Exhibit 10.2
INDEPENDENT CONTRACTOR
AGREEMENT
THIS INDEPENDENT CONTRACTOR
AGREEMENT (“ Agreement ”) is entered into
as of November 28, 2006 by and between ARTISTdirect, Inc., a
Delaware corporation (the “ Company ”),
and Nicholas Turner, an individual (“
Contractor ”).
RECITALS
A.
Contractor resigned his position as
the Company’s Vice President, Business Development, effective
as of August 31, 2006.
B.
In order to provide for the
availability of Contractor’s services to the Company, the
Company and Contractor have agreed to enter into this
Agreement.
C.
Concurrently with the execution and
delivery of, and as a material inducement to the Company to enter
into, this Agreement, Contractor has entered into and delivered a
release to the Company (to which this Agreement is attached) (the
“ Release ”).
D.
The Company’s management
considers it in the best interests of the Company to foster the
continued availability of Contractor, and Contractor agrees to
provide services to the Company and its subsidiaries, in accordance
with the terms hereof.
AGREEMENT
NOW, THEREFORE, in consideration of
the premises and mutual covenants contained herein and for other
good and valuable consideration, the parties agree as
follows:
1.
Consulting Services;
Status .
(a)
During the Term (as defined in
Section 6 below), Contractor shall make himself available to
provide non exclusive consulting services to the Company and its
subsidiaries, as set forth on Exhibit 1 . Contractor
agrees to relocate from the Company’s offices to another
location reasonably selected and paid for by him (including
appropriate amounts of insurance); provided , that ,
Contractor shall be available to personally attend meetings at
Company’s premises, or such other location, upon reasonable
advance notice by the Company. Contractor will comply with the
Company’s rules and policies relating to workplace conduct
and security while at the Company’s premises.
(b)
It is mutually understood and agreed
that the Contractor, while performing the responsibilities under
this Agreement, is and shall at all times be, act, function, and
perform all services and responsibilities in the legal capacity as
an independent contractor. It is mutually further understood
and agreed that no work, act, commission or omission of any act by
Contractor pursuant to the terms of this Agreement shall be
construed to make or render the Contractor an employee of the
Company, and Contractor shall have no authority to enter into
contracts on behalf of or bind the Company, or represent himself as
an employee, agent, authorized representative or officer of the
Company.
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(c)
Contractor shall, at all times in
the performance of his services hereunder, act in the best
interests of the Company and shall use his best efforts to
discharge and fulfill all of his obligations hereunder.
Contractor shall organize his business and affairs such that he is
available on a first call, priority basis as to all matters
affecting or relating to the Company.
(d)
Contractor shall, promptly upon
request of the Company, make introductions and referrals to persons
with which Contractor has had any material contact or negotiation
regarding the Company or its Affiliates.
2.
Base Compensation;
Commission .
During the Term, Contractor’s base monthly fee (“
Base Fee ”) and commission rate (“
Commission ”) will be as set forth on
Exhibit 1 .
3.
Bonus.
Consultant may be eligible to receive a cash
bonus, as set forth on Exhibit 1 (the “
Bonus ”).
4.
Stock Options
. The Company shall endeavor,
consistent with applicable law and its obligations to its
stockholders and creditors, to register Contractor’s stock
options to purchase shares of the Company’s common stock
outstanding as of the date hereof on a Registration Statement on
Form S-8. The number of stock options currently granted
to Contractor is set forth on Exhibit 2 . Contractor
is not entitled to, and does not hold or possess (directly or
indirectly) any stock, stock options or other forms of equity,
equity derivatives, equity linked instruments or similar forms of
compensation or equity in the Company or any of its
affiliates. Except as set forth in this Section 4, nothing in
this Agreement shall affect the vesting, exercise, strike price or
other terms and conditions of the option agreements and stock
option plans under which such stock options were
granted.
5.
Reimbursement;
Benefits .
(a)
The Company agrees to reimburse
Contractor for reasonable and necessary out-of-pocket expenses
incurred during the Term that are directly related to performance
of Contractor’s duties under this Agreement, to the extent
such expenses are in accordance with the existing policies and
procedures of the Company or are approved by the Company’s
chief executive officer or chief financial officer. In
connection with, but not as limitation on, the foregoing,
Contractor’s travel on behalf of the Company in connection
with the performance of his duties hereunder shall be taken in a
manner that is consistent with the Company’s past practice
involving travel by Contractor during 2006. Reimbursement is
subject to Contractor providing the Company with copies of
satisfactory documentation in sufficient detail to allow the
Company to confirm the business nature of the expenses and to claim
applicable deductions.
(b)
During the Term, the Company shall
reimburse Contractor for monthly expenses associated with
maintaining current health care coverage under the Consolidated
Omnibus Budget Reconciliation Act (“ COBRA
”), which currently equals $667.78 per month. The
Company shall not be obligated to provide any health care coverage
that exceeds coverage provided by the Company as of August 31,
2006. Except as required by applicable law or as otherwise
set forth herein, the Company shall have no obligation to provide
any other benefits to Contractor during the Term.
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6.
Term
. The term (the “
Term ”) of this Agreement shall commence as of
September 1, 2006 (the “ Effective Date
”) and shall terminate on April 30, 2007;
provided that the Term may end earlier in accordance
with Section 9 below.
7.
Rights to Works;
Confidentiality . In return for the consideration
described herein, Contractor agrees as follows:
(a)
All inventions, trade secrets,
ideas, recordings, original works of authorship or other work
product of any kind that Contractor conceives, develops, discovers
or makes in whole or in part in the course or scope of his services
hereunder or to the Company, and contributions thereto (hereinafter
referred to as “ Work Product ”) shall
belong solely and exclusively to the Company. The Company
shall have the perpetual and exclusive right to use, exhibit,
distribute, or license throughout the universe, any Work Product or
part thereof in which Contractor’s services with the Company
are utilized in all forms of audio, visual, textual, digital,
electronic or other distribution that are now known or may
hereafter exist, and otherwise exploit such Work Product in such
media, forums and for such uses throughout the universe as it deems
appropriate. All revenues derived by the Company from the
use, exhibition, distribution, licensing, or other exploitation of
such Work Product shall be the sole and exclusive property of the
Company.
(b)
To the extent that Work Product is
considered: (i) a contribution to collective works and/or
(ii) a part or component of audiovisual works, the parties
hereby expressly agree that Work Product shall be considered
“works made for hire” under the United States Copyright
Act of 1976, as amended (17 U.S.C. Section 101 et
seq.). In accordance therewith, the sole right of copyright
in and to the Work Product shall belong exclusively to the Company
in perpetuity. To the extent that the Work Product is deemed
a work other than a contribution to a collective work and/or a part
or component of an audiovisual work, Contractor hereby irrevocably
assigns and transfers to the Company to the maximum extent
permitted by law all right, title and interest in the Work Product,
including but not limited to, all copyrights, patents, trade secret
rights, and other proprietary rights in or relating to the Work
Product. At the Company’s reasonable written request
and sole expense, Contractor shall execute, verify, acknowledge,
deliver and file any and all formal assignments, recordations and
any and all other documents that the Company may prepare to give
effect to the provisions of this Agreement. In furtherance of
the foregoing, Contractor hereby and irrevocably constitutes and
appoints the Company, with full power of substitution, to be
Contractor’s true and lawful attorney, in his name, place,
and stead, to execute, acknowledge, swear to, and file all
instruments, conveyances, certificates, agreements, and other
documents, and to take any action which may be necessary or
appropriate to effect the provisions of this Section 7. The
powers of attorney granted herein shall be deemed to be coupled
with an interest and shall be irrevocable.
(c)
It is understood that the rights
granted to the Company in this Section 7 shall continue in effect
after the termination or expiration of this Agreement.
(d)
All provisions of this Agreement
relating to the assignment by Contractor of any invention or
innovation are subject to the provisions of California Labor Code
Sections 2870, 2871 and 2872. In accordance with Section 2870
of the California Labor Code, the obligation to assign as provided
in this Agreement does not apply to an invention or innovation that
Contractor developed entirely on his own time without using the
Company’s equipment,
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supplies, facilities, or trade
secrets except for those inventions that either: (i) relate to
either (A) the business of the Company or any of its subsidiaries
at the time of conception or reduction to practice of the
invention, or (B) actual or demonstrably anticipated research or
development of the Company or any of its subsidiaries; or (ii)
result from any work performed by Contractor for the Company or any
of its subsidiaries. A copy of California Labor Code Sections
2870, 2871 and 2872 is attached to this Agreement as
Exhibit 3 .
(e)
Contractor shall disclose all
inventions and innovations to the Company, even if he does not
believe that he is required under this Agreement, or pursuant to
California Labor Code Section 2870, in order to assign his interest
in such invention or innovation to the Company. If Contractor
and the Company disagree as to whether or not an invention or
innovation is included within the terms of this Agreement, it will
be Contractor’s responsibility to prove that it is not
included.
(f)
Contractor shall, at the request of
the Company, enter into the Company’s standard
confidentiality agreement for, and otherwise comply with the
Company’s standard policies regarding confidential
information that are applicable to, its employees and/or
contractors (as such agreement and policies may be modified and/or
updated from time to time). In the event that such
confidentiality agreement or policies conflict with the provisions
of any of the terms and conditions of this Agreement, this
Agreement shall govern to the extent of the such
conflict.
8.
Covenant Not to Compete or
Solicit .
(a)
Beginning on the date hereof and
ending on the later of: (i) April 30, 2007 or
(ii) the date of termination of Contractor’s services
with the Company (the “ Non-Competition Period
”), Contractor shall not (other than on behalf of the
Company), without the prior written consent of the Company, engage
in a Competitive Business Activity (as defined below) anywhere in
the Restricted Territory (as defined below). For all purposes
hereof, the term “ Competitive Business
Activity ” shall mean: (i) engaging or investing
in, managing or directing persons engaged in, or otherwise
providing financial or other support to, any business, persons or
entities acting, or proposing or planning to act, in competition
with the Company or any of its affiliates or subsidiaries; (ii)
acquiring or having an ownership interest in any entity that
competes (or which is intended or anticipated to compete) with the
Company or any of its affiliates or subsidiaries; or (iii)
participating in the operation or control of any firm, partnership,
corporation, entity or business that competes (or which is intended
or anticipated to compete) with the Company or any of its
affiliates or subsidiaries. For all purposes hereof, the term
“ Restricted Territory ” shall mean in
any State of the United States of America, or in any foreign
country in which the Company or an affiliate or subsidiary of the
Company is conducting such Competitive Business Activity.
Notwithstanding the foregoing, Contractor’s services for a
company whose primary business is e-commerce shall not be deemed
engagement in a “Competitive Business Activity” as
defined herein.
(b)
During the Non-Competition Period,
and for a period of twelve (12) months thereafter, the Contractor
shall not approach, solicit, encourage or take any other which
could cause, induce or encourage, or could reasonably be expected
to have the effect of causing, inducing or encouraging, any
employee, customer, client or vendor of the Company or any of
its
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subsidiaries to terminate, modify or
change his or her employment or other relationship with the Company
or its subsidiaries or affiliates. Notwithstanding the
foregoing, and during the term of this Agreement, Contractor may
approach customers and clients of the Company for the purpose of
advancing the Company’s sales, revenues and goodwill with
such customers and clients (and Contractor shall regularly update
the Company as to any actual or proposed contacts with current and
prospective customers and clients of the Company).
(c)
The covenants contained in Section
8(a) hereof shall be construed as a series of separate covenants,
one for each country, province, state, city or other political
subdivision of the Restricted Territory. The parties acknowledge
that the Competitive Business Activity is and will be national and
international in scope and thus the covenants in this Section 8
would be particularly ineffective if the covenants were to be
limited to a particular geographic area of the United States. If
any court of competent jurisdiction at any time deems the
Non-Competition Term unreasonably lengthy, or the Restricted
Territory unreasonably extensive, or any of the covenants set forth
in Section 8 not fully enforceable, the other provisions of
Section 8, and this Agreement in general, will nevertheless
stand and to the fullest extent consistent with law continue in
full force and effect, and it is the intention and desire of the
parties that the court treat any provisions of this Agreement which
are not fully enforceable as having been modified to the extent
deemed necessary by the court to render them reasonable and
enforceable and that the court enforce them to such extent (for
example, that the Restricted Term be deemed to be the longest
period permissible by law, but not in excess of the length provided
for in Section 8(a)), and the Restricted Territory be deemed to
comprise the largest territory permissible by law under the
circumstances, but not in excess of the territory provided for in
Section 8(a) and Section 8(b).
(d)
Notwithstanding the foregoing, the
Company understands that during the Term, Contractor may seek
employment or other consulting assignments.
9.
Termination
.
(a)
The Company shall have the right,
upon written notice to Contractor, to immediately terminate this
Agreement and Contractor’s services with the Company for
“Cause.” Upon such termination, Contractor will
have no further right to compensation or payments under
Sections 2 or 3 or Exhibit 1 . For purposes
of this Agreement only, “ Cause ” shall
mean the determination by the Company in the exercise of its sole
discretion, of any of the following:
(i) Contractor’s financial dishonesty, including,
without limitation, misuse, misappropriat
