EMPLOYMENT AGREEMENT
AGREEMENT, made as of this 1st day of January, 1999, between
Maxnet, Inc. (the "Company") a Delaware corporation with offices at 4400 US
Highway Rt. 9 South, Suite 2800, Freehold, NJ 07728 and Henry Val ("HV"), an
individual residing at 133 Wyncrest Road, Marlboro, NJ 07746
W I T N E S S E T H
The Company desires to secure the continued employment of HV
as its CEO, Director, Officer and HV desires to be so employed upon the terms
set forth in this Agreement.
NOW, THEREFORE. it is agreed as follows:
1. Engagement. The Company hereby employs HV as it CEO,
Director, Officer and HV hereby accepts such employment. upon and subject to the
terms and conditions set forth in this Agreement.
2. Services. As CEO, Director, Officer, HV shall be
responsible for overseeing the Operations of the Company, and shall have full
authority and responsibility, subject to the general discretion and approval of
the Company's Board of Directors, for formulating policies and administering the
business of the Company in all respects, including the implementation,
development and operation of the Company's Websites and other programs. The
Company shall support HV's efforts by providing such staff and facilities, as
the Company's Board of Directors shall deem reasonably necessary. HV shall
devote his time, attention and energies, exclusive of reasonable vacation
periods, to the business and affairs of the Company and the performance of his
duties hereunder. HV shall maintain his office at the Company and shall engage
in such travel as shall be reasonably required by his position and duties
hereunder. Nothing herein shall preclude HV from pursing personal investments
unrelated to the affairs of the Company during his term of his employment.
3. Compensation. As full and complete compensation for all
services to be rendered by HV pursuant to this Agreement. the Company shall pay
HV a salary for the periods and at the rates as follows: HV shall be paid a
salary of $25,000.00 for the first six - months of employment beginning January
1, 1999. Beginning on June 1, 1999, HV shall be paid an annual salary of
$125,000.00 with an annual increase during the following nine years of at least
10% per annum. each year. Said $125,000. 00 annual compensation will commence on
June 11, 1999 of this Agreement as set forth in Paragraph 3 and 7. Such salary
compensation shall be payable in equal bi-weekly payments.
(a) SIGNIFICANT CONTRACTUAL OBLIGATIONS TO HV AS
MEMBER OF MANAGEMENT. Maxnet has entered into employment agreements with HV as a
principal executive officer to provide for HV to receive a percentage of any
capital raised by Maxnet, the value of any acquisition by Maxnet and Maxnet's
pre-tax profits. The officer, Henry Val, the CEO and COB of the Company will
receive: (1) 2.5% of all pre-tax profits recorded by the Company in accordance
with Generally Accepted Accounting Principles ("GAAP"); (2) the greater of (i)
2% of the value of any acquisition by Maxnet (as computed by the purchase price
plus the value of any additional consideration paid in connection with such
acquisition) or (ii) 2% of the revenue reported by the acquired party in its
preceding fiscal year; and (3) 2.5% of any capital raised for Maxnet. In the
case that any portion of such consideration shall consist of publicly held
securities, the market price of these securities shall be used to determine
value, and the value related to any option, warrant or right to purchase these
securities shall be determined by the Black-Scholes Model. At HV's option, any
compensation due under the foregoing provisions may be converted into Maxnet's
Common Stock at a conversion price equal to the average closing bid price for
the Common Stock 30 days prior to any such acquisition or capital funding. Under
these agreements, in the event of a change of control the officers may resign
and all amounts due owing for the term of the agreements shall become due and
payable. Mr. Val waived fifty percent of his salary since January 1, 1999, in
exchange for options to purchase 150,000 shares of Common Stock for $2.00 per
share for three years.
(b) In addition to the compensation provided In
Section 3(a) hereof, HV shall receive bonuses in such amounts as the Board of
Directors may from time to time designate as well as beginning 4/1/1999 through
the term of this Agreement HV shall receive additional compensation in the form
of Employee Stock Options which will be equal to amount of 100,000 shares to be
purchased (strike price) at the closing price as of March 31 of the appropriate
year. HV shall also receive additional compensation in the event the Company has
a profitable year in the form of Employee Stock Options which will be equal to
amount of 200,000 shares to be purchased (strike price) at the closing price as
of March 31, of the appropriate year, plus an additional 5% of the pre-tax
profit amount of the Company for the appropriate year. HV shall have the option
to accept the additional 5% profit compensation as Cash or Company's Stock or
(Employee Stock Options that are equal to double amount of Cash compensation).
The Company shall properly and timely register all of the shares underlying the
Employee Stock Option Plan and additional compensation plans.
(c) HV shall participate in the Management Incentive
Plan with his bonus being 5% of pre-tax profits.
(d) Nothing herein shall prohibit the Board of
Directors from granting additional compensation to HV and his salary shall be
reviewed annually by the Board concerning appropriate increases and/or grant
appropriate bonuses for his contributions to the Company and he shall be
included in any cash or stock bonus or stock plan heretofore or hereinafter
adopted by the Company. Under no circumstances shall the compensation be reduced
without HV's consent.
4. Expenses: Automobile.
(a) The Company recognizes that HV may incur form
time to time for the Company's benefit and, in furtherance of the business of
the Company, certain expenses, including, but not limited to, expenses for
entertainment, travel and similar items, and upon presentation by HV of
appropriate vouchers therefore, the Company agrees to pay, advance or reimburse
HV for expenses reasonably incurred by HV for such business purposes.
(b) Provide HV with a Company car to be leased at a
cost, including all maintenance charges, of no more than $750.00 a month or, at
HV's option, with a car allowance of $750.00 per month.
5. Benefits / Insurance.
(a) HV shall be entitled to participate in all
employee benefit programs now in effect or hereafter adopted by the Company for
the benefit of the Company's key executives and/or officers, including, but not
limited to retirement, pension, incentive compensation, group insurance, stock
options, stock bonuses and other programs of like nature.
(b) During the term of employment of HV hereunder,
the Company shall maintain policies of medical insurance providing for major
medical coverage of HV and his family including his spouse or the equivalent
thereof, and shall also maintain a long-term disability policy for HV. The
coverage provided by such policies shall be comparable to those, which the
Company presently provides or shall provide.
(c) The Company shall purchase key man life insurance
on the life of HV the first $500,000.00 benefit from which shall be payable to a
beneficiary to be designated by HV with the balance payable to the Company.
(d) The Company shall secure directors and officers
liability insurance with coverage's and monetary amounts of protection mutually
agreed upon by the Company and HV.
(e) HV shall have the right to participate in the
Company's non-qualified stock option plan.
(f) Should the stock of the Company split or a stock
dividend be paid for any reason during the term of this Agreement, any
unexercised stock option or warrant, or portion thereof, shall be deemed to be
subject to the terms of the stock split or purchase the equivalent number of
share as covered by the split as if he had previously owned or received his
option prior to the stock split.
6. Vacation. Illness and Holidays.
(a) HV shall be entitled to reasonable time off when
ill and to four weeks or more of paid vacation during each calendar year of his
employment hereunder. HV shall also be entitled to observe legal and religious
holidays of his faith with pay.
7. Term.
(a) Subject to the succeeding provisions of this
paragraph, HV, shall be employed commencing January 1, 1999 and ending 1/1/
2000. Said $125,000.00 annual compensation for HV as stated in paragraph 3 will
commence on June 1, 1999. Thereafter, this Agreement and HV's employment
hereunder shall be automatically renewed for 9 years. Any such renewal shall be
upon all of the terms and conditions contained herein.
8. Termination.
(a) The Company may not terminate the employment of
HV hereunder except for cause, which shall mean and be limited to the following:
(i) HV's conviction of a felony involving
fraud, or unlawful business conduct;
(ii) If HV shall become permanently
disabled, as defined below, the Company
shall have the right to terminate his
employment hereunder as of the end of any
calendar month upon 30 days notice to him,
in which event he shall be entitled to
receive his compensation and all benefits
accrued hereunder until such termination.
For purposes of this Agreement, HV shall be
considered permanently disabled, if he shall
be unable to perform his duties hereunder by
reason of physical or mental incapacity for
periods aggregating 180 days, whether or not
consecutive, in any consecutive 365-day
period,
(b) HV may terminate his employment hereunder if the
Company shall commit a material breach of any of the provisions of this
Agreement, which shall continue for a period of thirty (30) days following
notice by HV to the Company specifying in reasonable detail the nature of any
such breach, except that HV may terminate his employment hereunder if the
Company shall fall to pay any compensation due HV directly or indirectly
pursuant to this Agreement, and such failure shall continue for a period of ten
(10) days following notice thereof by HV to the Company.
(c) Upon the death of HV during the term of this
Agreement, this Agreement shall terminate and HV shall be entitled to receive
his compensation and all other benefits accrued hereunder. In addition, the
death of HV following the termination of his employment shall not relieve the
Company of any obligation the Company may have to pay HV severance as provided
in Section 9 hereof. Any such severance shall be paid to HV's Estate.
9. Severance Compensation upon Termination of Employment.
If the Company shall terminate HV's employment for any reason
other than pursuant to Section 8 (a) hereof, or if HV shall terminate his
employment pursuant to Section 8 (c) hereof, then the Company shall pay to HV as
severance pay in a lump sum, in cash, on the fifth business day following the
date of such termination of employment, and equal amount to five times the
Executive's annualized includible compensation for the base period (as defined
in Section 280G(d) of the Internal Revenue Code of 1954, as amended (the "Code")
prior to the date of such termination of employment; provided, however, that if
the lump sum severance payment under this Section 9, calculated as set forth
above.
In the event of termination for cause, HV shall receive 100%
of his salary and bonus, and other benefits for ten years from the date of
discharge.
10. Covenant of Non-Competition.
During the period of this Agreement, provided Maxnet, Inc. is
not in material default of any of the provisions hereof, HV shall not, directly
engage in any activity which is in direct competition with Maxnet's business and
activities; nor shall he be a member of any partnership or as an officer,
director or employee of any corporation or business entity, which competes
directly with Maxnet, Inc. without the permission of the Company's Board of
Directors; nor shall he engage in or be actively involved in an other
consultation or advisory agreements, contracts or activities of a professional
or commercial nature, which compete directly with Maxnet unless permitted by
Maxnet and the Company's Board of Directors.
11. Confidentiality.
HV shall keep confidential and secret any methods,
formulations, inventions, know-how, sales and marketing techniques and other
information utilized by Maxnet during the course of his employment.
12. Notices.
All notices and other communications required hereunder shall
be in writing and shall be deemed to have been duly given if delivered or mailed
(registered or certified mail, postage prepaid, return receipt requested), if to
HV, to his residence, and if to Maxnet, Inc. to its principal office.
13. Waiver.
No waiver of any provision of this Agreement shall be deemed
or shall constitute a waiver of any other provision. No waiver shall be
effective unless executed in writing by the parties hereto.
14. Law Governing.
This Agreement shall be construed and governed in accordance
with the laws of the State of New Jersey.
15. Arbitration.
Should either party default in the terms or conditions of this
Agreement, the parties agree to binding Arbitration with the American
Arbitration Association in New York City, New York. The prevailing party shall
be entitled to recover all costs incurred as a result of such default including
all costs and reasonable attorney fees.
16. Entire Agreement.
This Agreement contains the entire understanding of the
parties and may not be modified, amended or supplemented, except by the written
agreement the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written. This Agreement will be effective
as of January 1, 1999.
--------------------------------- --------------------------------------
Israel Goldreich Date Henry Val Date
CEO Maxnet, Inc.
BE IT RESOLVED, that a duly constituted meeting of the Board
of directors of Maxnet, Inc. the foregoing Agreement was accepted and ratified,
and was authorized to be entered into by The Company.
BY SECRETARY: Date
------------------------------
