Consulting Agreement - MP3.com Inc. and Howard B. Wiener
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") is made by and between MP3.COM,
INC. ("Client"), a Delaware corporation, and The Honorable HOWARD B. WIENER, an
individual resident in the State of California ("Consultant"), as of October 30,
2000 (the "Effective Date").
1. ENGAGEMENT OF SERVICES. Client hereby engages Consultant, and Consultant
accepts engagement, to provide Client with such consulting services as may
reasonably be requested by Client from time to time in connection with Client's
digital distribution of music over the Internet and through other media. In
addition to serving as a General Business Consultant to Client, Consultant shall
report to Client's Chairman of the Board to whom Consultant shall concurrently
serve as a Special Consultant.
Although Consultant is an active member of the California State Bar
and Client may from time to time inquire as to Consultant's views on pending or
threatened litigation, Client acknowledges and agrees that Consultant's role is
not as legal counsel for Client. Client intends to look to its in-house and
retained counsel for advice on legal matters. Client acknowledges that
Consultant has advised it that he does not carry legal malpractice insurance.
Client also acknowledges that Consultant is engaged in private
dispute resolution serving as a mediator in litigated matters, and agrees that
over several months from the date of execution hereof, the time Consultant will
be able to devote to providing services to Client hereunder will be limited by
his present commitments to such matters scheduled prior to entering into this
Agreement. Client understands that after this initial period, Consultant's
business schedule shall have been revised, and that over the course of the first
year of the term hereof, Consultant shall have averaged the equivalent of two
(2) days per week devoted to performing his consulting services under this
Agreement.
2. COMPENSATION.
(a) ANNUAL FEE. As consideration for his provision of services
hereunder, Client shall pay Consultant an annual consulting fee in the amount of
Four Hundred Fifty Thousand Dollars ($450,000), payable in monthly installments
of Thirty-seven Thousand Five Hundred Dollars ($37,500).
(b) STOCK OPTIONS. As additional consideration, Client shall,
concurrently with the execution of this Agreement, grant to Consultant an option
to purchase one hundred twenty-five thousand (125,000) shares of Client's
capital stock at an exercise price of Three Dollars and Fifty-three Cents
($3.53) per share, the fair market value of the stock at the close of business
on October 27, 2000. This grant of options is pursuant to the Amended and
Restated 1998 Equity Incentive Plan, and is subject to the terms and conditions
of the standard stock option agreement. Options to purchase twenty-five percent
(25%) of the shares (31,250 shares) have vested upon the signing of the letter
containing the terms of this Agreement. Options to purchase the balance of the
shares shall vest quarterly thereafter in three additional increments of 23,438
shares each, with the fourth and final increment of 23,436 vesting on the one
year anniversary date of the signing of the letter. Any outstanding options will
immediately vest upon termination of this Agreement by the Client.
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3. EXPENSES. Consultant will be reimbursed for ordinary and necessary
expenses incurred by Consultant in the performance of his services hereunder
that have been expressly approved in advance by Client, provided Consultant has
furnished such documentation for authorized expenses as Client may reasonably
request.
4. OWNERSHIP OF WORK PRODUCT. Consultant hereby agrees to assign to Client
all right, title, and interest in and to any work product created by Consultant,
or to which Consultant contributes, pursuant to this Agreement (the "Work
Product"), including all copyrights, trademarks, and other intellectual property
rights contained therein. Consultant agrees to execute, at Client's request and
expense, all documents and other instruments necessary to effectuate such
assignment. In the event that Consultant does not, for any reason, execute such
documents within a reasonable time after Client's written request, Consultant
hereby irrevocably appoints Client as Consultant's attorney-in-fact for the
purpose of executing such documents on Consultant's behalf, which appointment is
coupled with an interest.
5. REPRESENTATIONS AND WARRANTIES. Consultant represents and warrants that
Consultant has the right and unrestricted ability to assign the Work Product to
Client as set forth in Section 4.
6. INDEPENDENT CONTRACTOR RELATIONSHIP. Consultant's relationship with
Client is that of an independent contractor, and nothing in this Agreement is
intended to, or should be construed to, create a partnership, agency, joint
venture or employment relationship. Consultant shall not be entitled to any of
the benefits that Client may make available to its employees, including, but not
limited to, group health or life insurance, profit sharing, or retirement
benefits, except as expressly stated in this Agreement or as a Board member.
Consultant is not authorized to make any representation, contract, or commitment
on behalf of Client unless specifically requested or authorized in writing to do
so by an executive officer of Client. Consultant is solely responsible for, and
will file, on a timely basis, all tax returns and payments required to be filed
with, or made to, any federal, state, or local tax authority with respect to the
performance of services and receipt of fees under this Agreement. Consultant is
solely responsible for, and must maintain adequate records of, expenses incurred
in the course of performing services under this Agreement. Client will not
withhold for the payment of any social security, federal, state, or any other
employee payroll taxes payable with respect to Consultant. Client will, as
applicable, regularly report amounts paid to Consultant by filing Form 1099-MISC
with the Internal Revenue Service as required by law.
7. CONFIDENTIAL INFORMATION. Consultant agrees to hold Client's
Confidential Information in strict confidence and not to disclose such
Confidential Information to any third parties. "Confidential Information" as
used in this Agreement shall mean all information disclosed by Client to
Consultant that is not generally known in the Client's trade or industry and
shall include, without limitation, (a) concepts and ideas relating to the
development and distribution of content in any medium or to the current, future
and proposed products or services of Client or its subsidiaries or affiliates;
(b) trade secrets, drawings, inventions, know-how, software programs, and
software source documents; (c) information regarding plans for research,
development, new service offerings or products, marketing and selling, business
plans, business forecasts, budgets and unpublished financial statements,
licenses and distribution arrangements, prices and costs, suppliers and
customers; (d) existence of any business discussions, negotiations
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or agreements; and (e) any information regarding the skills and compensation of
employees, contractors or other agents of the Client or its subsidiaries or
affiliates. Confidential Information also includes proprietary or confidential
information of any third party that may disclose such information to Client or
Consultant in the course of Client's business. Consultant's obligations set
forth in this Section 7 shall not apply with respect to any portion of the
Confidential Information that Consultant can document (a) was in the public
domain at the time it was communicated to Consultant by Client; (b) entered the
public domain through no fault of Consultant, subsequent to the time it was
communicated to Consultant by Client; (c) was in Consultant's possession free of
any obligation of confidence at the time it was communicated to Consultant by
Client; (d) was rightfully communicated to Consultant free of any obligation of
confidence subsequent to the time it was communicated to Consultant by the
Client; (e) was developed by employees or agents of Consultant independently of
and without reference to any information communicated to Consultant by Client;
or (f) was communicated by Client to an unaffiliated third party free of any
obligation of confidence. In addition, Consultant may disclose Client's
Confidential Information in response to a valid order by a court or other
governmental body, or as otherwise required by law. All Confidential Information
furnished to Consultant by Client is the sole and exclusive property of Client
or its suppliers or customers. Upon request by Client, Consultant agrees to
promptly deliver to Client the original and any copies of such Confidential
Information.
8. NO CONFLICT OF INTEREST. During the term of this Agreement, Consultant
will not accept work, enter into a contract, or accept an obligation from any
third party, inconsistent or incompatible with Consultant's obligations, or the
scope of services rendered for Client, under this Agreement. Consultant warrants
that there is no other contract or duty on his part inconsistent with this
Agreement. Consultant agrees to indemnify Client from any and all loss or
liability incurred by reason of the alleged breach by Consultant of any services
agreement with any third party.
9. TERM AND TERMINATION.
9.1 TERM. The term of this Agreement shall commence as of the Effective
Date and end after three (3) years, unless this Agreement is earlier terminated
as provided below.
9.2 TERMINATION BY CLIENT. Client may terminate this Agreement at any
time, with or without cause, upon thirty (30) days' written notice of
termination to Consultant. In the event Client terminates Consultant's services
hereunder, Client shall pay Consultant two (2) months' severance of Seventy-five
Thousand Dollars ($75,000), plus the monthly payment due Consultant for the
thirty (30)-day period, on the thirtieth (30th) day after notice was given, plus
the vesting of options set forth in paragraph 2(b).
9.3 TERMINATION BY CONSULTANT. Consultant may terminate this Agreement
at any time, with or without cause, upon thirty (30) days' written notice of
termination to Client.
9.4 SURVIVAL. The rights and obligations contained in Sections 4
("Ownership of Work Product"), 5 ("Representations and Warranties"), and 7
("Confidential Information") shall survive any termination or expiration of this
Agreement.
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10. SUCCESSORS AND ASSIGNS. Consultant may not subcontract or otherwise
delegate its obligations under this Agreement without Client's prior written
consent. This Agreement will be for the benefit of Client's successors and
assigns, and, subject to the foregoing sentence, will be binding on Consultant's
assignees.
11. NOTICES. Any notice required or permitted by this Agreement shall be
in writing and shall be delivered as follows with notice deemed given as
indicated: (i) by personal delivery when delivered personally; (ii) by overnight
courier upon written verification of receipt; (iii) by telecopy or facsimile
transmission upon acknowledgment of receipt of electronic transmission; or (iv)
by certified or registered mail, return receipt requested, upon verification of
receipt. Notice shall be sent to the addresses set forth below or such other
address as either party may specify in writing.
12. GOVERNING LAW. This Agreement shall be governed in all respects by the
laws of the United States of America and by the laws of the State of California,
as such laws are applied to agreements entered into and to be performed entirely
within California between California residents.
13. SEVERABILITY. Should any provisions of this Agreement be held by a
court of law to be illegal, invalid or unenforceable, the legality, validity and
enforceability of the remaining provisions of this Agreement shall not be
affected or impaired thereby.
14. WAIVER. The waiver by Client of a breach of any provision of this
Agreement by Consultant shall not operate or be construed as a waiver of any
other or subsequent breach by Consultant.
15. INJUNCTIVE RELIEF FOR BREACH. Consultant's obligations under this
Agreement are of a unique character that gives them particular value; breach of
any of such obligations will result in irreparable and continuing damage to
Client for which there will be no adequate remedy at law; and, in the event of
such breach, Client will be entitled to injunctive relief and/or a decree for
specific performance, and such other and further relief as may be proper
(including monetary damages if appropriate).
16. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties relating to this subject matter and supersedes all prior or
contemporaneous oral or written agreements concerning such subject matter. The
terms of this Agreement will govern all services undertaken by Consultant for
Client. This Agreement may only be changed by mutual agreement of authorized
representatives of the parties in writing.
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IN WITNESS WHEREOF, the parties have executed this Agreement in San
Diego, California as of the date first written above.
"CLIENT": "CONSULTANT":
MP3.COM, INC. HOWARD B. WIENER
A DELAWARE CORPORATION JUSTICE OF THE CALIFORNIA COURT
OF APPEAL (RET.)
By: /s/ ROBIN RICHARDS /s/ HOWARD B. WIENER
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Howard B. Wiener
Name:
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Title: Pres
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Address: Address:
4790 Eastgate Mall 501 West Broadway
San Diego, CA 92121-1970 Nineteenth Floor
San Diego, CA 92101
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