MP3.COM, INC.
P.O. Box 910091
San Diego, CA 92191
April 23, 1999
Paul Alofs
RE: EMPLOYMENT TERMS
Dear Paul:
MP3.com, Inc., a Delaware corporation, (the "Company") is pleased to offer you
the position of President of Strategic Business Units, on the following terms.
You will serve as President of Strategic Business Units, and will be responsible
for such duties as are normally associated with such positions or as otherwise
determined by the President of the Company, including, but not limited to,
responsibility in the areas of SBU's, internal operations, profit/loss
management, artist services, international operations strategy and fulfillment
operations. You will report to Robin Richards, the President and Chief Operating
Officer of the Company. You will work at our facility located in San Diego.
Your salary will be $16,666.67 per month, less payroll deductions and all
required withholdings. Your salary will be paid bi-weekly. You shall be entitled
to participate in all incentive, savings and retirement plans, practices,
policies and programs maintained or sponsored by the Company from time to time
for the benefit of its employees generally or its executive officers generally.
You will be eligible for standard benefits, such as medical insurance, sick
leave, vacations and holidays to the extent applicable generally to other
executive officers of the Company. Details about these benefits will be provided
in an Employee Handbook and in Summary Plan Descriptions, which will be prepared
by the Company and made available for your review in due course.
In addition to your salary, so long as you continue to be employed with the
Company, the Company will reimburse you for general living expenses, including,
without limitation, rent and utilities, not to exceed $2,250 per month, for a
period of twelve (12) months in connection with your relocation to San Diego;
provided, however, that you will be required to submit proper documentation to
the satisfaction of the President of the Company in order to qualify for such
reimbursement.
Upon commencement of employment with the Company pursuant to this letter (the
"Commencement Date"), you will be granted an Incentive Stock Option to purchase
330,000
shares of the Common Stock of the Company under the Company's 1998 Equity
Incentive Plan (the "Plan"). The exercise price per share of the Incentive Stock
Option will be equal to the fair market value of the Common Stock on the date
you commence your employment with the Company, as determined in good faith by
the Company's Board of Directors. The current fair market value of the Common
Stock of the Company is estimated to be approximately $1.00 per share. The
Company intends to grant the Incentive Stock Option to you in reliance upon the
exemption provided by Rule 701 under the Securities Act of 1933, as amended.
However, as you know, the Company cannot guarantee the availability of such
exemption.
The shares of Common Stock subject to your Incentive Stock Option will be
subject to vesting over four years so long as you continue to be employed with
the Company, according to the following schedule: sixty-six thousand (66,000) of
such shares will vest as of the earlier of (i) the effective date of the
Company's first firm commitment underwritten public offering of its Common Stock
registered under the Securities Act or (ii) the one-year anniversary of the
Commencement Date (either (i) or (ii), as applicable, being the "Initial Vesting
Date"); an additional five thousand five hundred (5,500) shares shall vest at
the end of each month following the Initial Vesting Date.
The specific terms and conditions of your Incentive Stock Option will be set
forth in an Incentive Stock Option Agreement between you and the Company. Such
agreement shall be in substantially the form approved by the Board of Directors
of the Company for use with the Plan, modified as necessary to appropriately
reflect the provisions outlined above, and will be executed after you commence
your employment with the Company pursuant to this letter.
As a Company employee, you will be expected to abide by Company rules and
regulations, and acknowledge in writing that you have read the Company's
Employee Handbook (once it has been made available to you). As a condition of
employment, you will be required to sign and comply with a Proprietary
Information and Inventions Agreement, a copy of which is attached hereto as
Exhibit A, which, among other things, prohibits unauthorized use or disclosure
of Company proprietary information.
You may terminate your employment with the Company at any time and for any
reason whatsoever simply by notifying the Company. Likewise, the Company may
terminate your employment at any time and for any reason whatsoever, with or
without cause or advance notice. This at-will employment relationship cannot be
changed except in a writing signed by a Company officer.
The employment terms in this letter supersede any other agreements or promises
made to you by anyone, whether oral or written, and comprise the final, complete
and exclusive agreement between you and the Company. As required by law, this
offer is subject to satisfactory proof of your right to work in the United
States.
Please sign and date this letter, and return it to me as soon as possible if you
wish to accept employment at the Company under the terms described above. If you
accept our offer, we would like you to commence your employment with us as soon
as practicable.
2.
We look forward to your favorable reply and to a productive and enjoyable work
relationship.
Sincerely,
MP3.COM, INC.
By: /s/ Robin Richards
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Name: Robin Richards
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Title: President
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ACCEPTED BY:
/s/ Paul Alofs
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Paul Alofs
April 27, 1999
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Date
3.
EXHIBIT A
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
Employment Agreement - MP3.com Inc. and Paul Alofs
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