EMPLOYMENT CONTRACT
THE STATE OF TEXAS )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF MIDLAND )
THIS EMPLOYMENT CONTRACT ("Agreement") is made and entered into on or as of the
12th day of September, 2001 and the initial term of this Agreement and all other
terms and provisions herein, except for the amount of salary, are effective
beginning as of the 3rd day of August, 1992 when CAP ROCK ELECTRIC COOPERATIVE,
INC. and ULEN A NORTH, JR. entered into an Employment Contract. This Agreement
modifies, amends and supersedes the Employment Contract entered into between CAP
ROCK ELECTRIC COOPERATIVE, INC. and ULEN A NORTH, JR. on August 3, 1992, which
Employment Contract has been transferred to and assumed by CAP ROCK ENERGY
CORPORATION.
By this Agreement, CAP ROCK ENERGY CORPORATION, referred to in this Agreement as
"Company", acting by and through its Chief Executive Officer, Xxxxx X. Xxxxxx
hereinafter referred to as "Xxxxxx", employs ULEN A. NORTH referred to in this
Agreement as "North", and whose principal place of employment is Midland,
Midland County, Texas who accepts employment on the following terms and
conditions:
ARTICLE 1
TERMS OF EMPLOYMENT
By this Agreement, the Company, acting by and through and under the
direction of Xxxxxx, employs North and North accepts employment with the Company
for an initial term of two (2) years. Unless a written notice to terminate this
Agreement is executed and properly delivered by either party prior to an
anniversary date and subject to a satisfactory evaluation by Xxxxxx of North on
the annual employee appraisal, this Agreement shall annually and automatically
be renewed for an additional term of two (2) years. This Agreement may, however,
be terminated earlier, as provided in Article 4, below.
ARTICLE 2
EMPLOYMENT COMPENSATION & BENEFITS
2.01 As compensation for all services rendered under this Agreement, North
shall be paid by Company a salary of $106,614.12 per year, or any greater
amount of compensation including bonuses, fees and deferred compensation
authorized by the wage and salary plan or Board policies authorized by
the Company, together with an annual salary adjustment in an amount at
least equal to any approved across the board salary adjustments for all
employees.
2.02 North shall receive the same annual leave and sick leave and all
other benefits as are accorded regular full-time employees of the Company
including provisions governing accrual and payment therefore on early
retirement or other methods of employment.
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2.03 Subject to the above paragraph 2.02, all provisions of the Company's
rules and regulations relating to annual leave (vacation), sick leave, early
retirement, insurance, savings, deferred compensation, bonuses, pension
program contributions, holiday and other fringe benefits and working
conditions as they now exist or hereafter may be amended, shall apply to
North as they would to other employees of the Company.
2.04 Because North's duties will from time to time require him to work
outside of, and in addition to, the Company's established normal work week,
work days and work hours, North shall be allowed to take compensatory time off.
ARTICLE 3
COVENANT TO PERFORM
3.01 North agrees and covenants to perform his work and services diligently
and use his best efforts to faithfully comply with all of the assignments
duly made to him on behalf of the Company by Xxxxxx.
ARTICLE 4
TERM AND TERMINATION
4.01 The Company shall employ North pursuant to this Agreement for the two (2)
year term beginning on the effective date of his employment hereunder, yearly
renewable subject to and following a satisfactory evaluation employee appraisal
report on North by Xxxxxx, for successive two year terms. However, if during
such employment, North fails or refuses to perform the work and services
assigned to him on behalf of the Company by Xxxxxx, or should he become derelict
in so performing, or become unable to perform, or otherwise become in
substantial breach of this Agreement all as may be determined by Xxxxxx in his
sole discretion or otherwise so act as to give the Company good cause, this
Agreement shall, at Xxxxxx'x sole option, cease and terminate and any of North's
rights hereunder not already finally vested shall cease on or at such time as
Xxxxxx shall notify North in writing. The term "good cause" shall mean the
following and not otherwise:
(1) Knowingly, willfully and substantially, during the term of this
Agreement, neglects the duties that North is required to perform
under the terms of this Agreement.
(2) Knowingly, willfully and substantially, during the term of this
Agreement, commits clearly dishonest acts toward the Company with
the intent to injure or damage the Company.
4.02 If North's employment terminates for any reason other than as provided
for in paragraphs 4.01, 4.03, 4.04 or 4.05 herein, the Company shall pay
North a lump-sum cash settlement equal to the total salary then in effect
for the two (2) year term of the contract, plus the amount the Company would
have paid for during such period for North's retirement-pension plans, and
health insurance, plus such amounts, if any, are at the time of his
termination of employment, payable for accrued but untaken vacation and sick
leave, compensatory time, bonuses and other compensation authorized by
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the Board of Directors.
4.03 Notwithstanding paragraphs 4.01 and 4.02, this Agreement and North's
employment hereunder may be terminated at such time and upon such terms and
conditions as the parties may mutually agree.
4.04 Notwithstanding the provisions of paragraphs 4.01, 4.02, and 4.03
herein, North's employment hereunder shall terminate under any of the
following conditions:
(1) Death. North's employment under this Agreement shall terminate
automatically upon his death. In such event, North's Base Salary
shall continue to be paid to his designated beneficiary for the
remaining term of this Agreement.
(2) Total Disability. The Company shall have the right to terminate this
Agreement if North becomes Totally Disabled. For purposes of this
Agreement, "Totally Disabled" means that North is not working and is
currently unable to perform the substantial and material duties of
his position hereunder as a result of sickness, accident or bodily
injury for a period of three months. Prior to a determination that
North is Totally Disabled, but after North has exhausted all sick
leave and vacation benefits provided by the Company, North shall
continue to receive his Base Salary, offset by any disability
benefits he may be eligible to receive, for the remaining term of
this Agreement.
4.05 Notwithstanding any other provisions in this Agreement, if (i) North
remains employed until the date that is three (3) months after the date of a
Change in Control (the "Retention Date"), or (ii) North's employment is
terminated after or in anticipation of a Change in Control (or the execution of
a definitive agreement providing for actions which, if completed, would
constitute a Change in Control) and before the Retention Date (A) by the Company
without Good Cause or (B) by North for Good Reason, then, in addition to any
other amounts payable pursuant to this Agreement, the Company shall pay North a
lump sum cash payment within thirty (30) days of termination equal to six (6)
times the sum of North's annual Base Salary and the greater of (x) the highest
bonus awarded to North in a prior year or (y) 50% of North's annual Base Salary.
For purposes of this Agreement "Change in Control" means: (i) a
reorganization or merger of the Company with or into any other company which
will result in the Company's stockholders immediately
prior to such transaction not holding, as a result of such transaction, at least
50% of the voting power of the surviving or continuing entity or the entity
controlling the surviving or continuing entity; (ii) a sale of all or
substantially all of the assets of the Company to an entity in which the
Company's stockholders immediately prior to such sale will not hold following
such sale at least 50% of the voting power of such purchasing entity; (iii) a
transaction or series of related transactions which result in more than 50% of
the voting power of the Company being "beneficially owned" by a single "person"
(quoted terms having their respective meanings under Sections 13(d) and 14(d)
under the Securities Exchange Act of 1934, as amended); (iv) a change in the
majority of the Board not approved by at least two-thirds of the Company's
directors in office prior to such change or (v)
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the adoption of any plan of liquidation providing for the distribution of all
or substantially all of the Company's assets.
For purposes of this Agreement, after a Change in Control, "Good Reason"
shall mean the occurrence of any one of the following circumstances without
North's consent:
(1) a material reduction in North's salary or benefits excluding the
substitution of substantially equivalent compensation and benefits;
(2) a material diminution of North's duties, authority or
responsibilities as in effect immediately prior to such diminution;
(3) the relocation of North's primary work location to a location more
than 50 miles from North's primary work location as of the date of
this Agreement; or
(4) the failure of a successor to assume and perform under this
Agreement.
4.06 In the event North is eligible to receive a lump sum payment pursuant to
this Agreement and such lump sum payment would cause North to be subject to an
excise tax in excess of normal income taxes on such lump sum, then and in that
event, the lump sum payment shall be increased (grossed up) in an amount
sufficient to pay such excise tax.
ARTICLE 5
SUPERSESSION AND EFFECTIVENESS
5.01 This Agreement supersedes any other agreement or understanding,
written or oral, between the parties with respect to the matters covered
hereunder, and it contains the entire understanding of the parties and all of
the covenants and agreements between them with respect to North's employment.
5.02 This Agreement shall bind and be for the benefit of the parties to the
Agreement, as well as their respective successors, heirs and assigns, it being
understood, however that this Agreement may be assigned only with the written
consent of both parties.
5.03 The existence and effectiveness of this Agreement between the parties
hereto does not preclude or otherwise interfere with employment of North by
subsidiary corporations of Cap Rock Energy Corporation, or by any corporation
organized by the Company's Board of Directors for the benefit of the Company, or
the receipt of compensation by North from any such corporations.
5.04 This Agreement shall become binding upon the parties from an as of the
date of the execution.
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IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate
originals, one being retained by each, on or as of the 12th day of September,
2001.
CAP ROCK ENERGY CORPORATION
/s/ ULEN A. NORTH, JR. /s/ XXXXX X. XXXXXX
------------------------------- -----------------------------
Ulen A. North, Jr. Xxxxx X. Xxxxxx, CEO
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THE STATE OF TEXAS )
)
COUNTY OF MIDLAND )
This instrument was acknowledge before me on this the 12th day of September,
2001, by XXXXX X. XXXXXX, Chief Executive Officer of Cap Rock Energy
Corporation, a Texas corporation, on behalf of said corporation.
/s/ XXXXXX X. XXXXXXXXX
--------------------------------
Notary Public, State of Texas
Printed Name of Notary:
XXXXXX X. XXXXXXXXX
--------------------------------
My Commission Expires: 7-11-03
----------
(SEAL)
THE STATE OF TEXAS )
)
COUNTY OF MIDLAND )
This instrument was acknowledge before me on this the 12th day of
September, 2001, by ULEN A. NORTH, JR.
/s/ XXXXXX X. XXXXXXXXX
--------------------------------
Notary Public, State of Texas
Printed Name of Notary:
XXXXXX X. XXXXXXXXX
--------------------------------
My Commission Expires: 7-11-03
----------
(SEAL)
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