Exhibit 10.85

 

EMPLOYMENT CONTRACT

 

THE STATE OF TEXAS

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KNOW ALL MEN BY THESE PRESENTS:

COUNTY OF MIDLAND

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This Employment Contract (“Agreement”) is made and entered into by and between
CAP ROCK ENERGY CORPORATION and WILLIAM WEST on this 30th day of December 2003,
and the initial term of this Agreement and all other terms and provisions
herein, are effective beginning as of January 1, 2003 This Agreement modifies,
amends and supercedes the Agreement previously executed by and between the
Parties to this Agreement.

 

By this Agreement, Cap Rock Energy Corporation, referred to in this Agreement as
“Company”, acting by and through its President and Chief Executive Officer,
David W. Pruitt, or his successor, hereinafter referred to as “Pruitt” employs
William West, referred to in this Agreement as “West”, and whose principal place
of employment is Midland, Midland County, Texas, who accepts employment on the
following terms and conditions:

 

ARTICLE 1

 

TERMS OF EMPLOYMENT

 

By this Agreement, the Company, acting by and through Pruitt, employs West and
West 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, West shall be paid by Company a salary of $185,000.00 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                        West 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.

 

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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
West as they would to other employees of the Company.  Notwithstanding the
foregoing however, West may, at his option, elect to be covered under or
participate in the Company’s employee benefit plans  as though he were hired
prior to May 1, 2002,.except that West shall not be entitled to receive health
and dental insurance benefits after his employment with the Company terminates
as are currently available to employees hired prior to May 1, 2002 pursuant to
Board Policy 123.

 

2.04                        Because West’s duties will from time to time require
him to work outside of, and in addition to, the Company’s established normal
workweek, work days and work hours, West shall be allowed to take compensatory
time off.

 

2.05                        Company will reimburse West for professional dues
and continuing education requirements.

 

2.06                        Company will pay West’s reasonable expenses to
include living expenses while living in Midland on a temporary basis prior to
moving his family between January 1, 2004 and July 31, 2004 or such later date
as the Parties agree.  The Company further agrees to pay West’s moving expenses
as follows:

Out of pocket costs of moving household contents and automobiles (at least two
bids submitted), pets and family members,

In the case where West’s current home is sold prior to the purchase of a
replacement home, temporary housing and storage if necessary,

In the case where West’s current home is not sold prior to the purchase of a
replacement home, out of pocket costs equal to the higher of the two homes
actual payments (debt service and escrow) for a period not to exceed six months.

 

ARTICLE 3

 

COVENANT TO PERFORM

 

3.01                        West 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 Pruitt.

 

 3.02                     West 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”.

 

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ARTICLE 4

 

TERM AND TERMINATION

 

4.01                        The Company shall employ West pursuant to this
Agreement for the one (1) year term beginning with the effective date set forth
above, yearly renewable subject to and following a satisfactory evaluation
employee appraisal report on West by Pruitt for successive one year terms. 
However, if during such employment, West fails or refuses to perform the work
and services assigned to him on behalf of the Company by Pruitt, 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 Pruitt’s sole option, cease and terminate and any of 
West’s rights hereunder not already finally vested shall cease on or at such
time as Pruitt shall notify West in writing.  The term “cause” shall include the
following:

 

1.                                       Knowingly, willfully and substantially,
during the term of this Agreement, neglects the duties that West 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.

 

4.                                       An unsatisfactory evaluation by Pruitt
of West on the annual employee appraisal,

 

4.02                        If West’s employment terminates for any reason other
than as provided for in paragraph 4.01, 4.03, 4.04, 4.05 or 4.06, the Company
shall pay West 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 Pruitt.

 

4.03                        Notwithstanding paragraphs 4.01 and 4.02, this
Agreement and West’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, and 4.03 above, West’s employment hereunder shall terminate under any of
the following conditions:

 

a.                                       Death.             West’s employment
under this Agreement shall terminate automatically upon his death.  In such
event, West’s 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 West becomes Totally
Disabled.  For purposes of this Agreement, “Totally Disabled” means that West 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 West is
Totally Disabled, but after West has exhausted all sick leave and vacation
benefits provided by the Company, West 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) West remains employed until the date that is three (3) months
after the date of a Change in Control (the “Retention Date”), or (ii) West’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 West for Good Reason, then, in addition to
any other amounts payable pursuant to this Agreement, the Company shall pay West
a lump sum cash payment within thirty (30) days of termination equal to six (6)
times the sum of West’s annual Base Salary and the greater of (x) the highest
bonus awarded to West in a prior year or (y) 50% of West’s 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 West’s
consent:

 

(1)                                  a material reduction in West’s salary or
benefits excluding the substitution of substantially equivalent compensation and
benefits;

 

(2)                                  a material diminution of West’s duties,
authority or responsibilities as in effect immediately prior to such diminution;

 

(3)                                  the relocation of West’s primary work
location to a location more than 50 miles from West’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

 

4.06                        West’s place of employment pursuant to this
Agreement shall be at the corporate offices in Midland, Texas, unless Pruitt
shall direct otherwise.  In that event, at West’s option, he may refuse to move,
terminate this Agreement and receive payment for the remainder of his contract
term as set forth in paragraph 4.02 above.

 

4.07                        In the event West is eligible to receive a lump sum
payment pursuant to this Agreement and such lump sum payment would cause West 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.

 

 

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ARTICLE 5

 

TRADE SECRETS AND CONFIDENTIAL INFORMATION

 

5.01                        During the term of West’s employment, the Company
will provide West 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                        West 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.  West 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. 
West, 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 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.  West agrees not to use, steal, or appropriate such
items or versions thereof, whether copies or reconstructed from memory or
otherwise, in any manner.  West 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.  West 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 West’s employment pursuant to this Agreement. 
Therefore, West 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 West of this Article shall be a material
violation of this Agreement and will justify legal and/or equitable relief. 
West 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, West 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, West 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.

 

 

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5.03                        West 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

 

West 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 West from,
among other things, attempts to serve or assist others in serving the Company’s
present or potential customers.  West 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                        West 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.  West agrees generally to speak
favorably of the Company and his employment with the Company.

 

7.02                        West 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 West’s employment with the Company is terminated.

 

7.03                        The Company and West 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 West 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 West of all amounts paid to West from the time of the breach, received by
West from Company pursuant to this Agreement from the time of the breach, or any
amounts which West is entitled to receive pursuant to this Agreement, and all
rights and benefits, including health insurance benefits and stock which West
may be entitled to receive pursuant to this Agreement.

 

 

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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 West’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 West 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 West from any such
corporations.

 

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 counterpart on
or as of the 30th day of December, 2003.

 

 

CAP ROCK ENERGY CORPORATION

 

 

/s/ Will West

 

/s/ David W. Pruitt

 

Will West

David W. Pruitt, President/CEO

 

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