EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
June 1, 1997, by and between Citadel Technology Incorporated, formerly Citadel
Computer Systems, Inc., a Delaware Corporation ("Citadel") and Xxxxxxx X.
Xxxxxx, Xx. (hereinafter referred to as "Employee").
RECITALS
1. Citadel desires to employ Employee as its Chief Financial Officer.
2. Employee desires to be employed by Citadel in such capacity.
3. The parties to this Agreement wish to reduce to writing their understanding
and agreement as to the employment and compensation of Employee.
NOW, THEREFORE, in consideration of the representations, warranties and
mutual promises hereinafter set forth, it is agreed as follows:
1. EMPLOYMENT. Citadel hereby employs Employee and Employee hereby accepts
employment as Chief Financial Officer of Citadel in the Dallas, Texas,
office of Citadel (or in such other position and/or locations as may be
mutually agreed upon) upon the terms and conditions set forth in this
Agreement. Employee represents and warrants to Citadel that Employee has
terminated any and all employment agreements that he may have with any
other entity or individual.
2. TERM OF EMPLOYMENT. Subject to the provisions for termination as provided
in this Agreement, the term of this Agreement (the "Term") shall commence
on June 1, 1997 and terminate on May 31, 2002. After May 31, 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.
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3. DUTIES. During the Term the Employee agrees to serve as Chief Financial
Officer of Citadel, except as may be modified by the written agreement of
the parties hereto. In his capacity as Chief Financial Officer, Employee
will be responsible for the day to day financial and accounting operations
of Citadel and will perform such duties and responsibilities for Citadel as
may from time to time be assigned to him by the Chief Executive Officer of
Citadel.
4. OTHER EMPLOYMENT. Employee shall devote his entire productive time,
knowledge, skill, merits, energies and attention solely to the business of
Citadel during the terms of this Agreement and any extension thereof.
Employee shall not engage in any other employment activities 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, Citadel shall pay Employee as follows:
(a) BASE SALARY. Employee shall receive a base salary of $10,833.33 per
month which shall be payable on the 1st and 16th of each month,
beginning December 16, 1996. The base salary shall be increased, as
of July 1, 1997, December 1, 1997 and July 1, 1998, as follows, or as
may be mutually agreed upon by the parties. After which, it shall be
reviewed by the Company on an annual basis, commencing July 1, 1999,
or on such other dates as may be mutually agreed to by the parties.
July 1, 1997 $10,000 per annum
December 1, 1997 $10,000 per annum
July 1, 1998 $10,000 per annum and annually
thereafter
At the option of the Employee, the Employee may elect to take the
entire increase or a portion thereof, as of dates indicated above, in
common stock of the Company. If so elected, the conversion price
shall be the closing bid price of the Company's stock on the date
written notice of such election is received by Company. The Company
will issue such shares within thirty (30) days of such notice and such
share shall be free-trading shares and free of any restrictions.
(b) BONUS. Employee may receive other bonuses or other extraordinary
compensation as determined in the discretion of the Board of Directors
of Citadel. Such bonuses shall be paid at such times and in such
amounts as the
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Board of Directors may determine. It is agreed by both parties that
a bonus of $10,000 will be paid on August 1, 1997.
(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 125,000 shares of
the Company's common stock on each four anniversaries of the date of
this Agreement at an exercise price of $.35 per share, which options
shall vest immediately in the event of termination of employee for any
reason, change in employee's position for which employee does not
agree to, 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.
Employee shall, at his own cost and expense, procure an automobile for use
in Citadel's business. Employee shall further procure and maintain in force
an automobile liability policy covering such automobile with Citadel as the
named insured in the minimum amount of $1,000,000 for bodily injury or
death in one accident, $1,000,000 for bodily injury or death to one person
in one accident and $100,000 for property damage in one accident. Employee,
if requested, shall deliver to Citadel a true copy of such automobile
liability insurance policy. Employee shall further, at his own cost and
expenses, maintain such automobile in proper operating condition. 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.
(a) Citadel shall use its best efforts to purchase and pay what the Board
of Directors considers to be, in its sole discretion, a reasonable
premium 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) Citadel 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. Citadel 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.
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(c) Citadel shall include Employee and his dependents under Citadel's
current or amended major medical and dental 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 Citadel
relating to retirement, health, disability, dental, group term life
insurance, paid holidays, and other related benefits offered to
employees generally by Citadel.
8. VACATION. Employee shall be entitled each year to three weeks vacation for
each calendar year, during which time his compensation shall be paid in
full. Such vacation shall be earned on a pro-rata basis at 1.25 days per
month. 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 either paid to Employee upon his request or 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. After 3 years of
employment, employee shall be entitled to four (4) weeks vacation.
If employee elects to be paid for his earned vacation hereunder, he may
elect to have such amounts paid to him in cash, or if mutually agreed upon
by both parties, in unrestricted free-trading common stock of the Company.
The conversion price to be based on the closing bid price of the Company's
common stock, as of the date of request.
9. WORKING FACILITIES. Employee shall be furnished with a private office at
Citadel's principal executive office in Dallas, Texas (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. Citadel 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 Citadel.
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 good cause, upon the good faith
determination by the Board of Directors or Executive Committee of Citadel
that good cause exists for the termination of the employment relationship.
As used herein, the term "good cause" shall include, but
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is not limited to, the following events which are only used herein for
illustrative purposes:
(i) any intentional misapplication by Employee of Citadel's funds,
or any other intentional act of dishonesty injurious to Citadel
committed by Employee; or
(ii) Employee's conviction of a crime involving moral turpitude, or
Employee's breach, nonperformance or nonobservance in any
material respect of a material term of this Agreement, including
his duties and obligations as an Employee, if such breach,
nonperformance or nonobservance shall continue beyond a period
of ten (10) business days immediately after notice thereof by
Citadel to Employee; or
(iii) any other intentional action by Employee involving willful and
deliberate malfeasance or gross negligence in the performance
of Employee's duties.
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. For the purposes of this Agreement,
no act or failure to act on the part of the Employee shall deemed to be
"intentional" unless the act or omission by the Employee is not in good
faith or without the reasonable belief that the act or omission was in the
best interest of the Company. 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.
In the event the Agreement is terminated by the Company without good cause
or there exist a change in the Employees position as Chief Financial
Officer or compensation, which has not been mutually agreed upon by the
parties, and the Employee elects to terminate his employment due to such
change, the Employee shall be entitled to receive a severance payment in
the amount of the greater of (i) the remaining payments during the term of
this Agreement or any extension thereof, discounted to present value using
an interest rate of six percent (6%) or (ii) an amount determined by
multiplying his base salary plus benefits 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 termination or, at the Company's
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option, in three quarterly installments following the date of termination.
The Employee shall also be entitled to receive any unpaid salary, bonus and
vacation pay accrued through the date of such termination and such amounts
shall be paid in a lump sum within 30 days after the effective date of his
termination. In addition, the Company agrees to pay the cost of an
out-placement service, which shall be selected by the Employee, for a
period of twelve (12) months.
12. WAIVER OF BREACH. The waiver by Citadel 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.
13. LEGAL CONSTRUCTION AND SEVERABILITY. If any one or more of the provisions
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.
14. ASSIGNMENT. This Agreement is a personal services contract and is not
assignable by Employee. This Agreement is not assignable by Citadel 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 Citadel under this
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of Citadel.
15. 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.
16. 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.
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17. 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:
Xxxxxxx X. Xxxxxx, Xx.
Citadel Computer Systems Incorporated
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
IF TO CITADEL:
Xxxxxx X. Xxxxxxx
Chief Executive Officer
Citadel Computer Systems Incorporated
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
18. ENTIRE AGREEMENT. This Agreement constitutes the sole and only agreement
of the 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.
Citadel has caused this Agreement to be executed by its authorized officer and
the Employee has signed this Agreement.
CITADEL TECHNOLOGY, INCORPORATED, formerly Citadel
Computer Systems, Inc.
/s/ Xxxxxx X. Xxxxxxx
-------------------------------------------------
Xxxxxx X. Xxxxxxx, President and Chief Executive
Officer
EMPLOYEE
/s/ Xxxxxxx X. Xxxxxx, Xx.
-------------------------------------------------
Xxxxxxx X. Xxxxxx, Xx.
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