Schedule 13D

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FuKf8dYJnf0ah6hiXhc+kBUmC47TrdPhxDCmUvIsS88R+PWFkeY7BoWgsDVkPqKf +9NOzUX/LMIBEkkhoUTWlQ== 0000950157-05-000687.txt : 20051221 0000950157-05-000687.hdr.sgml : 20051221 20051114181007 ACCESSION NUMBER: 0000950157-05-000687 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20051114 DATE AS OF CHANGE: 20051221 GROUP MEMBERS: LGB CAP ROCK LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CAP ROCK ENERGY CORP CENTRAL INDEX KEY: 0001129162 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 752794300 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-78508 FILM NUMBER: 051203722 BUSINESS ADDRESS: STREET 1: 500 WEST WALL STREET SUITE 400 CITY: MIDLAND STATE: TX ZIP: 79701 BUSINESS PHONE: 2142373223 MAIL ADDRESS: STREET 1: 500 WEST WALL STREET SUITE 400 CITY: MIDLAND STATE: TX ZIP: 79701 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Cap Rock Holding CORP CENTRAL INDEX KEY: 0001344267 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 630 FIFTH AVENUE, 30TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10111 BUSINESS PHONE: 212-651-1100 MAIL ADDRESS: STREET 1: 630 FIFTH AVENUE, 30TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10111 SC 13D 1 caprock-sc13d.htm SCHEDULE 13D Schedule 13D

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. )*

Cap Rock Energy Corporation

(Name of Issuer)

Common Stock, par value $.01 per share

(Title of Class of Securities)

13910R102

(CUSIP Number)

Robert J.S. Roriston

Cap Rock Holding Corporation

630 Fifth Avenue

New York, NY 10111

(212) 651-1111

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

With a copy to:

Richard Hall, Esq.

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, NY 10019

(212) 474-1000

November 4, 2005

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 240.13d-7 for other parties to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 ( “Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No. 13910R102

1	Names of Reporting Persons I.R.S. Identification Nos. of Above Persons (entities only) CAP ROCK HOLDING CORPORATION
2	Check the Appropriate Box if a Member of a Group (See Instructions)	(a) □ (b) □
3	SEC Use Only
4	Source of Funds (See Instructions) AF
5	Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)	□
6	Citizenship or Place of Organization Delaware

Number of Shares Beneficially Owned by Each Reporting Person With	7	Sole Voting Power 0
	8	Shared Voting Power See Items 5(a) and 5(b)
	9	Sole Dispositive Power 0
	10	Shared Dispositive Power See Items 5(a) and 5(b)

11	Aggregate Amount Beneficially Owned by Each Reporting Person 253,636 (consisting of possible deemed indirect beneficial ownership through voting agreement with principal shareholders). See Item 5.
12	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)	□
13	Percent of Class Represented by Amount in Row (11) 16.5%
14	Type of Reporting Person (See Instructions) CO, HC

CUSIP No. 13910R102

1	Names of Reporting Persons I.R.S. Identification Nos. of Above Persons (entities only) LGB CAP ROCK LLC
2	Check the Appropriate Box if a Member of a Group (See Instructions)	(a) □ (b) □
3	SEC Use Only
4	Source of Funds (See Instructions) AF
5	Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)	□
6	Citizenship or Place of Organization Delaware

Number of Shares Beneficially Owned by Each Reporting Person With	7	Sole Voting Power 0
	8	Shared Voting Power See Items 5(a) and 5(b)
	9	Sole Dispositive Power 0
	10	Shared Dispositive Power See Items 5(a) and 5(b)

11	Aggregate Amount Beneficially Owned by Each Reporting Person 253,636 (consisting of possible deemed indirect beneficial ownership through voting agreement with principal shareholders). See Item 5.
12	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)	□
13	Percent of Class Represented by Amount in Row (11) 16.5%
14	Type of Reporting Person (See Instructions) CO, HC

Item 1. Security and Issuer

This Schedule 13D relates to the common stock, par value $.01 per share (the “Common Stock”), of Cap Rock Energy Corporation, a corporation organized under the laws of the State of Texas (the “Company”). The address of the Company’s principal executive offices is 500 West Wall Street, Suite 400, Midland, Texas 79701.

Item 2. Identity and Background

This Schedule 13D is being filed by (i) Cap Rock Holding Corporation (“CHC”), a corporation organized under the laws of the State of Delaware, and (ii) LGB Cap Rock LLC, a limited liability company organized under the laws of the State of Delaware (“LGB CR LLC”), and together with CHC, the “Reporting Persons”). The Reporting Persons have entered into a Joint Filing Agreement (the “Joint Filing Agreement”), pursuant to which such persons have agreed to file this Schedule 13D in accordance with the provisions of Rule 13d-1(k)(1) promulgated under the Act. A copy of the Joint Filing Agreement is filed as Exhibit 1 to this Schedule 13D and is incorporated herein by reference.

CHC’s principal business is to acquire the Common Stock of the Company. The address of CHC’s principal business and principal office is 630 Fifth Avenue, New York, NY 10111. CHC is a wholly owned subsidiary of LGB CR LLC.

LGB CR LLC’s principal business is holding the common stock of CHC. The address of LGB CR LLC’s principal business and principal office is 630 Fifth Avenue, New York, NY 10111.

The (i) name, (ii) residence or business address, (iii) present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted and (iv) citizenship of each of the executive officers and members of the Board of Directors or managers, as the case may be, of each of the Reporting Persons are set forth on Exhibit 2 hereto.

None of the Reporting Persons nor, to the knowledge of any Reporting Person, any natural person named in Exhibit 2 hereto has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of which any such Reporting Person or person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or state securities laws or finding any violation with respect to such laws.

Item 3. Source and Amount of Funds or Other Consideration

The Company entered into an Agreement and Plan of Share Exchange, dated as of November 4, 2005 with CHC (the “Exchange Agreement”). Capitalized terms used herein but not defined herein shall have the meanings set forth in the Exchange Agreement.

As a condition to CHC’s willingness to enter into the Exchange Agreement, and in consideration therefor, certain shareholders of the Company, who collectively beneficially own 253,636 shares of Company Common Stock as of the date of the Exchange Agreement (the “Principal Shareholders”), entered into a Principal Shareholder Agreement, dated as of November 4, 2005, with CHC (the “Principal Shareholder Agreement”). CHC did not pay additional consideration to the Principal Shareholders in connection with the execution and delivery of the Principal Shareholder Agreement. Pursuant to the Principal Shareholder Agreement, each of the Principal Shareholders agreed (i) to vote his or her shares of Company Common Stock in favor of granting the Company Shareholder Approval, (ii) not to Transfer, or enter into any Contract, option or other arrangement (including profit sharing arrangement) with respect to the Transfer of, any of his or her shares of Company Common Stock to any person other than pursuant to the Share Exchange (as hereinafter defined) and (iii) that if the Exchange Agreement is terminated in circumstances under which CHC is or may become entitled to a termination fee under Section 6.09 of the Exchange Agreement, each Principal Shareholder shall, severally and not jointly, pay to CHC on demand an amount equal to 50% of the profit of such Principal Shareholder from the consummation of any Company Takeover Proposal that is consummated, or for which a definitive agreement is entered into, within 270 days of such termination. In addition, each Principal Shareholder delivered irrevocable proxies for the purpose of voting the shares covered by the Principal Shareholder Agreement.

The foregoing descriptions of the Exchange Agreement and Principal Shareholder Agreement do not purport to be complete and are qualified in their entirety by reference to the Exchange Agreement and Principal Shareholder Agreement, which are filed as Exhibits 3 and 4 to this Schedule 13D and are incorporated herein by reference.

Item 4. Purpose of Transaction

As described in Item 3 above, this 13D is being filed in connection with the Exchange Agreement and the Principal Shareholder Agreement. Subject to the satisfaction or waiver of the conditions contained in the Exchange Agreement, each share of Company Common Stock (other than (i) shares owned by the Company, (ii) shares held by the shareholders who are entitled to and who properly exercise appraisal rights in compliance with all required procedures under Texas law and (iii) shares owned by CHC at the Effective Time) will be converted into the right to receive $21.75 in cash without interest (the “Share Exchange”). Completion of the Share Exchange is subject to receipt of the approval of the Company’s shareholders and certain regulatory authorities and other customary closing conditions set forth in the Exchange Agreement.

Upon the consummation of the Share Exchange, the Company will be a wholly owned subsidiary of CHC and it is anticipated that the directors will resign from the Company’s Board of Directors. The Company Common Stock will no longer be traded on the American Stock Exchange and registration of the Common Stock under the Act will be terminated.

Except as set forth in this Schedule 13D and in connection with the Share Exchange described above, the Reporting Persons do not have any plans or proposals which relate to or would result in:

(a) The acquisition by any person of additional securities of the Company, or the disposition of securities of the Company;

(b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries;

(d) Any change in the present board of directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board;

(e) Any material change in the present capitalization or dividend policy of the Company;

(f) Any other material change in the Company’s business or corporate structure;

(g) Changes in the Company’s charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person;

(h) Causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association;

(i) A class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or

(j) Any action similar to any of those enumerated above.

Item 5. Interest in Securities of the Issuer

(a) The Company has represented to CHC that there were 1,415,727 shares of Common Stock issued and outstanding as of the close of business on November 4, 2005. The Principal Shareholders have represented to CHC that as of November 4, 2005, they owned an aggregate of 253,636 shares of Common Stock. The Company has provided certain information to CHC and LGB CR LLC indicating that only 128,717 of the 253,636 shares of Common Stock set forth above were issued and outstanding and the remaining 124,919 shares were unissued as a result of transfer restrictions or requirements under the Company’s stock for compensation program. The 253,636 shares would constitute 16.5% of: (i) the total issued and outstanding shares of Common Stock of the Company, plus (ii) the 124,919 unissued shares of the Principal Shareholders.

Nothing in this Schedule 13D shall not be construed as an admission that any of CHC or LGB CR LLC is, for the purposes of the Act, the beneficial owner of any of such shares of Common Stock owned by the Principal Shareholders.

(b) As the result of the Principal Shareholder Agreement, CHC may be deemed to have shared voting or dispositive power with respect to the 253,636 shares of Common Stock beneficially owned by the Principal Shareholders. As the owner of 100% of the capital stock of CHC, LGB CR LLC may be deemed to have shared voting or dispositive power with respect to the 253,636 shares of Common Stock beneficially owned by the Principal Shareholders.

(c) Other than as disclosed in this Schedule 13D, none of the Reporting Persons has effected any transaction in the Common Stock during the past 60 days. To the best knowledge of the Reporting Persons, no executive officer or director of any Reporting Person or manager of any of the Reporting Persons, as the case may be, has effected any transaction in the Common Stock during the past 60 days.

(d) Not applicable.

(e) Not applicable.

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

In connection with the Exchange Agreement, and as a condition to CHC’s willingness to enter into the Exchange Agreement, David W. Pruitt, Ulen A. North, Jr., Sam Prough, Celia Page and LGB CR LLC (the “Purchasers”) entered into a Rollover Agreement, dated as of November 4, 2005, with CHC (the “Rollover Agreement” ). Pursuant to the Rollover Agreement, each Purchaser has agreed, among other things, to subscribe for a number of shares of CHC common stock in exchange for an equal number of shares of Company Common Stock.

The foregoing description of the Rollover Agreement does not purport to be complete and is qualified in its entirety by reference to the Rollover Agreement, which is filed as Exhibit 5 to this Schedule 13D and is incorporated herein by reference.

Except for the agreements described above, to the knowledge of the Reporting Persons, there are no contracts, arrangements, understandings or relationships (legal or otherwise), including, but not limited to, transfer or voting of any of the securities, finder’s fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies, between the persons enumerated in Item 2, and any other person, with respect to any securities of the Company, including any securities pledged or otherwise subject to a contingency the occurrence of which would give another person voting power or investment power over such securities other than standard default and similar provisions contained in loan agreements.

Item 7. Material to Be Filed as Exhibits

Exhibit 1	Agreement in writing that such statement is filed on behalf of each of the Reporting Persons. See Rule 13d-1(k)(1) under the Act.

Exhibit 2	Information with respect to the Directors and Executive Officers of CHC and the Managers of LGB CR LLC.

Exhibit 3	Agreement and Plan of Share Exchange, dated as of November 4, 2005, between CHC and the Company (incorporated herein by reference to Exhibit 2.1 to the Form 8-K filed by Cap Rock Energy Corporation on November 9, 2005).

Exhibit 4	Principal Shareholder Agreement, dated as of November 4, 2005, among CHC and the Principal Shareholders (incorporated herein by reference to Exhibit 9.1 to the Form 8-K filed by Cap Rock Energy Corporation on November 9, 2005).

Exhibit 5	Rollover Agreement, dated as of November 4, 2005, among CHC and the Purchasers.

Signature

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: November 14, 2005

CAP ROCK HOLDING CORPORATION,
by
	/s/ Russell Triedman
	Name: Russell Triedman
	Title: Vice President and Secretary

Signature

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: November 14, 2005

LGB CAP ROCK LLC,
by
	/s/ Robert Roriston
	Name: Robert Roriston
	Title: Manager

EXHIBIT INDEX

Exhibit No.	Description

Exhibit 1	Agreement in writing that such statement is filed on behalf of each of the Reporting Persons. See Rule 13d-1(k)(1) under the Act.

Exhibit 2	Information with respect to the Directors and Executive Officers of CHC and the Managers of LGB CR LLC.

Exhibit 3	Agreement and Plan of Share Exchange, dated as of November 4, 2005, between CHC and the Company (incorporated herein by reference to Exhibit 2.1 to the Form 8-K filed by Cap Rock Energy Corporation on November 9, 2005).

Exhibit 4	Principal Shareholder Agreement, dated as of November 4, 2005, among CHC and the Principal Shareholders (incorporated herein by reference to Exhibit 9.1 to the Form 8-K filed by Cap Rock Energy Corporation on November 9, 2005).

Exhibit 5	Rollover Agreement, dated as of November 4, 2005, among CHC and the Purchasers.

EX-1 2 ex1.htm JOINT FILING AGREEMENT Joint Filing Agreement

EXHIBIT 1

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, each of the persons named below agrees to the joint filing of a Statement on Schedule 13D (including amendments thereto) with respect to the common shares of beneficial ownership, par value $0.01 per share, of Cap Rock Energy Corporation, a Texas corporation, and further agrees that this Joint Filing Agreement be included as an exhibit to such filings provided that, as contemplated by Section 13d-1(k)(ii), no person shall be responsible for the completeness or accuracy of the information concerning the other persons making the filing, unless such person knows or has reason to believe that such information is inaccurate. This Joint Filing Agreement may be executed in any number of counterparts, all of which together shall constitute one and the same instrument.

Dated as of November 14, 2005.

CAP ROCK HOLDING CORPORATION,
by
	/s/ Russell Triedman
	Name: Russell Triedman
	Title: Vice President

LGB CAP ROCK LLC,
by
	/s/ Robert Roriston
	Name: Robert Roriston
	Title: Manager

EX-2 3 ex2.htm DIRECTORS AND EXECUTIVE OFFICERS OF CHC AND MANAGERS OF LGB CAP ROCK LLC Unassociated Document

EXHIBIT 2

Directors and Executive Officers Cap Rock Holding Corporation

and

Managers of LBG Cap Rock LLC

The following table is a list of the directors and executive officers of Cap Rock Holding Corporation (“CHC”) and the managers of LGB Cap Rock LLC (“LGB CR LLC”), setting forth the name, present position with CHC, present position with LGB CR LLC and present principal occupation or employment (along with the name of any corporation or other organization in which such employment is conducted.) Each person listed below is a citizen of the United States, except for Robert Roriston, who is a citizen of the United Kingdom. The business address of each individual listed below is Goldberg Lindsay & Co. LLC, 630 Fifth Avenue, New York, NY.

Name	Position with CHC	Position with LGB CR LLC	Present Principal Occupation or Employment
Alan E. Goldberg	Director, Co-President	Manager	Co-Managing Partner, Goldberg Lindsay & Co. LLC
Robert D. Lindsay	Director, Co-President	Manager	Co-Managing Partner, Goldberg Lindsay & Co. LLC
Robert J.S. Roriston	Vice President,Treasurer	Manager	Partner, Goldberg Lindsay & Co. LLC
J. Russell Triedman	Director, Vice President, Secretary	Manager	Principal, Goldberg Lindsay & Co. LLC

EX-5 4 ex5.htm ROLLOVER AGREEMENT Rollover Agreement

EXHIBIT 5

ROLLOVER AGREEMENT dated as of November 4, 2005 among Cap Rock Holding Corporation, a Delaware corporation (“Parent”), LGB Cap Rock LLC, a Delaware limited liability company (the “LGB Shareholder”), and David W. Pruitt, Ulen A. North, Jr., Sam Prough and Celia B. Page (each, a “Shareholder” and, together with the LGB Shareholder, the “Purchasers”).

WHEREAS Parent and Cap Rock Energy Corporation, a Texas corporation (the “Company”), propose to enter into an Agreement and Plan of Share Exchange dated as of the date hereof (as the same may be amended or supplemented, the “Exchange Agreement”; capitalized terms used but not defined herein shall have the meanings set forth in the Exchange Agreement);

WHEREAS Parent and each Shareholder have entered into the Principal Shareholder Agreement, dated as of the date hereof;

WHEREAS each Shareholder intends to subscribe for the number of shares of Parent common stock, par value $0.01 (the “Parent Common Stock”) set forth opposite his or her name on Schedule A hereto (the “Purchased Shares”) and the LGB Shareholder intends to subscribe for the Remaining Shares (as defined below); and

WHEREAS, as a condition to its willingness to enter into the Exchange Agreement, Parent has requested that each Shareholder and the LGB Shareholder enter into this Agreement.

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

Subscription for and Acquisition

of Common Stock

Section 1.01. Issuance of Parent Common Stock to Shareholders. On the terms and subject to the conditions set forth in this Agreement, each Shareholder hereby subscribes for and agrees to acquire, and Parent hereby agrees to issue and transfer to such Shareholder, immediately prior to the Effective Time, the Purchased Shares, in consideration for an equal number of shares of Company Common Stock to be transferred to Parent by such Shareholder (the “Subject Shares”).

Section 1.02. Issuance of Parent Common Stock to LGB Shareholder. The term “Remaining Shares” shall represent shares of Parent Common Stock, the number of which shall be determined by (a) calculating the number of shares of Company Common Stock outstanding immediately prior to the Effective Time (disregarding the effects of any transactions contemplated herein), and (b) subtracting from such number the total number of Purchased Shares to be issued and transferred to all Shareholders pursuant to Section 1.01. On the terms and subject to the conditions set forth in this

Agreement, the LGB Shareholder hereby subscribes for and agrees to acquire, and Parent hereby agrees to issue and transfer to the LGB Shareholder, the Remaining Shares, immediately prior to the Effective Time, in consideration for a cash purchase price of $21.75 per Remaining Share.

Section 1.03. The Closing. The closing (the “Closing”) of the acquisition and transfer under Sections 1.01 and 1.02 of the Parent Common Stock shall occur on the Closing Date at the offices of Cravath, Swaine & Moore LLP, located at 825 Eighth Avenue, New York, NY 10019.

ARTICLE II

Representations and Warranties of Parent

Parent represents and warrants to each Purchaser on the date hereof and on and as of the Closing Date as follows:

Section 2.01. Authorization; Validity. Parent has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and this Agreement has been duly authorized, executed and delivered by Parent and is a valid and binding agreement of Parent, enforceable against Parent in accordance with its terms.

Section 2.02. Capitalization. The Parent Common Stock to be issued to each Purchaser pursuant to this Agreement, when issued and delivered in accordance with the terms hereof, will be duly authorized and validly issued and, upon receipt by Parent of the consideration to be received hereunder, will be fully paid and nonassessable.

Section 2.03. No Conflicts; No Violations. None of the execution, delivery or performance of this Agreement by Parent will conflict with Parent’s Articles of Incorporation or By-laws or result in any material breach of any terms or provisions of, or constitute a material default under, any material contract, agreement or instrument to which Parent is a party or by which Parent or its property is bound.

ARTICLE III

Representations and Warranties of the Purchasers

Each Purchaser hereby, severally and not jointly, represents and warrants to Parent on the date hereof and on and as of the Closing Date, with respect to itself, as follows:

Section 3.01 Authority; No Other Action. The Purchaser has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery by the Purchaser of this Agreement and consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Purchaser. The Purchaser has duly

executed and delivered this Agreement, and this Agreement constitutes the legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms. The execution and delivery by the Purchaser of this Agreement do not, and the consummation of the transactions contemplated hereby and compliance with the terms hereof will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancelation or acceleration of any obligation or to loss of a material benefit under, or to increased, additional, accelerated or guaranteed rights or entitlements of any person under, or result in the creation of any Lien upon any of the properties or assets of the Purchaser under, any provision of any Contract to which the Purchaser is a party or by which any properties or assets of the Purchaser are bound or, subject to the filings and other matters referred to in the next sentence, any provision of any Judgment or Law applicable to the Purchaser or the properties or assets of the Purchaser. No Consent of, or registration, declaration or filing with, any Governmental Entity is required to be obtained or made by or with respect to the Purchaser in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby, other than the Schedule 13E-3 and such reports under Sections 13(d) and 16 of the Exchange Act as may be required in connection with this Agreement and the transactions contemplated hereby.

Section 3.02. Investment Intention; No Resales. The Purchaser is acquiring the Purchased Shares or Remaining Shares, as the case may be, for investment, solely for its own account and not with a view to, or for resale in connection with, the distribution thereof; provided, however, that the Purchaser shall have the right at all times to sell or otherwise dispose of all or any part of the Parent Common Stock so acquired by the Purchaser pursuant to the terms of the Shareholders Agreement (as defined below).

Section 3.03. Stock Unregistered. The Purchaser has been advised by Parent that (a) the offer and sale of the Parent Common Stock has not been registered under the Securities Act or the securities laws of any other jurisdiction; (b) the offering and sale of the Parent Common Stock is intended to be exempt from registration under the Securities Act pursuant to Section 4(2) of the Securities Act; and (c) there is no established market for the Parent Common Stock, and it is not anticipated that there will be any public market for the Parent Common Stock in the foreseeable future.

Section 3.04. Parent Information. The Purchaser confirms that neither Parent nor any of its employees, officers, directors, affiliates or agents has made any representations or warranties to the Purchaser regarding (A) the value of the Parent Common Stock, (B) the business, assets, liabilities, results of operations, financial condition or prospects of Parent or its subsidiaries (including the Company and its subsidiaries), (C) the plans or intentions of Parent, its employees, officers, directors, affiliates or agents with respect to the Company and its subsidiaries or their business, operation or management, or (D) any other consideration to be paid to Purchaser by Parent or any of its subsidiaries in connection with the transactions contemplated herein or otherwise, except to the extent set forth in this Agreement.

ARTICLE IV

Representations and Warranties of the Shareholders

Each Shareholder hereby, severally and not jointly, represents and warrants to Parent on the date hereof and on and as of the Closing Date, with respect to himself or herself, as follows:

Section 4.01. The Subject Shares. The Shareholder is the record and beneficial owner of, or is the trustee of a trust that is the record holder of, and whose beneficiaries are the beneficial owners of, and has good and marketable title to, the Subject Shares, free and clear of any Liens. The Shareholder has the sole right to vote such Subject Shares, and none of such Subject Shares is subject to any voting trust or other agreement, arrangement or restriction with respect to the voting of such Subject Shares, except as contemplated by the Principal Shareholder Agreement.

Section 4.02. Further Authorization. If the Shareholder is married and the Subject Shares of the Shareholder constitute community property or such Shareholder otherwise needs spousal or other approval for this Agreement and the transactions contemplated herein to be legal, valid and binding, this Agreement has been duly authorized, executed and delivered by, and constitutes a valid and binding agreement of, the Shareholder’s spouse, enforceable against such spouse in accordance with its terms. No trust of which the Shareholder is a trustee requires the consent of any beneficiary to the execution and delivery of this Agreement or to the consummation of the transactions contemplated hereby.

ARTICLE V

Conditions Precedent

Section 5.01. Conditions to Each Party’s Obligation. The respective obligation of each party to effect the transactions contemplated hereunder is subject to the satisfaction or waiver of all conditions precedent to the Exchange set forth in Article VII of the Exchange Agreement.

Section 5.02 Conditions to Parent’s Obligation. The obligation of Parent to effect the transactions contemplated herein is subject to the execution and delivery by each party hereto of an agreement substantially in the form of the shareholders agreement (the “Shareholders Agreement”) attached as Exhibit A to the letter from Parent to each of the Purchasers dated as of the date hereof.

ARTICLE VI

Miscellaneous

Section 6.01. Binding Effect. All obligations imposed upon each Purchaser, and all rights granted to Parent hereunder, shall be binding upon each Purchaser’s heirs, legal representatives and successors. This Agreement and the rights

and obligations hereunder shall not be assignable or transferable by Parent or any Purchaser. Any attempted assignment or transfer in violation of this Section 6.01 shall be void.

Section 6.02. Recapitalizations, Exchanges, etc., Affecting Parent Common Stock or Company Common Stock. The provisions of this Agreement shall apply to the full extent set forth herein with respect to the Purchased Shares, Remaining Shares and Subject Shares and to any and all shares of capital stock of Parent and the Company or any successors or assigns of Parent and the Company (whether by merger, share exchange, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for, or in substitution of the Purchased Shares, Remaining Shares or Subject Shares, as the case may be, by reason of any stock dividend, stock split, stock issuance, reverse stock split, combination, recapitalization, reclassification, merger, consolidation or otherwise. Upon the occurrence of any of such events, amounts hereunder shall be appropriately adjusted if necessary.

Section 6.03. Amendment. This Agreement may be amended only by a written instrument signed by Parent and each Purchaser.

Section 6.04. Notices. All notices and other communications provided for herein shall be dated and in writing and shall be deemed to have been duly given when sent by registered or certified mail, return receipt requested, postage prepaid and when received, if delivered personally or otherwise, to the party to whom it is directed:

If to Parent, to it at the following address:

Cap Rock Holding Corporation

c/o Goldberg Lindsay & Co. LLC

630 Fifth Avenue

New York, NY 10111

Attention: J. Russell Triedman

with copies to:

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, New York 10019

Attention: Richard Hall, Esq.

Clark, Thomas & Winters, P.C.

300 West 6^th Street

15^th Floor

Austin, Texas 78701

Attention: Walter Demond, Esq.

If to the LGB Shareholder, to it at the following address:

LGB Cap Rock LLC

c/o Goldberg Lindsay & Co. LLC

630 Fifth Avenue

New York, New York 10111

Attention: J. Russell Triedman

with a copy to:

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, New York 10019

Attention: Richard Hall, Esq.

If to a Shareholder, to it at the following address:

Cap Rock Energy Corporation

500 West Wall Street, Suite 400

Midland, Texas 79701

or at such other address as the parties hereto shall have specified by notice in writing to the other parties (provided that such notice of change of address shall be deemed to have been duly given only when actually received).

Section 6.05. APPLICABLE LAW. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INTERPRETATION, VALIDITY AND PERFORMANCE OF THE TERMS OF THIS AGREEMENT, REGARDLESS OF THE LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICTS OF LAW.

Section 6.06. Integration. This Agreement, the Exchange Agreement, the Principal Shareholder Agreement and the Shareholders Agreement, and the documents referred to herein and therein or delivered pursuant hereto or thereto which form a part hereof or thereof contain the entire understanding of the parties with respect to the subject matter hereof. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein, in the Exchange Agreement, the Principal Shareholder Agreement and the Shareholders Agreement. This Agreement supersedes all prior agreements and understandings between the parties with respect to the subject matter hereof, other than such agreements and understandings set forth in the Exchange Agreement, the Principal Shareholder Agreement and the Shareholders Agreement, provided that in the event of any inconsistency between the Exchange Agreement and this Agreement (or any document delivered pursuant hereto), the terms and conditions of the Exchange Agreement shall control. FOR THE AVOIDANCE OF DOUBT, SUCH TERMS AND CONDITIONS SHALL INCLUDE THE APPLICABLE LAW, EXCLUSIVE JURISDICTION, SERVICE OF PROCESS, LAYING OF VENUE

AND WAIVER OF JURY TRIAL PROVISIONS PROVIDED FOR IN THE EXCHANGE AGREEMENT.

Section 6.07. Descriptive Headings. The headings in this Agreement are for convenience or reference only and shall not limit or otherwise affect the meaning of terms contained herein.

Section 6.08. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.

Section 6.09. Rights Cumulative; Waiver. The rights and remedies of each of the parties hereto shall be cumulative and not exclusive of any rights or remedies which it would otherwise have hereunder or at law or in equity or by statute, and no failure or delay by such party in exercising any right or remedy shall impair such right or remedy or operate as a waiver of such right or remedy, nor shall any single or partial exercise of any power or right preclude its other or further exercise or the exercise of any other power or right. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by either party to exercise any right or privilege hereunder shall be deemed a waiver of such party’s rights or privileges hereunder or shall be deemed a waiver of such party’s rights to exercise the same at any subsequent time or times hereunder.

Section 6.10. EXCLUSIVE JURISDICTION; WAIVER OF JURY TRIAL. (A) EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF (I) THE SUPREME COURT OF THE STATE OF NEW YORK, NEW YORK COUNTY, AND (II) UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY AGREEMENT ENTERED INTO IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. EACH OF THE PARTIES HERETO AGREES TO COMMENCE ANY ACTION, SUIT OR PROCEEDING RELATING HERETO EITHER IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR IF SUCH SUIT, ACTION OR OTHER PROCEEDING MAY NOT BE BROUGHT IN SUCH COURT FOR JURISDICTIONAL REASONS, IN THE SUPREME COURT OF THE STATE OF NEW YORK, NEW YORK COUNTY. EACH OF THE PARTIES HERETO FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO SUCH PARTY’S RESPECTIVE ADDRESS SET FORTH PURSUANT TO SECTION 6.04 SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR PROCEEDING IN NEW YORK WITH RESPECT TO ANY MATTERS TO WHICH IT HAS SUBMITTED TO JURISDICTION IN THIS CLAUSE. EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY

WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT, THE PLAN, ANY AGREEMENT ENTERED INTO IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN (X) THE SUPREME COURT OF NEW YORK, NEW YORK COUNTY, OR (Y) THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND HEREBY AND THEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(B) EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANOTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS SET FORTH ABOVE IN THIS SECTION 6.10.

Section 6.11. Severability. If any provision of this Agreement (or any portion thereof) or the application of any such provision (or any portion thereof) to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof (or the remaining portion thereof) or the application of such provision to any other persons or circumstances.

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

CAP ROCK HOLDING CORPORATION,
by:
	/s/ Russell Triedman
	Name: Russell Triedman
	Title: Vice President and Secretary

LGB CAP ROCK LLC,
by:
	/s/ Robert Roriston
	Name: Robert Roriston
	Title: Manager

DAVID W. PRUITT,
by:
	/s/ David Pruitt

ULEN A. NORTH, JR.,
by:
	/s/ Ulen A. North, Jr.

SAM PROUGH,
by:
	/s/ Sam Prough

CELIA PAGE,
by:
	/s/ Celia Page

SCHEDULE A

Name of Shareholder	Number of Purchased Shares
David W. Pruitt	86,111
Ulen A. North, Jr.	12,469
Sam Prough	13,220
Celia B. Page	7,589

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