Employment Agreement - Linktone Ltd. and Mark Begert
EMPLOYMENT AGREEMENT
Among
MARK BEGERT
And
LINKTONE LTD.
Dated as of April 1, 2003
<PAGE>
THIS EMPLOYMENT AGREEMENT ("Agreement")
is made and entered into this
1st day of April, 2003
(the "Effective Date")
by and between
MARK BEGERT
(the "Employee")
and
LINKTONE LTD. (THE COMPANY)
BACKGROUND
WHEREAS the Employee and Linktone Ltd. (a Cayman Islands-based corporation) have
entered into the Original Employment Agreements dated March 26, 2003 and desire
to terminate such agreements.
WHEREAS the Employee and the Company desire to enter into this Agreement for the
purpose of retaining the services of the Employee, and wishes to provide the
Employee with an inducement to remain with the Company;
WHEREAS the Employee has been employed by the Company
NOW, THEREFORE, intending to be legally bound, and in consideration of the
premises and the mutual promises set forth in this Agreement and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Employee agree as follows:
DEFINITIONS
"Affiliate" means with respect to any Person directly or indirectly Controlling,
Controlled by, or under common Control with such Person.
"Board" means Board of Directors.
"Cause" (i) Employee commits a crime involving dishonesty, breach of trust, or
physical harm to any person; (ii) Employee willfully engages in conduct that is
in bad faith and materially injurious to the Company, including but not limited
to, misappropriation of trade secrets, fraud or embezzlement; (iii) Employee
commits a material breach of this Agreement, which breach is not cured within
twenty (20) days after written notice to Employee from the Company; (iv)
Employee willfully refuses to implement or follow a reasonable and lawful policy
or directive of the Company, which breach is not cured within twenty (20) days
after written notice to Employee from the Company; or (v) Employee engages in
malfeasance demonstrated by a pattern of failure to perform
Confidential Copyright(C)2003 Linktone Ltd. Page 2 of 22
<PAGE>
job duties diligently and professionally.
"Change in Control" shall be as defined in Section 4.32.
"Change in Control Audit Date" shall be the date upon which the Board of
Directors of the Company and at least two out of the three of Acer IP Fund I
Ltd, Jun Wu and Lunar Occidental Group LLC, certifies the audited accounts of
the company for the first complete fiscal year, commencing on January 1st and
ending on December 31st, after the Change in Control
"Change in Control Percentage of Stock Options" shall be 25%.
"Change in Control Remaining Percentage of Stock Options" shall be 75%.
"Change in Control Stock Option Exercise Date" shall be the earliest possible
date upon which the value of one share of stock in the Company can be determined
based upon any transaction resulting in a sale of a majority of shares owned by
Common, Series A, Series B, Series C, Series D or Series E Shareholders, or as
can be otherwise determined, in good faith, by the Board of Directors of the
Company.
"Company" as defined in Preamble.
"Compensation Package Amount" shall be US$115,000 per annum for the period from
the Effective Date through December 31, 2003, and shall be US$120,000 per annum
thereafter, only and for purposes of definition shall not include any other
compensation including stock option awards.
"Control" (including the terms "Controlled by" and "under common Control with")
means the possession, directly or indirectly or as a trustee or executor, of the
power to direct or cause the direction of the management of a Person, whether
through the ownership of stock, as a trustee or executor, by contract or credit
agreement or otherwise.
"Effective Date" as defined in Preamble
"Employee" as defined in Preamble
"Employment Capacity" shall be Chief Financial Officer reporting to the Chief
Executive Officer of the Company.
"Employment Change of Control Termination Date" shall be the later of (i) 6
months after the Change in Control Audit Date; (ii) one year from the date of a
Change of Control; or (iii) the date on which either the Company or the Employee
elects not to extend the Agreement further by giving written notice to the other
party.
"Employment Contract Termination Date" shall be the later of April 1, 2005 or
the date on which either the Company or the Employee elects not to extend the
Agreement further by giving written notice to the other party.
"Employment Final Termination Date" shall be the date upon which the Employee's
employment with the Company ceases for any reason.
"Employee Stock Option" shall be the right given by the Company to the Employee
on specific vesting dates during the Employment Term to purchase a specific
number of Ordinary Shares of the
Confidential Copyright(C)2003 Linktone Ltd. Page 3 of 22
<PAGE>
Company, par value USD 0.01, at a specific strike price, for a length of time
equal to the earlier of 10 years from the Effective Date, 6 months after the
Employee Final Termination Date, or the Change in Control Stock Option Exercise
Date, subject to the Change in Control provisions in Section 4.3.
"Employment Term" shall be as defined in Section 1.1.
"Exchange Act" means the Securities and Exchange Act of 1934, as amended.
"Good Reason" in the context of the employee's resignation is defined as (a) a
change in the employees position which materially reduces the employee's level
of responsibilities, duties or stature; (b) reduction in the employee's
compensation or (c) a relocation of the employee's principal place of employment
by more than 50 miles.
"Monthly Rate of Compensation" shall be the amount in US Dollars of the
Compensation Package Amount divided by 12.
"Option Exercise Date" is the lesser of 10 years from the date first written
above, or 6 months from Employment Termination.
"Person" means an individual, corporation, partnership, limited liability
company, limited partnership, association, trust, unincorporated organization or
other entity or group (as defined in Section 13(d)(3) of the Securities and
Exchange Act of 1934, as amended).
"Qualified Public Transaction" shall mean an underwritten public offering of
Ordinary Shares of the Company at a public offering price that values the
Company as a whole at no less than US $150,000,000 and yields gross proceeds to
the Company in excess of US$30,000,000.
"Six Month Cliff Vesting Schedule" shall mean (i) an installment of the stock
option award equal to 1/8th of the total award vesting six months from the
Effective date; and (ii) the remaining 7/8ths of the stock option award vesting
in equal monthly installments over the following 3.5 years.
"Subsidiary" means, with respect to any Person, any entity which securities or
other ownership interests having ordinary voting power to elect a majority of
the Board of Directors or other persons performing similar functions are at the
time directly or indirectly owned by such Person.
ARTICLE I. EMPLOYMENT AND TERM
The Company employs Employee and the Employee hereby agrees to such employment
by the Company during the Employment Term to serve as the Chief Financial
Officer of the Company, with the customary duties, authorities and
responsibilities of such position and such other duties, authorities and
responsibilities relative to the Company that may from time to time be delegated
to Employee by the officers of the Company. . Employee shall perform such duties
and responsibilities as are normally related to such position in accordance with
the standards of the industry and any additional duties now or hereafter
assigned to Employee by the Company. Employee shall abide by the Company's
rules, regulations, and practices as they may from time-to-time be adopted or
modified.
1.1 EMPLOYMENT TERM. The Employment Term of this Agreement shall commence
on the Effective Date and shall continue until the earlier of the
Employment Contract Termination
Confidential Copyright(C)2003 Linktone Ltd. Page 4 of 22
<PAGE>
Date or the Employment Final Termination Date, except in the event that
a Change in Control occurs prior to the Employment Contract Termination
Date.
1.2 FULL WORKING TIME. During the Employment Term, the Employee shall
devote her or his attention, experience and efforts during normal
business hours to the proper performance of her or his duties hereunder
and to the business and affairs of the Company.
1.3 If a Change in Control occurs prior to the Employment Contract
Termination Date, then the terms outlined in Section 4.3 shall apply.
ARTICLE 2. COMPENSATION PACKAGE AMOUNT
2.1 COMPENSATION PACKAGE AMOUNT PLUS BENEFITS IN KIND. During the
Employment Term, as compensation for services hereunder, Employee shall
be paid the Compensation Amount; or such greater amount as may from
time to time be approved by the Board of Directors ("Board") (such
salary, as increased from time to time, the "Base Salary"). Base Salary
shall be payable in monthly installments of US$ and Chinese RMB.
The Compensation Package a Amount plus Benefits in Kind shall include
all compensation and Benefits in Kind described in any agreements
signed between Employee and the Company, or its subsidiaries, should be
entailed in the Compensation Package Amount and none of them should be
treated as additional to the Compensation Amount specified in Page 2.
2.2 BENEFITS IN KINDS INCLUDES THE FOLLOWING:
Housing Allowance (Rental, household utilities, telephone)
Family Visits Allowance
Meal Allowance
Taxi Allowance
Child Education Fees
Laundry Allowance
Transportation Allowance
The Employee's benefits in kinds per annum shall be no more than USD
$20,000.
All the allowances will be paid according to actual expense and proper
receipts/invoices will be required.
2.3 INDIVIDUAL INCOME TAX. The Company will pay individual income tax in
respect of the Compensation Package Amount on behalf of the Employee
according to PRC taxation laws and the tax amount will be deducted from
the Employee's monthly base salary.
2.4 BENEFITS. The Employee shall participate in the plans or programs
maintained by the Company for its expatriate employees generally that
provide insurance, medical benefits, retirement benefits, or similar
fringe benefits subject to the terms and eligibility requirements of
such plans. Insurance premium for the employee is up to US$2,000 per
annum
The Employee shall be entitled to four weeks of paid vacation each
calendar year of the
Confidential Copyright(C)2003 Linktone Ltd. Page 5 of 22
<PAGE>
Employment Term, which must be taken in accordance with the Company's
vacation policy then in effect.
2.5 EXPENSES. The Company shall pay or reimburse the Employee for
reasonable business expenses actually incurred or paid by the Employee
during the Employment Term, in the performance of her services
hereunder.
2.6 STOCK OPTION AWARDS.
2.6.1 The Employee will be granted the following Employee Stock
Options during the Employment Term:
2.6.1.1 An Employee Stock Option on 13,894 Ordinary Shares of the
Company, subject to vesting in equal installments on a
quarterly basis over a 4-year vesting period starting Mar
1. 2001, at a strike price per option equal to (i) in the
event of a change in control as indicated in Section
4.3.1.4.2; or otherwise (ii) US$7.20.
2.6.1.2 An Employee Stock Option on 32,000 Ordinary Shares of the
Company, subject to vesting in equal installments on a
semi-annual basis over a 2-year vesting period starting
Jan 1. 2002, at a strike price per option equal to (i) in
the event of a change in control as indicated in Section
4.3.1.4.2; or otherwise (ii) US$5.
2.6.1.3 An Employee Stock Option on the number of Ordinary Shares
of the Company based on the milestones listed below,
subject to the Six Month Cliff Vesting Schedule, Audited
Financial Accounts certified by the auditor of the Company
and calculated on the Calculation Date in good faith by
the Board of Directors of the Company, and at a strike
price per option equal to (i) in the event of a change in
control as indicated in Section 4.3.1.4.2.; or otherwise
(ii) US$5.
<TABLE>
<CAPTION>
MILESTONE NUMBER OF OPTIONS CALCULATION DATE
----------------------------------- ----------------------------------- -------------------
<S> <C> <C>
2003 Gross Profit 4,500 * (Gross Profit- 6,000,000)/ December 31st, 2003
USD 6-9m 3,000,000
(Maximum of 4,500)
2003 Net Profit 4,500 * (Net Profit / 4,000,000 December 31st, 2003
USD 2-4m (Maximum of 4,500)
2003 Binary Deal Incentive for December 31st, 2003
completion of a Strategic Financing 13,500
Deal
</TABLE>
2.6.2 In the event of a Qualified Public Transaction, all stock
options currently held by the employee (including stock earned
to date as a Stock Option Incentive. the Calculation Date for
which shall be the date of the Qualified Public Transaction),
shall accelerate by 1 year
2.6.3 In the event of a Change in Control, the additional terms
outlined in Section 4.3 shall apply.
ARTICLE 3. TERMINATION
Confidential Copyright(C)2003 Linktone Ltd. Page 6 of 22
<PAGE>
3.1 GENERAL.
3.1.1 COMPANY RIGHT TO TERMINATE. The Company shall have the right to
terminate the employment of the Employee at any time with or without
Cause but the relative rights and obligations of the parties in the
event of any such termination or resignation shall be determined under
this Agreement.
3.1.2 Employee Right to Terminate. The Employee shall have the right to
resign for any reason with 30 days notice to the Company, but the
relative rights and obligations of the parties in the event of any such
resignation shall be determined under this agreement ("Employee
Resignation", and the date of notice by the Employee to the Company of
which shall be the "Employee Resignation Date").
3.2 TERMINATION UNDER CERTAIN CIRCUMSTANCES.
3.2.1 TERMINATION WITHOUT SEVERANCE BENEFITS. In the event the
Employee's employment with the Company is terminated prior to
the expiration of the Employment Term by reason of (i) the
Employee's resignation for any or no reason, or (ii) the
Employee's discharge by the Company for Cause or gross
negligence, as determined by a majority of the Board of
Directors and defined herein, this Agreement shall terminate
including, without limitation, the Company's obligations to
provide any compensation, benefits or severance to the
Employee under Article III of this Agreement or otherwise,
other than the Standard Termination Entitlements as defined in
section 4.1.
3.2.2 TERMINATION WITHOUT CAUSE OR RESIGNATION FOR GOOD REASON.
Except in the event of a Change in Control, the Company will
be obligated to provide the Standard Termination Entitlements
as defined in Section 4.1 and Severance Benefits as defined in
Section 4.2 if either the Company terminates the employee's
employment without Cause or the Employee resigns for Good
Reason, subject to the Employee's compliance with Articles 5,
6, 7, 8, 9 and 10:
3.2.3 TERMINATION UPON A CHANGE IN CONTROL. In the event of a Change
of Control, the terms outlined in Section 4.3 shall apply.
3.3 LIQUIDATED DAMAGES. The Company and Employee hereby stipulate that the
damages which may be incurred by the Employee as a consequence of any
such termination of employment are not capable of accurate measurement
as of the date first above written and that the liquidated damages
payments provided for in this Agreement constitute a reasonable
estimate under the circumstances of, and are in full satisfaction of,
all damages sustained as a consequence of any such termination of
employment.
ARTICLE 4. STANDARD TERMINATION ENTITLEMENTS; SEVERANCE BENEFITS.
4.1 STANDARD TERMINATION ENTITLEMENTS. For all purposes of this Agreement,
the Employee's "Standard Termination Entitlements" shall mean and
include, subject to the provisions outlined in Article 7: (a) the
Employee's earned but unpaid compensation (including, without
limitation, salary, bonus, and all other items which constitute wages
under applicable law) as of the date of her termination of employment.
This payment shall
Confidential Copyright(C)2003 Linktone Ltd. Page 7 of 22
<PAGE>
be made at the time and in the manner prescribed by law applicable to
the payment of wages but in no event later than 30 days after the date
of the Employee's termination of employment; (b) the benefits, if any,
due to the Employee (and the Employee's estate, surviving dependents or
her designated beneficiaries) under the employee benefit plans and
programs and compensation plans and programs (including stock option
plans) maintained for the benefit of the employees of the Company; and
(c) all of the Employee's Employee Stock Options that have been deemed
to have vested prior to the Employment Final Termination Date. The time
and manner of payment or other delivery of these benefits and the
recipients of such benefits shall be determined according to the terms
and conditions of the applicable plans and programs.
4.2 SEVERANCE BENEFITS. For all purposes of this Agreement, the Employee's
"Severance Benefits" shall mean and include:
4.2.1 the payment of a lump sum amount equal to 3 multiplied by the
Employee's monthly rate of Compensation Package Amount in
effect immediately prior to her termination of employment; and
4.2.2 for a period of six months after the Employee's termination of
employment, direct payment by the Company to the carrier of
the premiums due for any health insurance continuation
coverage elected by the Employee under the Company group
health plans pursuant to the Consolidated Budget
Reconciliation of 1985; provided, however that in no event
shall any payment be made under this Agreement if it would
result in an excess parachute payment under section 280G of
the Internal Revenue Code of 1986.
4.3 CHANGE IN CONTROL
4.3.1 CHANGE IN CONTROL ADJUSTMENTS AND COMPENSATION. The "Change in
Control Adjustments and Compensation" shall mean the
following:
4.3.1.1 CHANGE IN CONTROL EMPLOYMENT TERM. If a Change in Control
occurs prior to the Employment Contract Termination Date
then the Employment Term shall continue until the earlier
of the Employment Final Termination Date or the Employment
Change of Control Termination Date.
4.3.1.2 CHANGE IN CONTROL SEVERANCE PAYMENT AMOUNT. If a Change in
Control occurs prior to the Employment Contract
Termination Date and the Company terminates the employee's
employment without Cause or the Employee resigns for Good
Reason prior to the Change in Control Audit Date, then the
Employee will be entitled to a payment equal to the
greater of 6 times the Monthly Rate of Compensation OR 12
months salary less any compensation paid to the employee
during the period between the Change in Control and
Employment Final Termination Date and the Company shall be
obligated to provide the Standard Termination Entitlements
as defined in Section 4.1 subject to the Employee's
compliance with Articles 5,6,7,8,9 and 10. If a Change in
Control occurs prior to the Employment Contract
Termination Date and the Company terminates the employee's
employment without Cause or the Employee resigns for Good
Reason after the Change in Control Audit Date, then the
severance payment in Section 4.2.1 shall apply.
Confidential Copyright(C)2003 Linktone Ltd. Page 8 of 22
<PAGE>
4.3.1.3 CHANGE IN CONTROL HEALTH AND LIFE INSURANCE BENEFITS. If a
Change in Control occurs prior to the Employment Contract
Termination Date then the Employee will be entitled to
Company-paid contributions for health and life insurance
premiums for the greater of six months or the number of
months between the Employment Final Termination Date and
the first anniversary of the Change in Control.
4.3.1.4 CHANGE IN CONTROL EMPLOYEE STOCK OPTION ENTITLEMENTS. If a
Change in Control occurs prior to the Employment Contract
Termination Date then the Employee Stock Options will be
modified to include the following provisions. In the event
that the following terms are in breach of the laws of the
People's Republic of China or any other jurisdiction, or
if the Board of Directors prior a Change of Control
decides to terminate or replace the Employee Stock Options
or any related plans, or in the event of a dispute, the
Company and Employee agree to effect whatever transaction
or agreement necessary to preserve the intent and economic
value represented by the terms outlined in this Section
4.3.1.4.
4.3.1.4.1 VESTING OF EMPLOYEE STOCK OPTION AWARDS. The number of
Employee Stock Options listed in Section 2.6.1.1. and
the maximum number of Employee Stock Options listed in
Section 2.6.1.2. shall be deemed to have vested in
full upon a Change of Control, the aggregate number of
which shall be the "Total Stock Option Award", subject
to the Strike Adjustment and Exercise Provisions
outlined in Section 4.3.1.4.3.
4.3.1.4.2 ADJUSTMENT TO THE EXERCISE AND STRIKE PROVISIONS OF
EMPLOYEE STOCK OPTIONS. If a Change in Control occurs
prior to the Employment Contract Termination Date, the
strike price and exercise date and ability to exercise
Employee Stock Options shall be as follows:
4.3.1.4.2.1 NO EMPLOYEE RESIGNATION PRIOR TO CHANGE IN CONTROL
AUDIT DATE. If the Employment Final Termination
Date is after Change in Control Audit Date, and
the Employee's Employment has not been terminated
under the provision outlined in Section 3.1.2,
then the Employee shall have the right to exercise
100% of the Employee Stock Options at a Strike
Price of US$5 per Share Option on the Change in
Control Stock Option Exercise Date. If a Change in
Control is structured such that there are 2 Change
in Control Stock Option Exercise Dates, then on
the second Change in Control Stock Option Exercise
Date, the Employee shall have the right to
exercise 80% of the Employee Stock Options at a
Strike Price of US$5 per Share Option and the
Employee shall have the right to exercise the
remaining 20% of the Employee Stock Options at a
Strike Price of US$5 per Share Option 6 months
after the Change in Control Audit Date.
4.3.1.4.2.2 EMPLOYEE RESIGNATION PRIOR TO CHANGE IN CONTROL
AUDIT DATE. If the Employee's Employment is
terminated under the provision outlined in Section
3.1.2 prior to Change in Control Audit Date, then
the following shall apply, subject to the Escrow
Confidential Copyright(C)2003 Linktone Ltd. Page 9 of 22
<PAGE>
Provisions outlined in Section 4.3.1.4.3.:
4.3.1.4.2.2.1 the Employee shall have the right to exercise
the following number of Employee Stock Options
at a Strike Price of US$5 per on the Change in
Control Stock Option Exercise Date: The Change
in Control Percentage of Stock Options of the
Total Stock Option Award, plus an additional
number of options equal to the Change in
Control Remaining Percentage of Stock Options
multiplied by percentage represented by the
number of days between the Change of Control
Date and the Employment Resignation Date
divided by the total number of days between
the Change of Control Date and Change in
Control Audit Date, (the number of Stock
Options referred to herein as the "Number of
Stock Options Entitled to at Original Strike
upon Change of Control and Early
Resignation"), and
4.3.1.4.2.2.2 the Employee shall have the right, but not the
obligation, to exercise the following number
of Employee Stock Options at a Strike Price of
US$9999 per share in full on the Change in
Control Stock Option Exercise Date: The Change
in Control Percentage of Stock Options of the
Total Stock Option Award minus the Number of
Stock Options Entitled to at Original Strike
upon Change of Control and Early Resignation.
4.3.1.4.3 ESCROW PROVISIONS: In the event that an Employee
exercises any options after the date of a Change of
Control and prior to the Change in Control Audit Date,
the proceeds resulting from the exercise of such
options shall be held in an escrow account at a
reputable law firm appointed by the Board of Directors
with the approval of the CEO of the Company for the
benefit of the Employee until no earlier than Change
in Control Audit Date. All related expenses derived
from the Escrow Provisions shall be paid for by the
Company.
4.3.2 DEFINITION. Change in Control shall mean any one of the
following:
4.3.2.1 the consummation of a reorganization, merger or
consolidation of the Company with one or more other
persons, other than a transaction following which:
4.3.2.2 at least 49% of the equity ownership interests of the
entity resulting from such transaction are
beneficially owned (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934,
as amended ("Exchange Act")) in substantially the same
relative proportions by persons who, immediately prior
to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange
Act) at least 100% of the outstanding equity ownership
interests in the Company; and
4.3.2.3 at least 49% of the securities entitled to vote
generally in the election of
Confidential Copyright(C)2003 Linktone Ltd. Page 10 of 22
<PAGE>
directors of the entity resulting from such
transaction are beneficially owned (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) in
substantially the same relative proportions by persons
who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) at least 100% of
the securities entitled to vote generally in the
election of directors of the Company.
4.3.2.4 a complete liquidation or dissolution of the Company;
or
4.3.2.5 the occurrence of any event if, immediately following
such event, at least 49% of the members of the Board
of Directors of the Company do not belong to any of
the following groups: (a) individuals who were members
of the Board of Directors of the Company on the date
hereof; or (b) individuals who first became members of
the Board of Directors of the Company after the date
hereof either: (i) upon election to serve as a member
of the Board of Directors of the Company by
affirmative vote of three-quarters of the members of
such board, or of a nominating committee thereof, in
office at the time of such first election; or (ii)
upon election by the stockholders of the Company to
serve as a member of such board, but only if nominated
for election by affirmative vote of three-quarters of
the members of the Board of Directors of the Company,
or of a nominating committee thereof, in office at the
time of such first nomination; provided, however, that
such individual's election or nomination did not
result from an actual or threatened contest for the
election of directors or other actual or threatened
solicitation of proxies or consents other than by or
on behalf of the Board of Directors of the Company.
4.3.2.6 In no event, however, shall a Change in Control be
deemed to have occurred as a result of (i) any
acquisition of securities or assets of the Company or
any subsidiary thereof, by the Company or any
subsidiary thereof, or by any employee benefit plan
maintained by any of in a transaction consummated
prior to June 30, 2000 or (ii) any Qualified Public
Transaction of the securities of the Company. For
purposes of this section, the term "person" shall have
the meaning assigned to it under sections 13(d)(3) or
14(d)(2) of the Exchange Act.
ARTICLE 5. PROPRIETARY INFORMATION
The Employee shall enter into a Key Employee Invention Assignment and
Confidentiality Agreement attached herein as Exhibit A and a Non-Compete
Agreement attached herein as Exhibit B. The Employee agrees that the provisions
of this Article 5, Exhibit A and Exhibit B are necessary to protect the
interests of the Company or its Subsidiaries or Affiliates and are reasonable
and valid in geographical and temporal scope and in all other respects. If any
court determines that the provisions of this Article 5 or any part thereof are
unenforceable because of the duration or geographical scope of such provision,
such court will have the power to reduce the duration or scope of such
provision, as the case may be, and, in its reduced form, such provision will be
enforceable.
ARTICLE 6. NON-COMPETITION AND NON-SOLICITATION
Confidential Copyright(C)2003 Linktone Ltd. Page 11 of 22
<PAGE>
The Employee shall enter into a Key Employee Invention Assignment and
Confidentiality Agreement attached herein as Exhibit A and a Non-Compete
Agreement attached herein as Exhibit B. The Employee agrees that the provisions
of this Article 5, Exhibit A and Exhibit B are necessary to protect the
interests of the Company or its Subsidiaries or Affiliates and are reasonable
and valid in geographical and temporal scope and in all other respects. If any
court determines that the provisions of this Article 6 or any part thereof are
unenforceable because of the duration or geographical scope of such provision,
such court will have the power to reduce the duration or scope of such
provision, as the case may be, and, in its reduced form, such provision will be
enforceable.
ARTICLE 7. THIS ARTICLE INTENTIONALLY OMITTED
ARTICE 8. REMEDIES
8.1 REMEDIES FOR CERTAIN BREACHES. If the Employee commits a breach, or
threatens to commit a breach, of any of the provisions of Articles 5,
6, or 7 hereof, the Company shall have the following rights and
remedies: forfeiture of stock options, forfeiture of any severance or
other termination benefits and damages associated with the Breach, each
of which rights and remedies shall be independent of the others, and
shall be severally enforceable, and all of which rights and remedies
shall be in addition to, and not in lieu of, any other rights and
remedies available under law or in equity to the Company, the right and
remedy to have the provisions of Articles 5, 6, and/or 7 enforced by
any court in the State of New York, USA, it being acknowledged and
agreed that any breach or threatened breach of Articles 5,6, and/or 7
hereof by the Employee will cause irreparable injury to the Company and
that money damages will not provide an adequate remedy to the Company.
ARTICLE 9. DISPUTE RESOLUTION
9.1 DISPUTE RESOLUTION. Any dispute, controversy or claim, at any time
arising out of this or relating to this Agreement, or the breach,
termination or invalidity thereof (other than any dispute, controversy
or claim pursuant to Articles 5,6, and/or 7 hereof, which may, at the
option of the Company, be submitted to any court having jurisdiction),
shall be referred to the Hong Kong courts for final and binding
arbitration. Any arbitral award may be enforced through a judgment
rendered in any court of competent jurisdiction.
ARTICLE 10. GENERAL PROVISIONS
10.1 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly received if so given) by hand
delivery, telegram, telex, or telecopy, or facsimile transmission, or
by mail (registered or certified mail, postage prepaid, return receipt
requested) or by any courier service, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties
at the following addresses or to such other address as the party to
whom notice is given may have previously furnished to the other parties
hereto in writing in the manner set forth above:
Confidential Copyright(C)2003 Linktone Ltd. Page 12 of 22
<PAGE>
If to the Employee: c/o Linktone Ltd
Harbour Ring Plaza
18 Xi Zang Zhong Lu
Shanghai PRC 200001
If to the Company: Linktone Ltd
Harbour Ring Plaza
18 Xi Zang Zhong Lu
Shanghai PRC 200001
10.2 ENTIRE AGREEMENT. This Agreement, taken together with Exhibit A and
Exhibit B, shall constitute the entire agreement between the Employee
and the Company with respect to the Company's employment of the
Employee and supersedes any and all prior agreements and
understandings, including but not limited to the Original Employment
Agreements, written or oral, with respect thereto.
10.3 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only by an instrument in writing and signed by the
party against whom such amendment or waiver is sought to be enforced.
10.4 SUCCESSORS AND ASSIGNS. The personal services of the Employee are the
subject of this Agreement and no part of the Employee's or the
Company's rights or obligations hereunder may be assigned, transferred,
pledged or encumbered by the Employee or the Company. This Agreement
shall inure to the benefit of, and be binding upon (a) the parties
hereto, (b) the heirs, administrators, executors and personal
representatives of the Employee and (c) the successors and assigns of
the Company as provided herein.
10.5 GOVERNING LAW AND VENUE. This Agreement, including the validity hereof
and the rights and obligations of the parties hereunder, and all
amendments and supplements hereof and all waivers and consents
hereunder, shall be construed in accordance with and governed by the
laws of the State of New York, USA, without giving effect to any
conflicts of law provisions or rule, that would cause the application
of the laws of any other jurisdiction .
10.6 SEVERABILITY. If any provisions of this Agreement, as applied to any
part or to any circumstance, shall be adjudged by a court to be invalid
or unenforceable, the same shall in no way affect any other provision
of this Agreement, the application of such provision in any other
circumstances or the validity or enforceability of this Agreement.
10.7 SURVIVAL. The rights and obligations of the Company and Employee
pursuant to Articles 3, 4, 5, 6, 7, 8 and 9 shall survive the
termination of the Employee's employment with the Company and the
expiration of the Employment Term.
10.8 CAPTIONS. The headings and captions used in this Agreement are used for
convenience only and are not to be considered in construing or
interpreting this Agreement.
10.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Confidential Copyright(C)2003 Linktone Ltd. Page 13 of 22
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
EMPLOYEE
By: /s/ Mark Begert
------------------------------------
Mark Begert
Title: Chief Financial Officer
COMPANY
By: /s/ Jun Wu
------------------------------------
Name: Jun Wu
Title: Chairman of the Board
ATTEST
By: /s/ Guangxin Li
------------------------------------
Name: Guangxin Li (Michael)
Address: 18 Xi Zang Zhong Lu
Shanghai, PRC 200001
Confidential Copyright(C)2003 Linktone Ltd. Page 14 of 22
<PAGE>
Exhibit A
Key Employee Invention Assignment and Confidentiality Agreement
In consideration of, and as a condition of my continued employment with
Linktone Ltd., a Cayman Islands company (as contemplated in the employment
agreement between Linktone Ltd. and me (the "Agreement")), or with any of its
subsidiaries, including, without limitation, Shanghai Linktone Consulting Co.,
Ltd., Shanghai Huitong Information Co Ltd., Shanghai Weilan Computer Co. Ltd.
and Shanghai Unilink Computer Co. Ltd. (collectively, the "Company"), I hereby
represent to, and agree with, the Company as follows:
I hereby represent to, and agree with the Company as follows:
1. Purpose of Agreement. I understand that the Company is engaged in a
continuous program of research, development, production and marketing
in connection with its business and that it is critical for the Company
to preserve and protect its Proprietary Information (as defined in
Section 3 below), its rights in Inventions (as defined in Section 2
below) and in any other intellectual property rights. Accordingly, I am
entering into this Employee Invention Assignment and Confidentiality
Agreement (this "Agreement") as a condition of my continued employment
with the Company, whether or not I am expected to create inventions of
value for the Company.
2. Disclosure of Inventions. I will promptly disclose in confidence to the
Company all inventions, improvements, designs, original works of
authorship, derivative works, formulas, processes, compositions of
matter, techniques, know-how, computer software programs, databases,
mask works and trade secrets (the "Inventions") that I make or conceive
or first reduce to practice or create, either alone or jointly with
others, during the period of my employment, whether or not in the
course of my employment, and whether or not such Inventions are
patentable, copyrightable or protectible as trade secrets or mask
works.
3. Proprietary Information. I understand that my employment by the Company
creates a relationship of confidence and trust with respect to any
information of a confidential or secret nature that may be disclosed to
me by the Company that relates to the business of the Company or to the
business of any parent, subsidiary, affiliate, customer or supplier of
the Company or any other party with whom the Company agrees to hold
information of such party in confidence (the "Proprietary
Information"). Such Proprietary Information includes but is not limited
to any confidential and/or proprietary knowledge, data or information,
any past, present or future Inventions, marketing plans, product plans,
business strategies, financial information (including budgets and
unpublished financial statements), licenses, prices and costs,
forecasts, personal information, suppliers, customers and lists of
either, information, trade secrets, patents, mask works, ideas,
confidential knowledge, data or other proprietary information relating
to new and existing products, processes, know-how, designs, formulas,
developmental or experimental work, improvements, discoveries, designs
and techniques, computer programs, data bases, other original works of
authorship, employee information including the skills and compensation
of other employees of Company, or other subject matter pertaining to
any business of Company. I agree that Company may from time to time
create a list of specific Proprietary Information and I will
acknowledge any such lists in writing upon request.
4. Confidentiality. At all times, both during my employment and after its
termination, I will
Confidential Copyright(C)2003 Linktone Ltd. Page 15 of 22
<PAGE>
keep and hold all such Proprietary Information in strict confidence and
trust. I will not use or disclose any Proprietary Information without
the prior written consent of the Company, except as may be necessary to
perform my duties as an employee of the Company for the benefit of the
Company. Upon termination of my employment with the Company, I will
promptly deliver to the Company all documents and materials of any
nature pertaining to my work with the Company. I will not take with me
any documents or materials or copies thereof containing any Proprietary
Information.
5. Work for Hire; Assignment of Inventions. I acknowledge and agree that
any copyrightable works prepared by me either alone or jointly with
others, within the scope of my employment are "works for hire" under
the United States Copyright Act and that the Company will be considered
the author and owner of such copyrightable works. In the event that any
such copyrightable works are not deemed to be "works made for hire," I
hereby irrevocably assign all of my right, title and interest in and to
such copyrightable works to Company. I agree that all Inventions that
(i) are developed using equipment, supplies, facilities or trade
secrets of the Company, (ii) result from work performed by me for the
Company, or (iii) relate to the Company's business or current or
anticipated research and development (collectively, "Company
Inventions"), will be the sole and exclusive property of the Company
and are hereby irrevocably assigned by me to the Company.
6. Assignment of Other Rights. In addition to the foregoing assignment of
Company Inventions to the Company, I hereby irrevocably transfer and
assign to the Company: (i) all worldwide patents, patent applications,
copyrights, mask works, trade secrets and other intellectual property
rights in any Company Invention; and (ii) any and all Moral Rights (as
defined below) that I may have in or with respect to any Company
Invention. I also hereby forever waive and agree never to assert any
and all Moral Rights I may have in or with respect to any Company
Invention, even after termination of my work on behalf of the Company.
"Moral Rights" mean any rights to claim authorship of a Company
Invention, to object to or prevent the modification of any Company
Invention, or to withdraw from circulation or control the publication
or distribution of any Company Invention, and any similar right,
existing under judicial or statutory law of any country in the world,
or under any treaty, regardless of whether or not such right is
denominated or generally referred to as a "moral right".
7. Assistance. For no consideration in addition to my salary or wages
during my employment, I agree to assist the Company in every proper way
to obtain for the Company and enforce patents, copyrights, mask work
rights, trade secret rights and other legal protections for the
Company's Inventions in any and all countries. I will execute any
documents that the Company may reasonably request for use in obtaining
or enforcing such patents, copyrights, mask work rights, trade secrets
and other legal protections. My obligations under this paragraph will
continue beyond the termination of my employment with the Company,
provided that the Company will compensate me at a reasonable rate after
such termination for time or expenses actually spent by me at the
Company's request on such assistance. I appoint the Secretary of the
Company as my attorney-in-fact to execute documents on my behalf for
this purpose. I hereby waive and quitclaim to Company any and all
claims, of any nature whatsoever, which I now or may hereafter have for
infringement of any proprietary rights assigned hereunder to Company.
8. No Breach of Prior Agreement. I represent that my performance of all
the terms of this Agreement and my duties as an employee of the Company
will not breach any invention
Confidential Copyright(C)2003 Linktone Ltd. Page 16 of 22
<PAGE>
assignment, proprietary information, confidentiality or similar
agreement with any former employer or other party. I represent that I
did not bring with me to the Company or use in the performance of my
duties for the Company any documents or materials or intangibles of a
former employer or third party that are not generally available to the
public or have not been legally transferred to the Company.
9. Efforts; Duty Not to Compete. I understand that my employment with the
Company requires my undivided attention and effort during normal
business hours. While I am employed by the Company, I will not, without
the Company's express prior written consent, provide services to, or
assist in any manner, any business or third party which compete with
the current or planned business of the Company.
10. Notification. I hereby authorize the Company to notify my actual or
future employers of the terms of this Agreement and my responsibilities
hereunder.
11. Non-Solicitation of Employees/Consultants. During my employment with
the Company and for a period of one (1) year thereafter, I will not
directly or indirectly solicit away employees or consultants of the
Company for my own benefit or for the benefit of any other person or
entity. "Solicit" shall not include the placement of an advertisement
in a publication of general circulation.
12. Non-Solicitation of Suppliers/Customers. During my employment with the
Company and after termination of my employment, I will not directly or
indirectly solicit or take away suppliers or customers of the Company
if the identity of the supplier or customer or information about the
supplier or customer relationship is a trade secret or is otherwise
deemed confidential information within the meaning of Chinese law.
13. Injunctive Relief. I understand that in the event of a breach or
threatened breach of this Agreement by me the Company may suffer
irreparable harm and will therefore be entitled to injunctive relief to
enforce this Agreement, without prejudice to any other rights or
remedies that Company may have for a breach of this Agreement.
14. Governing Law; Severability. This Agreement will be governed by and
construed in accordance with the laws of New York, without giving
effect to that body of laws pertaining to conflict of laws. If any
provision of this Agreement is determined by any court or arbitrator of
competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such provision will be enforced to the maximum extent possible
given the intent of the parties hereto. If such clause or provision
cannot be so enforced, such provision shall be stricken from this
Agreement and the remainder of this Agreement shall be enforced as if
such invalid, illegal or unenforceable clause or provision had (to the
extent not enforceable) never been contained in this Agreement.
Notwithstanding the forgoing, if the value of this Agreement based upon
the substantial benefit of the bargain for any party is materially
impaired, which determination as made by the presiding court or
arbitrator of competent jurisdiction shall be binding, then this
Agreement will not be enforceable against such affected party and both
parties agree to renegotiate such provision(s) in good faith.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be
deemed an original, and all of which together shall constitute one and
the same agreement.
16. Titles and Headings. The titles, captions and headings of this
Agreement are included for
Confidential Copyright(C)2003 Linktone Ltd. Page 17 of 22
<PAGE>
ease of reference only and will be disregarded in interpreting or
construing this Agreement. Unless otherwise specifically stated, all
references herein to "sections" and "exhibits" will mean "sections" and
"exhibits" to this Agreement.
17. Entire Agreement. This Agreement and the documents referred to herein
constitute the entire agreement and understanding of the parties with
respect to the subject matter of this Agreement, and supersede all
prior understandings and agreements, whether oral or written, between
or among the parties hereto with respect to the specific subject matter
hereof.
18. Amendment and Waivers. This Agreement may be amended only by a written
agreement executed by each of the parties hereto. No amendment of or
waiver of, or modification of any obligation under this Agreement will
be enforceable unless set forth in a writing signed by the party
against which enforcement is sought. Any amendment effected in
accordance with this section will be binding upon all parties hereto
and each of their respective successors and assigns. No delay or
failure to require performance of any provision of this Agreement shall
constitute a waiver of that provision as to that or any other instance.
No waiver granted under this Agreement as to any one provision herein
shall constitute a subsequent waiver of such provision or of any other
provision herein, nor shall it constitute the waiver of any performance
other than the actual performance specifically waived.
19. Successors and Assigns; Assignment. Except as otherwise provided in
this Agreement, this Agreement, and the rights and obligations of the
parties hereunder, will be binding upon and inure to the benefit of
their respective successors, assigns, heirs, executors, administrators
and legal representatives. The Company may assign any of its rights and
obligations under this Agreement. No other party to this Agreement may
assign, whether voluntarily or by operation of law, any of its rights
and obligations under this Agreement, except with the prior written
consent of the Company.
20. Further Assurances. The parties agree to execute such further documents
and instruments and to take such further actions as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
21. Not Employment Contract. I understand that this Agreement does not
constitute a contract of employment or obligate the Company to employ
me for any stated period of time.
Confidential Copyright(C)2003 Linktone Ltd. Page 18 of 22
<PAGE>
This Agreement shall be effective as of Effective Date.
COMPANY EMPLOYEE:
By: /s/ Jun Wu /s/ Mark Begert
--------------------------- ------------------------------------
Jun Wu, Chairman Name: Mark Begert
Board of Directors Position: Chief Financial Officer
Confidential Copyright(C)2003 Linktone Ltd. Page 19 of 22
<PAGE>
Exhibit B
Non Compete Agreement
Dear Mark Begert,
As an employee of Linktone Ltd., a Cayman Islands company (as
contemplated in the employment agreement between Linktone Ltd. and me (the
"Agreement")), or with any of its subsidiaries, including, without limitation,
Shanghai Linktone Consulting Co., Ltd., Shanghai Huitong Information Co Ltd.,
Shanghai Weilan Computer Co. Ltd. and Shanghai Unilink Computer Co. Ltd.,
(collectively, the "Company"), you must execute and deliver a covenant not to
compete with the Company during your employment and for 12 months thereafter.
The terms and conditions set forth below, as applicable, shall, upon your
acceptance thereof, become an agreement between you and the Company.
COVENANT NOT TO COMPETE
It is hereby agreed that, from the date hereof and so long as you are
an employee, consultant or serve in a similar capacity with the Company or any
of its subsidiaries, you shall devote substantially all of your professional
time to the Company and its subsidiaries and shall not participate in any manner
in the management or operation of any business other than that of the Company
and its subsidiaries or serving on the board of directors of the Company or any
of its subsidiaries.
If your are no longer employed by or acting as a consultant for the
Company or its subsidiaries, you shall not be employed by or participate in any
manner in the management or operation of any business or entity that is or may
reasonably become a competitor of the Company or its subsidiaries until 12
months after the date of termination of employment with the Company or any
subsidiary.
COMPANY RIGHTS IF YOU VIOLATE THIS AGREEMENT
In the event that you do not comply with the terms of this Agreement,
any profit sharing or stock options to which you would otherwise be entitled
will be forfeited.
In the event you do not comply with the terms of this Agreement, we
also reserve the right to discharge you as an employee. Furthermore, we reserve
the right to recover monetary damages from you, and we may also recover punitive
damages to the extent permitted by law. In the event that monetary damages are
an inadequate remedy for any harm suffered by us as a result of a breach of this
Agreement by you, we may also seek other relief, including an order of specific
performance or injunctive relief. You will not seek, and you agree to waive any
requirement for, the securing or posting of a bond in connection with our
seeking or obtaining such relief.
Confidential Copyright(C)2003 Linktone Ltd. Page 20 of 22
<PAGE>
You further agree to indemnify and hold us harmless from any damages,
losses, costs or liabilities (including legal fees and the costs of enforcing
this indemnity agreement) arising out of or resulting from your failure to abide
by the terms of this Agreement.
AT-WILL EMPLOYMENT
You agree and understand that, except as may be provided in any
employment agreement between you and the Company, your employment with the
Company is "at-will," meaning that it is not for any specified period of time
and can be terminated by you or by the Company at any time, with or without
advance notice, and for any or no particular reason or cause. You agree and
understand that it also means that job duties, title and responsibility and
reporting level, compensation and benefits, as well as the Company's personnel
policies and procedures, may be changed at any time at-will by the Company. You
understand and agree that nothing about the fact or the content of this
Agreement is intended to, nor should be construed to, alter the at-will nature
of your employment with the Company. You also understand and agree that the
at-will nature of employment with the Company can only be changed by the Chief
Executive Officer or President of the Company in an express writing signed and
dated by him or her and by you.
ACKNOWLEDGMENT
You agree that, in light of the substantial benefits you will receive
as our employee, the terms contained in this Agreement are necessary and
reasonable in all respects and that the restrictions imposed on you are
reasonable and necessary to protect our legitimate business interests.
Additionally, you hereby acknowledge and agree that the restrictions imposed on
you by this Agreement will not prevent you from obtaining employment in your
field of expertise or cause you undue hardship.
GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the New York, without regard to any conflicts of laws provision
thereof.
By accepting this Agreement, you acknowledge that, given the nature of
the Company's business, the provisions contained in this Agreement contain
reasonable limitations as to time, geographical area and scope of activity to be
restrained, and do not impose a greater restraint than is necessary to protect
and preserve the Company and to protect the Company's legitimate interests. If,
however, the provisions of this Agreement are determined by any court of
competent jurisdiction or any arbitrator to be unenforceable by reason of its
extending for too long a period of time or over too large a geographic area or
by reason of its being too extensive in any other respect, or for any other
reason, it will be interpreted to extend only over the longest period of time
for which it may be enforceable and over the largest geographical area as to
which it may be enforceable and to the maximum extent in all other aspects as to
which it may be enforceable, all as determined by such court or arbitrator in
such action.
Please confirm your agreement with the foregoing by signing and
returning directly to the undersigned the duplicate copy of this letter enclosed
herewith.
Confidential Copyright(C)2003 Linktone Ltd. Page 21 of 22
<PAGE>
Very truly yours,
COMPANY
By: /s/ Jun Wu
------------------------------------
Jun Wu, Chairman
Board of Directors
Accepted and Agreed to as
of the date first above written:
/s/ Mark Begert
----------------------------------
Name and Signature of Employee
Confidential Copyright(C)2003 Linktone Ltd. Page 22 of 22