**EXHIBIT 10.23.A**

 

**EMPLOYMENT CONTRACT**

 
| **THE STATE OF TEXAS** | **§** |                                                        |
|------------------------|------------|-------------------------------------------------------------|
|                   | **§** | **KNOW ALL MEN BY THESE PRESENTS:    ** |
| **COUNTYY OF MIDLAND** | **§** |                                                        |

 

THIS EMPLOYMENT CONTRACT(“Agreement”) is made and entered into on or as of the 12th 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 3rd day of August, 1992when CAP ROCK ELECTRIC COOPERATIVE, INC. and ULEN A NORTH, JR. entered into anEmployment Contract.  This Agreementmodifies, amends and supercedes the Employment Contract entered into betweenCAP ROCK ELECTRIC COOPERATIVE, INC. and ULEN A. NORTH, JR. on August 3, 1992,which Employment Contract has been transferred to and assumed by CAP ROCKENERGY CORPORATION.

 

By this Agreement, CAP ROCKENERGY CORPORATION, referred to in this Agreement as “Company”, acting by andthrough its Chief Executive Officer, David W. Pruitt, hereinafter referred toas “Pruitt”, employs ULEN A. NORTH, referred to in this Agreement as “North”,and whose principal place of employment is Midland, Midland County, Texas whoaccepts employment on the following terms and conditions:

 

**ARTICLE1**

**TERMSOF EMPLOYMENT**

 

By thisAgreement, the Company, acting by and through and under the direction ofPruitt, employs North and North accepts employment with the Company for aninitial term of two (2) years.  Unless awritten notice to terminate this Agreement is executed and properly deliveredby either party prior to an anniversary date and subject to a satisfactoryevaluation by Pruitt of North on the annual employee appraisal, this Agreementshall annually and automatically be renewed for an additional term of two (2)years.  This Agreement may, however, beterminated earlier, as provided in Article 4, below.

 

**ARTICLE2**

**EMPLOYMENTCOMPENSATION & BENEFITS**

 

2.01         Ascompensation for all services rendered under this Agreement, North shall bepaid by Company a salary of $106,614.12 per year, or any greater amount ofcompensation including bonuses, fees and deferred compensation authorized bythe wage and salary plan or Board policies authorized by the Company, togetherwith an annual salary adjustment in an amount at least equal to any approvedacross the board salary adjustments for all employees.

 

2.02         Northshall receive the same annual leave and sick leave and all other benefits asare accorded regular full-time employees of the Company including provisionsgoverning accrual and payment therefore on early retirement or other methods ofemployment.

 

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2.03         Subjectto the above paragraph 2.02, all provisions of the Company’s rules andregulations relating to annual leave (vacation), sick leave, early retirement,insurance, savings, deferred compensation, bonuses, pension programcontributions, holiday and other fringe benefits and working conditions as theynow exist or hereafter may be amended, shall apply to North as they would toother employees of the Company.

 

2.04         BecauseNorth’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, North shall be allowed to take compensatory time off.

 

**ARTICLE3**

**COVENANTTO PERFORM**

 

3.01         Northagrees and covenants to perform his work and services diligently and use hisbest efforts to faithfully comply with all of the assignments duly made to himon behalf of the Company by Pruitt.

 

**ARTICLE4**

**TERMAND TERMINATION**

 

4.01         TheCompany shall employ North pursuant to this Agreement for the two (2) year termbeginning on the effective date of his employment hereunder, yearly renewablesubject to and following a satisfactory evaluation employee appraisal report onNorth by Pruitt, for successive two year terms.  However, if during such employment, North fails or refuses toperform the work and services assigned to him on behalf of the Company byPruitt, or should he become derelict in so performing, or become unable toperform, or otherwise become in substantial breach of this Agreement all as maybe determined by Pruitt in his sole discretion or otherwise so act as to givethe Company good cause, this Agreement shall, at Pruitt’s sole option, ceaseand terminate and any of North’s rights hereunder not already finally vestedshall cease on or at such time as Pruitt shall notify North in writing.  The term “good cause” shall mean thefollowing and not otherwise:

 

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

 

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

 

4.02         IfNorth’s employment terminates for any reason other than as provided for inparagraphs 4.01, 4.03, 4.04 or 4.05 herein, the Company shall pay North alump-sum cash settlement equal to the total salary then in effect for the two(2) year term of the contract, plus the amount the Company would have paid forduring such period for North’s retirement-pension plans, and

 

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health insurance, plus suchamounts, if any, are at the time of his termination of employment, payable foraccrued but untaken vacation and sick leave, compensatory time, bonuses andother compensation authorized by the Board of Directors.

 

4.03         Notwithstandingparagraphs 4.01 and 4.02, this Agreement and North’s employment hereunder maybe terminated at such time and upon such terms and conditions as the partiesmay mutually agree.

 

4.04         Notwithstanding theprovisions of paragraphs 4.01, 4.02, and 4.03 herein, North’s employmenthereunder shall terminate under any of the following conditions:

 

(1)           Death. North’s employment under this Agreement shall terminate automaticallyupon his death.  In such event, North’sBase Salary 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 this Agreement ifNorth becomes Totally Disabled.  Forpurposes of this Agreement, “Totally Disabled” means that North is not workingand is currently unable to perform the substantial and material duties of hisposition hereunder as a result of sickness, accident or bodily injury for aperiod of three months.  Prior to adetermination that North is Totally Disabled, but after North has exhausted allsick leave and vacation benefits provided by the Company, North shall continueto receive his Base Salary, offset by any disability benefits he may beeligible to receive, for the remaining term of this Agreement.

 

4.05         Not withstanding anyother provisions in this Agreement, if (i) North remains employed until thedate that is three (3) months after the date of a Change in Control (the“Retention Date”), or (ii) North’s employment is terminated after or inanticipation of a Change in Control (or the execution of a definitive agreementproviding for actions which, if completed, would constitute a Change inControl) and before the Retention Date (A) by the Company without Good Cause or(B) by North for Good Reason, then, in addition to any other amounts payablepursuant to this Agreement, the Company shall pay North a lump sum cash paymentwithin thirty (30) days of termination equal to six (6) times the sum ofNorth’s annual Base Salary and the greater of (x) the highest bonus awarded toNorth in a prior year or (y) 50% of North’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 will nothold following such sale at least 50% of the voting power of such purchasingentity, (iii) a transaction or series of related transactions which result inmore than 50% of the voting power of the Company being “beneficially owned” bya single “person” (quoted terms having their respective meanings under Section13(d) and 14(d) under the Securities Exchange Act of 1934, as

 

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amended); (iv) a change in themajority of the Board not approved by at least two-thirds of the Company’sdirectors in office prior to such change or (v) the adoption of any plan ofliquidation providing for the distribution of all or substantially all of theCompany’s assets.

 

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

 

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

 

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

 

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

 

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

 

4.06         In the event North iseligible to receive a lump sum payment pursuant to this Agreement and such lumpsum payment would cause North to be subject to an excise tax in excess ofnormal income taxes on such lump sum, then and in that event, the lump sumpayment shall be increased (grossed up) in an amount sufficient to pay suchexcise tax.

 

**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 North’s employment.

 

5.02         ThisAgreement shall bind and be for the benefit of the parties to the Agreement, aswell as their respective successors, heirs and assigns, it being understood,however that 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 North 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 North from any such corporations.

 

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

 

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IN WITNESS WHEREOF, the partieshave executed this Agreement in duplicate originals, one being retained byeach, on or as of the 12th day of September, 2001.

 

 
|               | CAP ROCK ENERGY CORPORATION |
|--------------------|-----------------------------|
|               |                        |
| By:                | /s/ Ulen A. North, Jr.      |   | By: | /s/ David W. Pruitt |
| Ulen A. North, Jr. | David W. Pruitt, CEO        |
|                    |                             |  |  |  |

 

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

 

Thisinstrument was acknowledged before me on this 12th day of September,2001, by DAVID W. PRUITT, President/Chief Executive Officer of Cap Rock EnergyCorporation, a Texas corporation, 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 12th day of September,2001, by ULEN A. NORTH, JR.

 
|   | 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)

 

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