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Exhibit 10.15
NON-COMPETITION AGREEMENT
THIS
NON-COMPETITION AGREEMENT (this "Agreement") is made as of July
28,
2005 (the "Effective Date") by and among
ARTISTDIRECT, INC., a Delaware
corporation (the "Company"), WNT07
HOLDINGS, LLC, a Delaware limited liability
company ("Advisor"), ERIC PULIER
("Pulier"), and TEYMOUR BOUTROS-GHALI
("Boutros-Ghali", and together with Pulier,
the "Managers", and each a
"Manager").
RECITALS
A. The
Company has engaged Advisor to provide the services of the
Managers
with respect to the Company's business
activities on an advisory basis to
advise, aid and assist the Company.
B. In
consideration of Advisor making the services of the Managers
available to the Company, the Company has
issued to Advisor shares of common
stock, par value $0.01 per share of the
Company that will be subject to certain
restrictions as set forth herein (the
"Restricted Shares").
C. The
Managers are the managers of Advisor.
D. As a
condition to the Company issuing the Restricted Shares to
Advisor,
the Company requires that Advisor and the
Managers to enter into this Agreement.
AGREEMENT
In
consideration of the above recitals and of the mutual covenants
and
conditions contained in this Agreement, the
receipt and sufficiency of which are
hereby acknowledged, the parties hereto,
intending to be legally bound, hereby
agree as follows:
1. COVENANT NOT TO COMPETE OR SOLICIT.
(a)
Non-Competition. Beginning on the Effective Date and ending on
the
earlier of: (i) April 1, 2007, or (ii) the
date of termination of Advisor's
services with the Company by the Company
(the "Non-Competition Period"), Advisor
and Managers 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 in, or managing or directing
persons engaged in any business in
competition with the Company's Media
Defender business of on-line piracy
protection for music and/or movies; (ii)
acquiring or having an ownership
interest in any entity that derives
revenues from any business in competition
with the Competitive
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Business Activity (except for passive
ownership of three percent (3%) or less of
any entity whose securities are publicly
traded on a national securities
exchange or market or five percent (5%) or
less of any entity whose securities
are not publicly traded on a national
securities exchange or market); or (iii)
participating in the operation or control
of any firm, partnership, corporation,
entity or business (each, an "Entity")
described in clause (ii) of this
sentence; provided, however, that Advisor
or the Managers shall not be deemed to
be engaging in a Competitive Business
Activity solely because Advisor or a
Manager is employed by, serves as an
independent contractor to, is a partner of
a venture capital fund, or is otherwise
associated with an Entity that engages
in a Competitive Business Activity if (i)
Advisor or a Manager is employed in,
serves as an independent contractor to or
is otherwise associated with a
division of such Entity other than the
division engaged in a Competitive
Business Activity (a "Competing Division"),
(ii) the Advisor or a Manager does
not provide technical, marketing or other
assistance to a Competing Division, or
(iii) a Manager is a partner of a venture
capital fund that may invest in an
Entity engaged in a Competitive Business
Activity (although a Manager shall not,
individually, participate in the management
of such investment on behalf of the
venture fund (such as, by way of example,
serving as a director or manager of
the entity in which the venture fund
invested). 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.
(b)
Non-Solicitation. During the Non-Competition Period, neither
Advisor
nor the Managers shall solicit, encourage
or take any other action which is
intended to induce or encourage, or could
reasonably be expected to have the
effect of inducing or encouraging, any
employee of the Company or any of its
subsidiaries to terminate his or her
employment with the Company or its
subsidiaries; provided, however, that any
general solicitation of employees not
specifically targeted to the Company's
employees shall not be deemed a violation
of this Section 1(b).
(c)
Scope/Severabilty. The covenants contained in Section 1(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 1 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 1 not fully enforceable,
the other provisions of Section 1, 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 1(a), and
the Restricted Territory be deemed to
comprise the
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largest territory permissible by law under
the circumstances, but not in excess
of the territory provided for in Section
1(a)).
2. FORFEITURE RESTRICTIONS. Advisor agrees
it may not sell, transfer, pledge,
exchange, hypothecate, or otherwise dispose
of any of the Restricted Shares
(collectively, the "Forfeiture
Restrictions"), before the termination or lapse
of the Non-Competition Period.
3. REMEDIES. Advisor agrees that if either
Advi
