with information furnished in writing to the Company by Smith Barney expressly
for use therein. The Company and Smith Barney agree that any statement set forth
in the 2002 Official Statement and any supplement thereto furnished in writing
by Smith Barney for inclusion therein shall be contained in a section entitled
"Underwriting" and that Smith Barney's indemnification pursuant to this
paragraph (c) shall be limited to such section. In case any action shall be
brought against the Company in respect of which indemnity may be sought against
Smith Barney, Smith Barney shall have the rights and duties given to the
Company, and the Company shall have the rights and duties given to the
Indemnified Persons, by subsections (a) and (b) of this Section. The indemnity
agreement in this subsection (c) shall be in addition to any liability which
Smith Barney may otherwise have to the Company and shall extend upon the same
terms and conditions to each person, if any, who controls the Company within the
meaning of the Act.

          (d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) of this
Section 7 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company on grounds of policy or otherwise, the
Company and Smith Barney shall contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred
in connection with investigating or defending same) to which the Company and
Smith Barney may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and Smith Barney on
the other from the remarketing of the Bonds. The relative benefits received by
the Company on the one hand and Smith Barney on the other shall be deemed to be
in the same proportion as the aggregate principal amount of the Bonds remarketed
pursuant to this Agreement bear to the total remarketing fees received by Smith
Barney; provided, however, that (i) in no case shall Smith Barney be responsible
for any amount in excess of such fee applicable to the Bonds remarketed by Smith
Barney and (ii) no person guilty of fraudulent misrepresentation within the
meaning of Section 11(f) of the Act shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 7, each person who controls Smith Barney within the meaning of
Section 15 of the Act shall have the same rights as Smith Barney. Any party
entitled to contribution shall, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made against another party or parties under this
paragraph (d), notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any other
obligation it or they may have hereunder or otherwise than under this paragraph
(d) unless, and only to the extent that, such omission results in the forfeiture
of substantive rights or defenses by the party or parties from whom contribution
may be sought.

<PAGE>

                  (e) The indemnity and contribution agreements contained in
this Section 7 shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of Smith Barney or the Company, or the
delivery of and any payment for any Bonds hereunder, and shall survive the
termination or cancellation of this Agreement.

     Section 8. Miscellaneous. (a) Except as otherwise specifically provided in
this Agreement, all notices, demands and formal actions under this Agreement
shall be in writing and mailed, telegraphed or delivered to:

                  The Agent:

                           Salomon Smith Barney Inc.
                           390 Greenwich Street, 2nd Floor
                           New York, New York  10013
                           Attention:  Municipal Syndicate Operations

                  The Company:

                           El Paso Electric Company
                           100 North Stanton
                           El Paso, Texas 79901
                           Attention:  Secretary

                  The Tender Agent:

                           Salomon Smith Barney Inc.
                           390 Greenwich Street, 2nd Floor
                           New York, New York  10013
                           Attention:  Municipal Syndicate Operations

                  The Issuer:

                           Maricopa County, Arizona
                           Pollution Control Corporation
                           c/o Ryler Carlock & Applewhite
                           One North Central Avenue, Suite 1200
                           Phoenix, Arizona 85004-4417
                           Attention:  President

                  The Trustee:

                           JPMorgan Chase Bank
                           600 Travis, Suite 1150
                           Houston, Texas  77002
                           Attention:  Institutional Trust Services

<PAGE>

The Agent, the Company, the Trustee, the Tender Agent, the Issuer and the Bank
may, by notice given under this Agreement, designate other addresses to which
subsequent notices, requests, reports or other communications shall be directed.

          (b) This Agreement will inure to the benefit of and be binding upon
the Company and the Agent and their respective successors and assigns, and will
not confer any rights upon any other person, partnership, association or
corporation other than persons, if any, controlling the Company and the Agent to
the extent provided in Section 7 hereof. The terms "successors" and "assigns"
shall not include any purchaser of any of the Bonds merely because of such
purchase.

          (c) All of the representations, warranties and covenants of the
Company and the Agent in this Agreement shall remain operative and in full force
and effect, regardless of (i) any investigation made by or on behalf of the
Agent or the Company, (ii) delivery of and any payment for any Bonds hereunder
or (iii) termination or cancellation of this Agreement.

          (d) Section headings have been inserted in this Agreement as a matter
of convenience of reference only, and it is agreed that such section headings
are not a part of this Agreement and will not be used in the interpretation of
any provisions of this Agreement.

          (e) If any provision of this Agreement shall be held or deemed to be
or shall, in fact, be invalid, inoperative or unenforceable as applied in any
particular case in any jurisdiction or jurisdictions, or in all jurisdictions
because it conflicts with any provisions of any constitution, statute, rule of
public policy, or any other reason, such circumstances shall not have the effect
of rendering the provision in question invalid, inoperative or unenforceable in
any other case or circumstance, or of rendering any other provision or
provisions of this Agreement invalid, inoperative or unenforceable to any extent
whatever.

          (f) This Agreement may be executed in several counterparts, each of
which shall be regarded as an original and all of which shall constitute one and
the same document.

          (g) The principal office of the Agent is hereby designated to be that
office set forth in subsection (a) above.

          (h) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.

          (i) The Agent will not be liable to the Company on account of the
failure of any person to whom the Agent has sold a Bond to pay for such Bond or
to deliver any document in respect of the sale.

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Remarketing
Agreement to be duly executed as of the date first above written.

                                          EL PASO ELECTRIC COMPANY

                                          By: /s/ Kathryn Hood
                                              --------------------------------
                                               Name:   Kathryn Hood
                                               Title:  Treasurer

                                          SALOMON SMITH BARNEY INC.

                                          By: /s/ Kevin Stowe
                                              --------------------------------
                                               Name:   Kevin Stowe
                                               Title:  Vice President<PAGE>
                                                                    EXHIBIT 4.29

                                                                  EXECUTION COPY

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                                TENDER AGREEMENT

                                     Between

                            EL PASO ELECTRIC COMPANY

                                       and

                                SMITH BARNEY INC.

                                   $37,100,000
                            MARICOPA COUNTY, ARIZONA
                          POLLUTION CONTROL CORPORATION
                   Pollution Control Refunding Revenue Bonds,
                                  2002 Series A
                 (El Paso Electric Company, Palo Verde Project)

                           Dated as of August 1, 2002

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

<PAGE>

                                TENDER AGREEMENT

         THIS TENDER AGREEMENT is dated as of August 1, 2002 (the "Agreement"),
between EL PASO ELECTRIC COMPANY, a corporation organized and existing under the
laws of the State of Texas (the "Company"), and SALOMON SMITH BARNEY INC. (the
"Tender Agent"). Capitalized terms used herein and not otherwise defined shall
have the meaning given to such terms in the Indenture (defined below).

                              W I T N E S S E T H :

         WHEREAS, at the request of the Company, Maricopa County, Arizona
Pollution Control Corporation (the "Issuer") and JPMorgan Chase Bank, as Trustee
(the "Trustee") have entered the Indenture of Trust dated as of August 1, 2002
(the "Indenture"), and the Indenture provides that owners of the $37,100,000
principal amount of the Issuer's Pollution Control Refunding Revenue Bonds, 2002
Series A (El Paso Electric Company, Palo Verde Project) due May 1, 2037 (the
"Bonds") may deliver their Bonds (or portions thereof) to the Tender Agent for
purchase in accordance with the Indenture;

         WHEREAS, concurrently with the execution and delivery of this
Agreement, the Company is entering into a Remarketing Agreement, dated as of the
date hereof (the "Remarketing Agreement"), with Salomon Smith Barney Inc., as
remarketing agent.

         NOW, THEREFORE, in consideration of the premises the parties hereto do
hereby covenant and agree as follows:

         Section 1. The Tender Agent hereby accepts and assumes all the
obligations, duties and rights of the tender agent under the Indenture.

         Section 2. Compensation paid by the Company to the Tender Agent for
services rendered hereunder as Tender Agent shall be at such rate as the parties
hereto may from time to time agree.

         Section 3. The Tender Agent represents that it is a corporation duly
organized under the laws of the United States of America or any state or
territory thereof, having a combined capital stock, surplus and undivided
profits of at least $25,000,000 and authorized by law to perform all the duties
imposed upon it hereunder and under the Indenture.

         Section 4.

               (a) The Tender Agent may at any time resign and be discharged of
its duties and obligations hereunder and under the Indenture by giving at least
thirty (30) days' notice to the Issuer, the Company, the Trustee and the
Remarketing Agent. Such resignation shall take effect on the day a successor
Tender Agent shall have been appointed by the Company and shall have accepted
such appointment.

               (b) The Tender Agent may be removed at any time by an instrument
signed by the Company, filed with the Tender Agent, the Issuer, the Trustee and
the Remarketing Agent.

                                       2

<PAGE>

               (c) In the event of the resignation or removal of the Tender
Agent, the Tender Agent shall deliver any Bonds and moneys held by it in such
capacity to its successor or, if there is no successor, to the Trustee.

     Section 5. At any time the Tender Agent may consult counsel for the Company
or its own counsel in respect of any matter arising in connection with the
agency hereunder, and it shall not be liable or accountable for any action taken
or omitted by it in good faith in accordance with the opinion of such counsel.

     Section 6. The Tender Agent shall be protected:

          (a) in acting upon any paper or document reasonably believed by it to
be genuine and to have been signed by the proper person or persons; and

          (b) in recognizing Bonds which it reasonably believes to bear the
proper manual or facsimile signatures of the officers of the Issuer.

     The Tender Agent shall not be held to have notice of any change of
authority of any officer, employee or agent of the Company until receipt of
written notification thereof from the Company.

     Section 7. The following sections of the Remarketing Agreement are hereby
incorporated into this Agreement and all references to the "Agent" in those
sections shall be deemed to refer to the Tender Agent:

          (a) Section 3, Representations, Warranties, Covenants and Agreements
of the Company; and

          (b) Section 4, Conditions to Agent's Obligations.

     Section 8. The indemnification provisions, Section 7, of the Remarketing
Agreement are hereby incorporated in full into this Agreement.

     Section 9. The principal office of the Tender Agent is hereby designated to
be:

     Salomon Smith Barney Inc.
     390 Greenwich Street, 2nd Floor
     New York, New York  10013
     Attention:  Municipal Syndicate Operations

     Section 10. This Agreement may be amended in any respect but only by
written agreement of the parties hereto, subject to the limitations upon such
amendments set forth in the Indenture.

     Section 11. This Agreement may be executed in any number of counterparts,
each of which, when so executed and delivered, shall be an original; but such
counterparts shall together constitute but one and the same Agreement.

                                        3

<PAGE>

     Section 12. If any clause, provision or section of this Agreement be held
illegal or invalid by any court, the invalidity of such clause, provision or
section shall not affect any of the remaining clauses, provisions or sections
hereof, and this Agreement shall be construed and enforced as if such illegal or
invalid clause, provision or section had not been contained herein. In case any
agreement or obligation contained in this Agreement shall be held to be in
violation of law, then such agreement or obligation shall be deemed to be the
agreement or obligation of the Issuer or the Company, as the case may be, to the
full extent permitted by law.

     Section 13. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.

                                        4

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Tender
Agreement to be duly executed as of the date first above written.

                                          EL PASO ELECTRIC COMPANY

                                          By  /s/ Kathryn Hood
                                              ------------------------------
                                                Name:  Kathryn Hood
                                                Title:  Treasurer

                                          SALOMON SMITH BARNEY INC.

                                          By  /s/ Kevin Stowe
                                              ------------------------------
                                                Name:  Kevin Stowe
                                                Title:  Vice President

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