Employment Agreement - Encoding.com Inc. and Dave Bullis
June 23, 1999
Dave Bullis
PO Box 2022
Kirkland WA. 98083
Dear Dave,
On behalf of Encoding.com (the "Company"), I am pleased to offer you the
position of President and Chief Operating Officer of the Company. 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 Operating Officer of the
Company, working out of the Company's headquarters office in
Seattle, Washington. You will report to the Company's CEO.
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.
c. As President and Chief Operating Officer, you will have the right
to attend meetings of the Company's Board of Directors.
<PAGE>
Page 2
2. Start Date. Subject to fulfillment of any conditions imposed by this
letter agreement, you will commence this new position with the Company
on July 12, 1999.
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 date of hire, or our employment relationship with you may be
terminated.
4. Compensation.
a. Base Salary. You will be paid a monthly salary of $12,500.00,
which is equivalent to $150,000.00 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 officers of the Company).
b. Annual Review. Your base salary will be in March as part of the
Company's normal salary review process.
c. Bonus. You will be eligible to receive an incentive bonuses of
$50,000 if the Company achieve's the business plan milestones
established by the Board of Directors, in consultation with you.
You will also be eligible to earn incentive bonuses in future
years, again based on the achievement of objectives met by Company
established by the management team and the CEO.
5. Stock Options.
a. 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 450,000 shares of non-
qualified options at a strike price of .25 cents. Within a month
of your start date you will receive the Stock Option Plan and
subscription agreement which will enroll you in the program.
b. You will be eligible to vest your grant of incentive stock options
at a rate of 18.75% of the total number of options granted after
nine months of employment and 6.25% of the total number of options
every quarter thereafter until fully vested (pro-rated for any
periods less than a full calendar quarter).
<PAGE>
Page 3
You may exercise these options prior to their vesting subject to
the Company's right of repurchase which will lapse in accordance
with the above vesting schedule. If the Company merges or becomes
acquired the vesting of your options will be accelerated as
specified in the company's current stock options agreement. If the
merger occures within your first two years of employment, the
vesting of your options will be accelerated such that a minimum
50% of the total number of options will be vested upon
consummation of the acquisition.
c. You will also have the opportunity to invest $200,000.00 in the
Series C round with the same rights and the same price as the
other Series C investors according to the term sheet of the
current round set to close in July, 1999.
6. Benefits.
a. Insurance Benefits. The Company will provide you with standard
medical and optional dental insurance benefits. The Company will
purchase coverage for your dependents under The Company's medical
and dental insurance program. 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
Company will agree to advance any expenses for which
indemnification is available to the extent allowed by applicable
law.
7. Confidential Information and Invention Assignment 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 Confidential Information and Invention
Assignment Agreement, a copy of which is enclosed for your review and
execution (the "Confidentiality Agreement"), prior to or on your Start
Date.
8. Severance Agreement. If your employment is terminated by the Company
or its successor for any reason other than cause, as determined by the
Company's Board of Directors, you will be entitled to receive
continuation of your base salary and insurance benefits for two months
following the date of termination of your employment.
9. 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
<PAGE>
Page 4
purchase or option allocations to any person, including other employees
of the Company; 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.
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.
<PAGE>
Page 5
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 Confidentiality Agreement. This letter,
together with the Confidentiality Agreement, set forth the terms of your
employment with the Company and supersede 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,
ENCODING.COM
/s/ Martin Tobias
Martin Tobias,
Minister of Order and Reason
ACCEPTED AND AGREED:
Dave Bullis
/s/ Dave Bullis
------------------------------------
Signature
June , 1999
------------------------------------
Date
Enclosure: Confidential Information and Invention Assignment Agreement