Sample Business Contracts


Employment Agreement - Encoding.com Inc. and Tom Hodge

Employment Forms

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                                January 7, 2000



Tom Hodge


Dear Tom,

     On behalf of Encoding.com (the "Company"), I am pleased to offer you the
                                     -------
position of Minister of Law and Order (Vice President, General Counsel) of the
Company.  Speaking for myself, as well as the other members of the Company's
management team, we are all very impressed with your credentials and we look
forward to your future success in this position.

     The terms of your new position with the Company are as set forth below:

     1.   Position.
          --------

          a.  You will become the Minister of Law and Order (Vice President,
          General Counsel) of the Company, working out of the Company's
          headquarters office in Seattle, Washington. You will report to the
          Company's CFO.

          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 or NASDAQ.
<PAGE>

Page 2

     2.   Start Date. Subject to fulfillment of any conditions imposed by this
          ----------
          letter agreement, you will commence this new position with the Company
          on January 17, 2000.

     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 date of hire, or our employment relationship with you may
          be terminated.

     4.   Compensation.
          ------------

          a.   Base Salary. You will be paid a monthly salary of $10,833.33,
               -----------
               which is equivalent to $130,000.00 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 officers of the Company).

          b.   Bonus. You will also be eligible to receive up to $20,000.00 in
               -----
               end of the year incentive bonuses according to the achievement of
               objectives defined by the President and Board of Directors. You
               will also be eligible to earn incentive bonuses in future years.

     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 a qualified option to purchase of
          140,000 shares. You will be eligible to vest your grant of incentive
          stock options at a rate of 18.75% of the total number of options
          granted after nine months of employment and 6.25% of the total number
          of options every quarter thereafter until fully vested (pro-rated for
          any periods less than a full calendar quarter). Your purchase price
          will be determined at the Board of Directors meeting following your
          date of hire. You may exercise these options prior to their vesting
          subject to the Company's right of repurchase which will lapse in
          accordance with the Option Plan. If the Company experiences a change
          in control and your position is not terminated, vesting will
          accelerate with respect to 25% of these options. If the Company
          experience a change in control and your position is terminated within
          twelve months of acquisition, vesting will accelerate with respect to
          100% of these options. Upon Board of Director approval of your option
          grant, you will receive the Stock Option Plan and subscription
          agreement which will enroll you in the program.
<PAGE>

Page 3

          6.   Benefits.
               --------

          a.   Insurance Benefits.  The Company will provide you with standard
               ------------------
          medical and dental insurance benefits. The Company will also purchase
          coverage for your dependents under The Company's medical and dental
          insurance program.  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.

     7.   Confidential Information and Invention Assignment 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 Confidential Information and
          Invention Assignment Agreement, a copy of which is enclosed for your
          review and execution (the "Confidentiality Agreement"), prior to or on
                                     -------------------------
          your Start Date.

     8.   Severance Agreement. If your employment is terminated by the Company
          -------------------
          or its successor for any reason other than cause, as determined by the
          Company's Board of Directors, you will be entitled to receive
          continuation of your base salary and insurance benefits for six months
          following the date of termination.

     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, including other employees of the Company;
          except to the extent such information is the public domain other than
          as a result of a breach of this agreement and except as required by
          law; 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.  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.
<PAGE>

Page 4

     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 Confidentiality Agreement. This letter,
together with the Confidentiality Agreement, set 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,

                                    ENCODING.COM

                                    /s/ Martin Tobias

                                    Martin Tobias,
                                    Minister of Order and Reason



ACCEPTED AND AGREED:

Tom Hodge

/s/ Tom Hodge
________________________________
Signature

January   , 2000
________________________________
Date

Enclosure:  Confidential Information and Invention Assignment Agreement


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