EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this
15th day of July 1997, by and between Citadel Computer Systems, Inc.
(hereinafter referred to as "Employer" or "Citadel"), a Delaware Corporation
having its principal place of business at 0000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx
000, Xxxxxx, Xxxxx 00000, and Xxxxxx X. Xxxxxxx (hereinafter referred to as
"Employee").
RECITALS:
1. Employer desires to employ Employee as its Chief Executive Officer and
President.
2. Employee desires to be employed by Employer in such capacity.
NOW, THEREFORE, in consideration of the representations, warranties and
mutual promises hereinafter set forth, it is agreed as follows:
1. EMPLOYMENT. Employer hereby employs Employee and Employee hereby
accepts employment as Chief Executive Officer and President of the Employer in
the Dallas, Texas, office of Employer (or in such other position and/or
locations as may be mutually agreed upon) upon the terms and conditions
hereinafter set forth. Employee represents and warrants to Employer that
Employee has terminated any and all other employment agreements that he may have
with any other entity or individual.
2. TERM OF EMPLOYMENT. Subject to the provisions for termination as
hereinafter provided, the term of this Agreement (the "Term") shall commence on
the 15th day of July, 1997, and shall terminate on February 28, 2002. After
February 28, 2002, the parties may extend this Agreement for additional periods
of time and at such compensation as is mutually agreed upon by the parties from
time to time upon the execution of a mutually agreed written Extension Agreement
prior to the end of the Term or any extension thereof. Such additional
extensions shall be valid until written notice of termination is delivered by
either party thirty (30) days in advance of the termination date of this
Agreement. If the parties to this Agreement fail to execute an Extension
Agreement, unless otherwise terminated, this Agreement shall be automatically
renewed for an additional twelve (12) month period from the expiration of the
Term, or from the end of any period covered by any subsequently executed
extension, under the same terms and conditions applicable at the end of the
Term, or as may be amended in writing, and shall automatically renew in such
manner each year thereafter.
3. DUTIES. During the Employment Period the Employee agrees to serve as
Chief Executive Officer and President of Citadel, except as may be modified by
the written agreement of the parties hereto. In his capacity as Chief Executive
Officer and President, the Employee will be responsible for all matters
typically delegated to such officers, and will perform such duties and
responsibilities for Citadel as may from time to time be assigned to him by the
Board of Directors and the Executive shall report directly to the Board of
Directors of Citadel.
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4. OTHER EMPLOYMENT. Employee shall devote his entire productive time,
knowledge, skill, ability, energies, and attention solely and exclusively to the
business of Employer during the Term of this Agreement and any extension
thereof. Employee shall not engage in any other employment activity during such
time. This restriction shall not prevent Employee from engaging in other
business or investment activities so long as such activities do not require the
personal services of Employee.
5. COMPENSATION. As compensation for all services rendered by Employee
under this Agreement, Employer shall pay Employee as follows:
(a) BASE SALARY. Employee shall receive a base salary of the following
monthly amounts which shall be payable on the 1st and 16th of each
month, beginning July 16th 1997:
Period Monthly Salary
------ --------------
July 16, 1997 - November 31, 1997 $11,000
December 1, 1997-November 31, 1998 $12,000
December 1, 1998-November 31, 1999 $14,000
December 1, 1999-November 31, 2000 $14,000
December 1, 2000-November 31, 2001 $14,000
December 1, 2001-March 1, 2002 $14,000
(b) BONUS. Employee shall receive other bonuses or other extraordinary
compensation as determined in the discretion of the Board of Directors
of Employer but at least equal to the prior year's bonus. Such
bonuses shall be paid quarterly but the Employee may defer such
bonuses.
(c) WITHHOLDING FOR TAXES. All payments under this Agreement shall be
subject to federal withholding and other applicable taxes.
(d) OPTIONS. Employee shall receive options to purchase 250,000 shares
of the Company's common stock on each of the first four anniversaries
of the date of this Agreement at an exercise price of $0.25 per share,
which options shall vest in the event of the termination of the
Employee for any reason or in the event of any change in control.
6. AUTOMOBILE ALLOWANCE. Citadel shall pay Employee an automobile
allowance of $950.00 per month, payable on the last business day of each month.
In lieu of such allowance, Citadel may provide an automobile satisfactory to
Employee and pay insurance and maintenance costs thereof; provided however, that
if Employee has acquired an automobile for use in Citadel's business, Citadel
may not substitute the provision of an automobile except upon twelve months'
notice.
7. EMPLOYEE BENEFITS.
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(a) In addition to key man any insurance maintained by Employer for
its benefit, Employer shall purchase and pay the premiums on a life
insurance policy covering Employee in the amount of at least
$1,000,000. Employee shall have the sole right to designate one or
more beneficiaries under such policy. The current one-year term cost
of such policy shall be included in Employee's income to the extent
required by law.
(b) Employer shall continue the salary of Employee for a period of 180
days if Employee is not able to perform his duties as a result of
personal injury, disability or illness. Employer shall maintain a
disability income policy which shall commence payment of benefits to
Employee beginning not later than the 181st day of his disability at a
rate equal to at least 60% of his compensation for the twelve month
period immediately preceding the illness, injury or other event
causing disability (including deferred or postponed payments). The
cost of such insurance shall be included in the income of Employee.
(c) Employer shall include Employee and his dependents under
Employer's current major medical benefit plan at no cost to Employee.
(d) Employee shall be entitled to participate in any employee benefit
plans or agreements maintained or adopted in the future by Employer
relating to retirement, health, disability, dental, group term life
insurance, paid holidays, and other related benefits offered to
employees generally by Employer.
8. VACATION. Employee shall be entitled each year to four weeks vacation
for each calendar year, during which time his compensation shall be paid in
full. If Employee is for any reason unable to take such vacation, the
compensation which would have been paid to him during such vacation shall be
carried forward from year to year and paid to Employee upon termination of his
employment in addition to any other severance pay to which he shall be entitled.
9 WORKING FACILITIES. Employee shall be furnished with a private office
at Employer's principal executive office (at which he shall be stationed).
Employee shall also be provided stenographic help and such other facilities and
services, suitable to his position and adequate for the performance of his
duties.
10. BUSINESS EXPENSES. Employer shall pay all costs and expenses incurred
by Employee for all reasonable travel and other expenses incurred by Employee in
performing his obligations under this Agreement. Such reimbursement will be made
on or before the end of the first Pay Period following the date the expenses are
submitted by Employee to Employer.
11. TERMINATION OF EMPLOYMENT. This agreement shall not be terminated
prior to the expiration of its term or any extension thereof, except upon the
mutual consent of the parties hereto, or in the event of the death or permanent
total disability of Employee, or for due cause, upon the good faith
determination by the Board of Directors of Citadel that "due cause" exists for
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the termination of the employment relationship. As used herein, the term "due
cause" shall include, but is not limited to, the following events which are only
used herein for illustrative purposes:
(i) Employee's conviction of a crime involving moral turpitude, or
(ii) Employees breach, nonperformance or non-observance in any
material respect of a material term of this agreement, including
his duties and obligations as an employee, if such breach, non
performance or non observance shall continue beyond a period of
five (5) business days immediately after notice thereof by
Citadel to Employee; or
(iii) any other action by Employee involving willful and deliberate
malfeasance or gross negligence in the performance of Employee's
duties if such action shall continue beyond a period of five (5)
business days immediately after notice thereof by Citadel to
Employee.
For the purposes of the agreement, disability shall mean such physical,
mental or emotional disability of Employee as defined in the disability
insurance policy purchased by Citadel in accordance with Section 7(b) of this
agreement, which renders Employee unable to perform his duties for a period of
six (6) consecutive months. Any other termination of the agreement shall be in
breach hereof and shall not prejudice any other remedy to which the non-
terminating party may be entitled to either in law, in equity or under this
agreement.
12. SEVERANCE PAYMENTS
(a) If Employee's employment with Citadel is terminated by Citadel or the
Employee for other than good cause, Employee shall be entitled to a
severance payment equal to the greater of (i) the remaining payments which
would have been made during the Term of this agreement or any extension
thereof, discounted to present value using an interest rate of six percent
(6.0%) or (ii) an amount determined by multiplying his base salary for the
most recently completed full month of employment by 24. Such amount shall
be paid in a lump sum within 30 days after the effective date of his
termination of employment.
(b) In addition to the foregoing amounts, Employee shall be entitled upon
termination of employment for whatever cause to any unpaid salary, bonus
(based on a pro rata portion of the prior year's bonus) and vacation pay
(based on a pro rata portion of the portion of the year expired). Such
amounts shall be paid in a lump sum within 30 days alter the effective date
of his termination of employment. Any options to purchase shares which
would be exercisable during the Term of this Agreement or any extension
thereof shall become fully exercisable (and remain exercisable for at least
two year following the date of termination) upon the termination of this
Agreement.
13. WAIVER OF BREACH. The waiver by Employer of a breach of any provision
of this Agreement by Employee shall not operate or be construed as a wavier of
any subsequent breach by Employee.
14. LEGAL CONSTRUCTION AND SEVERABILITY. If any one or more of the
provisions
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contained in this Agreement shall for any reason be held invalid, illegal,
unenforceable in any respect, under present or future law, such provision
shall be fully severable and such invalid, illegal, or unenforceable provision
shall not affect any other provision of this Agreement. In such event this
Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part of this Agreement and the
remaining provisions of this Agreement shall continue in full force and effect
and shall not be affected by the illegal, invalid, or unenforceable provision
or its severance from this Agreement. Furthermore, in lieu of such illegal,
invalid, or unenforceable provision, there shall be added automatically as a
part of this Agreement, a provision as similar in terms to such illegal,
invalid, or unenforceable provision as may be possible and be legal, valid,
and enforceable.
15. ASSIGNMENT. This Agreement is a personal services contract and is not
assignable by Employee. This Agreement is not assignable by Employer except with
the consent of Employee and then only to a partnership, corporation, or other
entity which shall purchase substantially all of its assets or shall be its
legal successor pursuant to any merger, consolidation, or other action permitted
by law. Subject to the qualification in the preceding sentence, the rights and
obligations of Employer under this Agreement shall inure to the benefit of and
shall be binding upon the successors and assigns of Employer.
16. GOVERNING LAW: VENUE. This Agreement shall be construed under and in
accordance with the laws of the State of Texas. In the event that any legal
proceedings are instituted concerning the interpretation or enforcement of
this Agreement, exclusive venue over such proceedings shall be vested in
courts sitting in the State of Texas.
17. ATTORNEYS' FEES AND COSTS. 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 attorneys' fees, costs, and necessary
disbursements in addition to any other relief to which he may be entitled.
18. NOTICES. All notices shall be in writing and shall have been duly
given if delivered by hand or mailed, certified or registered mail, return
receipt requested to the following address or to such other address as either
party may designate by like notice:
IF TO EMPLOYEE:
Xxxxxx X. Xxxxxxx
0000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
IF TO EMPLOYER:
Citadel Computer Systems Incorporated
0000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
19. ENTIRE AGREEMENT. This Agreement constitutes the sole and only
agreement of the
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parties hereto and supersedes any prior understanding or written or oral
agreement between the parties respecting the within subject matter. This
Agreement may not be changed orally, but only by an agreement in writing
signed by both parties hereto.
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Citadel has caused this Agreement to be executed by its authorized
officer and the Employee has signed this Agreement.
CITADEL:
CITADEL COMPUTER SYSTEMS INCORPORATED
By: /s/ Xxxxxx Xxxxx
--------------------------------
Name: Xxxxxx Xxxxx
------------------------------
Title: Vice Chairman
-----------------------------
EMPLOYEE:
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxx
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