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 Israel Goldreich ("IG"),
an individual residing at 563 Oak Drive West, Lawrence, NY 11691.
W I T N E S S E T H
The Company desires to secure the continued employment of IG
as its Secretary, Vice President, COO and IG 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 IG as its Secretary,
Vice President, COO and IG hereby accepts such employment, upon and subject to
the terms and conditions set forth in this Agreement.
2. Services. As Secretary, Vice President and COO, IG shall be
responsible for 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 IG's efforts by providing such staff and facilities, as the Company's
Board of Directors shall deem reasonably necessary. IG 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.
IG 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 IG 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 IG pursuant to this Agreement, the Company shall pay
IG a salary for the periods and at the rates as follows: IG 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, IG shall be paid an annual salary of
$100,000.00 with an annual increase during the following nine years of at least
10% per annum. each year. Said $100,000. 00 annual compensation will commence on
June 1, 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 IG AS
MEMBER OF MANAGEMENT. Maxnet has entered into employment agreements with IG as a
principal executive officer to provide for IG to receive a percentage of any
capita! raised by Maxnet. the value of any acquisition by Maxnet, and Maxnet's
pre-tax profits. The officer, Israel Goldreich, the Vice President and Secretary
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
IG'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 and owing for the term of the agreements
shall become due and payable. Mr. Goldreich 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, IG 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 IG 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. IG 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. IG 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
Employee Stock Option Plan and additional compensation plans.
(c) IG 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 IG 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 IG's consent.
4. Expenses: Automobile.
(a) The Company recognizes that IG may incur from
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 IG of
appropriate vouchers therefore, the Company agrees to pay, advance or reimburse
IG for expenses reasonably incurred by IG for such business purposes.
(b) Provide IG with a Company car to be leased at a
cost, including all maintenance charges, of no more than $500.00 a month or, at
IG's option, with a car allowance of $500.00 per month.
5. Benefits / Insurance.
(a) IG 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 IG hereunder,
the Company shall maintain policies of medical insurance providing for major
medical coverage of IG and his family including his spouse or the equivalent
thereof, and shall also maintain a long-term disability policy for IG. 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 IG the first $500,000.00 benefit from which shall be payable to a
beneficiary to be designated by IG 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 IG.
(e) IG 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) IG 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. IG 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, IG, shall be employed commencing January 1, 1999 and ending 1/1/
2000. Said $100,000.00 annual compensation for IG as stated in paragraph 3 will
commence on June 1, 1999. Thereafter, this Agreement and IG'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
IG hereunder except for cause, which shall mean and be limited to the following:
(i) IG's conviction of a felony involving
fraud, or unlawful business conduct;
(ii) If IG 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, IG 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) IG 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 IG to the Company specifying in reasonable detail the nature of any
such breach, except that IG may terminate his employment hereunder if the
Company shall fall to pay any compensation due IG directly or indirectly
pursuant to this Agreement, and such failure shall continue for a period of ten
(10) days following notice thereof by IG to the Company.
(c) Upon the death of IG during the term of this
Agreement, this Agreement shall terminate and IG shall be entitled to receive
his compensation and all other benefits accrued hereunder. In addition, the
death of IG following the termination of his employment shall not relieve the
Company of any obligation the Company may have to pay IG severance as provided
in Section 9 hereof. Any such severance shall be paid to IG's Estate.
9. Severance Compensation upon Termination of Employment.
If the Company shall terminate IG's employment for any reason
other than pursuant to Section 8 (a) hereof, or if IG shall terminate his
employment pursuant to Section 8 (c) hereof, then the Company shall pay to IG 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, IG shall receive 100%
of his salary and bonus, and other benefits for ten others 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, IG 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 Beard of Directors.
11. Confidentiality.
IG 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
IG, 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 of 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.
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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
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