THIS AGREEMENT is
made as of May 8, 2009, between MakeMusic, Inc., a Minnesota
corporation (hereinafter called “MakeMusic”), and
Ronald B. Raup (hereinafter called
“Executive”):
1. The
following recitals shall be considered a part of this Agreement and
explain the parties’ rights and obligations under this
Agreement. Any interpretation or construction of this Agreement
shall be considered in light of these recitals.
2. Executive
is currently employed by MakeMusic as its Chief Executive Officer
pursuant to that certain Employment Agreement dated
February 20, 2007, as amended by the First Amendment to
Employment Agreement dated October 27, 2008.
3. Executive
desires to be employed by MakeMusic as its Chief Executive Officer
and MakeMusic desires to employ Executive as its Chief Executive
Officer on the terms stated in this Agreement.
4. Executive
recognizes, agrees and understands that execution of this Agreement
is an express condition of employment with MakeMusic as its Chief
Executive Officer under the terms of this Agreement.
NOW, THEREFORE, in
consideration of MakeMusic employing Executive as its Chief
Executive Officer under this Agreement and/or other benefits now or
hereafter paid or made available to Executive by MakeMusic,
Executive and MakeMusic agree as follows:
1.01
Confidential Information . For the purposes of this
Agreement, “Confidential Information” means any
information not generally known to the public and proprietary to
MakeMusic and includes, without limitation, trade secrets,
inventions, and information pertaining to research, development,
purchasing, marketing, selling, accounting, licensing, business
systems, business techniques, customer lists, prospective customer
lists, price lists, business strategies and plans, pending
patentable materials and/or designs, design documentation,
documentation of meetings, tests and/or test standards, or manuals
whether in document, electronic, computer or other form. For
example, Confidential Information may be contained in
MakeMusic’s customer lists, prospective customer lists, the
particular needs and requirements of customers, the particular
needs and requirements of prospective customers, and the identity
of customers or prospective customers. Information shall be treated
as Confidential Information irrespective of its source and any
information which is labeled or marked as being
“confidential” or “trade secret” shall be
presumed to be Confidential Information.
1.02
Invention . For purposes of this Agreement, the term
“Invention” means ideas, discoveries, and improvements
whether or not shown or described in writing or reduced
to
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practice and
whether patentable or not, relating to any of MakeMusic’s
present or future sales, research, or other business activities, or
reasonably foreseeable business interests of MakeMusic.
ARTICLE II
EMPLOYMENT, COMPENSATION AND BENEFITS
2.01
Employment With MakeMusic . MakeMusic hereby employs
Executive in the position of Chief Executive Officer of MakeMusic
and Executive hereby accepts such employment with
MakeMusic.
2.02
Term . This Agreement and Executive’s
employment hereunder shall commence on May 8, 2009 and terminate
when Executive’s employment with MakeMusic is terminated
pursuant to Paragraph 3.01 hereof.
(a) Executive
agrees, during his employment, to devote his full time and best
efforts to the businesses of MakeMusic, including, without
limitation, the performance of those duties and responsibilities
reasonably and customarily associated with his position; provided,
however, that Executive’s duties and responsibilities shall
be subject to determination by MakeMusic’s Board of Directors
or its designee. Any material change in Executive’s duties
and responsibilities shall be subject to Executive’s consent,
which consent shall not be unreasonably withheld. Executive shall
be granted such powers and authority as are reasonably and
customarily associated with his position.
(b) Executive
shall report to, and at all times shall be subject to the direction
of MakeMusic’s Board of Directors or its designee.
(c) Executive, at
all times during his employment with MakeMusic, shall comply with
MakeMusic’s reasonable standards, regulations and policies as
determined or set forth by MakeMusic from time to time and as
applicable to executive employees of MakeMusic.
(d) Executive
shall maintain and improve his managerial skills and knowledge of
MakeMusic’s businesses by attending appropriate conventions
and seminars, and participating in other activities reasonably
related thereto. MakeMusic shall pay and/or reimburse those
expenses of Executive, approved by MakeMusic, which are reasonably
related to this subparagraph 2.03(d).
2.04 Outside
Activities . MakeMusic acknowledges and agrees that from
time to time Executive may serve as a member of the Board of
Directors of one or more nonprofit entities or businesses other
than MakeMusic; provided, however, that Executive provides
MakeMusic’s Board of Directors with information about each
proposed directorship, including time required by such
directorship, whether such directorship may involve conflicts of
interest with MakeMusic or their businesses, the types of risks
which such directorship may involve, and any other factors
Executive or MakeMusic’s Board of Directors considers
material respecting such directorship. MakeMusic’s Board of
Directors shall promptly consider all submissions by
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Executive
pursuant to this Paragraph 2.04. MakeMusic’s Board of
Directors may request in good faith that Executive not accept a
particular directorship, or more than a specific number of
directorships, or that Executive resign from a particular
directorship, and Executive agrees to honor such
requests.
2.05 Base
Salary . Executive’s initial annual base salary under
this Agreement shall be calculated on the gross amount of $216,000
per year, less withholding for income and FICA taxes and any other
proper deductions. Executive’s base salary will be paid to
him in accordance with MakeMusic’s normal payroll practices.
Future adjustments, if any, to annual base salary will be
determined by MakeMusic. Executive may be entitled to bonuses as
determined in the sole discretion of MakeMusic.
2.06 Fringe
Benefits From MakeMusic .
(a) In addition to
cash compensation, Executive shall be eligible to receive equity
awards and fringe benefits as they may be made available to
executive employees of MakeMusic and offered to Executive from time
to time in the exclusive discretion of MakeMusic. Such benefits may
include, but are not limited to, bonuses, qualified pension or
retirement plans, health insurance and disability plans and
deferred compensation agreements.
(b) Executive
shall be eligible to participate in any and all other employee
benefit plans and programs offered by MakeMusic from time to time,
including, but not limited to, any medical, dental, short-term
disability and life insurance coverage, stock option, or retirement
plans, in accordance with the terms and conditions of those benefit
plans and programs and on a basis consistent with that customarily
provided to MakeMusic’s executive employees.
2.07
Vacation . In addition to the foregoing compensation
and fringe benefits, Executive shall be entitled to a paid vacation
of a duration to be determined by MakeMusic. At present, Executive
shall be entitled to five (5) weeks paid time off per calendar
year (prorated for partial calendar years of service). Such
vacation shall be subject to MakeMusic’s paid vacation
policies as they may exist from time to time.
2.08
Expenses . During the term of this Agreement,
Executive shall be entitled to prompt reimbursement by MakeMusic
for all reasonable, ordinary and necessary travel, entertainment
and other business related expenses incurred by Executive (in
accordance with the policies and procedures established by
MakeMusic for executive employees from time to time) in the
performance of his duties and responsibilities under this
Agreement; provided, however, that Executive shall properly account
for such expenses in accordance with federal, state and local tax
requirements and MakeMusic’s policies and
procedures.
3.01 Events
of Termination . Executive’s employment with
MakeMusic:
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(a) May be
terminated by mutual written agreement of MakeMusic and
Executive.
(b) Shall
terminate immediately upon the death of Executive.
(c) May be
terminated upon written notice from MakeMusic to Executive for
Cause, which shall mean the following:
(i) Failure of
Executive to (a) faithfully, diligently or competently perform
the material duties, requirements and responsibilities of his
employment as contemplated by this Agreement or as assigned by
MakeMusic’s Board of Directors or its designee, or
(b) take reasonable direction consistent with his position
from MakeMusic’s Board of Directors or its designee;
or
(ii) Failure of
Executive to comply with the material, reasonable policies,
regulations and directives of MakeMusic as in effect from time to
time; or
(iii) Any act or
omission on the part of Executive which constitutes a failure to
comply with material provisions of this Agreement; or
(iv) Any act or
omission on the part of Executive which is clearly and materially
harmful to the reputations or businesses of MakeMusic, including,
but not limited to, personal conduct of Executive which is
inconsistent with federal and state laws respecting harassment of,
or discrimination against, one or more of MakeMusic’s
employees; or
(v) Conviction of
Executive of, or a guilty or nolo contendere plea by Executive with
respect to, any crime punishable as a felony.
(d) May be
terminated upon 30 days’ written notice from MakeMusic
to Executive without Cause.
(e) May be
terminated upon 30 days’ written notice from Executive
to MakeMusic.
3.02
Compensation Upon Termination of Executive’s
Employment . In the event that Executive’s employment
with MakeMusic terminates the following provisions shall govern as
applicable:
(a) If termination
occurs pursuant to subparagraph 3.01(a), the agreement of the
parties shall control.
(b) If termination
occurs pursuant to subparagraph 3.01(b), all benefits and
compensation shall terminate as of the date of Executive’s
death.
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(c) If the
termination occurs pursuant to subparagraphs 3.01 (c) or (e),
all benefits and compensation shall terminate as of the termination
date.
(d) If termination
occurs pursuant to subparagraph 3.01(d), all benefits and
compensation shall terminate as of the termination date. In
addition, Executive shall receive cash severance payments equal to
Executive’s annual base salary in effect at the time of
termination of employment and the pro-rated value of any incentive
compensation earned through the date of termination. Such payments
shall be paid to Executive monthly over the course of a one-year
period, beginning after expiration of any applicable rescission
periods set forth in the required release agreement; provided,
however, that notwithstanding anything in this Agreement to the
contrary, if any of the payments described in this
Paragraph 3.02 are subject to the requirements of
Section 409A of the Internal Revenue Code of 1986, as amended
(“Code Section 409A”) and MakeMusic determines
that Executive is a “specified employee” as defined in
Code Section 409A as of the date of Executive’s
termination of employment, such payments shall not be paid or
commence earlier than the first day of the seventh month following
the date of Executive’s termination of employment. As a
condition to Executive’s receipt of such payments, Executive
shall be required to execute, return, comply with and not rescind a
full and final release of any and all claims in favor of MakeMusic.
Such release agreement shall be prepared by MakeMusic.
(e) If Executive
is terminated without Cause, as defined in subparagraph 3.01(c),
upon or within 12 months following a Change of Control of
MakeMusic, Executive shall be entitled to the severance payments
set forth in Paragraph 3.02(d) above.
(i) For purposes
of this Agreement, a “Change of Control”
means:
(a) The
consummation of any merger, consolidation, exchange, or
reorganization to which MakeMusic is a party if the individuals and
entities who were shareholders of MakeMusic immediately prior to
the effective date of such transaction have, immediately following
the effective date of such transaction, beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of
1934) of less than fifty percent (50%) of the total combined voting
power of all classes of securities issued by the surviving
corporation for the election of directors of the surviving
corporation;
(b) The
shareholders of MakeMusic approve any plan or proposal for the
liquidation of MakeMusic;
(c) A sale, lease
or other transfer of all or substantially all of the assets of
MakeMusic to any person or entity which is not an Affiliate of
MakeMusic; or
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(d) The
acquisition, without prior approval by resolution adopted by the
Board, of direct or indirect beneficial ownership (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934) of
securities of MakeMusic representing, in the aggregate, fifty
percent (50%) or more of the total combined voting power of all
classes of MakeMusic’s then-issued and outstanding securities
by any person or entity or by a group of associated persons or
entities acting in concert; provided, however, that a Change of
Control will not be deemed to occur if such acquisition is
initiated by the Executive or an entity in which the Executive owns
fifty percent (50%) or more of the total combined voting power of
all classes of such entity’s securities, or if the Executive
or such entity is a member of the group of associated persons or
entities acting in concert.
(ii) For purposes
of this Agreement, “Affiliate” shall mean any
individual, corporation, partnership, trust or other entity which
owns, directly or indirectly, fifty percent (50%) or more of the
total combined voting power of all classes of MakeMusic outstanding
stock entitled to vote; or any corporation, partnership, trust or
other entity of which fifty percent (50%) or more of the total
combined voting power of all classes of such entity’s
outstanding stock, units or other interests entitled to vote is
owned, directly or indirectly, by MakeMusic.
(iii) The
Executive shall not be entitled to receive any Change of Control
payment which would constitute a “parachute payment”
for purposes of Code Section 280G, or any successor provision,
and the regulations thereunder. In the event
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