EMPLOYMENT AGREEMENT
The effective date of this Agreement by and between TOPTEAM, INC. a
Delaware corporation (the "Company"), and XXXXXX XXXXXX (the "Officer") shall be
the effective date of the acquisition of Full Moon Interactive Group, Inc. by
TopTeam, Inc.
WITNESSETH
WHEREAS, the Company desires to employ Officer, and Officer desires to
accept such employment with the Company upon the terms and conditions set forth
herein,
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the Company and the Officer agree as follows:
AGREEMENT
1. EMPLOYMENT AND DUTIES.
The Company hereby employs Officer as Chief Financial Officer and
Officer hereby accepts employment by the Company upon the terms and conditions
set forth herein, with the authority and responsibilities customarily afforded
the chief financial officer of a company. Officer shall faithfully and
diligently manage and direct Company's financial and accounting activities, in
accordance with the Company's bylaws, and do and perform all acts in the
ordinary course of the Company's business (with such limits as the Board of
Directors of the Company may prescribe) necessary and conducive to the Company's
best interests. Officer shall devote full time, energy, and skill to the
business of the Company and to the promotion of the Company's best interests,
except for vacations and absences made necessary because of illness or personal
matters. Officer shall report to the Board or a designated officer of the
Company. The primary place of employment shall be at the Company's principal
offices in Los Angeles, California.
2. TERM.
The term of this Agreement shall commence as of the effective date of
the roll-up transaction between the Company and Full Moon Interactive Group,
Inc. and shall expire five years hence, unless sooner terminated as hereinafter
set forth (the "Term"). This Agreement will renew for an additional two years if
the Company's Board of Directors does not advise Officer in writing of its
intent to renew six (6) months prior to the expiration of the Term.
3. COMPENSATION.
Subject to the provisions of Paragraphs 4 and 5 of this Agreement, the
Company shall pay Officer for all services to be performed by Officer during the
Term of this Agreement the following compensation:
(a) BASE SALARY. The Company shall pay Officer a base salary at the
rate of no less than $125,000 per annum ("Base Salary"), payable in periodic
payments in accordance with the Company's practices for other executive,
managerial, and supervisory employees, as such practices may be determined from
time to time. The Company's Board of Directors will review such Base Salary
annually and, in its discretion, may grant increases thereof based upon
Officer's performance;
(b) ANNUAL CASH BONUS. The Officer shall be entitled to receive an
Annual Cash Performance Bonus of up to 25% of his then current gross annual
salary upon the achievement of reasonable corporate performance targets
established by the Board of Directors ("Annual Cash Performance Bonus"). For the
initial year, the Board of Directors shall provide in writing to the Officer
specific performance targets prior to the effective date of this Agreement. In
subsequent years and no later than sixty (60) days following the Company's
fiscal year end, the Annual Cash Performance Bonus will be established in
writing by the Board at an amount no less than the initial Annual Cash
Performance Bonus, provided the corresponding performance targets are achieved;
(c) STOCK OPTIONS. Upon the execution of this Agreement, the Company
shall grant Officer an option pursuant to the Company's 1999 Stock Plan (a copy
of which is attached hereto as Exhibit A) to purchase a total of 125,000 shares
of common stock at an exercise price of $7.50 per share with 25,000 shares being
immediately exercisable upon execution of this Agreement and the remaining
amounts becoming exercisable in four (4) equal, annual installment amounts on
the anniversary date hereof. In the event of a Change of Control as the term is
defined in Paragraph 4 or an Involuntary Termination, all of Officer's unvested
options will accelerate and become immediately exercisable. A copy of the form
of option agreement containing the terms and conditions of the stock options
granted hereunder is attached hereto as Exhibit B.
(d) WITHHOLDING. All such payments will be subject to such deductions
as may be required to be made pursuant to law, government regulations, or order,
or by agreement with, or consent of, the Officer;
(e) BENEFITS. Officer shall be entitled to participate in such life
insurance, medical, dental, long-term disability, pension, and retirement plans,
and other programs as may be approved from time to time by the Company for the
benefit of its officers. Officer also shall be entitled to no less than three
weeks of vacation with pay during each consecutive 12-month period during the
term of Officer's employment hereunder, to be taken at such times and in such
periods as Officer and the Company shall mutually determine and provided that no
vacation time shall interfere with the duties required to be rendered by Officer
hereunder; and
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(f) BUSINESS EXPENSES. The Company agrees that during the term of this
Agreement Officer shall be entitled to reimbursement by the Company for all
reasonable expenses actually and necessarily incurred by Officer on the
Company's behalf in the course of Officer's employment hereunder, for which
Officer shall submit substantiation in a form satisfactory to the Company and
which are approved by the Company in its reasonable discretion.
4. TERMINATION.
(a) Officer's employment with the Company may be terminated, subject to
the notification provisions set forth in Paragraph 4(b) below, as follows:
(i) Termination for Cause, which means
(1) Officer willfully and unreasonably refuses to
perform services hereunder;
(2) Officer materially breaches Paragraph 6 of this
Agreement;
(3) Officer engages in acts of dishonesty or fraud in
connection with the services performed hereunder
that have a material adverse effect on the Company;
or
(4) Officer engages in other serious misconduct of such
a nature that the continued employment of Officer
may, in the reasonable discretion of the Board of
Directors, be expected to materially and adversely
affect the business or properties of the Company,
including acts which violate securities laws,
misrepresentation of material facts to the Board or
the shareholders, or criminal acts.
(ii) Involuntary Termination, which is defined as termination
by the Company of Officer's employment, other than in a
Termination for Cause, Voluntary Termination, a
discontinuation of employment in accordance with Paragraph
5 or due to death or retirement on or after age 65.
Involuntary Termination as defined herein shall include a
termination by Officer for Good Reason; or
(iii) Voluntary Termination, which means termination by Officer
of Officer's employment by the Company.
(b) TERMINATION PAYMENTS. In the event of Officer's termination,
severance payments ("Severance Amount Payments") shall be made
as follows:
(i) TERMINATION FOR CAUSE. If Officer's employment with the
Company is Terminated for Cause, all accrued salary and
vacation as of the date of Termination for Cause, shall be
paid to Officer. If the Company determines that a reason
constituting cause for termination under clauses
4(a)(i)(1)-(4) has occurred, it shall give Officer written
notice thereof at least 30 days prior to the proposed date
of termination of employment. If Officer undertakes the
necessary steps to remedy the condition constituting cause
within 30 days after the receipt of such notice, then a
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reason for termination for cause shall be deemed not to
have occurred. If Officer shall not remedy the condition
constituting cause within such time period, then
Termination for Cause shall occur on the date set forth in
the notice from the Company.
(ii) VOLUNTARY TERMINATION. In the event of Voluntary
Termination during the term of Officer's employment
hereunder, Officer shall immediately be paid all accrued
salary and vacation pay as of the date of termination, but
no other compensation or reimbursement of any kind,
including without limitation, severance compensation.
(iii) INVOLUNTARY TERMINATION. In the event of an Involuntary
Termination including death or retirement on or after age
65, during the term of Officer's employment hereunder and
except as provided in Paragraph 5, the Company shall pay
the Officer, or a designated beneficiary in the event of
Officer's death, or if none, to Officer's then living
spouse, or if none, to the duly appointed personal
representative of Officer's estate, an amount equal to:
1) the then current Base Salary for the duration of
the Term set forth in Paragraph 3(a) herein on
the effective date of the termination, but in no
event, less than an amount equal to two years of
the then current Base Salary, plus
2) all accrued salary and vacation pay
3) the then maximum Annual Cash Performance Bonus
for the then current fiscal year set in
accordance with Paragraph 3(b)
4) and benefits for the later of the duration of the
Term and two years from the date of termination
If the Officer determines that a reason constituting
termination for Good Reason as defined in Paragraph 4(c)
below has occurred, he shall provide the Company written
notice thereof at least 30 days prior to the proposed date
of termination of employment. If the Company shall take
the necessary steps to remedy the condition constituting
Good Reason(s) for termination within 30 days after the
receipt of such notice, then a reason for termination for
Good Reason shall be deemed not to have occurred. If the
Company shall not remedy the condition constituting Good
Reason within such time period, then Termination for Good
Reason shall occur on the date set forth in the notice
from the Officer.
(c) DEFINITIONS. All the terms defined in this paragraph 4 shall have
the meanings given below throughout this Agreement:
(i) a "CHANGE OF CONTROL" shall be deemed to have occurred if:
a) a tender offer or exchange offer is made and
consummated for the ownership of securities of the
Company representing 50 percent or more of the
combined voting power of the Company's then
outstanding voting securities; or
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b) the Company transfers substantially all of its assets
to another corporation which is not a wholly-owned
subsidiary of the Company.
(ii) a "GOOD REASON" shall mean:
a) the assignment of Officer to any duties inconsistent
with, or any adverse change in, Officer's titles or
positions, duties, responsibilities or status with
the Company, or the removal of Officer from, or
failure to reelect Officer to, any of such positions:
or
b) the failure of the Company to provide support,
information, assistance and staffing reasonably
appropriate for Officer to carry out Officer's duties
or to achieve the performance goals set by the
Company; or
c) any other material breach by the Company of this
Agreement which is not cured within thirty (30) days
of notice thereof by the Officer to the Company; or
d) a change in the location of the Officer's principal
place of employment, which shall be designated and
operated as the Company's executive offices, by the
Company by more than thirty miles from the location
where the Officer was principally employed
immediately prior to the effective date of this
Agreement.
(d) CERTAIN PAYMENT REDUCTIONS:
(i) For purposes of this subparagraph (d), (i) a Payment shall
mean any payment or distribution in the nature of
compensation to or for the benefit of Officer, whether paid
or payable pursuant to this Agreement or otherwise; (ii)
Agreement Payment shall mean a Payment paid or payable
pursuant to this Agreement (determined without regard to
this subparagraph (d)); (iii) Net After Tax Receipt shall
mean the Present Value of a Payment net of all taxes imposed
on Officer with respect thereto under Sections 1 and 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"),
determined by applying the highest marginal rate under
Sections 1 of the Code which applied to the taxable income
of Officer for the immediately preceding taxable year; (iv)
"Present Value" shall mean such value determined in
accordance with Section 280G(d)(4) of the Code; and (v)
"Reduced Amount" shall mean the smallest aggregate amount of
Payments which (a) is less than the sum of all Payments
(determined without regard to this subparagraph (d)) and (b)
results in aggregate Net After Tax Receipts which are equal
to or greater than the Net After Tax Receipts which would
result if the aggregate Payments were equal to the sum of
all Payments (determined without regard to this subparagraph
(d)) or any other amount less than the sum of all payments
(determined without regard to this subparagraph (d)).
(ii) Anything in this Agreement to the contrary notwithstanding,
in the event the Company's independent public accounts (the
"Accounting Firm") shall determine that receipt of all
Payments would subject Officer to tax under Section 4999 of
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the Code, it shall determine whether some amount of Payments
would meet the definition of a "Reduced Amount." If the
Accounting Firm determines that there is a Reduced Amount,
the aggregate Agreement Payments shall be reduced to such
Reduced Amount; provided, however, that if the Reduced
Amount exceeds the aggregate Agreement Payments, the
aggregate Payments shall, after the reduction of all
Agreement Payments, be reduced (but not below zero) in the
amount of such excess.
(iii) If the Accounting Firm determines that aggregate Agreement
Payments or Payments, as the case may be, should be reduced
to the Reduced Amount, the Company shall promptly give
notice to Officer to that effect and a copy of the detailed
calculation thereof, and Officer may then elect, in
Officer's sole discretion, which and how much of the
Payments shall be eliminated or reduced (as long as after
such election the present value of the aggregate Payments
equals the Reduced Amount), and Officer shall advise the
Company in writing of Officer's election within ten days of
Officer's receipt of notice. If no such election is made by
Officer within such ten-day period, the Company may elect
which of the Agreement Payments or Payments, as the case may
be, shall be eliminated or reduced (as long as after such
election the present value of the aggregate Agreement
Payments or Payments, as the case may be, equals the Reduced
Amount) and shall notify Officer promptly of such election.
All determinations made by the Accounting Firm under this
Paragraph 4(d) shall be binding upon the Company and Officer
and shall be made within 60 days after a termination of
Officer's employment. As promptly as practicable following
such determination, the Company shall pay to or distribute
for Officer's benefit such Payments as are then due to
Officer under this Agreement and shall promptly pay to or
distribute for Officer's benefit in the future such Payments
as become due to Officer under this Agreement.
(iv) While it is the intention of the Company and Officer to
reduce the amounts payable or distributable to Officer
hereunder only if the aggregate Net After Tax Receipts to
Officer would thereby be increased, as a result of the
uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by the Accounting
Firm hereunder, it is possible that amounts will have been
paid or distributed by the Company to or for Officer's
benefit pursuant to this Agreement which should not have
been so paid or distributed ("Overpayment") or that
additional amounts which will have not been paid or
distributed by the Company to or for Officer's benefit
pursuant to this Agreement could have been so paid or
distributed ("Underpayment"), in each case, consistent with
the calculation of the Reduced Amount hereunder. In the
event that the Accounting Firm, based either upon the
assertion of a deficiency by the Internal Revenue Service
against the Company or Officer which the Accounting Firm
believes has a high probability of success or controlling
precedent or other substantial authority, determines that an
Overpayment has been made, any such Overpayment paid or
distributed by the Company to or for Officer's benefit shall
be treated for all purposes as a loan AB INITIO to Officer
which Officer shall repay to the Company together with
interest at the applicable federal rate provided for in
Section 7872(f)(2) of the Code; provided, however, that no
such loan shall be deemed to have been made and no amount
shall be payable by Officer to the Company if and to the
extent such deemed loan and payment would not either reduce
the amount on which Officer is subject to tax under Section
1and Section 4999 of the Code or generate a refund of such
taxes. In the event that the Accounting Firm, based upon
controlling precedent or other substantial authority,
determines that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Company to or for
Officer's benefit together with interest at the applicable
federal rate provided for under Section 7872(f)(2) of the
Code.
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(v) The Company will bear the fees and expenses of the
Accounting Firm in making the determinations required by the
Paragraph 4(d).
5. DISABILITY.
In the event that Officer is permanently disabled so as to be unable to
fully perform the services required hereunder, Officer's obligation to perform
such services will terminate and the Company may terminate this Agreement upon
five days' written notice to Officer. In the event of such termination,
Officer's Base Salary as defined in Paragraph 3 (a) hereof and benefits as
defined in Paragraph 3 (e) hereof shall continue during the then remaining Term
of this Agreement, reduced by any payments received by Officer during such term
under a long-term disability plan or policy maintained by the Company. For
purposes hereof, "Disability" shall mean that by reason of physical or mental
disability, officer will be unable to perform substantially the duties of
employment under this Agreement for a period of 180 consecutive days.
6. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
Officer acknowledges that the Company may disclose certain confidential
information to Officer during the term of this Agreement to enable Officer to
perform the duties required hereunder. Officer hereby covenants and agrees that
he will not, without the prior written consent of the Company, during the term
of this Agreement or for a two year period thereafter, knowingly disclose or
permit to be disclosed to any third party by any method whatsoever any of the
confidential information of the Company. For purposes of this Agreement,
"Confidential Information" shall include, but not be limited to, any and all
records, notes, memoranda, data, ideas, processes, methods, techniques, systems,
formulas, patents, models, devices, programs, computer software, writings,
research, personnel information, customer information, the Company's financial
information, plans, or any other information of whatever nature in the
possession or control of the Company which has not been published or disclosed
to the general public, or which gives to the Company an opportunity to obtain an
advantage over competitors who do not know of or use it. Confidential
Information will not, however, include information that Officer can establish:
(a) was already known to the Officer at the time it was disclosed through no
wrongful act of the Officer; (b) has become publicly known through no wrongful
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act of the Officer; (c) has been rightfully received from a third party without
restriction on disclosure and without breach of an obligation of
confidentiality; or (d) has been independently developed by the Officer without
reference to the Confidential Information. Officer further agrees that if
Officer's employment hereunder is terminated for any reason, he will leave with
the Company and will not take originals or copies of any records, papers,
programs, computer software, and documents or any matter of whatever nature that
bears secret or Confidential Information of the Company.
The foregoing paragraph shall not be applicable if and to the extent
Officer is required to testify in a judicial or regulatory proceeding pursuant
to an order of a judge or administrative law judge. Officer hereby does assign,
to the Company, its parent, subsidiary, successors, assigns, and nominees, all
inventions, discoveries, improvements, copyrightable material, trademarks,
programs, computer software, and ideas concerning the same, capable of use in
connection with the business of the Company, which Officer may make or conceive,
either solely or jointly with others, during the period of Employment by the
Company, its parent, subsidiaries, or successors.
Officer agrees, without charge to the Company and at the Company's
expense, to execute, acknowledge, and deliver to the Company all such papers,
including applications for patents, applications for copyright and trademark
registrations, and assignments thereof, as may be necessary, and at all times to
assist the Company, its parent, subsidiaries, successors, assigns, and nominees
in every proper way to patent or register said programs, computer software,
ideas, inventions, discoveries, improvements, copyrightable material, or
trademarks in any and all countries and to vest title thereto in the Company,
its parent, subsidiaries, successors, assigns, or nominees. Officer will report
to the Company all discoveries, inventions, or improvements of whatever nature
conceived or made by Officer at any time he was employed by the Company, its
parent, subsidiaries, or successors. All such discoveries, inventions, and
improvements which are applicable in any way to the Company's business shall be
the sole and exclusive property of the Company. The covenants set forth in this
paragraph which are made by Officer are in consideration of the employment or
continuing employment of, and the compensation paid to, Officer during
employment by the Company. The foregoing covenants will not prohibit Officer
from disclosing confidential or other information to other employees of the
Company or to third parties to the extent that such disclosure is necessary to
the performance of the duties required under this Agreement. Any breach of this
covenant of nondisclosure will result in the forfeiture by Officer and all other
persons of any and all rights to severance pay and supplemental pension benefits
unpaid at the time of breach and in such event the Company shall have no further
obligation to pay any amount related thereto.
This Agreement does not apply to any invention that qualifies fully
under the provisions of Section 2870(a) of the California Labor Code, which
reads as follows:
Section 2870. Inventions on Own Time--Exemption from Agreement
(a) Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
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equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to practice of the
invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer; or
(2) Result from any work performed by the employee for the employer.
7. ADDITIONAL REMEDIES.
Officer recognizes that irreparable injury will result to the Company
and to its business and properties in the event of any breach by Officer of any
of the provisions of Paragraph 6 of this Agreement, and that Officer's continued
employment is predicated on the commitments undertaken by Officer pursuant to
said paragraph. In the event of any breach of any of Officer's commitments
pursuant to Paragraph 6, the Company shall be entitled, in addition to any other
remedies and damages available, to injunctive relief to restrain the violation
of such commitments by Officer or by any person or persons acting for or with
Officer in any capacity whatsoever.
8. NONASSIGNMENT.
This Agreement is personal to Officer and shall not be assigned by him.
Officer shall not hypothecate, delegate, encumber, alienate, transfer or
otherwise dispose of his rights and duties hereunder. The Company may not assign
this Agreement without Officer's consent to any other entity that, in connection
with such assignment, acquires all or substantially all of the Company's assets
or into or with which the Company is merged and consolidated.
9. WAIVER.
The waiver of a breach of any provision of this Agreement by a party
shall not be construed as a waiver of any subsequent breach by said party.
10. SEVERABILITY.
If any clause, phrase, provision, or portion of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable under any applicable law, such event shall not affect or render
invalid or unenforceable the remained of this Agreement and shall not affect the
application of any clause, provision, or portion hereof to other persons or
circumstances.
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11. ARBITRATION.
(a) The terms of this Paragraph 11 contain the sole and exclusive
method, means and procedure to resolve any and all claims, disputes or
disagreements arising under this Agreement, except those arising under the
provisions of Paragraph 6, above. Nothing in this Paragraph 11 shall prohibit a
party from seeking and obtaining injunctive relief from a court of competent
jurisdiction pending the outcome of arbitration. A party bringing an action for
injunctive relief shall not be deemed to have waived his or its right to demand
arbitration of all disputes. The parties irrevocably waive any and all rights to
the contrary and shall at all times conduct themselves in accordance with the
terms of this Paragraph 11; any attempt to circumvent the terms of this
Paragraph 11 shall be null and void and of force or effect.
(b) Either party desiring to arbitrate shall give written notice to the
other party within a reasonable period of time after the party becomes aware of
the need for arbitration. The arbitration shall be conducted in Los Angeles,
California, in accordance with the National Rules of the American Arbitration
Association ("AAA"), and shall be conducted by a single arbitrator selected from
the approved AAA panel or by stipulation of the parties. In any arbitration
hereunder, the parties shall be entitled to all rights of discovery provided for
in the California Code of Civil Procedure for judicial proceedings. The
arbitrator shall give effect to statutes of limitation in determining any claim.
The decision of the arbitrator shall be final and binding. Judgment on any award
rendered by such arbitrator shall be final and binding. Judgment on any award
rendered by such arbitrator may be entered in any court having jurisdiction over
the subject matter of the controversy. The prevailing party shall receive an
award of costs and expenses related to the arbitration, including attorneys'
fees. The fees and costs of the arbitrator and the cost of any record or
transcript of the arbitration shall be borne by the losing party. Should Officer
or the Company institute any legal action or administrative proceeding with
respect to any claim waived by this agreement or pursue any dispute or matter
covered by this paragraph by any method other than said arbitration, the
responding party shall be entitled to recover from the other party all damages,
costs, expenses and attorneys' fees incurred as a result of such action.
12. RELEVANT LAW.
This Agreement shall be construes and enforced in accordance with the
laws of the State of California.
13. NOTICES.
All notices, requests, demands and other communications in connection
with this Agreement shall be made in writing and shall be deemed to have been
given when delivered by hand or 48 hours after mailing at any general or branch
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United States Post Office, by registered or certified mail, postage prepaid,
addressed as follows, or to such other address as shall have been designated in
writing by the addressee:
(a) if to the Company: (b) if to the Officer:
c/o eMarketplace, Inc. c/o Full Moon Interactive Group, Inc
000 Xxxx Xxxxxx Xxxxxx 0000 Xxxxxxxx Xxxxxx
Xxxxx 000 Xxxxxxxxx, XX 00000
Xxx Xxxx, XX 00000 Facsimile (000) 000-0000
Facsimile (000) 000-0000
14. ENTIRE AGREEMENT.
This Agreement sets forth the entire understanding of the parties and
supersedes all prior agreements, arrangements, and communications, whether oral
or written, pertaining to the subject matter hereof; and this Agreement shall
not be modified or amended except by written agreement of the Company and
Officer.
15. ATTORNEY'S FEES.
If any action or proceeding is brought to enforce or interpret any
provision of this Agreement, the prevailing party shall be entitled to recover
as an element of its cost, and not its damages, its reasonable attorneys' fees,
costs and expenses.
16. HEADINGS.
The subject heading of the paragraphs and subparagraphs of this
Agreement are included for purposes of convenience only, and shall not affect
the construction or interpretation of any of its provisions.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first set forth above.
EMPLOYER: TOPTEAM, INC. EMPLOYEE: XXXXXX XXXXXX
BY: /s/ XXXXXX XXXXXXX BY: /s/ XXXXXX XXXXXX
------------------------ ----------------------
OFFICER: CHAIRMAN
DATE: DATE:
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