EXHIBIT 10.10
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), dated December 5, 2003 is by and
between Xxxxxxx Xxx (the "Executive") and Loudeye Corp., a Delaware corporation
(the "Company" or "Loudeye"). The Company and the Executive are hereinafter
collectively referred to as the "Parties" and individually referred to as a
"Party."
WITNESSETH:
WHEREAS, the Executive has served the Company in the capacity of a
Consultant under a separate Consulting Agreement (the "Consulting Agreement")
dated April 1, 20003; and
WHEREAS, the Company wishes to obtain the future services of the
Executive as an employee of the Company and terminate the Consulting Agreement
contemporaneously with this Agreement, except as stated within; 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 herein, 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 Chairman and Chief Strategy Officer of the Company to serve
as an at-will employee at the pleasure of the Board of Directors of the Company
(the "Board").
2. Extent of Employment
The Executive shall perform his obligations hereunder faithfully and to
the best of his ability under the direction of and accountable to the Board and
in cooperation with and support of the Chief Executive Officer of the Company.
The Executive shall have such duties, responsibilities and obligations
("Responsibilities") as shall be assigned to him from time to time by the Board,
in its discretion. Executive shall devote such time, energy and skill as may be
reasonably necessary for the performance of his Responsibilities (except for
vacation periods and reasonable periods of illness or other incapacity),
estimated to average approximately 40% of the time which he would spend as a
full time senior executive of the Company. Executive's initial Responsibilities
shall be as set forth in Schedule D. 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 this Agreement, 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 $150,000 (the "Base Salary"). The Board shall annually, and in its sole
discretion, determine whether the Base Salary should be increased and, if so,
the amount of such increase. Executive will receive no additional compensation
as a member of the Board.
(b) Performance Bonus. The Executive shall be eligible to receive
a bonus of up to a maximum of One Hundred Percent (100%) of the Executive's Base
Salary (the "Target Bonus Amount"), provided, however, that for 2003, the Target
Bonus Amount shall be $50,000. The Target Bonus Amount shall be paid contingent
upon attainment of such performance criteria as the Board may determine from
time to time in its sole discretion. For 2003 the performance criteria are set
forth on Schedule 3. Notwithstanding anything to the contrary herein, the
payment of any Target Bonus shall be in the sole discretion of the Board.
(c) Stock Option. During the Term (as hereinafter defined), the
Executive shall be entitled to participate in the Company's stock option plan in
the discretion of the Board.
(d) Existing Consultant Options. Options previously granted to
Executive, pursuant to the Consulting Agreement, will remain in place and vest
in accordance with the terms and schedule set forth in the Consulting Agreement
and the document(s) evidencing the grant of such options, for so long as the
Executive is employed by the Company in accordance with the provisions of this
Agreement.
(e) Restricted Stock Award.
(i) Issuance of Shares.
Concurrently with the execution of this Agreement, the Parties hereto
shall execute and deliver a Restricted Stock Purchase Agreement, attached hereto
as Exhibit A and incorporated herein by this reference (the "Stock Purchase
Agreement"). Subject to the terms and conditions of this Agreement and the Stock
Purchase Agreement, a certificate representing 15,000 shares of the Company's
common stock (the "Shares") shall be issued, but held in escrow by the Company
for the benefit of the Executive, upon execution of this Agreement and the Stock
Purchase Agreement.
(ii) Repurchase Right of the Company.
The Company shall have the right to repurchase the Shares (the
"Repurchase Right") under the terms and conditions set forth in this
Agreement and the Stock Purchase Agreement. The repurchase price for
"Unvested Shares" shall be the original
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purchase price for such Shares paid by the Executive (the "Repurchase
Consideration"). For the purposes of this Section 2(e), "Vest," "Shares
that Vest" or "Vested Shares" shall mean that, subject to the terms and
conditions of this Agreement and the Stock Purchase Agreement, the
Company shall have no Repurchase Right with respect to those Shares
that have become Vested Shares. The Shares shall Vest quarterly in
arrears, during the period of October 1, 2003 -- October 1, 2005, upon
the terms and conditions set forth in the Stock Purchase Agreement.
(iii) Restriction on Transfer Imposed by the Company.
The Executive agrees that he shall not under any circumstances
transfer, assign, xxxxx x xxxx or security interest in, pledge, hypothecate,
encumber or otherwise dispose of any of the Shares which are subject to the
Company's Repurchase Right.
(f) Compensation on sale of the Company or Company assets.
Executive shall be entitled to a bonus or bonuses ("Sale Bonus") equal to one
and one-half percent (1.5%) of the total Incremental Value (as defined below)
upon consummation of a Change of Control. "Incremental Value" for purposes
hereof shall mean the difference between (x) the Consideration, as defined in
Schedule 1, delivered in connection with the consummation of a Change of Control
event as defined in Schedule 1 (a "Qualifying Transaction"), and (y)
$12,340,964, representing the market value of the Company as of April 1, 2003.
The Sale Bonus shall be fully earned upon consummation of the Qualifying
Transaction that creates Incremental Value, and shall be paid in the same
currency as the Consideration (including securities) paid to Loudeye or the
stockholders of Loudeye in connection with such Qualifying Transaction. In the
event that Executive is terminated without Cause or resigns with Good Reason
within six (6) months prior to a Qualifying Transaction, and Executive did not
otherwise receive a Sale Bonus, Executive shall be entitled to the Sale Bonus in
amounts described above. Payment of the Sale Bonus will be subject to execution
of a Release of Claims by Executive.
4. Term of this Agreement
This Agreement shall be effective as of October 1, 2003 (the "Effective
Date"), and shall continue until terminated in accordance with Section 5 herein
(the "Term"). Notwithstanding anything herein to the contrary, either Party may
terminate the Executive's employment under this Agreement at any time, with or
without Cause.
5. Termination
(a) Subject to the Company's obligations to make the payments
contemplated by Section 5(b)(i), this Agreement may be terminated at any time:
i. upon the death of the Executive ("Death");
ii. in the event that, due to a 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");
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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
("Resignation"); or
vii. by the Executive upon 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.
(b) If the Executive's employment is terminated for any reason
whatsoever, then, subject to the execution by Executive of a release of claims
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,
stockholders and agents ("Release of Claims") 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 Performance Bonus 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) reimbursement of 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 Termination Date. In the event the
Executive's employment is terminated pursuant to:
(i) Death, Disability, Good Reason, without Cause or due to a
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 ratably over a period of two
months (2) months as determined by the Company, provided, however, that
in the event of termination due to a 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.
(ii) Cause or Resignation, there will be no additional amounts
owing by the Company to the Executive under this Agreement from and
after the Termination Date.
(c) Termination of this Agreement will not terminate any other
provisions not associated specifically with this Agreement.
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(d) Upon termination of this Agreement, 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 this Agreement, 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. The Company shall have no obligation to establish or
maintain an particular plan or program. The Executive shall be entitled to paid
vacation accruing at the rate of .50 days per month, subject to the reasonable
requirements of the Company as to the timing of the taking of such vacation.
8. Confidential Information
Executive shall, as soon as practicable, execute and deliver to the
Company a Proprietary Information and Inventions Agreement in favor of the
Company (the "Confidentiality Agreement"), in such form as is reasonably
satisfactory to the Company. 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 herein, to the extent that
the definition contained herein does not conflict with such provisions of 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 twelve (12)
months from termination, the Executive will not, without the express written
approval of the Board, 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 venturer, 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. The Executive
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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 this Agreement and for a period of twenty-four (24)
months thereafter, Executive will not and will not cause another business or
commercial enterprise to, without the express prior written approval of the
Board, 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 venturer, 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 this Agreement, 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 this Agreement,
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 this Agreement, 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: Xxxxxxx Xxx
00000 XX 000xx Xxxxx
Xxxxxxx, XX 00000
Facsimile No._______________
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If to the Company: Loudeye Corp.
0000 Xxxxxxx Xxx. Xxxxx
Xxxxxxx, XX 00000
Attention: CEO
With a copy to the CFO
Facsimile No.: (000) 000-0000
with a copy to: Xxxx Xxxxxxxx
XXXXXXXX, XXXX, HARGREAVES & SAVITCH, LLP
000 X. Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
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, including, but not limited to, the Executive's financial, tax and
legal advisors, or such other 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. Termination of Consulting Agreement.
Subject to the provisions of this Agreement, the Parties agree that the
Consulting Agreement shall terminate on the Effective Date and the Company shall
have no further obligations thereunder. For the avoidance of doubt, the
Executive acknowledges and agrees that any provisions of the Consulting
Agreement that, by their terms, would survive termination, including, but not
limited to Section 8 therein, shall survive such termination.
16. Company's Obligation; Taxes.
In connection with a Change of Control, the Company will use all
reasonable efforts to maintain, or will use all reasonable efforts to cause any
successor to the Company to maintain, reasonably comparable directors' and
officers' insurance and indemnification policies (including employment practices
liability insurance) to be maintained for a period of not less than three years,
from the date of the consummation of the transaction constituting a Change of
Control, to the extent that they provide coverage for events occurring prior to
the effective date of the transaction constituting a Change of Control, for the
Executive's service as an officer and director of the Company prior to such
event. 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
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amounts payable to the Executive pursuant to this Agreement shall be subject to
withholding and any other applicable taxes.
17. 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.
18. 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.
19. 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.
20. 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
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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.
21. 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 ANY SUCH LITIGATION, PROCEEDING OR ACTION IN ANY
SUCH COURT OR THAT ANY SUCH LITIGATION, PROCEEDING OR ACTION WAS BROUGHT IN ANY
INCONVENIENT FORUM; (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.
22. 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.
23. Survival
Sections 5, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 21 and this
Section 23 of this Agreement shall survive the termination of this Agreement.
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24. 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.
______________________________ By:______________________________
Xxxxxxx Xxx Name: Xxxx Xxxxxx
Title: President and CEO
[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT
FOR XXXXXXX XXX DATED AS OF NOVEMBER 13, 2003]
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SCHEDULE D
Executive's Initial Responsibilities
In addition to Executive's normal governance responsibilities as
Chairman of the Board, Executive shall provide support to the Chief Executive
Officer and the Board on specific issues and initiatives which shall initially
include:
- Development of a "Strategic Priorities & Agenda" to drive the
company for the next twelve months;
- Strengthening and extending the Company's relationship with
Microsoft Corporation;
- Participation in selective, high potential new business
opportunities;
- Assistance on Technology and product strategy; and
- Mentorship and assimilation of Xxxx Xxxxxx.
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SCHEDULE 1
Certain Definitions
"Cause" shall include but not be limited to termination based on any of
the following grounds: (i) the Executive has committed an act that is intended
to and does materially injure the business of the Company; (ii) fraud,
misappropriation, embezzlement or acts of similar dishonesty; (iii) conviction
of a felony; (iv) illegal use of drugs or excessive use of alcohol in the
workplace; (v) intentional or willful misconduct that may subject the Company to
criminal or civil liability; (vi) breach of the Executive's duty of care or
loyalty, including the diversion or usurpation of corporate opportunities
properly belonging to the Company; (vii) willful disregard of Company policies;
(viii) breach of any of the material terms of this Agreement; (ix)
insubordination or the willful failure by the Executive to substantially perform
Executive's Responsibilities (other than any such failure resulting from
Executive's incapacity due to physical or mental illness), including a refusal
or failure to follow lawful and reasonable directions of the Board, 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 or failed to follow
directions of the Board, and Executive's failure within 10 days to cure such
insubordination or failure to perform; provided, however, that Employee shall
not be required to provide Executive with more than one cure period, (x) a
determination by the Board that the Executive has engaged in conduct
constituting sexual harassment of any current or former employee of the Company;
(xi) the Executive has committed an act that is intended to and does materially
injure the business of the Company; or (xii) the Executive's commission of any
fraud against the Company, its employees, agents or customers or use or
intentional appropriation for his personal use or benefit of any funds or
properties of the Company not authorized by the Board to be so used or
appropriated (but not including immaterial takings or uses of office supplies,
company facilities, etc.).
"Change of Control" means the occurrence of any of the following: (i)
the consummation of a 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, or (ii) the consummation of any transaction (including,
without limitation, any merger or consolidation) the result of which Loudeye
stockholders prior to the transaction no longer represent as a group a majority
of the voting stock of Loudeye after the consummation of the transaction.
"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
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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.
"Consideration" shall mean the total net proceeds and other
consideration paid or exchanged directly or indirectly by the Acquiror (as
hereinafter defined), to or for the benefit of the stockholders of the Company,
or to or for the benefit of the Company to the extent that such proceeds are
distributed to the stockholders, in connection with a transaction that shall
constitute a Change of Control, and be comprised of cash, notes, evidences of
indebtedness, securities and other property, or a combination thereof. For the
avoidance of doubt, Consideration shall not be deemed to include any "Contingent
Payments" which, for the purposes of this Agreement, shall mean Consideration
received or receivable by the Company in the form of deferred performance-based
payments, "earnouts", royalty agreements or other contingent payments based upon
the future performance of the Company, its business or assets. For the purposes
of this section, Acquiror shall mean the other party or parties to the
transaction that, when consummated, shall constitute a Change of Control.
"Good Reason" shall mean: (i) any substantial material diminution of
the Executive's authority, duties or responsibilities (ii) 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 (iii) 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), (ii) and (iii) 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 diminution, failure or relocation.
"Notice of Termination" Any termination of the Executive's employment
by Loudeye or by the Executive pursuant to this Agreement (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 Breakeven" shall mean EBITDA or EBIT, as allocated
Paragraph 1 of Schedule.
"Release of Claims" shall have the meaning set forth in Section 5(b).
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"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 or by the Executive for Good
Reason. In the event Loudeye terminates Executive's employment
hereunder without Cause, or Executive terminates his employment for
Good Reason, Loudeye shall provide the Executive with six (6) months'
severance, Base Salary. In addition, Executive will be entitled to
payment of such portion of the Performance Bonus as the Compensation
Committee shall authorize as necessary (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. In the event Executive is terminated without Cause within 6
months following a Change of Control, Executive's Performance Bonus
will be considered earned to the extent specified by the Compensation
Committee in its discretion, and, to the extent payable, payment will
be made no later than sixty (60) days after 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.
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 Death or Disability. Executive's employment shall
terminate if the Executive is unable to perform the Executive's
Responsibilities due to Death or Disability (as defined in Section
5(a)(ii) of the Agreement. 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 Disability; (b) to the extent specifically
provided in this 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.
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SCHEDULE 3
Performance Factors
(Set annually by BOD in its discretion, 2003 metrics listed below)
1. Revenue
2. New Customers
3. EBIT
4. CASH
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EXHIBIT A
RESTRICTED STOCK PURCHASE AGREEMENT
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