Exhibit 10.1


 


CONSULTING AGREEMENT


 


THIS CONSULTING AGREEMENT (“Consulting
Agreement”) is entered into as of  May
15, 2006 by and between ARTISTdirect, Inc., a Delaware corporation (the “Company”),
WNT Consulting Group, a California limited liability company (“Consulting
Company”), and Eric Pulier, an individual (“Consultant”).


 


RECITALS


 


A.                                    Consultant is a
member of the Company’s Board of Directors (“Board”).


 


B.                                    Consultant currently
provides consulting services to the Company outside the scope of ordinary Board
services.


 


C.                                    Consulting
Company is wholly-owned by Consultant.


 


D.                                    In order to
provide for the continued availability of Consultant’s services to the Company,
the Company, Consulting Company and Consultant have agreed to enter into this
Consulting Agreement.


 


E.                                      The Company’s
management considers it in the best interests of the Company to foster the
continued availability of Consultant, and Consultant 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; Duties. During the Term (as defined in Section 6 below),
Consultant shall make himself available to provide consulting services to the
Company and its subsidiaries, as set forth on Exhibit A. Consultant will
comply with the Company’s rules and policies relating to workplace conduct and
security while at the Company’s premises. Consultant shall not remove any
property of the Company or any third party from the Company’s premises without
the prior written consent of an executive officer of the Company.


 


2.                                      Signing Bonus; Base Compensation.


 


(a)                                  Consultant shall receive a
one-time signing bonus (“Signing Bonus”), as set forth on Exhibit A.


 


(b)                                 During the Term,
Consultant’s monthly base fee (“Base Fee”) will be as set forth on Exhibit
A.


 


3.                                      Bonus. Consultant may be eligible to receive a non-discretionary
and discretionary bonus in addition to the Signing Bonus and Base Fee, both as
set forth on Exhibit A (collectively, the “Bonus”).


 


4.                                      Stock
Options. Consultant agrees to waive, and shall not be
entitled to receive, any and all stock options and other stock-based
compensation granted to outside members of the Board during the Term.


 


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5.                                      Reimbursement; Benefits.


 


(a)                                  The Company
agrees to reimburse Consultant for reasonable and necessary out-of-pocket
expenses incurred during the Term related to performance of Consultant’s duties
under this Consulting Agreement, to the extent such expenses are approved by an
executive officer of the Company in advance. Reimbursement is subject to Consultant
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)                                 Except as
required by applicable law, the Company shall have no obligation to provide any
benefits to Consultant during the Term.


 


6.                                      Term. The term (the “Term”) of this Consulting Agreement
shall commence as January 1, 2006 (the “Effective Date”) and shall
terminate on the one (1) year anniversary thereof; provided that the
Term may end earlier in accordance with Section 9 below; provided  further
that the Term shall automatically renew for successive periods of one (1)
year each, unless any party delivers written notice to the other parties of its
intention not to renew the Term for such successive one (1) year period no
later than thirty (30) days prior to the commencement of any such renewal
period.


 


7.                                      Rights
to Works. In return for the consideration described herein, Consulting
Company and Consultant agree as follows:


 


(a)                                  All inventions,
trade secrets, ideas, recordings, original works of authorship or other work
product of any kind that Consultant conceives, develops, discovers or makes in
whole or in part in the course or scope of his services or other engagement, 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 Consultant’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, Consultant 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, Consultant 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 Consulting Agreement. In furtherance of
the foregoing, Consultant hereby and irrevocably constitutes and appoints the
Company, with full power of substitution, to be Consultant’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


 


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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 Consulting Agreement
and when Consultant is no longer a member of the Board.


 


(d)                                 All provisions
of this Consulting Agreement relating to the assignment by Consultant 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 Consulting Agreement
does not apply to an invention or innovation that Consultant 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 Consultant for the Company or any of
its subsidiaries. A copy of California Labor Code Sections 2870, 2871 and 2872
is attached to this Consulting Agreement as Exhibit B.


 


(e)                                  Consultant shall
disclose all inventions and innovations to the Company, even if he does not
believe that he is required under this Consulting Agreement, or pursuant to
California Labor Code Section 2870, in order to assign his interest in such
invention or innovation to the Company. If Consultant and the Company disagree
as to whether or not an invention or innovation is included within the terms of
this Consulting Agreement, it will be Consultant’s responsibility to prove that
it is not included.


 


8.                                      Covenant
Not to Compete or Solicit.


 


(a)                                  Beginning on
the date hereof and ending on the earlier of: (i) April 1, 2007, or (ii)
the date of termination of Consultant’s services with the Company by the
Company (the “Non-Competition Period”), Consulting Company and Consultant
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 MediaDefender, Inc. anti-piracy services;
(ii) acquiring or having an ownership interest in any entity that derives
revenues from any business in competition with the Competitive 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 Consulting Company
or the Consultant shall not be deemed to be engaging in a Competitive Business
Activity solely because Consulting Company or the Consultant is employed by, or
serves as an independent contractor to, an Entity that engages in a Competitive
Business Activity if (i) Consulting Company or the Consultant 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”) or (ii) the Consulting
Company or the Consultant does not provide technical, marketing or other assistance
to a Competing Division. 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.


 


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(b)                                 During the
Non-Competition Period, neither Consulting Company nor Consultant 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 8(b).


 


(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 Consulting 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 Consulting 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)).


 


9.                                      Termination.


 


(a)                                  The Company
shall have the right, upon written notice to Consulting Company and Consultant,
to immediately terminate this Consulting Agreement and Consultant’s services
with the Company for “Cause.”  Upon such
termination, Consultant will have no further right to compensation under
Section 2 or Exhibit A other than any such amounts of Base Fee that
have accrued but have not been paid at the date of termination, payment of the
Non-Discretionary Bonus (to the extent such payment is provided for in Exhibit
A) and payment of any unpaid portion of the Signing Bonus. For purposes of
this Consulting Agreement only, “Cause” shall mean the determination by the
Company in the exercise of its sole discretion, of any of the following:  (i) Consultant’s
financial dishonesty, including, without limitation, misappropriation or
embezzlement of the funds or property of the Company or any subsidiary or
affiliate, falsification of any Company or subsidiary of affiliate documents or
records or any unauthorized attempt by Consultant to take any business or
business opportunities of the Company or any subsidiary or affiliate for Consultant’s
own personal gain; (ii) Consultant’s unauthorized or improper use or disclosure
of the Company or any subsidiary or affiliate’s confidential or proprietary
information; (iii) any action by Consultant that has or is reasonably likely to
have a material detrimental or adverse effect on the Company or any subsidiary
or affiliate’s reputation, business or prospects; (iv) Consultant’s failure or
inability to perform any material duties contemplated by this Consulting Agreement;
(v) negligent, reckless or willful misconduct in performance of Consultant’s
duties; (vi) any material breach by Consultant of any agreement between Consultant
and the Company or any subsidiary or affiliate; (vii) Consultant’s conviction
(including any plea of guilty or nolo contendere) of any felony or the
commission of any other material act or material omission involving dishonesty,
disloyalty or fraud with respect to the Company, its subsidiaries or affiliates,
any customer, supplier or other material business relations; or (viii) a
material violation by Consultant of the Company policies, including, without
limitation, policies on prohibition of unlawful harassment and insider trading.


 


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(b)                                 The Company
shall have the right to terminate this Consulting Agreement and to terminate
Consultant’s services with the Company after the occurrence, and during the
continuance, of any “Disability” upon thirty (30) days written notice to Consulting
Company and Consultant. For purposes of this Consulting Agreement only, “Disability”
means Consultant’s incapacity to perform the essential functions of his duties
with or without reasonable accommodation as required hereunder for sixty (60) days
or more within any period of one hundred eighty (180) 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
Consultant’s Disability, the matter shall 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 Consultant. For this purpose,
Consultant will submit to appropriate medical examinations.


 


(c)                                  This Consulting
Agreement shall automatically terminate upon the event of Consultant’s death.


 


10.                               Consultant’s
Tax Obligations;  Insurance Coverage. All fees,
compensation, payments and other benefits payable or provided under this
Consulting Agreement shall be construed to include local, state or federal
sales, use, excise, personal property or other similar taxes or duties, and any
such taxes shall be assumed and paid for by Consultant. Consultant shall be
solely responsible for and shall make proper and timely payment of any
withholding or other taxes, such as Consultant’s estimated state and federal
income taxes, employment taxes and self-employment taxes. Consulting Company
shall maintain appropriate insurance coverage, as may be required by applicable
law, in each case, for the benefit of Consultant. Consultant will indemnify and
hold the Company harmless from and against any and all claims, damages,
liabilities, losses, costs and expenses, including, without limitation, legal
expenses and reasonable counsel fees, relating to any breach, or any allegation
which if true would evidence a breach, by Consultant of any warranty,
representation or agreement made by Consultant in this Consulting Agreement.


 


11.                               Securities
Laws; Insider Trading Policies.


 


(a)                                  Consultant agrees
to comply with all provisions of the securities laws of the United States,
including, but not limited to Section 16 of the Securities Exchange Act of
1934, as amended.


 


(b)                                 To the extent
Consultant resigns from the Board during the Term, Consultant agrees that he
shall execute a mutually agreeable confidentiality agreement which shall
prohibit, among other things, disclosure by Consultant of confidential
information pertaining to the Company in violation of Regulation FD.


 


(c)                                  Consultant
agrees to comply with all provisions of the Company’s insider trading policy.


 


12.                               Equitable
Relief. Consulting Company and Consultant acknowledge that
any breach or threatened breach by Consulting Company or Consultant of the
provisions of Sections 7 or 8 of this Consulting Agreement will result in
immediate and irreparable to the Company, for which there will be no adequate
remedy at law, and that the Company will be entitled to equitable relief to
restrain Consulting Company and Consultant from violating these Sections,
and/or to compel Consulting Company and Consultant to perform its obligations
thereunder, without posting bond or other security. Notwithstanding anything
contained herein to the contrary, the parties shall be entitled to seek a
temporary restraining order for alleged an alleged breach or threatened breach
of Sections 7 or 8 of this Consulting Agreement pursuant to California Code of
Civil Procedure Section 1281.8.


 


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13.                               Complete Agreement; Amendment; Waiver. This Consulting Agreement is the complete agreement
and understanding between the parties with respect to its subject matter and
supersedes any prior understandings, agreements or representations, written or
oral, which may relate to the subject matter hereof in any way. The provisions
of this Consulting Agreement may be amended or waived only with the prior
written consent of the Company, Consulting Company and Consultant, and no
course of conduct or failure or delay in enforcing the provisions of this Consulting
Agreement shall affect the validity, binding effect or enforceability of this Consulting
Agreement.


 


14.                               Counterparts. This Consulting
Agreement may be executed in separate counterparts, each of which is deemed to
be an original and all of which taken together constitute one and the same
agreement.


 


15.                               Successors and Assigns. This Consulting
Agreement is intended to bind and inure to the benefit of and be enforceable by
all the parties and their respective heirs, successors and assigns, except that
Consultant may not assign his rights or delegate his obligations hereunder.


 


16.                               Choice of Law. This Consulting
Agreement is made and entered into, and shall be interpreted and construed in
accordance with the laws of, the State of California.


 


17.                               Dispute
Resolution. The parties agree that any disputes related to
this Consulting Agreement, or otherwise related to services provided by
Consultant to the Company, shall be submitted to binding arbitration in
accordance with the employment arbitration rules of American Arbitration
Association (“AAA”) by a single impartial arbitrator. The arbitration
shall take place in the County of Los Angeles, California, and all parties
agree to submit to the jurisdiction of the arbitrator selected in accordance
with AAA’s rules and procedures. The parties agree that the arbitration
procedure provided for in this section will be the exclusive avenue of redress
for any disputes relating to or arising from this Consulting Agreement or
otherwise related to Consultant’s service with the Company, and that the award
of the arbitrator shall be final and binding on all parties, and nonappealable.
The arbitrator shall have discretion to award monetary and other damages, or no
damages, and to fashion such other relief as the arbitrator deems appropriate,
in accordance with applicable law. The arbitrator shall also have discretion to
award the prevailing party reasonable costs and attorneys’ fees incurred in
bringing or defending an action under this provision, in accordance with
applicable law. THE PARTIES ACKNOWLEDGE AND AGREE THAT BY AGREEING TO ARBITRATE
THE DISPUTES COVERED BY THIS SECTION 17, THEY ARE WAIVING ANY RIGHT TO
BRING AN ACTION AGAINST THE OTHER IN A COURT OF LAW, EITHER STATE OR FEDERAL,
AND ARE WAIVING THE RIGHT TO HAVE CLAIMS AND DAMAGES, IF ANY, DETERMINED BY A
JURY WITH RESPECT TO SUCH DISPUTES. Notwithstanding the foregoing, the parties
shall be entitled to seek a provisional remedy, including, but not limited to,
a temporary restraining order pursuant to California Code of Civil Procedure
Section 1281.8 before or during arbitration.


 


18.                               Notices. Any notice or
communication required or permitted by this Consulting Agreement shall be
deemed sufficiently given if in writing and, if delivered personally, when it
is delivered or, if delivered in another manner, the earlier of when it is
actually received by the party to whom it is directed or when the period set
forth below expires (whether or not it is actually received):  (i) if deposited with the U.S. Postal
Service, postage prepaid, and addressed to the party to receive it as set forth
below, forty-eight (48) hours after such deposit as registered or certified
mail; or (ii) if accepted by Federal Express or a similar delivery service in
general usage for delivery to the address of the party to receive it as set
forth next below, twenty-four (24) hours after the delivery time promised by
the delivery service.


 


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IN WITNESS WHEREOF, the parties have executed this
Consulting Agreement as of the date first written above:


 


	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  ARTISTDIRECT, INC.

  
	
   

  	
   

  
	
   

  	
    /s/ Robert N. Weingarten

  	
   

  
	
   

  	
  By:

  	
  Robert N. Weingarten

  
	
   

  	
  Its:

  	
  Chief Financial Officer

  
	
   

  	
  Address:

  	
  1601 Cloverfield
  Boulevard, Suite 400 South

  
	
   

  	
   

  	
  Santa Monica, California
  90404-4082

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CONSULTING COMPANY:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WNT Consulting Group, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    /s/ Eric Pulier

  	
   

  
	
   

  	
  By:

  	
  Eric Pulier

  
	
   

  	
  Its:

  	
  Director

  
	
   

  	
  Address:

  	
  12366 Ridge Circle

  
	
   

  	
   

  	
  Los Angeles, CA 90049

  
	
   

  	
   

  
	
   

  	
  CONSULTANT:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    /s/ Eric Pulier

  	
   

  
	
   

  	
  Eric
  Pulier

  
	
   

  	
  Address:

  	
  12366 Ridge Circle

  
	
   

  	
   

  	
  Los
  Angeles, CA 90049

  
						



 


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Exhibit A


 


	
  Duties:

  	
   

  	
  Consultant will provide
  consulting and advisory services outside of the ordinary course of what is
  provided by other members of the Company’s Board (excluding the Company’s
  employee directors), with respect to the business and operations of the
  Company and its subsidiaries (including MediaDefender, Inc.). Specific duties
  will be as mutually determined by Consultant and the Company’s Chief
  Executive Officer.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Consultant shall report
  directly to the Company’s Chief Executive Officer, Chief Operating Officer
  and President, subject to modification by the Company’s Chief Executive
  Officer. Senior executive officers of MediaDefender, Inc. shall be entitled
  to contact Consultant directly and to request any information, work product
  or other business ideas or strategies generated by Consultant during the
  Term.

  
	
   

  	
   

  	
   

  
	
  Signing Bonus;

  Base Fee:

  	
   

  	
  Signing Bonus equal to
  $50,000, payable in equal installments of $25,000 in the third and fourth
  fiscal quarter of 2006.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Commencing as of the
  Effective Date, monthly payments equal to $10,000. Such payments shall
  commence on June 1, 2006 and all amounts accrued for services rendered since
  the Effective Date shall be paid to Consultant on or prior to December 31,
  2006.

  
	
   

  	
   

  	
   

  
	
  Non-Discretionary

  Bonus:

  	
   

  	
  So long as Consultant has
  continued to provide consulting services through such date in accordance with
  the Consulting Agreement, a $25,000 Bonus payable on December 31, 2006,
  unless Consultant unilaterally exercises termination right under Section 6 of
  the Consulting Agreement.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Non-Discretionary
  Bonus (if earned and payable) shall be paid on the ninety-first (91st)
  day following the end of the Company’s then current fiscal year end (e.g.,
  April 1).

  
	
   

  	
   

  	
   

  
	
  Discretionary

  	
   

  	
  Consultant may be entitled
  to Discretionary Bonus amounts, as set forth below:

  
	
  Bonus:

  	
   

  	
   

  
	
   

  	
   

  	
  A. $50,000- For successful
  organization of artist managers and legal representation to educate the
  sector on incorporating anti-piracy clauses in artist contracts.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B. $50,000- For successful
  organization of industry advisory board, and for a Company executive officer
  or Consultant taking a personal leadership role in running the advisory board
  meetings toward the creation of end-state requirements.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  C. $50,000- For successful
  creation of a joint venture for the Company with Beverly Hills Film Festival
  (“BHFF”) to create the BHFF online, leveraging the existing
  infrastructure of the UBL website.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  D. $50,000- For successful
  creation of a database technology for the Company that can review massive
  amounts of peer-to-peer activities to deduce trends and predict popularity of
  upcoming music artists—virtual A&R.

  



 


8

















 


	
   

  	
   

  	
  For Consultant to be
  eligible to receive the Discretionary Bonus amounts referenced above,
  Consultant must be actively involved in the creation and execution of
  strategies necessary for the Company to achieve items A-D above, as
  applicable. Any discretionary bonus amounts earned during the Term shall be
  paid on the thirtieth (30th) day following achievement, but shall
  remain subject to final approval by the Compensation Committee of the Board,
  upon consultation with the Company’s Chief Executive Officer.

  
	
   

  	
   

  	
   

  
	
  Form of

  Compensation:

  	
   

  	
  The Signing Bonus and Base
  Fee referenced above will be paid by the Company in cash; however, up to fifty percent (50%) of the Signing Bonus
  and Base Fee may be paid in such other form as mutually agreed to by
  Consultant and the Company.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All Bonus amounts
  referenced above shall be payable in cash or such other form as mutually
  agreed to by Consultant and the Company.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Any issuances of the
  Company’s common stock made in lieu of cash compensation will be based
  on the closing sales price of the Company’s common stock on the date of such
  issuance (which date will generally occur during
  the four week “window” periods following the publication of the Company’s
  quarterly and annual financial results).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If the Company determines
  it to be reasonably necessary, the Company may defer any cash payments owed
  pursuant to this Consulting Agreement for a period of up to ninety (90) days.

  



 


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Exhibit B


 


California
Labor Code Sections 2870, 2871 and 2872


 


SECTION 2870


 


(a)                                  Any provision
in an employment agreement which provides that an employee shall assign, or
offer to assign, any of his or her rights in an invention to his or her
employer shall not apply to an invention that the employee developed entirely
on his or her own time without using the employer’s equipment, supplies,
facilities, or trade secret information except for those inventions that
either:


 


i.                                          Relate at the
time of conception or reduction to practice of the invention to the employer’s
business, or actual or demonstrably anticipated research or development of the
employer; or


 


ii.                                       Result from any
work performed by the employee for the employer.


 


(b)                                 To the extent a
provision in an employment agreement purports to require an employee to assign
an invention otherwise excluded from being required to be assigned under
subdivision (a), the provision is against the public policy of this state and
is unenforceable.


 


SECTION 2871


 


No employer shall require a
provision made void and unenforceable by Section 2870 as a condition of
employment or continued employment. Nothing in this article shall be construed
to forbid or restrict the right of an employer to provide in contracts of
employment for disclosure, provided that any such disclosures be received in
confidence, of all of the employee’s inventions made solely or jointly with
others during the term of his or her employment, a review process by the
employer to determine such issues as may arise, and for full title to certain
patents and inventions to be in the United States, as required by contracts
between the employer and the United States or any of its agencies.


 


SECTION 2872


 


If an employment agreement
entered into after January 1, 1980, contains a provision requiring the employee
to assign or offer to assign any of his or her rights in any invention to his
or her employer, the employer must also, at the time the agreement is made,
provide a written notification to the employee that the agreement does not
apply to an invention which qualifies fully under the provisions of Section
2870. In any suit or action arising thereunder, the burden of proof shall be on
the employee claiming the benefits of its provisions.


 


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