Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

WHEREAS,
Khoa D. Nguyen (the “Executive”)
and Video Server, Inc. entered into an Employment Agreement (the “Agreement”)
effective as of January 22, 1999;

 

WHEREAS,
Ezenia! Inc., a Delaware corporation (the “Company”) is the successor to Video
Server, Inc., the Executive is and has been employed by the Company and is
currently the Company’s Chairman of the Board, President and Chief Executive
Officer; and

 

WHEREAS,
the Company and the Executive desire to amend and restate the Agreement in its
entirety effective as of November 9, 2007, to provide additional financial
security and benefits to the Executive and to encourage the Executive to
continue his employment with the Company.

 

NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS

 

1.                                      DUTIES
AND SCOPE OF EMPLOYMENT.

 

1.1                                 POSITION.
The Company shall employ the Executive in the position of Chairman, President
and Chief Executive Officer, as such position has been defined in terms of
responsibilities and compensation as of the effective date of this Agreement;
provided, however, that the Board shall have the right, at any time prior to
the occurrence of a Change of Control, to revise such responsibilities and
compensation as the Board in its discretion may deem necessary or appropriate,
subject to the other provisions of this Agreement. The Executive shall comply
with and be bound by the Company’s operating policies, procedures and practices
from time to time in effect during his employment. During the term of the
Executive’s employment with the Company, the Executive shall continue to devote
his full time, skill and attention to his duties and responsibilities, and
shall perform them faithfully, diligently and competently, and the Executive
shall use his best efforts to further the business of the Company and its
affiliated entities. The foregoing shall not prevent the Executive from a
reasonable amount of service on the boards of directors of any entities,
subject to the terms of any noncompetition obligations he may have to the
Company from time to time, nor from engaging in academic, religious, charitable
or other community or non-profit activities that do not impair his ability to
fulfill his duties and responsibilities under this Agreement.

 

1.2.                              BASE
COMPENSATION. The Company shall pay the Executive as compensation for his
services a base salary at the annualized rate to be established by the Board of
Directors. Such salary shall be paid periodically in accordance with normal
Company payroll practices, except to the extent the Executive elected to defer
salary in accordance with the terms of The Ezenia! Inc. Deferred Compensation
Plan. The annualized compensation specified in this Section 1.2, as such
compensation may be increased or (subject to the other provisions of this
Agreement) decreased by the Board or the Compensation Committee of the Board,
is referred to in this Agreement as “Base Compensation.”

 

 

1.3                                 ANNUAL
INCENTIVE. Beginning with the Company’s current fiscal year and for each
fiscal year thereafter during the term of this Agreement, the Executive shall
be eligible to receive additional cash compensation under the Company’s annual
incentive plan (the “Annual Incentive Bonus”) based upon specific financial
and/or other targets approved by the compensation committee of the Board. The
Annual Incentive Bonus payable hereunder shall be payable in accordance with
the Company’s normal practices and policies, except with respect to the
Executive’s properly filed election to defer all or a portion of any such
Annual Incentive Bonus in accordance with the terms of The Ezenia! Inc.
Deferred Compensation Plan.

 

1.4                                 EXECUTIVE
BENEFITS. The Executive shall be eligible to participate in the employee
benefit plans and executive compensation programs maintained by the Company
applicable to other key executives of the Company, including (without
limitation) retirement plans, savings or profit-sharing plans, stock option,
incentive or other bonus plans, life, disability, health, accident and other
insurance programs, paid vacations, and similar plans or programs, subject in
each case to the generally applicable terms and conditions of the applicable
plan or program in question and to the sole determination of the Board or any
committee administering such plan or program. Nothing paid to the Executive
under any such plan or program will be deemed to be in lieu of other
compensation or benefits to which the Executive is entitled under this
Agreement.

 

1.5                                 LIFE
INSURANCE BENEFITS. In addition to the benefits described in Section 1.4,
the Company shall procure life insurance coverage on behalf of the Executive in
the amount of $1.75 million, without any limitations or exclusions of such
coverage in the event of the Executive’s death while on business travel. The
life insurance policy shall be owned by either the Executive or a trust
established by the Executive, and the Company shall have no interest in the
policy. During the term of the Executive’s employment with the Company, the
Company shall pay all premiums due on the policy until the policy is fully paid
up. Benefits payable as a result of such coverage shall be paid in accordance
with the terms and conditions of such life insurance policy. If prior to the
date the premium is paid in full: (a) the Executive terminates employment, with
or without a Change in Status, (b) the Company terminates the Executive’s
employment without Cause, (c) the Executive becomes disabled under Section 5.5.
below, or (d) a Change of Control occurs, subject to the provisions of Section
9.12, the Company shall pay the remaining balance of the premium within 30 days
of such date.

 

1.6                                 EMPLOYMENT
RELATIONSHIP. The Executive’s employment is and shall continue to be
at-will, as defined under applicable law, and may be terminated by either party
at any time and for any reason. If the Executive’s employment terminates for
any reason, the Executive shall not be entitled to any payments, benefits,
damages, awards or compensation other than (i) payment of amounts earned or
accrued as of the date of termination of employment, (ii) as provided by this
Agreement or required by law, or (iii) as may otherwise be available in
accordance with the Company’s established employee plans and policies
(including any deferred compensation plans) at the time of termination.

 

1.7                                 TERMINATION
NOTICE. The Company may terminate the Executive’s employment with or
without Cause effective immediately upon a vote of the Board of Directors and
written notice to the Executive.

 

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2.                                      TERMINATION
OF EMPLOYMENT WITHOUT CAUSE OR CHANGE IN STATUS — SEVERANCE BENEFITS.

 

2.1                                 SEVERANCE
BENEFITS. In the event the Executive is terminated by the Company without
Cause or the Executive resigns his employment on account of a Change in Status,
the Company shall provide the Executive with severance benefits in an amount
equal to two times (1) the highest annual salary in effect with respect to the
Executive during the twelve-month period immediately preceding the date of the
termination, and (2) the Executive’s current targeted Annual Incentive Bonus
(provided that if no Annual Incentive Bonus is then in effect with regard to
the Executive, then the highest Annual Incentive Bonus or other aggregate
bonus(es) actually paid to the Executive in any of the three preceding fiscal
years of the Company) (“Severance Benefits”). An amount equal to
one-twenty-fourth of the Severance Benefits shall be payable to the Executive
on a monthly basis until the earlier of (i) the date 24 months after the date
of termination, or (ii) the date the Executive commences substantially
full-time employment with another company or organization (the “Severance
Period”).

 

2.2                                 STOCK
OPTIONS AND OTHER BENEFITS.

 

(a)                                  In
the event the Executive is terminated by the Company without Cause or the
Executive resigns his employment on account of a Change in Status, all Options
and Restricted Stock Awards held by the Executive under the Company’s Stock
Option Plans (as defined below in Section 5) shall become fully vested,
notwithstanding any terms in the Company’s Stock Option Plans to the contrary. The
Executive shall also continue to be provided with Company’s employee medical
and dental insurance as is in effect during the Severance Period. Subject to
subsection (b) and following the Severance Period, the Executive and his Spouse
shall receive extended medical coverage for life, with such coverage equivalent
to the coverage they would have been entitled to under such medical insurance
plans if Executive had continued to be employed during such period; provided, however,
in the event that such coverage cannot be provided, in whole or in part, to the
Executive or his Spouse, as a non-employee subsequent to termination of
employment, the Company shall instead contribute an amount to the Executive’s
privately obtained benefits with comparable coverage for him and his Spouse
such that the Executive is not required to pay any more for such benefits than
the Executive was required to pay immediately preceding the date of
termination.

 

(b)                                 During
the Severance Period, the Executive shall be covered under the Company’s
short-term and long-term disability and life insurance plans but shall not be
entitled to make future deferrals to the Company’s 401(k) Plan or nonqualified
Deferred Compensation Plan and shall not accrue any further vacation time.

 

(c)                                  Notwithstanding
the provisions of subsection (a) or (b), if the provision of any benefits
covered by subsection (a) or (b) would trigger the 20% excise tax and interest
penalties under Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), then the benefit(s) that would trigger such tax and interest
penalties shall not be provided (the “Excluded Benefits”), and in lieu of the
Excluded Benefits, the Company shall provide the Executive with a lump sum cash
amount equal to the cost to the Company of providing the

 

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Excluded Benefits. Such lump sum payment
shall be paid as soon as practicable, but no earlier than six months after the
Executive’s “separation from service” within the meaning of Section 409A of the
Code.

 

2.3                                 RELEASE.
All severance payments due to the Executive under this Agreement shall be
conditioned upon and are in consideration of (a) the execution by the Executive
of a full Release in a form reasonably prescribed by the Company (the “Release”),
releasing the Company and its officers, directors, employees and advisors from
any and all liability to and including the date of the Termination Notice or
Change in Status, save only for claims for breach of this Agreement and (b) the
Executive not committing any act of Misconduct (as defined below in Section 5)
during the Severance Period. The Executive shall execute the release within 45
days after termination of employment and if the Executive does not revoke
within the permitted revocation period, subject to the provisions of Section
9.12, the severance payments shall commence on the payroll date following the
end of the revocation period, but such first payment shall also include any
amount that would have been due from the date of termination to the date of
such payment.

 

3.                                      TERMINATION
OR DISABILITY

 

3.1                                 VOLUNTARY
TERMINATION OR TERMINATION FOR CAUSE. If the Executive voluntarily resigns
from the Company (other than following a Change in Status), or if the Company
terminates the Executive’s employment for Cause, then the Executive shall not
be entitled to receive severance or other benefits except for (a) payment of
amounts earned or accrued as of the date of termination of employment, (b) as
required by law, or (c) those (if any) as may then be established under the
Company’s then existing severance and benefits plans and policies (including
any deferred compensation plans) at the time of such resignation or
termination.

 

3.2                                 DISABILITY.

 

(a)                                  In
the event that the Executive’s employment with the Company shall terminate
during the Employment Period on account of the Executive’s Disability as
defined in Section 5.5 below, then the Company shall make payment to the
Executive of (A) his earned but unpaid Base Compensation as of the date of his
termination of employment, (B) benefits to which he is entitled pursuant to the
terms of all applicable employee benefit plans and programs and compensation
plans and programs as of the date of his termination of his employment, and (C)
the provision of such other benefits, if any, to which he is entitled as a
former employee pursuant to the terms of the Company’s employee benefit plans
and programs and compensation plans and programs. All such payment shall be
made at the time and in the manner prescribed by law applicable to the payment
of wages or pursuant to the terms of the relevant benefit plan but in no event
later than 30 days after the Executive’s termination of employment.

 

(b)                                 Prior
to the Executive’s employment being terminated due to Disability, the Executive
shall continue to receive his full Base Compensation, bonuses and other
benefits to which he is entitled under this Agreement, including continued
participation in all employee benefit plans and programs.

 

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(c)                                  At
the time the Executive’s employment is terminated due to Disability, the
Executive shall become entitled to receive the Disability payments that may be
available under any applicable short-term disability plan, long-term disability
plan or other benefit plan. Such Disability payments shall be equal, on an
annualized basis, to at least 65% of the Executive’s Base Compensation as of
the date of his Disability.

 

(d)                                 Subject
to the provisions of Section 2.2(c), following the date the Executive’s
employment is terminated due to Disability, the Executive and his Spouse shall
be entitled to health and welfare benefits coverage for life (including
hospitalization, major medical and dental), with such coverage equivalent to
the coverage they would have been entitled to under such benefit plans if the
Executive had continued to be employed during such period; provided, however,
in the event that such coverage cannot be provided, in whole or in part, to the
Executive or his Spouse, as a non-employee subsequent to termination of the
Executive’s employment, the Company shall instead contribute an amount to the
Executive’s privately obtained benefits with comparable coverage for him and
his Spouse such that the Executive is not required to pay any more for such
benefits than the Executive was required to pay immediately preceding the date
of termination.

 

3.3                                 DEATH  In the event that the Executive’s employment
with the Company terminates on account of his death prior to his termination of
employment without Cause or Change in Status, the Company shall make a lump sum
payment to the Executive’s Spouse in an amount equal to what would be payable
under Section 2.1 had the Executive been terminated without Cause. Such payment
shall be paid within 15 days of the date of the Executive’s death. In the event
the Executive’s Spouse predeceases the Executive, such payments shall be made
to the Executive’s designated beneficiaries.

 

4.                                      CHANGE
OF CONTROL.

 

4.1                                 SEVERANCE
PAYMENTS; BENEFITS.

 

(a)                                  If
the Company terminates the Executive other than for Cause either in
anticipation of or as required to accomplish a Change of Control or within 24
months after a Change of Control or the Executive resigns on account of a
Change in Status within 24 months after a Change of Control, the Executive
shall be entitled to receive a severance payment equal to four times the sum of
(i) the Executive’s Base Compensation for the Company’s fiscal year then in
effect or if greater, the Executive’s Base Compensation for the Company’s
fiscal year immediately preceding the year in which the Termination occurs,
plus (ii) the Executive’s Annual Target Incentive for the fiscal year then in
effect (or, if no Target Incentive is in effect for such year, then the highest
Annual Incentive Bonus or other aggregate bonus(es) actually paid to the
Executive in any of the three (3) preceding fiscal years); provided, however,
that a signed Release must be received by the Company from the Executive prior
to and as a condition of receiving a severance payment. Any severance payments
to which the Executive is entitled pursuant to this Section 4.1 shall be paid
to the Executive (or to the Executive’s estate or beneficiary in the event of
the Executive’s death) in a lump sum at the time provided in Section 2.3

 

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hereof. The payments provided by this section
shall be in lieu of any payments to which the Executive would otherwise be
entitled under Section 2.1.

 

(b)                                 Subject
to the provisions of Section 2.2(c), following a termination described in
Section 4.1(a), the Executive and his Spouse shall be entitled to health and
welfare benefits coverage for life (including hospitalization, major medical
and dental), with such coverage equivalent to the coverage they would have been
entitled to under such benefit plans if Executive had continued to be employed
during such period; provided, however, in the event that such coverage cannot
be provided, in whole or in part, to the Executive or his Spouse, as a
non-employee subsequent to termination of the Executive’s employment, the
Company shall instead contribute an amount to the Executive’s privately
obtained benefits with comparable coverage for him and his Spouse such that the
Executive is not required to pay any more for such benefits than the Executive
was required to pay immediately preceding the date of termination.

 

4.2                                 OPTION
ACCELERATION. Effective upon a Change of Control (as defined below in
Section 5) of the Company, all Options and Restricted Stock Awards granted to
the Executive and then outstanding under any Stock Option Plan (as defined
below in Section 5) of the Company shall become exercisable and vested in full,
and all restrictions thereon shall lapse, notwithstanding any vesting schedule
or other provisions to the contrary in the agreements evidencing such options;
and the Company and the Executive hereby agree that such Option agreements and
Restricted Stock Awards are hereby and will be deemed amended to give effect to
this provision.

 

4.3                                 TAXES.

 

(a)                                  The
Company shall, within 30 days after each date on which the Executive becomes
entitled to receive (whether or not then due) a Contingent Compensation Payment
(as defined below) relating to a Change of Control, determine and notify the
Executive (with reasonable detail regarding the basis for its determination)
(i) which of the payments or benefits due to the Executive (under this
Agreement or otherwise) following such Change of Control constitute Contingent
Compensation Payments, (ii) the amount, if any, of the excise tax (the “Excise
Tax”) payable pursuant to Section 4999 of the Code by the Executive with
respect to such Contingent Compensation Payment, and (iii) the amount of
Gross-Up Payment (as defined below) due to the Executive with respect to such
Contingent Compensation Payment. Within 30 days after delivery of such notice
to the Executive, the Executive shall deliver a response to the Company (the “Executive
Response”) stating either (A) that he agrees with the Company’s determination
pursuant to the preceding sentence, or (B) that he disagrees with such
determination, in which case he shall indicate which payment and/or benefits
should be characterized as a Contingent Compensation Payment, the amount of the
Excise Tax with respect to such Contingent Compensation Payment and the amount
of the Gross-Up Payment due to the Executive with respect to such Contingent
Compensation Payment. In the event that the Executive fails to deliver an
Executive Response on or before the required date, the Company’s initial
determination shall be final. If the Company and the Executive cannot agree on
the proper determination of the foregoing characterizations, amounts or
payments, then the parties shall submit the matter to binding arbitration to be
heard by a single arbitrator, who shall be a Certified Public Accountant and
who shall be agreeable to both parties. Upon each Contingent

 

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Compensation Payment to the Executive, the
Company shall pay to the taxing authorities as withholding taxes on behalf of
the Executive the Gross-Up Payment with respect to such Contingent Compensation
Payment, in the amount determined pursuant to this Section 4.3(a).

 

(b)                                 For
purposes of this Section 4.3, the following terms shall have the following
respective meanings:

 

(i)                                     “Contingent
Compensation Payment” shall mean any payment (or benefit) in the nature of
compensation that is made or supplied (under this Agreement or otherwise) to a “disqualified
individual” (as defined in Section 280G(c) of the Code) and that is contingent
(within the meaning of Section 280G(b)(2)(A)(i) of the Code) on a Change of
Control of the Company.

 

(ii)                                  “Gross-Up
Payment” shall mean an amount equal to the sum of (i) the amount of the Excise
Tax payable with respect to a Contingent Compensation Payment, and (ii) the
amount necessary to pay all additional taxes imposed on (or economically borne
by) the Executive (including the Excise Taxes, state and federal income taxes
and all applicable employment taxes) attributable to the receipt of such
Gross-Up Payment. For purposes of the preceding sentence, all taxes
attributable to the receipt of the Gross-Up Payment shall be computed assuming
the application of the maximum tax rates provided by law.

 

4.4                                 EXERCISE
OF STOCK OPTIONS; PAYMENT OF REQUIRED TAXES. Following a Change of Control,
the Executive may take any or all of the following actions; provided, however,
that the Executive shall not take any such action if the Company reasonably requests
that he not do so, in order for the Company to comply with or receive favorable
treatment under legal or accounting requirements:

 

(a)                                  pay
any portion of the exercise price of any Options and/or satisfy any tax
withholding with respect to either the exercise of Options or the vesting of
Restricted Stock Awards by:

 

(i)                                     delivering
to the Company outstanding shares of common stock of the Company, valued at the
closing price of a share of such stock on the last trading day preceding the
date of delivery (the “Market Price”); and/or

 

(ii)                                  authorizing
the Company to withhold from issuance pursuant to the exercise of any such
Option or vesting of Restricted Stock a number of shares of common stock
otherwise issuable that, when multiplied by the Market Price of the common
stock, is equal to the aggregate exercise price being paid and/or tax being
withheld (and such withheld shares shall no longer be issuable under the
applicable Option or Restricted Stock Award); and

 

(b)                                 to
the extent not prohibited by the Sarbanes-Oxley Act of 2002, require the
Company to extend to the Executive a loan to cover the exercise price of any or
all of his Options, in which case the Company shall receive (1) a security
interest in the shares issued upon exercise of such Options, and (2) full
recourse to the maker, to secure payment of such loan. The loan shall bear
interest at an agreed-upon market rate, and shall be due and payable in full no

 

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later than thirty days after the latest date
that the Executive must hold such shares in order (i) to avoid liability under
Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or (ii) to comply, at the Company’s reasonable request, with any other
legal or accounting regulations or requirements.

 

4.5                                 SHORT-TERM
AND LONG-TERM DISABILITY BENEFITS.

 

(a)                                  During
the term of the Executive’s employment, the Company shall provide the Executive
with short-term and long-term disability insurance coverage equal to at least
65% of Executive’s Base Compensation, as determined on an annual basis. Income
replacement benefits payable as a result of such coverage shall be paid in
accordance with the terms and conditions of such disability policies.

 

(b)                                 In
the event the Executive becomes Disabled while employed by the Company, the
Executive shall be entitled to receive income replacement benefits under the
Company’s short-term and long-term disability insurance plans in an amount
equal to at least 65% of Executive’s Base Compensation as determined on an
annual basis. Such benefits shall be paid in accordance with the terms and
conditions of such disability policies.

 

5.                                      DEFINITION
OF TERMS.

 

5.1                                 CHANGE
IN STATUS. A “Change in Status” of the Executive shall mean the occurrence,
without the Executive’s written consent, of any of the following circumstances
(unless such circumstances constitute an isolated, insubstantial and
inadvertent action not taken in bad faith and are promptly and fully remedied
by the Company after receipt of notice thereof by the Executive): (a) any
diminution or change in a manner adverse to the Executive of (i) his title,
office or position with the Company, (ii) his salary, bonus, or other benefits,
or (iii) his duties, responsibilities or employment condition, (b) any breach
of this Agreement, including without limitation, the failure by the Company to
pay to the Executive any portion of his compensation or other benefits, (c) the
Company’s requiring the Executive to be based at any office or location more than
35 miles from the Company’s current main office or the Company’s requiring the
Executive to travel on Company business to a substantially greater extent than
required immediately before the date of this Agreement, or (d) any purported
termination by the Company of the Executive’s employment otherwise than as
expressly permitted by this Agreement.

 

5.2                                 CAUSE.
“Cause” shall mean (a) any act of personal dishonesty taken by the Executive in
connection with his responsibilities as an employee and intended to result in
substantial personal enrichment of the Executive, (b) conviction of a felony
that is injurious to the Company, (c) a willful act by the Executive which
constitutes gross misconduct and which is injurious to the Company, and (d)
continued violations by the Executive of the Executive’s obligations under
Section 1 of this Agreement that are demonstrably willful and deliberate on the
Executive’s part (and not resulting from any condition that constitutes, or
with the passage of time would constitute, a Disability (as defined below))
after there has been delivered to the Executive a written demand for
performance from the Company which describes the basis for the

 

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Company’s belief that the Executive has not
substantially performed his duties, in each case as determined by the Company’s
Board.

 

5.3                                 CHANGE
OF CONTROL. “Change of Control” shall mean the occurrence of any of the
following events:

 

(a)                                  Any
transaction or series of transactions, as a result of which any “person” (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act and the rules
and regulations thereunder) (other than (i) the Company, (ii) a person that
directly or indirectly controls the Company on the date of this Agreement,
(iii) a person that is controlled by or is under common control with the
Company, or (iv) any one or more employee benefit plans or related trusts
established for the benefit of the employees of the Company or any affiliate of
the Company) becomes a “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the total voting power represented
by the Company’s then outstanding voting securities; or

 

(b)                                 A
change in the composition of the Board of Directors of the Company occurring
within a one-year period, as a result of which fewer than a majority of the
directors are Incumbent Directors. “Incumbent Directors” shall mean directors
who either (i) are directors of the Company as of the date hereof, or (ii) are
elected, or nominated for election, to the Board of Directors of the Company
with the affirmative votes of at least a majority of the Incumbent Directors at
the time of such election or nomination; or

 

(c)                                  The
consummation of a merger or consolidation of the Company with any other
corporation or entity, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or the sale or disposition by the Company of all or
substantially all the Company’s assets.

 

5.4                                 DISABILITY.
“Disability” shall be deemed to have occurred after the Executive has been
absent from his duties hereunder on a full-time basis for six consecutive
months due to any physical or mental injury or disease that prevents the
Executive from engaging in substantially all of his duties. The existence of
such physical or mental injury or disease shall be determined by a physician
selected by the Company and or its insurers and acceptable to the Executive or
the Executive’s legal representative (such agreement as to acceptability not to
be unreasonably withheld). Nothing contained herein shall preclude the Company
from appointing or employing any other person to carry out the duties and
responsibilities of the Executive.

 

5.5                                 STOCK
OPTION PLAN. A “Stock Option Plan” of the Company shall mean any stock
option or equity compensation plan of the Company in effect at any time,
including without limitation the VideoServer Inc. Amended and Restated 1991
Stock Incentive Plan and any successor plans adopted by the Company. The terms “Option”
and “Restricted Stock Award” shall have the meanings ascribed to them in any
such Stock Option Plan.

 

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5.6                                 MISCONDUCT.
“Misconduct” shall mean material conduct on the part of the Executive that
is inimical, contrary or harmful to the interests of the Company, including,
but not limited to: (i) conduct related to the Executive’s employment for
which criminal or civil penalties against the Executive may be sought, (ii) willful
violation of the Company’s written policies, (iii) conduct that violates
the provisions of Section 6.2 or 6.4; or (iv) disparagement,
defamation or slander of the Company.

 

6.                                      CONFIDENTIAL
INFORMATION, NONCOMPETITION AND COOPERATION.

 

6.1                                 CONFIDENTIAL
INFORMATION. As used in this Agreement, “Confidential Information” means
information belonging to the Company which is of value to the Company in the
course of conducting its business and the disclosure of which could result in a
competitive or other disadvantage to the Company. Confidential Information
includes, without limitation, financial information, reports, and forecasts;
inventions, improvements and other intellectual property; trade secrets; know
how; designs, processes or formulae; software; market or sales information or
plans; customer lists; and business plans, prospects and opportunities (such as
possible acquisitions or dispositions of businesses or facilities) which have
been discussed or considered by the management of the Company. Confidential
Information includes information developed by the Executive in the course of
the Executive’s employment by the Company, as well as other information to
which the Executive may have access in connection with the Executive’s
employment. Confidential Information also includes the confidential information
of others with which the Company has a business relationship. Notwithstanding
the foregoing, Confidential Information does not include information in the
public domain, unless due to breach of the Executive’s duties under Section 6.2.

 

6.2                                 CONFIDENTIALITY.
The Executive understands and agrees that the Executive’s employment creates a
relationship of confidence and trust between the Executive and the Company with
respect to all Confidential Information. At all times, both during the
Executive’s employment with the Company and after its termination, the
Executive will keep in confidence and trust all such Confidential Information,
and will not use or disclose any such Confidential Information without the
written consent of the Company, except as may be necessary in the ordinary
course of performing the Executive’s duties to the Company.

 

6.3                                 DOCUMENTS,
RECORDS, ETC. All documents, records, data, apparatus, equipment and other
physical property, whether or not pertaining to Confidential Information, which
are furnished to the Executive by the Company or are produced by the Executive
in connection with the Executive’s employment will be and remain the sole
property of the Company. The Executive will return to the Company all such
materials and property as and when requested by the Company. In any event, the
Executive will return all such materials and property immediately upon
termination of the Executive’s employment for any reason. The Executive will
not retain with the Executive any such material or property or any copies
thereof after such termination.

 

6.4                                 NONCOMPETITION
AND NONSOLICITATION. During the term of his employment and for five (5) years
thereafter, the Executive (i) will not, directly or indirectly,

 

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whether as
owner, partner, shareholder, consultant, agent, employee, co-venturer or
otherwise, engage, participate, assist or invest in any Competing Business (as
hereinafter defined); (ii) will refrain from directly or indirectly
employing, attempting to employ, recruiting or otherwise soliciting, inducing
or influencing any person to leave employment with the Company (other than terminations
of employment of subordinate employees undertaken in the course of the
Executive’s employment with the Company); and (iii) will refrain from
soliciting or encouraging any customer or supplier to terminate or otherwise
modify adversely its business relationship with the Company. The Executive
understands that the restrictions set forth in this Section 6.4 are
intended to protect the Company’s interest in its Confidential Information and
established employee, customer and supplier relationships and goodwill, and
agrees that such restrictions are reasonable and appropriate for this purpose. For
purposes of this Agreement, the term “Competing Business” shall mean a business
conducted anywhere in North America which is competitive with any business
which the Company or any of its affiliates conducts or proposes to conduct at
any time during the employment of the Executive. Notwithstanding the foregoing,
the Executive may own up to one percent (1%) of the outstanding stock of a
publicly held corporation which constitutes or is affiliated with a Competing
Business.

 

6.5                                 LITIGATION
AND REGULATORY COOPERATION. During and after the Executive’s employment,
the Executive shall cooperate fully with the Company in the defense or
prosecution of any claims or actions now in existence or which may be
brought in the future against or on behalf of the Company which relate to
events or occurrences that transpired while the Executive was employed by the
Company. The Executive’s full cooperation in connection with such claims or
actions shall include, but not be limited to, being available to meet with
counsel to prepare for discovery or trial and to act as a witness on behalf of
the Company at mutually convenient times. During and after the Executive’s
employment, the Executive also shall cooperate fully with the Company in
connection with any investigation or review of any federal, state or local
regulatory authority as any such investigation or review relates to events or
occurrences that transpired while the Executive was employed by the Company. The
Company shall reimburse the Executive for any reasonable out of pocket expenses
incurred in connection with the Executive’s performance of obligations pursuant
to this Section 6.5.

 

6.6                                 INJUNCTION.
The Executive agrees that it would be difficult to measure any damages caused
to the Company which might result from any breach by the Executive of the
promises set forth in this Section 6, and that in any event money damages
would be an inadequate remedy for any such breach. Accordingly, subject to Section 9.11
of this Agreement, the Executive agrees that if the Executive breaches, or
proposes to breach, any portion of this Agreement, the Company shall be
entitled, in addition to all other remedies that it may have, to an
injunction or other appropriate equitable relief to restrain any such breach
without showing or proving any actual damage to the Company.

 

7.                                      SUCCESSORS.

 

7.1                                 COMPANY’S
SUCCESSORS. The Company shall cause any successor to the Company (whether
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company’s business
and assets to assume the obligations under this Agreement and agree expressly
to perform the obligations

 

11

 

under this
Agreement in the same manner and to the same extent as the Company would be
required to perform such obligations in the absence of a succession. For
all purposes under this Agreement, the term “Company” shall include any such
successor.

 

7.2                                 EXECUTIVE’S
SUCCESSORS. The terms of this Agreement and all rights of the Executive
hereunder shall inure to the benefit of, and be enforceable by, the Executive’s
personal or legal representatives, executors, administrators, successors,
heirs, devisees and legatees.

 

8.                                      NOTICE.

 

8.1                                 GENERAL.
Notices and all other communications contemplated by this Agreement shall be in
writing and shall be deemed to have been duly given when personally delivered
or two business days after being mailed by U.S. registered or certified mail,
return receipt requested and postage prepaid. In the case of the Executive,
mailed notices shall be addressed to him at the home address which he most
recently communicated to the Company in writing. In the case of the Company,
mailed notices shall be addressed to its corporate headquarters, and all
notices shall be directed to the attention of its Secretary.

 

8.2                                 NOTICE
OF TERMINATION OR CHANGE IN STATUS. Any Change of Control, Termination by
the Company or any claim by the Executive of a Change in Status shall be
communicated by a notice to the other party hereto given in accordance with Section 8.1
of this Agreement. Such notice shall indicate the specific provision in this
Agreement relied upon, shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for a Change of Control, termination
or Change in Status under the provision so indicated, and shall specify the
date of the Change of Control or the date on which the Executive shall be
terminated or on which the Change in Status occurred. The failure by either
party to include in the notice any fact or circumstance which contributes to a
showing of a Change of Control, Cause or Change in Status shall not waive any
right of the party hereunder or preclude the party from asserting such fact or
circumstance in enforcing its rights hereunder.

 

9.                                      MISCELLANEOUS
PROVISIONS.

 

9.1                                 INDEMNIFICATION
AND INSURANCE.

 

(a)                                  Notwithstanding
any change in the Company’s certificate of incorporation or bylaws, during the
employment period and for a period of six years thereafter, the Company shall
use its reasonable best efforts to cause the Executive to be covered by and
named an insured under any policy or contract of insurance obtained by it to insure
its directors and officers against personal liability for acts or omissions in
connection with service as an officer or director of the Company or service in
other capacities at the request of the Company.

 

(b)                                 Notwithstanding
any change in the Company’s certificate of incorporation or bylaws, during the
employment period and for a period of six years thereafter, the Company shall
indemnify the Executive and hold him harmless, at a minimum in accordance with
the provisions in effect as of the date of this Agreement in the Company’s
certificate of incorporation

 

12

 

and bylaws,
but subject in all cases to any limitations under applicable law, against any
losses, claims, damages, liabilities, costs, expenses (including advancing from
time to time his attorney’s fees and expenses in advance of the final
disposition of any claim, suit, proceeding or investigation), judgments, fines
and amounts paid in settlement in connection with any threatened or actual claim,
action, suit, proceeding or investigation whether civil, criminal or
administrative, in which the Executive is, or is threatened to be, made a party
by reason of being or having been a director of the Company or, in connection
with the administration of his official duties as assigned to him by the Board
of Directors from time to time, as an officer of the Company or serving or
having served at the request of the Company as a director, trustee, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to an employee
benefit plan, whether the basis of such proceeding is alleged action or failure
to act in an official capacity as a director, trustee, officer, employee or agent.
The Executive hereby undertakes to repay any and all attorney’s fees and
expenses paid to the Executive in advance by the Company if it is finally
determined by a court of competent jurisdiction that the Executive is not
entitled to indemnification hereunder with respect to such fees and expenses.

 

9.2                                 NO
DUTY TO MITIGATE. The Executive shall not be required to mitigate the
amount of any payment contemplated by this Agreement (whether by seeking new
employment or in any other manner), nor shall any such payment be reduced by
any earnings that the Executive may receive from any other source, other
than as provided specifically in Section 2.1.

 

9.3                                 WAIVER.
No provision of this Agreement shall be modified, waived or discharged unless
the modification, waiver or discharge is agreed to in writing and signed by the
Executive and by an authorized officer of the Company (other than the
Executive). No waiver by either party of any breach of, or of compliance with,
any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same
condition or provision at another time.

 

9.4                                 WHOLE
AGREEMENT. No agreements, representations or understandings (whether oral
or written and whether express or implied) which are not expressly set forth in
this Agreement have been made or entered into by either party with respect to
the subject matter hereof. The foregoing, notwithstanding this Agreement, is
unrelated to and shall have no effect upon any deferred compensation agreement
or program in effect regarding the Executive. No modification of this Agreement
shall be valid unless made in writing and signed by the parties hereto;
provided, however, that if the Company determines, after a review of the final
regulations issued under Section 409A of the Code and all applicable IRS
guidelines, that this Agreement should be further amended to avoid triggering
the tax and interest penalties imposed by Section 409A of the Code, the
Company may amend this Agreement to the extent necessary to avoid
triggering the tax and interest penalties imposed by Section 409A of the
Code.

 

9.5                                 CHOICE
OF LAW. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the Commonwealth of Massachusetts
without giving effect to its conflicts of laws principles.

 

13

 

9.6                                 SEVERABILITY.
The invalidity or unenforceability of any provision or provisions of this
Agreement shall not affect the validity or enforceability of any other
provision hereof, which shall remain in full force and effect.

 

9.7                                 NO
ASSIGNMENT OF BENEFITS. The rights of any person to payments or benefits
under this Agreement shall not be made subject to option or assignment, either
by voluntary or involuntary assignment or by operation of law, including
(without limitation) bankruptcy, garnishment, attachment or other creditor’s
process, and any action in violation of this Section 9.7 shall be void.

 

9.8                                 EMPLOYMENT
TAXES. All payments made pursuant to this Agreement will be subject to
withholding of applicable income and employment taxes.

 

9.9                                 NO
EFFECT ON EMPLOYEE BENEFIT PLANS OR PROGRAMS. The termination of the
Executive’s employment, whether by the Executive or by the Company, shall have
no effect on the vested rights of the Executive under the Company’s qualified
or non-qualified retirement, pension, savings or stock-bonus plans, or other
employee benefit plans or programs, or compensation plans or programs in which
the Executive was a participant.

 

9.10                           SOURCE
OF PAYMENTS. It is intended by the parties hereto that all payments
provided in this Agreement shall be paid in cash or check from the general
funds of the Company except to the extent payments are made otherwise pursuant
to the terms of health and welfare or other benefit plans.

 

9.11                           ARBITRATION.
Any dispute, controversy or claim arising out of or relating to this Agreement
or the breach thereof, shall be submitted to and finally settled by arbitration
in accordance with the Employment Dispute Resolution Rules (the “Rules”)
of the American Arbitration Association (the “AAA”) then in effect before a
panel of three arbitrators selected by the Company. Arbitration shall occur in
New Hampshire or such other location as may be mutually agreed to by the
parties.

 

The award made by all or a majority of the panel of arbitrators shall
be final and binding, and judgment may be entered based upon such award in
any court of law having competent jurisdiction. The award is subject to confirmation,
modification, correction or vacation only as explicitly provided in Title 9 of
the United Sates Code. The prevailing party shall be entitled to receive any
award of pre- and post-award interest as well as attorney’s fees incurred in
connection with the arbitration and any judicial proceedings related thereto. The
parties acknowledge that this Agreement evidences a transaction involving
interstate commerce. The United States Arbitration Act and the Rules shall
govern the interpretation, enforcement, and proceedings pursuant to this
Section. Any provisional remedy which would be available from a court of law
shall be available from the arbitrators to the parties to this Agreement
pending arbitration. Either party many make an application to the arbitrators
seeking injunctive relief to maintain the status quo, or may seek from a
court of competent jurisdiction any interim or provisional relief that may be
necessary to protect the rights and property of that party, until such times as
the arbitration award is rendered or the controversy otherwise resolved. This Section 9.11
shall be specifically enforceable.

 

14

 

9.12                           SECTION 409A
SAVINGS CLAUSE. This Agreement is intended to comply with the provisions of
409A of the Code. If any compensation or benefits provided by this Agreement may result
in the application of Section 409A of the Code, the Company shall, in
consultation with the Executive, modify the Agreement in the least restrictive
manner necessary in order to exclude such compensation from the definition of “deferred
compensation” within the meaning of such Section 409A of the Code or in
order to comply with the provisions of Section 409A of the Code, other
applicable provision(s) of the Code and/or any rules, regulations or other
regulatory guidance issued under such statutory provisions and without any
diminution in the value of the payments to the Executive. To the extent
necessary to avoid adverse tax consequences under Section 409A, if the
Executive is a Specified Employee, any benefit hereunder otherwise payable upon
the Executive’s separation from service shall be delayed until the seventh
month following the date the Executive separates from service with the Company,
or, if earlier, the date the Executive dies. The first payment shall include
amounts that would otherwise have been payable during the delayed period but
for the operation of this Section 9.12. “Specified Employee” means any
Company employee that the Company determines is a Specified Employee within the
meaning of Section 409A of the Code. Notwithstanding the preceding, the
Company makes no representations regarding the tax consequences of compensation
or benefits payable under this Agreement and the Executive is responsible for
all such tax consequences other than the Company’s share of employment taxes.

 

9.13                           COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together will constitute one and the same
instrument.

 

THIS
AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED
BY THE PARTIES.

 

IN WITNESS WHEREOF,
each of the parties has executed this Agreement, in the case of the Company by
its duly authorized officer, this 9th day of November, 2007.

 

 

	
  Ezenia! Inc.

  	
  Khoa D. Nguyen

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Roger
  Tuttle

  	
   

  	
  /s/ Khoa D.
  Nguyen

  	
   

  
	
   

  	
   

  	
  Roger Tuttle

  	
  Khoa D. Nguyen

  
	
  Its:

  	
   

  	
  Chief Financial Officer

  	
   

  
						

 

15Exhibit 10.68

 

AGREEMENT FOR CONSULTING SERVICES

 

THIS CONSULTING SERVICES
AGREEMENT (the “Agreement”) dated as of this 31st  day of August, 2007, (the “Effective Date”) is by and
between ARTISTdirect, Inc., a Delaware corporation  (the
“Contractor”), having an office at 1601 Cloverfield Boulevard, Suite 400 South,
Santa Monica, CA  90404 and Robert N.
Weingarten (the “Consultant”) whose address is at 5439 Lockhurst Drive,
Woodland Hills, CA. 91367.

 

WHEREAS, Contractor desires to have Consultant perform
consulting services for Contractor and Consultant has agreed to do so upon the
terms and conditions set forth below;

 

NOW, THEREFORE, in consideration of the mutual
promises and covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties to this Agreement agree as follows:

 

Article I -  Services

 

Consultant shall perform services at the direction of
the Contractor in the areas of accounting, finance, public reporting and SEC
filings, and shall assist in special projects assigned to him from time to time
by the Contractor (the ”Services”). Contractor reserves the right in its reasonable
discretion to make such changes in work or specifications, as may be reasonably
necessary. Consultant shall devote sufficient time, attention and energy to
perform the Services on a timely basis and through December 31, 2007, he shall
give the Services his first priority over any and all other business obligations
he may have.

 

Article II -  Term
and Hours

 

Provided that Consultant has executed and not revoked
that certain Separation Agreement and Release of even date herewith (the “Release
Agreement”), the term of this Agreement shall commence on September 1, 2007 (“Start
Date”) and will continue through August 31, 2008, unless sooner terminated
pursuant to the provisions of this Agreement. From the Start Date through
December 31, 2007, the Parties agree that Consultant is expected to work
substantially the same as he worked when he served as the Contractor’s Chief
Financial Officer. From January 1, 2008 through May 31, 2008, Consultant
shall work on an “as needed” basis for Contractor for up to forty (40) hours
per week and Contractor shall provide Consultant with reasonable advance notice
of its need for Consultant’s Services. From June 1, 2008 through August 31,
2008, Consultant shall continue to work on an as-needed basis for Contractor for
up to ten (10) hours per week. Consultant shall be required to obtain
Contractor’s prior approval for any work performed by him in excess of the
forty (40) or ten (10) hours per week described above in order to receive the
hourly compensation described in Article III. Consultant shall have the right
to terminate the consulting relationship on or after May 31, 2008, by giving
not less than 30 days prior written notice to the Contractor.

 

1

 

Article III -  Compensation
and Expenses

 

The compensation for the Services shall be solely as
follows:

 

From the Start Date through August 31, 2008,
Consultant shall be paid $16,250 per month payable in semi-monthly installments
of $8,125 in accordance with the regular executive salary payment schedule
adopted from time to time by Contractor. It is anticipated that no deductions
or withholds will be required but in the event that Contractor becomes legally
obligated to make deductions then such deductions shall be made.

 

Consultant shall be compensated at the rate of $200
per hour for all approved hours worked performing Services for Contractor in
excess of the hourly amounts described in Article II and for any Services
performed after August 31, 2008.

 

Consultant shall be reimbursed for all reasonable
out-of-pocket expenses incurred by Consultant in performing the Services
pursuant to this Agreement provided Consultant shall first furnish proper
documentation for approval setting forth the information required by the United
States Treasury Department for deductible business expenses and an explanation
of the nature of each expense item.

 

From the Start Date through December 31, 2007,
Contractor shall pay Consultant $1,619 per month as reimbursement for Consultant’s
medical premium expense, payable on or around the 15th of each
month.

 

From the Start Date through May 31, 2008, Contractor
shall provide a Blackberry or similar device (and e-mail service), an Apple
laptop computer and parking to Consultant at Contractor’s office. During the
term of this Agreement, Contractor shall provide Consultant with access to
non-exclusive work space and a computer at Contractor’s office in the event
that Consultant performs the Service at Contractor’s office.

 

Consultant shall provide Contractor with a statement
of his services and out-of-pocket expenses within ten business days after the
end of each calendar month covering that month’s charges. Consultant shall keep
records of the hours charged to Contractor, together with an explanation of the
Services performed during such time period. Consultant shall promptly provide
Contractor with a copy of such records with his monthly statement.

 

Article IV -  Status
as Independent Contractor

 

Both Contractor and Consultant expressly acknowledge
and agree that Consultant is an independent contractor and shall not act as or
be an agent for or employee of Contractor. All of Consultant’s activities in
performing the Services shall be at Consultant’s sole risk and except as
expressly provided herein, Consultant shall not be entitled to Workers
Compensation or any 

 

2

 

other benefits or insurance protection provided by
Contractor to their agents and employees. Subject to Article V, as an
independent contractor, Consultant shall be solely responsible for determining
the means and methods for performing the Services. Consultant shall be solely
responsible for complying with and paying any and all taxes applicable to
compensation received under this Agreement and shall indemnify Contractor for
any claims related to any non-payment of applicable taxes.

 

Article V -  Standard
of Care

 

Consultant agrees to perform the Services with that
standard of care, skill and diligence normally provided by a professional
person in the performance of similar services. Consultant shall perform the
assigned tasks and duties in an efficient, competent and timely manner in
accordance with generally accepted industry standards. Consultant expressly
acknowledges that Contractor will rely upon the competence and completeness of
Consultants’ Services in utilizing the results of such Services in fulfilling
their contractual commitments to third parties. In no event shall Consultant
retain, hire or employ the services of subcontractors, third parties or others
without the express written authorization and approval of Contractor.

 

Article VI -  Use
of Materials; Confidentiality; Non-Solicitation; Adherence to Rules

 

Section 1 -  Use
of Materials.

 

Contractor shall own all rights to any and all work
products, patents, processes, copyrights, studies, flow charts, diagrams,
devices, programs, source codes, inventions, original works of authorship,
know-how, and other tangible or intangible material or data of any nature
developed by Consultant or as a result of any of Consultant’s Services. Any
work product generated by Consultant hereunder shall be deemed a work made for
hire. If any of such work product shall be deemed other than a work for hire,
Consultant hereby assigns to Contractor all rights, title and interest in and
to such work product. Consultant agrees to execute and deliver such documents
and instruments as Contractor may deem necessary and appropriate to transfer to
Contractor any and all rights, title, and interest, including copyrights,
Consultant has in any such work.

 

Section 2 -  Confidentiality.

 

Consultant shall not publish, disclose, or otherwise
divulge Confidential Information to any person, at any time during or after the
term of this Agreement, without Contractor’s prior express written consent. For
purposes of this Agreement, “Confidential Information” shall mean non-public,
confidential or proprietary information belonging to Contractor.

 

The term “Confidential Information” does not include
any information which (i) at the time of disclosure or thereafter is generally
available to the public (other than as a result of a disclosure by Consultant
or her representatives in violation of this Agreement), (ii) was available to
Consultant on a non-confidential basis from a source other than Contractor,
provided that such source is not bound by a confidentiality agreement that was
applicable to the Confidential Information, or (iii) has been independently
acquired or developed by Consultant without violating any of her obligations
under this Agreement.

 

3

 

In the event that Consultant becomes legally compelled
(by deposition, interrogatory, request for documents, subpoena, civil
investigative demand or other similar process) to disclose any of the
Confidential Information, Consultant shall give Contractor prompt prior written
notice of such requirement so that Contractor may seek a protective order or
other appropriate remedy and/or waive compliance with the terms of this
Agreement. In the event that such protective order or other remedy is not
obtained, or that Contractor waives compliance with the terms hereof,
Consultant agrees to provide only that limited portion of the Confidential
Information that it is advised by written opinion of counsel is legally
required and to exercise reasonable efforts to obtain assurance that
confidential treatment will be accorded such Confidential Information.

 

Consultant represents that his/her performance of all
terms of this Agreement as a consultant of Contractor has not breached and will
not breach any agreement to keep in confidence proprietary information,
knowledge or data acquired by Consultant in confidence or trust prior or
subsequent to the commencement of the Agreement, and Consultant will not
disclose to Contractor, or induce Contractor to use, any inventions,
confidential or proprietary information or material belonging to any previous
employer or any other party.

 

The parties agree that in the event of a breach of
this Confidentiality provision, Contractor shall be entitled to equitable
relief, including injunction and specific performance, in addition to all other
remedies available at law or equity. Consultant shall be responsible for, and
shall indemnify and hold harmless Contractor, for the violation of this
Confidentiality provision by any of its representatives. This Confidentiality
provision shall survive the termination of this Agreement.

 

Section 3 -  Solicitation
of Employees, Consultants and Other Parties.

 

Consultant agrees that during the term of the
Agreement, and for a period of twelve (12) months immediately following the
termination of the Agreement for any reason, Consultant shall not either
directly or indirectly solicit, induce, recruit or encourage any of Contractor’s
employees or other consultants to terminate their relationship with Contractor,
or take away such employees or consultants, or attempt to solicit, induce,
recruit, encourage or take away employees or consultants of Contractor, either
for himself/herself or for any other person or entity. Further, for a period of
twelve (12) months following termination of the Agreement for any reason,
Consultant shall not solicit any licensor to or customer of Contractor or
licensee of Contractor’s products, in each case, that are known to Consultant,
with respect to any business, products or services that are competitive to the
products or services offered by Contractor or under development as of the date
of termination of the Agreement.

 

Section 4 -  Adherence
to Rules.

 

At the time this Agreement is signed, the Contractor
shall provide Consultant with copies of the Contractor’s employment and insider
trading policies in effect at that time. Consultant shall strictly adhere to
and obey all the rules, policies and regulations now in effect or subsequently
modified governing the conduct of employees or advisors of Contraction.

 

4

 

Article VII -  Termination

 

This Agreement shall terminate upon Consultant’s death
or “Disability” (which for purposes of this Agreement shall mean Consultant’s
inability to substantially perform the duties described herein for a continuous
period of at least thirty (30) days, as reasonably determined by Contractor in
its reasonable discretion). Additionally, Contractor may terminate the
consulting relationship and this Agreement at any time with or without Cause by
providing written notice to Consultant. For all purposes of this Agreement, “Cause”
shall mean Consultant has (i) been convicted of, or pleade nolo contendre to,
any felony or lesser crime involving fraud, embezzlement or misappropriation of
the property of Contractor or any of its subsidiaries, or (ii) engaged in gross
negligence or willful misconduct in the performance of his duties hereunder
that has resulted in material injury to the Contractor, or (iii) materially and
willfully breached any material provision hereof which breach is not cured
within ten (10) business days after written notice of such breach is received
from Contractor, or (iv) misappropriated for his own purpose and benefit any
material opportunity of the Contractor, or (v) repudiates that certain Separation
Agreement and Release dated of even date herewith between the Parties or
revokes the release contained therein. This Agreement shall also terminate in
the event that the Consultant becomes an employee of Contractor or Consultant
terminates this Agreement. No compensation or benefits will be paid or provided
to the Consultant under this Agreement for periods following the date when a
termination of this Agreement by Contractor for Cause,
death, Disability, Consultant becoming an employee of Contractor is effective
or if Consultant terminates this Agreement unless such termination by
Contractor is due to Contractor’s material breach of a material term of this
Agreement. In the event that Consultant is terminated without Cause, Consultant
shall, as a severance payment, continue to receive all of the Compensation
described in Article III for the periods indicated as if the consulting
relationship had not been terminated.

 

Article VIII -  Miscellaneous
Provisions

 

Section 1 -  Prior
Agreements.

 

This Agreement embodies and constitutes the entire
understanding between the parties with respect to the transaction contemplated
herein, and all prior agreements, understandings, representations and
statements, oral or written, are superseded by this Agreement except as
otherwise provided in the stock option agreements between Contractor and
Consultant and the Release Agreement.

 

Section 2 -  Amendments.

 

Neither this Agreement nor any provisions hereof may
be waived, modified, amended, discharged or terminated, except by an instrument
signed by the party against whom the enforcement of such waiver, modification,
amendment, discharge or termination is sought, and then only to the extent set
forth in such instrument.

 

5

 

Section 3 -  Assignment.

 

This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors and/or
permitted assigns; provided, however, that Consultant may not assign this
Agreement without the prior written consent of Contractor in its sole
discretion.

 

Section 4 -  Availability
of Information.

 

All financial statements, reports, billings and other
documents shall properly reflect the facts about all activities and
transactions handled for the accounts of Contractor. Contractor’s duly
authorized representatives shall have, during the term of this Agreement and
for five (5) years thereafter, access at all reasonable times to all of the
Consultant’s accounts and records that may be needed to verify and audit
compliance with the provisions of this Agreement and all charges to Contractor
(except those charged solely on a lump-sum basis).

 

Section 5 -  Business
Ethics.

 

Consultant shall exercise reasonable care and
diligence to prevent any actions or conditions which could result in a conflict
with Contractor’s interest.

 

During the term of this Agreement, Consultant shall
not accept any employment or engage in any work which creates a conflict of
interest or competes with Contractor. Before engaging in an activity which may
compete with Contractor or may give rise to a conflict or interest or the
perception of such conflict of interest, Consultant shall disclose to
Contractor its contemplated activity and obtain Contractor’s express written
approval before proceeding.

 

Consultant shall not offer gifts, entertainment,
payments, loans or other considerations to Contractor’s employees, their
families, vendors, subcontractors and other third parties for the purpose of
influencing such persons to act contrary to Contractor’s interest.

 

Consultant shall immediately notify Contractor of all
violations of this provision upon becoming aware of such violation.

 

Section 6 -  Consequential Damages.

 

Neither party nor its
affiliates, nor their officers, directors, employees or agents shall be liable
hereunder to the other party or its affiliates for consequential or indirect
loss or damage, including loss of profit, loss of use, loss of revenue or any
other special or incidental damages.

 

Section 7 -  Business
Opportunities.

 

This Agreement shall in no way be construed to (i)
preclude in any way either party from pursuing any other business
opportunities; (ii) establish any relationship between Contractor and
Consultant with respect to such
business opportunities; or (iii) establish any relationship between Contractor
and Consultant with respect to the transaction that is the subject of this
Agreement.

 

6

 

Section 8 -  Notice.

 

Any notice given under this Agreement shall be in
writing and shall be hand delivered, sent by registered or certified mail, or
delivered by a reputable overnight courier such as Federal Express to the
parties at their respective addresses specified above.

 

Section 9 -  Severability.

 

The terms of this Agreement shall be deemed severable
so that if any term should be found illegal or unenforceable, the remaining
terms shall nevertheless continue in full force and effect.

 

Section 10 -  Governing
Law.

 

This Agreement shall be interpreted governed and construed
under the laws of the State of California

 

Section 11 -  Arbitration.

 

(a)           Disputes. ANY AND ALL DISPUTES
OR CONTROVERSIES BETWEEN EXECUTIVE AND COMPANY ARISING OUT OF, RELATING TO OR
OTHERWISE CONNECTED WITH EXECUTIVE’S EMPLOYMENT OR THE TERMINATION OF SUCH
EMPLOYMENT, THIS AGREEMENT, OR THE VALIDITY, CONSTRUCTION, PERFORMANCE OR
TERMINATION OF THIS AGREEMENT SHALL BE SETTLED EXCLUSIVELY BY BINDING
ARBITRATION TO BE HELD IN LOS ANGELES, CALIFORNIA. THE ARBITRATION PROCEEDINGS
SHALL BE GOVERNED BY (i) THE NATIONAL RULES FOR THE RESOLUTION OF EMPLOYMENT
DISPUTES THEN IN EFFECT OF THE AMERICAN ARBITRATION ASSOCIATION AND (ii) THE
FEDERAL ARBITRATION ACT.

 

THE ARBITRATOR SHALL HAVE THE SAME, BUT NO GREATER, REMEDIAL AUTHORITY
AS WOULD A COURT HEARING THE SAME DISPUTE. THE DECISION OF THE ARBITRATOR SHALL
BE WRITTEN, FINAL, CONCLUSIVE AND BINDING ON THE PARTIES TO THE ARBITRATION AND
SHALL BE IN LIEU OF THE RIGHTS THOSE PARTIES MAY OTHERWISE HAVE TO A JURY
TRIAL; PROVIDED, HOWEVER, THAT SUCH DECISION SHALL BE SUBJECT TO CORRECTION,
CONFIRMATION OR VACATION IN ACCORDANCE WITH THE PROVISIONS AND STANDARDS OF
APPLICABLE LAW GOVERNING THE JUDICIAL REVIEW OF ARBITRATION AWARDS.

 

THE PREVAILING PARTY IN SUCH ARBITRATION, AS DETERMINED BY THE
ARBITRATOR, AND IN ANY ENFORCEMENT OR OTHER COURT PROCEEDINGS, SHALL BE
ENTITLED, TO THE EXTENT PERMITTED BY LAW, TO REIMBURSEMENT FROM THE OTHER PARTY
FOR ALL OF THE PREVAILING PARTY’S COSTS (EXCLUDING THE ARBITRATOR’S
COMPENSATION AND OTHER ARBITRATION FEES AND COSTS, WHICH SHALL BE PAID BY
COMPANY IN ACCORDANCE WITH APPLICABLE STATE LAW), EXPENSES AND ATTORNEY’S FEES.
JUDGMENT SHALL 

 

7

 

BE
ENTERED ON THE ARBITRATOR’S DECISION IN ANY COURT HAVING JURISDICTION OVER THE
SUBJECT MATTER OF SUCH DISPUTE OR CONTROVERSY. NOTWITHSTANDING THE FOREGOING,
EITHER PARTY MAY IN AN APPROPRIATE MATTER APPLY TO A COURT PURSUANT TO
CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1281.8, OR ANY COMPARABLE STATUTORY
PROVISION OR COMMON LAW PRINCIPLE, FOR PROVISIONAL RELIEF, INCLUDING A
TEMPORARY RESTRAINING ORDER OR A PRELIMINARY INJUNCTION. TO THE EXTENT
PERMITTED BY LAW, THE PROCEEDINGS AND RESULTS, INCLUDING THE ARBITRATOR’S
DECISION, SHALL BE KEPT CONFIDENTIAL.

 

(b)           Consent to Personal Jurisdiction.
The arbitrator(s) will apply California law to the merits of any dispute or
claim, without deference to conflicts of law rules. Executive hereby consents
to the personal jurisdiction of the state and federal courts located in
California for any action or proceeding arising from or relating to this
Agreement or relating to any arbitration in which the Parties are participants.

 

(c)           Counterparts. This Agreement
may be signed in multiple counterparts, each of which shall constitute an
original and all of which, taken together, shall constitute one and the same
instrument. One or more counterparts of this Agreement may be delivered by
facsimile, with the intention that they shall have the same effect as an
original counterpart thereof and shall be binding on the person delivering the
same.

 

(d)           Acknowledgment. EXECUTIVE HAS
READ AND UNDERSTANDS THIS AGREEMENT, WHICH DISCUSSES ARBITRATION. EXECUTIVE
UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE AGREES TO SUBMIT ANY
CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR
THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION
THEREOF, TO BINDING ARBITRATION AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A
WAIVER OF EXECUTIVE’S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF
ALL DISPUTES RELATING TO ALL ASPECTS OF THE RELATIONSHIP BETWEEN THE PARTIES.

 

8

 

IN WITNESS WHEREOF, the parties hereto have signed
this Agreement on the date and year first written above.

 

 

	
   

  	
  Robert N. Weingarten

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:  Consultant

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ARTISTdirect, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

9

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