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
11th 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 XXXXX X. XXXXXX entered into an Employment Contract. This Agreement
modifies, amends and supersedes the employment Contract entered into between CAP
ROCK ELECTRIC COOPERATIVE, INC. and XXXXX X. XXXXXX 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", whose principal place of office is located in Midland, Midland
County, Texas, employs XXXXX X. XXXXXX, referred to in this Agreement as
"Xxxxxx", whose residence is in Midland, Midland County, Texas, who accepts
employment on the following terms and conditions:
ARTICLE 1
TERMS OF EMPLOYMENT
1.01 By this Agreement, the Company employs Xxxxxx and Xxxxxx accepts
employment with the Company as its Chief Executive Officer (CEO) for an
initial term of ten (10) years. Unless a written notice to terminate this
Agreement at the expiration of the initial ten (10) year term is executed and
properly delivered by either party at least 360 days prior to the eighth
anniversary date of the initial term of this Agreement, this Agreement shall
be automatically extended for a three year term from said eighth (8th)
anniversary date. Thereafter, unless a written notice to terminate this
Agreement is executed and properly delivered by either party within ninety
(90) days prior to any subsequent anniversary date of this Agreement, the
term of this Agreement shall automatically be extended, annually, on said
anniversary date for a three year term from said anniversary date until
Xxxxxx attains age 65. 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, Xxxxxx
shall be paid by Company a salary of $206,726.04 per year or any greater
amount of compensation including bonuses, fees and deferred compensation
authorized by the wage and salary plan or policies authorized by the
Company's Board of Directors, together with an annual salary adjustment in an
amount at least equal to any approved across the board salary adjustments for
all employees.
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2.02 Xxxxxx'x duties require that he shall have the exclusive and
unrestricted use at all times during his employment with the Company of an
automobile provided for him by the Company. The Company shall be responsible
for paying for liability, property damage, and comprehensive insurance and
for the purchase, operation, maintenance, repair and replacement of said
automobile.
2.03 Xxxxxx shall receive the same annual leave and sick leave and all
other benefits as are accorded regular full-time employees of Cap Rock Energy
Corporation including provisions governing accrual and payment therefore on
early retirement or other methods of employment.
2.04 Subject to the above paragraph 2.03, 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 approved by the Board of Directors as they now exist or hereafter
may be amended, shall apply to Xxxxxx as they would to other employees of the
Company. However, Xxxxxx, at his option, can elect to invest the Company's
annual expenses of Xxxxxx'x retirement plan in any chosen and Board approved
separate plan that provides for at least the same security for both the
Company and Xxxxxx.
2.05 Because Xxxxxx'x 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, Xxxxxx shall be allowed to take compensatory time
off.
ARTICLE 3
COVENANT TO PERFORM; PROFESSIONAL IMPROVEMENT
3.01 Xxxxxx agrees and covenants to perform his work and services
diligently and use his best efforts to faithfully comply with all of the
Company's duly made assignments to him as CEO in accordance with all of the
Company's directives and applicable bylaws, and policies.
3.02 The Company will from time to time, pay for the travel and related
out-of-pocket and other expenses of Xxxxxx and his spouse for Xxxxxx'x
attendance at and participation in meetings, conferences, seminars and the
like for the purpose of continuing his professional development and thereby
enhancing his ability to perform his work and services for the Company, and
for other activities deemed by the Board to be beneficial to and in the best
interest of the Company and its members.
ARTICLE 4
TERM AND TERMINATION
4.01 The Company shall employ Xxxxxx pursuant to this Agreement for the ten
(10) year term beginning on the date of this Agreement, together with such
annual three(3) year renewals as provided herein, and ending no later than
the end of the three(3) year term next expiring on/after the date when Pruitt
attains the age of sixty-five (65) years. During such employment, Xxxxxx
shall be obligated to perform the work and services reasonably required in
order to carry out those responsibilities and exercise those authorities
specified in the Position Responsibility Guide, General
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Manager, agreed to by the Company and Xxxxxx on December 1, 1987, which
document is attached to and incorporated herein by reference. However, the
Company may terminate this Contract for good cause in which event any of
Xxxxxx'x rights hereunder not already finally vested shall also terminate.
The term "good cause" shall mean the following and not otherwise:
(1) Knowingly, willfully and substantially, during the term of this
Agreement, neglect the duties that Xxxxxx is required to perform
under the terms of this Agreement.
(2) Knowingly, willfully and substantially, during the term of this
Agreement, commit dishonest acts toward the Company with the
intent to injure or damage the Company.
4.02 If Xxxxxx'x employment terminates prior to the initial term or any
extended term for any reason other than as provided for in paragraph 4.01,
4.03, 4.04 or 4,05 or because his authorities and responsibilities hereunder
are substantially and adversely (to him) limited, changed or eliminated, or
because he is required by the Company to move his residence and principal
site of work from the Midland, Texas area, and Xxxxxx is otherwise both able
and willing to perform his work and services as provided for hereunder, then,
in any such event, the Company shall pay Xxxxxx a lump-sum cash settlement
equal to the total salary then in effect for the remainder of the term of the
contract, plus the other amounts Company would have paid during such
remainder for Xxxxxx'x retirement, pension, MINT, bonus, fees or other
compensation plans authorized by the Board of Directors, 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.
4.03 Notwithstanding paragraphs 4.01 and 4.02, the parties hereto may mutually
agree to terminate this Agreement upon such terms and conditions as the parties
may mutually agree in writing.
4.04 Notwithstanding the provisions of paragraphs 4.01, 4.02, and 4.03, above,
Xxxxxx'x employment hereunder shall terminate under any of the following
conditions:
(1) Death. Xxxxxx'x employment under this Agreement shall terminate
automatically upon his death. In such event, Xxxxxx'x 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 Xxxxxx becomes Totally Disabled. For purposes of this
Agreement, "Totally Disabled" means that Xxxxxx 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 Xxxxxx is Totally Disabled, but after Xxxxxx has exhausted all
sick leave and vacation benefits provided by the Company, Xxxxxx
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.
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4.05 Notwithstanding any other provisions in this Agreement, if (i) Xxxxxx
remains employed until the date that is three (3) months after the date of a
Change in Control (the "Retention Date"), or (ii) Xxxxxx'x 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 Xxxxxx for Good Reason, then, in
addition to any other amounts payable pursuant to this Agreement, the Company
shall pay Xxxxxx a lump sum cash payment within thirty (30) days of
termination equal to six (6) times the sum of Xxxxxx'x annual Base Salary and
the greater of (x) the highest bonus awarded to Xxxxxx in a prior year or (y)
50% of Xxxxxx'x 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) 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
Xxxxxx'x consent:
(1) a material reduction in Xxxxxx'x salary or benefits excluding the
substitution of substantially equivalent compensation and benefits;
(2) a material diminution of Xxxxxx'x duties, authority or
responsibilities as in effect immediately prior to such diminution;
(3) the relocation of Xxxxxx'x primary work location to a location more
than 50 miles from Xxxxxx'x primary word 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 either party should bring legal action or incur attorney's
fees and/or court costs for the enforcement of any of the terms of this
agreement, it is agreed that the prevailing
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party shall be entitled to recover from the other such reasonable
attorney fees and/or court costs incurred. For purpose of this clause,
the prevailing party is the party who obtains a net recovery or the party
in whose favor final judgment is entered.
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 agreement between them with respect to Xxxxxx'x employment.
5.02 This Agreement shall 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 Xxxxxx 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 Xxxxxx from any such corporations.
5.04 This Agreement shall become binding upon the parties from an as of the
date of the execution.
IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate
originals, one being retained by each, on or as of the 11th day of September,
2001.
CAP ROCK ENERGY CORPORATION
/s/ XXXXX X. XXXXXX /s/ XXXXXXX X. XXXXX
------------------------- ------------------------------
Xxxxx X. Xxxxxx Xxxxxxx X. Xxxxx
Chairman
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THE STATE OF TEXAS )(
)(
COUNTY OF MIDLAND )(
This instrument was acknowledge before me on this the 11th day of September,
2001, by XXXXXXX X. XXXXX, Chairman 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
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(SEAL)
THE STATE OF TEXAS )(
)(
COUNTY OF MIDLAND )(
This instrument was acknowledge before me on this the 11th day of
September, 2001, by XXXXX X. XXXXXX.
/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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