Exhibit 10.48
MANAGEMENT SERVICE AGREEMENT
This Agreement ("Agreement") is made and entered into by and between CAP
ROCK ELECTRIC COOPERATIVE, INC., a Texas electric cooperative corporation
("CAP ROCK"), and Xxxxx Electric Cooperative Association, a Texas electric
cooperative corporation ("XXXXX").
RECITALS
1. XXXXX is an electric distribution cooperative providing electric utility
service to its members within its duly certificated service area.
2. CAP ROCK is an electric distribution cooperative providing electric
utility service to its members within its duly certificated service area.
3. CAP ROCK and XXXXX previously entered into an agreement to combine the
two cooperatives and the members of XXXXX voted to combine with CAP ROCK.
4. There is currently litigation pending which makes it presently unclear
whether or not the combination between CAP ROCK and XXXXX can ever be
consummated.
5. XXXXX is in need of expertise and skills not currently available to it
at an affordable price.
6. XXXXX is in need of management expertise and resources that CAP ROCK can
offer in order to assist it in surviving in the deregulated market that is
coming in the near future.
7. CAP ROCK currently manages other non-owned electric utilities including
the Farmersville Municipal system in Farmersville, Texas.
8. Independent of the proposed combination of CAP ROCK and XXXXX, XXXXX is
in need of management skills and expertise that CAP ROCK can provide.
9. CAP ROCK proposes to assume management control of XXXXX and to manage
XXXXX under this Agreement.
AGREEMENT
In consideration of the foregoing recitals, the mutual promises and
obligations contained herein, and other good and valuable consideration, CAP
ROCK and XXXXX agree as follows:
1. EFFECTIVE DATE: This Management Service Agreement between CAP ROCK and
XXXXX shall be effective upon its execution by the last of the parties hereto to
sign this Agreement, as shown by the dates of their acknowledgments below.
2. ON THE EFFECTIVE DATE:
a. CAP ROCK will assume the responsibility and authority for the
management of XXXXX, including all aspects of managing LAMAR's
system and personnel. This includes decisions with regard to the
hiring and firing of employees, dealing with members, customer
service and all other areas of management of Xxxxx.
b. CAP ROCK will assign a designated person or persons as the manager
of XXXXX. Such designated person may change from time to time as
determined by CAP ROCK in its sole discretion.
c. CAP ROCK shall be responsible for all day to day management
functions of XXXXX and shall report directly to the XXXXX Board of
Directors.
d. Additionally, CAP ROCK shall provide routine engineering services
in the day to day operations, but additional, non-routine
engineering services such as engineering substations, transmission
lines, etc. shall be provided at an additional cost.
e. The XXXXX Board shall continue to set policy and perform all of its
fiduciary responsibilities, including monthly and yearly reviews,
and CAP ROCK shall perform the duties of a manager.
f. CAP ROCK agrees to manage XXXXX in a good and reasonable manner.
3. PAY FOR MANAGEMENT CONTRACT:
a. Upon the effective date, the pay for management services will be
$1,000.00 per month, plus expenses (automobile mileage, airfare,
hotel, meals and other normal travel expenses) if CAP ROCK does
not provide on site management services. If Cap Rock provides
onsite management services the pay shall be the employee cost,
plus expenses (automobile mileage, airfare, hotel, meals and other
normal travel expenses). The employee cost shall not exceed
$125,000.00 per year without the written consent of the Board of
Directors. The employee costs and other fees shall be paid monthly.
b. Additionally, CAP ROCK may, if requested by the Board of Directors
of Xxxxx, provide other services such as non- routine engineering
services, engineering sub stations and transmission systems,
SCADA, budgeting and accounting etc. Such services shall be
provided at an additional at-cost fee as agreed upon between CAP
ROCK and XXXXX.
4. TERM: This contract shall start on the date executed by CAP ROCK and
XXXXX (effective date) and shall be binding thereafter for an initial term of
five (5) years. Unless either party gives the other ninety (90) days written
notice prior to the expiration of the original term of this Agreement or any
extension thereof, the Agreement shall automatically be renewed for a term of
one (1) year, and the Agreement shall continue to automatically renew each year
unless either party gives the other party notice of intent to terminate the
Agreement as set forth herein. CAP ROCK and XXXXX agree that CAP ROCK will incur
additional costs and expense in staffing requirements in order to perform its
services under this Agreement. CAP ROCK and XXXXX agree that the damages to CAP
ROCK, included but not limited to, these additional costs, for early termination
of this Agreement are difficult if not impossible to ascertain. Therefore, if
XXXXX terminates the Agreement prior to the expiration of the original term or
any extension thereof, it shall be required to pay to CAP ROCK the balance
remaining to be paid to CAP ROCK under the original term of the Agreement or any
extension thereof plus a cancellation fee of $300,000.00 as liquidated damages.
5. ELECTRIC SERVICE/QUALITY: CAP ROCK shall be responsible for providing
service quality to the members equal to the service quality now in effect at
XXXXX. All of the current XXXXX work plan will be completed by CAP ROCK using
the funds within the time period specified by the current XXXXX work plan.
6. INDEMNIFICATION OF ALL DIRECTORS, ATTORNEYS, AND EMPLOYEES: CAP ROCK
shall indemnify and save harmless LAMAR's directors, officers, attorneys,
agents, management service companies, and employees from any personal
liability from all suits, actions, or claims of any character, type, or
description, for injuries or damages of any type to any person or entity,
including but not limited to any claims for injury to or death of any person
or persons suing for damage to or loss of property or any other type of
damages or loss, arising out of or attributed, directly or indirectly, to the
negligent or intentional actions of CAP ROCK under this agreement.
Furthermore, CAP ROCK agrees to indemnify and hold harmless XXXXX, its
directors, officers, attorneys, agents, management service companies, and
employees from the following:
a. Any claims brought by Xxxxxxx Country Electric Cooperative
Association as a result of the execution or performance of this
agreement;
b. Any claims made by any other individuals or entities as a result of
the execution of this agreement;
c. Any and all sanctions and/or damages assessed against XXXXX, its
directors, officers, attorneys, agents, management service
companies, and employees as a result of the injunction issued in
Cause No. CV-428,814; and
d. CAP ROCK agrees to be responsible for LAMAR's attorney's fees and
expenses incurred as a result of any allegation or claim made as a
result of a, b and c above.
7. CONFIDENTIALITY:
a. CAP ROCK agrees that all information communicated to CAP ROCK with
respect to the products, including any confidential information
gained by CAP ROCK or its representatives by reason of association
or employment with XXXXX or its associates is confidential. CAP
ROCK further agrees that all information, conclusions,
recommendations, reports, advice, or other documents generated by
CAP ROCK pursuant to this Agreement are confidential.
b. CAP ROCK promises and agrees that CAP ROCK shall not disclose any
confidential information to any other person unless specifically
authorized in writing by XXXXX to do so. If XXXXX gives CAP ROCK
written authorization to make any disclosures, CAP ROCK shall do so
only within the limits and to the extent of that authorization.
c. CAP ROCK shall use its best efforts to prevent inadvertent
disclosure of any confidential information to any third party by
using the same care and discretion that CAP ROCK uses with any
similar data CAP ROCK designates as confidential.
d. CAP ROCK acknowledges and agrees that all information concerning
the products and any future and proposed products of XXXXX
constitutes an exceptionally valuable trade secret of XXXXX. That
information includes, but is not limited to the fact that the
product is planned or in production, as well as any descriptions of
the features of the products.
e. CAP ROCK recognizes that XXXXX has and will have information
regarding products, prices, apparatus, costs, discounts, business
affairs, processes, trade secrets, technical matters, customer
lists, product design, copyrights, and other vital information
(collectively "information") which are valuable, special and unique
assets of XXXXX. CAP ROCK agrees that CAP ROCK will not at any time
or in any manner, either directly or indirectly, divulge, disclose,
or
communicate in any manner any such information to any third party
without the prior written consent of the XXXXX. CAP ROCK will
protect the information and treat it as strictly confidential.
8. MISCELLANEOUS PROVISIONS: This Agreement shall be binding upon, inure
to the benefit of; and be enforceable by CAP ROCK and XXXXX and their
respective heirs, personal representatives, successors, and permitted
assigns. This Agreement shall be governed by the laws of the State of Texas.
This Agreement represents the entire agreement of the parties hereto and
shall not be amended except by a written agreement signed by all the parties
hereto. In the event one or more of the provisions contained in this
Agreement or any application thereof shall be invalid, illegal, or
unenforceable in any respect, the validity, legality, and enforceability of
the remaining provisions of this Agreement or any other application thereof
shall not in any way be affected or impaired thereby. The application of any
provision of this Agreement may be waived by the person entitled to the
benefit thereof; provided, however, that no delay or failure on the part of
any person in exercising any right hereunder, and no partial or single
exercise thereof; shall constitute a waiver of any other rights hereunder.
Paragraph headings herein have no legal significance. This Agreement shall
not be assignable by either party except by CAP ROCK to any entity with which
CAP ROCK may merge or consolidate or to which CAP ROCK transfers
substantially all of its assets, and then only in the event that such
assignee assumes all of the obligations to XXXXX hereunder. Each party
warrants and covenants with the other that it has all authority necessary for
it to execute and carry out the provisions of this Agreement.
9. REMEDIES: If any action at law or equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys' fees, costs, and necessary disbursements in addition
to any other relief to which such party may be entitled.
10. PRIOR AGREEMENTS SUPERSEDED: This Agreement constitutes the sole and
only agreement of the parties hereto regarding the management of XXXXX by CAP
ROCK and supersedes any prior understandings or written or oral agreements
between the parties respecting the subject matter herein. The Parties
recognize and agree that this Agreement shall have no effect whatsoever on
the Agreement to Combine XXXXX and CAP ROCK which was previously executed by
the Parties and which shall continue in %11 force and effect unless and until
terminated by its terms. At such time as the Agreement to Combine XXXXX and
CAP ROCK is fully consummated and all assets and liabilities of XXXXX have
been transferred to and assumed by CAP ROCK and all customers of XXXXX have
become customers of CAP ROCK, then and at that time, this Management
Agreement shall terminate.
11. NOTICES: All notices and other communications with
respect to the subject matter of this Agreement shall be in writing and shall be
mailed by certified mail, return receipt requested, postage prepaid, or
delivered by hand, messenger, or reputable overnight courier, and shall be
deemed given when received at the addresses of the parties set forth below, or
at such other address furnished in writing to the other parties hereto following
the date of this Agreement:
If to Xxxxx: Xxxxx Electric Cooperative Association
X.X. Xxx 000
Xxxxx, Xxxxx 00000-0000
ATTN: Xxxxxxx Xxxxx, Chairman of the Board
If to Cap Rock: CAP ROCK ELECTRIC COOPERATIVE, NC. 000
X. Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
ATTN: Xx. Xxxx North, Executive Vice-President
12. COUNTERPARTS: This agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, XXXXX has executed this Agreement on this the 29 day
of AUG 2000.
Xxxxx Electric Cooperative Association
By:______________________________________
Xxxxxxx Xxxxx, Chairman of the Board
ATTEST:
_____________________________________
Secretary
STATE OF TEXAS )(
)(
COUNTY OF XXXXX )(
Before me, the undersigned authority, on this day personally appeared
XXXXXXX XXXXX, known to me to be the person whose name is subscribed to the
foregoing instrument, did under oath swear and affirm that he did sign the
instrument as his free and voluntary act and who further acknowledged to me
that he executed the same for the purposes and consideration therein
expressed.
Given under my hand and seal of office on this the 29 day of AUGUST, 2000.
______________________________
Notary Public, State of Texas
Printed Name of Notary
______________________________
My Commission Expires: _________
IN WITNESS WHEREOF, CAP ROCK has executed this Agreement on this the 29 day
of AUGUST, 2000.
Cap Rock Electric Cooperative, Inc.
By:________________________________________
Ulen North, Jr., Executive Vice President
ATTEST:
_______________________________
Secretary
STATE OF TEXAS )(
)(
COUNTY OF XXXXX )(
Before me, the undersigned authority, on this day personally appeared
ULEN NORTH known to me to be the person whose name is subscribed to the
foregoing instrument, did under oath swear and affirm that he did sign the
instrument as his free and voluntary act and who further acknowledged to me
that he executed the same for the purposes and consideration therein
expressed.
Given under my hand and seal of office on this the 29TH day AUGUST, 2000.
______________________________
Notary Public, State of Texas
Printed Name of Notary
______________________________
My Commission Expires: __________
