Exhibit 10.94

 

CAP ROCK ENERGY CORPORATION

RETAINER AGREEMENT

 

THIS RETAINER AGREEMENT (the “Agreement”) is entered into as of this 3rd day of
November 2005, effective at such time as David W. Pruitt ceases to serve as
Chief Executive Officer of Cap Rock Energy Corporation, and such Agreement is by
and between Cap Rock Energy Corporation, a corporation organized and existing
under the laws of the State of Texas having its principal place of business at
500 West Wall, Suite 400, Midland, Texas 79701 (“Company”) and David W. Pruitt,
an individual who resides at 5805 Stonecrest, Midland Texas 79707 (“Pruitt”),
collectively referred to as the “Parties”.

 

WITNESSETH:

 

WHEREAS, the Company is in the business of electric distribution services; and

 

WHEREAS, under Pruitt’s direction and leadership, the Company’s corporate
structure was reorganized from a member owned electric cooperative to a
shareholder owned corporation; and

 

WHEREAS, such reorganization provided tremendous benefits to the former members
of the cooperative and its customers and greatly enhanced the value of the
Company for its shareholders; and

 

WHEREAS, the Company operates as a public company in a competitive and
deregulated environment and Pruitt’s knowledge and expertise is critical to
enable the Company to continue to survive and prosper; and

 

WHEREAS, Pruitt’s current plans are to cease to be President and/or CEO or an
employee of the Company after a Special Shareholders meeting to be held in 2006
and to remain as a member of the Board of Directors and to remain as Co-Chairman
of the Board; and

 

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WHEREAS, the Company desires to retain Pruitt’s services as “Senior Advisor to
the Company” so that the Company will have Pruitt’s knowledge and experience
available to assist the incoming President/CEO; and

 

WHEREAS, the Company desires to retain Pruitt’s services as “Senior Advisor to
the Company” in order to assist the Company in the future and to prevent
competitors from hiring Pruitt; and

 

WHEREAS, the Company further desires to retain Pruitt’s services as “Senior
Advisor to the Company” in recognition of Pruitt’s past deeds, achievements and
accomplishments; and

 

WHEREAS, it is common practice for companies to enter into retainer agreements
with CEO’s who leave their employment; and

 

WHEREAS, the Company feels that it is in the best interest of the Company, its
shareholders, customers and employees to retain Pruitt so that he can provide
his advice and counsel to the Company.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained, the parties hereto agree as follows:

 

1.                                       THE SERVICES

 

Pruitt agrees to provide consulting services for the Company as requested by its
President/CEO and the Company from time to time and more particularly described
on Exhibit “A” and made a part hereof. The parties to this Agreement
specifically agree that Pruitt can provide his consulting services at such times
and places that are most convenient to Pruitt, at the Company’s expense. The
Company shall pay Pruitt’s expenses, including airfare and other expenses from
wherever Pruitt may be at such time as the Company may request that he attend a
meeting or other

 

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function in person.

 

2.                                       WORK FOR HIRE

 

a.                                       It is the intention of the parties
hereto that all rights, including without limitation copyright, in any written
materials, software products, reports, memoranda or notes prepared by Pruitt
pursuant to the terms of this Agreement, or otherwise for Company (hereinafter
the “Work”) vest in Company. The parties expressly acknowledge that the Work was
specially ordered or commissioned by Company, and further agree that it shall be
considered a “Work Made for Hire” within the meaning of the copyright laws of
the United States and that Company is entitled, as author, to the copyright and
all other rights therein, throughout the world, including, but not limited to,
the right to make such changes therein and such uses thereof, as it may
determine in its sole and absolute discretion.

 

b.                                      If, for any reason, the Work is not
considered a work made for hire under the copyright law, then Pruitt hereby
grants and assigns to Company, its successors and assigns, all of its rights,
title, and interest in and to the Work, including, but not limited to, the
copyright therein throughout the world (and any renewal, extension or reversion
copyright now or hereafter provided), and all other rights therein of any nature
whatsoever, whether now known or hereafter devised, including, but not limited
to the right to make such changes therein, and such uses thereof, as Company may
determine in its sole and absolute discretion.

 

3.                                       PROPRIETARY INFORMATION

 

a.                                       For purposes of this Agreement,
“proprietary information” shall mean any information relating to the business of
Company that has not previously been publicly released by duly authorized
representatives of Company and shall include (but shall not be limited to)

 

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information encompassed in all proposals, marketing and sales plans, financial
information, costs, pricing information, computer programs (including source
code, object code, algorithms and models), customer information, customer lists,
and all methods, concepts, know-how or ideas in or reasonably related to the
business of Company as well as confidential information belonging to Company’s
customers or clients.

 

b.                                      Pruitt agrees to regard and preserve as
confidential, all proprietary information, whether Pruitt has such information
in memory or in writing or other physical form. Pruitt shall not, without
written authority from Company to do so, directly or indirectly, use for the
benefit or purposes, nor disclose to others, either during the term of its
engagement hereunder of thereafter, except as required by the conditions of
Pruitt’s engagement hereunder, any proprietary information.

 

c.                                       Pruitt shall not disclose any reports,
recommendations, conclusions or other results of the Work or the existence or
the subject matter of this contract without the prior written consent of
Company. In Pruitt’s performance hereunder, Pruitt shall comply with all legal
obligations he may now or hereafter have respecting the information or other
property of any other person, firm or corporation. Neither Pruitt nor the
Company shall make any disparaging written or oral statements or comments about
the other during and after the term of this Agreement.

 

d.                                      Pruitt expressly agrees that the
covenants set forth in this Paragraph are being given to Company in connection
with the engagement of Pruitt by Company and that such covenants are intended to
protect Company against  competition by Pruitt, within the terms stated, to the
fullest extent deemed reasonable and permitted in law and equity. In the event
that the foregoing limitations upon the conduct of Pruitt are beyond those
permitted by law, such limitations, both as to time and geographical area, shall
be, and be deemed to be, reduced in scope and effect to the maximum extent

 

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permitted by law.

 

4.                                       INJUNCTIVE RELIEF

 

Pruitt acknowledges that the injury to Company resulting from any violation by
it of any of the covenants contained in this Agreement will be of such a
character that it cannot be adequately compensated by money damages, and,
accordingly, Company may, in addition to pursuing its other remedies, obtain an
injunction from any court having jurisdiction over the matter restraining any
such violation; and no bond or other security shall be required in connection
with such injunction.

 

5.                                       FEES AND REIMBURSEMENT OF CERTAIN
EXPENSES

 

a.                                       Company shall pay Pruitt a retainer fee
equal to fourteen thousand dollars ($14,000.00) per month, plus reasonable and
necessary expenses, including but not limited to travel expenses directly
related to the consulting services performed by Pruitt hereunder for Pruitt and
his wife. Pruitt shall furnish to Company, upon request, suitable evidence
regarding all such expenses. Such payments shall be made monthly during the term
of this Agreement by direct deposit into Pruitt’s designated bank account unless
Pruitt shall designate a different method of payment. Pruitt shall also be paid
stock in the same proportion as the officers of the Company.

 

b.                                      Pruitt shall retain his Midland Country
Club and Petroleum Club memberships and all incidents of ownership therein,
including credit for any assessments or charges of any kind previously paid by
the Company on his behalf. The Company shall pay all fees and dues associated
therewith on the same basis as the Company has paid such fees and dues in the
past through June 2005 and in the future through the end of this Agreement and
any renewals or extensions thereof. After the end of the term of this Agreement
and any renewals or extensions thereof, Pruitt shall pay

 

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such fees and dues.

 

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c.                                       During the term of this Agreement, the
Company shall continue to pay the premiums on Pruitt’s Principal Universal Group
Life Insurance policy that is currently in effect and that is to continue in
force during the term of this Agreement. At the termination of this Agreement,
Pruitt shall have the option, in accordance with the terms of such policy, to
keep the policy and pay the premiums if he so desires. Such policy shall remain
the property of Pruitt.

 

d.                                      Upon the effective date of this
Agreement, Pruitt shall no longer be an employee of the Company and shall be a
“retiree” of the Company. As a retiree, Pruitt shall be provided the maximum
lump sum amounts available to retirees under all of the Company’s policies, i.e.
sick leave (50% of 100% of all unused), personal leave and vacation (100% of all
unused), health and dental insurance benefits pursuant to Company policy on the
same basis as has been offered to other retirees with at least twenty years
employment (currently $580.00 per month) and all cash owed to Pruitt by the
Company at that time.

 

e.                                       During the term of this Agreement,
Pruitt will continue to serve on the Board of Directors of the Company, unless
his term on the Board expires and he is not reelected or there is a change of
control, in which case the balance of compensation Pruitt would have received as
a director through the term of this Agreement shall be immediately due and
payable to Pruitt, in addition to any other compensation Pruitt is entitled to
receive pursuant to this Agreement. Upon the effective date of this Agreement,
Pruitt shall become an outside director and he shall be entitled, at that time,
to all board fees etc. that all other outside directors receive (currently
$15,000.00 per year retainer, $5,000.00 per meeting attended in person,
$2,500.00 for telephone meetings, plus expenses and bonuses) for so long as he
serves as a director. Pruitt shall also be eligible to continue as Co-Chairman
of the Board if so elected and receive the additional compensation per board
policy as

 

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Chairman of the Board (currently $500.00 per meeting) and he shall be entitled
to receive stock bonuses, cash bonuses and stock awards on the same basis as all
other outside directors. Pruitt shall also continue to be eligible to
participate in the Company’s stock for comp and deferred compensation plans and
shall have the same options as officers and other directors with regard to
foregoing the issuance of amounts of stock to him, including grossing up of the
shares of stock issued and cash payments in order to pay income taxes on such
stock when issued or vested.

 

f.                                         Pruitt and his wife shall be entitled
to participate and attend, at the Company’s expense (which shall include dues
and all expenses for attendance), as Co- Chairman and/or Senior Advisor to the
Company, all CEO Club Super Pac and CEO club meetings, Association of Edison
Illuminating Companies (“AEIC”), various conferences sponsored by law firms and
various Funds that relate to the electric utility industry, merger and
acquisition seminars and/or forums, or the equivalent during the term of this
Agreement. Pruitt shall also be entitled to attend, at the Company’s expense,
any seminars or conferences etc. that the CEO requests Pruitt to attend or that
Pruitt deems beneficial to his role as Senior Advisor to the Company.

 

g.                                      Upon the effective date of this
Agreement, Pruitt shall be a participant, or continue to be a participant, in
the UBS Cap Rock Energy Corporation Supplemental Executive Deferred Compensation
Retirement Plan, or any successor plan, or equivalent plan, at such time as such
plan is established or whatever type of deferred compensation plan is in effect
at the time this Agreement becomes effective or which becomes effective during
the term of this Agreement. If no such plan is available to Pruitt, then in that
event, the Company shall contribute an amount as set forth below, grossed up by
39.6% for taxes,  into an individual plan designated by Pruitt. Pruitt’s
contribution to such plan as described above will be matched by the Company
based on the Company’s current

 

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401K contribution for employees hired prior to May 1, 2002 at $168,000.00 per
year (Pruitt’s compensation hereunder). For example, if Pruitt contributes 9%,
($15,120.00) into the plan, then the Company would contribute 12.5% ($21,000.00)
per year into a Company plan or $34, 768.00 per year if no Company plan is
available to Pruitt.

 

h.                                      Pruitt shall retain all mileage and
points earned in all travel programs such as American Airlines, American
Express, Southwest Airlines, Continental, Starwood and other hotels etc. earned
while an employee of the Company and during the term of this Agreement.

 

i.                                          During the term of this Agreement,
Pruitt shall be covered by the Company’s director and officer liability
insurance policies for the same amount as officers and directors of the Company
for his services hereunder. Further, during the term of this Agreement and
thereafter, the Company shall indemnify Pruitt and hold him harmless, and
provide for his legal defense, for any and all claims or causes of action of any
kind whatsoever made against Pruitt arising out of services rendered pursuant to
this Agreement or actions taken by Pruitt as President/CEO of the Company.

 

j.                                          Upon termination of this Agreement,
Pruitt expressly understands and agrees that Company’s sole obligation hereunder
shall be to pay Pruitt in accordance with this Agreement. However, Pruitt shall
still be entitled, after termination of this Agreement, to receive all amounts
to which he is entitled to receive as a Company retiree and as a member of the
Board of Directors.

 

6.                                       BENEFITS

 

Pruitt, as an independent contractor, shall not be entitled to any compensation,
wages, bonuses or benefits other than those provided for under Paragraph 5 of
this Agreement. Pruitt shall be entitled to such fees and expenses as set forth
in Paragraph 5 of this Agreement through the initial term of this Agreement,
regardless of whether or not this Agreement is terminated earlier. Pruitt

 

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shall not be required to carry liability insurance or any other type of
insurance as an Independent Contractor.

 

7.                                       DUTY TO REPORT INCOME

 

Pruitt acknowledges and agrees that he is an independent contractor under this
Agreement and not an employee of the Company and that it is Pruitt’s sole
obligation to report as income all compensation received from Company pursuant
to this Agreement. Pruitt further agrees that the Company shall not be obligated
to pay withholding taxes, social security, unemployment taxes, disability
insurance premiums, or similar items, in connection with any payments made to
Pruitt pursuant to the terms of this Agreement. Notwithstanding the above, the
Company and Pruitt agree and understand that all stock granted to him under
prior and future stock grants and all stock previously deferred under the
Company’s Stock for Compensation Plan or other deferred compensation plan shall
be grossed up in accordance with the normal Company policy in order to pay all
withholding and taxes such as income tax, social security tax, Medicare tax etc.
and Pruitt shall be paid the gross up amounts in cash.

 

8.                                       TERM

 

This Agreement shall be effective beginning November 12, 2005, when Pruitt
ceases to be an employee and officer of the Company. This Agreement shall
supercede Pruitt’s current Employment Contract, except that the provisions in
Section 4.05 regarding a “Change in Control” shall be incorporated by reference
in this Agreement and shall continue in effect for the term of this Agreement
and any extension thereof. The salary and bonus on which any such Change in
Control payment shall be based is Pruitt’s 2005 salary and 2004 bonus, which
amount equals $436,000.00. This Agreement shall continue for a period of five
years from its effective date; provided, however,

 

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that either Company or Pruitt may terminate this Agreement in whole or in part
at any time upon one year written notice to the other party. In the event the
Company terminates the Agreement pursuant to this provision, Pruitt shall remain
entitled to receive all compensation and benefits set forth herein, payable in a
lump sum within twenty days from such termination, and he shall not be required
to seek other employment or take any action to mitigate the total amount of
payments owed to him by the Company pursuant to this Agreement. In the event
Pruitt terminates the Agreement pursuant to this provision, he shall be entitled
to payment for all amounts payable under this Agreement up until the date of
termination, including reimbursement for all expenses incurred and Pruitt shall
have no further obligation to the Company pursuant to this Agreement, other than
those that specifically survive the termination of this Agreement.

 

In the event Pruitt becomes disabled or dies during the term of this Agreement
and is therefore unable to perform the services hereunder, all amounts payable
to Pruitt hereunder for the remaining term of this Agreement shall be paid to
him or his designated beneficiary (currently Patricia Ann Pruitt).

 

Either Party shall be entitled to terminate this Agreement if the other Party
refuses to perform its duties hereunder. In such case, the performing Party must
notify the non-performing Party of a breach and if such breach is not cured
within twenty days, the performing Party may terminate the Agreement. It shall
not be a breach of this Agreement or non-performance hereunder if Pruitt is
unable to perform requested duties in the time frame requested. Non-performance
by Pruitt shall mean a total failure to perform any duties as set forth in this
Agreement.

 

This Agreement may be extended by the mutual agreement of the Parties hereto. In
the event of termination or upon expiration of this Agreement, Pruitt shall be
permitted to keep any and all

 

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equipment which Pruitt received from Company. However, all documents or
materials, and all copies made thereof, which Pruitt received from Company for
the purposes of this Agreement shall be returned to the Company if requested by
the Company. Notwithstanding the foregoing, during the term of this Agreement,
Pruitt shall be entitled to keep all equipment such as cell phones, fax
machines, printers, copiers, personal computers, blackberry etc. in his
possession and the Company shall pay the related expenses of such equipment.
Also during the term of this Agreement, the Company shall provide any additional
equipment needed by Pruitt to perform services hereunder at the Company’s
expense and shall provide Pruitt with any clerical or secretarial assistance
needed. The Company may continue to provide such equipment and related expenses
and clerical or secretarial assistance to Pruitt, at the Company’s expense,
after the termination or expiration of this Agreement, if the President/CEO
approves such arrangement.

 

9.                                       NOTICES

 

All notices shall be in writing and sent via first class mail to Company and
Pruitt at their respective addresses set forth at the beginning of this
Agreement, or to such other address as either party shall notify the other party
by notice given hereunder.

 

10.                                 SUCCESSORS/CHANGE OF CONTROL

 

This Agreement shall remain binding on any successor of the Company and any such
successor, for whatever reason, change of control etc, shall be obligated to
assume and perform all of the Company’s obligations under this Agreement.

 

In the event Pruitt fails to serve out the remainder of his term on the Board of
Directors for which he was elected in 2004 or to which he is elected at a future
election, for any reason other than his own choosing (i.e. he is forced out
and/or pressured or encouraged to resign), he shall receive the

 

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normal outside director fees, bonuses, stock awards and all benefits he would
have received as a member of the Board of Directors through the end of his
current term. For purposes of this paragraph, in addition to other benefits,
Pruitt shall be entitled to receive the yearly retainer (currently $15,000.00
per year), $5,000.00 per meeting, pay for telephone board meetings estimated at
four per year which currently pay $2,500.00 per meeting, plus the additional
amount (currently $500.00 per meeting) for serving as Co-Chairman, and a yearly
bonus based on the average director bonus for the prior three years.

 

11.                                 COVENANT NOT TO COMPETE

 

During the term of this Agreement, Pruitt shall not engage, except as a passive
investor in publicly held companies, engage in or own or control any interest
in, or act as principal, director, officer or employee of, or consultant to, any
firm or corporation which is in competition with the Company. The Parties
specifically recognize and agree that this covenant not to compete shall not
prevent Pruitt from continuing to serve as a consultant/director for Panda
Energy, Delinea or other Company’s that are not in direct competition with the
Company. Further, Pruitt may consult for and serve as a director of other
entities with the approval of the Company’s General Counsel and CEO.

 

12.                                 CONFIDENTIALITY

 

The terms of this Agreement and the existence of the Agreement shall be kept
confidential except as required by law to be disclosed such as to the SEC or IRS
and except as disclosure is mandated by court order.

 

13.                                 ARBITRATION

 

Any controversy, claim or breach arising out of or relating to this Agreement or
the breach thereof shall be settled by arbitration in Midland, Texas or the
closest office thereto of the American

 

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Arbitration Association in accordance with the rules of the American Arbitration
Association and the judgment or award rendered shall be entered by consent in
any court having jurisdiction thereof.

 

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14.                                 GENERAL

 

a.                                       The terms and conditions of Paragraphs
2, 3, 4, 5, 6, 8, 10, 14g and 14h hereof shall survive the termination of this
Agreement.

 

b.                                      Pruitt shall not assign this Agreement
or delegate its duties hereunder and shall not subcontract any of the services
to be performed hereunder without the prior written consent of the Company.

 

c.                                       Pruitt shall perform the consulting
services described herein as an independent contractor and shall not be
considered an employee, partner, or joint venturer of Company or otherwise
related to Company for any purpose. Pruitt shall not be required to carry
liability insurance or any other type of insurance in performing his services as
an independent contractor hereunder.

 

d.                                      This Agreement shall be governed by the
laws of the State of Texas.

 

e.                                       All rights and obligations of the
Parties under this Agreement shall survive the termination of this Agreement.

 

f.                                         This Agreement constitutes the entire
understanding between Pruitt and Company respecting the consulting services
described herein.

 

g.                                      No amendment, or alteration of this
Agreement, nor any substitution or successor agreement,  shall be valid unless
made in writing and signed by all Parties hereto or the Company’s successor and
Pruitt.

 

h.                                      The terms of this Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their respective
personal representatives, heirs, administrators, successors and permitted
assigns.

 

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i.                                          The failure of either party to
exercise its rights under this Agreement shall not be deemed to be a waiver of
such rights or a waiver of any subsequent breach.

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date first above written.

 

Cap Rock Energy Corporation

 

By:

 

 

 

Russell E. Jones, Co-Chairman

David W. Pruitt

 

 

STATE OF TEXAS

)(

 

)(

COUNTY OF MIDLAND

)(

 

This instrument was acknowledged before me on this 3rd day of November 2005, by
RUSSELL E. JONES, Co-Chairman of the Board of Cap Rock Energy Corporation, a
Texas corporation, on behalf of said corporation.

 

 

 

Notary Public, State of Texas

 

(SEAL)

 

STATE OF TEXAS

)(

 

)(

COUNTY OF MIDLAND

)(

 

Before me, on this 3rd day of November 2005, personally appeared DAVID W.
PRUITT, known to me to be the person whose name is subscribed to the foregoing
instrument and acknowledged to me that he executed the same for the purposes and
consideration therein expressed.

 

 

 

Notary Public, State of Texas

 

(SEAL)

 

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Exhibit “A”

 

Description of Consulting Services

 

Provide advice and direction to the President/CEO and the Board of Directors of
Cap Rock Energy Corporation as requested. Services under this Agreement are to
be performed at a time and place most convenient to Pruitt and if Pruitt is
required to perform services in person, then and in that event, the Company
shall pay for all of Pruitt’s and his wife’s travel expenses from wherever he is
at the time to the location where the Company requests his presence and all of
Pruitt’s and his wife’s travel expenses to return to the location where he was
at the time the Company requested his presence. As set forth in Paragraph 5
herein, the Company shall pay all of Pruitt’s expenses, including travel,
lodging, and meals etc., related to the consulting services performed by Pruitt
pursuant to this Agreement.

 

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