Employment Agreement - Loudeye Corp. and John Martin
August 13, 2003
Mr. John Martin
Dear John:
On behalf of Loudeye Corp., a Delaware corporation (the "Company"), I am pleased
to offer you the position of Senior Vice President. 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 Senior Vice President, 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>
John Martin
August 16, 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 August 18, 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
$16,666.67 which is equivalent to $200,000.00 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 employees of the Company). In the event that
you are required to spend time transitioning from
your current employer which takes your time away from
Loudeye, your salary will be adjusted on a pro-rata
basis during any such transition period to an amount
agreeable to both parties.
b. Signing Bonus. We are pleased to offer you a signing
bonus of $65,000. This bonus will be paid to you in a
lump sum on October 1, 2003. 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. Personal Objectives Bonus. You will be eligible to
receive a bonus of up to a maximum of Fifty Percent
(50%) 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.
d. Company Objectives Bonus. You will be eligible to
receive a bonus of up to a maximum of Fifty Percent
(50%) of your base salary (the Target Company
Objectives Bonus Amount"). 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: Twenty-five Percent (25%) of the
Target Company Objectives Bonus Amount shall
be earned upon the Company
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John Martin
August 16, 2003
Page 3 of 4
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
fourth quarter of 2003.
(ii) Operational Breakeven: Twenty-five Percent
(25%) of the Target Company Objectives Bonus
Amount shall be earned at such time as the
Company achieves breakeven EBIT for the
applicable quarter.
e. Annual Review. Your base salary will be reviewed
annually as part of the Company's normal salary
review process.
f. 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 grams being subject to the approval of the Board
of Directors of Loudeye. Subject to approval, you
will receive an award effective on the date
established by the Board of Directors, of 350,000
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 August 16,
2003.
g. Vesting Period. This grant shall have a ten year term
and shall be exercisable as follows: 125,000 over one
year at the rate of 1/12th per month in arrears, and
225,000 over three years at the rate of 1/36th per
month in arrears. 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.
<PAGE>
John Martin
August 16, 2003
Page 4 of 4
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.
John, 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 only yours,
LOUDEYE CORP.
JEFF CAVINS
PRESIDENT & CEO
Enclosures: Employment Agreement
Proprietary Information and Inventions Agreement