Employment Agreement - Loudeye Technologies Inc. and John Baker
February 23, 2001
John Baker
1245 20th Place
Hermosa Beach, CA 90254
Dear John,
On behalf of Loudeye Technologies, Inc., a Delaware corporation (the
"Company"), I am pleased to offer you the position of President and Chief
Executive Officer of the Company. You will also become a member of the Board of
Directors. Speaking for myself, as well as the other members of the Company's
management team, we are all very impressed with your credentials and we look
forward to your future success in this position.
The terms of your new position with the Company are as set forth below:
1. Position.
a. You will become the President and Chief Executive Officer of
the Company, working out of the Company's office in Seattle,
Washington . You will report to the Board of Directors.
b. You agree to the best of your ability and experience that
you will at all times loyally and conscientiously perform
all of the duties and obligations required of and from you
pursuant to the express and implicit terms hereof, and to
the reasonable satisfaction of the Company. During the term
of your employment, you further agree that you will devote
all of your business time and attention to the business of
the Company, the Company will be entitled to all of the
benefits and profits arising from or incident to all such
work services and advice, you will not render commercial or
professional services of any nature to any person or
organization, whether or not for compensation, without the
prior written consent of the Company's Board of Directors,
and you will not directly or indirectly engage or
participate in any business that is competitive in any
manner with the business of the Company. Nothing in this
letter agreement will prevent you from accepting speaking or
presentation engagements in exchange for honoraria or from
serving on boards of charitable organizations, or from
owning no more than one percent (1%) of the outstanding
equity securities of a corporation whose stock is listed on
a national stock exchange.
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February 23, 2001
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2. Start Date. Subject to fulfillment of any conditions imposed by
this letter agreement, you will commence this new position with
the Company on March 5, 2000.
3. Proof of Right to Work. For purposes of federal immigration law,
you will be required to provide to the Company documentary
evidence of your identity and eligibility for employment in the
United States. Such documentation must be provided to us within
three (3) business days of your Start Date, or our employment
relationship with you may be terminated.
4. Compensation.
a. Base Salary. You will be paid a monthly salary of
$25,000.00, which is equivalent to $300,000.00 on an
annualized basis. Your salary will be payable in two equal
payments per month pursuant to the Company's regular payroll
policy (or in the same manner as other employees of the
Company).
b. Annual Review. Your base salary will be reviewed annually
as part of the Company's normal salary review process and at
the discretion of the Board of Directors.
c. Annual Bonus. You are eligible to receive an annual bonus
of between $75,000.00 and $150,000.00 based on the
achievement of objectives set forth by you and the Board of
Directors.
5. Stock Options.
a. Initial Option Grant. You will be eligible to participate
in any stock option or other incentive programs available to
officers or employees of the Company. Your initial grant
amount will be issued on your Start Date and will total
1,200,000 Nonqualified Stock Options. This grant shall have
a ten-year term and shall be exercisable at the rate of
18.75% of the shares on the nine month anniversary from your
Vesting Commencement Date, (which shall be start date), and
quarterly thereafter at a rate of 6.25% of the total number
of options every quarter until fully vested (pro-rated for
any periods less than a full calendar quarter). The exercise
price per share of your Initial Option Grant will be equal
to the Company's closing common stock price on your Start
Date.
b. Bonus Option Grants. You will be eligible for a bonus grant
of 200,000 options issued at the exercise price of $4.00 per
share at such time as the Company's common stock closes at
or above a price of $4.00 for ten
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February 23, 2001
Page 3
consecutive days. You will also be eligible for a bonus
grant of 200,000 options issued at the exercise price of
$6.00 per share at such time as the Company's common stock
closes at or above a price of $6.00 for ten consecutive
days. You will also be eligible for a bonus grant of 200,000
options issued at the exercise price of $8.00 per share at
such time as the Company's common stock closes at or above a
price of $8.00 for ten consecutive days. Each such bonus
option grant shall have a ten-year term and shall be
exercisable at the rate of 6.25% of the total number of
options every quarter from the date of grant until fully
vested (pro-rated for any periods less than a full calendar
quarter).
c. Change of Control. If the Company experiences a change in
control, the vesting and exercisability of these options
will accelerate with respect to 100% of the total number of
shares originally subject to these options.
d. Severance.
1. Acceleration. If you are terminated not for Cause and
not related to change of control, you will receive 50%
accelerated vesting of your remaining options. "Cause"
for termination of your employment shall exist if you
willfully fail to substantially perform your duties and
responsibilities to the Company, have repeated
unexplained or unjustified absences from the Company,
commit any act of fraud, embezzlement, dishonesty or
other willful misconduct that causes or would likely
cause material injury to the Company, use or disclose
without authorization any proprietary information or
trade secrets of the Company (or other parties to whom
you owe an obligation of confidentiality as a result of
your relationship with the Company), or willfully
breach your obligations under any agreement with the
Company including the Confidentiality Agreement.
"Cause" is also not defined as you willfully separating
from the Company.
2. Exerciseability. If you are terminated not for cause,
you will have up to 90 days after any trading
restrictions have been removed to exercise any vested
options.
6. Benefits.
a. The Company will provide you and your dependents with
standard medical and optional dental and vision insurance
benefits. The Company will subsidize 100% of these premiums.
In addition, the Company currently indemnifies all officers
and directors to the maximum extent permitted by law, and
you will be requested to enter into the Company's standard
form of Indemnification Agreement giving you such
protection. Pursuant to the Indemnification Agreement, the
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February 23, 2001
Page 4
Company will agree to advance any expenses for which
indemnification is available to the extent allowed by
applicable law.
b. You will be eligible to participate in all standard employee
benefits including the following: 17 general
vacation/sick/personal days; 8 paid Holidays; the Company's
401K plan; Employee Stock Purchase Program; Short and Long
Term Disability plans; Soft Dollar "Life Enhancement" plan;
and the Company's Flexible Spending Account plan. Also, in
addition to the $150,000.00 of employer paid Life and AD&D
insurance, you are also eligible to apply for voluntary Life
insurance and will receive a guarantee issue of $50,000.00
if you elect coverage. If you complete and pass a medical
questionnaire and possible medical exam, you are eligible to
receive up to $300,000.00 upon approval.
7. Proprietary Information and Inventions Agreement. Your
acceptance of this offer and commencement of employment with the
Company is contingent upon the execution, and delivery to an
officer of the Company, of the Company's Proprietary Information
and Inventions Agreement, a copy of which is enclosed for your
review and execution (the "Confidentiality Agreement"), prior to
or on your Start Date.
8. Confidentiality of Terms. You agree to follow the Company's
strict policy that employees must not disclose, either directly
or indirectly, any information, including any of the terms of
this agreement, regarding salary, bonuses, or stock purchase or
option allocations to any person; provided, however, that you may
discuss such terms with members of your immediate family and any
legal, tax or accounting specialists who provide you with
individual legal, tax or accounting advice.
9. Severance Agreement. If your employment is terminated by the
Company or its successor for any reason other than Cause, as
reasonably determined by the Company's Board of Directors, you
will be entitled to receive continuation of your base salary and
reimbursement of your insurance benefit expenses for twelve
months following the date of termination of your employment.
10. At-Will Employment. Notwithstanding the Company's obligation
described in Section 8 above, your employment with the Company
will be on an "at will" basis, meaning that either you or the
Company may terminate your employment at any time for any reason
or no reason, without further obligation or liability.
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February 23, 2001
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11. Relocation. You will be eligible to receive reimbursement for
relocation and transition expenses up to $100,000 and will be
asked to submit receipts. You will also be able to expense
temporary housing and travel to the Company for the estimated
four month transition period until your relocation is complete.
We are all delighted to be able to extend you this offer and look
forward to working with you. To indicate your acceptance of the Company's
offer, please sign and date this letter in the space provided below and return
it to me, along with a signed and dated copy of the Proprietary Information and
Inventions Agreement. This letter, together with the Proprietary Information
and Inventions Agreement, sets forth the terms of your employment with the
Company and supersedes any prior representations or agreements, whether written
or oral. This letter may not be modified or amended except by a written
agreement, signed by the Company and by you.
Very truly yours,
LOUDEYE TECHNOLOGIES
/s/ Martin Tobias
MARTIN TOBIAS
Chairman, Board of Directors
ACCEPTED AND AGREED:
John Baker
/s/ John Baker
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Signature
February 23, 2001
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Date
Enclosure: Proprietary Information and Inventions Agreement