8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):

May 5, 2009

El Paso Electric Company

(Exact name of registrant as specified in its charter)

Texas	0-296	74-0607870
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

Stanton Tower, 100 North Stanton, El Paso, Texas	79901
(Address of principal executive offices)	(Zip Code)

(915) 543-5711

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers

(b) Retirement of Principal Financial Officer.

On May 5, 2009, El Paso Electric Company (the “Company”) entered into an Employment Retirement Agreement (the “Retirement Agreement”) with Scott D. Wilson, Executive Vice President and Chief Financial and Administrative Officer, regarding Mr. Wilson’s retirement from the Company effective May 31, 2009. Under the terms of the Retirement Agreement, the Company agreed to pay Mr. Wilson a lump-sum payment of $125,000 in satisfaction of any and all obligations (other than accrued compensation and benefits under the Company’s health, welfare and retirement plans) resulting from Mr. Wilson’s service to the Company, and Mr. Wilson agreed to a general release of claims. In addition, the Company entered into a Consulting Agreement (the “Consulting Agreement”) with Mr. Wilson with a term of twelve months beginning June 1, 2009. Under the terms of the Consulting Agreement, Mr. Wilson will receive a monthly consulting fee of $28,350 in consideration for providing financial and regulatory consulting services to the Company.

The descriptions above of the Retirement Agreement and the Consulting Agreement are qualified in their entirety by reference to the full text of such agreements which are filed as Exhibits 10.1 and 10.2 respectively, to this Current Report on Form 8-K.

(b) Retirement of Director

On May 6, 2009, Gary R. Hedrick retired as a director of the Company.

(d) Election of New Director.

In accordance with Article III, Section 3 of the Bylaws and based on the recommendation of the Nominating and Corporate Governance Committee, the Board of Directors of the Company (the “Board”) appointed Catherine A. Allen to fill the vacancy created by the retirement of Mr. Hedrick effective May 7, 2009. Since 1996, Ms. Allen has been the Chairman and Chief Executive Officer of The Santa Fe Group, a strategic consulting company that serves the financial sector in the areas of payments, fraud, information security and regulatory reform. From 1997 to 2007, Ms. Allen also served as founding CEO of BITS, an industry association of the 100 largest financial services companies in the United States. Ms. Allen is a director of Stewart Information Services Corp., a member of the boards of directors of Liquid Machines, Inc. and Singlepoint, LLC and on the advisory board for Citicorp Transaction Services.

Ms. Allen will initially serve as a Class II Director for Mr. Hedrick’s unexpired term through the date of the annual meeting of shareholders in 2011. Ms. Allen will serve on the Compensation and External Affairs Committees of the Board. Ms. Allen will receive compensation for non-employee directors as described in our most recent proxy statement.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

10.1	Employment Retirement Agreement and Release between the Company and Scott D. Wilson
10.2	Consulting Services Agreement between the Company and Scott D. Wilson

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	El Paso Electric Company
Dated: May 8, 2009	By:	/s/ GARY D. SANDERS
	Name:	Gary D. Sanders
	Title:	Senior Vice President and General Counsel

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EX-10.1

Exhibit 10.1

EMPLOYMENT RETIREMENT AGREEMENT AND RELEASE

This Employment Retirement Agreement and Release (“Agreement”) is a contract entered into between El Paso Electric Company, a Texas corporation (the “Company”), and Scott D. Wilson (“Employee”), on May 7, 2009 unless revoked by Employee within seven (7) days following its execution by Employee.

WHEREAS, the Company and Employee have agreed to Employee’s retirement from the Company effective on or about May 31, 2009;

WHEREAS, the Company and Employee have reached an accord regarding the financial and other aspects of this retirement; and

WHEREAS, the Company and Employee desire to enter into this Agreement.

NOW, THEREFORE, in consideration of the foregoing recitals, and the mutual promises and agreements hereinafter set forth, the Company and Employee agree as follows:

1. Retirement Date. Employee will retire and his employment with the Company, its subsidiaries, and affiliates, effectively cease on May 31, 2009; provided, however, that Employee’s duties as Chief Financial Officer of the Company will cease at close of business on May 5, 2009. At the retirement date, the Employee will have 6 years credit in the Company’s Retirement Income Plan

2. Payment to Employee. In exchange for executing this Agreement, the Company agrees to make a payment to Employee in the amount of One Hundred Twenty Five Thousand Dollars ($125,000.00) (less deductions for applicable federal, state, and local taxes, all and in each instance in accordance with the payment practices of the Company) on January 4, 2010; provided, however, that as conditions precedent to any entitlement to the payment under this Section 2, Employee must (i) execute and deliver this Agreement to the Company, (ii) not revoke or otherwise withdraw his acceptance of this Agreement for a period of seven (7) days following such delivery of this Agreement, and (iii) not be in breach or default of any provision of this Agreement. Employee acknowledges and agrees that he has no entitlement to such payment except as set forth in this Agreement.

3. Other Benefits. Nothing in this Agreement shall affect Employee’s rights (as such exist immediately prior to May 31, 2009) in the Company’s retirement plan, which is subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and is qualified under Section 401(a) of the Internal Revenue Code (“the Code”), to include medical benefit coverage and/or life insurance under retirement terms and conditions. Subject to Employee’s retirement, Employee may elect to continue, at Employee’s sole cost and expense, dental benefit coverage under and in accordance with the provisions of the Company’s Employee Welfare Benefit Plan, the Consolidated

Omnibus Budget Reconciliation Act of 1996 (“COBRA”), and Section 4980B of the Code. Employee is also entitled to all amounts, if any, accrued by and vested in Employee under and in accordance with the El Paso Electric Company Savings Plan (“401(k) Plan”) as of May 31, 2009. Employee shall also be entitled to a prorated payout in 2010 under the Company’s 2009 short-term bonus plan for all officers of the Company provided that the Company meets the performance criteria set forth in such plan and bonuses under such plan are approved by the Board compensation committee. Upon retirement and in accordance with Company policy, Employee will be paid for any unused PTO hours in Employee’s current PTO bank and at appropriate value for any eligible hours in Employee’s Old and New Sick Banks. Except as otherwise provided in this Agreement, Employee’s participation in any and all other benefit and compensation plans and arrangements of the Company are deemed by both parties to have ceased on May 31, 2009. Employee shall also be entitled to keep the MacBook laptop computer and Blackberry assigned to him by the Company, subject to the Company removing from such devices all Company confidential and/or proprietary information unrelated to the consulting services Employee has agreed to provide pursuant to a consulting agreement of even date.

4. Release.

(a) Employee agrees to and does fully and completely release, discharge and waive any and all claims, complaints, charges, causes of action, demands of whatever kind or nature which Employee 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 of execution of this Agreement (hereinafter “Claims”). Employee agrees that this Agreement specifically covers, but is not limited to, any and all Claims which Employee has or may have against the Company relating in any way to compensation, or to any other terms, conditions, or circumstances of Employee’s employment with the Company, and to the cessation of such employment, whether for retirement, severance, or cessation based on statutory or common law claims for employment discrimination, including claims under the Civil Rights Act of 1964, 42 U.S.C. §2000(e) et seq., the Americans with Disabilities Act, the Age Discrimination in Employment Act, and any and all discrimination or retaliation claims under federal or state law, claims under the Texas Labor Code, wrongful discharge, breach of contract, defamation, or any other theory whether legal or equitable, in contract or in tort; provided, however, that this release shall not affect Employee’s rights, which by statute or law cannot be waived and any rights under or with respect to any retirement plan which is subject to ERISA and is qualified under Section 401(a) of the Code.

(b) Employee agrees and understands that upon receipt of an executed original of this Agreement and the consideration described in Section 2, Employee cannot recover any relief pursuant to any and all Claims pending before any court, agency, or other tribunal.

Scott D. Wilson-Retirement 2

(c) This Agreement is intended to constitute a general release by Employee of all Claims, is not an admission of liability by the Company, and memorializes the settlement of doubtful and disputed Claims. To the extent any Claims against the Company have not been released by this Agreement, Employee hereby assigns those Claims to the Company. Notwithstanding the foregoing, Employee does not waive nor assign any of his rights to enforce this Agreement.

5. Confidentiality, No Disparagement.

(a) Employee agrees not to cause or participate in the publication of any information concerning the terms and conditions of this Agreement to any person or entity. This provision shall not prevent Employee from disclosing such information as may be required by law or to Employee’s immediate family or to Employee’s legal counsel and accountants to obtain professional advice; provided that each are advised as to and agree to observe the confidentiality of such information. Employee agrees not to make negative statements or representations, or otherwise communicate negatively, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage or be damaging to the Company, its subsidiaries, affiliates, successors or their respective directors, officers, employees, businesses or reputations.

(b) Company agrees that it shall not authorize any officer, agent, employee, or other representative of the Company to make negative statements or representations, or otherwise communicate negatively, directly or indirectly, in writing, orally or otherwise, or take any action which may, directly or indirectly, disparage or be damaging to the Employee concerning Employee’s performance of Employee’s duties while employed by the Company, Employee’s separation from employment with the Company, or the terms and conditions of this Agreement to any person or entity (other than the Company’s legal counsel and accountants, or as otherwise required by law).

6. Taxes. Employee agrees to be solely and fully responsible for satisfying any federal, state, or local income tax or other tax liability that may be assessed against Employee as a result of the payment of any monies by the Company to Employee pursuant to the terms of this Agreement. Employee acknowledges the Company has provided no legal or other advice concerning the tax consequences, if any, of the consideration provided for or paid under this Agreement.

7. Proprietary Information.

(a) Employee acknowledges that trade secrets, data, and information of the Company and its affiliates, or any data and information of third parties made available to the Company or its affiliates, concerning products and their development, technical information, marketing, investment, sales activities and procedures, promotion and pricing, credit and financial data, operations, customer services and accounts, regulatory and legal matters, employee data, information technology software, data, and media (“Proprietary Information”) are valuable, special, and unique assets of the

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Company and its affiliates, access to and knowledge of which have been gained by virtue of Employee’s position and involvement with the Company and its affiliates. Employee agrees that all Proprietary Information obtained by Employee as a result of Employee’s employment with Company shall be considered confidential. In recognition of such fact, Employee agrees that Employee will not disclose any such Proprietary Information to any person or other entity for any reason or purpose whatsoever, and that Employee will not make use of any Proprietary Information for his own purposes or for the benefit of any person or other entity.

(b) Employee acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Section 7(a) would be inadequate and, in recognition of this fact, Employee agrees that, in the event of a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction and any other equitable remedy which may then be available.

8. Entire Agreement; Amendment. This Agreement shall supersede any and all existing agreements between Employee and the Company or any of its affiliates relating to the terms of Employee’s employment, and contains the entire understanding of the parties with respect to the cessation of Employee’s employment. It may not be altered, modified, or amended except by a written agreement signed by both parties hereto. Nothing herein modifies the consulting services agreement entered into by Employee and the Company on or about the date hereof.

9. No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

10. Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal, or unenforceable in any respect, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected thereby.

11. Benefits of Agreement. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, representatives, successors, and assigns.

12. Acknowledgement. Employee acknowledges that Employee has carefully read this Agreement, fully understands, and accepts all of its provisions. Employee further acknowledges that Employee has been provided a full opportunity to review and reflect on the terms of this Agreement, has been advised by the Company to seek the advice of legal counsel of choice, signs the Agreement voluntarily, of Employee’s own free will, and has signed an acknowledgement (Exhibit A, fully incorporated herein by this reference) to that effect.

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13. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas without reference to its conflicts of law or choice of laws rules.

14. Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement effective as of the date and year first above written.

/s/ Scott D. Wilson

Scott D. Wilson, Employee

5/5/09

Date of Execution

EL PASO ELECTRIC COMPANY
By:	/s/ David W. Stevens
	David W. Stevens
	Chief Executive Officer
	5/5/09
	Date of Execution

Scott D. Wilson-Retirement 5

Exhibit A

ACKNOWLEDGEMENT

I acknowledge that I am allowed at least twenty–one (21) days to review and consider the Employment Separation Agreement and Release (“Agreement”) to which this is Exhibit A. I have also been advised verbally and by this writing of my right to consult with an attorney prior to executing this Agreement. I understand that by signing the Agreement, I am voluntarily relinquishing, in exchange for the consideration listed in the Agreement, my past and present right to bring any claim, including those under the Civil Rights Act of 1964, 42 U.S.C. §2000(e) et seq., the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Texas Labor Code, and any other equivalent federal or state laws or statutes, against El Paso Electric Company. I do not waive any claims that may arise from conduct which occurs after the effective date of this Agreement. I am further aware that even if I sign the Agreement, I may revoke the Agreement for a period of seven (7) days following the day I sign the Agreement, and the Agreement shall not be effective or enforceable until the revocation period has expired. I further acknowledge that changes (material or otherwise) to the Agreement agreed to by the parties during the consideration or revocation period will not restart such time periods.

/s/ Scott D. Wilson

Scott D. Wilson, Employee

5-5-09

Date

Scott D. Wilson-Retirement 6

EX-10.2

Exhibit 10.2

CONSULTING SERVICES AGREEMENT

This Consulting Services Agreement (“Agreement”) is executed to be effective as of June 1, 2009 by and between El Paso Electric Company, a Texas corporation (“EPE”), and Scott D. Wilson, a Florida resident (“Consultant”).

1. Recitals.

1.1 EPE desires Consultant to perform certain services described in the statement of work (the “Statement of Work”) appended to and hereby incorporated into this Agreement by reference as Appendix 1, all and in each instance in accordance with the provisions of this Agreement and such Statement of Work.

1.2 Consultant is ready, willing, and able to undertake the duties and obligations set forth in this Agreement.

1.3 In consideration of the foregoing recitals and the mutual covenants contained in this Agreement, EPE and Consultant agree as provided below.

2. Services to Be Performed.

2.1 All services and deliverables to be performed and provided under this Agreement are described in the Statement of Work. Consultant, as an independent contractor, shall furnish all necessary supervision, labor, materials, tools, and equipment to perform the services and provide the deliverables specified in and in the manner prescribed by this Agreement and the Statement of Work. Changes to the scope of services or deliverables described in the Statement of Work (including any corresponding increase or decrease in pricing therefor) shall not be effective unless set forth in a written document executed by EPE and Consultant.

3. Term and Termination of Agreement.

3.1 This Agreement shall be for a term of twelve (12) months beginning June 1, 2009 (the “Effective Date”) and continuing through May 31, 2010 (the “Term”), unless earlier terminated in accordance with Sections 3.2 or 3.3.

3.2 Either party may upon written notice terminate this Agreement at any time if the other party breaches a material provision of this Agreement and such breach is not fully cured within thirty (30) days following the non-performing party’s receipt of notice describing the nature of such breach in reasonable detail. In such event and subject to the restrictions and limitations prescribed by Section 7.3 and Section 7.4, the non-breaching party may take such action to enforce any other rights or remedies available under this Agreement, applicable law, and/or principles of equity.

3.3 EPE shall also have the right and option to terminate this Agreement immediately upon notice to Consultant if, during the Term, (i) Consultant accepts full-time employment with any person or entity, or (ii) Consultant interferes with the business of the Company or holds any position or accepts any engagement that results in a position adverse to that of the Company in any matter.

4. Compliance with Applicable Laws.

4.1 Consultant shall perform all services in accordance and compliance with all federal, state, and local statutes, laws, ordinances, codes, rules, and regulations (collectively “Laws”) including, without limitation, Laws governing workplace health and safety and the protection of the environment.

Consulting Services Agreement – Wilson

5. Inspection, Acceptance, and Payment.

5.1 EPE shall pay Consultant compensation for services and deliverables in accordance with the provisions of this Agreement and the Statement of Work. EPE agrees to pay Consultant a monthly retainer in the amount of Twenty Eight Thousand Three Hundred Fifty Dollars ($28,350.00), payable each month throughout the term of this Agreement.

5.2 Consultant shall deliver monthly invoices to EPE for services rendered. Each invoice shall be mailed or hand delivered to:

El Paso Electric Company

Attention: David W. Stevens

100 N. Stanton

El Paso, Texas 79901

5.3 All payments or reimbursements otherwise due Consultant under this Agreement shall be subject to EPE’s right to contractual setoff solely for a breach of Paragraph 5 of the Employment Retirement Agreement and Release of even date which right of contractual setoff is hereby granted by Consultant to EPE to the fullest extent allowed by applicable law.

5.4 As set forth in the Statement of Work, EPE agrees to reimburse Consultant for reasonable out-of-pocket expenses incurred for out-of-town travel which was requested and approved in advance by EPE and for other incremental expenses necessary for Consultant to perform his duties under this contract, such as overnight delivery services, long distance phone charges, etc. No reimbursement will be made, however, for (i) alcoholic beverages, (ii) hotel pay-per-view movies or other entertainment expenses, or (iii) undocumented costs or expenses. Consultant shall use reasonable efforts to limit travel and living expenses by using coach airfare, booked at least seven (7) days in advance (unless otherwise approved in advance by EPE), staying in housing identified by EPE as offering contractors a discounted rate, and sharing rental cars.

6. Services, Deliverables, and Media Warranties.

6.1 All services and deliverables shall conform to all descriptions, specifications, and standards included or referenced in the Statement of Work and be performed in good faith and with that level of care and skill ordinarily exercised by members of Consultant’s profession.

6.2 If, during the one (1) year period following EPE’s acceptance (as described in Section 5.3) of all services and deliverables to be provided under this Agreement, any service or deliverable fails to conform to the warranty prescribed by Section 6.1, Consultant shall at its sole cost and expense and within thirty (30) days following its receipt of written notice describing such nonconformity in reasonable detail, re-perform such service or repair or replace such deliverable to correct such nonconformity.

6.3 THE REMEDY PRESCRIBED BY SECTION 6.2 SHALL BE EPE’S SOLE AND EXCLUSIVE REMEDY FOR CONSULTANT’S BREACH OF THE LIMITED WARRANTIES PRESCRIBED BY SECTION 6.1.

6.4 EXCEPT AS PROVIDED IN SECTION 6.1, CONSULTANT DISCLAIMS ALL OTHER WARRANTIES WITH RESPECT TO THE SERVICES AND DELIVERABLES, INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

7. Indemnification and Limitation of Liability.

7.1 Each party shall indemnify and hold harmless the other party and its respective owners, directors, officers, and employees for, against, and from any and all claims, liabilities, damages, losses, costs, and expenses of any kind or nature (including reasonable attorneys’

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fees) for personal injury (including mental anguish) to or death of any person or for destruction or loss of or damage to the property of any third person or entity in each instance to the extent determined to be proportionately attributable to the (i) negligence (including strict liability in tort), gross negligence, or willful misconduct of the indemnitor, its owners, directors, officers, employees, agents, or contractors arising from, in connection with, or in any way related to this Agreement (including the performance or nonperformance thereof), or (ii) breach of this Agreement by the indemnitor, its owners, directors, officers, employees, agents, or contractors. It is the intention of the parties that the indemnitees shall be entitled to reciprocal and comparative indemnification under this Section 7.1.

7.2 Consultant shall indemnify, defend, and hold EPE harmless against any loss, cost, or expense arising out of any claim that Consultant’s services or deliverables or EPE’s use of the deliverables under this Agreement infringes any United States patent, copyright, or trade secret. Should Consultant’s services or deliverables be determined to have infringed, or, if in Consultant’s judgment such use is likely to infringe, any such patent, copyright, or trade secret, Consultant may, at its option and at its sole cost and expense (i) obtain for EPE the right to continue to use the affected services and deliverables, or (ii) replace or modify the affected services and deliverables to make such use non-infringing and substantially equivalent in function. This indemnity does not cover infringement claims arising from or caused by modifications to Consultant’s services or the deliverables that are not made by Consultant, its agents, affiliates or subcontractors or that result from the combination of such matters with products or services not provided by Consultant. Consultant’s obligations under this Section 7.2 are conditioned upon:

(i) EPE promptly notifying Consultant in writing of any such claim;

(ii) Consultant being able to control the defense and settlement of such claim; and

(iii) EPE cooperating with all reasonable requests of Consultant (at Consultant’s expense) in defending or settling such claim. EPE shall have the right, at its option and expense, to participate in the defense of any action, suit or proceeding relative to such claims through counsel of its own choosing.

7.3 EXCEPT FOR CLAIMS FOR (i) INDEMNIFICATION UNDER SECTION 7.1 OR SECTION 7.2 OR BREACH OF THE CONFIDENTIALITY PROVISIONS OF SECTION 9, EACH TO WHICH THE PROVISIONS AND LIMITATIONS OF THIS SECTION 7.3 SHALL NOT APPLY, OR (ii) DAMAGE TO OR DESTRUCTION OF THE REAL PROPERTY OR TANGIBLE PERSONAL PROPERTY OF A PARTY, WHICH SHALL BE LIMITED TO THE AMOUNTS REQUIRED TO FULLY ABATE OR REPAIR SUCH DAMAGE TO OR TO REPLACE SUCH PROPERTY, NOT TO EXCEED THE AGGREGATE AMOUNT OF $1,000,000 REGARDLESS OF WHETHER SUCH AMOUNTS ARE CONSIDERED SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES, LOSS OF PROFITS OR REVENUE, LOSS OF USE OF PROPERTY, OR OTHER ECONOMIC DAMAGES. ALL PAYMENTS DUE CONSULTANT UNDER THIS AGREEMENT FOR SERVICES, DELIVERABLES, COSTS, AND EXPENSES SHALL BE DEEMED TO CONSTITUTE DIRECT DAMAGES (AND NOT SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES) FOR THE PURPOSES OF THIS SECTION 7.3.

7.4 EXCEPT FOR CLAIMS FOR (i) INDEMNIFICATION UNDER SECTION 7.1 OR SECTION 7.2 OR BREACH OF THE CONFIDENTIALITY PROVISIONS OF SECTION 9, EACH TO WHICH THE PROVISIONS OF THIS SECTION 7.4 SHALL NOT APPLY, OR (ii) DAMAGE TO OR DESTRUCTION OF REAL PROPERTY OR TANGIBLE PERSONAL PROPERTY OF EPE, WHICH SHALL BE SUBJECT TO THE PROVISIONS AND LIMITATIONS PRESCRIBED BY SECTION 7.3, CONSULTANT SHALL IN NO EVENT BE LIABLE TO EPE FOR AN AMOUNT EXCEEDING THE AGGREGATE AMOUNT TO BE PAID TO CONSULTANT FOR SERVICES AND DELIVERABLES UNDER THIS AGREEMENT.

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8. Force Majeure.

8.1 Neither party shall be liable to the other for failure to perform or delay in performance of its obligations under this Agreement if and to the extent that such failure or delay is caused by or results from causes beyond its control, including, without limitation, any act (including delay, failure to act, or priority) of the other party or any governmental authority, civil disturbances, fire, acts of God, acts of public enemy, compliance with any regulation, order, or requirement of any governmental body or agency, or inability to obtain transportation or necessary materials in the open market.

8.2 As a condition precedent to any extension of time otherwise prescribed by Section 8.3, the party seeking an extension of time shall, not later than ten (10) days following the occurrence of the event giving rise to such delay, provide the other party written notice of the occurrence and nature of such event.

8.3 In the event of a delay in performance excusable under Section 8, the date of delivery or time for performance of the work will be extended by a period of time reasonably necessary to overcome the effect of such delay.

9. Confidentiality and Nondisclosure.

9.1 For purposes of Section 9, “Confidential Information” shall mean all:

(i) financial, statistical, marketing, customer, and personnel data and information furnished by or obtained from EPE;

(ii) deliverables, output data, and information prepared for EPE under this Agreement;

(iii) working papers, proprietary software, tools, and other methodologies of each party;

(iv) software or other intellectual property licensed to EPE by any third party;

(v) other data or information identified in writing as confidential or proprietary by either party; and

(vi) oral information which is designated as confidential or proprietary at the time of disclosure and which is summarized and reduced to a writing otherwise conforming to Section 9.1(v) within ten (10) business days following disclosure.

9.2 Each party receiving Confidential Information (a “Recipient”) shall use its best efforts and take all reasonable steps to ensure that Confidential Information is not disclosed or transmitted to any person or entity other than such Recipient’s consultants, officers and employees (collectively “Representatives”) who (i) have a need to review or know such Confidential Information in order to perform the services or provide the deliverables described in the Statement of Work, (ii) are informed of the confidential nature of the Confidential Information, and (iii) agree to be bound by the terms of Section 9. Recipient shall not be required to hold confidential any Confidential Information which (i) becomes publicly available other than through Recipient, (ii) is required to be disclosed by a governmental or judicial order, rule or regulation, (iii) is independently developed by Recipient, or (iv) becomes available to Recipient without restriction from a third party. Recipient shall be responsible for any breach of Section 9 by its Representatives.

9.3 Should any person or entity seek to legally compel Recipient (by oral or written questions, interrogatories, request for information or documents, subpoena, civil investigative demands, regulation, statute, or otherwise) to disclose any Confidential Information, Recipient will provide the disclosing party prompt written notice so that the disclosing party may seek a protective order or other appropriate remedy (including participating in any proceeding to which Recipient is a party, which Recipient will use its reasonable business and legal efforts

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to permit). If, in the absence of a protective order, Recipient is, in the opinion of its legal counsel, compelled to disclose the Confidential Information, Recipient may disclose only such of the Confidential Information to the person or entity compelling disclosure as is required by applicable law, order, rule, or regulation.

9.4 Recipient acknowledges that the disclosing party would be irreparably injured by any breach of Section 9 and that remedies at law may be inadequate to protect the disclosing party against such injury. Accordingly, Recipient agrees that the disclosing party shall be entitled to equitable relief including, without limitation, injunctive relief and specific performance, without proof of actual damages in the event of any actual or threatened breach of any provision of Section 9 by Recipient, and any requirement for the posting of a bond or similar security as a condition precedent to such relief is hereby waived. Such remedies shall not be deemed to be the exclusive remedies for a breach of Section 9 by Recipient, but shall be in addition to all other remedies available at law or in equity.

9.5 Recipient shall return all Confidential Information within ten (10) days following receipt of the disclosing party’s written request for the return of such information.

10. Insurance.

10.1 Consultant shall at all times during the term of this Agreement carry and maintain at his sole cost and expense personal automobile liability coverage with limit of liability of not less than that required by the State of Texas.

10.2 On or before the commencement of services or conveyance of deliverables under this Agreement, Consultant shall provide EPE a certificate of insurance evidencing the coverage required by Section 10.1 if requested by EPE.

11. Notices.

11.1 Except as otherwise provided in this Agreement, all notices under this Agreement shall be in writing and be effective upon delivery if delivered by (i) hand, (ii) certified or registered United States Mail postage prepaid, or (iii) facsimile, provided that service by facsimile after 5:00 p.m. local time of the recipient shall be deemed delivered on the following business day, as follows:

(i) if notice is to Consultant:

Scott D. Wilson

6400 Jamaica Court

Tallahassee, FL 32309

Facsimile (850) 906-9257

(ii) if notice is to EPE:

El Paso Electric Company

Attention David W. Stevens

100 N. Stanton

El Paso, Texas 79901

Facsimile (915) 521-4728; and

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if the notice is sent for the purposes described in Section 3.3, Section 8.2, Section 9.4, or Section 11.2, with a copy to:

El Paso Electric Company

Office of the General Counsel

100 N. Stanton

El Paso, Texas 79901

Facsimile (915) 521-4747.

11.2 Each party may change its address for purposes of notice under this Agreement by notice complying with Section 11.1.

12. Taxes.

12.1 EPE agrees to pay the amount of any sales, use, excise, or similar taxes (other than franchise taxes or taxes based on Consultant’s income) applicable to the performance of the services, if any, or, in lieu thereof, EPE shall provide Consultant a valid certificate exempting EPE from payment of such taxes.

12.2 EPE shall have no responsibility with respect to withholding, deductions, or payment of any federal or state income or employment-related taxes on behalf of Consultant or any of Consultant’s employees. Consultant agrees to pay and comply with and hold EPE harmless from and against the payment of all income and employment-related taxes which may be payable by Consultant under federal, state, or local laws arising out of the performance of this Agreement, including any interest or penalties. Consultant waives any and all claims for compensation because of any increase in the aforementioned taxes.

13. Subcontracts.

13.1 Consultant may not subcontract all or any part of the services or deliverables without the prior written approval of EPE, and such subcontracting shall not relieve Consultant of any of his duties or obligations under this Agreement.

14. Independent Contractors.

14.1 Consultant is an independent contractor and nothing in this Agreement shall be construed or deemed to create the relationship of employer and employee, joint venturers, or partnership between the parties. Subject to the provisions of this Agreement, Consultant shall be solely responsible for and shall wholly control the details of the services to be performed under this Agreement including, but not limited to, (i) the means and methods of performing the services, (ii) when to start and stop work and to take breaks and to control the progress of the services, (iii) coordination of Consultant’s services with the efforts of EPE’s employees and other contractors retained by EPE, and (iv) the duty and obligation to select and furnish the personal protective gear, transportation, tools, implements, and supplies necessary to accomplish Consultant’s duties and obligations under this Agreement.

15. [SECTION INTENTIONALLY OMITTED]

16. Entire Agreement.

16.1 This Agreement constitutes the entire agreement between the parties with respect to the services and deliverables and supersedes, except to the extent expressly incorporated herein, all prior negotiations, representations, or agreements relating thereto, whether written or oral. No amendments, changes, alterations, or modifications of this Agreement shall be effective unless in writing and executed by EPE and Consultant.

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17. Captions.

17.1 Headings of particular paragraphs are inserted for convenience only and in no way constitute a limitation of the scope of the paragraphs to which they refer.

18. Partial Invalidity.

18.1 If any term or provision of this Agreement is determined to be invalid, void, or unenforceable, the remaining terms and provisions of this Agreement shall, to the extent reasonable and practicable, continue in full force and effect.

19. Waiver.

19.1 No waiver of the terms, conditions, and covenants of this Agreement shall be binding and effective unless the same shall be in writing signed by the parties. A waiver of any breach of the terms, conditions, and covenants of this Agreement shall be for that one time only and shall not apply to any subsequent breach.

20. Assignment.

20.1 Consultant shall not assign this Agreement to any person or entity without the prior written consent of EPE. Any attempted assignment in violation of this Section 20.1 shall be null and void.

21. Attorneys’ Fees.

21.1 If legal action is filed to enforce the terms of this Agreement, the prevailing party shall be entitled to court costs, collection costs, and reasonable attorneys’ fees in addition to any other relief to which that party may be entitled.

22. Governing Law.

22.1 This Agreement shall be governed by and construed under the laws of the State of Texas without reference to its rules governing conflicts of law or choice of laws.

23. Non-Solicitation of Employees.

23.1 Absent prior written consent of the other party in each instance, neither party nor any of its related or affiliated persons or organizations, will, for so long as this Agreement is in effect, solicit for hire, hire or in any way employ or engage the services of or otherwise compensate any person who, in the preceding twelve (12) month period, was an employee of the other party or its related or affiliated persons or organizations, until a period beginning twelve (12) months after such person’s employment with the other party terminated. In the event of a breach of the provisions of this Section 23.1, the non-breaching party shall provide written notice to the other party of the alleged violation hereof and shall provide a cure period of thirty (30) days for the breaching party to remedy the violation if it is able and so chooses or to obtain the written consent of the non-breaching party to the hiring or solicitation of such employee or former employee. In the event that the breaching party fails to cure the violation or obtain the written consent of the non-breaching party within the cure period specified above, the non-breaching party shall be entitled to collect liquidated damages from the breaching party in an amount equal to the first year’s salary for the employee at issue. The liquidated damages specified above shall be the exclusive remedy for a violation of this Section 23.1 and the non-breaching party shall not seek or collect any additional damages or remedies (including equitable relief) in connection with the violation.

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24. Survival.

24.1 The provisions of Sections 3, 5, 6, 7, 9, 11, 12, 13, 14, 16, 17, 18, 19, 20, 21, 22, 23, 24 and 25 shall survive the termination of this Agreement; provided, however, the provisions of Sections 6.1 and 6.2 shall not survive the termination of this Agreement under Section 3.2 or Section 3.3.

25. Multiple Counterparts.

25.1 This Agreement may be signed in two or more counterparts, each of which shall be treated as an original but which, when taken together, shall constitute one and the same instrument.

26. Cross Default.

26.1 Any default under the terms and conditions of that certain Employee Separation Agreement and Release entered into of even date herewith between Consultant and EPE shall be construed to be a default under the terms and conditions of this Agreement.

Scott D. Wilson	El Paso Electric Company
/s/ Scott D. Wilson	By:	/s/ David W. Stevens
Signature		David W. Stevens
		Chief Executive Officer

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STATEMENT OF WORK

I. Description of Consulting Services:

Consultant shall make himself available from time to time to provide advice, expert or factual testimony, preparation or review of testimony, preparation of analyses or other work product, attend hearings or other meetings, or otherwise assist EPE, as directed by David Stevens, David Carpenter or their designee, in connection with state and federal regulatory matters, including, but not limited to, matters before the New Mexico Public Regulation Commission, the Public Utility Commission of Texas and the Federal Energy Regulatory Commission, or provide such other services within the scope of Consultant’s prior job responsibilities as the Chief Financial Officer of EPE as may be reasonably requested by EPE from time to time.

II. Consultant agrees to devote a reasonable amount of time each month, not to exceed 80 hours, though by the mutual consent of EPE and the Consultant such hours may be increased to a total not to exceed 100 hours per month, in the performance of the services described above

III. Consultant shall be responsible for out-of-pocket expenses incurred in the performance of his duties hereunder unless such expenses are reasonable and have been approved in advance by EPE. EPE agrees to reimburse Consultant for reasonable out-of-pocket expenses incurred for out-of-town travel which was requested by EPE and for other incremental expenses necessary for Consultant to perform his duties under this contract, such as overnight delivery services, long distance phone charges, etc.

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Consulting Services Agreement – Wilson