Employment Agreement - Loudeye Corp. and Michael Harburg
June 16, 2003
Mr. Michael Harburg
18446 40th Place NE
Seattle, WA 98155
Dear Mike:
On behalf of Loudeye Corp., a Delaware corporation (the "Company"), I am pleased
to offer you the position of Chief Technology Officer. Speaking for myself, as
well as the other members of the Company's management team and board of
directors, we are very much looking forward to having you on the Loudeye team in
that capacity.
The terms of your new position with the Company are outlined below:
1. Position.
a. You will be the Chief Technology Officer, working out of the
Company's headquarters in Seattle, Washington. At present, you
will report to the 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 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,
and 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 is designed to prevent you from
accepting speaking or presentation engagements consistent with
Loudeye's business plan 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. Please seek my approval before
accepting a speaking or presentation engagement.
<PAGE>
Michael Harburg
July 31, 2003
Page 2 of 4
2. Start Date. Subject to fulfillment of any conditions imposed by the
accompanying Employment Agreement, you will commence this new
position with the Company on June 16, 2003.
3. Proof of Right to Work. For purposes of federal immigration law, you
are required to provide to the Company documentary evidence of your
identity and eligibility for employment in the United States.
4. Compensation.
a. Base Salary. You will be paid a monthly salary of $14,583.33
which is equivalent to $175,000 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. Signing Bonus. We are pleased to offer you a signing bonus of
$37,000. This bonus will be paid to you in one installment
within your first month of employment. Please note that this
signing bonus will be considered taxable income and payroll
taxes will be withheld. In the unlikely event that you leave
the Company of your own volition within 12 months of your
start date, you will be responsible for reimbursement to the
Company of the entire signing bonus. You hereby authorize the
Company to withhold this amount from any monies owed to you
upon the severance of your employment.
c. Other Bonus. You will be eligible to receive a bonus of up to
a maximum of Thirty Percent (30%) of your base salary (the
"Target Bonus Amount"). The Target Bonus Amount shall be
subdivided into two separate performance specific targeting
bonus amounts which shall be awarded based upon the following:
(i) Revenue: Fifteen Percent (15%) of the Target Bonus
Amount shall be earned upon the Company delivering
results in which revenue exceeds the Board of Directors'
approved revenue plan, by not less than Ten Percent
(10%) over the immediately preceding quarter. The
measurement of this shall commence in the first quarter
of 2003.
(ii) Operational Breakeven: Fifteen Percent (15%)of the
Target Bonus Amount shall be earned at such time as the
Company achieves EBIT for the applicable quarter.
<PAGE>
Michael Harburg
July 31, 2003
Page 3 of 4
d. Annual Review. Your base salary will be reviewed annually as
part of the Company's normal salary review process.
e. Stock Options. 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 of 80,000
Incentive Stock Options was issued on May 9, 2003. You will be
eligible to receive an additional 60,000 Incentive Stock
Options once you have met defined and agreed upon individual
performance metrics. These performance objectives will be
determined by you and the CEO. You are also eligible to
receive an additional 30,000 Incentive Stock Options once the
Company achieves operational cash flow positive performance
for any quarter. And finally, you are eligible to receive an
additional 30,000 Incentive Stock Options upon the Company
delivering results in which revenue exceeds the Board of
Directors' approved revenue plan over two consecutive
quarters. The vesting of these options will accelerate in the
event of a change of control, to be defined by the board of
directors.
5. 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.
6. Confidentiality of Terms. The Company maintains your personnel file,
including information about your salary and benefits, in a private
and confidential manner. Our policy to protect the privacy of such
information is enhanced when you keep the information confidential.
7. At-Will Employment. 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.
This letter summarizes the general terms and conditions of your potential
employment with the Company and is provided as a courtesy. The accompanying
Employment Agreement and the Proprietary Information and Inventions Agreement
set forth the proposed contractual terms of your employment with the Company and
supersede any prior representations or agreements, whether written or oral. To
indicate your acceptance of the Company's offer, please sign and date the
accompanying Employment Agreement and return it to me, along with a signed and
dated copy of the Proprietary Information and Inventions Agreement, at your
earliest convenience.
<PAGE>
Michael Harburg
July 31, 2003
Page 4 of 4
Mike, I am delighted to be able to extend you this offer and we all look forward
to working with you in your new capacity.
Very truly yours,
LOUDEYE CORP.
Jeffrey Cavins
President and CEO
Enclosures: Employment Agreement
Proprietary Information and Inventions Agreement