Employment Agreement - ARTISTdirect LLC and Keith Yokomoto
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is dated as of January 1,
1998 (the "Effective Date") and is entered into between ARTISTdirect, LLC, a
California limited liability company (the "Company") and Keith Yokomoto
("Employee").
R E C I T A L S
WHEREAS, the Company desires to employ Employee to serve the Company and
its subsidiaries and Employee desires to be so employed by the Company, on the
terms and subject to the conditions hereinafter set forth.
A G R E E M E N T
NOW, THEREFORE, the parties hereto have agreed, and do hereby mutually
agree, as follows:
1. Employment and Duties. Subject to the other terms and conditions set
forth herein, the Company hereby employs Employee, and Employee agrees to be
employed by the Company, as Chief Operating Officer and Vice President, Business
Development of the Company and all of its subsidiaries, including, without
limitation, The Ultimate Band List, LLC. Employee shall report to Marc Geiger,
Donald Muller, and/or such other executives of the Company and/or its
subsidiaries as the Company may designate from time to time.
2. Devotion. During the Term, Employee shall faithfully perform to the
best of his ability and in a satisfactory manner all services and acts necessary
or advisable as both (i) are consistent with his title and position and (ii) may
reasonably be assigned to him by any of the persons described in Section 1
above. In addition, during the Term, Employee shall devote his business time,
skill and energies exclusively to the business of the Company and its
subsidiaries and affiliates from time to time (the "Subsidiaries").
3. Principal Place of Employment. During the Term, Employee's place of
employment shall be at the principal offices of the Company in the Los Angeles
area; provided, however, it is agreed that Employee will be expected to travel
from time to time at the Company's expense in accordance with the provisions of
Section 6(c) below.
4. Term. The term of Employee's employment (the "Term") shall commence
on the Effective Date and continue until December 31, 2000, unless terminated
sooner as provided in Section 7 below (the "Initial Period"). The Company shall
have the option (the "First Option"), exercisable by written notice to Employee
at any time prior to the date sixty (60) days prior to the end of the Initial
Period, to extend the Term for an additional one (1) year period (the "First
Option Period"), subject to earlier termination in accordance with Section 7
below. If the Company exercises the First Option, the Company shall have an
additional option, exercisable by written notice to Employee at any time prior
to the date sixty (60) days prior to the end of the First Option Period, to
extend the Term for an additional one (1) year period (the "Second Option
Period), subject to earlier termination in accordance with Section 7 below.
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5. Compensation. For all services to be rendered by Employee hereunder,
and for all rights granted the Company hereunder, Employee shall be paid by the
Company the amounts set forth in this Section 5.
(a) Base Salary. The Company shall pay Employee a base salary at
the annual rate of: (i) ONE HUNDRED THOUSAND DOLLARS ($100,000) for the first
five (5) months of the Term, (ii) ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000)
for the balance of the first twelve (12)-month period of the Term and (iii) ONE
HUNDRED FIFTY THOUSAND DOLLARS ($150,000) for the second, third, fourth (if any)
and fifth (if any) twelve (12)-month periods of the Term, in each case prorated
for any portion thereof and payable in accordance with the Company's standard
payment schedule for employees.
(b) Guaranteed Bonuses. The Company shall pay Employee the following
guaranteed bonuses: (a) FIFTY THOUSAND DOLLARS ($50,000) for the second twelve
(12)-month period of the Term; (b) ONE HUNDRED THOUSAND DOLLARS ($100,000) for
each of the third, fourth (if any) and fifth (if any) twelve (12)-month periods
of the Term, in each case prorated for any portion thereof and payable in
arrears at the end of each three (3)-month period during the applicable twelve
(12)-month period of the Term.
Amounts payable to Employee pursuant to this Section 5 shall be subject to
required withholdings and reviewed for any increases annually by the
compensation committee of the Board of Directors of the Company (the "Company
Board") or, if none, the Company Board (the "Committee"), provided that any
adjustments shall be in the sole discretion of the Committee.
6. Employee Benefits; Reimbursement for Expenses.
(a) Employee shall be entitled to participate in such Company
retirement, profit sharing and pension plans and life and other insurance
programs, as well as other benefits programs, which are available to other
similarly situated employees of the Company, subject to the Company's policies
with respect to all of such benefits or insurance programs or plans; provided,
however, that notwithstanding anything herein to the contrary, the Company shall
not be obligated to institute or maintain any particular benefit or insurance
program or plan or aspect thereof.
(b) Employee shall be entitled to not less than three (3) weeks
vacation during each year of the Term hereof to be scheduled at mutually
agreeable times and accrued and taken in accordance with Company policy.
(c) During the Term, the Company agrees to reimburse Employee for
such reasonable, ordinary, necessary and authorized actual out-of-pocket
expenses incurred by Employee in the performing of assigned duties subject to
approval by the Company or the Company's designated agent, including but not
limited to for business-related travel, hotel, meals, telephone calls and
entertainment. As an additional condition to the reimbursement of such expenses
by the Company to Employee, Employee shall provide the Company with copies of
all available invoices and receipts, and otherwise account to the Company in
sufficient detail and with adequate documentation to allow the Company to
confirm the business nature of the expenses and claim an income tax deduction
for such paid items, if such items are deductible. The obligations of the
Company to make the reimbursements specified hereunder shall survive any
termination of the Term.
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7. Termination.
(a) The Company may terminate Employee's employment hereunder
after the occurrence and during the continuance of any "Disability" (as defined
below) of Employee, upon thirty (30) days' prior written notice to Employee. For
purposes of this Agreement, "Disability" means Employee's incapacity to perform
substantially all of his then current duties as required hereunder for one
hundred eighty (180) days or more within any period of three hundred sixty-five
(365) consecutive days because of mental or physical condition, illness or
injury, consistent with applicable state and federal law. In the event of any
dispute regarding the existence of Employee's Disability, the matter will be
resolved by the determination of a physician qualified to practice medicine in
the State of California, selected by the Company and reasonably approved by
Employee. For this purpose, Employee will submit to appropriate medical
examinations.
(b) The Company may terminate Employee's employment hereunder for
"Cause." For the purposes of this Agreement, "Cause" shall mean Employee shall
have (i) committed fraud, embezzlement or material dishonesty against the
Company or any of its Subsidiaries or an act of moral turpitude; (ii) engaged in
gross negligence or willful misconduct in the performance of Employee's duties
hereunder; (iii) been convicted of, or pleaded nolo contendere to, any felony;
(iv) breached any material provision hereof or failed to perform any material
duty assigned to Employee; or (v) materially misappropriated for his own purpose
and benefit any property or opportunity of the Company, or any Subsidiary or
other affiliated entity of Company. Notwithstanding anything to the contrary
contained herein, none of the foregoing events or circumstances (other than
clause (iii) above) shall constitute "Cause" for purposes of this Agreement
unless the Company gives Employee written notice delineating the claimed event
or circumstance and setting forth the Company's intention to terminate
Employee's employment if such claimed event or circumstance is not capable of
remedy or is not duly remedied within thirty (30) days following such notice, if
capable of remedy, and Employee fails to remedy such event or circumstance
within such thirty (30)-day period.
(c) The employment of Employee hereunder shall be automatically
terminated on the date of Employee's death.
(d) If Employee's employment is terminated pursuant to this
Section 7, Employee shall be entitled to, and the Company's obligation hereunder
shall be limited to, (i) the payment of the compensation (including, without
limitation, guaranteed bonus) accrued under Section 5 above to the effective
date of such termination; (ii) any approved unreimbursed expenses and other
accrued employee benefits (as described above) through the date of termination;
and (iii) the additional compensation provided in Section 7(e) below, if any.
(e) If Employee's employment is terminated:
(i) by the Company pursuant to 7(a) above, Employee will
receive the benefit of any Company disability plans; or
(ii) by the Company other than pursuant to Sections 7(a),
7(b) or 7(c) above, the Company shall continue to pay to Employee Employee's
salary in equal monthly installments, and Employee's guaranteed bonuses in equal
quarterly installments, in each case at the annualized levels being paid to
Employee pursuant to Section 5 above at the time of such termination, less
required withholdings, and for a period (the "Payment Period") equal to the
lesser of (A) twelve (12) consecutive months after the effective date of such
termination and (B) the
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number of months (rounded to the nearest whole number) remaining in the
applicable period of the Term (i.e., the Initial Period, the First Option Period
or the Second Option Period) during which such termination occurs. In addition,
during the Payment Period, Employee shall be entitled to continued participation
in all of the Company's employee benefit plans, including, without limitation,
continued accrual for retirement benefits and continued coverage under any
Company medical, hospitalization, or life insurance plan; provided, however,
that the Company may, at its option, in lieu of continuing Employee's
participation in any or all such benefit plans, pay Employee a lump sum equal to
the aggregate cost to the Company of Employee's participation in the benefit
plan in which Employee shall no longer participate, which lump sum shall be
calculated based upon the cost to the Company of Employee's participation in
such benefit plan immediately prior to the termination of Employee's employment.
Amounts payable by the Company pursuant to this Section 7(e)(ii) shall be
subject to Employee's duty to mitigate his damages by using reasonable efforts
to seek other comparable employment. Compensation (in whatever form) payable to
Employee on account of other employment during the unexpired Term shall reduce
Company's obligations hereunder. Employee shall promptly notify the Company of
such other employment and the terms thereof. The parties hereto agree that the
payments set forth in this Section 7(e)(ii) constitute fair compensation and the
sole remedy for damages for any termination by the Company other than pursuant
to Section 7(a), 7(b) or 7(c) above.
(f) Nothing in this Agreement shall be deemed a release or waiver
of right to any medical or other employee benefits available to Employee on or
after the effective date of termination of the executive's employment by the
Company under any federal, state or local law that provides for the continuation
of any medical or other employee benefits after employment.
8. Rights to Works. In return for the consideration described herein,
Employee agrees as follows:
(a) All programs, inventions, recordings and work product of any
nature made pursuant to this Agreement or otherwise in the course of Employee's
services and Employee's contributions thereto (hereinafter referred to as
"Works") 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 or part thereof in which Employee's services
are utilized by all forms of audio, visual, textual, digital, electronic or
other distribution that are now known or may hereafter exist, and otherwise
exploit such Works in such media, forums and for such uses throughout the
universe as it deems appropriate; provided, however, that no likeness or quote
of Employee shall be used without Employee's written consent. All revenues
derived by the Company from the use, exhibition, distribution, licensing, or
other exploitation of such Works shall be the sole and exclusive property of the
Company.
(b) To the extent that the Works are considered: (i)
contributions to collective works and/or (ii) as parts or components of
audiovisual works, the parties hereby expressly agree that the Works 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 Works shall belong exclusively to the Company
in perpetuity. To the extent that the Works are deemed works other than
contributions to collective works and/or parts or components of audiovisual
works, Employee hereby assigns to the Company all rights, title and interest in
and to the copyrights of such Works and all renewals and extensions of the
copyrights that may be secured under the laws now or hereafter in force and
effect in the United States of America or any other country or countries. At the
Company's reasonable written request and sole expense, Employee shall execute,
verify, acknowledge, deliver and file any and all formal assignments,
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recordations and any and all other documents that the Company may prepare and
reasonably call for to give effect to the provisions of this Agreement. If
Employee fails to execute any such document or instrument, or perform any such
act, within ten (10) business days, Employee shall be deemed to have irrevocably
constituted and appointed the Company, with full power of substitution, to be
Employee's true and lawful attorney, in Employee's 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 8. 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 8 shall continue in effect after the termination or expiration of
this Agreement to the extent necessary for the Company's full enjoyment of such
rights.
(d) All provisions of this Agreement relating to the assignment
by Employee 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 Employee developed
entirely on his own time without using the Company's equipment, supplies,
facilities, or trade secret information 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 Employee for the
Company or any of its Subsidiaries.
(e) Employee shall disclose all inventions and innovations to the
Company, even if Employee does not believe that he or she is required under this
Agreement, or pursuant to California Labor Code Section 2870, to assign his
interest in such invention or innovation to the Company. If the Company and
Employee disagree as to whether or not an invention or innovation is included
within the terms of this Agreement, it will be the responsibility of Employee to
prove that it is not included.
9. Trade Secrets. During the term of this Agreement and at all times
thereafter, Employee shall hold in secrecy all trade secrets and confidential
information relating to the Company's (and its affiliates') business and affairs
that may come to his knowledge or have come to his knowledge while employed by
the Company (excluding information that is or becomes publicly known or
available for use through no fault of Employee), including but not limited to:
(a) matters of a business nature, such as confidential information about costs,
profits, markets, sales, lists of customers, lists of clients and other
information of a similar nature, (b) confidential plans or strategies for
development of the business of the Company and (c) confidential matters of a
technical nature. Except as required in the performance of his duties to the
Company under this Agreement, Employee shall not use for his own benefit or
disclose to any person, directly or indirectly, such matters unless such use or
disclosure has been specifically authorized in writing by the Company in
advance.
10. Employee's Representations. Employee hereby represents and warrants
that: (a) he has the right to enter into this Agreement and to grant the rights
granted by him herein, (b) the provisions of this Agreement do not violate any
other contracts or agreements to which he is a party and that would adversely
affect his ability to perform his obligations hereunder, and (c) he
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will comply with all policies of the Company of which he has notice, provided
they are consistent with applicable laws.
11. The Company's Representations. The Company hereby represents and
warrants that: (a) it has the right, power and authority to enter into this
Agreement and to incur the obligations incurred by it herein, (b) this Agreement
has been duly and validly authorized by the Company, and (c) the provisions of
this Agreement do not violate any other contracts or agreements to which it is a
party that would adversely affect its ability to perform its obligations
hereunder.
12. Indemnification. The Company agrees that Employee shall be entitled
to indemnification and payment or reimbursement of expenses (including, without
limitation, attorneys' fees and expenses) to the fullest extent provided to
employees in the Company's Operating Agreement, as in effect on the date hereof,
and as it may be amended (but in no event on terms less favorable to Employee
than those in effect on the date hereof), for all damages, losses and expenses
incurred by Employee in connection with any third-party claim, action, suit or
proceeding that arises from Employee's services and/or activities (other than
Employee's gross negligence or willful misconduct) as an officer and/or employee
of the Company or any affiliate thereof. This Section 12 shall survive any
termination of the Term.
13. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal substantive laws (and not the laws of
choice of laws) of the State of California.
14. Entire Agreement. This Agreement constitutes the whole agreement of
the parties hereto in reference to any employment of Employee by the Company and
in reference to the subject matter hereof, and all prior agreements, promises,
representations and understandings relative thereto are merged herein.
15. Assignability.
(a) The services to be performed by Employee hereunder are
personal in nature and, accordingly, Employee may not, without the prior consent
of the Company, assign or transfer this Agreement or any rights or obligations
hereunder.
(b) Nothing expressed or implied herein is intended or shall be
construed to confer upon or give to any person, other than the parties hereto,
any right, remedy or claim under or by reason of this Agreement or of any term,
covenant or condition hereof.
16. Remedies. Any material breach, violation or evasion by Employee of
the terms of this Agreement, including specifically, but not limited to,
Sections 8 and 9 above, would result in immediate and irreparable injury and
harm to the Company, and will cause damage to the Company in amounts difficult
to ascertain and for which Company's remedies and defenses at law would be
inadequate. Accordingly, in the event of any such breach or threatened breach,
the Company shall be entitled to, and Employee hereby consents to the entry of,
the remedies or injunction and specific performance, or either of such remedies,
as well as all other remedies to which the Company may be entitled, at law, in
equity or otherwise.
17. Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived only by a
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written instrument executed by the parties hereto or, in the case of a waiver,
by the party waiving compliance. Any amendment to a material term of this
Agreement shall require the approval of the Committee. The failure of any party
at any time or times to require performance of any provision hereof shall in no
manner affect the right at a later time to enforce the same. No waiver by any
party of the breach of any term or provision contained in this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be, or construed as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in this Agreement.
18. Notice. All notices, consents, requests and other communications
hereunder shall be in writing and, if given by personal delivery, shall be
deemed to have been validly served, given or delivered upon actual delivery and,
if mailed or delivered by overnight courier, shall be deemed to have been
validly served, given or delivered when deposited in the United States mail, as
registered or certified mail, with proper postage prepaid, or when deposited
with the courier service, and addressed to the party or parties to be notified,
at the following addresses (or such other address(es) as a party may designate
for itself by like notice):
If to Employee: Keith Yokomoto
1746 Havemeyer Lane
Redondo Beach, CA 90278
If to the Company: ARTISTdirect, LLC
17835 Ventura Blvd.
Suite 310
Encino, California 91316
With a copy to: Lenard & Gonzalez LLP
1900 Avenue of the Stars
Twenty-Fifth Floor
Los Angeles, California 90067
Attn: Allen D. Lenard, Esq.
19. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating
or affecting the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent that a
restrictive covenant contained herein may, at any time, be more restrictive than
permitted under the laws of any jurisdiction where this Agreement may be subject
to review and interpretation, the terms of such restrictive covenant shall be
those allowed by law and the covenant shall be deemed to have been revised
accordingly. Each and every term of this Agreement shall be enforced to the
fullest extent permitted by law.
20. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed an original and both of which together shall be
deemed one Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"EMPLOYEE" "COMPANY"
ARTISTdirect, LLC
/s/ Keith Yokomoto
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Keith Yokomoto
By: /s/ Marc Geiger
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Marc Geiger
Its: Member
By: /s/ Donald Muller
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Donald Muller
Its: Member