EXHIBIT 10.70.A


 


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 24th day of October, 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, David W. Pruitt, or his successor, hereinafter referred to as “Pruitt”
employs Ronald Lyon, 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 Pruitt, 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 Ronald W. Lyon, 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 Pruitt, for
Lyon’s 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 Pruitt.


 


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 Pruitt.


 


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 Hunt-Collin Division Office or Lyon may
office elsewhere in the North Texas area at his expense, at Lyon’s option.  Should Lyon


 


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choose to office at the Hunt-Collin 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).


 


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 Pruitt.


 


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 performing 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 on 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 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
Lyon’s rights hereunder not already finally vested shall cease on or at such
time as Pruitt shall notify Lyon in writing. 
The term “cause” shall mean 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.


 


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(3)           Insubordination or
failing to follow the directives of the President/CEO in connection with normal
assigned job related duties.


 


4.02        If
Lyon’s employment terminates for any reason other than as provided for in
paragraphs 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 Pruitt.


 


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:


 


(1)           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.


 


(2)           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


 


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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 Section 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 he
may become familiar with, various trade secrets and other confidential or
proprietary information of the Company, train him 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 him 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,
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


 


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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 all such information of the Company confidential.  Lyon 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 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 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, Lyon 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, 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 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 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


 


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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 successor, 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 Section 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 AAA.  The decision or award of a
majority of the 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 24th day of
October, 2001.


 


 


	
   

  	
  CAP ROCK ENERGY CORPORATION

  
	
   

  	
   

  
	
  By:

  	
  /s/ Ronald Lyon

  	
   

  	
  By:

  	
  /s/

  	
  David W. Pruitt

  
	
   

  	
  Ronald Lyon

  	
   

  	
  David W. Pruitt/CEO

  
							



 


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  STATE OF TEXAS

  	
  )(

  
	
   

  	
  )(

  
	
  COUNTY OF MIDLAND

  	
  )(

  



 


This instrument was acknowledged before me on this 24th day
of October, 2001, by DAVID W. PRUITT, President/Chief Executive Officer of Cap
Rock Energy Corporation, a Texas corporation, on behalf of said corporation.


 


	
   

  	
  By:

  	
  /s/ Sharon A. Hoelscher

  	
   

  
	
   

  	
   

  	
  Sharon A. Hoelscher

  
					



 


(SEAL)


 


	
  STATE OF TEXAS

  	
  )(

  
	
   

  	
  )(

  
	
  COUNTY OF GRAYSON

  	
  )(

  



 


This instrument was acknowledged before me on this 24th day
of October, 2001, by Ronald Lyon.


 


	
   

  	
  By:

  	
  /s/ Leslie A. Melson

  	
   

  
	
   

  	
  Leslie A. Melson

  



 


(SEAL)


 


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Exhibit "A"


 


CAP ROCK ENERGY CORPORATION


 


EMPLOYEE
PLEDGE AND


PROPRIETARY
RIGHTS AND INFORMATION AGREEMENT


 


This Agreement sets forth the understanding between you and Cap Rock
Energy Corporation (“Cap Rock Energy”) concerning your relationship as an
employee of Cap Rock Energy and your treatment of Cap Rock Energy’s
confidential and proprietary information. 
Cap Rock has agreed to employ you with the understanding and expectation
that you agree to and will abide by the following terms and conditions:


 


I.              Employee Pledge


 


a.             Conduct as an Employee.  I will conduct myself at all times while I
am on duty in a manner that will reflect well on Cap Rock Energy Corporation
since I am aware that my conduct as an employee of Cap Rock Energy reflects on
the Cooperative.  I understand that when
people observe me and my actions, they are looking at me as a representative of
Cap Rock Energy and will judge Cap Rock Energy through my actions.  Therefore, I will conduct myself in a
professional and dignified manner at all times.


 


b.             Giving the best.  I will strive to give the best of my ability
in my duties as an employee of Cap Rock Energy, and


 


c.             Defending and Promoting.  I will defend and promote the mission statement,
goals, and decisions of Cap Rock Energy whenever appropriate.


 


II.            PROPRIETARY INFORMATION


 


You understand that your employment with Cap
Rock Energy creates a relationship of a confidential or proprietary nature that
may be disclosed to you by Cap Rock Energy or learned by you in the course of
your duties at Cap Rock Energy, and that relates to:  (i) the business of Cap Rock Energy or that of any of its
subsidiaries, affiliates, customers, suppliers, or (ii) any confidential
information of third parties disclosed to Cap Rock Energy.  Such confidential and proprietary
information includes information concerning business strategies, financial
information and forecasts, personnel information and member-consumer lists and
is referred to collectively in this Agreement as “Proprietary Information.”


 


a.             Confidentiality of Proprietary
Information.  At all times, both
during your employment by Cap Rock Energy and after its termination, you agree
to keep all Proprietary Information in confidence and trust, and you will not
use or disclose Proprietary Information without the written consent of Cap Rock
Energy, except as may be necessary to perform your duties as an employee of Cap
Rock Energy.  Upon termination of your
employment with Cap Rock Energy, you will promptly deliver to Cap Rock Energy
all documents and materials of any kind pertaining to your work with Cap Rock
Energy, and you will not take with you any documents, materials or copies
thereof, whether on paper, magnetic or optical media, or any other medium
containing Proprietary Information.


 


b.             Information of Former Employer.  You agree that during your employment at Cap
Rock Energy you will not improperly use or disclose any confidential or
proprietary information of your former employers.


 


III.           NO CONFLICTING OBLIGATIONS


 


a.             No Conflicting Employment.  You agree that during the term of your
employment at Cap Rock Energy you will not plan or engage in any other
employment, occupation, consulting or other business activity directly related
to the business in which Cap Rock Energy is now involved or becomes involved
during the term of your employment, nor will you engage in any other activities
that conflict with your employment obligations to Cap Rock Energy.


 


b.             No Conflicting Agreements.  You represent to Cap Rock Energy that you
have no other agreements or commitments that would hinder or prevent the full
performance of your duties as a Cap Rock Energy employee or your obligations
under this Agreement, and you agree not to enter into such conflicting agreement
during the term of your employment at Cap Rock Energy.


 


c.             Disclosure of Agreement.  You hereby authorize Cap Rock Energy to
notify others, including customers of Cap Rock Energy, and any future employers
you may have, of the terms of this Agreement and your responsibilities under
this Agreement.


 


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IV.           NO IMPLIED EMPLOYMENT RIGHTS


 


You understand and agree that this Agreement
does not confer upon you any right to continued employment by Cap Rock Energy
that you would not otherwise have, nor does this Agreement obligate Cap Rock
Energy to employ you for any specific period of time.


 


V.            GENERAL PROVISIONS


 


a.             Severability.  If one or more of the provisions of this
Agreement are deemed void by law, then the remaining provisions will continue
in full force and effect.


 


b.             Governing Law.  This Agreement will be governed by the laws
of the State of Texas.


 


c.             Entire Agreement.  This Agreement sets forth the entire
Agreement and understanding between you and Cap Rock Energy relating to the
subject matter of this Agreement.  No
modification or amendment of this Agreement, nor any waiver of any rights under
this Agreement will be effective unless in writing signed by both you and an
authorized representative of Cap Rock Energy. 
Any subsequent changes in your duties, salary or compensation will not
affect the validity or scope of this Agreement.


 


d.             Successors and Assigns.  This Agreement will be binding upon your
heirs, executors, administrators and other legal representatives and will be
for the benefit of Cap Rock Energy, its successors and assigns.


 


 


	
  By:

  	
  /s/ Ronnie Lyon

  	
   

  	
  10/24/01

  	
   

  
	
  Employee Signature

  	
  Date Signed

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name

  	
  /s/ Ronnie Lyon

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  David W. Pruitt

  	
   

  	
  10/24/01

  	
   

  
	
  CRE Representative

  	
  Date Signed

  	
   

  
							



 


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