EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is made, effective as of the 11th day of
May, 1998, by and between Xxxxx X. XxXxxxx (hereinafter referred to as
"Executive"), and IWL Holdings Corp., a Texas corporation (hereinafter referred
to as "Employer").
WITNESSETH:
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, Employer desires to employ Executive;
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 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 May 10, 1999, 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").
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ARTICLE II
TITLE AND AUTHORITY
GENERAL
2.01. Executive agrees to perform the duties of such position or office
which the Board of Directors of Employer (hereinafter referred to as the "Board
of Directors") shall designate for Executive. Executive shall render such
services as are normally delegated to such position and such other additional
services as may be delegated to him from time to time by 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 Dallas, Texas at the Employer's
place of business located in Dallas, Texas.
2.02 Executive initial title shall be Senior Vice-President and Chief
Financial Officer.
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 Thousand Dollars ($200,000) 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 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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3.03b The Board of Directors will, in consultation with outside
compensation consultants, create or modify Employer's Incentive Bonus Program
for senior executives. Executive will be entitled to participate in any such
designated program as approved by the Board of Directors.
PARTICIPATION IN STOCK OPTION PROGRAM
4.01 The Board of Directors of Employer, with the assistance of outside
consultants, will create or modify an Incentive Stock Option Program for the
employees of Employer. Executive will be entitled to participate in such
Incentive Stock Option Program as a senior executive of Employer in a manner
approved by the Board of Directors.
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 benefit s 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
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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; 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 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);
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D. Executive's using for his own benefit or the benefit of any third party
any material, nonpublic 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;
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 12 months after the date
of such termination (the "Severance Period"), 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 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 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 one (1) year 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 twelve month (12-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 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
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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 one (1) year 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.
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
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accordance with the terms and provisions of this Agreement.
SURVIVAL
7.06.a 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 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 one (1) year after the date of termination (no
matter how such termination occurs).
7.06.b In the event Employer ceases to exist as a result of the failure of
Employer and CapRock to consummate their combination, this Agreement will
continue as an agreement between CapRock as Employer and Employee.
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: 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: Xxxxx X. XxXxxxx
00000 Xxx Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000
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
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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.
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 therein 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
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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 &11 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.
EXECUTED as of the day and year first above written.
EMPLOYER:
IWL HOLDINGS CORP.
By: /s/ XXXX X. XXXXXXXX, XX.
-----------------------------------
Its: Chief Executive Officer
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EXECUTIVE:
/s/ XXXXX X. XXXXXXX
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Xxxxx X. XxXxxxx
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