EXHIBIT 10.62
CONSULTANT AGREEMENT
AGREEMENT made as of October 8, 2002, between LIQUID AUDIO, INC., a
Delaware corporation (the "Company"), and XXXXXXX XXXX (the "Consultant").
WHEREAS, while the Consultant was a director of the Company, the
Company entered into the Amended and Restated Agreement and Plan of Merger dated
as of June 14, 2002 and as amended and restated as of July 14, 2002 (the "Merger
Agreement") by and among the Company, April Acquisition Corp., a Delaware
corporation and wholly-owned subsidiary of the Company ("Merger Sub"), and
Alliance Entertainment Corp, a Delaware corporation ("Alliance"), pursuant to
which Merger Sub shall be merged with and into Alliance (the "Merger");
WHEREAS, the Company desires to benefit from the Consultant's business
acumen and commercial expertise by retaining the Consultant under this
Agreement; and
WHEREAS, the Consultant, in accordance with the terms and provisions
set forth below, desires to be retained by the Company under this Agreement and
to advise and consult with the Company regarding the Merger and Merger Agreement
and any other matters brought to the Special Committee of the Board of
Directors, which was established by resolution of the Board of Directors on
October 8, 2002 (the "Special Committee").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
SERVICES
1.01. Services. The Consultant agrees to advise and consult with the
Company on such matters as the Board of Directors or any committee thereof
requests of the Consultant from time to time (the "Services"). Nothing contained
in this Agreement shall prevent the Consultant from engaging in any business,
charitable or personal activities that do not interfere with his ability to
perform the Services.
1.02. Term. This Agreement shall become effective on the date hereof
and shall terminate on the earlier of (i) the consummation of the Merger or (ii)
the termination of the Merger Agreement pursuant to its terms, unless otherwise
extended at the request of the Board of Directors or the Special Committee with
respect to other matters brought to the Special Committee or terminated earlier
pursuant to Section 2.04 hereof at the direction of the Special Committee (the
"Term").
1.03 Confidential Information. (a) The Consultant shall not, during
and after the Term, without the prior written consent of the Company, directly
or indirectly, use any Confidential Information (as defined below) in any way,
or divulge, disclose or make available or accessible any Confidential
Information to any person, firm, partnership, corporation, trust or any other
entity or third party, other than when required to do so in good faith to
perform the Services under and in accordance with this Agreement or when
required to do so by a lawful order of a court of competent jurisdiction. In
addition, the Consultant shall not create any derivative work or other work
product based on or resulting from any Confidential Information, except in good
faith in order to provide the Services under and in accordance with this
Agreement.
(b) The Consultant shall at all times use his best efforts to safeguard
any Confidential Information in his possession or under his control. In
addition, the Consultant shall immediately notify the Company if he becomes
aware of any unauthorized use or disclosure of any Confidential Information by
any third party, and the Consultant agrees to cooperate fully in any attempts or
efforts by the Company or any of its affiliates to obtain any relief or remedy
in respect of such unauthorized use or disclosure.
(c) For purposes of this Agreement, "Confidential Information" shall mean
all information relating to the Merger, the Merger Agreement or the business,
investments, finances or other matters of a confidential nature of the Company
or any of its affiliates of which the Consultant may in the course of his duties
hereunder or otherwise become possessed; provided, however, that Confidential
Information shall not include any information that is, becomes, generally
available to the public (unless such availability occurs as a result of the
Consultant's breach of any portion of this Section or any other obligation the
Consultant owes to the Company or any of its affiliates).
ARTICLE II
REMUNERATION OF THE CONSULTANT; TERMINATION
2.01. Compensation. The Company shall pay the Consultant $1,500 in
respect of any day during which the Consultant is engaged in any Service on
behalf of the Company at the request of the Board of Directors including the
Special Committee or any committee of the Board of Directors; provided, however,
that such compensation shall not exceed $50,000 in the aggregate.
2.02. Expenses. The Company shall reimburse the Consultant for all
ordinary, necessary and reasonable business expenses incurred by the Consultant
in connection with the Services. The Consultant shall furnish the Company with
reasonably detailed documentation for any such reimbursable expenses.
2.03. Indemnification. (a) In the event the Consultant in his capacity
under and in accordance with the provisions of this Agreement was, is or becomes
a party to or other participant in, or is threatened to be made a party to or
other participant in, a Claim (as defined
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below) by reason of (or arising or allegedly arising in any manner out of or
relating to in whole or in part) an Indemnifiable Event (as defined below), the
Company to the fullest extent permitted by applicable law shall indemnify and
hold harmless the Consultant from and against any and all Losses (as defined
below) suffered, incurred or sustained by the Consultant or to which the
Consultant becomes subject, resulting from, arising out of or relating to such
Claim. The Consultant shall give the Company written notice of any Claim
(accompanied by such reasonable supporting documentation as may be in the
Consultant's possession) as soon as practicable after the Consultant becomes
aware thereof; provided, however, that the failure of the Consultant to give
such notice shall not relieve the Company of its indemnification obligations
under this Agreement, except to the extent that such failure materially
prejudices the rights of the Company.
(b) For purposes of this Agreement, (i) a "Claim" shall mean any
threatened, pending or completed action, suit or proceeding (whether civil,
criminal, administrative, formal or informal investigative or other), whether
instituted by the Company or any other party, or any inquiry or investigation
that the Consultant in good faith believes might lead to the institution of any
such action, suit or proceeding, (ii) an "Indemnifiable Event" shall mean any
event or occurrence relating to or directly or indirectly arising out of, or any
action taken or omitted to be taken by the Consultant in good faith in
connection with the Services, (iii) "Losses" shall mean any and all damages,
judgments, fines, penalties, amounts paid or payable in settlement,
deficiencies, losses and Expenses (including all interest, assessments, and
other charges paid or payable in connection with or in respect of such Losses),
and (iv) "Expenses" shall mean all reasonable attorneys' fees and all other
reasonable fees, costs, expenses and obligations paid or incurred in connection
with the Services or related matters, including without limitation,
investigating, defending or participating (as a party, witness or otherwise) in
(including on appeal), or preparing to defend or participate in, any Claim
relating to any Indemnifiable Event.
(c) In the case of the commencement of any action against the Consultant
in respect of which he may seek indemnification from the Company hereunder, the
Company will be entitled to participate therein, including, without limitation,
the negotiation and approval of any settlement of such action and, to the extent
that the Company may wish to assume the defense thereof, with counsel
satisfactory to the Consultant, and after notice from the Company to the
Consultant of the Company's election so to assume the defense thereof, together
with the Company's written acknowledgement and agreement that it will fully
indemnify the Consultant under the terms of this Agreement with regard to such
Claim, the Company will not be liable to the Consultant under this Agreement for
any Expenses subsequently incurred by him in connection with the defense thereof
other than reasonable costs of investigation and preparation therefore
(including, without limitation, appearing as a witness and reasonable fees and
expenses of legal counsel in connection therewith). The Company shall in no
event be liable for any settlement of any action effected without its prior
written consent (which consent shall not be unreasonably withheld). The Company
shall not settle any Claim in any manner that would impose any expense, penalty,
obligation or limitation on the Consultant, or would contain language (other
than a recitation of any amounts to be paid in settlement) that could reasonably
be viewed as an acknowledgment of wrongdoing on the part of the Consultant or as
materially detrimental to the reputation of the Consultant, without the
Consultant's prior written consent (which consent shall not be unreasonably
withheld).
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(d) The Consultant's right to indemnification in this Section 2.03 shall
include the right of the Consultant to be advanced by the Company any Expenses
incurred in connection with any Indemnifiable Event as such expenses are
incurred by the Consultant; provided, however, that all amounts advanced in
respect of such Expenses shall be repaid to the Company by the Consultant if it
shall ultimately be determined in a final judgment that the Consultant is not
entitled to be indemnified for such Expenses.
2.04. Termination. This Agreement may be terminated by the Company at
the direction of the Special Committee or by the Board of Directors, effective
upon two (2) days prior written notice to the Consultant, at any time with or
without cause. If the Term is terminated early by the Company or if the
Consultant should die during the Term or if the Consultant terminates his
performance of the Services under this Agreement prior to the end of the Term
for any reason, the Term shall automatically be terminated, and the Consultant
(or his designated beneficiary or estate in the event of death) shall be
entitled to receive his compensation and reimbursement of expenses incurred
through the date of such termination (or death).
ARTICLE III
GENERAL PROVISIONS
3.01. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California, without
reference to the principles of conflicts of laws.
3.02. Assignment. This Agreement shall bind and inure to the benefit
of the successors and assigns of the parties hereto. Neither of the parties
hereto may assign this Agreement or any rights hereunder without the written
consent of the other party hereto.
3.03. Waiver or Amendment. No waiver, change or amendment of any
provision of this Agreement shall be valid or of force or effect unless made in
writing and signed by the party against which the enforcement of such change or
waiver is sought. The signing of such waiver or change in any instance shall in
no event be construed to be a general waiver, abandonment or change of any of
the provisions hereof, but shall be strictly limited to the specific instance
and for the specific purpose stated therein.
3.04. No Agency, Etc. This Agreement is not intended to create an
employment relationship between the Company and the Consultant. For all
purposes, the Consultant shall be deemed an independent contractor and not the
Company's agent or employee, and the Consultant shall have no authority to act
for, represent, bind or obligate the Company, and nothing contained herein shall
be deemed to create a partnership or a joint venture between the Company and the
Consultant. Neither party shall be liable for any act of or failure to act by
the other party except as herein specifically provided.
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3.05. Survival. The provisions of Section 1.03 and Article II shall
survive the termination of this Agreement. Moreover, the respective rights and
obligations of the parties hereto shall survive any expiration and/or
termination of the Term and/or this Agreement for any reason to the extent
necessary to effect the intended provision of such right and obligation.
3.06. Entire Agreement. This Agreement constitutes the entire
agreement between the Consultant and the Company regarding the subject matter
hereof and supercedes all previous agreements, promises, proposals,
representations, understandings and negotiations, whether written or oral,
between the Consultant and the Company and/or its affiliates regarding such
subject matter.
3.07. Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
3.08. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their duly authorized representatives as of
the day and year first above written.
LIQUID AUDIO, INC.
By: /s/ XXXXXX XXXXX
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Name: Xxxxxx Xxxxx
Title: SVP of Business Development
/s/ XXXXXXX X. XXXX
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XXXXXXX XXXX
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