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EXHIBIT 10.64
EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is made, entered into and executed as of
the 9th day of October, 1999, but effective as set forth below, by and between
Xxx X. Xxx (hereinafter referred to as "Executive"), and CapRock Communications
Corp., a Texas corporation (hereinafter referred to as "Employer" or the
"Company").
W I T N E S S E T H:
WHEREAS, Employer desires to employ Executive as President and Chief
Operating Officer;
WHEREAS, Executive desires to accept such employment on the terms and
conditions herein set forth;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Employer and Executive
hereby agree as follows.
ARTICLE I
AGREEMENT
EMPLOYMENT
1.01. Subject to the terms and conditions of this Agreement, Employer
agrees to employ Executive as President and Chief Operating Officer and
Executive hereby accepts such employment with Employer.
TERM
1.02. The term (the "Base Term") of this Agreement shall commence on
October 18, 1999 (hereinafter referred as the "Effective Date"), and shall
continue thereafter through the third anniversary of the Effective Date unless
earlier terminated as provided herein or unless extended on such terms and
conditions and for such period of time as may be agreed upon in writing by
Employer and Executive (the Base Term, as so extended or earlier terminated, is
referred to herein as the "Term").
ARTICLE II
TITLE AND AUTHORITY
GENERAL
2.01. Executive agrees to act as President and Chief Operating Officer of
Employer and perform the duties of such position or office reporting to the
Chairman of the Board and the Chief Executive Officer of Employer. Executive
shall render such services as are normally delegated to such position and such
other additional services as may be reasonably delegated to him from time to
time by the Board of Directors of Employer (hereinafter referred to as the
"Board of Directors").
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Executive further agrees to hold such additional positions of the Employer as
may be assigned to him from time to time by the Board of Directors. In
performing such duties hereunder, Executive shall give Employer the benefit of
his special knowledge, skills, contacts and business experience. During the
Term, Executive will be the Company's full-time employee and, except as may
otherwise be approved in advance in writing by the Board of Directors, and
except during vacation periods and reasonable periods of absence due to
sickness, personal injury or other disability, the Executive will devote
substantially all of his working time and efforts to his duties under this
Agreement. Notwithstanding the foregoing, Executive may (i) manage personal and
family investments and (ii) serve as an officer, director, trustee or otherwise
participate in purely educational, welfare, social, charitable, religious and
civic organizations. In connection with his employment during the Term, unless
otherwise agreed by Executive, the Executive will be based at the Company's
principal executive offices in Dallas, Texas. It is the intent of the parties to
this Agreement that Executive shall be elected to fill the existing vacancy on
the Board of Directors at its next regularly scheduled meeting and shall
continue to serve as a Director of the Company throughout the Term of this
Agreement.
ARTICLE III
COMPENSATION
BASE SALARY
3.01. As compensation for services rendered under this Agreement, Executive
shall be entitled to receive from the Employer an aggregate minimum base salary
of Two Hundred Fifty Thousand Dollars ($250,000) per annum. The base salary to
be paid to Executive hereunder shall be paid in equal installments in accordance
with Employer's normal payroll practice for senior executives and shall be less
applicable withholding, FICA, Medicare, FUTA, SUTA and other taxes, if any. Such
installments shall be paid on such days of each month, as determined by Employer
from time to time. Beginning in October 2000, the Executive's minimum base
salary shall be reviewed on an annual basis by the Compensation Committee.
CHANGES IN COMPENSATION
3.02. Nothing in this Agreement shall either prevent or require the Board
of Directors or the Compensation Committee thereof from increasing, in its sole
and absolute discretion, prospectively or retroactively, any compensation or
other benefits payable or provided to Executive.
ANNUAL BONUS
3.03. Beginning in the year 2000, a bonus in an amount up to 60% of the
base salary for such calendar year may be paid to Executive at the end of each
calendar year during the Term of this Agreement. The amount of such bonus shall
be determined by the Board of Directors or the Compensation Committee thereof
based upon the achievement of various organizational and individual objectives
which the Board of Directors and/or the Compensation Committee may set. A bonus
shall also be payable for any partial year during the Term ending after December
31, 1999.
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SIGNING BONUS
3.04 A signing bonus of Six Hundred Thousand Dollars ($600,000) shall be
paid to Executive upon the Effective Date.
RESTRICTED SHARES
3.05 The Employer shall on the Effective Date, pursuant to the Employer's
1998 Equity Incentive Plan, issue 100,000 shares of Employer's restricted stock
to Executive. Such shares shall be subject to the restrictions set forth in the
Restricted Stock Agreement entered into as of the Effective Date in the form of
that attached hereto as Exhibit "A" and incorporated herein by reference.
STOCK OPTIONS
3.06 A. The Employer shall, pursuant to the Employer's 1998 Equity
Incentive Plan, grant Executive on the Effective Date options to purchase
500,000 shares (subject to increase as set forth below in this Section
3.06) of the Employer's common stock pursuant to a Stock Option Agreement
in the form of that attached hereto as Exhibit "B" and incorporated herein
by reference. The exercise price of such stock options shall be equal to
the closing price of the Employer's common stock on the trading day
immediately preceding the Effective Date. If the Employer publicly
announces prior to the Effective Date that Executive will become an
Employee of the Employer and the closing price of the Employer's common
stock on the trading day immediately preceding the Effective Date is
greater than the closing price of the Employer's common stock on the
trading day immediately preceding such public announcement, the number of
options to purchase shares of the Employer's common stock shall be
increased by a percentage equal to the percentage increase in the share
price of the common stock of Employer.
B. In addition, Executive will be entitled to participate in the
Employer's annual stock option grant program commencing in 2001.
EXPENSES OF COUNSEL
3.07 Employer hereby agrees promptly after the Effective Date to pay the
fees and expenses of Executive's counsel hired to represent Executive in
connection with entering into an employment relationship with Employer.
LOANS
3.08 A. Upon the Effective Date, Employer shall make a loan to Executive of
Nine Hundred Thousand Dollars ($900,000) ("Loan") bearing interest at the
prime rate of interest with the principal and interest payable in three
payments on each of the first, second and third anniversaries of the
Effective Date (each, a "Loan Payment Date"). All amounts owed under such
Loan and not forgiven pursuant to Section 3.09 shall be immediately due and
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payable upon termination of Executive's employment. Executive agrees to
execute a promissory note (the "Note"), in the form of that attached hereto
as Exhibit "C" and incorporated herein by reference, to evidence the Loan.
B. Subject to any limitations placed upon Employer by that certain
Indenture dated as of May 18, 1999 between Employer and Chase Manhattan
Trust Company, National Association, as trustee, (the "Indenture"),
Employer will loan Executive an amount of money equal to Executive's excise
tax liability under Section 4999 of the Internal Revenue Code (the "Tax
Liability") that arises as a result of a "Change of Control" as defined in
Employer's 1998 Equity Incentive Plan. Such loan shall be made in one or
more installments at the time or times the Tax Liability is due to be paid
by, or withheld from the compensation of, Executive, and shall have a
maturity date not later than the earlier of (i) ninety days after Executive
sells shares of Employer for consideration at least equal to the Tax
Liability or (ii) three years. Such loan shall bear interest at the prime
rate of interest with all principal and interest payable in one lump sum
payment on the expiration date of such loan. Executive agrees to execute a
promissory note, mutually agreed upon by the parties, to evidence the loan
for the Executive's Tax Liability. To the extent the Tax Liability exceeds
the principal amount of such loan, Employer shall promptly pay to Executive
an amount in cash equal to such excess.
LOAN FORGIVENESS
3.09 On each Loan Payment Date occurring during the Term of this Agreement,
Employer shall immediately forgive a portion of the Loan in an amount of
$300,000 plus any interest accrued and payable on the Loan as of such Loan
Payment Date. Upon a "Change of Control" as defined in Employer's 1998 Equity
Incentive Plan, or upon the termination of Executive's employment hereunder
pursuant to Section 5.02 (Incapacity), 5.03 (Death) or 5.05 (Without Cause)
hereof, Employer shall forgive fully and completely the principal amount of the
Loan and any accrued and unpaid interest thereon. In connection with any such
loan forgiveness provided for in this Section 3.09, Executive shall be
responsible for applicable withholding, FICA, Medicare, FUTA, SUTA and other
taxes, if any.
ARTICLE IV
BENEFITS
MEDICAL CARE PLAN
4.01. Employer shall provide Executive with coverage under a group medical
care plan and life and dental insurance benefits that are the same or
substantially similar to the coverage and benefits provided from time to time to
other senior executives of Employer.
VACATION
4.02. Executive shall be entitled to four weeks paid vacation in accordance
with Employer's written vacation policy, as in effect from time to time during
the Term.
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EMPLOYEE BENEFIT PLANS
4.03 Executive shall be entitled to participate in Employer's employee
benefit plans established from time to time for its senior executives, including
without limitation its 401(k) plan.
LIFE INSURANCE
4.04 Employer shall purchase and maintain through the term of this
Agreement, One Million Dollars ($1,000,000) of term life insurance on the life
of Executive payable to the estate of Executive.
PERQUISITES
4.05. Executive will be entitled to the perquisites and other fringe
benefits made available to senior executives of the Company, commensurate with
his position and level of responsibility with the Company.
ARTICLE V
TERMINATION
GENERAL
5.01. Employer and Executive shall have the right to terminate the
employment of Executive as set forth in this Article V.
INCAPACITY OF EXECUTIVE TO PERFORM
5.02. If Executive shall become ill or be injured or otherwise become
incapacitated such that, in the good faith opinion of the Board of Directors, he
cannot carry out and perform fully his duties hereunder, and such incapacity
shall continue for a period of ninety (90) consecutive days, the Board of
Directors may, at any time after the ninety (90)-day period has passed, by
giving Executive written notice of such termination, fully and finally terminate
his employment under this Agreement. Termination under this Section 5.02 shall
be effective as of the date provided in such notice. In connection with the
termination of Executive pursuant to this Section 5.02, Employer shall pay to
Executive, in equal installments as set forth in Section 3.01, severance pay for
twelve (12) months or, if less than twelve (12) months remain in the Term of
this Agreement, an amount equal to his base salary for that number of the months
immediately preceding the termination that is equal to the number of months
remaining in the Term but in any event for not less than six (6) months;
provided, however, that such payments shall be reduced by the aggregate amount
of any payments Executive will be entitled to receive over the period from the
date of the termination of his employment hereunder through the end of the Term
of this Agreement under any long term disability insurance policy provided to
Executive by Employer. Upon such termination, Executive shall receive (i)
amounts payable pursuant to the terms of any applicable insurance policy or
similar arrangement that the Company maintains during the Term, (ii) payment for
any accrued but unused vacation days (the "Vacation Payment"), (iii) the unpaid
base salary to which the Executive is entitled pursuant to Section 3.01 and any
other compensation earned but not yet paid through the date of Executive's
termination (collectively, the "Compensation Payments"), and (iv) such
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payments under applicable plans or programs, including but not limited to those
referred to in Article IV, to which the Executive is entitled pursuant to the
terms of such plans or programs. This Section 5.02 shall not limit the
entitlement of Executive or his beneficiaries to any benefits then available to
Executive under any stock option, restricted stock, Company loan, or other
benefit plan or policy that is maintained by the Company for the Executive's
benefit. The rights of Executive described in this paragraph shall be in
addition to and not to the exclusion of, the other remedies and termination
rights set forth in this Agreement.
DEATH OF EXECUTIVE
5.03. The employment of Executive shall automatically terminate upon the
death of Executive. Upon such termination, Executive's estate or, if applicable,
his heirs shall receive (i) the Compensation Payments, (ii) the Vacation
Payment, and (iii) any death benefits under the employee benefit programs of the
Company. This Section 5.03 shall not limit the entitlement of the Executive's
estate or beneficiaries to any death or other benefits then available to the
Executive under any life insurance, stock option, restricted stock, Company
loan, or other benefit plan or policy that is maintained by the Company for the
Executive's benefit.
TERMINATION FOR CAUSE
5.04. In addition to any other remedies that Employer may have at law or in
equity, the Board of Directors may terminate Executive's employment under this
Agreement by giving Executive written notice of such termination upon the Board
of Directors' determination that "Cause" therefor exists. "Cause" means that,
prior to any termination pursuant to Section 5.05, the Executive shall have:
(i) been convicted of a criminal violation involving fraud, embezzlement or
theft in connection with his duties or in the course of his employment with
the Company; (ii) committed intentional wrongful damage to property of the
Company; (iii) willfully and continuously failed to perform material
assigned duties after written notice from the Board of Directors of such
failure and Executive fails to cure such failure within a reasonable period
after receipt of such notice, or (iv) committed intentional wrongful
disclosure of secret processes or confidential information of the Company;
and any such act shall have been demonstrably and materially harmful to the
Company. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for "Cause" hereunder unless and until there shall have
been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the Board of Directors then in
office at a meeting of the Board of Directors called and held for such purpose,
after reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel (if the Executive chooses to have counsel
present at such meeting), to be heard before the Board of Directors, finding
that, in the good faith opinion of the Board of Directors, the Executive had
committed an act constituting "Cause" as herein defined and specifying the
particulars thereof in detail. Nothing herein will limit the right of the
Executive or his beneficiaries to contest the validity or propriety of any such
determination. Upon termination for Cause, Executive shall receive (a) the
Compensation Payments and (b) the Vacation Payment, and the Executive will be
entitled to no other compensation, except as otherwise due to him under
applicable law or the terms of any applicable plan or program.
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TERMINATION WITHOUT CAUSE
5.05. The Board of Directors may terminate Executive's employment under
this Agreement without any Cause whatsoever by giving Executive thirty (30)
days' written notice. If such termination is made pursuant to this Section 5.05,
Employer shall pay to Executive severance pay in an amount equal to the base
salary that would be payable to Executive over the period commencing on the date
of termination and ending twelve (12) months thereafter (the "Severance
Period"), assuming the base salary is the amount of Executive's base salary at
the time of the termination (or such greater amount previously in effect if
clause (iii) is applicable), which severance pay shall be paid to Executive
during the Severance Period in equal installments as set forth in Section 3.01.
For purposes of this Agreement, Executive's voluntary termination of employment
within sixty (60) days after the occurrence of any of the following events shall
be deemed a termination without Cause under this Section 5.05, (i) the reduction
in title of Executive from President and Chief Operating Officer of Employer,
(ii) a material adverse alteration or diminution in the nature or status of the
Executive's authority, duties or responsibilities from those in effect
immediately prior to such change, other than an isolated, insubstantial and
inadvertent action that is fully corrected within ten (10) days after receipt of
written notice from the Executive, (iii) a reduction in Executive's base
compensation, (iv) the failure to elect (as described in Section 2.01) or
reelect or otherwise to maintain the Executive as a Director of the Company or
(v) a material breach of this Agreement by the Employer. Upon termination
pursuant to this Section 5.05, Executive shall receive, in addition to the
amounts expressly provided by this Section 5.05, (i) the Compensation Payments
and (ii) the Vacation Payment, and the Executive will be entitled to no other
compensation, except as otherwise due to him under applicable law or the terms
of any applicable plan or program. This Section 5.05 shall not limit the
entitlement of Executive or his beneficiaries to any benefits then available to
Executive under any stock option, restricted stock, Company loan, or other
benefit plan or policy that is maintained by the Company for the Executive's
benefit. For the purpose of determining the period of continuation coverage to
which the Executive or any of his dependents is entitled under Section 4980B of
the internal Revenue Code of 1986, as amended (or any successor provision
thereto), under any group health plan maintained by the Company or its
affiliates, the Executive will be deemed to have remained employed until the end
of the Severance Period.
TERMINATION BY EXECUTIVE
5.06. Executive may, with or without cause, terminate his employment under
this Agreement by giving Employer at least thirty (30) days' prior written
notice of such termination. Upon such termination, Executive shall receive (i)
the Compensation Payments and (ii) the Vacation Payment, and the Executive will
be entitled to no other compensation, except as otherwise due to him under
applicable law or the terms of any applicable plan or program. This Section 5.06
shall not apply to any termination of employment described by Section 5.05.
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ARTICLE VI
EXPENSE REIMBURSEMENT
The Company will promptly reimburse the Executive for all travel and other
business expenses that the Executive incurs in the course of the performance of
his duties to the Company under this Agreement in a manner commensurate with the
Executive's position and level of responsibility with the Company and in
accordance with the Company's policies and rules relating to the reimbursement
of such expenses.
ARTICLE VII
COVENANTS
NONSOLICITATION OF CUSTOMERS
7.01. The Executive hereby covenants and agrees that during the Term and
for one year thereafter Executive will not, without the prior written consent of
the Company, on behalf of Executive or on behalf of any person, firm or company,
directly or indirectly, attempt to influence, persuade or induce, or assist any
other person in so persuading or inducing, any person known by Executive to be a
customer of Employer within the States of Texas, Arizona, New Mexico, Oklahoma,
Louisiana and Arkansas (or in any other state(s) in which the Employer then owns
a switch or fiber or in which Employer has a material number of customers) to
give up, or to not commence, a business relationship with Employer.
NO CONFLICTING AGREEMENTS
7.02. Except for the Undertaking with MCI Communications Corporation dated
August 31, 1998, the Separation Agreement dated October 11, 1996, with UniSite,
Inc. and the Second Amended and Restated Shareholders' Agreement dated December
18, 1997 with UniSite, Inc. and various shareholders thereof, copies of each of
which have been previously furnished by Executive to the Employer, Executive
represents and warrants to the Employer that Executive is not a party to any
agreement, contract or covenant: (i) limiting the freedom of Executive (or any
entity employing Executive) to compete in the business of the Employer or with
any person in any geographic area or restricting Executive or, by virtue of his
employment hereunder by the Employer, the Employer; or (ii) imposing upon
Executive or his employer any duty with respect to confidential or proprietary
information or with respect to the solicitation or hiring of any person.
BREACH
7.03. Executive hereby recognizes and acknowledges that irreparable injury
or damage shall result to the business of Employer in the event of a breach or
threatened breach by Executive of any of the terms or provisions of this Article
VII, and Executive therefore agrees that Employer shall be entitled to an
injunction restraining Executive from engaging in any activity constituting such
breach or threatened breach. Nothing contained herein shall be construed as
prohibiting Employer from pursuing any other remedies available to Employer at
law or in equity for such breach or threatened breach, including, but not
limited to, the recovery of damages from Executive and, if Executive is an
employee of the Employer, terminating the employment of Executive in accordance
with the terms and provisions of this Agreement.
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SURVIVAL
7.04. Notwithstanding the termination of the employment of Executive or the
termination of this Agreement, the provisions of this Article VII shall survive
and be binding upon Executive unless a written agreement that specifically
refers to the termination of the obligations and covenants of this Article VII
is executed by Employer.
ARTICLE VIII
MISCELLANEOUS
NOTICES
8.01. Any notices to be given hereunder by either party to the other may be
effected either by personal delivery in writing or by mail, registered or
certified, postage prepaid with return receipt requested. Mailed notices shall
be addressed to the parties at the following addresses:
If to Employer: CapRock Communications Corp.
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxxxx, Xx.
Facsimile No.: (000) 000-0000
If to Executive: Xxx X. Xxx
0000 Xxxxx Xxx
XxXxxxxx, Xxxxx
Phone No.: (000) 000-0000
Fax No.: (000) 000-0000
Any party may change his or its address by written notice in accordance
with this Section. Notices delivered personally shall be deemed communicated as
of actual receipt, mailed notices shall be deemed communicated as of three (3)
days after proper mailing.
INCLUSION OF ENTIRE AGREEMENT HEREIN
8.02. This Agreement and the agreements contemplated by Sections 3.05, 3.06
and 3.08 supersede any and all other agreements, either oral or in writing,
between the parties hereto with respect to the employment of Executive by
Employer and contain all of the covenants and agreements between the parties
with respect to such employment in any manner whatsoever.
LAW GOVERNING AGREEMENT
8.03. This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas, and all obligations shall be performable in the
State of Texas.
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EMPLOYER REPRESENTATIONS
8.04. Employer represents and warrants to Executive that this Agreement and
the grants of the restricted shares and stock options contemplated hereby will
be duly authorized and approved by the Board of Directors or the Compensation
Committee of Employer not later than the Effective Date. Copies of the
resolutions of the Board of Directors or the Compensation Committee of Employer
evidencing such action will be provided to Executive not later than the
Effective Date.
WAIVER
8.05. No term or condition of this Agreement shall be deemed to have been
waived nor shall there be any estoppel to enforce any of the terms or provisions
of this Agreement except by written instrument of the party charged with such
waiver or estoppel. Further, it is agreed that no waiver at any time of any of
the terms or provisions of this Agreement shall be construed as a waiver of any
of the other terms or provisions of this Agreement and that a waiver at any time
of any of the terms or provisions of this Agreement shall not be construed as a
waiver at any subsequent time of the same terms or provisions.
AMENDMENTS
8.06. Except as otherwise provided in Section 8.07, no amendment or
modification of this Agreement shall be deemed effective unless and until
executed in writing by all of the parties hereto.
SEVERABILITY AND LIMITATION
8.07. All agreements and covenants contained herein are severable and, in
the event any of them shall be held to be invalid by any competent court, this
Agreement shall be interpreted as if such invalid agreements or covenants were
not contained herein. Should any court or other legally constituted authority
determine that for any such agreement or covenant to be effective that it must
be modified to limit its duration or scope, the parties hereto shall consider
such agreement or covenant to be amended or modified with respect to duration
and scope so as to comply with the orders of any such court or other legally
constituted authority or to be enforceable under the laws of the State of Texas,
and as to all other portions of such agreement or covenants they shall remain in
full force and effect as originally written.
HEADINGS
8.08. All headings set forth in this Agreement are intended for convenience
only and shall not control or affect the meaning, construction or effect of this
Agreement or of any of the provisions thereof.
ASSIGNMENT
8.09. Subject to Executive's rights under Section 5.05, Executive agrees
that his representations, warranties, covenants, promises and obligations
contained herein may be
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assigned by Employer to any person, partnership, firm, association, corporation
or other business entity to which Employer may transfer its business and assets
or any portion thereof.
COUNTERPARTS
8.10. This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which together constitute one (1)
and the same instrument.
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EXECUTED as of the day and year first above written.
EMPLOYER:
CAPROCK COMMUNICATIONS CORP.
By: /s/ X. X. XXXXXXXX, XX.
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Its: CEO
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EXECUTIVE:
/s/ XXX X. XXX
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Xxx X. Xxx
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