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 14th day of September, 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 Xxx Xxxxxx, referred to in this Agreement as "Xxxxxx", and whose
principal place of employment is Xxxxxxx, Xxxxxx County, Texas, who accepts
employment on the following terms and conditions:
ARTICLE I
TERMS OF EMPLOYMENT
By this Agreement, the Company, acting by and through and under the
direction of Xxxxxx, employees Xxxxxx and Xxxxxx accepts employment with the
Company 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, Xxxxxx
shall be paid by Company a salary of $84,864.00 per year, or any greater amount
of compensation including bonuses 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 Xxxxxx shall receive fifteen (15) days of vacation (annual leave),
available immediately upon his employment pursuant to this Agreement, and the
same sick leave and all other benefits as are accorded regular full-time
employees of the Company including provisions governing accrual and payment
thereof on early retirement or other methods of employment as set forth in the
Company's employee policies.
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, stock options as
available and appropriate for his responsibility and experience and other fringe
benefits and working conditions as
they now exist or hereafter may be amended, shall apply to Xxxxxx as they would
to other employees of the Company.
2.04 Because Xxxxxx'x duties will from time to time require his 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.
2.05 Company will reimburse Xxxxxx for professional dues and continuing
education requirements.
ARTICLE 3
COVENANT TO PERFORM
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 assignments duly made
to him on behalf of the Company by Xxxxxx.
3.02 Xxxxxx 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".
ARTICLE 4
TERM AND TERMINATION
4.01 The Company shall employ Xxxxxx 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 Xxxxxx by, for successive one year terms. However, if during such
employment, Xxxxxx 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 Pruitt 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 Xxxxxx'x rights
hereunder not already finally vested shall cease on or at such time as Xxxxxx
shall notify Xxxxxx in writing. The term "cause" shall include the following:
1. Knowingly, willfully and substantially, during the term of this
Agreement, neglects 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, 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. An unsatisfactory evaluation by Xxxxxx of Xxxxxx on the
annual employee appraisal.
4.02 If Xxxxxx'x 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 Xxxxxx 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 accrued but untaken vacation and sick leave, compensatory time, bonuses and
other compensation authorized by the Board of Directors or Xxxxxx.
4.03 Notwithstanding paragraphs 4.01 and 4.02, this Agreement and Xxxxxx'x
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 above,
Xxxxxx'x employment hereunder shall terminate under any of the following
conditions:
a. 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.
b. 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.
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
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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 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 Xxxxxx is eligible to receive a lump sum payment pursuant to
this Agreement and such lump sum payment would cause Xxxxxx 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
TRADE SECRETS AND CONFIDENTIAL INFORMATION
5.01 During the term of Xxxxxx'x employment, the Company will provide Xxxxxx
access to, so he 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 Xxxxxx acknowledges that such training and the use of the trade secrets and
confidential or proprietary information will enable him to perform his job and
enhance his compensation. Xxxxxx
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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. Xxxxxx, therefore, covenants and agrees
that, except as required by his employment hereunder or with the express prior
written consent of the Company, he shall not, during the term of his employment
by the Company or at anytime thereafter, either directly or indirectly, make
independent use or 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. Xxxxxx agrees not to use, steal, or appropriate such items or
versions thereof, whether copies or reconstructed from memory or otherwise, in
any manner. Xxxxxx 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. Xxxxxx
therefore agrees that he 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 Xxxxxx'x employment pursuant to this Agreement. Therefore, Xxxxxx 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
Xxxxxx of this Article shall be a material violation of this Agreement and will
justify legal and/or equitable relief. Xxxxxx recognizes that if he 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, Xxxxxx agrees that, in the event that he 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, Xxxxxx 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 Xxxxxx 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
Xxxxxx 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
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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 Xxxxxx from, among other things, attempts to serve or
assist others in serving the Company's present or potential customers. Xxxxxx
further agrees that he will never at any time after executing this Agreement,
assist any person or entity in buying, merging with or acquiring the Company
unless the Company consents in writing.
ARTICLE 7
PROHIBITIONS
7.01 Xxxxxx 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. Xxxxxx agrees generally to speak favorably of the Company
and his employment with the Company.
7.02 Xxxxxx 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 Xxxxxx'x employment with the Company is terminated.
7.03 The Company and Xxxxxx 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 Xxxxxx
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 Xxxxxx of
all amounts paid to Xxxxxx from the time of the breach, received by Xxxxxx from
Company pursuant to this Agreement from the time of the breach, or any amounts
which Xxxxxx is entitled to receive pursuant to this Agreement, and all rights
and benefits, including health insurance benefits and stock which Xxxxxx 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 Xxxxxx'x 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 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.
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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.
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 14th day of September,
2001.
CAP ROCK ENERGY CORPORATION
/s/ Xxx Xxxxxx /s/ Xxxxx X. Xxxxxx
------------------------------- ------------------------------
Xxx Xxxxxx 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 14th day of
September, 2001, by XXXXX X. XXXXXX, President/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: 7-11-2003
------------
(SEAL)
THE STATE OF TEXAS )(
)(
COUNTY OF MIDLAND )(
This instrument was acknowledged before me on this the 20th day of
September, 2001, by XXX XXXXXX.
/s/ Xxxxxx X. Xxxxxx
-------------------------------------------
Notary Public, State of Texas
Printed Name of Notary:
XXXXXX X. XXXXXX
-------------------------------------------
My Commission Expires: 11-17-2003
--------------------
(SEAL)
