PACIFICNET INC. EXECUTIVE EMPLOYMENT CONTRACT
EXHIBIT
10.18
 |
PacificNet
Inc. (Nasdaq:PACT)
|
US
Office: 000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxx, XX 00000, XXX. Tel. x0 (000)
000-0000 Fax. x0 (000) 000-0000
HK
Office: Xxxx 0000, XxxxxXxxx Xxxxxxx Xxxxx, 000 Xxxxxxxxxx Xxxx, Xxxxxxx,
Xxxx
Kong. Tel:
(000) 00000000 Fax: (000) 0000 0000
PACIFICNET
INC. EXECUTIVE EMPLOYMENT CONTRACT
THIS
EMPLOYMENT CONTRACT (“CONTRACT”) is made as of the 30th
day of December, 2002,
by and
between PacificNet Inc., a company registered in the State of Delaware, USA,
with its primary office located at 000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxx,
XX
00000-0000, XXX (“PacificNet” or “Company”); and Xx. Xxxx
X
Xxxx.
(“Executive”).
WHEREAS,
PacificNet desires to employ Executive, and Executive is willing to accept
such
employment upon the terms and conditions hereinafter set forth;
NOW,
THEREFORE, in consideration of the premises and of the agreements hereinafter
contained, the parties agree as follows:
1.
Position and Duties.
The
Company hereby affirms its employment of Executive as its Chief
Executive Officer,
to
perform the duties and functions as are specified by the Company’s Articals of
Incorporation and ByLaws, under the authority of the Board of Directors as
selected and approved by the majority of the shareholders.
In
addition to performing the duties and exercising the powers in connection with
the business of the Company which the Board of Directors may from time to time
assign to the Executive, the Executive shall further exercise the power and
the
business of any associated and/or subsidiary companies of the Company and/or
the
parent company of the Company, PacificNet Inc., 000 Xxxx Xxxxxxx Xxxx, Xxxxx
000, Xxxxx, XX 00000-0000, XXX, as may be requested by the Board of Directors
from time to time.
Executive
hereby accepts such continued employment and, during the Employment Term shall
perform his duties (as set forth herein) in a diligent, trustworthy, loyal,
businesslike and efficient manner, all for the purpose of advancing the business
of the Company and increase shareholder value.
2.
Term.
The
commencement date of this employment CONTRACT is April
1, 2002,
and
shall continue on for a term of three
(3) years,
or
until he resigns or is terminated in accordance with Section 5 of this
CONTRACT.
3.
Compensation.
As
compensation for his services, Executive shall receive the following
compensation, expense reimbursement and other benefits:
| a. |
Base
Salary. For
all services rendered by Executive pursuant to this CONTRACT, the
Company
shall pay Executive an annual salary of US$160,000,
out of which US$100,000 is payable in Cash and US$60,000 is payable
in
freely tradable and fully registered PACT Shares (the number of PACT
Shares to be issued each month is based on the average price of PACT
shares during the month). Such annual salary shall be paid once per
month
in equal installments and shall
be subject to such periodic cost of living and/or merit increases
as
PacificNet’s Board of Directors in its discretion as it may deem
appropriate.
|
| b. |
Performance
Cash Bonuses.
Executive shall be entitled to a quarterly performance bonus as defined
in
Appendix 1, (payable in Cash, stock options, or free trading PACT
shares).
|
| c. |
Quarterly
Stock Options.
Executive shall be entitled to quarterly stock options grant as defined
in
Appendix 1; the Company’s Compensation Committee may elect to grant more
for any quarter.
|
| d. |
Housing
Allowance. Executive
shall be entitled to US$2,500
per month
as
accommodation allowance.
|
| e. |
Allowances
for Automobile and Tax Preparation Services. Executive
shall be entitled to an Automobile Allowance of US$500
per month
and US$2000
per year for Tax Preparation expenses.
|
| f. |
Reimbursement
of Expenses.
Executive shall be reimbursed, upon submission of appropriate vouchers
and
supporting documentation, for all travel, entertainment and other
out-of-pocket expenses incurred by Executive in the performance of
his
duties hereunder.
|
| g. |
Medical
and Life Insurance Coverage.
Executive and his immediate family shall be entitled to medical,
dental,
out-patient, hospitalization, health and life insurance coverage.
The
Company also agrees to provide Executive with a term life insurance
policy. The amount of such policy shall be determined by the Company
in
its sole discretion, provided that such policy shall provide benefits
in
an amount at least equal to US$1,000,000. The Company’s Board of Directors
may from time to time grant Executive further
benefits.
|
| h. |
Relocation
and Moving Allowances.
If
relocation is needed, Executive
shall be compensated for all the necessary moving and relocation
expenses,
visa fees, regular family visit travel expenses, and children’s education
and school expenses as a result of the move or relocation.
|
| i. |
Annual
Leave.
Executive shall be entitled to paid annual vacation of thirty
(30) days.
Any unused vacation in a particular year may be carried over into
the
following year.
|
4.
Other Terms of Employment.
All
other conditions of employment will be in accordance with the terms and
conditions outlined in the Company's Conditions of Employment Handbook.
5.
Termination.
| a. |
Termination
Upon Notice.
Executive’s employment by PacificNet may be terminated at the discretion
of either the Board of Directors of the Company or Executive by means
of
written notice given to the other at
least 90 days
prior to the effective date of such termination. Executive’s employment
shall terminate immediately in the event of Executive’s death or
“Disability” (as defined below).
|
| x. |
Xxxxxxxxx
Pay.
In
the event Executive’s employment by PacificNet is terminated by PacificNet
for reasons that do not constitute “Cause” (as defined below)
then:
|
| (i) |
PacificNet
shall continue to pay Executive his base salary
(in cash, stock and options, and on the same dates as would have
been paid
had he remained an employee) at the same rate (combined base rate
and
annual bonus rate per pay period as was in effect at the time of
termination for a period
of six
(6) months
after the date of termination. The severance period shall increase
to
twelve
(12) months
in
the event of a Change in control of the Company.
|
‘Change
in Control’ shall mean (1) the consummation of a merger or consolidation of the
Company with or into another entity or any other corporate reorganization,
if
more than 50% of the combined voting power of the continuing or surviving
entity’s securities outstanding immediately after such merger, consolidation or
other reorganization is owned by persons who were not stockholders of the
Company immediately prior to such merger, consolidation or other reorganization;
or (2) the sale, transfer or other disposition of all or substantially all
of
the Company’s assets; or (3) the consummation of transactions that result in
more than 50% of the combined voting power or beneficial interests of the
Company’s securities being owned by persons who are current stockholders of the
Company. A transaction shall not constitute a Change of Control if its sole
purpose is to change the state of the Company’s incorporation or to create a
holding company that will be owned in substantially the same proportions by
the
persons who held the Company’s securities immediately before such
transaction."
| (ii) |
Those
options to purchase shares in PacificNet which have been granted
to
Executive by PacificNet, and which would have (but for such termination)
vested and become exercisable at the next vesting date following
such
termination, shall become vested as of the date of termination and
(together with any options which have already vested) shall be exercisable
for a period of up to 5
years
after the date of termination, at which time any unexercised options
shall
terminate.
|
| (iii) |
PacificNet
shall provide medical, dental, and life insurance benefits for a
period of
12
months
after termination.
|
| c. |
“Cause”
Defined.
For purposes of this CONTRACT, “Cause” means: (i) a material violation of
a specific written resolution by the majority of the Board of Directors;
(ii) gross negligence or willful misconduct by Executive as to a
matter
which is material to PacificNet. No termination shall be for “Cause” under
clauses (i) or (ii) above unless Executive shall have first received
written notice from the Company’s Board of Directors advising Executive of
the act or omission that constitutes Cause and, if such act or omission
is
capable of cure, has continued uncured for 60
days
or
such longer period for cure as is specified in PacificNet’s notice
identifying such act or omission.
|
| d. |
“Disability”
Defined.
For purposes of this CONTRACT, “Disability” means that Executive shall
have failed, because of illness or incapacity, to render services
of the
character contemplated by this CONTRACT for a period of three consecutive
months and on the date of determination continues to be so disabled.
The
existence or nonexistence of disability shall be determined in good
faith
by the Board of Directors after notice in writing given to Executive
at
least 30 days prior to such determination. During such 30-day period,
Executive shall be permitted to make a presentation to the Board
of
Directors for its consideration.
|
| e. |
Surrender
of Records and Property.
Upon
termination of his employment with PacificNet, Executive shall deliver
promptly to PacificNet all records, documents, letters, memoranda,
notes,
notebooks, reports, data, tables, calculations or copies thereof,
which
are the property of PacificNet.
|
6.
General
Provisions.
| a. |
Successors;
Assignment.
This CONTRACT shall be binding upon and inure to the benefit of PacificNet
and its respective successors and assigns, and any entity which purchases
all or substantially all of the business assets of PacificNet, and
any
such other entity shall be deemed “PacificNet” hereunder. PacificNet has
the right to assign payment of the compensation amount to one of
its
overseas operating subsidiaries according to the location and service
provided by Executive. Company agrees that Executive shall have to
right
to assign the compensation and terms of this CONTRACT to a consulting
company designated by Executive. This CONTRACT shall be binding upon
and
inure to the benefit of Executive and its respective successors and
assignees.
|
| b. |
Entire
Agreement; Modifications.
This
CONTRACT constitutes the entire agreement between the parties respecting
the subject matter hereof, and supersedes all prior negotiations
agreements with respect thereto, whether written or oral. No provision
of
this CONTRACT may be modified or waived except by a written agreement
signed by the parties hereto.
|
| c. |
Obligations
and Benefits.
The obligations and benefits set forth in this CONTRACT shall be
binding
and inure to the benefit of the respective parties hereto and their
personal representatives, successors and permitted
assigns.
|
| d. |
Governing
law.
This
CONTRACT shall in all respects be interpreted, construed and governed
by
and in accordance with the laws of Minnesota, USA and the parties
hereby
submit to the non-exclusive jurisdiction of the Minnesota, USA
courts.
|
| e. |
Severability.
If
any portion or portions of this CONTRACT shall be, for any reason,
invalid
or unenforceable, the remaining portion or portions shall nevertheless
be
valid and enforceable.
|
| f. |
Counterparts.
This CONTRACT may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together
shall
constitute one and the same
CONTRACT.
|
7.
Non-Disclosure Agreement. Executive
acknowledges the interest of the Company in maintaining the confidentiality
of
information related to its business and shall not at any time during the
Employment Term or thereafter, regardless of the reason for or circumstances
of
termination of employment, directly or indirectly, reveal or cause to be
revealed to any person or entity the production processes, inventions, trade
secrets, customers lists or other confidential business information obtained
by
him as a result of his employment or relationship with the Company, except
when
authorized in writing to do so by the Board of Directors of the Company;
provided, however, that the parties acknowledge that it is not the intent of
this section to include within its subject matter (i) information not
proprietary to the Company, or (ii) information which is in the public
domain.
8.
Notices.
All
notices and other communications under this CONTRACT will be sufficient if
written and sent by registered or certified mail, return receipt requested,
in
the case of Executive, to his residence as shown on the Company’s records, and
in the case of the Company, to its registered office.
In
Witness Whereof, this CONTRACT has been executed as of the date first written
above.
EXECUTIVE:
/s/
Xxxx X.
Xxxx
Xxxx
X.
Xxxx
Approval
by the Board of Directors of PacificNet Inc. Date
of
Approval: December
30, 2002
Signed
by: /s/
Yue (Xxxxxx)
Xxxx
Xxx
(Xxxxxx) Xxxx, Chairman of the Compensation Committee
PACIFICNET
INC. EXECUTIVE EMPLOYMENT
CONTRACT
Appendix
1: Quarterly Performance Cash Bonus and Stock Options Bonus
Schedule
1.
Quarterly Performance Cash Bonus
Year
2002 and 2003
|
GAAP
loss/profit for the quarter
|
Cash
bonus
|
|
GAAP
loss
|
US$0
|
|
GAAP
net profit greater than US$0 but less than US$100,000
|
3%
of net profit
|
|
GAAP
net profit greater than US$100,000 but less than
US$250,000
|
4%
of net profit
|
|
GAAP
net profit greater than US$250,000 but less than
US$500,000
|
5%
of net profit
|
|
GAAP
net profit greater than US$500,000 but less than
US$1,000,000
|
6%
of net profit
|
|
GAAP
net profit greater than US$1,000,000
|
7%
of net profit
|
Year
2004
- to be
determined in January 2004.
Year
2005
- to be
determined in January 2005.
2.
Quarterly Stock Options Bonus
Year
2002 and 2003
Exercise
Price of Options: US$0.20 per share, and will be exercisable on a 1-1 basis
with
the stock. Options will be granted on quarterly basis within 10 days of the
release of each Quarterly Financial Report, and exercisable immediately after
the grant. Other terms will be consistent with the Company’s Stock Option
Plan.
|
Average
PACT share price during each quarter (US$)
|
Number
of Options*
|
|
Less
than 0.10
|
0
|
|
0.101
- 0.20
|
100,000
|
|
0.201
- 0.40
|
200,000
|
|
0.401
- 0.60
|
300,000
|
|
0.601
- 0.80
|
400,000
|
|
0.801
- 1.00
|
500,000
|
|
1.001
- 2.00
|
600,000
|
|
Greater
than 2.00
|
1,000,000
|
*Calculated
on a pre-split adjusted basis. For example a 5-1 reverse split will decrease
the
number options by 80%.
Year
2004
- to be
determined in January 2004.
Year
2005
- to be
determined in January 2005.
Amendment
1 -- Dated: 10th
day of April, 2003
PACIFICNET
INC. EXECUTIVE EMPLOYMENT CONTRACT - AMENDMENT 1
THIS
EMPLOYMENT CONTRACT (“CONTRACT”) Amendment 1 is made as of the 10th
day of April, 2003,
by and
between PacificNet Inc., a company registered in the State of Delaware, USA,
with its primary office located at 000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxx,
XX
00000-0000, XXX (“PacificNet” or “Company”);
and
Xx.
Xxxx
X
Xxxx.
(“Executive”).
Background
In
order
to conserve the cash position of PacificNet and reduce the Company’s net cash
out-flow, both parties, PacificNet (“Company”) and Xxxx Xxxx (“Executive”),
agree to the following amendments to the original Employment Contract dated
December 30, 2002.
List
of amendments:
A1-1.
Clause
3a, Base Salary, is amended to:
Beginning
in May 1, 2003, Executive’s Base Salary Cash Component of US$100,000 annually
will be substituted with the Exercise Price payment of Executive’s Stock Options
of the equivalent amount.
A1-2.
Clause
3b, Performance Cash Bonuses, is amended to:
Beginning
in May 1, 2003, Executive’s Performance Cash Bonuses will be substituted with
the Exercise Price payment of Executive’s Stock Options of the equivalent
amount.
A1-3.
Term
of
Amendment:
The
above
temporary amendments will be valid for 12 months: beginning in May 1, 2003
and
ending in March 31, 2004. After March 31, 2004, all the original terms of this
Employment Contract shall resume valid.
This
CONTRACT AMENDMENT shall be binding upon and inure to the benefit of PacificNet
and its respective successors and assigns, and any entity which purchases all
or
substantially all of the business assets of PacificNet, and any such other
entity shall be deemed “PacificNet” hereunder. PacificNet agrees that Executive
shall have to right to assign the compensation and terms of this CONTRACT and
AMENDMENT to a consulting company designated by Executive.
In
Witness Whereof, this CONTRACT AMENDMENT has been executed as of the date
written above.
EXECUTIVE:
/s/
Xxxx X.
Xxxx
Xxxx
X.
Xxxx
Approval
by the Board of Directors of PacificNet Inc. Date
of
Approval: April
10, 2003
Signed
by: /s/
Yue (Xxxxxx)
Xxxx
Xxx
(Xxxxxx) Xxxx, Chairman of the Compensation Committee
Amendment
2 -- Dated: 14th
day of May, 2003
PACIFICNET
INC. EXECUTIVE EMPLOYMENT CONTRACT - AMENDMENT 2
THIS
EMPLOYMENT CONTRACT (“CONTRACT”) Amendment 2 is made as of the 14th
day of May, 2003,
by and
between PacificNet Inc., a company registered in the State of Delaware, USA,
with its primary office located at 000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxx,
XX
00000-0000, XXX (“PacificNet” or “Company”);
and
Xx.
Xxxx
X
Xxxx.
(“Executive”).
Background
In
order
to conserve the cash position of PacificNet and reduce the Company’s net cash
out-flow, both parties, PacificNet (“Company”) and Xxxx Xxxx (“Executive”),
agree to the following amendments to the original Employment Contract dated
December 30, 2002.
List
of amendments:
X0-0.
Xxxxxx
0x, Xxxxxxx Xxxxxxxxx, is amended to:
Beginning
in May 1, 2003, Executive’s Housing Allowance will be suspended for one year or
until after the company has achieved 4 consecutive profitable
quarters.
A2-2.
Clause
3e, Allowances for Automobile and Tax Preparation Services, is amended
to:
Beginning
in May 1, 2003, Executive’s Allowances for Automobile and Tax Preparation
Services will be suspended for one year or until after the company has achieved
4 consecutive profitable quarters.
This
CONTRACT AMENDMENT shall be binding upon and inure to the benefit of PacificNet
and its respective successors and assigns, and any entity which purchases all
or
substantially all of the business assets of PacificNet, and any such other
entity shall be deemed “PacificNet” hereunder. PacificNet agrees that Executive
shall have to right to assign the compensation and terms of this CONTRACT and
AMENDMENT to a consulting company designated by Executive.
In
Witness Whereof, this CONTRACT AMENDMENT has been executed as of the date
written above.
EXECUTIVE:
/s/
Xxxx X.
Xxxx
Xxxx
X.
Xxxx
Approval
by the Board of Directors of PacificNet Inc. Date
of
Approval: May
14, 2003
Signed
by: /s/
Yue (Xxxxxx)
Xxxx
Xxx
(Xxxxxx) Xxxx, Chairman of the Compensation Committee
