EXHIBIT 10.81

 

CAP ROCK ELECTRIC

Achievement Based Compensation Contract

 

Southwestern Public Service Company Contract

 

In accordance with Cap Rock Electric Cooperative, Inc. (“Cap Rock Electric”)
Board Policy #143, this contract provides for calculation and payment of
incentive compensation in the form of a percentage of net power cost savings
resulting from the Southwestern Public Service Company power supply contract.

 

(1)          Responsible Individual:

 

Steven E. Collier, Director of Power Supply and Regulatory Affairs.

 

(2)          Amount of Achievement Based Compensation:

 

The Achievement Based Compensation will be two percent (2%) of the net savings,
where the net savings is defined as the amount by which SPSCo purchased power
costs are less than the purchased power costs would have been had TU Electric
remained the full requirements power suppliers.

 

Since a portion of the savings will result from the diversity of the various
delivery points that were served under noncoincident peak billing by TU Electric
and which will be served as a single point of delivery under the terms
negotiated with SPSCo, and since Cap Rock Electric would have eventually
combined the delivery points into one or two in any event, the portion of the
savings resulting from diversity will be imputed only for the first five years
of the Achievement Based Compensation or until TU Electric implements coincident
peak billing, whichever is sooner.

 

(3)          Calculation of the Savings:

 

The net savings will be calculated as the difference between the sum of the
power bills that would have applied under the standard TU Electric wholesale
tariff and the power bill that actually occurs under the SPSCo tariff.

 

Since the various substations that would have been separate delivery points
under the TU Electric noncoincident billing approach will be combined into one
delivery point for SPSCo, actual noncoincident demand billing units may not be
conveniently available.  If this is the case, the coincident demand of the load
served by SPSCo will be converted to an equivalent noncoincident demand for
calculation of the TU Electric benchmark bill using the average demand diversity
that existed among the relevant delivery points for the two years prior to
transfer to SPSCo.

 

(4)          Term of Achievement Based Compensation:

 

The Achievement Based Compensation will be paid until the sooner of the
termination of the SPSCo contract or ten years.

 

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(5)          Payment of the Achievement Based Compensation:

 

The Achievement Based Compensation will be paid after the end of each calendar
year based on the above-referenced calculation for that calendar year after
review and approval by the General Manager and Board of Directors of this
contract and the annual approval of the above-referenced calculation by the
General Manager.

 

The Achievement Based Compensation will be paid in cash to each eligible
individual in a lump sum unless the amount exceeds $10,000.00, in which case Cap
Rock Electric will have the option to spread the payment over as many months as
many months as necessary so that any one monthly payment does not exceed
$10,000.00.  The lump-sum payment or series of payments, if applicable, will be
made as provided in Board Policy #143 and with cash availability and overall
cash flow of the Cooperative considered.

 

The eligible individual shall have the option to elect some or all of the
payment to be made to such deferred compensation plans as may be maintained by
the individual or Cap Rock Electric.

 

(6)          Conditions and Considerations for Payment:

 

Except upon becoming eligible for benefits under any Cap Rock Electric
retirement plan, either early or regular, the Achievement Based Compensation
will by payable to the recipient listed below in para. (7) without regard to the
continued employment of those individuals by Cap Rock Electric or an affiliate
or subsidiary thereof, provided that, unless otherwise agreed by Cap Rock, each
individual agrees that he will not voluntarily terminate his employment by Cap
Rock Electric or any affiliate or subsidiary of Cap Rock Electric for the
shorter of three years following the date of initial payment under this contract
or until power deliveries have started and then ceased under the SPSCo contract,
during the first ten (10) years of said contract.  Further, each individual
agrees that he will keep the terms of this contract, as well as the terms of the
transaction causing the awarding and payment of the Achievement Based
Compensation, confidential.

 

(7)          Sharing with Other Individuals:

 

In recognition of the necessary contribution of the entire management team to
the continued success of Cap Rock Electric and the successful implementation of
the lease-purchase financing arrangements, the Achievement Based Compensation
will be shared among the Responsible Individual and the other management team
members as follows:

 

Responsible Individuals – 50%

 

Management Team – 50%

a.                                       Chief Executive Officer – 30%

b.                                      Other individuals selected by the CEO
and Board of Directors –20%

i.                                          Ulen North 10%

iii.                                    John D. Parker 10%

 

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Except for the confidentiality and retirement provisions, the conditions for
payment described above in Para. (6) are not applicable to those persons
identified and listed above as “Other Individuals”.  It is further understood
and agreed that such conditions for payment as set out in para. (6) are
applicable subject to the amount of such Achievement Based Compensation total
payment being commensurate and with the condition placed upon the recipients by
acceptance of such Compensation.

 

In the event the Responsible Party should violate the terms of the Agreement,
the right to receive future payments under this Agreement shall immediately
cease and such interest or right to future payments shall revert to Cap Rock
Electric.  In the event any individual name herein by the Chief Executive
Officer and Board of Directors as a part of the Management Team shall violate
the terms of this agreement, die, retire, or terminate their employment with Cap
Rock Electric for any reason, the right to receive future payments under this
contract shall immediately cease and the Chief Executive Officer shall have the
right to allocate such share among those named individuals or others as he may
deem in the best interests of the Cooperative.

 

Witness our hands on this 27th day of October, 1992

 

 

/s/ Steven E. Collier

10/27/92

 

Responsible Individual

Date

 

 

 

 

 

 

 

/s/ David W. Pruitt

10/27/92

 

Chief Executive Officer

Date

 

 

 

 

 

 

 

/s/ Russell Jones

10/27/92

 

Chairman

Date

 

 

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