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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
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