**EXHIBIT 10.24.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 11th day of September,2001 and the initial term of this Agreement and all other terms and provisionsherein, except for the amount of salary, are effective beginning as of the 3rdday of August, 1992 when CAP ROCK ELECTRIC COOPERATIVE, INC. and DAVID W.PRUITT entered into an Employment Contract. This Agreement modifies, amends and supercedes the Employment Contractentered into between CAP ROCK ELECTRIC COOPERATIVE, INC. and DAVID W. PRUITT.on August 3, 1992, which Employment Contract has been transferred to andassumed by CAP ROCK ENERGY CORPORATION.

 

By this Agreement, CAP ROCKENERGY CORPORATION, referred to in this Agreement as “Company”, whose principalplace of office is located in Midland, Midland County, Texas employs DAVID W.PRUITT, referred to in this Agreement as “Pruitt”, whose residence is inMidland, Midland County, Texas, who accepts employment on the following termsand conditions:

 

**ARTICLE1**

 

**TERMSOF EMPLOYMENT**

 

**1.01**        By this Agreement, theCompany employs Pruitt and Pruitt accepts employment with the Company as itsChief Executive Officer (CEO)for an initial term of ten (10) years.  Unless a written notice to terminate thisAgreement at the expiration of the initial ten (10)year term is executed andproperly delivered by either party at least 360 days prior to the eighthanniversary date of the initial term of this Agreement, this Agreement shall beautomatically extended for a three year term from said eighth (8th)anniversarydate.  Thereafter, unless written noticeto terminate this Agreement is executed and properly delivered by either partywithin ninety (90) days prior to any subsequent anniversary date of thisAgreement, the term of this Agreement shall automatically be extended,annually, on said anniversary date for a three year term from said anniversaryuntil Pruitt attains age 65.  ThisAgreement may, however, be terminated earlier, as provided in Article 4, below.

 

**ARTICLE2**

 

**EMPLOYMENTCOMPENSATION & BENEFITS**

 

**2.01****       **Ascompensation for all services rendered under this Agreement, Pruitt shall bepaid by Company a salary of $206,726.04 per year or any greater amount ofcompensation including bonuses, fees and deferred compensation authorized bythe wage and salary plan or policies authorized by the Company’s Board ofDirectors, together with an annual salary adjustment in an amount at leastequal to any approved across the board salary adjustments for all employees.

 

1

----

 

**2.02****       **Pruitt’sduties require that he shall have the exclusive and unrestricted use at alltimes during his employment with the Company of an automobile provided for himby the Company.  The Company shall beresponsible for paying for liability, property damage, and comprehensiveinsurance and for the purchase, operation, maintenance, repair and replacementof said automobile.

 

**2.03****       **Pruittshall receive the same annual leave and sick leave and all other benefits asare accorded regular full-time employees of Cap Rock Energy Corporationincluding provisions governing accrual and payment therefore on earlyretirement or other methods of employment.

 

**2.04****       **Subjectto the above paragraph 2.03, all provisions of the Company’s rules andregulations relating to annual leave(vacation), sick leave, early retirement,insurance, savings, deferred compensation, bonuses, pension program contributions,holiday and other fringe benefits and working conditions approved by the Boardof Directors as they now exist or hereafter may be amended, shall apply toPruitt as they would to other employees of the Company.  However, Pruitt, at his option, can elect toinvest the Company’s annual expenses of Pruitt’s retirement plan in any chosenand Board approved separate plan that provides for at least the same securityfor both the Company and Pruitt.

 

**2.05****       **BecausePruitt’s duties will from time to time require him to work outside of, and inaddition to, the Company’s established normal work week, work days and workhours, Pruitt shall be allowed to take compensatory time off.

 

**ARTICLE3**

 

**COVENANTTO PERFORM: PROFESSIONAL IMPROVEMENT**

 

**3.01****       **Pruittagrees and covenants to perform his work and services diligently and use hisbest efforts to faithfully comply with all of the Company’s duly madeassignments to him as CEO in accordance with all of the Company’s directivesand applicable bylaws, and policies.

 

**3.02****       **TheCompany will from time to time, pay for the travel and related out-of-pocketand other expenses of Pruitt and his spouse for Pruitt’s attendance at andparticipation in meetings, conferences, seminars and the like for the purposeof continuing his professional development and thereby enhancing his ability toperform his work and services for the Company, and for other activities deemedby the Board to be beneficial to and in the best interest of the Company andits members.

 

**ARTICLE4**

 

**TERMAND TERMINATION**

 

**4.01****       **TheCompany shall employ Pruitt pursuant to this Agreement for the ten (10) yearterm beginning on the date of this Agreement, together with such annualthree(3) year renewals as provided herein, and ending no later than the end ofthe three(3) year term next expiring on/after the date when Pruitt attains theage of sixty-five (65) years.  Duringsuch employment, Pruitt shall be obligated to perform the work and servicesreasonably required in order to carry out

 

2

----

 

those responsibilities andexercise those authorities specified in the Position Responsibility Guide,General Manager, agreed to by the Company and Pruitt on December 1, 1987, whichdocument is attached to and incorporated herein by reference.  However, the Company may terminate thisContract for good cause in which event any of Pruitt’s rights hereunder notalready finally vested shall also terminate. The term “good cause” shall mean the following and not otherwise:

 

(1)           Knowingly, willfully and substantially,during the term of this Agreement, neglect the duties that Pruitt is requiredto perform under the terms of this Agreement.

 

(2)           Knowingly, willfully and substantially,during the term of this Agreement, commit dishonest acts toward the Companywith the intent to injure or damage the Company.

 

**4.02****       **IfPruitt’s employment terminates prior to the initial term or any extended termfor any reason other than as provided for in paragraphs 4.01, 4.03, 4.04 or4,05 because his authorities and responsibilities hereunder are substantiallyand adversely (to him) limited, changed or eliminated, or because he isrequired by the Company to move his residence and principal site of work fromthe Midland, Texas area, and Pruitt is otherwise both able and willing toperform his work and services as provided for hereunder, then, in any suchevent, the Company shall pay Pruitt a lump-sum cash settlement equal to thetotal salary then in effect for the remainder of the term of the contract, plusthe other amounts Company would have paid during such remainder for Pruitt’sretirement, pension, MINT, bonus, fees other than compensation plans authorizedby the Board of Directors, and health insurance, plus such amounts, if any, areat the time of his termination of employment, payable for accrued but untakenvacation and sick leave.

 

**4.03****       **Notwithstandingparagraphs 4.01 and 4.02, the parties may mutually agree to terminate thisAgreement upon such terms and conditions as the parties may mutually agree inwriting.

 

**4.04****       **Notwithstandingthe provisions of paragraphs 4.01, 4.02, and 4.03, above, Pruitt’s employmenthereunder shall terminate under any of the following conditions:

 

(1)           Death.    Pruitt’semployment under this Agreement shall terminate automatically upon hisdeath.  In such event, Pruitt’s BaseSalary shall continue to be paid to his designated beneficiary for theremaining term of this Agreement.

 

(2)           Total Disability.    The Company shall have the right to terminate thisAgreement if Pruitt becomes Totally Disabled. For purposes of this Agreement, “Totally Disabled” means that Pruitt isnot working and is currently unable to perform the substantial and materialduties of his position hereunder as a result of sickness, accident or bodilyinjury for a period of three months. Prior to a determination that Pruitt is Totally Disabled, but afterPruitt has exhausted all sick leave and vacation benefits provided by theCompany, Pruitt shall continue to receive his Base Salary, offset by anydisability benefits he may be eligible to receive, for the remaining term ofthis Agreement.

 

3

----

 

**4.05****       **Notwithstanding any other provisions in this Agreement, if (i) Pruitt remainsemployed until the date that is three (3) months after the date of a Change inControl (the “Retention Date”), or (ii) Pruitt’s employment is terminated afteror in anticipation of a Change in Control (or the execution of a definitiveagreement providing for actions which, if completed, would constitute a Changein Control) and before the Retention Date (A) by the Company without Good Causeor (B) by Pruitt for Good Reason, then, in addition to any other amountspayable pursuant to this Agreement, the Company shall pay Pruitt a lump sumcash payment within thirty (30) days of termination equal to six (6) times thesum of Pruitt’s annual Base Salary and the greater of (x) the highest bonusawarded to Pruitt in a prior year or (y) 50% of Pruitt’s annual Base Salary.

 

For purposesof this Agreement “Change in Control” means (i) a reorganization or merger ofthe Company with or into any other company which will result in the Company’sstockholders immediately prior to such transaction not holding, as a result ofsuch transaction, at least 50% of the voting power of the surviving orcontinuing 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 anentity in which the Company’s stockholders immediately prior to such sale willnot hold following such sale at least 50% of the voting power of suchpurchasing entity, (iii) a transaction or series of related transactions whichresult in more than 50% of the voting power of the Company being “beneficiallyowned” by a single “person” (quoted terms having their respective meaningsunder Section 13(d) and 14(d) under the Securities Exchange Act of 1934, asamended); (iv) a change in the majority of the Board not approved by at leasttwo-thirds of the Company’s directors in office prior to such change or (v) theadoption of any plan of liquidation providing for the distribution of all orsubstantially all of the Company’s assets.

 

For purposesof this Agreement, after a Change in Control, “Good Reason” shall mean theoccurrence of any one of the following circumstances without Pruitt’s consent:

 

(1)           a material reduction in Pruitt’s salary orbenefits excluding the substitution of substantially equivalent compensationand benefits;

 

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

 

(3)           the relocation of Pruitt’s primary worklocation to a location more than 50 miles from Pruitt’s primary work locationas of the date of this Agreement; or

 

(4)           the failure of a successor to assume andperform under this Agreement

 

**4.06****       **Inthe event either party should bring legal action or incur attorney’s fee and/orcourt costs for the enforcement of any of the terms of this agreement, it isagreed that the prevailing party shall be entitled to recover from the othersuch reasonable attorneys fees and/or court costs incurred.  For purposes of this clause, the prevailingparty is the party to obtains a net recovery or the party in whose favor finaljudgment is entered.

 

4

----

 

**ARTICLE5**

**SUPERSESSIONAND EFFECTIVENESS**

 

5.01         ThisAgreement supercedes any other agreement or understanding, written or oral,between the parties with respect to the matters covered hereunder, and itcontains the entire understanding of the parties and all of the covenants andagreements between them with respect to Pruitt’s employment.

 

5.02         ThisAgreement shall be for the benefit of the parties to the Agreement, as well astheir respective successors, heirs and assigns, it being understood, howeverthat this Agreement may be assigned only with the written consent of bothparties.

 

5.03         Theexistence and effectiveness of this Agreement between the parties hereto doesnot preclude or otherwise interfere with employment of Pruitt by subsidiarycorporations of Cap Rock Energy Corporation, or by any corporation organized bythe Company’s Board of Directors for the benefit of the Company, or the receiptof compensation by Pruitt from any such corporations.

 

5.04         ThisAgreement shall become binding upon the parties from an as of the date of theexecution.

 

IN WITNESS WHEREOF, the parties have executed this Agreement induplicate originals, one being retained by each, on or as of the 11thday of September, 2001.

 

 
|   | CAP ROCK ENERGY CORPORATION |
|--------|-----------------------------|
|   |                        |
| By:    | /s/ David W. Pruitt         |   | By: | /s/ Russell E. Jones |
|   | David W. Pruitt             | Russell E. Jones  Chairman |
|        |                             |  |  |  |  |

 

5

----

 
| **STATE OF TEXAS**    | **)(** |
|-----------------------|--------|
|                  | **)(** |
| **COUNTY OF MIDLAND** | **)(** |

 

Thisinstrument was acknowledged before me on this 11th day of September,2001, by RUSSELL E. JONES, Chairman of Cap Rock Energy Corporation, a Texascorporation, on behalf of said corporation.

 
|   | By:                           | /s/ Sharon A. Hoelscher |   |
|--------|-------------------------------|-------------------------|--------|
|   |                          | Sharon A. Hoelscher     |
|   | Notary Public, State of Texas |                    |
|   | Printed Name of Notary:       | /s/ Sharon A. Hoelscher |   |
|   | My Commission Expires:        |  7/11/03           |   |
|        |                               |                         |        |  |  |  |  |  |

(SEAL)

 
| **STATE OF TEXAS**    | **)(** |
|-----------------------|--------|
|                  | **)(** |
| **COUNTY OF GRAYSON** | **)(** |

 

Thisinstrument was acknowledged before me on this 11th day of September,2001, by DAVID W. PRUITT.

 
|   | By:                           | /s/ Sharon A. Hoelscher |   |
|--------|-------------------------------|-------------------------|--------|
|   |                          | Sharon A. Hoelscher     |
|   | Notary Public, State of Texas |                    |
|   | Printed Name of Notary:       | /s/ Sharon A. Hoelscher |   |
|   | My Commission Expires:        |  7/11/03           |   |
|        |                               |                         |        |  |  |  |  |  |

 

(SEAL)

 

6

----

 

**CAPROCK ELECTRIC COOPERATIVE, INC.**

 

**PositionResponsibility Guide**

 

**GeneralManager**

 

I.              OBJECTIVE

 

To advise and assist the Board of Directors in its considerations anddecisions in all matters and areas of concern for which it is responsible.  To provide the Cooperative membership withthe highest quality of electric service at the lowest possible cost, consistentwith sound economical and financial management.

 

II.            RESPONSIBILITIESAND AUTHORITIES

 

1.             Directs and coordinates the administrationof policies and programs approved by the Board of Directors, and assuresconformity and compliance with the intent of the directors’ decisions.

 

2.             Is responsible for determining basicoperational procedures that are in accordance with board decisions, and assuresthat operations of the Cooperative are carried out in a manner advantageous tothe membership so as to gain member understanding and support.

 

3.             Is responsible for preparation of agendafor and reports to be made at meetings of the Board of Directors.  Presents to the directors the operationaland financial reports, and reports on the effectiveness of various programs andover-all operations.

 

4.             Keeps the board fully informed of actionstaken or decisions reached in areas relevant to board consideration even thoughspecific board action may not be required.

 

5.             Is responsible for the effective andefficient operation of all activities within the Cooperative including, but notlimited to, the following:

 

1.             Planning – Initiates and/or directsthe planning of all operational procedures essential to the most efficientoperation and effectiveness of the Cooperative.  Reviews, coordinates and approves procedures recommended by thestaff members with respect to their operations.

 

2.             Organization – Reviews periodicallyall facets of the cooperative’s operation and determines the need and type oforganizational structure required to provide the most efficient operation. Inthis regard, the Manager shall select, appoint and/or terminate staff membersin accordance with an approved organizational plan.  He shall also recommend to the Board of Directors a wage andsalary program designed to provide the employees with a fair and equitablecompensation plan

 

7

----

 

that encourages individual incentive and increased productivity,thereby providing the members of the Cooperative with reliable, effective andefficient service.

 

3.             Administration – Directs theadministration of all activities of the Cooperative through staff membersand/or consultants, including legal counsel, to ensure that allresponsibilities, authorities and relationships are clarified and executed inaccordance with delegated authority, approved policies, programs andbudgets.  Devotes adequate  portions of time in conference with thestaff, in groups or with individuals, to discuss problems of engineering,construction, maintenance, operations, finance, personnel complaints,grievances, or any other matters of concern to the Cooperative.  Assigns staff and/or supervisory personnelto represent the Cooperative at various technical and educational meetings thatwill enhance the effectiveness of the Cooperative’s operation.

 

Communicates with the members, Board of Directors, employees, andgeneral public in order to gain their support and to improve the over-all acceptanceand understanding of the Cooperative’s policies and programs.

 

4.             Coordination – Exercisecoordination of board-approved budgets, policies and programs with operationalactivities through staff meetings and individual conferences.  Acts as coordinator between the membership,the Board of Directors and the employees.

 

5.             Controlling – Directs themaintenance of all controls, reports and records in conformity with allregulations and requirements.  Reviewsand analyses periodic reports, including financial audits, submitted byCooperative personnel and/or consultants for the purpose of determining whethertheir activities are in conformity with approved policies, programs, budgets,standards and costs; directs remedial action as required.

 

II.            RELATIONSHPS

 

A.            Within the Cooperative

 

1.             Consults freely  with Board of Directors and board committees regarding matters ofinformation and mutual interest on Cooperative’s affairs.

 

2.             Consults with staff as consultativemanagement procedure on all matters of organizational or operational concern,or programs and problems of mutual interest

 

3.             Advises and counsels staff departmentheads with respect to plans, activities, organization, problems, budgets,reports or matters concerning single departments.

 

8

----

 

4.             Encourages team spirit and teamwork tomaintain high morale, high productivity and great satisfactions in working forthe Cooperative.

 

5.             Maintains friendly and working relationswith as many members as possible to maintain high values of members’satisfactions and to set the  examplefor all employees to maintain friendly and satisfactory relationships withmembers.

 

B.            Outside the Cooperative

 

1.             Maintains contact through correspondenceand some visitation with governmental officials, elected or appointed atvarious local, state and national governmental levels.

 

2.             Maintains contact with widespread sectorof the industry and public to maintain good relations and understanding.

 

IV.           SCOPE

 

The above authorities and responsibilities are limited only byappropriate provisions of Federal and State statues, rules, regulations andrequirements; corporate documents consisting of Articles of Incorporation andBylaws; and board policies, specific delegations or restrictions and otherdirectives.

 

V.            RESPONSIBLETO:  Board of Directors

 

VI.           EXEMPTIONSTATUS

This positionis exempt from overtime payment.

 
| AGREED TO:          | APPROVED: |
|---------------------|-----------|
|                |      |
|                |      |
| /s/ David W. Pruitt |      | /s/ Russell E. Jones |   |
| General Manager     | President |
|                |      |
| 9-11-01             |      |   |
| Date                |      |

 

I hereby acknowledge that I have received acopy of the General Obligations and Responsibilities of Employees.

 

 
| /s/ David W. Pruitt |       |  9-11-01 |   |
|---------------------|------------|---------------|--------|
| General Manager     |  Date |

 

9

----