EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is made, entered into and executed as
of the 16th day of February, 1998, by and between Xxxxxxx X. Xxxxxxxx
(hereinafter referred to as "Executive"), and IWL Holdings Corp., a Texas
corporation (hereinafter referred to as "Employer").
W I T N E S S E T H:
WHEREAS, Employer has agreed, subject to certain conditions, to engage
in a business combination (the "Combination") pursuant to which Holdings will
acquire all of the issued and outstanding capital stock of IWL
Communications, Incorporated ("IWL") and CapRock Communications Corp.
("CapRock") and all of the partnership interests in CapRock Fiber Network,
Ltd., a Texas limited partnership (the "Partnership");
WHEREAS, one of the conditions to the consummation of the Combination is
the execution of this Agreement by Employer and Executive;
WHEREAS, Employer desires to employ Executive as Controller, Treasurer
and Secretary;
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 Controller, Treasurer and Secretary and
Executive hereby accepts such employment with Employer.
TERM
1.02. The term (the "Base Term") of this Agreement shall commence on
the date hereof (hereinafter referred as the "Effective Date") and shall
continue thereafter through April 30, 2001, 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 Controller, Treasurer and Secretary of
Employer and perform the duties of such positions or offices. Executive
shall render such services as are normally delegated to such positions and
such other additional services as may be delegated to him from time to time
by the Board of Directors of Employer (hereinafter referred to as the "Board
of Directors"). 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 and shall devote all of his business time, attention, ability and
energy exclusively to the business of Employer. Executive shall office in
Houston, Texas at the Employer's place of business located in Houston, Texas.
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 Ninety Two Thousand Dollars ($92,000.00) 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 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 week, as determined by
Employer from time to time.
CHANGES IN COMPENSATION
3.02. Nothing in this Agreement shall either prevent or require the
Board of Directors from increasing, in its sole and absolute discretion,
prospectively or retroactively, any compensation or other benefits payable or
provided to Executive.
DISCRETIONARY BONUS
3.03. A discretionary bonus in an amount determined by the Board of
Directors may be paid to Executive at the end of each calendar year during
the Term of this Agreement. No obligation to pay any such bonus is hereby
created.
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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 executives of Employer.
VACATION
4.02. Executive shall be entitled to paid vacation in accordance with
Employer's written vacation policy, as in effect from time to time during the
Term.
EMPLOYEE BENEFIT PLANS
4.03 Executive shall be entitled to participate in Employer's employee
benefit plans established from time to time for its employees, including
without limitation its management incentive bonus plan.
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 Base 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 Base 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
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employment hereunder through the end of the Base Term of this Agreement under
any long term disability insurance policy provided to Executive by Employer.
Upon such termination, Executive shall receive only such amounts as are
earned and due to him under this Agreement as the result of his activities
prior to such termination, and thereafter no further consideration or
compensation shall be owed by Employer to Executive. 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 only such amounts as are earned and due
to Executive under this Agreement as the result of his activities prior to
his death, and thereafter no further consideration or compensation shall be
owed by Employer to Executive or to his estate.
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 immediately terminate Executive's
employment under this Agreement by giving Executive written or oral notice of
such termination upon the occurrence of any of the following events:
A. Failure of Executive to be present for work and duties as set
forth herein for ten (10) or more consecutive business days (except
during vacation and periods of illness as set forth herein) without
giving prior written notice to the Board of Directors and receiving
approval of the Board of Directors of such absence, which approval shall
not be unreasonably withheld;
B. Executive's conviction for a felony offense or commission by
Executive of any act abhorrent to the community that the Board of
Directors considers materially damaging to or tending to discredit the
reputation of Employer or its respective successors and assigns;
C. Dishonesty, fraud, willful misconduct, unlawful
discrimination or theft on the part of Executive (whether within the
workplace or elsewhere);
D. Executive's using for his own benefit or the benefit of any
third party any material, non-public information, confidential
information or proprietary information of Employer or its respective
successors and assigns, or willfully or negligently divulging any such
information to third parties without the prior written consent of the
Board of Directors, or any violation by Executive of any of its
obligations under Article VII hereof;
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E. Executive's public drunkenness, use of illegal substances or
drugs or the use, possession, distribution or being under the influence
of alcohol or illegal substances or drugs in the workplace. The only
exception is that Executive may consume alcohol reasonably and
responsibly, if he or she so chooses, at legitimate business events and
functions where alcohol is legally available; and
F. The determination by the Board of Directors that, in the good
faith opinion of the Board of Directors, Executive has continually
failed or refused to comply, after notice of and a reasonable
opportunity to cure such failure or refusal, with the policies,
standards, regulations, instructions, or directions of Employer as they
currently exist or as they may be modified from time to time.
Upon termination for any of the reasons described above, Executive shall
receive only such amounts as are owed to him under this Agreement as the
result of his activities prior to such termination, and thereafter no further
consideration shall be owed by Employer to Executive. Employer may deduct
from Executive's paycheck any unauthorized expenses, charges or
misappropriations for which Employer may be responsible as the result of
Executive's conduct.
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 or, at the election of the Board of Directors, immediate
notice and the payment of an amount equal to his base salary for the previous
thirty (30) days, at the time set forth therein. In addition to any amounts
owed to the Executive pursuant to the preceding sentence, 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 at
the end of the Base Term of this Agreement, which period shall in no event be
less than six (6) months (the "Severance Period"), assuming the base salary
is the amount of Executive's base salary at the time of the termination,
which severance pay shall be paid to Executive during the Severance Period in
equal installments as set forth in Section 3.01. In addition, upon such
termination the vesting of all options that are granted to Executive under
any stock option plan of Employer or any subsidiary thereof (provided such
options are granted on or after the date on which the Combination with IWL,
CapRock and the Partnership is consummated) will automatically accelerate,
with the result that such options will be fully vested upon the date of
termination. Upon such termination, Executive shall receive only such
amounts as are owed to him under this Agreement as the result of his
activities prior to such termination and as expressly set forth in this
Section 5.05 and thereafter no further consideration shall be owed by the
Employer to Executive.
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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 only such amounts as are owed to him under this Agreement as the
result of his activities prior to such termination and thereafter no further
consideration shall be owed by Employer to Executive.
ARTICLE VI
EXPENSE REIMBURSEMENT
Executive is authorized to incur reasonable business expenses in
connection with the business of Employer, including expenditures for
entertainment and travel. Subject to the requirements of this Article VI,
Employer will reimburse Executive from time to time for all business expenses
that are determined to be reasonable by the Board of Directors or any officer
of Employer designated by the Board of Directors to review and approve those
expenses. All reimbursements are contingent upon Executive providing to the
Board of Directors a receipt for each expenditure and an account book or
expense record in which Executive recorded at or near the time each
expenditure was made: the amount of the expenditure; the time, place and
designation of the type of entertainment and travel or other expense; the
business or other reason for the expenditure; and the names, occupations and
addresses of each person who was entertained.
ARTICLE VII
COVENANT NOT TO COMPETE, TRADE SECRETS, AND ASSIGNMENTS
COVENANT NOT TO COMPETE
7.01. Executive understands that this Agreement is being entered into
in connection with the Combination and acknowledges that as a result of the
Combination Executive will receive a substantial number of shares of the
common stock of Employer. Executive also acknowledges that IWL, CapRock and
the Partnership would not be prepared to engage in the Combination unless
Executive agreed to the covenants contained in this Article VII. Executive
is entering into this Agreement and making the covenants contained in this
Article VII, among other things, to induce Employer, IWL, CapRock and the
Partnership to engage in the Combination. Executive recognizes and
acknowledges that Employer is placing its confidence and trust in the
Executive. Executive will have access to information which enables Employer
to be successful in its business. Some of the information may be confidential
and constitute trade secrets; however, that information when combined with
all other information regarding Employer constitutes proprietary information
and methods that could seriously affect the ability of Employer to do
business if Executive were allowed to use it other than for Employer.
Executive, therefore, covenants and agrees that for a period beginning on the
Effective Date and ending two (2) years after the date of termination (except
as set forth in Section 7.06 below) of Executive's employment with Employer,
Executive shall not continue or commence to:
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A. Either directly or indirectly engage in or carry on any
business or in any way become associated with any business that is in
direct or indirect competition with the Business of the Employer (as
such term is used and defined herein). As used in this Article VII, the
term "Business of the Employer" shall include all business activities in
which the Employer is engaged on the Effective Date or in which the
Employer is engaged on the date of Executive's termination or at any
time between such dates, including, but not limited to, the provision of
local or long distance telecommunications services;
B. Attempt in any manner to solicit from any person or entity
that is or was a client of Employer at any time prior to the date of
termination of Executive's termination, business of the type performed
or formerly performed by Employer for such client or to persuade any
client or Employer to cease to do business or to reduce the amount of
business which any such client has customarily done with Employer or
contemplates doing with Employer; or provide to or for any client any
services or products of the type provided by Employer or formerly
provided by Employer (as used herein the noun "client" shall mean anyone
who is a client or customer, supplier, sales representative or other
person who does business with Employer: (i) as of the date hereof or the
date of Executive's termination or at the time of the alleged conduct or
at any time in between such times; (ii) at any time during the twelve
(12) month period immediately preceding the time of alleged prohibited
conduct; and (iii) any prospective persons to whom Employer had made a
formal presentation (or similar offering of services) within a period of
twelve (12) months immediately preceding the alleged prohibited conduct);
C. Either directly or indirectly be or become an employee,
agent, consultant or representative of or become a director or officer
of or be otherwise in any manner associated with any person, firm,
corporation, association or other entity that is engaged in or currently
intends to become engaged in or is carrying on any business that is in
direct or indirect competition with the Business of Employer;
D. Either directly or indirectly solicit for employment or
employ any person employed by Employer at any time during the
twenty-four month (24-month) period immediately preceding such
solicitation or employment; and
E. Either directly or indirectly be or become a shareholder,
joint venturer in or owner (in whole or in part) of or be a partner of
or associated with or have any proprietary or financial interest in any
firm, corporation, joint venture, partnership or association or other
entity that is engaged in or is carrying on any business that is in
direct or indirect competition with the Business of Employer.
Executive hereby recognizes and acknowledges that the existing business
area of Employer extends throughout the United States and therefore agrees
that the covenants not to compete contained in this Section 7.01 shall be
applicable in and throughout such area. Executive further warrants and
represents that, because of his varied skill and abilities, he does not need
to compete with the Business
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of Employer in the area described above, in order to make a living. Nothing
in this Section will prevent Executive from owning less than five percent
(5%) of the stock of any publicly traded corporation after the termination of
his employment as long as Executive is not a participant in the management or
affairs of the corporation in a manner that would otherwise violate any
prohibition contained in this Section. Executive further acknowledges that
all references in this Section 7.1 and in Sections 7.02, 7.03 and 7.04 to
"Employer" shall include all existing and future subsidiaries of Employer and
any successor thereof, including without limitation IWL, CapRock and the
Partnership upon consummation of the Combination, and the covenant not to
compete granted in this Section 7.1 shall extend to all such entities.
TRADE SECRETS
7.02. Executive recognizes and acknowledges that information in
whatever form it may exist pertaining to the financial condition of Employer,
its products, processes, properties, assets, inventions, proprietary rights,
customers, specifically targeted potential customers, markets, technology,
know-how, trade secrets, prospects, proposals, concepts and all other aspects
of the Business of Employer (collectively "Confidential Information") is
valuable, special and unique. Accordingly, Executive agrees that he will not
during the Term of his employment with Employer or for five (5) years
thereafter, disclose any such Confidential Information to any person, firm,
corporation, association, or other entity for any reason or purpose
whatsoever or make use in any other way to his personal advantage or to the
advantage of any third parties, of any Confidential Information available to
him.
RECORDS
7.03. All files of customers and of Employer and all records of the
accounts of customers, and any other records, memoranda, etc., relating in
any manner whatsoever to the customers, Employer's product, the Business of
Employer, the Confidential Information, suppliers or prospective customers or
prospective suppliers of Employer, whether prepared by Executive or otherwise
coming into his possession, shall be the exclusive property of Employer. All
such files and records shall be immediately placed in the physical possession
of Employer on the termination of Executive's employment with Employer or at
any other time specified by the Board of Directors. Executive agrees not to
retain or use duplicates in any form of such files and records by Executive
is prohibited after the termination of Executive's employment with Employer
and acknowledges that such use is prohibited.
7.04. DISCLOSURE AND ASSIGNMENT OF RIGHTS.
A. Executive shall disclose in writing to Employer full and complete
details respecting any Confidential Information, inventions, enhancements,
technology or other proprietary assets whether tangible or intangible
(collectively "Confidential Information and Proprietary Assets") that
Executive may devise, develop, invent, compile, enhance, design, write or
discover (whether alone or with others or whether during or after business
hours, or whether at the premises of Employer, the
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home of Executive or elsewhere) while he is employed by the Employer. Such
disclosure shall be made promptly upon such development, enhancement,
invention, compilation, design, writing or discovery having been made or
created, and shall be disclosed in writing pursuant to such form as Employer
may from time to time provide.
B. Executive agrees to assign and does hereby irrevocably assign to
Employer all of his right, title and interest in and to any Confidential
Information and Proprietary Assets including, but not limited to, that which
relates to the Business of the Employer that he has devised, developed,
invented, compiled, enhanced, designed, written or discovered (whether alone
or with others or whether during or after business hours, or whether at the
premises of Employer, the home of Executive or elsewhere), or in which he may
otherwise obtain any rights, while he is or was employed by Employer or which
he owned at the time of becoming an employee of the Employer. Executive
agrees to take any actions, including the execution of documents or
instruments, that the Employer may reasonably require to effect the
Executive's assignment of rights pursuant to this Section 7.04, and Executive
hereby constitutes and appoints, with full power of substitution and
resubstitution, the President and any Vice President, acting alone, of
Employer as his attorney-in-fact to execute and deliver on behalf and in the
stead of Executive any documents or instruments that Executive is obligated
to execute and deliver pursuant to this Section 7.04.
C. Executive shall promptly notify Employer of any patent relating to
any portion of the Confidential Information and Proprietary Assets that is
applied for by any person or entity or issued to any person or entity
(including Executive) ("Patent"). Such notice shall be in writing in such
form as Employer may from time to time require. On the written request of
Employer, Executive shall sell to Employer, and Employer shall purchase from
Executive, all right, title and interest of Executive in and to any Patent,
whether or not Executive is employed by Employer at the time the Patent
issues. The purchase price for any Patent or Copyright shall be one dollar
($1) and shall be paid by Employer at the time it makes the written request
to purchase the Patent or Copyright. Executive agrees to execute any and all
documents and instruments necessary to evidence and effect the transfer to
Employer of all right, title and interest of Executive in and to the Patent
or Copyright.
D. At the request of Employer, Executive shall assist Employer in
applying for and obtaining both domestic and foreign patents or copyrights,
as the case may be, on all Confidential Information and Proprietary Assets
that Employer deems to be patentable or copyrightable that he has previously
devised, developed, invented, compiled, written, designed or discovered or
that he may devise, develop, invent, compile, design, write or discover,
(whether alone or with others or whether during or after business hours, or
whether at the premises of Employer, the home of Executive or elsewhere),
while he is or was employed by Employer, and Executive shall execute at any
time or times any and all documents and perform all acts reasonably requested
by Employer and that Employer deems to be necessary or desirable in order to
obtain such patents or copyrights or otherwise to vest in Employer full and
exclusive title and interest in and to all such Confidential Information and
Proprietary Assets, to protect the same against infringement by others and
otherwise to aid Employer in connection with any continuations, renewals or
reissues of any patents or
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copyrights, or in the conduct of any proceedings or litigation in regard
thereto. All expenses of procuring any patent or copyrights shall be borne
by Employer.
E. Executive has no inventions and/or other rights or items made or
conceived by Executive prior to the date hereof that are not in the public
domain or the property of Employer that in any manner could be deemed to be
Confidential Information and Proprietary Assets.
BREACH
7.05. 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.
SURVIVAL
7.06. Except as set forth below in this Section 7.06, 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. The provisions of Section 7.01 shall terminate two (2) years
after the date of termination unless the termination is made pursuant to
Section 5.05. If the termination is made pursuant to Section 5.05 the
provisions of Section 7.01 shall terminate upon expiration of the Severance
Period. The provisions of Section 7.02 shall terminate five (5) years after
the date of termination (no matter how such termination occurs).
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:
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If to Employer: IWL Holdings Corp.
Two Galleria Tower, Suite 1925
00000 Xxxx Xxxx
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxx X. Xxxxxxxx, Xx.
Facsimile No.: (000) 000-0000
If to Executive: Xxxxxxx X. Xxxxxxxx
00000 Xx Xxxxxx Xxxx
Xxxxxxx, XX 00000
Phone No.: (000) 000-0000
Fax No.:
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 supersedes any and all other agreements, either
oral or in writing, between the parties hereto with respect to the employment
of Executive by Employer and contains all of the covenants and agreements
between the parties with respect to such employment in any manner whatsoever.
Any existing employment agreement between Executive and Employer is hereby
terminated effective as of the Effective Date and shall be of no further
force or effect from and after the Effective Date.
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.
ATTORNEY'S FEES AND COSTS
8.04. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorney's fees, costs and necessary disbursements in addition
to any other relief to which such party may be entitled.
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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. Executive agrees that his representations, warranties, covenants,
promises and obligations contained herein may be 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.
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EXECUTED as of the day and year first above written.
EMPLOYER:
IWL HOLDINGS CORP.
By: /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------------
Its: President
----------------------------------
EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxxxx
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