Employment Agreement - Loudeye Corp. and Larry Madden
March 12, 2004
Mr. Larry Madden
Dear Larry:
On behalf of Loudeye Corp., a Delaware corporation (the "Company"), I am
pleased to offer you the position of Executive Vice President and Chief
Financial Officer. Speaking for myself, as well as the other members of the
Company's management team, 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 Executive Vice President and Chief Financial
Officer of the company responsible for all financial, accounting,
administration and legal affairs, working out of the Company's
headquarters in Seattle, Washington. 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.
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 March 15, 2004.
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Larry Larry Madden
March 24, 2004
Page 2 of 4
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 $19,583.33 which
is equivalent to $235,000.00 on an annualized basis. Your salary
will be payable in two equal payments per months pursuant to the
Company's regular payroll policy (or in the same manner as other
employees of the Company).
b. MBO. We are pleased to offer you a special MBO Bonus target of
$40,000. This special MBO bonus will be paid to you in a lump sum
in the second quarter when you achieve your target objectives set
forth here. These targets will be as follows: (i) assessment of our
accounting, finance and legal organizations and actions to correct
the expense and use of outside legal services that are not
securities or M&A related. (ii) establishing the structure and
focus for each organization and providing target objectives for
each, (iii) securing digital download agreements with the five
major labels. 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 this special MBO
bonus. You hereby authorize the Company to withhold this amount
from any monies owed to you upon the severance of your employment.
c. Signing Bonus. You will receive a signing bonus of seventeen
thousand dollars ($17,000) to be paid on the last pay period of the
first month of your employment.
d. Moving Expenses. The company will reimburse you for direct expenses
related to your relocation to Seattle. These expenses will be costs
of moving household items, temporary housing, auto rental, meals
and other transportation incurred during the interim housing
period.
e. Personal Objectives Bonus. You will be eligible to receive a bonus
of twenty five percent (25%) of your base salary (the "Target
Personal Objectives Bonus Amount"). The Target Personal Objectives
Bonus Amount shall be subdivided into two or three separate
performance specific targeting bonus amounts which shall be jointly
determined by the CEO and you within the next 30 days.
f. Company Objectives Bonus. You will be eligible to receive a bonus
of seventy five percent (75%) of your base salary (the "Target
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Larry Larry Madden
March 24, 2004
Page 3 of 4
Company Objectives Bonus Agreement"). The Target Company Objectives
Bonus Amount shall be subdivided into two separate performance
specific targeting bonus amounts which shall be awarded based upon the
following:
(i) Revenue growth and Profitability; The company must achieve its
revenue growth and profitability targets in order for management
to be eligible for the Company Objectives Bonus. The metrics on
revenue growth and profitability are currently before the
compensation committee and will be finalized by March 15, 2004.
(ii) Annual Review. Your base salary will be reviewed annually as
part of the Company's normal salary review process.
g. Stock Options. During the employment period, you will be eligible to
participate in the stock option or other incentive programs available
to officers or employees of the Company and shall have the opportunity
to purchase shares in accordance with its rules at a level
commensurate with your position, all such grants being subject to the
approval of the Board of Directors of Loudeye. Subject to board
approval, you will receive an award effective on the date established
by the Board of Directors, of 750,000 options to purchase, to the
extent available, shares of Loudeye with an exercise price based on
the closing price of Loudeye stock upon the date of board approval of
the grant of the options.
h. Vesting Period. This grant shall vest over forty eight (48) months,
shall have a ten year term and shall be exercisable after the first
nine months of vesting. 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.
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.
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Larry Larry Madden
March 24, 2004
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7. At-Will Employment. Your employment with the Company will be on
and "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
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 this offer and return it
to me, along with a signed and dated copy of the Proprietary Information and
Inventions Agreement, at your earliest convenience.
Larry, I am delighted to be able to extend you this offer and we all look
forward to working with you.
Very truly yours,
LOUDEYE CORP.
/s/ Jeff Cavins
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Jeff Cavins
President & CEO
Enclosures: Proprietary Information and Inventions Agreement