Employment Agreement - Loudeye Corp. and Lee Kirby
This Employment Agreement, dated as of May 10, 2004, (this "Agreement"), is by
and between Lee Kirby (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 Executive Vice President of Professional & Customer Services 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 CEO 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 $220,000 (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.
(b) Performance Bonus. The Executive shall have incentive compensation
targets equal to One Hundred and Twenty Seven Percent (127%) of the
Executive's Base Salary (the "Target Bonus Amount"). The Target
Bonus Amount shall be subdivided into two separate performance
specific targeted bonus amounts which shall be awarded based upon
two separate performance factors ("Performance Factors") as set
forth on Schedule 3 hereto. Schedule 3 hereto may be amended or
modified to reflect such other performance criteria as the
Compensation Committee of the Board of Directors may determine from
time to time. Such amendments will not be made retroactively without
executive's consent. 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 Compensation Committee of 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, the Executive may
be eligible to participate in one-time bonus programs that are
approved by the Compensation Committee of the Board of Directors.
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(c) 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 Compensation Committee of the
Board of Directors of Loudeye. Subject to approval, the Executive
will receive an award effective on the date established by the
Compensation Committee in accordance with the schedule set forth
below, of options to purchase, to the extent available under IRS
regulations, 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
or about May 10, 2004.
Date awarded Target Number of Stock Options Shares
------------ -------------------------------------
May 10, 2004 Options to purchase 500,000 shares
(d) Vesting period. This grant shall have a ten year term and shall be
exercisable at the rate of 25% of the grant after the first twelve
(12) months of employment and monthly at the rate of 1/36
thereafter. The exercise price per share of your Incentive Option
Grant will be equal to the Company's closing common stock price on
or about May 10, 2004. 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.
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;
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. 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.
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(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.
(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 a particular plan or program. The Executive shall be
entitled to four (2) weeks paid vacation in each twelve month period, 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 ________ __, 2004 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
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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 venture, 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. 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 venture, 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:
Lee Kirby
4445 160th Ave SE
Issaquah, WA. 98027
with a copy to: Jerry Hahn
Oseran, Hahn, Spring & Watt, P.S.
850 Skyline Tower
10900 NE 4th Street
Bellevue, WA 98004
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If to the Company: Loudeye Corp.
1130 Rainier Ave. South
Seattle, WA 98144
Attention: Jeff Cavins
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
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 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.
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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 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 King County, Washington. (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.
/s/Lee Kirby By: /s/ Jeff Cavins
--------------------------------------- ----------------------------------
Lee Kirby Name: Jeff Cavins
Title: CEO
<PAGE>
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.
"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) 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 (ii) 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 hereunder unless with respect to each of (i) and (ii)
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
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 Profitability" shall mean 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 twelve (12) 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. Executive MBO: Forty Percent (40%) of the Target Bonus Amount shall be
earned at such time Executive achieves the bookings and revenue targets
assigned by the CEO and approved by the Compensation Committee of the
Board of Directors. The targets will be mutually agreed upon by Executive
and the CEO. The executive is eligible for additional MBO Target Bonuses
from time to time as approved by the Compensation Committee of the Board
of Directors of Loudeye.
2. Profitability Bonus: Sixty Percent (60%) of the Target Bonus Amount shall
be earned upon the Company achieving Operational Profitability for the
full year. Operational Profitability is defined as positive net earnings
for the period before interest and taxes. The annual Target Bonus will be
measured and paid when earned, pro rata, on a quarterly basis. The Target
Bonus will be considered earned upon the Company reaching profitability in
the period after the bonus is paid to executive. Upon approval from the
Compensation Committee of the Board of Directors of Loudeye, the Executive
may exchange all or a portion of the earned bonus for additional options
in the company share option program.