Employment Agreement - Loudeye Corp. and Jeff Cavins
This Employment Agreement, dated as of April 1, 2003, (this
"Agreement"), is by and between Jeff Cavins (the "Executive") and Loudeye Corp.,
a Delaware corporation (the "Company" or "Loudeye").
WITNESSETH:
WHEREAS, the Company wishes to obtain the future services of the
Executive for the Company; and
WHEREAS, the Executive is willing, upon the terms and conditions herein
set forth, to provide services hereunder; and
WHEREAS, defined terms not defined herein shall have the respective
meanings set forth on Schedule 1 attached hereto;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained here, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Nature of Employment
The Company hereby employs Executive and Executive agrees to accept
such employment, as President and Chief Executive Officer of the Company.
2. Extent of Employment
The Executive shall perform his obligations hereunder faithfully and to
the best of his ability under the direction of the Board of Directors of the
Company. The Executive shall devote all of his business time, energy and skill
as may be reasonably necessary for the performance of his duties,
responsibilities and obligations hereunder (except for vacation periods and
reasonable periods of illness or other incapacity), consistent with norms in
similar positions. Nothing contained herein shall require the Executive to
follow any directive or to perform any act which would violate any laws,
ordinances, regulations or rules of any governmental, regulatory or
administrative body, agent or authority, any court or judicial authority, or any
public, private or industry regulatory authority (collectively, the
"Regulations").
3. Compensation During the Term of Employment, the Company shall
pay compensation to the Executive as follows:
(a) Base Salary As base compensation for his services hereunder,
consistent with the Company's regular payroll practices, an annual base salary
of $250,000 (the "Base Salary"). The Board of Directors of the Company (the
"Board of Directors") shall annually, and in its sole discretion, determine
whether the Base Salary should be increased and, if so, the amount of such
increase. In no event shall Executive's then current Base Salary be decreased.
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(b) Performance Bonus. The Executive shall be eligible to receive a
bonus of up to a maximum of One Hundred Percent (100%) of the
Executive's Base Salary (the "Target Bonus Amount"). The Target
Bonus Amount shall be subdivided into four separate performance
specific targeted bonus amounts which shall be awarded based upon
four separate performance factors ("Performance Factors") as set
forth on Schedule 3 hereto. With the Executive's consent, Schedule
3 hereto may be amended or modified to reflect such other
performance criteria as the Board of Directors may determine from
time to time. The bonus will be deemed earned upon the first to
occur of (i) the end of the applicable period, and (ii) the day
immediately preceding the date of consummation of a Change of
Control, pro rated for the quarter in which the Change of Control
occurs. The amount of the earned Target Bonus Amount, if any,
shall be determined by the Board of Directors based upon the
Company's results for the applicable period. Payment of the bonus
shall be made five (5) business days following the first to occur
of (i) the date of filing of the Company's Form 10-Q or Form 10-K
for the applicable period, or (ii) the last date, without any
extensions, that the Company must file its Form 10-Q or Form 10-K
for the applicable period without violating and SEC or NASDAQ rule
or regulation, in each case relating to achievement of the
Performance Factors. Payment of the bonus is conditioned upon the
Executive being employed by the Company during the relevant
performance period, with certain exceptions discussed in Schedule
2. In addition to the foregoing, Executive shall have the right to
a One-Time Special Bonus as set forth below.
(c) One Time Special Bonus. In addition to the foregoing, Executive
shall be entitled to a bonus equal to thirty percent 30% of
executive's total incentive compensation (a "One Time Special
Bonus") upon the first to occur of: (a) the closing prices per
share of Loudeye common stock as quoted on NASDAQ Small Cap
multiplied by the total number of common shares outstanding equals
a market capitalization equal to or greater than Twenty Million
Dollars ($20,000,000) for any Thirty (30) consecutive trading day
period, or (b) upon the consummation of a Change of Control,
provided that the valuation of the total equity of the Company in
connection with the Change of Control is to or greater than Twenty
Million Dollars ($20,000,000); provided, however, that the One
Time Special Bonus payable in connection with a Change of Control
shall be paid in the same consideration as that consideration
(including securities) paid to security holders of Loudeye in
connection with the Change of Control. In the event that Executive
is terminated without Cause or resigns with Good Reason within Six
(6) months of a Change of Control, and Executive did not otherwise
receive a One Time Special Bonus, Executive shall be entitled to
the One Time Special Bonus.
(d) Stock Option. During the employment period, the Executive shall
participate in the Executive share option plan of Loudeye and
shall have the opportunity to purchase shares in accordance with
its rules at a level commensurate with Executive's position, all
such grants being subject to the approval of the Board of
Directors of Loudeye. Subject to approval, the Executive will
receive an award effective on the date established by the Board of
Directors, in accordance with the schedule set forth below, of
options to purchase, to the extent available, incentive stock
option (ISO) shares of Loudeye, and to the extent that ISO's are
not available, non-qualified options with an exercise price based
on the closing price for Loudeye shares on April 1, 2003.
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Date awarded Target Number of Stock Options Shares
April 1, 2003 Options to purchase 1,500,000 shares
(e) Vesting period. This grant shall have a ten year term and shall be
exercisable at the rate of 1/12th per month in arrears. The
exercise price per share of your Incentive Option Grant will be
equal to the Company's closing common stock price on April 1,
2003. Vesting will accelerate upon the first to occur of (i) a
Change of Control, or (ii) the adoption by the Board of Directors
of the Company of a plan of liquidation or dissolution of Loudeye.
(f) Compensation on sale of company or assets. Executive shall be
entitled to a bonus or bonuses ("Sale Bonus") equal to two and one
half percent (2.5%) of the total Incremental Value (as defined
below) upon consummation of a Change of Control. "Incremental
Value" for purposes hereof shall mean the difference between (x)
the aggregate sum of cash, value or other consideration related to
a transaction described in clause (i) of the definition of Change
of Control or the aggregate consideration paid or payable by or
for the benefit of Loudeye in connection with one or more
transactions described in clause (ii) of the definition of Change
of Control (each, a "Transaction"), and (y) the market value of
Loudeye as of the close of business on April 1, 2003. The Sale
Bonus shall be fully earned upon consummation of the Transaction
that creates Incremental Value, and shall be paid in the same
currency as the consideration (including securities) paid to
Loudeye or the shareholders of Loudeye in connection with such
Transaction. In the event that Executive is terminated without
Cause or resigns with Good Reason within Six (6) months of a
Transaction, and Executive did not otherwise receive a Sale Bonus,
Executive shall be entitled to the Sale Bonus in amounts described
above.
4. Term of Employment
The "Term of Employment" shall commence on the date hereof and shall
end on the date of termination as provided in Section 5.
5. Termination
(a) Subject to the Company's obligations to make the payments
contemplated by Section 5(b)(i), the Term of Employment may be terminated at any
time:
i. upon the death of the Executive ("Death");
ii. in the event that because of physical or mental
disability the Executive is unable to perform, and
does not perform, as certified by a mutually
agreeable competent medical physician, his material
duties hereunder for 30 days in any continuous 60 day
period ("Disability");
iii. by the Company for Cause;
iv. by the Company for any reason and without Cause;
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v. by the Executive for Good Reason;
vi. by the Executive voluntarily or for any reason or no
reason, in each case, after sixty (60) days' prior
written notice to the Company and the Board of
Directors ("Resignation"); or
vii. s by the Executive upon Change of Control. Upon Change
of Control, the Executive's severance, earned and
unpaid incentive compensation and bonuses will be
considered earned and is payable in a lump sum, with
payment to be made no later than sixty (60) days from
the effective date of the Change of Control. The
Executive will be entitled to all rights under this
Change of Control provision in the event that the
Executive's employment is terminated without Cause
within six months prior to a Change of Control
Executive acknowledges that no representations or promises have been made in
connection with this Agreement or any other arrangement, plan or agreement
between the Executive and the Company concerning the grounds for termination or
the future operation of the Company's business, and that nothing contained
herein or otherwise stated by or on behalf of the Company modifies or amends the
right of the Company to terminate the Executive at any time, with or without
Cause.
(b) If the Executive's employment is terminated for any reason
whatsoever, then, subject to the execution by Executive of a release in form
reasonably satisfactory to the Company, which shall include without limitation a
waiver of all claims the Executive may have against Loudeye, and all of its
respective subsidiaries, affiliates, directors, officers, employees,
shareholders and agents other than rights of indemnification and any rights to
accrued benefits under the employee benefit plans (including equity plans), the
Executive shall be entitled to (i) accrued and unpaid base salary, earned and
unpaid incentive compensation and benefits (including sick pay, vacation pay and
benefits under Section 7) with respect to the period prior to termination, (ii)
reimbursement for expenses under Section 6 with respect to such period, and
(iii) any other benefits (including COBRA) required by law to be provided after
termination of employment under the circumstances. Except as may otherwise be
expressly provided to the contrary in this Agreement, nothing in this Agreement
shall be construed as requiring the Executive to be treated as employed by the
Company for purposes of any employee benefit plan following the date of the
termination of the Executive's Term of Employment. In the event the Executive's
employment is terminated pursuant to:
(i) Death, Disability, Good Reason, without Cause or Change of
Control, the Company will also pay to Executive (or his estate or
representative) the termination benefits in accordance with Schedule 2.
Such payment shall be made over a period of two (2) months as
determined by the Company, provided, however, that in the event of
termination due to Change of Control, the payment shall be made in a
lump sum at the time of the consummation of the transaction
constituting a Change of Control; and
(ii) Cause or Resignation, there will be no additional amounts
owing by the Company to the Executive under this Agreement from and
after such termination.
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(c) Termination of the Term of Employment will not terminate any
other provisions not associated specifically with the Term of Employment.
(d) Upon termination of the Executive's employment, the Company
shall have no further obligations to the Executive under any option plan, share
subscription or similar plan or arrangement, except to the extent that the
documentation governing such plan or arrangement specifically requires the
Company to continue to incur such obligations.
6. Reimbursement of Expenses
During the Term of Employment, the Company shall reimburse Executive
for reasonable documented travel, entertainment and other expenses reasonably
incurred by Executive in connection with the performance of his duties hereunder
and, in each case, in accordance with the rules, customs and usages promulgated
by the Company from time to time in effect.
7. Benefits
The Executive shall be entitled to participate in and be covered by any
insurance plan (including, but not limited to, medical, dental, health,
accident, hospitalization and disability), vacation policy, 401(k) plan and
non-qualified pension plan of the Company, each as determined, from time to
time, by the Board of Directors. The Company shall have no obligation to
establish or maintain an particular plan or program. The Executive shall be
entitled to four (4) weeks paid vacation in each twelve month period, accruing
at the rate of 1.67 days per month, subject to the reasonable requirements of
the Company as to the timing of the taking of such vacation.
8. Confidential Information
Executive acknowledges execution of that certain Proprietary
Information and Inventions Agreement dated ________ __, 200__ by Executive in
favor of the Company (the "Confidentiality Agreement). The terms of the
Confidentiality Agreement shall survive termination hereof.
9. Non-Competition
The Executive acknowledges that services to be provided give him the
opportunity to have special knowledge of the Company and of its affiliates and
subsidiaries (the "Company Group") and their Confidential Information (as such
term is defined in the Confidentiality Agreement) and the capabilities of the
individuals employed by or affiliated with the Company and that interference in
these relationships would cause irreparable injury to the Company. In
consideration of this Agreement, the Executive covenants and agrees that for a
period of six (6) months from termination, the Executive will not, without the
express written approval of the Board of Directors directly or indirectly, in
one or a series of transactions, or enter into any agreement to, own, manage,
operate, control, invest or acquire an interest in, or otherwise engage or
participate in, whether as a proprietor, partner, stockholder, lender, director,
officer, employee, joint venturer, investor, lessor, agent, representative or
other participant, in any business which competes with the Company, provided,
however, that Executive may in one or a series of transactions, own, invest or
acquire an interest in up to five percent (5%) of the capital stock of another
corporation whose capital stock is traded publicly.
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The Executive acknowledges that the terms of this Section 9 are reasonable and
necessary for the protection of the Company, and that the scope and term of this
Section 9 would not preclude Executive from earning a living with an entity that
does not compete with the Company.
10. Non-Solicitation
During the Term of Employment and for a period of six (6) months
thereafter, Executive will not and will not cause another business or commercial
enterprise to, without the express prior written approval of the Board of
Directors, in one or a series of transactions, recruit, solicit or otherwise
induce or influence any proprietor, partner, stockholder, lender, director,
officer, employee, sales agent, joint venturer, investor, lessor, customer,
consultant, agent, representative or any other person which has a business
relationship with any member of the Company Group or had a business relationship
with any member of the Company Group to discontinue, reduce or modify such
employment, agency or business relationship.
11. Non-Disparagement
During and after the Term of Employment, Executive agrees that he shall
not make any false, defamatory or disparaging statements about the Company or
any member of the Company Group, or the officers or directors of the Company or
any member of the Company Group. During and after the Term of Employment, the
Company shall not make any false, defamatory or disparaging statements about the
Executive.
12. Defense of Claims
The Executive agrees that from the date hereof, and continuing for a
reasonable period after termination of the Term of Employment, the Executive
will cooperate with the Company in defense of any claims that may be made
against the Company provided same does not interfere with the Executive's then
current employment. The Company agrees to reimburse the Executive for all of the
Executive's reasonable out-of-pocket expenses associated with such cooperation,
including travel expenses and the fees and expenses of the Executive's legal
counsel.
13. Notice
Any notice, request, demand or other communications required or
permitted to be given under this Agreement shall be given in writing and if
delivered personally, sent be certified or registered mail, return receipt
requested, sent by overnight courier or sent by facsimile transmission (with
confirmation and a copy sent by mail within one day) as follows (or to such
other addressee or address as shall be set forth in a notice given in the same
manner):
If to the Executive:
Jeff Cavins
2409 29th Ave West
Seattle, WA 98199
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with a copy to:
If to the Company: Loudeye Corp.
1130 Ranier Ave. South
Seattle, WA 98144
Attention: CEO
Facsimile No.: (206) 830-5351
with a copy to: Eric J. DALE
ROBINSON & COLE LLP
Financial Centre
695 East Main Street
P.O. Box 10305
Stamford, CT 06904-2305
Facsimile No.: (203) 462-7599
Any such notices shall be deemed to be given on the date personally delivered or
sent by facsimile transmission or such return receipt is issued or the day after
if sent by overnight courier.
14. The Executive's Representations
The Executive hereby warrants and represents to the Company that
Executive has carefully reviewed this Agreement and has consulted with such
advisors as Executive considers appropriate in connection with this Agreement,
and is not subject to any covenants, agreements or restrictions, including
without limitation any covenants, agreements or restrictions arising out of
Executive's prior employment which would be breached or violated by Executive's
execution of this Agreement or by Executive's performance of his duties
hereunder.
15. Company's Obligation: Taxes
In connection with a Change of Control, Loudeye will cause to be
maintained for a period of not less than three years from the date of the
consummation of the transaction constituting a Change of Control directors' and
officers' insurance and indemnification policies (including employment practices
liability insurance) to the extent that they provide coverage for events
occurring prior to the effective date (the "Effective Date") of the Change of
Control (the "D&O Insurance") for Executive's service as an officer and director
of Loudeye prior to the Effective Date; provided, however, that Loudeye may, in
lieu of maintaining or causing to be maintained such D&O Insurance as provided
above, cause coverage to be provided under any policy maintained for the benefit
of Loudeye so long as the terms thereof are not less advantageous to Executive
than the existing D&O Insurance. The Executive agrees and acknowledges that the
obligations owed to Executive under this Agreement are solely the obligation of
the Company, and that none of the Company's members, stockholders, directors,
officers, or lenders will have any obligations or liabilities in respect of this
Agreement and the subject matter
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hereof. Any amounts payable to the Executive pursuant to this Agreement shall be
subject to withholding and any other applicable taxes.
16. Severability
Whenever possible, each provision of this Agreement will be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or any other jurisdiction, but this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein. If any court determines that any
provision of this Agreement is unenforceable and therefore acts to reduce the
scope or duration of such provision, the provision in its reduced form shall
then be enforceable.
17. Breach; Waiver of Breach: Specific Performance
If either party breaches its obligations in connection with this
Agreement, the non-breaching party shall be entitled to pursue all remedies
available at law or in equity for such breach. The waiver by the Company or
Executive of a breach of any provision of this Agreement by the other party
shall not operate or be construed as a waiver of any other breach of such other
party. Each of the parties (and any third party beneficiaries) to this Agreement
will be entitled to enforce its rights under any provision of this Agreement and
to exercise all other rights existing in its favor. The parties hereto agree and
acknowledge that the Company would be irreparably injured by a violation of
Sections 8 through 11 of this Agreement, that the provisions of such sections
are reasonable and that the Company could not adequately be compensated in
monetary damages, in light of the sensitivity of the non-public information of
the Company to which the Executive will be exposed and that the Company may
apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions in order to enforce or prevent
any violations of the provisions of such sections of this Agreement.
18. Assignment: Third Parties
Neither the Executive nor the Company may assign, transfer, pledge,
hypothecate, encumber or otherwise dispose of this Agreement or any of his or
its respective rights or obligations hereunder, without the prior written
consent of the other. Notwithstanding the foregoing, the Company may, in its
sole discretion and without the requirement of notice to or consent of
Executive, assign this Agreement in the event of the sale of all or
substantially all of the assets of the Company.
19. Amendment: Entire Agreement
This Agreement may not be changed orally but only by an agreement in
writing agreed to by the parties hereto. This Agreement constitutes the entire
Agreement between the parties concerning the subject matter hereof and, except
as expressly set forth herein, supersedes all prior agreements, if any, between
the parties relating to the subject matter hereof. The enforceability of this
Agreement shall not cease or otherwise be adversely affected by the termination
of the Executive's employment
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with the Company. The Executive and the Company agree that the language used in
this Agreement is the language chosen by the parties to express their mutual
intent, and that no rule of strict construction is to be applied against any
party hereto.
20. Choice of Law; Litigation
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF WASHINGTON. THE
CHOICE OF FORUM SET FORTH IN THIS SECTION 20 SHALL NOT BE DEEMED TO PRECLUDE THE
ENFORCEMENT OF ANY JUDGMENT OF A WASHINGTON FEDERAL OR STATE COURT, OR THE
TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SUCH A JUDGMENT, IN ANY
OTHER APPROPRIATE JURISDICTION. IN THE EVENT ANY PARTY TO THIS AGREEMENT
COMMENCES ANY LITIGATION, PROCEEDING OR OTHER LEGAL ACTION IN CONNECTION WITH OR
RELATING TO THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY MATTERS DESCRIBED OR
CONTEMPLATED HEREIN OR THEREIN, THE PARTIES TO THIS AGREEMENT HEREBY (1) AGREE
UNDER ALL CIRCUMSTANCES ABSOLUTELY AND IRREVOCABLY TO INSTITUTE ANY LITIGATION,
PROCEEDING OR OTHER LEGAL ACTION IN A COURT OF COMPETENT JURISDICTION LOCATED
WITHIN THE STATE OF WASHINGTON; (2) AGREE THAT IN THE EVENT OF ANY SUCH
LITIGATION, PROCEEDING OR ACTION, SUCH PARTIES WILL CONSENT AND SUBMIT TO THE
PERSONAL JURISDICTION OF SUCH COURT AND TO SERVICE OF PROCESS UPON THEM IN
ACCORDANCE WITH THE RULES AND STATUTES GOVERNING SERVICE OF PROCESS; (3) AGREE
TO WAIVE TO THE FULL EXTENT PERMITTED BY LAW ANY OBJECTION THAT THEY MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH LITIGATION, PROCEEDING OR ACTION IN ANY
SUCH COURT OR THAT ANY SUCH LITIGATION, PROCEEDING OR ACTION WAS BROUGHT IN ANY
INCONVENIENT FORUM; (4) AGREE, AFTER CONSULTATION WITH COUNSEL, TO WAIVE ANY
RIGHTS TO A JURY TRIAL TO RESOLVE ANY DISPUTES OR CLAIMS RELATING TO THIS
AGREEMENT; AND (5) AGREE THAT NOTHING HEREIN SHALL AFFECT THE RIGHTS OF ANY
PARTY TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
21. Headings
The headings contained in this Agreement are for convenience only and
shall not affect in any way the meaning or interpretation of this Agreement.
22. Counterparts
This Agreement may be executed in counterparts, each of which will be
deemed an original, but all of which together shall constitute one and the same
instrument.
THE NEXT PAGE IS THE SIGNATURE PAGE
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IN WITNESS WHEREOF, the parties hereto have set their hands as of the
day and year first written above.
EXECUTIVE: LOUDEYE CORP.
__________________________________ By:__________________________________
Jeff Cavins
Name: Anthony Bay
Title: Chairman
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SCHEDULE 1
Certain Definitions
"Cause" shall include but not be limited to termination based on any of
the following grounds: (i) fraud, misappropriation, embezzlement or acts of
similar dishonesty; (ii) conviction of a felony; (iii) illegal use of drugs or
excessive use of alcohol in the workplace; (iv) intentional and willful
misconduct that may subject the Company to criminal or civil liability; (v)
breach of the Executive's duty of loyalty, including the diversion or usurpation
of corporate opportunities properly belonging to the Company; (vi) willful
disregard of Company policies and; (vii) breach of any of the material terms of
this Agreement; and (viii) insubordination or the willful and continued failure
by the Executive to substantially perform Executive's duties with Loudeye (other
than any such failure resulting from Executive's incapacity due to physical or
mental illness) after a written demand for substantial performance is delivered
to Executive by Loudeye, which specifically identifies the manner in which
Loudeye believes that the Executive has not substantially performed Executive's
duties, and Executive's failure within 30 days to cure such insubordination or
failure to perform.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related or unrelated
transactions, of all or substantially all of the assets of Loudeye and its
subsidiaries, or (ii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which Loudeye
shareholders prior to the transaction no longer represent as a group a majority
of the voting stock of Loudeye after the consummation of the transaction.
"Confidential Information" means any confidential information
including, without limitation, any study, data, calculations, software storage
media or other compilation of information, patent, patent application,
copyright, "know-how", trade secrets, customer lists, details of client or
consultant contracts, pricing policies, operational methods, marketing plans or
strategies, product development techniques or plans, business acquisition plans
or any portion or phase of any scientific or technical information, ideas,
discoveries, designs, inventions, creative works, computer programs (including
source of object codes), processes, procedures, formulae, improvements or other
proprietary or intellectual property of the Company Group, whether or not in
written or tangible form, and whether or not registered, and including all
files, records, manuals, books, catalogues, memoranda, notes, summaries, plans,
reports, records, documents and other evidence thereof. Notwithstanding the
foregoing, the term "Confidential Information" does not include, and there shall
be no obligation hereunder with respect to, information that is or becomes
generally available to the public other than as a result of a disclosure by the
Executive not permissible hereunder or that was in the possession of Executive
prior to the date of this Agreement.
"Good Reason" shall mean: (i) any substantial material diminution of
the Executive's authority, duties or responsibilities (ii) the knowing and
willful failure of Loudeye to make any payments provided under Subsections 3(a)
or 3(b) in accordance with the terms of each of those subsections; or (iii) the
relocation without the Executive's consent of the Executive's principal work
location more than 50 miles from the former Loudeye work location where the
Executive was formally employed; provided, however, that the Executive shall not
be deemed to have resigned for Good Reason
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hereunder unless with respect to each of (i), (ii) and (iii) above, the
Executive shall have provided written notice to Loudeye within 60 calendar days
after the event that the Executive believes gives rise to the Executive's right
to terminate employment for Good Reason, describing in reasonable detail the
facts that provide the basis for such belief, and Loudeye shall have thirty (30)
days from the date of such notice to cure any such diminution, failure or
relocation.
"Notice of Termination" Any termination of the Executive's employment
by Loudeye or by the Executive during the Term of Employment (other than
termination on account of the Executive's death) shall be communicated by
written "Notice of Termination" to the other party hereto in accordance with
Section 13.
"Operational Breakeven" shall mean EBITDA or EBIT, as allocated
Paragraph 2 of Schedule 3.
"Termination Date" shall mean: (i) if the Executive's employment is
terminated by Executive's death, the date of Executive's death; (ii) if the
Executive's employment is terminated on account of Disability, the date of the
Notice of Termination is transmitted to Executive once the conditions set forth
in Section 5(a)(ii) have been satisfied; (iii) if the Executive's employment is
terminated due to a Change of Control, the date of the consummation of the
transaction that constitutes a Change of Control; and (iv) if the Executive
employment is terminated for any other reason, the date on which a Notice of
Termination is transmitted (or any later date set forth in such Notice of
Termination) or the Executive's last day of active employment, whichever date is
later.
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SCHEDULE 2
Termination Benefits
a) Termination by Loudeye Without Cause. In the event Loudeye terminates
Executive's employment hereunder without Cause, Loudeye shall provide
the Executive with nine (9) months' severance, inclusive of Executive's
then current Base Salary, earned and unpaid incentive compensation,
bonuses and benefits, to be paid within sixty (60) days from the date
of termination and, as to any Bonus payment, on the date it would have
been made had the Executive remained in active status (collectively,
the "Severance Payments"). Executive will cooperate, if requested by
the Company, in the training and support Executive's replacement, if
any. Failure of Executive to comply with this requirement may result in
Termination for Cause.
b) Termination by Loudeye For Cause. Loudeye may terminate Executive's
employment immediately for "Cause", in which case Executive shall
receive only Executive's Base Salary and normal benefits through the
last day of Executive's active employment. For purposes of this
Agreement, the term "Cause" shall be defined in Schedule 1.
c) Termination By Executive Due to Voluntary Resignation. The Executive
may terminate Executive's employment hereunder by voluntarily resigning
Executive's employment and providing Loudeye with sixty (60) days prior
notice of such resignation. In such event, Executive shall continue to
receive Base Salary, earned incentive compensation and benefits during
the period in which Executive remains in active employment or Loudeye
may, in its sole discretion, terminate the employment at any time
within such sixty (60) day period with no further obligation.
d) Termination By Executive for Good Reason. The Executive shall have the
right to resign for Good Reason and any such resignation shall be
deemed a Termination by Loudeye without Cause under Section (a).
e) Termination By Death or Disability. Executive's employment shall
terminate if the Executive is unable to perform the duties of
Executive's position due to death or disability. In such case, the
Executive's heirs, beneficiaries, successors, or assigns shall not be
entitled to any of the compensation or benefits to which Executive is
entitled under this Agreement, except: (a) with respect to any Base
Salary earned prior to the Executive's death or incapacity; (b) to the
extent specifically provided in this Employment Agreement; (c) to the
extent required by law; or (d) to the extent such benefit plans or
policies under which Executive is covered provide a benefit to the
Executive's heirs, beneficiaries, successors, or assigns. For purposes
of this Agreement, the term "Disability" shall mean that, as a result
of the Executive's incapacity due to physical or mental illness, the
Executive shall have been unable to substantially perform Executive's
duties hereunder for a period of 6 consecutive months or 180 days
within any 270 day period.
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SCHEDULE 3
Performance Factors
1. Reduction of Lease Liabilities: Twenty Five Percent (25%) of
the Target Bonus Amount shall be earned at such time as the
Company's (inclusive of its subsidiaries) total lease
obligation or monthly lease expense ("Real Estate Expense") is
reduced by not less than 70% compared with the Real Estate
Expense on February 28, 2003 or, if the Company determines not
to sell its Vidipax division pursuant to the plan approved by
the Board and to occupy the space located at 111 W. 19th
Street, not less than __% compared with the Real Estate
Expense on February 28, 2003. This bonus will be paid in full
to Executive upon execution of definitive agreements.
2. Operational Breakeven: Eighteen and Three Quarters Percent
(18.75%) of the Target Bonus Amount shall be earned at such
time as the Company achieves EBITDA for the applicable
quarter, and Six and One Quarter (6.25%) of the Target Bonus
Amount shall be earned at such time as the Company achieves
EBIT for the applicable quarter.
3. Cash Usage Breakeven: Twenty Five Percent (25%) of the Target
Bonus Amount shall be earned upon the Company having
unrestricted cash and short-term investments at the end of a
quarter that are equal to or greater than unrestricted cash
and short-term investments of the prior quarter
4. Revenue: Twenty Five Percent (25%) of the Target Bonus Amount
shall be earned upon delivering results in which revenue
exceeds the Board of Directors' approved revenue plan,
(Schedule 4) by not less than Twenty Five Percent (25%) over
the immediately preceding quarter, with such revenue measured
on a pro forma basis with adjustments for any acquisitions or
divestitures. This shall be pro rated annually and paid on a
quarterly basis. By way of example only, if the Company's
revenue exceeds the Board of Directors' approved revenue plan
by not less than Twenty Five Percent (25%) over the
immediately preceding quarter in three of four quarters,
Executive would be entitled to a bonus of 18.75% of Base
Salary based upon this Performance Factor and would be paid
6.25% following each quarter in which the Performance Factor
is achieved.
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