Employment Agreement - Loudeye Technologies Inc. and Joel McConaughy
[LOGO OF LOUDEYE]
VIA EMAIL
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March 14, 2001
Mr. Joel McConaughy
245 Via Linda Vista
Redondo Beach, CA 90277
Dear Joel,
On behalf of Loudeye Technologies, Inc., a Delaware corporation (the
"Company"), I am pleased to offer you the position of Senior Vice President,
Chief Technology Officer of the Company. 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.
The terms of your new position with the Company are as set forth below:
1. Position.
a. You will be the Senior Vice President, Chief Technology
Officer of the Company, working out of the Company's
headquarters in Seattle, Washington. You will report to the
President and 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 of and from you
pursuant to the express and implicit terms hereof, and 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, 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 agreement will prevent you from accepting speaking or
presentation engagements 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.
2. Start Date. Subject to fulfillment of any conditions imposed by
this letter agreement, you will commence this new position with
the Company on March 26, 2001.
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March 14, 2001
Page 2
3. Proof of Right to Work. For purposes of federal immigration law,
you will be required to provide to the Company documentary
evidence of your identity and eligibility for employment in the
United States. Such documentation must be provided to us within
three (3) business days of your Start Date, or our employment
relationship with you may be terminated.
4. Compensation.
a. Base Salary. You will be paid a monthly salary of
$18,750.00, which is equivalent to $225,000.00 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).
b. Annual Review. Your base salary will be reviewed annually
as part of the Company's normal salary review process and at
the discretion of President and CEO and approved by the
Board of Directors.
c. Annual Bonus. You are eligible to receive an annual bonus
of up to $90,000.00 (or 40% of your base salary) which will
be determined at the discretion of the President and CEO and
approved by the Board of Directors, based on the achievement
of objectives met by the Company and those set forth for you
based on individual performance.
5. 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 amount will be
issued on your Start Date and will total 350,000 Nonqualified
Stock Options. This grant shall have a ten-year term and shall be
exercisable at the rate of 18.75% of the shares on the nine month
anniversary from your Vesting Commencement Date, which shall be
your Start Date, and quarterly thereafter at a rate of 6.25% of
the total number of options every quarter until fully vested
(pro-rated for any periods less than a full calendar quarter).
The exercise price per share of your Initial Option Grant will be
equal to the Company's closing common stock price on your Start
Date.
6. Change of Control. If the Company experiences a change in
control and effective upon the closing of the change of control,
the vesting and exercisability of these options will accelerate
with respect to 50% of the total number of shares originally
subject to these options. The amount of vesting acceleration in
the preceding sentence is in addition to any vesting acceleration
that applies to the options under the terms of the Company's
stock plan, provided that except as set forth in the following
sentence, the maximum number of shares that may be accelerated
shall not exceed 50% of the total number of shares originally
subject to the options. In addition, if you are terminated
without Cause or you resign for Good Reason within twelve months
after a change in control, vesting will accelerate with respect
to 100% of the shares underlying these options.
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March 14, 2000
Page 3
"Cause" for termination of your employment shall exist if you
willfully fail to substantially perform your duties and
responsibilities to the Company, have repeated unexplained or
unjustified absences from the Company, commit any act of fraud,
embezzlement, dishonesty or other willful misconduct that causes
or would likely cause material injury to the Company, use or
disclose without authorization any proprietary information or
trade secrets of the Company (or other parties to whom you owe an
obligation of confidentiality as a result of your relationship
with the Company), or willfully breach your obligations under any
agreement with the Company including the Confidentiality
Agreement.
You will be considered to resign for "Good Reason" if you resign
your employment with the Company within 30 days following a
material reduction in your job responsibilities, duties or title
(provided that neither a change in title nor reassignment
following a change of control to a position substantially similar
to the position you held prior to the change of control
constitutes such a reduction), without your approval the Company
requires you to change your place of work to a location more than
35 miles from your work place prior the change of control, or a
material reduction in your then-current base salary (provided
that an across the board reduction in salaries of all other
similarly-placed employees by the same percentage as part of a
general salary reduction does not constitute such a salary
reduction).
For purposes of the preceding two paragraphs, the term "Company"
shall be interpreted to include affiliates and successors to the
Company, if appropriate.
7. Benefits. The Company will provide you and your dependents with
standard medical and optional dental and vision insurance
benefits. The Company will subsidize 100% of these premiums. In
addition, the Company currently indemnifies all officers and
directors to the maximum extent permitted by law, and you will be
requested to enter into the Company's standard form of
Indemnification Agreement giving you such protection. Pursuant to
the Indemnification Agreement, the Company will agree to advance
any expenses for which indemnification is available to the extent
allowed by applicable law. You will also be eligible to
participate in all standard employee benefits including the
following: 17 general vacation/sick/personal days; 8 paid
Holidays; the Company's 401K plan; Employee Stock Purchase
Program; Short and Long Term Disability plans; Soft Dollar "Life
Enhancement" plan; and the Company's Flexible Spending Account
plan. Also, in addition to the $150,000.00 of employer paid Life
and AD&D insurance, you are also eligible to apply for voluntary
Life insurance and will receive a guarantee issue of $50,000.00
if you elect coverage.
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March 14, 2001
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If you complete and pass a medical questionnaire and possible
medical exam, you are eligible to receive up to $300,000.00 upon
approval.
8. 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.
9. Confidentiality of Terms. You agree to follow the Company's
strict policy that employees must not disclose, either directly
or indirectly, any information, including any of the terms of
this agreement, regarding salary, bonuses, or stock purchase or
option allocations to any person; provided, however, that you may
discuss such terms with members of your immediate family and any
legal, tax or accounting specialists who provide you with
individual legal, tax or accounting advice.
10. Severance Agreement. If your employment is terminated by the
Company or its successor for any reason other than Cause, as
reasonably determined by the Company's Board of Directors, or if
you resign for Good Reason, you will be entitled to receive
continuation of your base salary and reimbursement of your
insurance benefit expenses for nine (9) months following the date
of termination of your employment.
11. At-Will Employment. Notwithstanding the Company's obligation
described in Section 8 above, 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.
12. Signing and Relocation Bonus. Upon commencing employment, you
will receive a one-time, lump sum signing and relocation bonus
equal to $75,000.00 to assist you in relocating you and your
family to the Seattle area. In addition, you will be permitted to
expense reasonable temporary housing and travel expenses to the
Company for the estimated four-month transition period until your
relocation is complete. In order to receive your bonus payment,
you will be required to sign a promissory note evidencing your
obligation to repay the bonus if you willfully vacate your
position during the first 12 months of your employment for
anything other than Good Reason. All amounts owing under the
promissory note will be forgiven on the 12-month anniversary of
your Start Date.
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March 14, 2001
Page 5
Joel, we are all delighted to be able to extend you this offer and look
forward to working with you. To indicate your acceptance of the Company's offer,
please sign and date this letter in the space provided below and return it to
me, along with a signed and dated copy of the Proprietary Information and
Inventions Agreement. This letter, together with the Proprietary Information and
Inventions Agreement, sets forth the terms of your employment with the Company
and supersedes any prior representations or agreements, whether written or oral.
This letter may not be modified or amended except by a written agreement, signed
by the Company and by you.
Very truly yours,
LOUDEYE TECHNOLOGIES
/s/ John T. Baker
John T. Baker
President and Chief Executive Officer
ACCEPTED AND AGREED:
Joel McConaughy
/s/ Joel McConaughy
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Signature
March 14, 2001
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Date
Enclosure: Proprietary Information and Inventions Agreement