Exhibit 10.1


 


EMPLOYMENT AGREEMENT


 


This
EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of February 1,
2009 (the “Effective Date”) by and between ARTISTdirect, Inc., a Delaware
corporation (the “Company”), and Dimitri Villard, (“Villard” and collectively
with the Company, the “Parties”), with reference to the following facts:


 


WHEREAS, the
Company had previously retained the services of Villard as interim Chief
Executive Officer pursuant to a Services Loanout Agreement dated as of March 6,
2008 (the “Services Agreement”) between Byzantine Productions, Inc. (“Byzantine”)
and the Company;


 


WHEREAS, the
Company desires to employ Villard directly pursuant to the terms hereof; and


 


NOW,
THEREFORE, the Company and Villard desire to set forth in this Agreement the
terms and conditions of Villard’s employment with the Company.


 


ARTICLE I


EMPLOYMENT; TERM; DUTIES


 


1.1                            Engagement.  Upon the terms and conditions hereinafter set
forth, the Company hereby engages Villard to serve as the Chief Executive
Officer of the Company.


 


1.2                            Duties.  Villard shall perform such duties for the
Company as are customarily associated with the position of a chief executive
officer of a public company, and shall report to the Company’s Board of
Directors (the “Board”).  Until notified
by the Board, Villard shall also serve as Chief Executive Officer of
ARTISTdirect Internet Group, Inc. and Media Defender, Inc.  Further, Villard may continue to serve as a
member of the Company’s Board of Directors.


 


1.2.1                   Villard
shall use his best efforts and abilities faithfully and diligently to promote
the Company’s business interests.  For so
long as Villard is employed by the Company, Employee shall not, directly or
indirectly, either as an employee, employer, consultant, agent, investor, principal,
partner, stockholder (except as the holder of less than 1% of the issued and
outstanding stock of a publicly held corporation), corporate officer or
director, or in any other individual or representative capacity, engage or
participate in any business that is in competition in any manner whatsoever
with the business of the Company and its subsidiaries (the “Company Group”), as
such businesses are now or hereafter conducted. 
Subject to the foregoing prohibition and provided such services or
investments do not violate any applicable law, regulation or order, or
interfere in any way with the faithful and diligent performance by Villard of
the services to the Company otherwise required or contemplated by this
Agreement, the Company expressly acknowledges that Villard may:


 


(a)                                  make
and manage personal business investments of Employee’s choice without
consulting the Board; and


 


(b)                                 continue
to serve as Chairman/President of Pivotal Biosciences, Inc. and Byzantine
Productions, Inc.


 


ARTICLE II


COMPENSATION


 


2.1                            Base
Salary.  During the Term, as defined
below, for all services rendered by Villard hereunder and all covenants and
conditions undertaken by the Parties pursuant to this Agreement, the Company
shall pay, and Villard shall accept, as compensation, a monthly base salary of
$25,000, subject to increases as determined by the Board of Directors, in its
sole discretion (“Base Salary”).


 

















 


2.1.1                   The
Base Salary shall be payable in accordance with the normal payroll practices of
the Company.


 


2.2                            Bonus.  Commencing for the fiscal year ending December 31,
2009 and for each subsequent fiscal year thereafter, Villard shall receive an
annual bonus (“Bonus”) equal to 33% of the amount by which the Company’s
earnings before interest, taxes, depreciation and amortization (“EBITDA”) for
the applicable fiscal year exceeds the target set by the Board or the Board’s
Compensation Committee for such year. 
Any Bonus shall be prorated for a partial fiscal year.  Notwithstanding the foregoing, the Board or
Compensation Committee, in its sole discretion, may grant a Bonus in addition
to the Bonus tied to EBITDA.


 


2.3                            Stock
Options.  Villard is hereby granted
options (“Options”) to purchase 3,920,000 shares of the Common Stock of the
Company at $0.03 per share vesting monthly over 36 months commencing on the
Effective Date.  The terms of the Options
shall be set forth in a separate Option Agreement.


 


2.4                            Benefits.  The Company will provide to Villard health,
dental, vision and/or supplemental disability insurance and other benefits as
are provided to its executive employees. 
At Villard’s option, the Company shall pay him $1,000 per month in lieu
of medical/dental coverage. 
Additionally, Villard shall receive $500 per month for a car allowance.


 


ARTICLE III


 BUSINESS EXPENSES


 


3.1                            Business
Expenses.  Villard will be reimbursed
for all reasonable out-of-pocket business expenses incurred in the performance
of his duties on behalf of the Company consistent with the Company’s policies
and procedures, including prior approval requirements and submission of
appropriate supporting documentation.


 


ARTICLE IV


TERMINATION OF EMPLOYMENT


 


4.1                            Term
of Employment


 


Villard’s
employment pursuant to this Agreement shall commence as of the date hereof and
terminate on the earliest to occur of the following (the “Term”):


 


(a)                                  on
the third anniversary of the Effective Date (the “Effective Date”);


 


(b)                                 upon
the death of Villard (“Death”);


 


(c)                                  upon
the delivery to Villard of written notice of termination by the Company if
Villard shall suffer a physical or mental disability or illness which renders
Villard, in the reasonable judgment of the Board, unable to perform his duties
and obligations under this Agreement for either 60 consecutive days or 180 days
in any 12-month period (“Disability”);


 


(d)                                 upon
delivery to Villard of written notice of termination by the Company For Cause;
or


 


(e)                                  upon
the delivery to the Company of written notice of termination by Villard for
Good Reason.


 


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4.2                            Certain
Definitions. For purposes of this Agreement, the following terms shall have
the following meanings:


 


4.2.1                   “For
Cause” shall mean, in the context of a basis for termination of Villard’s
employment with the Company:


 


(a)                                  Villard is convicted of, or pleas nolo contendere (no contest) to, any crime (whether or not
involving the Company) constituting a felony in the jurisdiction involved;


 


(b)                                 Villard’s
willful misconduct in the performance of Villard’s duties hereunder;


 


(c)                                  Villard’s
gross negligence in the performance of his duties hereunder or willful and
repeated failure or refusal to perform such duties as may be delegated to
Villard by the Company commensurate with his position; or


 


(d)                                 Villard
is in material breach of any provision of this Agreement, and failure of
Villard to cure such breach within fourteen (14) days from receipt of written
notice of such breach.


 


4.2.2                   “Good
Reason” giving rise to Villard’s right to terminate this Agreement means if Villard claims that the Company has
materially breached this Agreement, Villard shall have first provided written
notice to the Company of any such claimed material breach with exact details of
the claimed material breach and the Company shall have had fourteen (14) days
from the date of receipt of such written notice to cure any such breach, if
curable, and in the event Company does so cure such breach within said fourteen
(14) days, such claimed breach shall not constitute good reason or a breach of
this Agreement.


 


4.3                            Effect
of Termination


 


4.3.1                   If
Villard’s employment is terminated pursuant to Sections 4.1(b), (c) or (d) or
Section 4.4, the Company shall only be obligated to pay Villard: (i) the
amount of Base Salary and Bonus, if any, accrued through the effective date of
such termination; and (ii) the amount of any accrued but unused vacation
time.  If Villard’s employment is
terminated pursuant to Section 4.1(e) or for any other reason, the
Company shall continue to pay Villard the amount of Base Salary and Bonus, if
any, through the third Anniversary of the Effective Date.


 


4.3.2                   Villard
shall have no obligation to offset any payments he receives from the Company
following the termination of his employment by any payments he receives from
his subsequent employer, except that any payments Villard receives under the
employee benefit plans or programs of a subsequent employer shall offset any
payments he receives from comparable employment benefit plan or program of the
Company.


 


4.4                            Change in Control.  In the event of a “Change in
Control,” as defined below, (i) Villard shall have the right to terminate
this Agreement, and (ii) upon Villard’s written notice to the Company of
his intent to terminate, this Agreement will be terminated 14 days after
receipt of such notice and the Company and Villard shall have no further
obligation or duties to each other, except as provided in Article V.


 


4.4.1                   For purposes of this Agreement, a “Change in Control”
shall mean and be determined to have occurred if (A) any person (“Person”)
(as such term is used in Sections 13(d) and 14(d) of the Securities
and Exchange Act of 1934, as amended) (the “Exchange Act”) is or becomes the
beneficial owner (“Beneficial Owner”) (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
the Company representing fifty one percent (51 %) or more of the combined
voting power of the then outstanding securities of the Company; (B) during
any period of two (2) years, a majority of the members of the Board is
replaced by directors who were not nominated and approved by the Board; or (C) the
Company is combined with or acquired by another company and the Board shall
have determined, either before such event or thereafter, by resolution, that a
Change in Control will occur or has occurred.


 


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ARTICLE V


INVENTIONS AND TRADEMARK; CONFIDENTIAL INFORMATION; NON-DISCLOSURE; 


UNFAIR COMPETITION; CONFLICT OF INTEREST


 


5.1                            Inventions
and Trademark.  All ideas,
inventions, trademarks, proprietary information, know-how, processes and other
developments or improvements developed by Villard, alone or with others, during
the Term, that are within the scope of Company’s business operations or that
relate to Company’s work or projects, are the exclusive property of
Company.  In that regard, Villard agrees
to disclose promptly to Company any and all inventions, discoveries,
trademarks, proprietary information, know-how, processes or improvements,
patentable or otherwise, that it and/or he may make from the beginning of
Villard’s employment until the termination thereof, that relate to the business
of Company, whether such is made solely or jointly with others.  Villard further agrees that, during the Term,
he will provide Company with a reasonable level of assistance, at Company’s sole
option and expense, to obtain patents in the United States of America, or
elsewhere on any such ideas, inventions, trademarks and other developments, and
agrees to execute all documents necessary to obtain such patents in the name of
Company.


 


5.2                            Confidential
Information.  Villard shall hold and
keep confidential for the benefit of Company all secret or confidential
information, files, documents other media in which confidential information is
contained, knowledge or data (collectively the “Confidential Information”)
relating to Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by Villard during Villard’s
employment by Company or any of its affiliated companies. Confidential
Information does not include information that is already public knowledge at
the time of disclosure (other than by acts by Villard or his representatives in
violation of this Agreement) or that is provided to Villard by a third party
without an obligation with Company to maintain the confidentiality of such
information.  After termination of
Villard’s employment with Company, he shall not, without the prior written
consent of Company, or as may otherwise be required by law or legal process,
communicate or divulge any Confidential Information to anyone other than
Company and those designated by it. 
Villard shall acknowledge that all confidential documents are and shall
remain the sole and exclusive property of Company regardless of who originally
acquired the confidential documents. 
Villard agrees to return to Company promptly upon the expiration or
termination of his employment or at any other time when requested by Company,
any and all property of Company, including, but not limited to, all
confidential documents and copies thereof in his possession or control.  Any loss resulting from a breach of the
foregoing obligations by Villard to protect the Confidential Information could
not be reasonably or adequately compensated in damages in an action at
law.  Therefore, in addition to other
remedies provided by law or this Agreement, Company shall have the right to
obtain injunctive relief, in the appropriate court, at any time, against the
dissemination by Villard of the Confidential Information, or the use of such
information by Villard in violation hereof.


 


5.2.1                   Restriction
on Use of Confidential/Trade Secret Information.  Villard agrees that his use of
confidential/trade secret information is subject to the following restrictions
for an indefinite period of time so long as the confidential/trade secret
information has not become generally known to the public:


 


(a)                                  Non-Disclosure.  Villard agrees that he will not publish or
disclose, or allow to be published or disclosed, confidential/trade secret
information to any person without the prior written authorization of the
Company unless pursuant to Villard’s job duties to the Company under this
Agreement.


 


(b)                                 Non-Removal/Surrender.  Villard agrees that he will not remove any
confidential/trade secret information from the offices of the Company or the
premises of any facility in which the Company is performing services, except
pursuant to his duties under this Agreement. 
Villard further agrees that he shall surrender to the Company all
documents and materials in his possession or control which contain
confidential/trade secret information and which are the property of the Company
upon the termination of this Agreement, and that he shall not thereafter retain
any copies of any such materials.


 


4

















 


5.2.2                   Non-Solicitation
of Customers/Prohibition Against Unfair Competition.  Villard agrees that at no time after his
employment with the Company will he engage in competition with the Company
while making any use of the Company’s confidential/trade secret
information.  Villard agrees that he will
not directly or indirectly accept or solicit, whether as an employee,
independent contractor or in any other capacity, the business of any customer
of the Company with whom Villard worked or otherwise had access to the Company’s
confidential/trade secret information pertaining to its business with that
customer during the last year of his employment with the Company.


 


5.3                            Non-Solicitation
During Employment.  Villard shall not
during his employment inappropriately interfere with the Company’s business
relationship with its customers or suppliers or solicit any of the employees of
the Company to leave the employ of the Company.


 


5.4                            Non-Solicitation
of Villard.  Villard agrees that, for
one year following the termination of his employment, he shall not, directly or
indirectly, ask or encourage any of the Company’s employees to leave their
employment with the Company or solicit any of the Company’s employees for
employment.


 


5.5                            Breach
of Provisions.  If Villard breaches
any of the provisions of this Section 5, or in the event that any such
breach is threatened by the Villard, in addition to and without limiting or
waiving any other remedies available to the Company at law or in equity, the
Company shall be entitled to immediate injunctive relief in any court, domestic
or foreign, having the capacity to grant such relief, to restrain any such
breach or threatened breach and to enforce the provisions of this Section 5.


 


5.6                            Reasonable
Restrictions.  The parties acknowledge
that the foregoing restrictions, as well as the duration and the territorial
scope thereof as set forth in this Section 5, are under all of the
circumstances reasonable and necessary for the protection of the Company and
its business.


 


5.7                            Definition.  For purposes of this section 5, the term
“Company” shall be deemed to include any parent, subsidiary or affiliate
of the Company.


 


ARTICLE VI


MISCELLANEOUS


 


6.1                            Binding
Effect; Assignment.  This Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective legal representatives, heirs, distributees, successors and
assigns.  Villard may not assign any of
his rights and obligations under this Agreement.  The Company may assign its rights and
obligations under this Agreement to any successor entity.


 


6.2                            Indemnification.  The Company shall indemnify,
defend and hold harmless Villard to the fullest extent permitted by law from
any and all actions, complaints, disputes, arbitrations, investigations,
guarantees or the like signed by Villard on behalf of the Company, or any other
proceedings of any kind whatsoever, or threats thereof (“Claims”) and any and
all damages, losses, expenses (including without limitation reasonable
attorneys’ fees, disbursements and other charges of counsel incurred by Villard
and selected by Company) or other liabilities, contingent or otherwise, of any
kind whatsoever arising from or relating to any aspect of Villard’s
relationship with the Company, the performance of any of Villard’s duties
hereunder, or otherwise arising from or relating to any aspect of Villard’s
relationship with the Company and any current or future subsidiary or
affiliates, the performance of any of Villard’s duties hereunder, or otherwise
arising from or relating to any action or inaction of Villard while serving as
an officer or director of the Company or, if applicable, as an officer or
director of the Company, or, if applicable, as an officer or director of any
other entity or as a fiduciary of any benefit plan, including without
limitation any personal liability of any kind under any law, rule, regulation,
agreement or understanding applicable to the Company and the persons who serve
as officers and directors thereof or any subsidiary or affiliate thereof,
during the Term or thereafter unless a result of Villard’s gross negligence or
willful misconduct.  


 


5

















 


The Company shall cover Villard under general liability insurance,
errors and omissions insurance (if any) and any other Company insurance, both
during and, while potential liability exists, after the Term in the same amount
and to the same extent as the Company covers its other officers and directors
and will make available to Villard any certificates of the foregoing.


 


6.3                            Notices.  Any notice provided for herein shall be in
writing and shall be deemed to have been given or made (a) when personally
delivered or (b) when sent by telecopier and confirmed within 48 hours by
letter mailed or delivered to the party to be notified at its or his/hers
address set forth herein; or three days after being sent by registered or
certified mail, return receipt requested, (or by equivalent currier with
delivery documentation such as FEDEX or UPS) to the address of the other party
set forth or to such other address as may be specified by notice given in
accordance with this section 6.3:


 


	
  If to the Company:

  	
   

  	
  ARTISTdirect, Inc. 

  
	
   

  	
   

  	
  1601 Cloverfield Boulevard, Suite 400S 

  
	
   

  	
   

  	
  Santa Monica, California 90404-4082 

  
	
   

  	
   

  	
  Telephone:

  	
  (310) 956-3300 

  
	
   

  	
   

  	
  Facsimile:

  	
  (310) 956-3301 

  
	
   

  	
   

  	
  Attention:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
  If to Villard:

  	
   

  	
  8721 Santa Monica Blvd.,
  Suite 100  

  
	
   

  	
   

  	
  Los Angeles CA 90069  

  
	
   

  	
   

  	
  Telephone:   (310)
  734-4551  

  
	
   

  	
   

  	
  Facsimile:   (310)
  362-8898

  



 


6.4                            Severability.  If any provision of this Agreement, or
portion thereof, shall be held invalid or unenforceable by a court of competent
jurisdiction, such invalidity or unenforceability shall attach only to such
provision or portion thereof, and shall not in any manner affect or render
invalid or unenforceable any other provision of this Agreement or portion
thereof, and this Agreement shall be carried out as if any such invalid or
unenforceable provision or portion thereof were not contained herein.  In addition, any such invalid or
unenforceable provision or portion thereof shall be deemed, without further
action on the part of the parties hereto, modified, amended or limited to the
extent necessary to render the same valid and enforceable.


 


6.5                            Waiver.  No waiver by a party hereto of a breach or
default hereunder by the other party shall be considered valid, unless
expressed in a writing signed by such first party, and no such waiver shall be
deemed a waiver of any subsequent breach or default of the same or any other
nature.


 


6.6                            Entire
Agreement.  This Agreement sets forth
the entire agreement between the Parties with respect to the subject matter
hereof, and supersedes any and all prior agreements between the Company and
Byzantine or Villard, whether written or oral, relating to any or all matters covered
by and contained or otherwise dealt with in this Agreement, including the
Services Agreement.  This Agreement does
not constitute a commitment of the Company with regard to Villard’s employment,
express or implied, other than to the extent expressly provided for herein.


 


6.7                            Amendment.  No modification, change or amendment of this
Agreement or any of its provisions shall be valid, unless in writing and signed
by the party against whom such claimed modification, change or amendment is
sought to be enforced.


 


6.8                            Authority.  The Parties each represent and warrant that
it or he has the power, authority and right to enter into this Agreement and to
carry out and perform the terms, covenants and conditions hereof.


 


6

















 


6.9                            Attorneys’
Fees.  If either party hereto
commences an arbitration or other action against the other party to enforce any
of the terms hereof or because of the breach by such other party of any of the
terms hereof, the prevailing party shall be entitled, in addition to any other
relief granted, to all actual out-of-pocket costs and expenses incurred by such
prevailing party in connection with such action, including, without limitation,
all reasonable attorneys’ fees, and a right to such costs and expenses shall be
deemed to have accrued upon the commencement of such action and shall be
enforceable whether or not such action is prosecuted to judgment.


 


6.10                      Titles.  The titles of the sections of this Agreement
are inserted merely for convenience and ease of reference and shall not affect
or modify the meaning of any of the terms, covenants or conditions of this
Agreement.


 


6.11                      Applicable
Law; Choice of Forum.  This
Agreement, and all of the rights and obligations of the parties in connection
with the employment relationship established hereby, shall be governed by and
construed in accordance with the substantive laws of the State of California
without giving effect to principles relating to conflicts of law.


 


6.12                      Arbitration.


 


6.12.1             Scope.  To the fullest extent permitted by law,
Villard and the Company agree to the binding arbitration of any and all
controversies, claims or disputes between them arising out of or in any way
related to this Agreement, the employment relationship between the Company and
Villard and any disputes upon termination of employment, including but not
limited to breach of contract, tort, discrimination, harassment, wrongful
termination, demotion, discipline, failure to accommodate, family and medical
leave, compensation or benefits claims, constitutional claims; and any claims
for violation of any local, state or federal law, statute, regulation or
ordinance or common law.  For the purpose
of this agreement to arbitrate, references to “Company” include all parent,
subsidiary or related entities and their employees, supervisors, officers,
directors, agents, pension or benefit plans, pension or benefit plan sponsors,
fiduciaries, administrators, affiliates and all successors and assigns of any
of them, and this agreement to arbitrate shall apply to them to the extent
Villard’s claims arise out of or relate to their actions on behalf of the
Company.


 


6.12.2             Arbitration
Procedure.  To commence any such
arbitration proceeding, the party commencing the arbitration must provide the other
party with written notice of any and all claims forming the basis of such right
in sufficient detail to inform the other party of the substance of such
claims.  In no event shall this notice
for arbitration be made after the date when institution of legal or equitable
proceedings based on such claims would be barred by the applicable statute of
limitations.  The arbitration will be
conducted in Los Angeles, California, by a single neutral arbitrator and in
accordance with the then-current rules for resolution of employment
disputes of the American Arbitration Association (“AAA”).  The Arbitrator is to be selected by the
mutual agreement of the Parties.  If the
Parties cannot agree, the Superior Court will select the arbitrator.  The parties are entitled to representation by
an attorney or other representative of their choosing.  The arbitrator shall have the power to enter
any award that could be entered by a judge of the trial court of the State of
California, and only such power, and shall follow the law.  The award shall be binding and the Parties
agree to abide by and perform any award rendered by the arbitrator.  The arbitrator shall issue the award in
writing and therein state the essential findings and conclusions on which the
award is based.  Judgment on the award
may be entered in any court having jurisdiction thereof.  The Company shall bear the costs of the
arbitration filing and hearing fees and the cost of the arbitrator.


 


6.13                      This
Agreement shall not be terminated by any voluntary or involuntary dissolution
of the Company resulting from either a merger or consolidation in which the
Company is not the consolidated or surviving corporation, or a transfer of all
or substantially all of the assets of the Company.  In the event of any such merger or
consolidation or transfer of assets, Villard’s rights, benefits and obligations
hereunder shall be assigned to the surviving or resulting corporation or the
transferee of the Company’s assets.


 


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IN WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.


 


	
   

  	
  ARTISTdirect, Inc., a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dimitri Villard

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
    Chief Financial Officer

  
						



 


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