Employment Agreement - Overture Services Inc. and Leonard R. Stein
March 21, 2003
Leonard R. Stein
2218 Clay Street
San Francisco, CA 94115
Dear Lenny:
I am delighted to confirm our offer to join Overture Services, Inc. (the
"Company") as Chief Legal Officer commencing on or before April 7, 2003. This
position will report to the President and Chief Executive Officer and you will
be a member of our Executive Management Team.
The following are the specific terms of our offer:
- You will earn a base salary of $12,916.67 per semi-monthly pay period,
which is equivalent to $310,000.00 on an annual basis. You will be paid
in accordance with the Company's normal payroll procedures.
- Your annual short-term incentive will be $175,000 at Target with a
maximum payout of 200% ($350,000) of target. Bonuses are reviewed and
earned on an annual basis prorated from the date of hire, and subject
to the Company's eligibility rules, available funding and payout
schedule. For 2003, Overture agrees that your short-term incentive will
be $160,000 at Target with a maximum payout of 200% ($320,000) and to
pay you a minimum of 100% of this bonus target amount (i.e.$160,000).
Your 2003 short-term incentive shall not be prorated to reflect the
portion of the year you are employed with us.
- You will receive a one-time hiring bonus of $25,000 within ten days
after you commence work.
- We understand that between your start date and August 2004, you expect
to commute from your home in San Francisco. As we've discussed, we
would expect that you will typically spend 4 days per week at our
corporate headquarters in Pasadena except when traveling on company
business outside of the Pasadena area. You will be provided with the
necessary assistance to support your commute between your home and
Overture's office in Pasadena until you are able to permanently
relocate to Southern California. Overture agrees to cover reasonable
commuting expenses through August, 2004. Reasonable expenses would
include lodging and transportation consistent with Company policy. In
addition, the Company will reimburse incidental expenses including, for
example, meals or health club, up to $25 per day (if traveling to other
locations on company business, reimbursement would follow the Company's
Travel and Entertainment expense guidelines).
- You will be provided with an allowance not to exceed $50,000 to help
you relocate your primary residence within a reasonable commuting
distance of our Pasadena office within 18
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months of your start date. This allowance can only be used for IRS
allowable expenses and must follow company policy for the type of
allowable expense, the reimbursement process for submitting receipts,
and other reasonable guidelines. We use a professional third party
reloca tion administrator to provide you with expert assistance in
facilitating your move, and we expect you to work through the
administrator.
- We will recommend to the Board of Directors of the Company (or the
Compensation Committee if it has delegated the assignment) that, at the
next meeting, you be granted an option to purchase 50,000 shares of
Common Stock of the Company (the "Initial Half Grant") at the fair
market value as determined by the closing price for the Common Stock on
the last market trading day prior to the grant date, as reported in the
Wall Street Journal. The vesting commencement date of the Initial Half
Grant will be your Start Date. Subject to your continued employment by
the Company, at the first meeting of the Board of Directors (or the
Compensation Committee if it has delegated the assignment) after the
three month anniversary of your first date of full-time employment with
the Company, we will recommend that you be granted a stock option to
purchase 50,000 shares of Common Stock of the Company (the "Subsequent
Half Grant") at the fair market value as determined by the closing
price for the Common Stock on the last market trading day prior to the
grant date, as reported in the Wall Street Journal. The vesting
commencement date for the "Subsequent Half Grant" will be the
three-month anniversary of your Start Date. Options granted under both
the Initial Half Grant and the Subsequent Half Grant shall be subject
to the terms and conditions of the Company's Stock Option Plan and
Stock Option Agreement, including vesting requirements. Subject to the
terms of the Stock Option Plan, these stock option agreements shall
provide you with the ability to exercise vested options up to 1 year
from the date of termination, in the event you are terminated without
Cause as that term is defined in the Overture Services, Inc. Change of
Control Severance Agreement, hereafter the "Change of Control
Agreement).
- As a Section 16 employee, it is our policy to recommend to the
Committee that you receive a set of severance benefits in the event you
are terminated pursuant to a change of control ("double-trigger"
termination). Standard double-trigger benefits include accelerated
vesting of stock options, 24-months exercise extension, and twelve (12)
months of base salary as severance. Please refer to this "Tier I"
Change of Control Agreement for the complete terms.
- In the future, your annual salary and short and long term incentive
awards will be reviewed on a regular basis at the same time and in the
same manner as other peer senior managers.
- You will receive 10 days of paid vacation in 2003 and per calendar year
thereafter until your years of service make you eligible for a higher
accrual. You will also receive 2 personal days per calendar year; each
accrues on a 6-month basis. In addition, you may take additional days
on an unpaid basis. You may take your previously planned vacation on
April 14th-18th and May 2nd.
- You will be eligible for all benefit programs offered to employees,
subject to the eligibility rules of each program.
- We will pay on your behalf your California and District of Columbia Bar
fees and section memberships, reasonable expenses to meet your
continuing education requirements, and your memberships in the American
Bar Association, American Corporate Counsel Association,
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Silicon Valley Association of General Counsel and one local bar
association (San Francisco or Los Angeles) of your choice, including
reasonable expenses of attending appropriate meetings of these
organization consistent with your job responsibilities.
- At present, the Company purchases and maintains in effect for its
employees short- and long-term disability insurance. The short-term
disability coverage provides employees with an income equal to 70% of
base compensation up to a maximum of $2,500 per week (short-term
disability), while the long-term coverage provides 60% of the
employee's base salary up to a maximum of $10,000 per month. As
discussed, and in order to address your desire to secure income
protection in the 60% range of your yearly base salary, the Company is
exploring how it might make its disability coverage more attractive to
you and similarly situated Company executives (including the possible
modification of current monthly "caps" on the amount of disability
coverage). The Company agrees that it shall purchase and maintain in
effect disability insurance coverage sufficient to provide you with an
income of not less than 60% of your base compensation in the event that
you are not able to perform your duties as Chief Legal Officer. The
cost of such insurance shall be reflected as additional compensation to
you for tax purposes.
- If your employment is terminated by us other than for Cause (as that
term is defined in the Change of Control Agreement) within the first 12
months of your employment, you will become entitled to six (6) months
of severance pay in the aggregate of your total annual target
compensation (computed as base plus short term incentive at Target).
Your severance payments shall be made monthly and will be subject to
withholding of all applicable taxes.
Your employment with the Company shall be on an at-will basis.
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 the Company within
three (3) business days of your date of hire, or our employment relationship
with you may be terminated.
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. This letter, along with
the agreement relating to proprietary rights between you and the Company, 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 written agreement, signed by a designated Company
representative and by you.
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We look forward to working with you.
Sincerely,
/s/ Jackie DeMaria
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Jackie DeMaria
Chief People Officer
Overture Services, Inc.
Accepted and agreed to:
Signature: /s/ Leonard R. Stein Date: April 4, 2003
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Leonard R. Stein