Document:

<PAGE>

                                                                   EXHIBIT 10.34

                        CFC CONSOLIDATING LOAN AGREEMENT

         AGREEMENT, dated March 30, 1993, between CAP ROCK ELECTRIC
COOPERATIVE, INC., (herein called the "Borrower"), a corporation organized
and existing under the laws of the State of Texas (the "State") and NATIONAL
RURAL UTILITIES COOPERATIVE FINANCE CORPORATION (herein called "CFC"), a
corporation organized and existing under the laws of the District of Columbia.

                                    RECITALS

         WHEREAS, the Borrower is a corporation that survives the
consolidation of Cap Rock Electric Cooperative, Inc. and Lone Wolf Electric
Cooperative, Inc. (collectively, the "Consolidating Cooperatives"), and

         WHEREAS, the Consolidating Cooperatives hereto have previously
entered into loan agreements dated as of the dates set forth in Schedule I
hereto (the "Previous Loan Agreements") and the Consolidating Cooperatives
have issued notes to CFC in connection therewith; and

         WHEREAS, the Borrower has succeeded to the respective rights and
assumed the respective obligations of the Consolidating Cooperatives, and

         WHEREAS, CFC and the Borrower desire to amend and restate the
Previous Loan Agreements and Notes as provided for herein and the Borrower
will, assume such debt;

         NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants hereinafter contained, the parties here to agree and bind
themselves as follows:

                                    ARTICLE I

                          REPRESENTATIONS AND WARRANTIES

         SECTION 1.  The Borrower represents and warrants that:

         A. GOOD STANDING. The Borrower is a corporation duly incorporated
and validly existing under the laws of the State, is duly qualified in those
states in which it is required to be qualified to conduct its business and
has corporate power to make and perform this Agreement, to borrow hereunder
and to give security as provided for herein.

         B. AUTHORITY. The execution, delivery and performance by the
Borrower of this Agreement, the Note (as hereinafter defined) and the
Mortgage (as defined in Schedule I hereto) and the performance of the
transactions contemplated thereby have been duly authorized by all necessary
corporate action and will not violate any provision of law or of the Articles
of Incorporation or By-Laws of the Borrower or result in a breach of, or
constitute a default under, any agreement, indenture or other instrument to
which the Borrower is a party or by

Consolidated Loan Agreement
C37 Class A & B
REA Borrower, Mortgage
TX 107.MGR   (MAK)

                                       1
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which it may be bound. The Borrower is not in default of any of its
obligations to the Rural Electrification Administration (herein called "REA").

         C. LITIGATION. There are no suits or proceedings pending or to the
knowledge of the Borrower threatened against or affecting the Borrower or its
properties which, if adversely determined, would have a material adverse
effect upon the financial condition or the business of the Borrower. The
Borrower is not, to its knowledge, in default with respect to any judgment,
order, rule or regulation of any court, governmental agency or other
instrumentality which would have a material adverse effect on the Borrower.

         D. FINANCIAL STATEMENTS. The balance sheet of the Borrower most
recently submitted to CFC as at the date thereof and the statement of
operations of the Borrower for the period ending on said date, are complete
and correct. Said balance sheet fairly presents the financial condition of
the Borrower as at said date and said statement of operations fairly reflects
its operations for the period ending on said date. The Borrower has no
contingent obligation or unusual forward or long-term commitments except as
specifically stated in said balance sheet or herein. There has been no
material adverse change in the financial condition or operations of the
Borrower from that set forth in said financial statements except changes
disclosed in writing to CFC. The Borrower has heretofore furnished to CFC
true and complete copies of its financial and statistical reports to the REA
on REA Form 7 (or any successor form) for the month of December for each of
the three most recent calendar years, and a copy of its most recent such
report on REA Form 7 (or any successor form) and the facts stated therein are
true.

         E. LOCATION OF OFFICE. The chief place of business of the Borrower
and the office where its records concerning accounts and contract rights are
kept is identified in Schedule l hereto.

         F. LOCATION OF PROPERTIES. All property owned by the Borrower is
located in the counties identified in Schedule l hereto.

         G. NO OTHER LIENS. As to property which is presently included in the
description of Mortgaged Property (as that term is defined in the Mortgage),
the Borrower has not, without the prior written approval of CFC, signed any
security agreement or filed or permitted to be filed any financing statement
with respect to assets owned by it, other than security agreements and
financing statements running in favor of REA and/or CFC, except as disclosed
in writing to CFC prior to the date hereof.

         H. REQUIRED APPROVALS. No license, consent or approval of any
governmental agency or authority is required to enable the Borrower to enter
into this Agreement or to perform any of its obligations provided for herein
except that of the REA, and except as disclosed in Schedule l hereto.

         I. SURVIVAL. All representations and warranties made by the Borrower
herein or made in any certificate delivered pursuant here to shall survive
the making of the Advances (as hereinafter defined) and the execution and
delivery to CFC of the Note.

                                       2
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         If the Borrower elects a fixed interest rate, the rate shall equal
the CFC long-term rate at the time of each Advance for loans similarly
classified pursuant to the long-term loan programs established by CFC from
time to time. Such rate shall apply until a date, determined by CFC,
approximately seven years after the first Advance (the "Adjustment Date"),
written notice of which shall be provided to the Borrower at least 90 days
prior to the Adjustment Date. After the Adjustment Date, the interest rate
shall be computed in like manner and fixed by CFC from time to time;
provided, however, that CFC will not change any such fixed interest rate
without giving the Borrower at least 60 days prior written notice (any such
90-day or 60-day notification period being herein called a "Notification
Period" and such period from January 1 to December 31 immediately following a
Notification Period being herein called a "Repricing Period").

         If the Borrower elects a variable interest rate, the rate for each
month shall be equal to the rate established by CFC for such month for
variable interest rate long-term loans similarly classified pursuant to the
long-term loan programs established by CFC from time to time. Such variable
interest rate shall apply until the Maturity Date of the Note unless the
Borrower elects to convert to a fixed rate pursuant to the terms hereof.

         The Borrower may, at any time, convert from a variable interest rate
to a converted fixed interest rate provided that the Borrower submits to CFC
a resolution of its Board of Directors requesting such conversion. The
converted fixed interest rate shall be equal to the rate of interest quoted
by CFC and communicated, or generally made known, to borrowers from CFC on
the date an authorized representative of the Borrower requests such
conversion. Such quoted rate shall remain available to the Borrower for 30
days; it being understood and agreed that the effective date of such quoted
rate as to all amounts outstanding on the Note shall be the day after the
Payment Date next following receipt by CFC of the resolution referred to in
the preceding sentence. Upon the election of the Borrower to convert to a
converted fixed rate, such rate shall remain in effect for seven years
beginning the January l next following the effective date of such converted
fixed interest rate; provided that during the period from January l to
December 31 of the seventh year (which shall be considered a Repricing
Period), the Borrower may elect either a variable interest rate or a fixed
interest rate pursuant to the long-term loan policies then in effect and
applicable to long-term loans similarly classified. CFC agrees that its
long-term loan policies will include a fixed interest rate option until the
Maturity Date.

         The Borrower may at any time convert from a fixed interest rate to a
variable interest rate, if the Borrower: (i) submits to CFC a resolution of
its Board of Directors requesting that the variable interest rate apply to
any outstanding loan balance and future Advances; and (ii) pays to CFC,
promptly upon receipt of an invoice, a conversion fee calculated pursuant to
the long-term loan policies of CFC for long-term loans similarly classified.

         SECTION 2.4. PREPAYMENT. Subject to the terms of the Mortgage, the
Borrower may at any time or from time to time, on not less than 30 days'
written notice to CFC, prepay the Note in whole, or in part together with the
interest accrued to the date of prepayment and any prepayment premium that
CFC may from

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time to time prescribe. Each prepayment on the Note shall be applied in
payment of installments of principal of the Note in inverse order of their
maturity.

                                   ARTICLE III

                              CONDITIONS OF LENDING

         SECTION 3. The obligation of CFC to make any Advance hereunder is
subject to satisfaction of the following conditions:

         A. LEGAL MATTERS. All legal matters incident to the consummation of
the transactions hereby contemplated shall be satisfactory to counsel for CFC
and, as to all matters of local law, to such local counsel as counsel for CFC
may associate with them.

         B. DOCUMENTS. CFC shall have been furnished with executed copies,
satisfactory to CFC, of this Agreement, the Note and the Mortgage and
certified copies, satisfactory to CFC, of all such corporate documents and
proceedings of the Borrower authorizing the transactions hereby contemplated
as CFC or its counsel shall require. CFC shall have received an opinion of
counsel for the Borrower: (i) substantially in the form of Exhibit B hereto;
and (ii) addressing such other legal matters as CFC or its counsel shall
reasonably require.

         C. GOVERNMENT APPROVALS. The Borrower shall have furnished to CFC
true and correct copies of all certificates, authorizations and consents,
including without limitation the consents referred to in Section 1.H. hereof,
necessary for the execution, delivery or performance by the Borrower of this
Agreement, the Note and the Mortgage.

         D. REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Article I shall (except as affected by the
transactions contemplated by this Agreement) be true on the date of the
making of each Advance hereunder with the same effect as though such
representations and warranties had been made on such date; no Event of
Default specified in Article V and no event which, with the lapse of time or
the notice and lapse of time specified in Article V would become such an
Event of Default, shall have occurred and be continuing or will have occurred
after giving effect to the Advance on the books of the Borrower; there shall
have occurred no material adverse change in the business or condition,
financial or otherwise, of the Borrower; and nothing shall have occurred
which in the opinion of CFC and REA materially and adversely affects the
Borrower s ability to meet its obligations hereunder.

         E. MORTGAGE FILING. The Mortgage shall have been duly recorded as a
mortgage on real property and duly filed, recorded or indexed as a security
interest in personal property wherever CFC shall have requested, all in
accordance with applicable law, and the Borrower shall have caused
satisfactory evidence thereof to be furnished to CFC.

         F. SPECIAL CONDITIONS. The Borrower shall have complied with any
special conditions listed in Schedule l hereto.

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         G. REQUISITIONS. The Borrower will requisition all Advances by
submitting its requisition to CFC on REA Form 595 or such other requisition
in form and substance satisfactory to CFC. Requisitions shall be made only
for the purpose of paying the costs associated with the Project. If the
requisition is approved by CFC, CFC will seek to obtain REA approval of the
requisition. CFC will make the requested Advance only if REA approval is
obtained. The Borrower agrees to apply the proceeds of the Advances in
accordance with its loan application with such modifications as may be
mutually agreed upon and to deposit all funds advanced hereunder in its
Trustee Special Construction Fund Account.

                                   ARTICLE IV

                              AFFIRMATIVE COVENANTS

         SECTION 4. After the date hereof and until payment in full of the
Note and performance of all obligations of the Borrower hereunder, the
Borrower agrees that it will:

         A. MEMBERSHIP. Remain a member in good standing of CFC.

         B. ANNUAL REPORT. Promptly upon its becoming available, furnish to
CFC a true and correct copy of the annual report of the Borrower to the
United States Department of the Treasury on Form 990 or any successor form
thereto.

         C. FINANCIAL RATIOS. Subject to applicable laws and rules and orders
of regulatory bodies, and to events in the judgment of CFC beyond the control
of the Borrower, so operate and manage its business as to achieve both a
Times Interest Earned Ratio (as hereinafter defined and herein called "TIER")
of not less than 1.5, and a Debt Service Coverage Ratio (as hereinafter
defined and herein called "DSC") of not less than 1.25, each of said ratios
being determined by averaging the two highest annual ratios during the most
recent three calendar years. For the purpose of this subsection (C): TIER
shall mean the ratio determined in each year by adding Patronage Capital and
Margins (as computed for purposes of line A.27 on REA Form 7, rev. 8/88, and,
if applicable, line A.17 on said REA Form 7, or the comparable items on a
successor form) to Interest Expense (as computed for purposes of line A.15 on
said REA Form 7, or the comparable item on a successor form, minus an amount
as computed for purposes of line A.16 on said Form 7, or the comparable item
on a successor form), and dividing the total so obtained by Interest Expense
(as so computed); DSC shall mean the ratio determined in each year by adding
Patronage Capital and Margins and Interest Expense (each computed as set
forth above) to Depreciation and Amortization Expense (as computed for the
purpose of line A.12 on said Form 7, or the comparable item on a successor
form), and dividing the total so obtained by an amount equal to the sum of
all payments of principal and interest required to be made during such year
on account of Total Long-Term Debt (as computed for the purpose of line C.35
on said REA Form 7, or the comparable item on a successor form).

         D. ANNUAL CERTIFICATE. Within 60 days after the close of each
calendar year, commencing with the year following the year in which the
initial Advance hereunder shall have been made, deliver to CFC a written
statement signed by its

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General Manager, stating that said person has furnished to the governing
board of the Borrower a report of the activities of the Borrower, and of its
performance under this Agreement, the Note and the Mortgage, during such
year, and that to the best of said person's knowledge, the Borrower has
fulfilled all of its obligations under this Agreement, the Note, and the
Mortgage throughout such year or, if there has been a default in the
fulfillment of any such obligations, specifying each such default known to
said person and the nature and status thereof.

         E. LOAN CERTIFICATE PURCHASE. The Borrower has satisfied the
requirements as of the date hereof for the purchase of Purchase a Loan
Capital Term Certificates. The LCTC's shall bear not interest and shall
mature on the Maturity Date.

         F. SPECIAL AFFIRMATIVE COVENANTS. Comply with any and all special
affirmative covenants as listed in Schedule 1.

                                   ARTICLE V

                               EVENTS OF DEFAULT

         SECTION 5. The following shall be Events of Default under this
Agreement:

         A. REPRESENTATIONS AND WARRANTIES. Any representation or warranty
made by the Borrower in Article I hereof or any certificate furnished to CFC
hereunder shall prove to have been incorrect in any material respect at the
time made and shall at the time in question be untrue or incorrect in any
material respect and remain uncured;

         B. PAYMENT. Default shall be made in the payment of or on account of
interest on or principal of the Note when and as the same shall be due and
payable, whether by acceleration or otherwise, which shall remain unsatisfied
for 5 business days;

         C. OTHER COVENANTS. Default by the Borrower in the observance or
performance of any other covenant or agreement contained in this Loan
Agreement, in the Note or the Mortgage, which shall remain unremedied for 30
calendar days after written notice thereof shall have been given to the
Borrower by CFC;

         D. CORPORATE EXISTENCE. The Borrower shall forfeit or otherwise be
deprived of its corporate charter, franchises, permits, easements, consents
or licenses required to carry on any material portion of its business;

         E. OTHER OBLIGATIONS. Default by the Borrower in the payment of any
obligation, whether direct or contingent, for borrowed money or in the
performance or observance of the terms of any instrument pursuant to which
such obligation was created or securing such obligation;

         F. BANKRUPTCY. A court having jurisdiction in the premises shall
enter a decree or order for relief in respect of the Borrower in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter

                                       7
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in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official, or order the winding up or
liquidation of its affairs, and such decree or order shall remain unstayed
and in effect for a period of 90 consecutive days or the Borrower shall
commence a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or under any such law, or
consent to the appointment or taking possession by a receiver, liquidator,
assignee, custodian or trustee, of a substantial part of its property, or
make any general assignment for the benefit of creditors; or

         G. DISSOLUTION OR LIQUIDATION. Other than as provided in subsection
F. above, the dissolution or liquidation of the Borrower, or failure by the
Borrower promptly to forestall or remove any execution, garnishment or
attachment of such consequence as will impair its ability to continue its
business or fulfill its obligations and such execution, garnishment or
attachment shall not be vacated within 30 days. The term "dissolution or
liquidation of the Borrower", as used in this subsection, shall not be
construed to include the cessation of the corporate existence of the Borrower
resulting either from a merger or consolidation of the Borrower into or with
another corporation following a transfer of all or substantially all its
assets as an entirety, under the conditions permitting such actions.

                                  ARTICLE VI

                                   REMEDIES

         SECTION 6. If any of the Events of Default listed in Section 5
hereof shall occur after the date of this Agreement and shall not have been
remedied, then CFC may pursue all rights and remedies available to CFC that
are contemplated by the Mortgage in the manner, upon the conditions, and with
the effect provided in the Mortgage, including but not limited to a suit for
specific performance, injunctive relief or damages. Nothing herein shall
limit the right of CFC to pursue all rights and remedies available to a
creditor following the occurrence of an Event of Default listed in Section
S.F. hereof. Each right, power and remedy of CFC shall be cumulative and
concurrent, and recourse to one or more rights or remedies shall not
constitute a waiver of any other right, power or remedy.

                                  ARTICLE VII

                                 MISCELLANEOUS

         SECTION 7.1. NOTICES. All notices, requests and demands shall be
given to or made upon the respective parties hereto as follows:

                  National Rural Utilities
                     Cooperative Finance Corporation
                  Woodland Park
                  2201 Cooperative Way
                  Herndon, Virginia 22071
                  Attention:  Governor

                                       8
<PAGE>

                  The Borrower:

                  The address set forth in Schedule 1 here to

or in such other manner, as to either party hereto, as such party shall
designate by written notice to the other party hereto.

         SECTION 7.2. EXPENSES. The Borrower will pay all costs and expenses
of CFC, including reasonable fees of counsel, incurred in connection with the
enforcement of this Agreement, the Note, the Mortgage and the other
instruments provided for herein or with the preparation for such enforcement
if CFC has reasonable grounds to believe that such enforcement may be
necessary.

         SECTION 7.3. LATE PAYMENTS. If payment of any principal and/or
interest due under the terms of the Note is not received at CFC's office in
Herndon, Virginia, or such location as CFC may designate to the borrower
within 5 business days after the due date thereof or such other time period
as CFC may prescribe in is policies (such unpaid amount of principal and/or
interest being herein called the "delinquent amount", and the period
beginning after such due date until payment of the delinquent amount being
herein called the "late-payment period"), the Borrower will pay to CFC, in
addition to all other amounts due under the terms of the Note, the Mortgage
and this Agreement, any late-payment charge as may be fixed by CFC from time
to time on the delinquent amount for the late-payment period.

         SECTION 7.4. FILING FEES. To the extent permitted by law, the
Borrower agrees to pay all expenses of CFC (including the reasonable fees and
expenses of its counsel) in connection with the enforcement of this
Agreement, the collection of amounts due hereunder or on account of the Note
or the filing or recordation of all financing statements and instruments as
may be required by CFC in connection with this Agreement, including, without
limitation, all documentary stamps, recordation and transfer taxes and other
costs and taxes incident to recordation of any document or instrument in
connection herewith. Borrower agrees to save harmless and indemnify CFC from
and against any liability resulting from the failure to pay any required
documentary stamps, recordation and transfer taxes, recording costs, or any
other expenses incurred by CFC in connection with this Agreement. The
provisions of this subsection shall survive the execution and delivery of
this Agreement and the payment of all other amounts due hereunder or due on
the Note.

         SECTION 7.5. NO WAIVER. No failure on the part of CFC to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof nor shall any single or partial exercise by CFC of any right
hereunder preclude any other or further exercise thereof or the exercise of
any other right.

         SECTION 7.6. GOVERNING LAW. THIS AGREEMENT AND THE DOCUMENTS PROVIDED
FOR HEREIN SHALL BE DEEMED TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF VIRGINIA.

                                       9
<PAGE>

         SECTION 7.7. HOLIDAY PAYMENTS. If any payment to be made by the
Borrower hereunder shall become due on a Saturday, Sunday or business holiday
under the laws of the Commonwealth of Virginia such payment shall be made on
the next succeeding business day and such extension of time shall be included
in computing any interest in respect of such payment.

         SECTION 7.8. RESCISSION FEE. The Borrower may elect not to borrow
all or any portion of the CFC Commitment in which event CFC shall release the
Borrower from its obligations hereunder provided the Borrower complies with
such terms and conditions as CFC may impose for such release including,
without limitation, payment of any rescission fee that CFC may from time to
time prescribe.

         SECTION 7.9. AMENDING DOCUMENT, MODIFICATIONS. This Amending Loan
Agreement, including all attachments and matters incorporated by reference,
contains the entire agreement of the parties here to with respect to the
matters covered and the transactions for the Previous Loan Agreements. Not
modification or waiver of any provision of this Agreement or the Note and no
consent to any departure by Borrower therefrom, shall in any event be
effective unless the same shall be in writing.

         SECTION 7.10. MERGER AND INTEGRATION. This Agreement and the
attached Exhibits and matters incorporated by reference contain the entire
agreement of the parties hereto with respect to the matters covered and the
transactions contemplated hereby.

         SECTION 7.11. HEADINGS. The headings and subheadings contained in
the titling of this Agreement are intended to be used for convenience only
and do not constitute part of this Agreement.

         SECTION 7.12. SEVERABILITY. If any term, provision or condition, or
any part thereof, of this Agreement or the Mortgage shall for any reason be
found or held invalid or unenforceable by any court or governmental agency of
competent jurisdiction, such invalidity or unenforceability shall not affect
the remainder of such term, provision or condition nor any other term,
provision or condition, and this Agreement, the Note, and the Mortgage shall
survive and be construed as if such invalid or unenforceable term, provision
or condition had not been contained therein.

         SECTION 7.13. SCHEDULE 1. Schedule 1 attached hereto is an integral
part of this Agreement.

                                       10
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.

                                       CAP ROCK ELECTRIC COOPERATIVE, INC.

(SEAL)

                                       By:    /s/ Russell E. Jones
                                          ----------------------------
                                                    Chairman

Attest:  /s/ Alfred G. Schwartz
       ----------------------------
               Secretary

                                       NATIONAL RURAL UTILITIES
                                       COOPERATIVE FINANCE CORPORATION

(SEAL)

                                       By: /s/ illegible
                                          ----------------------------
                                                   Governor

ATTEST: /s/ illegible
       ----------------------------
            Assistant Secretary

                                       11
<PAGE>

                                   SCHEDULE I

1.       The Previous Loan Agreements referred to in the recitals are as
         follows:

<TABLE>
<CAPTION>
         Note                   Loan                         Original                       Maturity
         Designation            Agreement                    Principal Amount               Date
         -----------            ---------                    ----------------               ----
<S>                             <C>                          <C>                            <C>
Cap Rock Electric Cooperative, Inc.

         9001                   9/21/88                              109,000                5/15/2008
         9002                   9/21/88                              158,000                10/21/2009
         9004                   9/21/88                              565,000                8/14/2010
         9008                   9/21/88                            2,330,000                7/27/2013
         9012                   9/21/88                            3,692,000                3/18/2017
         9013                   9/21/88                            4,186,316                9/24/2020
         9014                   4/19/89                            5,161,290                9/25/2022
         9015                   4/19/89                            4,000,000                9/25/2022
         9016                   4/19/89                            4,000,000                9/25/2022
         9017                   4/19/89                            4,000,000                9/25/2022
         9018                   3/22/90                            4,301,075                3/22/2025
         9019                   3/22/90                            2,365,591                3/22/2025
         9020                   3/22/90                            4,301,075                3/22/2025
         9021                   3/22/90                            3,763,441                3/22/2025
         9022                   3/22/90                            3,225,806                3/22/2025
         9024                   3/10/92                              846,411                3/10/2027
         9025                   3/10/92                              846,411                3/10/2027
         9026                   3/10/92                              846,411                3/10/2027
         9027                   3/10/92                              846,411                3/10/2027

Lone Wolf Electric Cooperative, Inc.

         9001                   11/12/71                              10,000                2/17/2007
         9004                   1/12/77                              105,000                3/28/2012
         9011                   6/11/79                              146,000                10/16/2014
         9012                   4/17/81                              641,000                6/4/2016
         9013                   2/1/84                               257,000                5/15/2019
         9008                   9/15/86                              390,625                1/20/2022

</TABLE>

2.       The term "Mortgage" as used in this Agreement shall mean the Restated
         Mortgage and Security Agreement, dated as of even date herewith, among
         the Borrower, CFC and REA, as it may have been or shall be
         supplemented, amended, consolidated or restated from time to time.

3.       The chief place of business of the Borrower, referred to in Section
         1.E. is West Loop 214, Stanton, Texas 79782-0700.

4.       The governmental authority referred to in Section l.H is N/A.

5.       All of the property of the Borrower is located in the Counties of
         Andrews, Borden, Dawson, Ector, Fisher, Glasscock, Howard, Irion,
         Martin, Midland, Mitchell, Nolan, Reagan, Scurry, Sterling, Tom Green
         and Upton.

<PAGE>

6.       The term "CFC Commitment" as referred to in Section 2.1 is
         $17,074,468.00.

7.       The months referred to in the first paragraph of Section 2.2. are
         February, May, August and November.

8.       Amortization of Advances shall be based upon the method indicated
         below:

                               level principal
                  ----------

                      XX       level debt service
                  ----------

9.       The special condition(s) referred to in Section 3.F. is (are): N/A

10.      The special affirmative covenant(s) referred to in Section 4.F. is
         (are): N/A

11.      The address of the Borrower referred to in Section 7.1. is West Loop
         214, P.O. Box 700, Stanton, TX 79782-0700.

<PAGE>

         IN WITNESS WHEREOF the Borrower has caused this Note to be signed in
its corporate name and its corporate seal to be hereunto affixed and to be
attested by its duly authorized officers, all as of the day and year first above
written.

                                           CAP ROCK ELECTRIC COOPERATIVE, INC.
(SEAL)

Attest:                                    By:
       -------------------------------        -------------------------------
                (Secretary)                             (President)

Loan No.:  TX 107-C-9028

<PAGE>

                                                                     Exhibit A-2

                                  SUBSTITUTE
                            SECURED PROMISSORY NOTE

$105,000.00                                                            , 19

CAP ROCK ELECTRIC COOPERATIVE, INC., a Texas corporation (herein called the
"Borrower"), for value received promises to pay, without setoff, deduction,
recoupment or counterclaim, to the order of NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION (herein called the "Payee") at its office in
Herndon, Virginia, the sum of the aggregate unpaid principal amount of all
Advances made by the Payee pursuant to the Loan Agreement dated as of even
date herewith, between the Borrower and the Payee (herein called the "Loan
Agreement"), with interest thereon from the respective dates of each Advance
hereunder at the rate of 8.25% per annum, in lawful money of the United
Sates, in installments as follows: interest only accrued on said principal
amount to the last day of February, May, August and November next ensuing the
termination date (as such term is defined in said Loan Agreement, shall be
paid on or before said day, and thereafter equal quarterly installments in
the amounts shown in the Payment Schedule (described herein below) shall be
paid on the last day of each February, May, August and November; except that,
if not sooner paid, any balance of the principal amount and interest accrued
thereon shall be due and payable on March 28, 2012 (such date being the
"Maturity Date"). Each quarterly instalment shall be applied first to
interest accrued on the principal amount to the due date of such installment
(or, at the election of the holder hereof, to the date of payment of such
installment if the same is not paid on its due date) and the balance to the
reduction of principal. All Advances made by the Payee pursuant to said Loan
Agreement shall be endorsed by the Payee on the reverse side hereof on or
before any assignment or transfer hereof by the Payee. On or after the
Termination Date (as so defined), the Payee will furnish to the Borrower a
Payment Schedule indicating the precise amount of each quarterly installment
of principal and interest, and the total amount of each such quarterly
installment, to be paid by the Borrower pursuant to such Payment Schedule.

         The Borrower may at its option make prepayments of the principal
hereof, in the manner and to the extent provided in said Loan Agreement.

         This Note is secured by a Restated Mortgage and Security Agreement
dated as of even date herewith, among the Borrower, the Payee and the United
States of America, as it may have been or shall be supplemented, amended,
consolidated or restated from time to time (herein called the "Mortgage").
This Note is executed as a renewal of the Secured Promissory Note dated as of
March 28, 1977 and executed to the order of the Payee. This Note is the Note
referred to in, and has been executed and delivered pursuant to the Loan
Agreement. This Note is the Note referred to in, and has been executed and
delivered pursuant to, the Loan Agreement.

<PAGE>

         IN WITNESS WHEREOF the Borrower has caused this Note to be signed in
its corporate name and its corporate seal to be hereunto affixed and to be
attested by its duly authorized officers, all as of the day and year first
above written.

                                           CAP ROCK ELECTRIC COOPERATIVE, INC.
(SEAL)

Attest:                                    By:
       -------------------------------        -------------------------------
                (Secretary)                             (President)

Loan No.:  TX 107-C-9029

<PAGE>
                                                                     Exhibit A-3

                                  SUBSTITUTE
                           SECURED PROMISSORY NOTE

$146,000.00                                                             , 19

CAP ROCK ELECTRIC COOPERATIVE, INC., a Texas corporation (herein called the
"Borrower"), for value received promises to pay, without setoff, deduction,
recoupment or counterclaim, to the order of NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION (herein called the "Payee") at the Payee's
office in Herndon, Virginia, or such other place as Payee may designate, in
lawful money of the United States, the sum of the aggregate unpaid principal
amount of all Advances made by the Payee pursuant to the Loan Agreement dated
as of even date herewith, between the Borrower and the Payee (herein called
the "Loan Agreement"), on the dates provided in the Loan Agreement (except
that if not sooner paid, any balance shall be due and payable on October 16,
2014, such date being the Maturity Date), with interest thereon in like money
from the respective dates of each Advance (as defined in the Loan Agreement)
hereunder, at the rate or rates and payable at the times provided in said
Loan Agreement.

         All Advances made by the Payee pursuant to said Loan Agreement shall
be endorsed by the Payee on the reverse side hereof on or before any
assignment or transfer hereof by the Payee.

         This Note is secured under a Restated Mortgage and Security
Agreement dated as of even date herewith, among the Borrower, the Payee and
the United States of America, as it may have been or shall be supplemented,
amended, consolidated or restated from time to time (herein called the
"Mortgage"). This Note is executed as a renewal of the Secured Promissory
Note dated as of October 16, 1979 and executed to the order of the Payee.
This Note is the Note referred to in, and has been executed and delivered
pursuant to, the Loan Agreement.

         Upon the occurrence of an event of default under the Mortgage, the
principal hereof and interest accrued thereon may be declared to be forthwith
due and payable in the manner, upon the conditions, and with the effect
provided in the Mortgage.

         The Borrower waives demand, presentment for payment, notice of
dishonor, protest, notice of protest, and notice of non-payment of this Note.

         IN WITNESS WHEREOF the Borrower has caused this Note to be signed in
its corporate name and its corporate seal to be hereunto affixed and to be
attested by its duly authorized officers, all as of the day and year first
above written.

                                           CAP ROCK ELECTRIC COOPERATIVE, INC.
(SEAL)

Attest:                                    By:
       -------------------------------        -------------------------------
                (Secretary)                             (President)

Loan No.:  TX 107-C-9030

<PAGE>
                                                                     Exhibit A-4
                                   SUBSTITUTE
                             SECURED PROMISSORY NOTE

$641,000.00                                                            , 19

CAP ROCK ELECTRIC COOPERATIVE, INC., a Texas corporation (herein called the
"Borrower"), for value received promises to pay, without setoff, deduction,
recoupment or counterclaim, to the order of NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION (herein called the "Payee") at its office in
Herndon, Virginia, the sum of the aggregate unpaid principal amount of all
Advances made by the Payee pursuant to the Loan Agreement dated as of even
date herewith, between the Borrower and the Payee (herein called the "Loan
Agreement"), with interest thereon from the respective dates of each Advance
hereunder at the rate of 12.5% per annum, in lawful money of the United
Sates, in installments as follows: interest only accrued on said principal
amount to the last day of February, May, August and November next ensuing the
termination date (as such term is defined in said Loan Agreement, shall be
paid on or before said day, and thereafter equal quarterly installments in
the amounts shown in the Payment Schedule (described herein below) shall be
paid on the last day of each February, May, August and November; except that,
if not sooner paid, any balance of the principal amount and interest accrued
thereon shall be due and payable on June 4, 2016 (such date being the
"Maturity Date"). Each quarterly instalment shall be applied first to
interest accrued on the principal amount to the due date of such installment
(or, at the election of the holder hereof, to the date of payment of such
installment if the same is not paid on its due date) and the balance to the
reduction of principal. All Advances made by the Payee pursuant to said Loan
Agreement shall be endorsed by the Payee on the reverse side hereof on or
before any assignment or transfer hereof by the Payee. On or after the
Termination Date (as so defined), the Payee will furnish to the Borrower a
Payment Schedule indicating the precise amount of each quarterly installment
of principal and interest, and the total amount of each such quarterly
installment, to be paid by the Borrower pursuant to such Payment Schedule.

         The Borrower may at its option make prepayments of the principal
hereof, in the manner and to the extent provided in said Loan Agreement.

         This Note is secured by a Restated Mortgage and Security Agreement
dated as of even date herewith, among the Borrower, the Payee and the United
States of America, as it may have been or shall be supplemented, amended,
consolidated or restated from time to time (herein called the "Mortgage").
This Note is executed as a renewal of the Secured Promissory Note dated as of
June 4, 1981 and executed to the order of the Payee. This Note is the Note
referred to in, and has been executed and delivered pursuant to the Loan
Agreement. This Note is the Note referred to in, and has been executed and
delivered pursuant to, the Loan Agreement.

         IN WITNESS WHEREOF the Borrower has caused this Note to be signed in
its corporate name and its corporate seal to be hereunto affixed and to be
attested by its duly authorized officers, all as of the day and year first
above written.

                                           CAP ROCK ELECTRIC COOPERATIVE, INC.
(SEAL)

Attest:                                    By:
       -------------------------------        -------------------------------
                (Secretary)                             (President)

Loan No.:  TX 107-C-9031

<PAGE>
                                                                     Exhibit A-6

                                   SUBSTITUTE
                             SECURED PROMISSORY NOTE

$390,625.00                                                            , 19

CAP ROCK ELECTRIC COOPERATIVE, INC., a Texas corporation (herein called the
"Borrower"), for value received promises to pay, without setoff, deduction,
recoupment or counterclaim, to the order of NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION (herein called the "Payee") at the Payee's
office in Herndon, Virginia, or such other place as Payee may designate, in
lawful money of the United States, the sum of the aggregate unpaid principal
amount of all Advances made by the Payee pursuant to the Loan Agreement dated
as of even date herewith, between the Borrower and the Payee (herein called
the "Loan Agreement"), on the dates provided in the Loan Agreement (except
that if not sooner paid, any balance shall be due and payable on January 20,
2022, such date being the Maturity Date), with interest thereon in like money
from the respective dates of each Advance (as defined in the Loan Agreement)
hereunder, at the rate or rates and payable at the times provided in said
Loan Agreement.

         All Advances made by the Payee pursuant to said Loan Agreement shall
be endorsed by the Payee on the reverse side hereof on or before any
assignment or transfer hereof by the Payee.

         This Note is secured under a Restated Mortgage and Security
Agreement dated as of even date herewith, among the Borrower, the Payee and
the United States of America, as it may have been or shall be supplemented,
amended, consolidated or restated from time to time (herein called the
"Mortgage"). This Note is executed as a renewal of the Secured Promissory
Note dated as of January 20, 1987 and executed to the order of the Payee.
This Note is the Note referred to in, and has been executed and delivered
pursuant to, the Loan Agreement.

         Upon the occurrence of an event of default under the Mortgage, the
principal hereof and interest accrued thereon may be declared to be forthwith
due and payable in the manner, upon the conditions, and with the effect
provided in the Mortgage.

         The Borrower waives demand, presentment for payment, notice of
dishonor, protest, notice of protest, and notice of non-payment of this Note.

         IN WITNESS WHEREOF the Borrower has caused this Note to be signed in
its corporate name and its corporate seal to be hereunto affixed and to be
attested by its duly authorized officers, all as of the day and year first
above written.

                                           CAP ROCK ELECTRIC COOPERATIVE, INC.
(SEAL)

Attest:                                    By:
       -------------------------------        -------------------------------
                (Secretary)                             (President)

Loan No.:  TX 107-C-9033

<PAGE>
                                                                       Exhibit B

Date:
     -------------------

Governor
National Rural Utilities
  Cooperative Finance Corporation
Woodland Park
2201 Cooperative Way
Herndon, Virginia 22017

Re:
   --------------------------------------------------------------

Dear Sir:

I am counsel for __________________________________________ , organized under
the laws of the State of __________ (hereinafter called the "Borrower") and
render this opinion to you in connection with the loans in the aggregate of
$___________________________ provided for in the consolidating loan agreement
(hereinafter called the "CFC Loan Agreement"), dated as of
____________________ 19____ , made by and between the Borrower and National
Rural Utilities Cooperative Finance Corporation (hereinafter called "CFC").

I have examined such corporate records and proceedings of the Borrower, and
such other documents as I have deemed necessary as a basis for the opinions
hereinafter expressed.

I have also examined the following documents as executed and delivered: (1)
the CFC Loan Agreement, (2) the Secured Promissory Note (hereinafter called
the "CFC Notes"), dated _______________ , 19____, in the principal amount of
$_____________________ , payable to the order of CFC, and (3) the
Consolidated Mortgage and Security Agreement, (hereinafter called the
"Mortgage"), dated as of ______________ , 19____ , made by and Among the
Borrower, the United States of America and CFC.

I have also examined, or caused to be examined by competent and trustworthy
persons, the records and files of all offices in which there might be
recorded, filed or indexed evidence of the Borrower's title, and any liens of
any nature whatsoever affecting the title, to any real or personal property
of the Borrower other than easements or rights of way relating to the
electric lines of the Borrower.

I have supervised, examined, or caused to be examined by competent and
trustworthy persons, the recordation of the Mortgage as a mortgage of

                                      -1-
<PAGE>

Based upon the foregoing, I am of the opinion that:

           (i) the Borrower is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction of its
organization, and the Borrower has full corporate power (l) to execute and
deliver the CFC Note, the CFC Loan Agreement and the Mortgage; (2) to perform
all acts required to be done by it under the CFC Note, the CFC Loan Agreement
and the Mortgage; and (3) to own, operate and maintain its properties and
operate its business as conducted at the date of this Opinion;

          (ii) to the extent reasonably required for the maintenance and
operation of its properties and business taken as a whole, the Borrower has
complied with all requirements of the laws of all states in which it operates
or does business and holds all certificates, licenses, consents or approvals
of governmental authorities required to be obtained on or prior to the date
of this Opinion to enable it to engage in the business then transacted by it;

         (iii) the CFC Note, the CFC Loan Agreement, and the Mortgage have
been duly authorized, executed and delivered by the Borrower and constitute
the valid and binding obligations of the Borrower, enforceable against the
Borrower in accordance with their respective terms;

          (iv) the execution and performance by the Borrower of the CFC Note,
the CFC Loan Agreement and the Mortgage, and the transactions contemplated
thereby will not violate any provision of law, the articles of incorporation,
or bylaws* of the Borrower, or result in the breach of, or constitute a
default under, any agreement, indenture or other instrument to which the
Borrower is a party, or by which it may be bound, known to counsel;

           (v) the Mortgage has been duly recorded and filed, in such manner
and to such extent as specified in paragraph "7" under COVENANTS AND
WARRANTIES contained in Attachment B to this Opinion, to constitute the
Mortgage a validly recorded and filed mortgage lien upon the real and
personal property of the Borrower therein described, subject and subordinate
only to liens and encumbrances, if any, permitted by paragraph "2" of
COVENANTS AND WARRANTIES contained in Attachment B to this Opinion;

-----------------------------------------------
*NOTE:  As used herein, "articles of incorporation" includes "certificate of
        incorporation", "articles of association" or "charter"; and "bylaws"
        includes "code of regulations".

                                      -2-
<PAGE>

          (vi) no authorization from any regulatory body is required in
connection with the execution and delivery of the CFC Note, the CFC Loan
Agreement, or the Mortgage; and

         (vii) I know of no litigation pending or threatened against or
affecting the Borrower or its property which, in my opinion, would have a
material adverse effect upon the business, operations or financial condition
of the Borrower.

I also wish to advise you that nothing has occurred since the date of the
opinion of counsel of ____________________, 19_____, heretofore delivered to
you, which in any manner changes the effect or application of such opinion
with reference to the matters therein set forth, and I confirm that said
opinion is true and correct as of the date hereof.

This Opinion (or a true copy thereof) may be relied upon by Manufacturers
Hanover Trust Company, as Trustee under the CFC Indenture dated as of
December 1, 1972, as amended and supplemented, as if this Opinion were
addressed to it. I have read the conditions contained in paragraph (5) of
Section 3.01(b) of said Indenture and the definitions in Article I of said
Indenture relating thereto*; in my opinion I have made such examination or
investigation as is necessary to enable me to express an informed opinion as
to whether or not said conditions will be complied with upon delivery of this
Opinion (or a true copy thereof) to said Trustee; and in my opinion, such
conditions will be complied with upon such delivery.

Sincerely,

-----------------------------------------------
*NOTE:  The conditions and definitions referred to are attached to this Opinion
        as Attachment A and Attachment B.

                                       -3-
<PAGE>

                                 ATTACHMENT A

I.       Conditions contained in Section 3.01(b), paragraph (5) of the
         Indenture, dated as of December 1, 1972, made by and between CFC and
         Manufacturers Hanover Trust Company, Trustee, relating to the
         requirements that Opinions of Counsel for a member state in substance
         that as of the date of such Opinion:

                    (i) such Member is duly organized, validly existing and in
         good standing under the laws of its jurisdiction of organization and
         has full corporate power to execute and deliver such Mortgage Note, the
         Loan Agreement pursuant to which it was issued (if any) and the
         Mortgage securing the same, to perform all acts required to be done by
         it under such Mortgage Note, Loan Agreement (if any) and Mortgage and
         to own, operate and maintain its properties and operate its business as
         conducted at the date of such opinion;

                   (ii) to the extent reasonably required for the maintenance
         and operation of its properties and business taken as a whole, such
         Member has complied with all requirements of the laws of all States
         in which it operates or does business and holds all certificates,
         licenses, consents or approvals of governmental authorities required
         to be obtained on or prior to the date of such Opinion to enable it
         to engage in the business then transacted by it;

                  (iii) such Mortgage Note, Loan Agreement (if any) and Mortgage
         have been duly authorized, executed and delivered by said Member and
         constitute the valid and binding obligations of such Member,
         enforceable against such Member in accordance with their respective
         terms;

                   (iv) the execution and performance by such Member of such
         Mortgage Note, Loan Agreement (if any) and Mortgage, and the
         transactions contemplated thereby, will not violate any provisions of
         law, the Articles of Incorporation or by-laws of such Member, or result
         in the breach of, or constitute a default under, any agreement,
         indenture or other instrument to which such Member is a party, or by
         which it may be bound, known to such Counsel;

                    (v) such Mortgage has been duly recorded and filed (in such
         manner and to such extent, as shown by such Opinion, as specified in
         paragraph 7 under COVENANTS AND WARRANTIES in Schedule l to this
         Indenture)* to constitute such Mortgage a validly recorded and filed
         lien upon the real and personal property of such Member therein
         described, shown by such Opinion to be subject and subordinate only to
         liens and encumbrances, if any, permitted by paragraph 2 under said
         PAGE COVENANTS AND WARRANTIES;*

-----------------------------------------------
*NOTE:  Provisions of paragraphs 2 and 7 under COVENANTS AND WARRANTIES in
        Schedule 1 of the Indenture are attached as Attachment B.

<PAGE>

ATTACHMENT A
Page 2

                   (vi) no authorization from any regulatory body is required in
         connection with the execution and delivery of such Mortgage Note, Loan
         Agreement (if any) or Mortgage or that each such authorization so
         required has been obtained; and

                  (vii) such Counsel knows of no litigation pending or
         threatened against or affecting such Member or its property which, in
         the opinion of such Counsel (or in the opinion of such Member as
         evidenced by a certificate of the manager or other responsible officer
         of such Member annexed to said Opinion), would have a material adverse
         effect upon the business, operations or financial condition of such
         Member.

II.      Definitions, contained in Article I of the Indenture, relating to the
         foregoing conditions:

                  COMPANY - means National Rural Utilities Cooperative Finance
         Corporation until a successor corporation shall have become such
         pursuant to the applicable provisions of this Indenture, and thereafter
         "Company" shall mean such successor corporation.

                  DISTRIBUTION SYSTEM MEMBER - means a Member 50% or more of
         whose gross operating revenues are derived from sales of electricity to
         ultimate consumers, determined as of the end of the last Completed
         Calendar Year.

                  INDENTURE - means this instrument as originally executed or as
         it may from time to time be supplemented or amended by one or more
         indentures supplemental hereto entered into pursuant to the applicable
         provisions hereof.

                  LOAN AGREEMENT - means a loan agreement (if any) between a
         Member and the Company (or between a Member and a wholly-owned
         subsidiary of the Company whose interest has been assigned to the
         Company) providing for the issuance of Mortgage Notes.

                  MEMBER - means any Person which is a member or patron of the
         Company, or any Person which at any time has been or is eligible to
         borrow from REA under the Rural Electrification Act of 1936, as from
         time to time in effect.

                  MORTGAGE - means a mortgage or deed of trust or pledge of
         revenues securing one or more Mortgage Notes (i) which complies with
         the requirements set forth in Schedule 1 here to annexed and made a
         part hereof, or, in the case of a change in the status of a
         Distribution System Member to a Power System Member, or vice versa,
         which complies with the requirements set forth in Schedule l either
         with respect to mortgages or deeds of trust or pledges of revenues of
         Power System Members or with respect to mortgages or deeds of trust or
         pledges of revenues of Distribution System Members, as said Schedule 1
         shall have

<PAGE>

ATTACHMENT A
Page 2

         been amended from time to time in accordance with the provisions
         hereof, (ii) which was made to the Company (or to a wholly-owned
         subsidiary of the Company whose interest has been assigned to the
         Company) or to a Trustee or Trustees under a trust indenture,
         (iii) as to which the interest of the Company (if any) has been
         assigned to the Trustee and (iv) an executed or true copy of which
         has been delivered to the Trustee.

                  MORTGAGE NOTE - means a note or bond of a Member payable to
         the Company (or a wholly-owned subsidiary of the Company whose interest
         has been assigned to the Company) and pledged with the Trustee.

                  OPINION OF COUNSEL - means a written opinion of counsel, who
         may (except as otherwise expressly provided in this Indenture) be
         counsel for the Company or for a Member.

                  PERSON - means any individual, corporation, partnership, joint
         venture, association, joint-stock company, trust, unincorporated
         organization or government or any agency or political subdivision
         thereof.

                  POWER SYSTEM MEMBER - means a Member, other than a
         Distribution System Member.<PAGE>

                              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 23rd day of May, 2000.

         By this Agreement, CAP ROCK ELECTRIC COOPERATIVE, INC., referred to
in this agreement as "Cooperative", acting by and through its President and
Chief Executive Officer, David W. Pruitt, hereinafter referred to as "Pruitt"
employs Mickey Sims, referred to in this Agreement as "Sims", and who accepts
employment on the following terms and conditions:

                                    ARTICLE 1

                               TERMS OF EMPLOYMENT

         By this Agreement, the Cooperative, acting by and through and under
the direction of Pruitt, employees Sims and Sims accepts employment with the
Cooperative for an initial term of two (2) years. Unless a written notice to
terminate this Agreement is executed and properly delivered by either party
prior to an anniversary date and subject to a satisfactory evaluation by
Pruitt of Sims on the annual employee appraisal, this Agreement shall
annually and automatically be renewed for an additional term of two (2)
years. 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, Sims
shall be paid by Cooperative an annual salary of $110,000.00 per year,
together with an annual salary adjustment in an amount at least equal to any
approved across the board salary adjustments for all employees. Additionally,
upon the execution of this Agreement, Sims shall receive a $100,000.00
signing bonus to be paid as Sims directs at his discretion, immediately, or
deferred over time as Sims directs the Cooperative.

2.02 Sims shall receive a benefit package which is equivalent to or better
than the benefit package that he currently has with his current employer.
Sims shall provide the Cooperative with necessary information about his
current benefit package so that the Cooperative and Sims can work together to
arrange such a benefit package.

2.03 The term "benefit package" shall include annual leave, sick leave,
vacation, retirement or 401k plans, holiday pay, etc. Sims, in recognition of
his previous years of service in the telecommunications industry, shall
immediately be vested with three (3) weeks of vacation and shall accrue three
(3)

                                       1
<PAGE>

weeks of vacation per year during his employment with the Cooperative.
Additionally, Sims shall be entitled up to five (5) days of "paid executive
education" courses per year.

2.04 During the term of this Agreement, Sims shall have the potential to earn
up to five times his base salary in bonuses or other forms of compensation in
any given calendar or fiscal year. Such bonuses shall be awarded in
accordance with a procedure for accomplishing goals and/or results in
accordance with targets established by Pruitt and Sims each calendar or
physical year.

2.05 Because Sims' duties will from time to time require him to work outside
of; and in addition to, the Cooperative's established normal work week, work
days and work hours, Sims shall be allowed to take compensatory time off.

2.06 The parties recognize that Sims' current domicile is in Lubbock, Texas.
The parties agree that for at least the first seven (7) years that this
Agreement is in effect, Sims shall perform his duties pursuant to this
Agreement by working at such location as he chooses, at his discretion, so
long as he is able to perform the duties hereunder at such location.

2.07 The Cooperative shall furnish Sims a vehicle during his employment and
shall pay the monthly dues for Sims' membership at the Lubbock Country Club.

                                    ARTICLE 3

                               COVENANT TO PERFORM

3.01 Sims 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 Cooperative by Pruitt.

3.02 Sims agrees to execute and honor and abide by the Cooperative's
"Employee Pledge and Proprietary Rights and Information Agreement" which all
other employees of the Cooperative have executed and agreed to, a copy of
which is attached hereto as Exhibit "A".

                                   ARTICLE 4

                              TERM AND TERMINATION

4.01     The Cooperative shall employ Sims pursuant to this Agreement for the
two (2) year term beginning with the effective date of his employment
hereunder, yearly renewable subject to and following a satisfactory
evaluation employee appraisal report on Sims by Pruitt, for successive two
year terms. However, if during such employment, Sims fails or refUses to
perform the work and services assigned to him on behalf of the Cooperative 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 Cooperative cause, this Agreement shall, at Pruitt's sole option,
cease and terminate and any of

                                       2
<PAGE>

Sims' rights hereunder not already finally vested shall cease on or at such
time as Pruitt shall notify Sims in writing. The term "cause" shall include
the following:

         1.       Knowingly, willfully and substantially, during the term of
                  this Agreement, neglects the duties that Sims 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
                  Cooperative with the intent to injure or damage the
                  Cooperative.

         3.       Insubordination or failing to follow the directives of
                  the President/CEO.

4.02 If Sims' employment terminates for any reason other than as provided for
in paragraph 4.01, the Cooperative shall pay Sims a lump sum cash settlement
equal to the total salary then in effect for the two (2) year term of the
Contract, plus the amount the Cooperative would have paid during such period
for Sims' benefit package, including any accrued but untaken vacation, sick
leave, compensatory time, bonuses and other compensation authorized by the
Board of Directors.

4.03 Notwithstanding paragraphs 4.01 and 4.02, this Agreement and Sims's
employment hereunder may be terminated at such time and upon such terms and
conditions as the parties may mutually agree.

                                   ARTICLE 5

                    TRADE SECRETS AND CONFIDENTIAL INFORMATION

5.01 During the term of Sims' employment, the Company will provide Sims
access to, so he may become familiar with, various trade secrets and other
confidential or proprietary information of the Company, train his in the use
of same, and provide associates a working environment in which he can
contribute toward enhancing same and upgrading his general knowledge. Trade
secrets, proprietary information and confidential information encompass,
without limitation, anything which is owned by the Company and is regularly
used in the operation of the business of the Company to obtain a competitive
advantage over the Company's competitors who do not know, have access to, or
utilize such information or trade secrets. Proprietary information further
includes, but is not limited to, records, files, documents, bulletins,
publications, manuals, financial data and information concerning and the
identity of customers, prospects and suppliers. Trade secrets further
include, but are not limited to, specifications, software programs, both the
source code and the object code, documentation, flow charts, diagrams,
schematics, data, data bases, and business and production methods and
techniques.

5.02 Sims 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. Sims 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. Sims, therefore, covenants and agrees that, except as required by
his employment hereunder or with the express

                                       3
<PAGE>

prior written consent of the Company, he shall not, during the term of his
employment by the Company or at anytime thereafter, either directly or
indirectly, make independent use of, publish or otherwise disclose any of the
aforesaid trade secrets or other confidential or proprietary information of
the Company (whether acquired, learned, obtained or developed by him alone or
in conjunction with others) to any person, firm, corporation, association or
other entity for any reason or purpose whatsoever or allow any other person,
firm, corporation, association or other entity to make use of, publish or
disclose any of the aforesaid trade secrets or other confidential or
proprietary information. Sims agrees not to use, steal, or appropriate such
items or versions thereof, whether copies or reconstructed from memory or
otherwise, in any manner. Sims 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 that is
confidential information and that the goodwill afforded to Company depends
upon, among other things, Company and its employees keeping such services and
information confidential. Sims 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 Sims' employment
pursuant to this Agreement. Therefore, Sims 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 Sims of
this Article shall be a material violation of this Agreement and will justify
legal and/or equitable relief. Sims 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, Sims 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, Sims 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 Sims 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

         Sims agrees that upon his termination of employment from the
Company, for a period of Five (5) years, he will not engage or participate,
directly or indirectly, in competition with the Company or any of its
affiliates or subsidiaries without the prior written consent of the Company
which consent shall not be unreasonably withheld. This Agreement shall
prohibit Sims from,

                                       4
<PAGE>

among other things, attempts to serve or assist others in serving the
Company's present or potential customers. Sims further agrees that he will
never at any time after executing this Agreement, assist any person or entity
in buying, merging with or acquiring the Company unless the Company consents
in writing.

                                   ARTICLE 7

                        SUPERSESSION AND EFFECTIVENESS

7.01 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 Sims' employment.

7.02 This Agreement shall bind and be for the benefit of the parties to the
agreement, as well as their respective successors, heirs and assigns, it
being understood, however that this Agreement may be assigned only with the
written consent of both parties.

7.03 The existence and effectiveness of this Agreement between the parties
hereto does not preclude or otherwise interfere with employment of Sims by
subsidiary corporations of Cap Rock Electric Cooperative, Inc., or by any
corporation organized by the Cooperative's Board of Directors for the benefit
of the Cooperative, or the receipt of compensation by Sims from any such
corporations.

7.04     This Agreement shall become binding upon the parties from and as of
the date of the execution.

         IN WITNESS WHEREOF, the parties have executed this Agreement in
duplicate originals, one being retained by each, on or as of the 23rd day of
May, 2000.

                                       CAP ROCK ELECTRIC COOPERATIVE, INC.

---------------------------------      ----------------------------------------
MICKEY SIMS                            DAVID W. PRUITT, President/CEO

                                       5
<PAGE>

THE STATE OF TEXAS                  )(
                                    )(
COUNTY OF MIDLAND                   )(

     This instrument was acknowledged before me on this the 23rd day of May,
2000, by DAVID W. PRUITT, President/Chief Executive Officer of Cap Rock
Electric Cooperative, Inc., a Texas cooperative corporation, on behalf of
said corporation.

----------------------------         /s/   Sharon A. Hoelscher
     SHARON A. HOELSCHER             ----------------------------------------
[SEAL] MY COMMISSION EXPIRES         Notary Public, State of Texas
          July 11, 2003              Printed Name of Notary: Sharon A. Hoelscher
-----------------------------                                -------------------
                                     My Commission Expires: 7-11-2003
                                                            --------------------

(SEAL)

THE STATE OF TEXAS                  )(
                                    )(
COUNTY OF LUBBOCK                   )(
          -------

         This instrument was acknowledged before me on this the 22 day of May,
2000, by MICKEY SIMS.

                                       /s/ Ester Martinez
                                       --------------------------------------
                                       Notary Public, State of Texas
                                       Printed Name of Notary:
                                       Ester Martinez
                                       --------------------------------------
                                       My Commission Expires: 7-23-2003
                                                             ----------------

(SEAL)                                 --------------------------------------
                                                    ESTER MARTINEZ
                                       [SEAL]  Notary Public, State of Texas
                                              My Commission Expires 7-23-2003
                                       --------------------------------------

                                       6
<PAGE>

                                  EXHIBIT "A"

<PAGE>

                         CAP ROCK ELECTRIC COOPERATIVE, INC.

                               EMPLOYEE PLEDGE AND
                    PROPRIETARY RIGHTS AND INFORMATION AGREEMENT

This Agreement sets forth the understanding between you and Cap Rock Electric
Cooperative, Inc. ("Cap Rock Electric") concerning your relationship as an
employee of Cap Rock Electric and your treatment of Cap Rock Electric'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:

          1.   EMPLOYEE PLEDGE

               a.   CONDUCT OF EMPLOYEE. I will conduct myself at all times
                    while I am on duty in a manner that will reflect well on Cap
                    Rock Electric Cooperative, Inc. I understand that when
                    people observe me and my actions, they are looking at me as
                    a representative of Cap Rock Electric and will judge Cap
                    Rock Electric 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 Electric and

               c.   DEFENDING AND PROMOTING. I will defend and promote the
                    mission statement goals, and decisions of Cap Rock Electric
                    whenever appropriate.

          II.  PROPRIETARY INFORMATION

               You understand that your employment with Cap Rock Electric
               creates a relationship of a confidential or proprietary nature
               that may be disclosed to you by Cap Rock Electric or learned by
               you in the course of your duties at Cap Rock Electric and that
               relates to; (i) the business of Cap Rock Electric or that of any
               of its subsidiaries, affiliates, customers, suppliers or (ii) any
               confidential information of third parties disclosed by Cap Rock
               Electric. 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 Electric 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 Electric, except as may be necessary to perform
                    our duties as an employee of Cap Rock Electric. Upon
                    termination of your employment with Cap Rock Electric, you
                    will promptly deliver to Cap Rock Electric all documents and
                    materials of any kind pertaining to your work with Cap Rock
                    Electric 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 Electric you will not improperly use
                    or disclose and confidential or proprietary information of
                    your former employer.

          III. NO CONFLICTING OBLIGATIONS.

               a.   NO CONFLICTING EMPLOYMENT. You agree that during the term of
                    our employment at Cap Rock Electric 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 Electric is now involved or becomes involved
                    during the term of our employment, nor will you engage in
                    any other activities that conflict with our employment
                    obligations to Cap Rock Electric.

               b.   NO CONFLICTING AGREEMENTS. our represent to Cap Rock
                    Electric that you have no other agreements or commitments
                    that would hinder or prevent the full performance of your
                    duties as a Cap Rock Electric 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 Electric.

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

          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 Electric that
               you would not otherwise have, nor does this Agreement obligate
               Cap Rock Electric 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, 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.

<PAGE>

               c.   ENTIRE AGREEMENT. This Agreement sets forth the entire
                    Agreement and understanding between you and Cap Rock
                    Electric relating to the subject matter of this Agreement. o
                    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 Electric. 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
                    representative and will be for the benefit of Cap Rock
                    Electric, it successors and assigns.

/s/ Mickey L. Sims                                            May 22, 2000
---------------------------                            ------------------------
    Employee Signature                                        Date Signed

Mickey L. Sims
---------------------------
       Print Name

---------------------------                            -----------------------
    CPR Representative                                        Date Signed

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