Exhibit 10.05

EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this “Agreement”), effective as of June 1, 2012 (the
“Effective Date”), by and between El Paso Electric Company, a Texas corporation
(“Company”), and Thomas V. Shockley (“Executive”).
WHEREAS, Executive has been serving as Chief Executive Officer of the Company on
an interim basis since early 2012; and
WHEREAS, the Company desires Executive to serve as its permanent Chief Executive
Officer, and to remain a member of its Board of Directors, on the terms and
conditions set forth herein, and to replace Executive's interim CEO compensation
with the compensation and benefits set forth below; and
WHEREAS, Executive is willing, on the terms and subject to the conditions
provided in this Agreement, to undertake the responsibilities contemplated
herein, to furnish services to the Company as provided herein, and to be subject
to certain employment restrictions and obligations;
NOW, THEREFORE, in consideration of the premises and the covenants herein
contained and other good, valuable, and binding consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
EMPLOYMENT

Section 1.01. Responsibilities And Authority. Executive shall continue to serve
as the Company's Chief Executive Officer and as a member of its Board of
Directors. The duties of Executive shall be those duties which can reasonably be
expected to be performed by a person with the title of Chief Executive Officer.
Executive shall report directly to the Board of Directors of the Company (the
“Board”) and shall perform such other duties as may be assigned to him and as
may be reasonably acceptable to him and consistent with carrying out his
responsibilities under this Agreement.

Section 1.02. Acceptance Of Employment. Executive agrees, subject to the terms
of this Agreement, to devote substantially all of his business time to advance
the business of the Company. Nothing contained in this Agreement shall be
construed so as to prevent Executive from investing his personal assets in such
a manner and otherwise engaging in business transactions, and charitable and
community service, in each case that are not inconsistent with the interests of
the Company and that will not require a substantial portion of Executive's
business time or otherwise interfere with the performance of his duties
hereunder. Executive expressly represents and warrants to the Company that the
Executive is not a party to any contract or agreement and is not otherwise
obligated in any way, and is not subject to any rules or regulations, whether
governmentally imposed or otherwise, which will or may restrict in any way the
Executive's ability to fully perform the Executive's duties and responsibilities
under this Agreement.

1

--------------------------------------------------------------------------------

Section 1.03. Agreement Term. The term of this Agreement shall be for a period
from the Effective Date through the earlier of (i) December 31, 2014 and (ii)
such earlier date as Executive's employment hereunder ends (such period, the
“Term”). The parties may agree mutually in writing to extend the Term or to
shorten the Term upon appointment of a successor.

Section 1.04. At-will Employment. Notwithstanding anything else herein,
Executive's employment with Company shall be at‑will and may be terminated
during or after the Term by either party at any time for any or no reason,
including by the Company either with or without cause, with no further payment
obligations beyond such termination date other than those specified in Section
2.07 below if applicable.
ARTICLE 2
COMPENSATION AND INCENTIVES DURING THE TERM

Section 2.01. Base Compensation. During the Term, Executive's annualized base
salary shall be $600,000 per annum. This base salary amount will be reviewed
annually by the Board, which may, in its discretion, make appropriate annual
merit increases. The compensation paid to Executive pursuant to this Section is
hereinafter referred to as “Base Compensation.” In no event will the Base
Compensation be reduced without Executive's consent. The Base Compensation shall
be paid to Executive in installments in accordance with the Company's payroll
policy as in effect from time to time.

Section 2.02. Annual Bonus. During the Term, Executive shall be eligible for an
annual performance bonus (the “Annual Bonus”) which, except as set forth below
regarding treatment on termination of employment, shall be under the terms of
the Company's bonus plans in place from to time. Executive's annual target bonus
opportunity during the Term will be 70% of annualized Base Compensation, with
actual bonus based on completion of the performance goals under the Company's
bonus plan. Executive's maximum Annual Bonus will be 200% of his target
opportunity. The Annual Bonus for 2012 shall be prorated for seven months of
service, reflecting the period from the Effective Date through December 31,
2012. If Executive's employment terminates during the Term due to his death or
Disability (as defined in the LTIP), he or his estate will receive a prorated
portion of his Annual Bonus for the fiscal year in which such termination
occurs, which will be paid no later than 75 days following the end of such
fiscal year. In addition, for the fiscal year ending December 31, 2014, to the
extent the performance goals for such period are met, Executive will not forfeit
his Annual Bonus if his employment ends on December 31, 2014, which Annual Bonus
will be paid, to the extent earned, no later than 75 days following the end of
such fiscal year.

Section 2.03. Discretionary Bonus. For each fiscal year during the Term, the
Board or a committee of the Board will consider whether to award a discretionary
bonus (in an amount up to $150,000 for fiscal 2012 and up to $350,000 for each
of fiscal 2013 and fiscal 2014) to Executive based on parameters set by the
Board or a committee of the Board. Such discretionary bonus may be paid in cash
or in stock subject to a vesting schedule, as determined by the Board or a
committee of the Board in its sole discretion.

Section 2.04. Equity Awards. The Company will issue the equity awards set forth
below pursuant to separate award agreements under the El Paso Electric Company
2007 Long-Term

2

--------------------------------------------------------------------------------

Incentive Plan (“LTIP”), except that the terms set forth in this Section 2.04
and Section 2.07 shall supersede the applicable terms of the LTIP. Executive
shall be eligible to receive other equity awards as determined by the Board or a
committee of the Board in its sole discretion.

(a)Sign-On Grant. On or promptly following the Effective Date, the Company will
issue Executive a restricted stock award (the “Sign-On Grant”) under the LTIP of
10,000 shares of Company common stock. The Sign-On Grant shall vest 50% on the
first anniversary of the Effective Date and 50% on the second anniversary of the
Effective Date, in each case if Executive remains employed hereunder on such
date.
(b)Long-Term Equity Award.
(i)On or promptly following the Effective Date, the Company will issue Executive
a restricted stock award (the “Long-Term Award”) under the LTIP representing the
number of shares of Company common stock determined by dividing $470,000 by the
closing price of the Company common stock on the grant date as reported on the
New York Stock Exchange (rounded down to the nearest whole share). The Long-Term
Award shall be subject to performance conditions and become earned (between 0%
and 200% of the initial number of shares) and vested based on the Company's
total shareholder return over the three-year period ending December 31, 2014,
under the same terms and conditions as the performance share awards granted to
the Company's other executive officers in January 2012 for such three-year
period; provided that to the extent the performance goals for such three-year
period are met, (x) Executive's Long-Term Award will not be forfeited if his
employment ends on December 31, 2014 and (y) if Executive is terminated without
Cause (as defined in Section 2.07(c) below) after September 30, 2014 and signs
the Release (as defined in Section 2.07(a) below), he will remain eligible to
receive the earned portion of the Long-Term Award, which will become vested no
later than March 15, 2015. If Executive's employment terminates during the Term
due to his death or Disability (as defined in the LTIP), he or his estate will
receive a prorated portion of his Long-Term Award at the 100% target level,
which will be paid within 30 days following the end of the fiscal year in which
such termination occurs.

(ii)Executive understands and acknowledges that the Company does not intend to
grant annual long-term equity awards to Executive during 2013 and 2014.

Section 2.05. Other Benefits.

(a)During the Term, Executive shall be entitled to participate in all benefits
plans available from time to time to senior executives of the Company including
but not limited to the Company's Retirement Income Plan for Employees and Excess
Benefit Plan, monthly car allowance, life insurance benefit coverage, and health
and welfare benefit plans (including a requirement to take a Company-paid
physical exam on an annual basis). In addition, Executive will have no less than
5 weeks of annual paid time-off. Executive will be reimbursed the cost of moving
to the El Paso area in accordance with the Company's policies for an executive
officer.

3

--------------------------------------------------------------------------------

(b)During the Term, Executive will not receive separate compensation or benefits
for his service as a member of the Board.

Section 2.06. Indemnification. The Company shall provide Executive with the same
indemnification and insurance protection provided by Company from time to time
to all of its officers and directors.
Section 2.07. Involuntary Termination; Change of Control.

(a)Involuntary Termination. Subject to subsections (b) and (d) below, if, during
the Term, Executive's employment is terminated by the Company without Cause or
by Executive within 60 days after he is removed from the position of Chief
Executive Officer or has his duties as Chief Executive Officer materially
reduced without his consent, and if Executive signs within 21 days following his
termination date, and lets become effective, the release of claims attached
hereto as Exhibit A (the “Release”), then Executive shall receive the following:

(i) a lump sum cash payment equal to the lesser of (i) 12 months of Base
Compensation and (ii) the Base Compensation that would have been payable
hereunder to Executive from the date of termination through December 31, 2014,
in either case paid within 60 days following the date of termination;

(ii) pro-rated Annual Bonus for the year in which the termination occurs,
calculated following the end of the year consistent with the annual bonus
calculation for the other executive officers, paid within 75 days following the
end of the year in which the termination occurs;

(iii) reimbursement of COBRA premiums for continued health insurance coverage,
until the earlier of (x) 12 months following termination of employment,
(y) commencement of employment with another employer or (z) the date on which
Executive ceases to be eligible for COBRA; provided that the Company shall have
the right to pay an equivalent amount in a lump-sum cash payment within 60 days
following the date of termination;

(iv) accelerated vesting of the Sign-On Grant; and

(v) if the termination occurs after September 30, 2014, the Long-Term Award
shall be treated as provided in Section 2.04(b)(i)(y) above.

For the avoidance of doubt, any payments or benefits pursuant to this subsection
(a) shall not be duplicative of those set forth in subsection (b) below in the
event of a termination without Cause upon or following a Change of Control (as
defined in subsection (c) below).
(b)     Change of Control. In the event of a Change of Control during the Term,
Executive shall receive the following (in lieu of any payments and benefits set
forth in subsection (a) above):
        

4

--------------------------------------------------------------------------------

(i)     a lump sum cash payment equal to 12 months of Base Compensation, paid on
or within 15 days following the date of such Change of Control;
(ii)     pro-rated Annual Bonus calculated at “target”, paid on or within 15
days following the date of such Change of Control;
(iii)     if applicable, reimbursement of COBRA premiums for continued health
insurance coverage, until the earliest of (x) 12 months following the date of
such Change of Control, (y) commencement of employment with another employer or
(z) the date on which Executive ceases to be eligible for COBRA; provided that
the Company shall have the right to pay an equivalent amount in a lump-sum cash
payment within 60 days following the date of Executive's termination of
employment; and
(iv)     accelerated vesting of all Executive's then-outstanding equity awards
(including the Sign-On Grant); provided that with respect to the Long-Term
Award, the amount earned and vested shall be determined by the “Performance
Period” thereunder being shortened to end upon such Change of Control in the
manner and on the date determined by the Board or its committee in its sole
discretion and the performance goals associated with such awards shall be
measured based on performance achieved through the end of such shortened
Performance Period and such awards shall become vested and payable (on the date
of such Change of Control or such other date determined by the Board or its
committee, but in no event later than 30 days following the Change of Control)
on a prorated basis to reflect such shortened Performance Period, with the
remaining portion of the Long-Term Award terminating.
(c)Definitions. For purposes of this Agreement and the equity awards granted
hereunder, and notwithstanding any definition set forth in the LTIP or other
Company plan or agreement:
(i)“Cause” shall mean the willful and continued failure by the Executive to
perform his essential duties, or the engaging by the Executive in illegal
conduct or misconduct in connection with Executive's employment that is
materially injurious to the Company, in each case following written notice and a
reasonable opportunity to respond, and a reasonable opportunity to cure the
failure or cease any non-criminal misconduct. The determination that Cause
exists shall be made by the vote of not less than a majority of directors who
are then members of the Board.
(ii)“Change of Control” shall mean:
(A)the acquisition by any individual, entity or group (a “Person”), including
any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) of beneficial
ownership within the meaning of Rule 13d 3 promulgated under the Exchange Act,
of 50% more of either (i) the then outstanding shares of common stock of

 

5

--------------------------------------------------------------------------------

the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting
power of the then outstanding securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities”); excluding, however, the following: (A) any acquisition directly
from the Company (excluding any acquisition resulting from the exercise of an
exercise, conversion or exchange privilege unless the security being so
exercised, converted or exchanged was acquired directly from the Company), (B)
any acquisition by the Company, (C) any acquisition by an employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (D) any acquisition by any corporation pursuant to
a transaction which complies with clauses (i), (ii) and (iii) of subsection (3)
of this definition;
(B)individuals who, as of the date of this Agreement (the “Effective Date”),
constitute the Board of Directors (the “Incumbent Board”) cease for any reason
to constitute at least a majority of such Board; provided that any individual
who becomes a director of the Company subsequent to the Effective Date whose
election, or nomination for election by the Company's stockholders, was approved
by the vote of at least a majority of the directors then comprising the
Incumbent Board shall be deemed a member of the Incumbent Board; and provided
further, that any individual who was initially elected as a director of the
Company as a result of an actual or threatened election contest, as such terms
are used in Rule 14a 11 of Regulation 14A promulgated under the Exchange Act, or
any other actual or threatened solicitation of proxies or consents by or on
behalf of any Person other than the Board shall not be deemed a member of the
Incumbent Board;
(C)Consummation of a shareholder-approved reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a “Corporate Transaction”); excluding, however, a
Corporate Transaction pursuant to which (i) all or substantially all of the
individual or entities who are the beneficial owners, respectively, of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities
immediately prior to such Corporate Transaction will beneficially own, directly
or indirectly, more than 50% of, respectively, the outstanding shares of common
stock, and the combined voting power of the outstanding securities of such
corporation entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Corporate Transaction (including,
without limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly or
indirectly) in substantially the same proportions relative to each other as
their ownership, immediately prior to such Corporate Transaction, of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities,
as the case may be, (ii) no Person (other than: the Company; any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; the corporation resulting from such
Corporate Transaction; and any Person which beneficially owned, immediately
prior to such Corporate Transaction, directly or indirectly, 50% or more of the

6

--------------------------------------------------------------------------------

Outstanding Company Common Stock or the Outstanding Company Voting Securities,
as the case may be) will beneficially own, directly or indirectly, 50% or more
of, respectively, the outstanding shares of common stock of the corporation
resulting from such Corporate Transaction or the combined voting power of the
outstanding securities of such corporation entitled to vote generally in the
election of directors and (iii) individuals who were members of the Incumbent
Board will constitute at least a majority of the members of the board of
directors of the corporation resulting from such Corporate Transaction; or
(D)approval by the stockholders of the Company of a plan of complete liquidation
or dissolution of the Company.

Notwithstanding the foregoing, in no event shall a “Change of Control” be deemed
to have occurred as a result of the formation of a Holding Company. For the
purposes hereof, “Holding Company” shall mean an entity that becomes a holding
company for the Company or its businesses as a part of any reorganization,
merger, consolidation or other transaction, provided that the outstanding shares
of common stock of such entity and the combined voting power of such entity
entitled to vote generally in the election of directors is, immediately after
such reorganization, merger, consolidation or other transaction, beneficially
owned, directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding
Company Voting Securities immediately prior to such reorganization, merger,
consolidation or other transaction in substantially the same proportions as
their ownership, immediately prior to such reorganization, merger, consolidation
or other transaction, of such Outstanding Company Voting Securities.
(d)     Succession Plan. The obligation of the Company to pay Executive the
amounts due under Section 2.07(a) above is subject to the satisfaction of the
requirements set forth in this Section 2.07(d). Executive shall have presented
to the Board his succession plan covering succession in the event of the
retirement, incapacitation or removal of any of the Company's senior officers
(which shall mean Executive and each of the Company's executives who report
directly to Executive and/or whose appointment is subject to the approval of the
Board), and the Board shall have determined in its reasonable judgment that such
plan is comprehensive and achievable. The Board and Executive shall work
together to establish benchmarks and timelines for the delivery and
consideration of a succession plan. Such plan shall include development plans
for each senior officer, including consideration of the necessary skills for
each senior officer position, the skills of the current senior officers and
recommendations of methods either to recruit persons with additional skills
needed to complement the senior officer group or to assist the current senior
officers in developing such complementary skills. Executive and the Board will
update the succession plan regularly and schedule a full review on a semi-annual
basis and within 30 days following the departure of any senior officer. The
Board will promptly provide Executive with any objections to the plan and will
work together with Executive to remedy any deficiencies.

7

--------------------------------------------------------------------------------

ARTICLE 3
ARBITRATION AND MEDIATION

Section 3.01. Mediation. Any dispute arising hereunder between Executive and
Company (including any dispute over whether Company has properly terminated
Executive for Cause) which cannot be resolved by them to their mutual
satisfaction within a period of 14 days, unless mutually extended, shall first
be submitted to mediation in El Paso, Texas, to a mediator selected pursuant to
the rules of the American Arbitration Association (“AAA”). All costs of
mediation incurred by Executive will be paid by the Company.
Section 3.02. Arbitration. If such mediation shall not result in an agreed
settlement between the parties, the dispute will be promptly submitted to
binding arbitration (conducted in El Paso, Texas, by a panel of three
arbitrators) in accordance with the rules of the AAA then in effect. The results
of such arbitration shall be binding and conclusive upon the parties hereto, and
judgment on the award may be entered at the instance of either party in any
court of competent jurisdiction. The dispute resolution procedure set forth in
this Section may be initiated by either party upon five business days prior
written notice to the other and after failure to resolve the dispute after the
expiration of the 14‑day time period referred to in the preceding Section.

Section 3.03. Proceedings. Unless otherwise expressly agreed in writing by the
parties to the arbitration proceedings:
    
(a) The arbitration proceedings shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, as amended
from time to time.

(b) Any procedural issues not determined under the arbitral rules selected
pursuant to item (a) above shall be determined by the law of the place of
arbitration, other than those laws which would refer the matter to another
jurisdiction.

(c) The Company will pay all arbitration, administrative, professional services
and reasonable attorney fees for Executive in connection with such proceeding.

(d) The decision of the arbitrators shall be reduced to writing; final and
binding without the right of appeal; the sole and exclusive remedy regarding any
claims, counterclaims, issues or accounting presented to the arbitrators; made
and promptly paid in United States dollars free of any deduction or offset; and
any costs or fees incident to enforcing the award shall, to the maximum extent
permitted by law, be charged against the party resisting such enforcement.

Section 3.04. Acknowledgement Of Parties. Each party acknowledges that he or it
has voluntarily and knowingly entered into an agreement to arbitration under
this Section by executing this Agreement.

ARTICLE 4
MISCELLANEOUS

Section 4.01. Notices. Any notice, demand or request to be given hereunder to
either party hereto shall be deemed given and effective only if in writing and
either (1) delivered

8

--------------------------------------------------------------------------------

personally to Executive or (in case of a notice to Company) to the Chairman of
the Board of the Company with a copy to the General Counsel, or (2) sent by
certified or registered mail, postage prepaid, to the address set forth on the
signature page hereof or to such other address as either party may hereafter
specify to the other by notice similarly served (or, in the case of Executive,
to the address most recently set forth in the Company's employment records).

Section 4.02. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Texas.

Section 4.03. Modification. No modification or waiver of any provision hereof
shall be made unless it be in writing and signed by both of the parties hereto.

Section 4.04. Scope Of Agreement. This Agreement constitutes the whole of the
agreement between the parties on the subject matter, superseding all prior oral
and written conversations, negotiations, understandings, and agreements in
effect as of the date of this Agreement.

Section 4.05. Successors and Assigns. This Agreement shall not be assignable by
the Company (other than to an affiliate of the Company or to any successor or
assign of the Company) without the written consent of Executive; provided that
no such assignment shall adversely affect Executive's rights or expectation to
receive the financial benefits due him under this Agreement. The Company will
require any successor to all or substantially all of the business and/or assets
of the Company to expressly assume and agree to perform the obligations under
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. This Agreement
shall inure to the benefit of and be enforceable by Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees, and legatees. If Executive should die or become disabled
while any amount is owed but unpaid to Executive hereunder, all such amounts,
unless otherwise provided herein, shall be paid to Executive's devisee, legatee,
legal guardian or other designee, or if there is no such designee, to
Executive's estate. Executive's rights hereunder shall not otherwise be
assignable.

Section 4.06. Tax Payments, Withholdings And Reporting.

(a)Executive recognizes that the payments and benefits provided under this
Agreement may result in taxable income to him which Company and its affiliates
will report to the appropriate taxing authorities. Company shall have the right
to deduct from any payment made under this Agreement any federal, state, local
or foreign income, employment or other taxes it determines are required by law
to be withheld with respect to such payments or benefits provided thereunder or
to require payment from Executive which he agrees to pay upon demand, for the
purpose of satisfying any such withholding requirement.
(b)     Section 409A.

(i) The benefits hereunder are intended to qualify for the short-term deferral
exception from Section 409A of the U.S. Internal Revenue Code of 1986, as
amended and the final regulations and any guidance promulgated thereunder, as
each may be amended from time to time (together, “Section 409A”) or, to the
extent the short-term deferral exception is not available, as involuntary

9

--------------------------------------------------------------------------------

termination payments under Section 409A. Notwithstanding the foregoing, no
Deferred Compensation Separation Benefits (as defined below) payable under this
Agreement will be considered due or payable until and unless Executive has a
“separation from service” within the meaning of Section 409A, and if Executive
is a “specified employee” within the meaning of Section 409A at the time of
Executive's “separation from service” other than due to Executive's death, then
any severance benefits payable pursuant to this Agreement and any other
severance payments or separation benefits, that in each case when considered
together may be considered deferred compensation under Section 409A (together,
the “Deferred Compensation Separation Benefits”) and are otherwise due to
Executive on or within the six (6) month period following Executive's
“separation from service” will accrue during such six (6) month period and will
instead become payable (without interest) in a lump sum payment on the date
six (6) months and one (1) day following the date of Executive's “separation
from service.” All subsequent Deferred Compensation Separation Benefits, if any,
will be payable in accordance with the payment schedule applicable to each
payment or benefit. Each payment and benefit payable under this Agreement is
intended to constitute separate payments for purposes of Section 1.409A‑2(b)(2)
of the Treasury Regulations.

(ii) For purposes of Section 409A of Internal Revenue Code of 1986, as amended,
all expenses eligible for reimbursement hereunder shall be paid to Executive
promptly in accordance with the Company's customary practices (if any)
applicable to the reimbursement of expenses of such type, but in any event by no
later than the last day of Executive's taxable year following the taxable year
in which the expense was incurred, and the expenses incurred by Executive in any
calendar year that are eligible for reimbursement under this Agreement shall not
affect the expenses incurred by Executive in any other calendar year that are
eligible for reimbursement hereunder.

(iii) Notwithstanding anything herein to the contrary, if Executive dies
following his “separation from service” but prior to the six (6) month
anniversary of the date of his “separation from service,” then any Deferred
Compensation Separation Benefits delayed in accordance with this Section will be
payable in a lump sum as soon as administratively practicable after the date of
Executive's death, but not later than ninety (90) days after the date of
Executive's death, and all other Deferred Compensation Separation Benefits will
be payable in accordance with the payment schedule applicable to each payment or
benefit.

(iv) It is the intent of this Agreement to comply with the requirements of
Section 409A so that none of the severance payments and benefits to be provided
hereunder will be subject to the additional tax imposed under Section 409A, and
any ambiguities herein will be interpreted to so comply; provided that in no
event shall this clause increase the cost to the Company of providing any
payments or benefits to Executive.

Section 4.07. Separate Counsel. Executive acknowledges that he has been advised
by Company that before he signs this Agreement he should consult with an
attorney.

10

--------------------------------------------------------------------------------

Section 4.08. Severability. In the event any provision of the Agreement shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Agreement, and the Agreement shall be
construed and enforced as if the illegal or invalid provision had not been
included.

Section 4.09. Counterparts. This Agreement may be signed in several
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were on the same instrument.
[Signature Page Follows]

11

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date set forth above.
EL PASO ELECTRIC COMPANY

By: /s/ Michael K. Parks
Name: Michael K. Parks
Title: Vice Chairman of the Board

Address for Notice:
100 North Stanton
El Paso, Texas 79901

EXECUTIVE

/s/ Thomas V. Shockley
Thomas V. Shockley

Address for Notice
(if different than the address most recently set
forth in the Company's employment records):

12

--------------------------------------------------------------------------------

Exhibit A - Form of Release and Waiver
Executive agrees to and does fully and completely release, discharge and waive
any and all claims, complaints, causes of action, demands of whatever kind or
nature which Executive has or may have against the Company, its subsidiaries,
affiliates, predecessors, and successors and all of their respective directors,
officers, and employees by reason of any event, matter, cause, or thing that has
occurred prior to the date hereof (hereinafter “Executive Claims”). Executive
agrees that this release and waiver specifically covers, but is not limited to,
any and all Executive Claims which Executive has or may have against the Company
relating in any way to compensation, or to any other terms, conditions, or
circumstances of Executive's employment with the Company, and to the cessation
of such employment, based on statutory or common law claims for employment
discrimination, including claims under Title VII, the Age Discrimination in
Employment Act, Americans with Disabilities Act, the Texas Labor Code, and any
and all discrimination or retaliation claims under state or federal law,
wrongful discharge, breach of contract, defamation, intentional infliction of
emotional distress, breach of fiduciary duty, or any other theory whether legal
or equitable; provided, however, that this release shall not affect Executive's
rights under or with respect to any retirement plan which is subject to ERISA
and is qualified under Section 401(a) of the Code.
Executive acknowledges that he has twenty-one (21) days to review and consider
this release and waiver. Executive has also been advised verbally and by this
writing of his right to consult with an attorney prior to executing this release
and waiver. Executive is further aware that if he signs this release and waiver,
he may revoke it for a period of seven (7) days following the day he signs it,
and this release and waiver shall not be effective or enforceable until the
revocation period has expired.

Exh. A-1