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 _____ day of ________________________, 2001.
By this Agreement, Cap Rock Energy Corporation, referred to in this
Agreement as "Company", acting by and through its President and Chief
Executive Officer, Xxxxx X. Xxxxxx, or his successor, hereinafter referred to
as "Xxxxxx" employs Xxxxxx Xxxx, referred to in this Agreement as "Lyon", and
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, employees Lyon and Lyon accepts employment with the
Company as Vice-President/General Counsel for an initial term of one (1)
year. Unless a written notice to terminate this Agreement is executed and
properly delivered by either party at least ninety days prior to an
anniversary date of the execution of this Agreement, this Agreement shall
annually and automatically be renewed for an additional term of one (1) year.
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 by Lyon,
Company shall pay to Law Offices of Xxxxxx X. Xxxx, P.C. ("Lyon PC"), of
which Lyon is the President, $13,500.00 per month, or any greater amount of
compensation authorized by the Company, together with any annual salary
adjustment in an amount as determined by Xxxxxx, for Xxxx'x salary and for
non-reimbursed office expenses and overhead and for secretarial and staff
support as Lyon deems necessary to perform his duties as General Counsel
including Lyon's secretary/legal assistant. Lyon shall be paid by Lyon P.C .
Additionally, Company shall pay $1,000.00 per month into the executive
supplemental deferred compensation plan or a similar plan on behalf of Lyon,
or any greater amount as determined by Xxxxxx.
2.02 Lyon shall work full time for the Company and shall be allowed time off
similar to regular full-time employees of the Company as approved by Xxxxxx.
2.03 Company will reimburse Lyon for professional dues and continuing legal
education requirements.
2.04 Company will provide Lyon with an office at the Xxxx-Xxxxxx Division
Office or Lyon may office elsewhere in the North Texas area at his expense,
at Lyon's option. Should Lyon choose to office at the Xxxx-Xxxxxx office,
then amount of payment set forth in paragraph 2.01 above, shall be reduced by
the amount of rent Lyon currently pays and the monthly telephone service (not
including long distance charges).
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2.05 Company will reimburse Lyon for traditional out of pocket expenses as
it has prior to this Agreement including mileage, long distance telephone,
copies etc.
ARTICLE 3
COVENANT TO PERFORM
3.01 Lyon 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.
3.02 Lyon agrees to execute and honor and abide by the Company's "Employee
Pledge and Proprietary Rights and Information Agreement" which all other
employees of the Company have executed and agreed to, a copy of which is
attached hereto as Exhibit "A".
3.03 Lyon shall devote full time to his duties as General Counsel of
Company. However, nothing in this Agreement shall prevent Lyon from perform
nonconflicting legal work that does not interfere with his duties as General
Counsel as approved by Pruitt.
ARTICLE 4
TERM AND TERMINATION
4.01 The Company shall employ Lyon pursuant to this Agreement for the one
(1) year term beginning with the effective date of his employment hereunder,
yearly renewable subject to and following a satisfactory evaluation employee
appraisal report on Lyon by, for successive one year terms. However, if
during such employment, Lyon fails or refuses to perform the work and
services assigned to his 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
cause, this Agreement shall, at Xxxxxx'x sole option, cease and terminate and
any of Lyon's rights hereunder not already finally vested shall cease on or
at such time as Xxxxxx shall notify Lyon in writing. The term "cause" shall
include the following:
1. Knowingly, willfully and substantially, during the term of this
Agreement, neglects the duties that Lyon 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.
3. Insubordination or failing to follow the directives of the
President/CEO in connection normal assigned job related duties.
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4.02 If Lyon's employment terminates for any reason other than as provided
for in paragraph 4.01, 4.03, 4.04 or 4.05, the Company shall pay Lyon a lump
sum cash settlement equal to the total salary then in effect for one (1)
year, plus such amounts, if any, are at the time of his termination of
employment, payable for bonuses and other compensation authorized by the
Board of Directors or Xxxxxx.
4.03 Notwithstanding paragraphs 4.01 and 4.02, this Agreement and Lyon'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, 4.03 and 4.05
herein, Lyon's employment hereunder shall terminate under any of the
following conditions:
a. DEATH. Lyon's employment under this Agreement shall terminate
automatically upon his death. In such event, Lyon's Compensation shall
continue to be paid to his designated beneficiary for the remaining
term of this Agreement.
b. TOTAL DISABILITY. The Company shall have the right to terminate this
Agreement if Lyon becomes Totally Disabled. For purposes of this
Agreement, "Totally Disabled" means that Lyon 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 Lyon is
Totally Disabled, Lyon shall continue to receive his Compensation,
offset by any disability benefits he may be eligible to receive, for
the remaining term of this Agreement.
4.05 If (i) Lyon remains employed until the date that is three (3) months
after the date of a Change in Control (the "Retention Date"), or (ii) Lyon'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 Lyon for Good Reason,
then, in addition to any other amounts payable pursuant to this Agreement,
the Company shall pay Lyon a lump sum cash payment within thirty (30) days of
termination equal to six (6) times the sum of Lyon's annual Base Salary and
the greater of (x) the highest bonus awarded to Lyon in a prior year or (y)
50% of Lyon's annual Compensation.
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
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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
Lyon's consent:
(1) a material reduction in Lyon's compensation or benefits excluding
the substitution of substantially equivalent compensation and benefits;
(2) a material diminution of Lyon's duties, authority or
responsibilities as in effect immediately prior to such diminution;
(3) the relocation of Lyon's primary work location to a location more
than 50 miles from Lyon'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
ARTICLE 5
TRADE SECRETS AND CONFIDENTIAL INFORMATION
5.01 During the term of Lyon's employment, the Company will provide Lyon
access to, so she may become familiar with, various trade secrets and other
confidential or proprietary information of the Company, train his in the use
of same, and provide associates a working environment in which he can
contribute toward enhancing same and upgrading his general knowledge. Trade
secrets, proprietary information and confidential information encompass,
without limitation, anything which is owned by the Company and is regularly
used in the operation of the business of the Company to obtain a competitive
advantage over the Company's competitors who do not know, have access to, or
utilize such information or trade secrets. Proprietary information further
includes, but is not limited to, records, files, documents, bulletins,
publications, manuals, financial data and information concerning and the
identity of customers, prospects and suppliers. Trade secrets further
include, but are not limited to, specifications, software programs, both the
source code and the object code, documentation, flow charts, diagrams,
schematics, data, data bases, and business and production methods and
techniques.
5.02 Lyon acknowledges that such training and the use of the trade secrets
and confidential or proprietary information will enable his to perform his
job and enhance his compensation. Lyon recognizes and acknowledges that the
trade secrets and other confidential or proprietary information of the
Company are valuable, special and unique and that the protection thereof is
of critical importance to the Company in maintaining its competitive
position. Lyon, therefore, covenants and agrees that, except as required by
his employment hereunder or with the express prior written consent of the
Company, she shall not, during the term of his employment by the
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Company or at anytime thereafter, either directly or indirectly, make
independent use of, publish or otherwise disclose any of the aforesaid trade
secrets or other confidential or proprietary information of the Company
(whether acquired, learned, obtained or developed by him alone or in
conjunction with others) to any person, firm, corporation, association or
other entity for any reason or purpose whatsoever or allow any other person ,
firm, corporation, association or other entity to make use of, publish or
disclose any of the aforesaid trade secrets or other confidential or
proprietary information. Lyon agrees not to use, steal, or appropriate such
items or versions thereof, whether copies or reconstructed from memory or
otherwise, in any manner. Lyon further recognizes and acknowledges that in
order to enable Company to perform services for its customers and engage in
Company's business, information may be furnished to the Company confidential
information and that the goodwill afforded to Company depends upon, among
other things, Company and its employees keeping such services and information
confidential. Lyon therefore agrees that she shall keep all such information
of the Company and any of its affiliates and subsidiaries completely and
absolutely confidential. This agreement not to disclose confidential
information shall survive after the term of Lyon's employment pursuant to
this Agreement. Therefore, Lyon shall be bound by his agreement herein not
to disclose confidential information of the Company and its affiliates or
subsidiaries both during his employment with the Company and after his
employment with the Company is terminated. A violation by Lyon of this
Article shall be a material violation of this Agreement and will justify
legal and/or equitable relief. Lyon recognizes that if she breaches this
agreement and discloses confidential information or trade secrets of the
Company or any of its affiliates or subsidiaries, the Company will suffer
substantial, irreparable and continuing injuries, damages and costs attendant
thereto. Further, recognizing that money damages may not provide adequate
relief, Lyon agrees that, in the event that she breaches or threatens to
breach this Agreement, the Company shall be entitled to a preliminary or
permanent injunction in order to prevent the continuation of such harm and,
as liquidated damages, Lyon shall forfeit all payments made pursuant to this
Agreement from the date the Agreement was breached and any payments that are
or may be due pursuant to this Agreement, as well as any rights or benefits,
including health insurance benefits.
5.03 Lyon and the Company acknowledge and agree that the fact that the
Parties have entered into this Agreement and the terms of this Agreement are
confidential. Neither of the Parties may therefore disclose the terms of
this Agreement to others, except as necessary with regard to the filing of
income taxes and other necessary documents or as required by law, or pursuant
to a subpoena or court order, unless such disclosure has been approved by the
other Party's written permission.
ARTICLE 6
NON-COMPETITION AGREEMENT
Lyon agrees that upon his termination of employment from the Company, for
a period of two (2) years, he will not engage or participate, directly or
indirectly, in competition with the Company or any of its affiliates or
subsidiaries without the prior written consent of the Company which consent
shall not be unreasonably withheld. This Agreement shall prohibit Lyon from,
among other things, attempts to serve or assist others in serving the
Company's present or potential customers. Lyon further agrees that he will
never at any time after executing this
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Agreement, assist any person or entity in buying, merging with or acquiring
the Company unless the Company consents in writing. Notwithstanding the
foregoing, nothing in this Agreement does not apply to legal services whether
rendered to Company or to a subsequent employer of Lyon and nothing in this
Agreement shall be construed to relieve Lyon of his ethical duties regarding
conflicts of interest.
ARTICLE 7
PROHIBITIONS
7.01 Lyon shall not, at any time during or after the term of this Agreement,
make derogatory, false, or misleading oral or written comments to any person
or entity regarding the Company, its management, officers, directors,
employees or agents. Lyon agrees generally to speak favorably of the Company
and his employment with the Company.
7.02 Lyon agrees that neither he, nor any member of his immediate family,
shall run for or serve as a Director of the Company for a period of five (5)
years after Lyon's employment with the Company is terminated.
7.03 The Company and Lyon recognize and agree that the damages to the
Company for violation of Articles 5,6 and 7 may be difficult, if not
impossible to ascertain, and therefore the Parties hereby agree that in the
event Lyon breaches these Articles 5, 6, and 7, the Company shall be entitled
to liquidated damages for such breach which shall be forfeiture and
reimbursement by Lyon of all amounts paid to Lyon from the time of the
breach, received by Lyon from Company pursuant to this Agreement from the
time of the breach, or any amounts which Lyon is entitled to receive pursuant
to this Agreement, and all rights and benefits, including health insurance
benefits and stock which Lyon may be entitled to receive pursuant to this
Agreement.
ARTICLE 8
SUPERSESSION AND EFFECTIVENESS
8.01 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 Lyon's employment.
8.02 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.
8.03 The existence and effectiveness of this Agreement between the parties
hereto does not preclude or otherwise interfere with employment of Lyon 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 Lyon from any such corporations.
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8.04 This Agreement shall become binding upon the parties from and as of the
date of the execution.
ARTICLE 9
GOVERNING LAW
This Agreement has been executed in the State of Texas and shall be
governed by and construed in all respects in accordance with the laws of the
State of Texas. Nothing in this Agreement, including but not limited to
Sections 5, 6 and 7, shall conflict with all ethical rules applicable to
attorneys, and to the extent the contractual requirements conflict with such
ethical rules, the ethical rules shall control.
ARTICLE 10
ARBITRATION
All disputes, claims and matters in question arising under, with respect
to or out of this Agreement or the relationship between the parties created
by this agreement, whether sounding in contract, tort or otherwise, which
cannot be resolved between the Parties, shall be resolved by binding
arbitration pursuant to the Federal Arbitration Act. The arbitration shall
be administered by the American Arbitration Association ("AAA") in Dallas,
Texas in accordance with the Commercial Arbitration Rules of the AAA. There
shall be three arbitrators. Each party shall designate an arbitrator, who
need not be neutral, within 30 days of receiving notification of the filing
with the AAA of a demand for arbitration. The two arbitrators so designated
shall elect a third arbitrator. If either party fails to designate an
arbitrator within the time specified or the two parties' arbitrators fail to
designate a third arbitrator within 30 days of their appointments, the third
arbitrator shall be appointed by the AAA. The decision or award of a
majority of the arbitrators shall be final and binding upon the parties. Any
arbitral award may be entered as a judgment or order in any court of
competent jurisdiction. It is expressly agreed that the arbitrators shall
have no authority to award punitive or exemplary damages, the parties hereby
waiving their right, if any, to recover punitive or exemplary damages, either
in arbitration or in litigation.
IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate
originals, one being retained by each, on or as of the ____day of
____________________, 2001.
CAP ROCK ENERGY CORPORATION
____________________________________ ____________________________________
Xxxxxx Xxxx Xxxxx X. Xxxxxx, President/CEO
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THE STATE OF TEXAS )(
)(
COUNTY OF MIDLAND )(
This instrument was acknowledged before me on this the ______day of
_______________, 2001, by XXXXX X. XXXXXX, President/Chief Executive Officer
of Cap Rock Energy Corporation, a Texas corporation, on behalf of said
corporation.
____________________________________
Notary Public, State of Texas
(SEAL)
THE STATE OF TEXAS )(
)(
COUNTY OF XXXXXXX )(
This instrument was acknowledged before me on this the ______day of
_______________, 2001, by Xxxxxx Xxxx.
____________________________________
Notary Public, State of Texas
(SEAL)
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